UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  ¨                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

March 23, 201222, 2013

Dear Shareholder:

Please accept our invitation to attend our Annual Meeting of Shareholders on Wednesday, May 2, 20121, 2013 at 10:00 a.m. This year’s meeting will be held at Fox Hill Club & Residences, 8300 Burdette Road, Bethesda, Maryland.

The business to be conducted at the meeting is described in the formal notice that follows. In addition, management will provide a review of 20112012 operating results and discuss the outlook for the future. After the formal presentation, our Trustees and management will be available to answer any questions you may have.

You may vote by mail by completing, signing and returning the enclosed proxy card. You also may vote either by telephone (1-800-PROXIES or 1-800-776-9437) or on the Internet (www.voteproxy.com) by following the instructions on your proxy card. We also encourage you to read the section titled “How may I“registered” shareholders and shareholders holding Shares in “street name” elect to receive future shareholder materials electronically instead of by mail”electronically” included in this proxy statement. This section provides information on how to receive future shareholder materials, including proxy materials and annual reports, electronically either through e-mail or by accessing the internetInternet rather than by mail. These online services not only allow you to access these materials more quickly than ever before, but help us reduce printing and postage costs and be more environmentally friendly while decreasing the amount of paper delivered to your home.

Your vote is important and we urge you to vote by one of the three methods mentioned above.

We look forward to seeing you on May 2.1.

Sincerely,

Joseph S. Vassalluzzo		Donald C. Wood
Non-Executive Chairman of the Board		President and Chief Executive Officer

FEDERAL REALTY INVESTMENT TRUST

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 2, 20121, 2013

To Our Shareholders:

The 20122013 Annual Meeting of Shareholders of Federal Realty Investment Trust (the “Trust”) will be held at Fox Hill Club & Residences, 8300 Burdette Road, Bethesda, Maryland, on Wednesday, May 2, 2012,1, 2013, at 10:00 a.m. for the purpose of considering and acting upon the following:

Shareholders of record at the close of business on March 19, 201214, 2013 are entitled to notice of and to vote at the Annual Meeting.

For the Trustees:

Dawn M. Becker

Executive Vice President—General

Counsel and Secretary

Your vote is important. Even if you plan to attend the meeting, please vote by completing, signing and returning the enclosed proxy card by mail, by telephone (1-800-PROXIES or 1-800-776-9437) or on the Internet (www.voteproxy.com) by following the instructions on your proxy card.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 2, 20121, 2013

The 20122013 Proxy Statement and 20112012 Annual Report to Shareholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2011,2012, are available at www.federalrealty.com.

TABLE OF CONTENTS

FEDERAL REALTY INVESTMENT TRUST

1626 East Jefferson Street, Rockville, Maryland 20852

PROXY STATEMENT

March 20, 201215, 2013

The BoardWe are providing these proxy materials in connection with the 2013 Annual Meeting of Trustees (the “Board” or “Board of Trustees”Shareholders (“Annual Meeting”) of Federal Realty Investment Trust (the “Trust”) is soliciting your proxy to vote on matters that will be presented at our 2012 Annual Meeting of Shareholders (“Annual Meeting”). The Annual Meeting will be held at 10:00 a.m., Wednesday, May 2, 2012, at Fox Hill Club & Residences, 8300 Burdette Road, Bethesda, Maryland. This proxy statement, the accompanying proxy card and our 2011 Annual Report to Shareholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2011, are being mailed on or about March 26, 2012 to our “registered” shareholders. These materials will assist you in voting your common shares of beneficial interest of the Trust (“Shares”) by providing information on matters that will be presented at the Annual Meeting. As permitted by the Securities and Exchange Commission (“SEC”), we are providing online access to this proxy statement and related proxy materials to our shareholders who hold their Shares in “street name.” A “Notice of Internet Availability of Proxy Materials” (“Notice”) is being mailed to our shareholders who hold their Shares in “street name” on or about March 23, 2012. The Notice describes how to access our proxy materials online and how to request a printed copy of our proxy materials.

ABOUT THE ANNUAL MEETING

Who is soliciting my vote?

The Board of Trustees (the “Board” or “Board of Trustees”) of the Trust is soliciting your proxy to vote on matters that will be presented at our Annual Meeting.

When will the Annual Meeting take place?

The Annual Meeting will be held at 10:00 a.m. EDT, Wednesday, May 1, 2013, at Fox Hill Club & Residences, 8300 Burdette Road, Bethesda, Maryland.

What is the purpose of the Annual Meeting?

To vote on the following matters:

What are the Board’s recommendations?

The Board recommends a vote:

Why am I receiving these proxy materials?

You are receiving these materials because you owned our Shares as a “registered” shareholder or you held Shares in “street name” at the close of business on the record date for the Annual Meeting.

What is the difference between a “registered” shareholder and holding Shares in “street name?”

If your Shares are registered directly in your name with American Stock Transfer and Trust Company, our transfer agent, you are a “registered” shareholder. If you own Shares through a broker, bank, trust or other nominee rather than in your own name, you are the beneficial owner of the Shares, but considered to be holding the Shares in “street name.”

WhatWhy did I receive a “Notice of Internet Availability of Proxy Materials” in the mail regarding the Internet availability of proxy materials instead of a paper copy of proxy materials?

As permitted by the Securities and Exchange Commission (“SEC”), we are furnishing proxy materials including this proxy statement and our 2012 Annual Report to Shareholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2012, to our shareholders who hold their Shares in “street name” by providing access to such documents on the Internet instead of mailing printed copies. A “Notice of Internet Availability of Proxy Materials” (“Notice”) describes how to access and review our proxy materials online, how to submit your vote online and how to request a printed copy of our proxy materials. The Notice is being mailed to our shareholders who hold their Shares in “street name” on or about March 22, 2013.

Can I vote my Shares by filling out and returning the record dateNotice?

No. The Notice identifies the items to be voted on at the Annual Meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote by (i) Internet, (ii) telephone, (iii) requesting and returning a paper proxy card or voting instruction form; or (iv) submitting a ballot in person at the meeting.

Why did I receive a paper copy of the proxy materials?

This proxy statement, the accompanying proxy card and our 2012 Annual Report to Shareholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2012, are being mailed to our “registered” shareholders on or about March 26, 2013 who have not elected to receive proxy materials electronically.

How may “registered” shareholders and shareholders holding Shares in “street name” elect to receive future shareholder materials electronically?

Opting to receive all future proxy materials electronically saves us the cost of producing and mailing documents to your home or business and helps us to conserve natural resources. “Registered” shareholders who wish to receive their proxy materials electronically rather than by mail may register to do so on American Stock Transfer & Trust Company’s website atwww.amstock.com. “Registered” shareholders who choose to receive future proxy materials electronically will receive an email containing links to our proxy materials. “Registered” shareholders who hold Shares in different ways (i.e., joint tenancy, trusts, custodial accounts) or in multiple accounts will need to complete this process for each account. Your election to receive your proxy materials by electronic email delivery will remain in effect for all future annual meetings until you revoke it.

If you own Shares in “street name” and wish to receive your proxy materials electronically via an email containing links to our proxy materials, you must contact your broker, bank, trust or nominee for instructions on how to receive future proxy materials in this manner. Shareholders who hold Shares in “street name” in different ways (i.e., joint tenancy, trusts, custodial accounts) or in multiple accounts will need to complete this process for each account. Your election to receive your proxy materials by electronic email delivery will remain in effect for all future annual meetings until you revoke it.

Who is entitled to vote at the Annual Meeting?

The Board established March 19, 201214, 2013 as the record date for the Annual Meeting. Holders who owned our Shares at the close of business on that date are entitled to receive notice of and tomay attend and vote at the Annual Meeting or any postponements or adjournments of the meeting. We had 63,897,30865,238,930 Shares outstanding on March 19, 2012.14, 2013.

What is a quorum?How many votes must be present to hold the Annual Meeting?

A quorum is required for our shareholders to conduct business at the Annual Meeting. A quorum occurs when a majority of the Shares entitled to vote at the Annual Meeting are present in person or by proxy. Properly executed proxy cards marked “for,” “against”, “withhold” or “abstain” and broker “non-votes” will be counted as present at the Annual Meeting for purposes of determining a quorum.

What is a proxy?How many votes do I have?

A proxy is your legal designationAs to each item, you are entitled to cast one vote per Share; however, as to the election of another person (the “proxy”)Trustees, you are entitled to cast one vote your Shares on your behalf. By completing and returningper Share for each of the enclosedseven open trustee positions. The proxy card indicates the number of Shares you are giving Dawn M. Becker and Andrew P. Blocher the authority to vote your Shares in the manner you indicate on your proxy card.

Why did I receive more than one proxy card?

You will receive multiple proxy cards if you hold your Shares in different ways (i.e., joint tenancy, trusts, custodial accounts) or in multiple accounts. You should vote and sign each proxy card you receive.

How do I vote my Shares?

If you are a “registered” shareholder, you may vote your Shares in person at the Annual Meeting or you may vote:

Please refer to the specific instructionsowned on the enclosed proxy card. For security reasons, our electronic voting system has been designed to authenticate your identity as a shareholder. Telephone and internet services for all shareholders will be available 24 hours a day and will close at 11:59 p.m. (EDT) on May 1, 2012.

If you hold your Shares in “street name” and wish to vote the Shares in person at the Annual Meeting, you must obtain a proxy form from the broker, bank, trust or nominee that is the record holder of your Shares and bring it with you to the Annual Meeting. Alternatively, you may vote your Shares held in “street name” without attending the Annual Meeting by following the voting instructions provided to you by your broker, bank, trust or nominee.date.

What if I don’t vote my Shares?

If you do not vote your Shares, your Shares will not be counted for purposes of determining a quorum or for determining whether the matters presented at the meeting are approved.

What if I abstain?

Abstentions are counted as present for determining a quorum; however, abstentions will have no effect on any of the items to be considered at the Annual Meeting.

How willreturn my Shares be voted if I do not specify how they should be voted?proxy card but don’t give specific voting instructions?

If you are a “registered” shareholder and you sign and return your proxy card without indicating how you want your Shares to be voted, Dawn M. Becker and Andrew P. BlocherJames M. Taylor, Jr. will vote your Shares as follows:

in accordance with the recommendations of the Board. If you own Shares in “street name,” you must give your broker, bank, trust or nominee specific instructions on how to vote your Shares with respect to Items 1 and 3. If you fail to give your broker, bank, trust or nominee specific instructions on how to vote your Shares on those matters, your vote will NOT be counted for those matters. It is important for every shareholder’s vote to be counted on these matters so we encourage you to provide your broker, bank, trust or nominee with voting instructions. If you fail to give your broker, bank, trust or nominee specific instructions on how to vote your Shares on Item 2, such broker, bank, trust or nominee will generally be able to vote on Item 2 as he, she or it determines.

How many votes do I have?What is a proxy?

AsA proxy is your legal designation of another person (the “proxy”) to each item,vote your Shares on your behalf. By completing and returning the enclosed proxy card, you are entitledgiving Dawn M. Becker and James M. Taylor, Jr. the authority to cast one vote per Share;your Shares in the manner you indicate on your proxy card.

What if I return my proxy card but abstain?

Abstentions are counted as present for determining a quorum; however, as to the election of Trustees, you are entitled to cast one vote per Share for eachabstentions will have no effect on any of the seven open trustee positions. The proxy card indicatesitems to be considered at the number of Shares you owned on the record date.Annual Meeting.

May I change my vote after I return my proxy card?

Yes. A proxy may be revoked by a “registered” shareholder at any time before it is exercised at the Annual Meeting by submitting a proxy bearing a later date or by voting in person at the Annual Meeting. If you hold your Shares in “street name,” you must contact your broker, bank, trust or other nominee to determine how to revoke your original proxy. In general, submitting a subsequent proxy executed by the party that executed the original proxy will revoke the earlier proxy.

How mayWhy did I elect to receive future shareholder materials electronically instead of by mail?more than one Notice, proxy card, voting instruction form and/or email?

We are permitted to deliver shareholder materials, includingYou will receive more than one Notice, proxy statements and annual reports, to you by internet accesscard, voting instruction form or electronic delivery rather than by mailemail, or any combination of these if you so choose. Electronic delivery of materials can help us achieve a substantial reduction in our printing and mailing costs and it is environmentally friendly. “Registered” shareholders who choose to receive proxy materials by accessing the internet will receive before next year’s annual meeting a Notice of Internet Availability of Proxy Materials when the proxy materials and annual report to shareholders are available over the internet. “Registered” shareholders who choose instead to receive proxy materials by electronic delivery will receive an email containing the proxy materials and the annual report to shareholders.

If you are a “registered” shareholder and currently receivehold your proxy materials by mail and wish to receive future proxy materials electronically instead of by mail, you may register to do so on American Stock Transfer & Trust Company’s website atwww.amstock.com.

If you own Shares in “street name”, you already receive a Notice of Internet Availability of Proxy Materials when the proxy materials and annual report to shareholders are available over the internet. If you wish to receive your proxy materials by electronic delivery, you must contact your broker, bank, trust or nominee for instructions on how to receive future proxy materials by email.

Shareholders who hold Shares in different ways (i.e., joint tenancy, trusts, custodial accounts) or in multiple accountsaccounts. You should provide voting instructions for all Notices, proxy cards, voting instruction forms and email links you receive.

Are there other matters to be acted upon at the Annual Meeting?

The Trust does not know of any matter to be presented at the Annual Meeting other than those described in the proxy statement. If, however, other matters are properly presented for action at the Annual Meeting, Dawn M. Becker and James M. Taylor, Jr. will needhave the discretion to completevote on such matters in accordance with their best judgment.

Who is paying for the solicitation of proxies?

The cost of this processsolicitation of proxies will be borne by us. In addition to the use of the mail, we may solicit proxies in person and by telephone or facsimile, and may request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting materials to the beneficial owners of Shares and reimburse them for each account. Your electiontheir reasonable expenses. We may also hire a proxy solicitation firm at a standard industry compensation rate.

What if I have questions about the Notice, voting or electronic delivery?

Questions regarding the Notice, voting or electronic delivery should be directed to receive your proxy materials by accessing the internetour Investor Relations Department at (800) 937-5449 or by electronic email delivery will remain in effect for all future annual meetings until you revoke it.atIR@federalrealty.com.

SHARE OWNERSHIP

Who are the largest owners of Shares?

Based upon our records and the information reported in filings with the SEC, the following were beneficial owners of more than 5% of our Shares as of March 19, 2012:14, 2013:

power over 43,448164,079 Shares, shared voting power over 49,200 Shares, sole dispositive power over 6,362,9847,316,597 Shares and shared dispositive power over 43,448124,880 Shares; and that Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 43,44844,880 Shares as a result of serving as investment manager of collective trust accounts, the voting of which it directs; and that Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 199,199 Shares as a result of serving as investment manager of Australian investment offerings, the voting of which it directs.

(3)

Information based on a Schedule 13G/A filed with the SEC on February 9, 2012January 11, 2013 by BlackRock, Inc., which states BlackRock, Inc., a parent holding company, has sole voting and dispositive power over 6,100,6076,645,506 Shares and that none of its subsidiaries owns 5% or more of Shares. The Schedule 13G/A states that BlackRock, Inc.’s subsidiaries are BlackRock Japan Co. Ltd., BlackRock Advisors (UK) Limited, BlackRock Asset Management Deutschland AG, BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset Management Canada Limited, BlackRock Asset Management Australia Limited, BlackRock Advisors, LLC, BlackRock Capital Management, Inc., BlackRock Financial Management, Inc., BlackRock Investment Management, LLC , BlackRock Investment Management (Australia) Limited, BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock Fund Managers Limited, BlackRock Life Limited, BlackRock Asset Management Australia Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock Asset Management Ireland Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock International Limited, BlackRock Institutional Trust Company, N.A., BlackRock Japan Co. Ltd. and BlackRock Investment Management (UK) Limited.

(4)	Information based on a Schedule 13G filed with the SEC on February 9, 201211, 2013 by State Street Corporation, which states State Street Corporation, a parent holding company, has shared voting and dispositive power

over 4,131,9184,348,637 Shares. The Schedule 13G also states that State Street Corporation’s subsidiaries are State Street Global Advisors France S.A., an investment advisor, State Street Bank and Trust Company, a bank, SSGA Funds Management, Inc., an investment advisor, Tuckerman Group, LLC, an investment advisor, State Street Global Advisors Limited, an investment advisor, State Street Global Advisors LTD, an investment advisor, State Street Global Advisors, Australia Limited, an investment advisor, StatedState Street Global Advisors Japan Co., LTD., an investment advisor and State Street Global Advisors, Asia Limited, an investment advisor.

(5)

Information based on a Schedule 13G/A filed with the SEC on February 14, 20122013 by Vanguard Specialized Funds – Vanguard REIT Index Fund. The Schedule 13G/A states that Vanguard Specialized Funds – Vanguard REIT Index Fund, an investment company registered under Section 8 of the Investment Company Act of 1940, has sole voting power over 4,244,034 Shares.

(6)

Information based on a Schedule 13G/A filed with the SEC on February 14, 2013 by Cohen & Steers, Inc. and its subsidiaries, Cohen & Steers Capital Management, Inc., and Cohen & Steers Europe S.A. The Schedule 13G/A states that Cohen & Steers, Inc. is the parent holding company of Cohen & Steers Capital Management, Inc., an investment advisor, and that Cohen & Steers, Inc. and Cohen & Steers Capital Management, Inc., together own Cohen & Steers Europe S.A., an investment advisor. The Schedule 13G/A also states that Cohen & Steers, Inc. has sole voting power over 1,445,4541,865,673 Shares and sole dispositive power over 4,103,1013,951,671 Shares, Cohen & Steers Capital Management, Inc., has sole voting power over 1,430,5401,865,673 Shares and sole dispositive power over 4,053,9543,937,180 Shares and Cohen & Steers Europe S.A. has sole voting power over 14,914 Shares and sole dispositive power over 49,147 Shares.

(6)

Information based on a Schedule 13G/A filed with the SEC on January 27, 2012 by Vanguard Specialized Funds – Vanguard REIT Index Fund. The Schedule 13G/A states that Vanguard Specialized Funds – Vanguard REIT Index Fund, an investment company registered under Section 8 of the Investment Company Act of 1940, has sole voting power over 3,480,684 Shares.

(7)

Information based on a Schedule 13G filed with the SEC on February 14, 2012 by Invesco Ltd., and its subsidiaries, Invesco Advisers, Inc., Invesco PowerShares Capital Management, Invesco Asset Management(Japan) Limited, Invesco Investment Advisers, LLC and Invesco PowerShares Capital Management Ireland Limited. The Schedule 13G states that Invesco Ltd, is the parent holding company of the following investment advisors: Invesco Advisers, Inc., Invesco PowerShares Capital Management, Invesco Asset Management(Japan) Limited, Invesco Investment Advisers, LLC, and Invesco PowerShares Capital Management Ireland Limited. The Schedule 13G also states that Invesco Advisers, Inc. has sole voting power over 1,185,651 Shares, sole dispositive power over 3,329,502 Shares, shared voting power over 12,900 Shares and shared dispositive power over 9,102 Shares; Invesco PowerShares Capital Management has sole voting and dispositive power over 9,633 Shares; Invesco Asset Management(Japan) Limited has sole voting and dispositive power over 7,060 Shares; Invesco Investment Advisers, LLC has sole voting and dispositive power over 3,517 Shares; and Invesco PowerShares Capital Management Ireland Limited has sole voting and dispositive power over 17414,491 Shares.

How many Shares do our Trustees and executive officers own?

As of March 19, 2012,14, 2013, our Trustees and executive officers, both individually and collectively, beneficially owned the Shares reflected in the table below. The number of Shares shown in this table reflects beneficial ownership determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and, therefore, includes unvested Shares and Shares that have not been issued but as to which options are outstanding and may be exercised within 60 days of the date of this proxy statement. Except as noted in the footnotes that follow the table, each Trustee and executive officer has sole voting and investment power as to all Shares listed. Fractional Shares have been rounded to the nearest full Share.

CORPORATE GOVERNANCE

Independence of Trustees

Article III, Section 1 of our Bylaws provides that no more than one of our Trustees can fail to qualify as independent under the requirements of the New York Stock Exchange (“NYSE”), the SEC, our Corporate Governance Guidelines and other applicable rules and regulations. At its first quarterly meeting each calendar year, the Board reviews all relationships between us and each Trustee to determine whether each Trustee is independent under all applicable requirements. That review includes a determination of whether there are any material relationships between us and the Trustee which, in the opinion of the Board, adversely affect the Trustee’s ability to exercise independent judgment as a trustee. The Board also considers independence on an ongoing basis throughout the year if there are any changes in circumstances that could impact a Trustee’s independence.

The Board, on recommendation of the Nominating and Corporate Governance Committee, and after considering all relevant facts and circumstances, determined in February 20112012 and February 20122013 that, except for Mr. Wood, the Trust’s Chief Executive Officer, each Trustee then serving on the Board satisfied all applicable requirements to be considered independent. In making that determination, the Board concluded that a Trustee’s position as a director of a company with which we do business does not constitute a material relationship so long as payments made by that company do not account for more than five percent (5%) of our gross revenues or more than ten percent (10%) of the gross revenues of that company. This standard is set forth in our Corporate Governance Guidelines. Further, the Board has concluded that except for Mr. Wood, who is an employee of the Trust, there are no relationships, material or otherwise, between us and any of the Trustees except as described below. All of these relationships were considered by the Board in making its determination that all Trustees other than Mr. Wood are independent. The specific relationships considered by the Board in making its independence determinations were the following, which includes all of those relationships described in the “Certain Relationships and Related Transactions” section below:

In no instance did the payments made to us by any tenant with which our Trustees are affiliated, or the payments made by us to Pebblebrook Hotel Trust, account for more than five percent (5%) of our gross revenues or more than ten percent (10%) of the gross revenues of any tenant.tenant or Pebblebrook Hotel Trust. Further, the payments made by us to Pebblebrook Hotel Trust accounted for less than 2% of both our and

Pebblebrook Hotel Trust’s consolidated gross revenues in 2012 and the payments made to us by two of Thompson Hospitality Corporation’s wholly-owned subsidiaries Austin Grill, LLC and Thompson Tap Room, LLC, collectively accounted for less than 2% of both our and Thompson Hospitality Corporation’s consolidated gross revenues for each of the last three fiscal years.

Board of Trustees and Board Committees

Board of Trustees:

The Board of Trustees discharges its responsibilities through regularly scheduled meetings as well as through telephonic meetings, action by written consent and other communications with management as appropriate. During 2011,2012, the Board of Trustees held fivesix meetings. The non-management Trustees (all of whom are independent) held four executive sessions at the meetings that were open for participation by all non-management Trustees. Mr. Vassalluzzo, the Non-Executive Chairman of the Board, presided over all Board meetings as well as all executive sessions of the non-management Trustees during 2011.2012. The Non-Executive Chairman of the Board is expected to preside over all future Board meetings and executive sessions of non-management Trustees. Since 2003, we have operated under a governance structure where the Chairman of the Board and Chief Executive Officer are separate positions held by different individuals. At its meetings in February 20112012 and 2012,2013, the Board discussed whether this structure was still the best structure for us and concluded that it was. Having the Board operate under the leadership and direction of someone independent from management provides the Board with the most appropriate mechanism to fulfill its oversight responsibilities and hold management accountable for the performance of the Trust. It also allows our Chief Executive Officer to focus his time on running our day-to-day business. The Board believes that one of the most important attributes for the Board is independence from management and that belief has been reflected in the separation of the chairman and CEO roles as well as in our Corporate Governance Guidelines which permit no more than one member of the Board to be a non-independent trustee.

Each of the Trustees attended at least 75% of all meetings of the Board and the Board committees on which each Trustee served during 2011.2012. On an aggregate basis, the Trustees attended 97%96% of all Board and Board committee meetings on which each Trustee served in 2011.2012. Our Corporate Governance Guidelines provide that all Trustees are expected to attend all meetings of the Board and the Board committees on which he or she serves as well as the Annual Meeting of Shareholders. All Trustees attended our 20112012 Annual Meeting of Shareholders.

Board Committees:

The Board has three standing committees which are the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee operates under a written charter which is available in the Investors section of our website atwww.federalrealty.com. Each member of these committees meets, and throughout 20112012 met, the independence, experience and, with respect to the Audit Committee, the financial literacy requirements, of the NYSE, the SEC and our Corporate Governance Guidelines.

The current membersmembership, primary functions and number of meetings during 2012 for each of these standing committees are:are described below:

Audit Committee

The Audit Committee is responsible for, among other things: (a) selecting the independent registered public accounting firm and approving and overseeing its work; (b) overseeing our financial reporting, including reviewing results with management and the independent registered public accounting firm; and (c) overseeing our internal systems of accounting and controls. During 2011, the Audit Committee met four times.

Compensation Committee

The Compensation Committee is responsible for, among other things: (a) reviewing and recommending compensation for our officers; (b) administering our Amended and Restated 2001 Long-Term Incentive Plan (“2001 Plan”) and our 2010 Performance Incentive Plan (“2010 Plan”), including making awards under the 2010 Plan; and (c) administering other benefit programs of the Trust. During 2011, the Compensation Committee met three times.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is responsible for, among other things: (a) recommending individuals to stand for election to the Board; (b) making recommendations regarding committee memberships; and (c) overseeing our corporate governance policies and procedures, including Board and Trustee evaluations. During 2011, the Nominating and Corporate Governance Committee met two times.

Identifying individuals to stand for election as Trustees

The Nominating and Corporate Governance Committee is responsible for identifying individuals to stand for election as Trustees. It begins the process by determining whether there are any changes that should be made to the Board in terms of size or skill sets in order for the Board to appropriately perform its responsibilities. If the Committee concludes that no changes are needed, it first reviews each of the incumbent Trustees whose terms are expiring to determine whether those individuals should be nominated for reelection to the Board. If the Committee determines that the Board should be expanded or that the incumbent Trustees whose terms are expiring should not be nominated for reelection and those positions need to be filled, the Committee will seek recommendations from other Board members for possible candidates. If no appropriate candidates are identified,

the Committee will consider retaining a search firm. Recommendations provided by shareholders will also be considered and will be evaluated on the same basis as all other Board candidates.

The primary factors included in the Committee’s determination are whether the individual possesses skills which are desirable for the effective oversight of the Trust’s operation and complementary to the skills of the other Trustees. If the individual is an incumbent Trustee, the Committee also considers whether he or she is performing his or her responsibilities as a Trustee well and adding value to the Board and its operations as reflected on the most recent individual Trustee evaluations. All candidates for election to the Board should, at a minimum, possess public company, real estate, retail and/or other financial experience and have a history of honesty, integrity and fair dealing with third parties. The Board has no specific policy on diversity but believes that Board membership should reflect diversity in a broad sense, including, among other things, geography, gender and ethnicity. In addition, the Board specifically reviews and considers the backgrounds, experience and competencies of each Trustee nominee and Trustee to ensure that the Board reflects as a whole an appropriate diversity of knowledge, experience, skill and expertise required to enable the Board to perform its responsibilities in managing and directing our business efficiently and effectively.

Once a candidate is identified who has not previously served on the Board, the Committee arranges meetings between the candidate and Board members as well as our senior management. The Committee also undertakes whatever investigative and due diligence activities it deems necessary to verify the candidate’s credentials and determine whether the candidate would be a positive contributor to the operations of the Board and a good representative of our shareholders. Critical to this whole process is the Committee’s determination that any candidate presented to the shareholders for election to the Board satisfies all of the independence requirements imposed by the NYSE, the SEC, our Corporate Governance Guidelines and other applicable rules and regulations.

Any shareholder may propose a candidate to be nominated for election to the Board by following the procedures outlined in Article II, Section 13 of our Bylaws. Any shareholder wishing to present a candidate for

consideration as a Trustee for election at the Trust’s 20132014 Annual Meeting of Shareholders must provide the Committee with the name of the shareholder proposing the candidate as well as contact information for that shareholder, the name of the individual proposed for election, a resume or similar summary that includes the individual’s qualifications and such other factual information that would be necessary or helpful for the Committee to evaluate the individual. The information should be sent to the Committee, in care of the Trust’s Secretary, by no later than November 26, 20122013 so that the Secretary can forward it to the Committee chair for consideration. The Committee will not have sufficient time to evaluate any candidate submitted after that date. A copy of our Bylaws may be obtained by sending a written request to Investor Relations at 1626 East Jefferson Street, Rockville, MD 20852.

Risk Management Oversight

Although our Board has delegated to our Audit Committee responsibility for overseeing our risks and exposures on an ongoing basis, the entire Board receives regular updates from management on the continued viability of our business plan, market conditions, capital position, and our business results and specifically reviews potential risks from time to time. The Board reviews that information together with our quarterly and annual financial statements and operating results and short and long-term business prospects to assess the risks that we may encounter and to establish appropriate direction to avoid or minimize the potential impact of the identified risks. Some of the details that are discussed as part of the Board’s review of potential risks facing us include, without limitation: (a) the impact of market conditions on our business; (b) operational risks such as the ability of our tenants to be successful and the ability to grow the company through increasing rents and redeveloping our properties; (c) liquidity and credit risks, including our ability to access capital to run and grow our business and our overall cost of capital and the impact on our profitability; (d) investment risks from acquisitions and our development and redevelopment projects; (e) regulatory risks that may impact our profitability such as environmental laws and regulations, the Americans with Disabilities Act of 1990 and various

other federal, state and local laws; (f) REIT risks such as our failure to qualify as a REIT for federal income tax purposes; and (g) general risks inherent in the real estate industry.

As part of the Board’s risk oversight function, our Compensation Committee reviewed in February 20122013 our compensation policies and practices for all of our employees to determine whether any of such policies or programs created any risk that could have a material adverse impact on us. Approximately 97%95% of our employees participate in compensation programs tied to either corporate performance or regional performance necessary to achieve corporate objectives and the Committee believes that those programs do not encourage excessive orand unnecessary risk taking. The Committee focused its review on the approximately 3%5% of our employees (8(11 individuals) who are compensated on a full or partial commission/bonus basis where significant portions of their annual compensation areis driven by completing leasing transactions, closing acquisitions or achieving specific milestones on development projects. As part of that review, the Committee reviewed the internal approval processes of the Trust and determined that none of the individuals who are compensated on a transactional commission/bonus basis can complete any leasing, acquisition or development transaction without getting approval from the Board and/or one or more members of senior management whose compensation is tied to achieving corporate objectives.

Trustee Compensation

The Trustees received the following fees for their service on the Board in 2011:2012:

In 2011, eachEach non-employee Trustee and the Non-Executive Chairman of the Board receivedare paid sixty percent (60%) of thehis/her annual retainer ($150,00090,000 for other Trustees and $150,000 for the Non-Executive Chairman of the Board and $90,000 for other Trustees)Board) in the form of Shares. All Shares paid as part of the annual retainer vested immediately upon issuance. The equity portion of the annual retainer for 20112012 was paid in Shares on January 3, 2012.2, 2013. The number of Shares actually received by each Trustee on January 3, 20122, 2013 was determined by dividing the amount of the annual retainer to be paid in Shares by $90.75,$104.02, the closing price of our stock on the NYSE on December 30, 2011,31, 2012, the last business day prior to the date the Shares were issued. The remainder of the annual retainer as well as the annual fees paid to the Chairs of the Audit, Compensation and Nominating and Corporate Governance Committees were paid in cash. In addition, the Board adopted ownership guidelines for the Trustees requiring that theyEach Trustee is required to hold at all times an amount of Shares valued at least at five times the amount of the cash portion of the annual retainer and giving Trustees five years to achieve the required level of ownership.retainer. As of December 31, 2011, all but one Trustee satisfied the ownership requirements. With the Shares issued in January 2012, as payment for 2011 service, all Trustees reachedcomplied with the required level of stock ownership.

In addition to the annual retainer described above, and in exchange for providing additional services to the Board with respect to evaluating prospective real estate acquisitions and dispositions by us, Mr. Vassalluzzo receives administrative support for both Trust business and personal use from our regional office in Wynnewood, Pennsylvania. Except for the annual retainerfee for serving as a Trustee, the annual fee for serving as the chair of a committee and the use of administrative support made available to Mr. Vassalluzzo, all as described above, there were no additional fees paid to any Trustee, including the Non-Executive Chairman, for service on any of the Board committees or for attendance at any Board or committee meetings.

Total compensation awarded to Trustees for service in 20112012 was as follows:

Communications with the Board

Any shareholder of the Trust or any other interested party may communicate with the Board as a whole, the non-management Trustees of the Board as a group, the Non-Executive Chairman of the Board, and/or any individual Trustee by sending the communication to the Trust’s corporate offices at 1626 East Jefferson Street, Rockville, MD 20852 in care of the Trust’s Secretary. All such communication should identify the party to whom it is being sent, and any communication which indicates it is for the Board of Trustees or fails to identify a particular Trustee will be deemed to be a communication intended for the Trust’s Non-Executive Chairman of the Board. The Trust’s Secretary will promptly forward to the appropriate Trustee all communications she receives for the Board or any individual Trustee which relate to the Trust’s business, operations, financial condition, management, employees or similar matters. The Trust’s Secretary will not forward to any Trustee any advertising, solicitation or similar materials.

Other Corporate Documents

The Board of Trustees has adopted a Code of Ethics for senior financial officers as well as a Code of Business Conduct that applies to all of our Trustees and employees. In addition, the Board operates under Corporate Governance Guidelines. The Code of Ethics for our senior financial officers, our Code of Business Conduct and our Corporate Governance Guidelines are available in the Investors section of our website atwww.federalrealty.com.

ITEM 1

ELECTION OF TRUSTEES

Composition of the Board

Our Board of Trustees has seven Trustees. Section 5.2 of the Trust’s Declaration of Trust provides that all Trustees be elected at each annual meeting of shareholders. As a result, the nominees for Trustee this year will be elected to serve one-year terms until the 20132014 Annual Meeting of Shareholders. The Board, on recommendation of the Nominating and Corporate Governance Committee, approved the nomination of the following individuals, all of whom are currently serving on the Board, for election as trustees to hold office until the 20132014 Annual Meeting of Shareholders and until their successors have been duly elected and qualified:

In connection with reviewing nominees to stand for election at the 20122013 Annual Meeting of Shareholders, the Committee considered the following qualifications for each Trustee nominee:

Jon E. Bortz, President, Chief Executive Officer and Chairman of the Board of Pebblebrook Hotel Trust, a REIT that acquires and operates upper upscale hotels in large US cities (from 2009 to the present); Chief Executive Officer and a Trustee (from 1998 to 2009), President (from 1998 to 2008) and Chairman of the Board (from 2001 to 2009) of LaSalle Hotel Properties, a multi-tenant, multi-operator hotel REIT; and various real estate related positions with Jones Lang LaSalle (from 1981 to 1998). Mr. Bortz brings to the Board public

company, REIT and real estate experience. His experience as chief executive officer of LaSalle Hotel Properties and Pebblebrook Hotel Trust provide a valuable perspective for running a public real estate company while his real estate experience at Jones Lang LaSalle provides fundamental real estate experience critical to our core business.

David W. Faeder, Managing Partner of Fountain Square Properties, a diversified real estate company, since 2003; Vice Chairman (from 2000 to 2003), President (from 1997 to 2000) and Executive Vice President and Chief Financial Officer (from 1993 to 1997) of Sunrise Senior Living, Inc., a provider of senior living services in the United States, United Kingdom and Canada; Vice President of Credit Suisse First Boston (formerly First Boston Corporation) from 1991 to 1993, directing the real estate advisory business for the RTC in the Washington, DC area; Vice President of Morgan Stanley and Company, Inc., a brokerage firm, from 1984 to 1991 specializing in real estate transactions and financings; and prior to that time, various other accounting positions with Ernst and Whinney, Better Homes of Virginia, and Goodman and Company. Mr. Faeder is a valuable member of the Board because of his public company and accounting experience, having previously served as the chief financial officer of Sunrise Senior Living, and his real estate investment experience from his time as a private real estate investor.

Kristin Gamble, President of Flood, Gamble Associates, Inc., an investment counseling firm, since 1984; and prior to that time, various management positions with responsibility for investments and investment research with brokerage firms and other financial services companies. Director of Ethan Allen Interiors Inc., a furniture manufacturer and retailer. Ms. Gamble benefits the Board through her broad financial related experience from an

investor perspective, including as President of her own investment counseling company for over 30 years, and before that, as an executive with responsibility for investments and investment research with various brokerage firms and other financial services companies.

Gail P. Steinel, Owner of Executive Advisors (from 2007 to present), which provides consulting services to chief executive officers and leadership seminars to companies. Executive Vice President with BearingPoint, Inc. (from 2002 to 2007), a management and technology consulting firm that provides application services, technology solutions and managed services to companies and government organizations with responsibility for overseeing the global commercial services business unit; global managing partner and a founding member of Arthur Andersen’s business consulting practice (from 1984 to 2002). Director of MTS Systems Corporation, a provider of mechanical test systems, material testing, fatigue testing and tensile testing equipment as well as motion simulation systems and calibration services. Ms. Steinel has over 25 years of auditing and consulting experience that provides the Board with a helpful perspective on managing risk and systems operations.

Warren M. Thompson, President and Chairman of Thompson Hospitality Corporation, a food service company that owns and operates restaurants and contract food services, since founding the company in October 1992. Mr. Thompson is the president, chairman and founder of his own private food service company, Thompson Hospitality Corporation since 1992. Mr. Thompson’s experience running restaurants owned by Thompson Hospitality provides the Board and management with a unique perspective that is shared by a large percentage of the Trust’s retail tenants.

Joseph S. Vassalluzzo, Non-Executive Chairman of the Board of Trustees since February 2006; Vice Chairman of Staples, Inc. (from 2000 to 2005), a retailer specializing in home, office, and computer products, with responsibility for overseeing domestic and international growth in its retail and commercial operations; various other officer positions with StaplesStaples’ and Staples Realty & Development, a subsidiary of Staples, Inc. (from 1997 to 2000); Director of iParty Corp., a premier multi-channel party supply and party planning company; Lead Director of Life Time Fitness, Inc., an operator of distinctive and large sports, athletic, fitness and family recreation centers. Mr. Vassalluzzo’s extensive background in retail and real estate as a result of having served as an executive with Staples, expanding the real estate owned by Staples Realty & Development, a subsidiary of Staples, Inc. for over 10 years and serving on the boards of a number of retailers provides the board and management with retail and retail real estate expertise that is essential to our core business.

Donald C. Wood, President and Chief Executive Officer of the Trust since January 2003; prior to that time, various officer positions with the Trust, including President and Chief Operating Officer (from 2001 to 2003), Senior Vice President and Chief Operating Officer (from 2000 to 2001), Senior Vice President-Chief Operating Officer and Chief Financial Officer (from 1999 to 2000) and Senior Vice President-Treasurer and Chief Financial Officer (from 1998 to 1999); Chairman of the Board of the National Association of Real Estate Investment Trusts sincefrom November 2011;2011 to November 2012; Director of the Real Estate Roundtable sincefrom July 2011;2011 to July 2012; Director of Post Properties, Inc., a developer and operator of upscale multifamily communities in the United States. Mr. Wood has been employed by the Trust for nearly fourteenfifteen years and serves on the Board as the sole non-independent Trustee. His tenure with the Trust and his responsibilities as chief executive officer provides the Board with familiarity and details on all aspects of the operations of the Trust.

Vote Required

The affirmative vote of a plurality of votes cast at the Annual Meeting, in person or by proxy, is required for the election of Trustees. If any Trustee does not receive at least 50% of the votes cast at the Annual Meeting, he or she must tender his or her resignation to the Chairman of the Nominating and Corporate Governance Committee within five (5) business days after certification of the vote. The Nominating and Corporate Governance Committee will promptly consider the resignation and make a recommendation to the Board of Trustees. In deciding whether to accept or reject a resignation that has been tendered, the Nominating and Corporate Governance Committee and the Board will consider such factors as they deem appropriate and

relevant which may include, among others: (a) the stated reasons why votes were withheld from the Trustee and whether those reasons can be cured; (b) the Trustee’s length of service, qualifications and contributions as a Trustee; (c) listing requirements of the NYSE, rules and regulations of the SEC and other applicable rules and regulations; (d) our Corporate Governance Guidelines; and (e) such other factors as the Nominating and Corporate Governance Committee or the Board deems appropriate. Any rejection of a resignation may (but does not have to) be conditioned on curing the underlying reason for the withheld votes. The Board will take action on any resignation no later than sixty (60) days after the certification of the vote, and will disclose the action taken with a full explanation of the process used by the Board and the reason for its decision in a Form 8-K filed with the SEC within four (4) business days after the Board’s decision. If a Trustee’s resignation is accepted by the Board of Trustees, then the Board of Trustees may fill the resulting vacancy pursuant to our Bylaws. The Trustee who tenders his or her resignation will not participate in the recommendation of the Nominating and Corporate Governance Committee or the decision of the Board.

If you are a “registered” shareholder and fail to give any instructions on your proxy card on this matter, the proxies identified on the proxy card will vote FOR the election of the named individuals. An abstention or broker non-vote will have no effect on the outcome of the vote on this proposal. You are entitled to cast one vote per Share for each of the seven named individuals. Proxies may not be voted for more than seven individuals.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR”���FOR” THE SEVEN NOMINEES FOR TRUSTEE.

REPORT OF THE AUDIT COMMITTEE

The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Trust filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Trust specifically incorporates this Report by reference therein.

Management is responsible for the financial reporting process, including the system of internal controls, for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) and for management’s report on internal control over financial reporting. The Trust’s independent registered public accounting firm, Grant Thornton LLP (“GT”), is responsible for auditing the consolidated financial statements and expressing an opinion on the financial statements and the effectiveness of internal control over financial reporting. The Audit Committee oversees the financial reporting process on behalf of the Board. In addition, the Audit Committee oversees the work of the Trust’sour internal audit function, which has beenis provided by the Reznick Group since March 2003.PricewaterhouseCoopers LLP (“PwC”).

The Audit Committee meets at least quarterly and at such other times as it deems necessary or appropriate to carry out its responsibilities. AllThe Audit Committee met four times during 2012, and all four of these quarterly meetings during 2011 included executive sessions with our independent accountant without management being present. The Audit Committee met four times during 2011, including four executive sessions with GT. In the course of fulfilling its oversight responsibilities, the Audit Committee met with both management and GT to review and discuss all annual and quarterly financial statements and quarterly operating results prior to their issuance. Management advised the Audit Committee that all financial statements were prepared in accordance with GAAP. The Audit Committee also discussed with GT matters required to be discussed pursuant to Statement on Auditing Standards No. 61, as amended,Communication with Audit Committees,applicable Public Company Accounting Oversight Board standards, including the reasonableness of judgments and the clarity and completeness of financial disclosures.

In addition, the Audit Committee discussed with GT matters relating to its independence and has received from GT the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with GT its independence.

The Audit Committee continually monitors the non-audit services provided by GT. During 2011,2012, the Audit Committee limited non-audit services primarily to income tax form preparation for us and our subsidiaries and

the provision of advice on the tax impacts and structuring of acquisition and other property related transactions. GT also performed the 20112012 audit of the financial statements of our joint venture with affiliates of a discretionary fund created and advised by ING Clarion Partners in which we own a 30% equity interest. The Audit Committee approved GT’s performing this audit only after determining that it would not adversely impact GT’s independence.

In addition,2012 as part of its oversight of our internal audit function, the Audit Committee, after a lengthy interview process, engaged PwC to provide our internal audit function. During 2012, the Audit Committee continued to oversee in 2011 the internal auditor’s ongoing testing of the effectiveness of our internal controls. The findings of the internal auditor were reported to the Audit Committee on a quarterly basis. GT, as part of its 20112012 audit of our financial statements, independently reviewed our internal controls and concluded that there were no material weaknesses or significant deficiencies.weaknesses.

On the basis of the reviews and discussions the Audit Committee has had with GT, our internal auditor and management, the Audit Committee recommended to the Board of Trustees that the Board approve the inclusion of our audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 20112012 for filing with the SEC.

Submitted by:

Gail P. Steinel, Chairperson

Jon E. Bortz

David W. Faeder

Warren M. Thompson

RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

GT has served as our independent registered public accounting firm for the years 2002 through 2011.2012. The Audit Committee approves in advance all fees paid to and services provided by GT. In addition, the Audit Committee has considered those services provided by GT and has determined that such services are compatible with maintaining the independence of GT. During 20112012 and 2010,2011, we retained GT to provide services in the following categories and amounts:

ITEM 2

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Trustees has retained GT as our independent registered public accounting firm for the year ending December 31, 20122013 and is asking the shareholders to ratify that selection. Our organizational documents do not require ratification of the selection of our independent registered public accounting firm; however, we are seeking ratification because we believe that it is a matter of good corporate practice to do so. If the selection of GT is not ratified, the Audit Committee may reconsider whether to retain GT. Even if the selection of GT is ratified, the Audit Committee may change the appointment of GT at any time if it determines such a change would be in the best interests of the Trust and our shareholders.

A representative of GT will be present at the Annual Meeting and will have the opportunity to make a statement and answer appropriate questions from shareholders.

The Audit Committee believes that GT is qualified to serve as our independent registered public accounting firm. GT is familiar with our affairs and financial procedures, having served as our independent accountant since June 2002. GT is registered with the Public Company Accounting Oversight Board. Pursuant to its charter, the Audit Committee must pre-approve all audit and non-audit services provided by GT. For 20122013 the Audit Committee to date has approved GT’sGT providing the following non-audit services: (a) tax planning and other consultation for purposes of structuring acquisitions, dispositions, joint ventures and other investment or financing opportunities as well as consultation associated with financial reporting matters (e.g. implementation of newly issued accounting standards) provided that the aggregate amount paid to GT for such services does not exceed $100,000; (b) issuance of comfort letters and consents in connection with capital markets transactions approved in accordance with the Trust’s policies and

procedures provided that the aggregate amount paid to GT for such services does not exceed $75,000;$125,000; (c) issuance of audit opinions related to acquisition audits required under Rule 3-14 of Regulation S-X provided that the aggregate amount paid to GT for such services does not exceed $75,000; and (d) a Limited Review of the Trust’s letter to the State of California EPADepartment of Environmental Quality provided that the aggregate amount paid to GT for such services does not exceed $3,000.$3,000, if requested by the State of California.

Once the pre-approved dollar limit for the applicable non-audit service has been reached, no additional services of that type can be provided by GT without further approval by the Audit Committee. The Audit Committee has concluded that GT’s providing these permissible non-audit services up to the aggregate pre-approved amounts would not compromise GT’s independence. The Audit Committee may approve GT’sGT providing additional non-audit services or services in excess of the amounts specified above if it determines that it is in our best interest and that GT’s independence would not be compromised. All audit and non-audit services provided to the Trust by GT for the 20112012 fiscal year are described in the “Relationship With Independent Registered Public Accounting Firm” section above.

In addition to the foregoing non-audit services, the Audit Committee also has approved GT’sGT performing the audit of the financial statements for our equity joint venture with affiliates of a discretionary fund created and advised by ING Clarion Partners for the fiscal years ending 2004 through 2011.2012. We own a 30% interest in that joint venture. The Audit Committee approved GT’sGT performing this audit using the same criteria it uses for approving non-audit services. Although we do not consolidate the results of the joint venture, we do include our share of the joint venture’s results in our financial statements. The Committee concluded that having GT perform the joint venture’s audit facilitates the inclusion of those results in our financial statements.

Vote Required

The affirmative vote of a majority of votes cast at the Annual Meeting, in person or by proxy, is required to approve the proposal to ratify the Audit Committee’s selection of GT as our independent registered public accounting firm for 2012.2013. If you fail to give any instructions on your proxy card on this matter, the proxies

identified on the proxy card will vote FOR this proposal. An “abstention” or broker “non-vote” will have no effect on the outcome of the vote on this proposal, however, if you fail to give instructions to your broker, your broker may have authority to vote the shares for this proposal.

THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO RATIFY THE AUDIT COMMITTEE’S SELECTION OF GT AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2012.2013.

EXECUTIVE OFFICERS

Our current named “executive officers” are:

Donald C. Wood, Information for Mr. Wood is provided above in “Item 1—Election of Trustees.”

Andrew P. BlocherJames M. Taylor, Jr.,, SeniorExecutive Vice President – ChiefPresident-Chief Financial Officer and Treasurer of the Trust since September 1, 2008,August 15, 2012, with responsibility for overseeing the Trust’s capital markets, financial reporting, investor relations, corporate communications, human resources and information technology and East Coast acquisitions functions; and prior to that time, various officer positions withExecutive Vice President of the Trust including Senior Vice President-Capital Marketsfrom July 30, 2012 until August 14, 2012; and Investor Relations (2007a senior managing director in the real estate investment banking division of Eastdil Secured and predecessors Wachovia Securities and First Union Securities (1998 to 2008), Vice President-Capital Markets2012). Prior to his career in investment banking, Mr. Taylor practiced corporate and Investor Relations (2003securities law at Hunton & Williams (1994 to 2007)1998) and Vice President-Investor Relations and Finance (2000worked as a senior accountant for Price Waterhouse (1988 to 2003)1991).

Dawn M. Becker, Executive Vice President – Chief Operating Officer (since February 2010) and General Counsel and Secretary of the Trust (since April 2002), with responsibility for overseeing all of the Trust’s operations and asset management functions and the Trust’s Legal Department;and Human Resources Departments; and prior to that time, various officer positions with the Trust, including Vice President–Real Estate and Finance Counsel (2000 to 2002).

COMPENSATION DISCUSSION AND ANALYSIS

You will be asked in Item 3 of this proxy statement to provide a non-binding, advisory vote on the compensation of our named executive officers as described in the following sections of this proxy statement. Please keep that in mind as you review the CD&A, summary compensation table, the supplemental tables and narrative disclosures that follow.

Executive Summary

2011Performance:

2012 was an exceptional year of performance in all aspects of our business. On the operating front, we delivered record levels of funds from operations (both in total as well as on a per share basis) and property operating income (“POI”) and we saw strong growth from our core operating portfolio as evidenced by our year

over year same center POI growth. OurWe also set ourselves up for future growth in 2013 and beyond by having executed more new and renewal leases in 2012 than ever before in our 50 year history. We signed 394 deals for 1.8 million square feet that is expected to generate nearly $7 million of additional rent per year which provides the basis for future growth as these leases come on line in a year or two. We were also able to increase the occupancy in our portfolio (excluding acquired properties) by nearly 330,000 square feet. These strong operating results allowed us to increase our cash dividend to shareholders for the 4445^th consecutive year.

2011 was also oneDuring 2012, we broke ground on the first phase of the most productive acquisition years in our 50 year history. We invested more than $350 million in our acquisitions of Tower Shops in Davie, Florida, Plaza El Segundo in El Segundo, California and Montrose Crossing in Rockville, Maryland. Each of these assets is a market dominant, high quality asset in one of our core markets that provides opportunities for future growth through redevelopment and increasing rents, and each of these assets was or will be accretive to earnings in our first full year of ownership.

On the development front, we made significant progress on our two large-scale mixed use development projects, Assembly Row in Somerville, Massachusetts and Pike & Rose in Rockville, Maryland to put us in position to break groundand on both projects in 2012. We also advanced our planning for an approximately 212 unit residential buildinglatest phase of redevelopment at Santana Row in San Jose, California to the point thatCalifornia. In all, we will break ground on that project as well in 2012. With our continued buildout of Santana Row and our progress at Assembly Row and Pike & Rose, our efforts in 2011 put us in the positionexpect to invest more than $500 million in these and other projects over the next 3-42-3 years at an expected return, on average, of 7%-8% which will create significant additional value for our shareholders over the long-term.

Lastly, during 2011,The strength of our operating performance was matched in 2012 by a further strengthening of our balance sheet. We raised $250 million of 10 year unsecured debt at 3% which was, at the time, the lowest rate ever achieved by a real estate investment trust for a ten year security and we raised more than $800$90 million of capitalequity through our at the market equity program at a net price in excess of $100 per share.

2012 was also a year of transition for our Chief Financial Officer (“CFO”) position. In August 2012, James Taylor replaced Andrew Blocher as our CFO. Mr. Taylor had been an outside advisor to the form of equityTrust for more than a decade and bank debt, all at attractive pricingwas added to the team to provide depth and without any reduction inexperience to our ability to source and evaluate corporate business development and strategic opportunities.

Our strong and consistent performance over the past several years coupled with the visibility for future growth through our development pipeline and our prudent balance sheet metrics. The attractive pricing hasmanagement helped to push our stock price to a record level in 2012 and will continue to have a positive impact on our earnings and the prudent stewardship of our balance sheet has resulted in the Trust’s corporate bond rating being placed on positive outlook by Moody’s Investor Service.

Our strong 2011 operating performance coupled with our growth initiatives through both acquisitions and development and our smart balance sheet management will allow us to fund our growth in a fiscally responsible manner and have provided the foundationtotal returns for our strong total shareholder return performanceshareholders on both a relative and absolute basis over the past one, three and five year periods both on an absolute and relative basis.periods.

2012 Compensation Actions:

At our 2012 annual meeting of shareholders, our advisory vote on say on pay was overwhelmingly approved by our shareholders, garnering support from 97% of the votes cast at the meeting. We considered our 2012 compensation programs in light of that vote as well as our evaluation of the effectiveness of our compensation programs in achieving our compensation philosophies. Ultimately we concluded that our compensation programs were accomplishing their intended purpose and as a result, we made no changes to the compensation programs for 2012.

TheWith respect to the compensation of our current named executive officers, we took the following actions for 2011 reflects these strong results and includes: (a)2012:

As a result of these actions and our 2011 acquisitions volume; and (d) equity awards for Mr. Wood, Ms. Becker and Mr. Blocher being paid atstrong 2012 performance, the maximum potential. The final compensation that was earned by each of our current named executive officers based on performance in 2011 (base salary and annual bonus) and throughduring the 3-year performance period that ended inon December 31, 2012 (and for comparison purposes, the performance periods ending on December 31, 2011 (equity)and 2010) was as follows:

The numbers in the annual bonus and equity columns of this chart differ from the numbers reflected in the Summary Compensation Table because it reflects compensation earned for the specified periodone and three year performance periods ending December 31, 2012, 2011 and 2010 as opposed to compensation required to be reported for the applicable period pursuant to SEC rules. We believe that providing compensation information based on the performance period during which it was earned (as we have in the chart above and the graph below) enables our shareholders to more effectively compare that compensation to our performance for the same period and better see the alignment achieved by our pay for performance philosophy. The following chartgraph shows the compensation earned by each individual who was an executive officerour Chief Executive Officer, Chief Operating Officer and Chief Financial Officer positions for each of 2007-20112008-2012 compared to the total annual shareholder return we delivered to our shareholders in each of those years. For the CFO position, the compensation for Mr. Blocher is included for 2008 through 2011 and the compensation for Mr. Taylor (with base salary annualized to reflect a full year of employment) is included for 2012.

Compensation Philosophy and Objectives:

Our compensation programs are designed to create a compensation package for each named executive officer that is sufficiently competitive to attract and retain top-level real estate professionals and to motivate

those individuals to achieve superior results for us and our shareholders. As part of this compensation philosophy, we try to provide a strong link between an executive’s total earnings opportunity and both our short-term and long-term performance based on the achievement of pre-determined financial targets and operating goals and to encourage our executives to enhance shareholder value by acting and thinking like shareholders. The key principles guiding our compensation decisions are:

1. Total compensation opportunities must be competitive with the marketplace so that we can attract, retain and motivate talented executives who are necessary for achieving superior results for the Trust; however, the aggregate compensation levels must be reasonable in the context of our overall cost structure and must support our business strategy.

2. The compensation of our named executive officers should include a significant portion that is “at risk” and variable depending on both our short-term financial performance and long-term creation of shareholder value with the largest portion of that “at risk” compensation designed to incentivize the creation of sustainable, long-term shareholder value. The “at risk” portion of 2012 compensation for our named executive officers is

comprised of annual bonuses and long-term equity awards, both of which are earned only if the Trust meets pre-established performance hurdles and represented 90% of the total 2012 compensation earned by our Chief Executive Officer, 86% of the total 2012 compensation earned by our Chief Financial Officer and 75% of the total 2012 compensation earned by our Chief Operating Officer.

3. A significant portion of each executive’s total compensation opportunity should be equity based. Our executives should act in the best interest of our shareholders and the best way to encourage them to do that is through compensating them with an equity stake in the Trust and requiring that they maintain a meaningful ownership position. To facilitate this objective, we have adopted guidelines requiring that Mr. Wood, as our CEO, have an equity ownership in the Trust having a value of at least three times his base salary and annual bonus and that Ms. Becker and Mr. BlocherTaylor each have an equity ownership in the Trust having a value of at least two and one-half times their respective base salary and annual bonus. The Nominating and Corporate Governance Committee confirmed that each of Mr. Wood and Ms. Becker and Mr. Blocher were in compliance with the minimum stock ownership requirements at December 31, 2011. The Nominating and2012. Given that Mr. Taylor only joined the Trust in July 2012, he was not in compliance with the ownership requirements as of December 31, 2012. Pursuant to our Corporate Governance Committee exemptedGuidelines, Mr. Berkes from complying with anyTaylor has five years within which to meet the ownership requirements through 2012 given that he was converted to a cash based compensation plan in 2009.requirements.

4. The amount each executive actually earns out of his or her total compensation opportunity should vary based on the individual’s performance, contribution and overall value to the business. The proportion of an individual’s total compensation that varies with individual and company performance objectives should increase as the individual’s business responsibilities increase.

In crafting our compensation policies and programs, we also consider whether they will encourage excessive or unnecessary risk taking and as described in the “Risk Management Oversight” section, we have concluded that our compensation programs do not do so. We do not currently have any policy that addresses the ability of our named executive officers to hedge their stock ownership position in us nor do we currently have any “clawback” or other compensation recovery policy with respect to compensation that may have been paid on the basis of incorrect financial results. We do expect to adopt such policies in the future to comply with the terms of the Dodd-Frank Act.

The following table describes the primary components of our named executive officers’ 2011 compensation, the reason for each component and the objective it serves in support of our compensation philosophy.

Compensation Methodology

The Compensation Committee of the Board is responsible for approving all compensation for our named executive officers. The Committee periodically reviews all elements of compensation to ensure that we remain competitive in the market and to ensure that overall compensation, including the means by which payment is made, is aligned with our business objectives, our performance and the interests of our shareholders. The Committee conducts an annual review of our CEO’s performance and takes those results into consideration when setting compensation for our CEO. Our CEO plays a significant role in setting the compensation for our other named executive officers by providing the Committee with an evaluation of their performances and recommendations for their compensation, including recommendations for any adjustments to annual bonus and long-term equity payouts which are otherwise determined formulaically. The Committee has the discretion to accept, reject or modify the CEO’s recommendations.

The total potential compensation for our named executive officers is established based on the scope of their individual responsibilities and contributions to our performance taking into account competitive market compensation paid for similar positions. Competitive market compensation for our named executive officers is generally determined by the Committee members applying their individual understanding, experiences and judgments in the national marketplace of senior level real estate positions and related industry pay in both public and private concerns that may compete for our executives, considering the relative importance of various positions at the Trust given our business plan and organization compared with the business plans of our major competitors. The Committee consulted the National Association of Real Estate Investment Trust’s 20102011 and 20112012 Compensation Surveys (“NAREIT Surveys”) to confirm its assessment of appropriate market compensation for

our executive officers, both the information reported for each position by the more than 95 public113 real estate

investment trusts (“REITs”) that participated in the survey as well as by the approximately 1917 retail focused REITs that participated in the survey. Not all REITs that participated in the survey provided information for each of the named executive officer positions and it is not possible to determine from the NAREIT Survey which of the participating REITs provided information for which executive officer position. Once the Committee determines an appropriate level of aggregate compensation for our named executive officers, an individual compensation package is created using a combination of base salary, annual bonus and long-term equity incentives, all in accordance with the compensation philosophy and objectives described earlier.

In addition to consulting the NAREIT Survey, the Compensation Committee retained Mercer Consulting, a nationally recognized compensation consultant (“Mercer”) in late 2010 to benchmark comparable real estate companies and make recommendations for compensation for our CEO and other members of senior management, including our other named executive officers. The total fees paid for this report in 2010 were $35,448. For benchmarking purposes, Mercer used the following publicly traded REITs:

Although not specifically included in the peer group for benchmarking purposes, Mercer also looked at information for each of General Growth, Simon Property Group and Vornado Realty Trust as additional points of reference. The peer group includes US based publicly traded REITs with sales ranging from one-half (1/2) to two (2) times the sales of the Trust at the time the study was done and that have a market capitalization in excess of $1 billion with a primary focus on retail REITs with a few other non-retail, market leading REITs added in order to increase the size of the peer group. The report prepared by Mercer was considered by the Compensation Committee in establishing a total compensation range for our CEO which was used by the Committee to establish base salary, annual bonus potential and potential equity award payouts for both 2010 through 2012. The information in the report prepared for our other named executive officers was used solely as a point of reference and 2011.not specifically to set compensation packages for those positions. Except for this benchmarking study and a benchmarking study performed for our Nominating and Corporate Governance Committee in 2010 with respect to Board compensation, Mercer has not and does not provide any other services to us.

Elements of Total Compensation

The following sections apply to Mr. Wood, Ms. Becker and Mr. Blocher. Mr. Berkes was compensated in 2011 under a different compensation structure that will be discussed in detail below. We considered our compensation programs in light of the vote received from shareholders on our 2010 compensation programs and our evaluation of the effectiveness of our compensation programs in achieving our compensation philosophies and ultimately concluded that there was no reason to make a change in our compensation programs at this time. Accordingly, our compensation programs for 2011 were unchanged from 2010.

Base Salaries

Base salaries are used to compensate the executive for services rendered during the year. Base salaries are set at the beginning of each year and are intended to be competitive with the market and commensurate with the executive’s level of responsibility, experience and sustained individual performance. Base salaries provide retention value and also align the executive with shareholder interests. Generally, we believe that executive base salaries should account for a relatively modest portion of each individual’s total compensation package. Because we start our process with determining an appropriate level of total compensation, we do not target base salaries to any specific level. We did, however, use information in the NAREIT Survey and the reports prepared by Mercer as a guide to confirm that the base salaries for our named executive officers are within market parameters. Base salaries are reviewed annually at the beginning of each calendar year, and are adjusted from time to time to realign salaries with market levels and to take into account individual responsibilities, performance and experience. The base salary for Mr. Wood in 2011 was unchanged from his 2010 base salary.

The base salaries for Mr. Wood and Ms. Becker for 2012 were unchanged from 2011, remaining at $850,000 and $425,000, respectively. Mr. Blocher were increased 6% and 8%, respectively, to reflect the marketTaylor’s base salary for their positions and the continued growth2012 was $400,000 which was established as part of both individualshis initial hiring package which is discussed in their positions.more detail below.

Annual Bonus:

Annual bonuses for Mr. Wood, Ms. Becker and Mr. BlocherTaylor are determined each year in accordance with our Annual Incentive Bonus Plan (“Annual Bonus Plan”) that covers approximately 97%95% of our employees. The Annual Bonus Plan is a cash based

plan that is intended to compensate those individuals for performance during a calendar year. Payment under the Annual Bonus Plan is dependent on achieving an annual level of FFO per share that is consistent with our business objectives for that year and for achieving individual annual performance objectives as subjectively evaluatedevaluated: (a) by the Board with respect to our CEOCEO; and (b) by our CEO with respect to each of Ms. Becker and Mr. Blocher. The annual bonus plan for Mr. Berkes will be discussed below.

Taylor. Under our Annual Bonus Plan, the Compensation Committee sets annually a potential bonus payout for each of Mr. Wood, Ms. Becker and Mr. BlocherTaylor for achieving various levels of FFO per share for that calendar year. The Compensation Committee also has the ability to decrease the final annual bonus payout to any of these individuals based on their performance for the year. Each of Mr. Wood, Ms. Becker and Mr. Taylor (as well as approximately 40 other employees) has the option to receive up to 25% of the annual bonus in the form of Shares that vest equally over three years. The amount an individual elects to receive in Shares is paid out at 120% of that amount in consideration of the extended vesting.

The level of FFO per share at which payouts are established are set at the beginning of each year by the Compensation Committee after a thorough review and discussion of our budget and investor expectations for that year.year and considering recommendations of our CEO. The FFO per share levels established by the Compensation Committee are intended to reflect acceptable to exceptional performance in light of our business objectives. FFO is widely accepted in the REIT industry as an appropriate measurement of operating performance on an annual basis and as a result, we believe FFO per share is an appropriate metric to use for determining short-term financial success which is being rewarded in annual performance bonuses. The following chart shows the potential 20112012 annual bonus payouts established by the Compensation Committee for each of Mr. Wood, Ms. Becker and Mr. BlocherTaylor at various levels of FFO per share and the final potential annual bonus payout based on our 20112012 results:

In 2011,2012, we achieved FFO of $4.00$4.31 per share which, when interpolated, resulted in a final potential payout at approximately 91%92% of the maximum potential. A reconciliation of net income to FFO available for common shareholders can be found on page 49,47, in Item 7, of our Form 10-K for calendar year 20112012 filed with the SEC on February 16, 2012.12, 2013.

We were able to achieve operating results at the higher end of the FFO range we had established primarily through both active managementhigher than anticipated revenue with the key drivers of that higher revenue being: (a) the ability to leverage the strong non-economic terms of our portfolioleases in order to negotiate favorable payments from several underperforming tenants that allowed them to terminate their leases early and gave us the opportunity to replace those tenants with stronger performing tenants at strong rents; and (b) our balance sheet as well as an economy that improved more than anticipated which significantly benefitted performancerecord level of many of our tenants. We saw this impactleasing in a number of areas. First, we saw significantly improved tenant sales in all of our regions2012 that resulted in greater than expected percentage rent including from certain new restaurant tenants who exceeded sales expectations to such an extent that they were required to pay a substantial amount of percentage rent1.7% increase in their first year of operations. Percentage rent is over and above the fixed rent provided for under our leases and is designed to allow us to participate in the success of our tenants. Second, we saw a much more significant improvementoccupancy (approximately 330,000 square feet) in our bad debt expense than we had anticipated. In 2011, bad debt as a percentage of our rental revenue declined to a level more than 40% below our 10 year average. This dramatic improvement in bad debt was primarily drivenportfolio (excluding acquired properties) by unexpected payments from former and current tenants who had filed bankruptcy, performance improvements by a number of tenants that enabled them to begin making payments on past due balances we previously thought were uncollectible, and improved collection efforts that have resulted in declining receivable balances. Third, we were able to strategically manage our capital deployment during the first half of the year which allowed us to delay refinancing some of our debt for several months and lock financing costs at a much lower rate than we

would have been able to do had we refinanced earlier in the year. These items combined with improved leasing pace and improved ability to push rental rates on new and renewal deals drove our FFO results to the higher end of our budgeted range.2012.

The Committee determined, after reviewing all the factors laid out in our compensation plan,individual performance, that annual bonuses should be paid to Mr. Wood, Ms. Becker and Mr. Blocher at 89%, 100% and 72%, respectively, ofTaylor should each be paid the full amount of the annual bonus to which he or she would otherwise have beenis entitled based on the potential bonus payouts describedTrust’s 2012 results as shown in the table above. The Committee’s determination with respect to Mr. Wood’s evaluation takesWood took into consideration our financial results for the year, progress made with our acquisitions and development projects to set the Trust up for future long-term growth, Mr. Wood’s effectiveness in leading the company, long-term strategic planning, succession planning, relationship with the Board, and relationship with shareholders and other stakeholders, among other factors. With respect to each of Ms. Becker and Mr. Blocher,Taylor, the Committee accepted Mr. Wood’s recommendations as to the amount of their annual bonus payouts. Mr. Wood’s recommendations as to the bonus payouts for each of Ms. Becker and Mr. BlocherTaylor were based on his subjective assessment of each individual’s contributions to the Trust’s performance in 20112012 in their respective job functions.

Those contributions included, without limitation, the following: (a) Ms. Becker’s oversight of the day to day operations of the Trust that resulted in year over year increases in FFO, FFO per share and property operating income and her work in helping to structure and close our 2011 acquisitions and other deals necessary to move forward our Assembly Row project;income; and (b) Mr. Blocher’sTaylor’s work in raising more than $800 million of debtre-establishing a fuller acquisitions capability on the East Coast and equity capital at favorable pricingdeveloping and his performance in leadingrefining financing strategies for the various departments for which Mr. Blocher is responsible.Trust’s development pipeline.

Under our Annual Bonus Plan, Mr. Wood, Ms. Becker and Mr. Blocher and approximately 40 other employees have the option to receive up to 25% of the annual bonus in the form of Shares that vest equally over three years. The amount an individual elects to receive in Shares is paid out at 120% of that amount in consideration of the extended vesting. For 2011,2012, Ms. Becker elected to receive 25% of her annual bonus in Shares and each of Mr. Wood and Mr. BlocherTaylor elected to receive 20% of his annual bonus in Shares. The cash portion of the annual bonuses is reflected in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table in this proxy statement. The stock portion of these annual bonuses will be included in the “Stock Awards” column in the Summary Compensation Table and the Grants of Plan-Based Awards Table in next year’s proxy statement.

Annual Long-Term Equity Incentives:

We believe that outstanding long-term performance is achieved through an ownership culture that encourages a focus on long-term performance by our executive officers through the use of equity-based awards. Long-term incentive awards are made annually to all officers and participants in our leadership education and development program under our Long-Term Incentive Award Program (“LTIAP”).LTIAP. This program was structured to align the most significant portion of compensation for our senior management team, including Mr. Wood, Ms. Becker and Mr. Blocher,Taylor, with the creation of long-term shareholder value. Recipients of awards under this program realize value over a minimum 6-year time horizon comprised of a 3-year performance period followed by a minimum of a 3-year vesting period. We believe that the combination of this extended period with the requirements described above for Mr. Wood, Ms. Becker and Mr. BlocherTaylor to continually hold a meaningful equity position in the company creates a strong long-term alignment of interests between those individuals and our shareholders.

The performance metrics used under the LTIAP, the levels of performance required to be achieved for Mr. Wood, Ms. Becker and Mr. BlocherTaylor to earn an LTIAP award and the performance actually achieved for the three year period from January 1, 20092010 through December 31, 20112012 are set forth below:

The Compensation Committee believes that relative total shareholder return, absolute total shareholder return and return on invested capital are appropriate metrics to use for rewarding long-term performance. The relative shareholder return metric reflects how well we have performed for our shareholders as compared to other companies facing the same general market dynamics. The Compensation Committee determined that the BBRESHOP (Bloomberg REIT Shopping Center Index) was the best index to use because the BBRESHOP is an industry index made up of primarily companies that own and operate strip shopping centers whose businesses are most closely aligned with ours. Absolute shareholder return measures whether we have actually created any value for our shareholders during this time while return on invested capital determines how effectively we have invested our shareholders’ capital. These performance metrics support the objectives of the company and the LTIAP and remain unchanged from prior years.

The potential LTIAP payments for Mr. Wood, Ms. Becker and Mr. BlocherTaylor at the various levels of performance for each of the performance metrics under the LTIAP and the amounts actually earned by each of Mr. Wood, Ms. Becker and Mr. BlocherTaylor for the prior 3-year period are set forth in the following table:

The Compensation Committee approved paying each of Mr. Wood, Ms. Becker and Mr. BlocherTaylor the full amount of the LTIAP award to which they were entitled. The Compensation Committee has the discretion to increase or decrease any LTIAP award by up to 20% to reflect individual performance but did not exercise that discretion for the 20112012 LTIAP awards for eitherany of Mr. Wood, Ms. Becker or Mr. Blocher. For 2011, Mr. Berkes was not eligible to receive an award under the LTIAP.Taylor.

The LTIAP awards are made in the form of restricted Shares that vest in equal installments over a three-year period; however, each individual can elect to take up to 50% of his or her award in the form of options which vest equally over five years. Although the Compensation Committee believes that paying these awards in restricted Shares provides the most retention value for employees, it has agreed to permit individuals to elect to take up to 50% of the award in options in order to give the individual employee some ability to structure his or her own equity compensation in a way that best matches the individual’s needs and provides the most value to that individual. The Compensation Committee has concluded that individual employees place value in having the ability to match the form of their equity compensation to their individual financial objectives and that this value to employees outweighs any diminution in the retention value of LTIAP awards by permitting up to 50% to be paid in options. Shares or options are issued under the LTIAP only after all performance has been achieved during the prior three-year period and thereafter, the Shares or options are subject to time-based vesting over an additional three-year period.period for Shares and five-year period for options. Dividends are paid on all Shares issued under the LTIAP.

Each of Mr. Wood, Ms. Becker and Mr. BlocherTaylor elected to take the entirety of their 20112012 LTIAP award in Shares. The number of Shares actually awarded to each individual was determined by dividing the amount of the award by $95.96,$106.99, the closing price of our stock on the NYSE on February 9, 2012,7, 2013, the date the award was made. There is no amount included in the Summary Compensation Table or Grants of Plan-Based Awards Table in this proxy statement for these awards to Mr. Wood, Ms. Becker or Mr. Blocher.Taylor. The LTIAP awards reflected in the Summary Compensation Table and the Grants of Plan-Based Awards Table in this proxy statement relate to performance for the 3-year period ending December 31, 20102011 which were awarded in February 2011.

Retention/Non-Solicitation Awards:

In February 20112012, with respect to Mr. Wood requested and the Compensation Committee approved restricted Share awards valued at $200,000 for each of Ms. Becker, Mr. Berkes and Mr. Blocher. These awards were structured to provide additional retention value for each of Ms. Becker, Mr. Berkes and Mr. Blocher in exchange for the Trust’s receiving a non-solicitation agreement from each of those individuals. Fifty percent (50%) of these Shares will vest in February 2015 with the remaining fifty percent (50%) vesting in February 2017 so long as the named executive officer is employed by us at the time of the vesting. After Mr. Wood was actively recruited by other real estate companies at the end of 2010, he determined that these awards were appropriate and should be made in order to put the Trust in the best position to retain the current members of senior management which is important to the Trust’s ability to take advantage of future opportunities to create shareholder value. So that these awards would not result in any extra expense to the Trust, Mr. Wood voluntarily reduced the equity award he was entitled to receive in 2011 by the amount necessary to make these awards. The number of Shares actually awarded to each individual was determined by dividing the amount of the award by $81.98, the closing price of our stock on the NYSE on February 10, 2011, the date the award was made. These awards are reflected in the “Stock Awards” column in the Summary Compensation Table and the Grants of Plan-Based Awards Table.Becker.

Chief Executive Officer Compensation

In October 2010,Mr. Wood’s compensation plan for 2012 was unchanged from 2011. The basic components of Mr. Wood’s compensation – base salary, annual bonus target and LTIAP target award level – were established by the Compensation Committee retained Mercer to benchmark other comparable real estate companies and make recommendations on a compensation package for Mr. Wood that was reflective of the current market for his services. Afterin October 2010 taking into account the information in Mercer’s report,compensation survey conducted by Mercer described above, our historical outperformance in total shareholder return since Mr. Wood became our Chief Executive Officer, the prospects for continued outperformance in the future, the active recruiting for Mr. Wood’s services in the marketplace at the time the target levels for each compensation component were set, the related strong desire to retain Mr. Wood, and the ability of Mr. Wood and the current senior management team to take advantage of future opportunities to increase shareholder value,value. The components of Mr. Wood’s compensation plan as established by the Board created the followingCompensation Committee in 2010 and used for 2012 compensation package for Mr. Wood for his 2011 compensation:decisions are: (a) base salary of $850,000; (b) a range for Mr. Wood’s annual bonus from $956,250$0 to $1,593,750;$1,593,750 with a target of $1,275,000; and (c) a target equity award under the LTIAP atof $4,000,000 creating a range for a potential LTIAP award from $2,000,000$0 to $6,000,000. These targets create a compensation package where 86% of the total targeted compensation is considered at risk and will vary with company performance and more than 65% of the compensation will be paid in the form of equity. Based on the Trust’s results for the performance period ending December 31, 20112012 and the Committee’s assessment of individual performance, the Committee awarded Mr. Wood an annual bonus for 2012 of $1,300,000$1,466,250 and ana 2012 LTIAP award of

$6,000,000. The following chart shows the compensation earned by Mr. Wood based on company results delivered in the performance periods ending on December 31 of each of 2007-20112008-2012 compared to the total annual shareholder return we delivered to our shareholders in each of those years. TheWe believe that providing compensation amounts shown for Mr. Woodinformation based on the performance period during which it was earned (as we have in the following chart differ fromgraph below) is the amounts shown for Mr. Wood in the Summary Compensation Table of our proxy statement for those years in orderbest way to best show theevaluate whether there is an alignment between pay for a given yearexecutive compensation and performance for that year.performance.

We purchased for Mr. Wood in 1998 a split dollar life insurance policy and consistent with the terms of that arrangement approved by the Compensation Committee in 1998, we continued to hold in 20112012 an outstanding interest free loan for the benefit of Mr. Wood secured by that split dollar life insurance policy. We reflect the amount of interest that would have been payable by Mr. Wood on that loan in 20112012 under the “All Other Compensation” column of the Summary Compensation Table. That loan is scheduled to be repaid by its terms in 2013. We also have an agreement in place with Mr. Wood (“Health Coverage Continuation Agreement”) pursuant to which we have agreed to provide to Mr. Wood, his spouse and his dependents continuation of health coverage after Mr. Wood’s termination upon death, disability, retirement, change in control or otherwise (other

than a termination with cause or resignation). The coverage will continue as to Mr. Wood and his spouse until their death, or with respect to his spouse until divorce, if earlier. As to Mr. Wood’s children, coverage will continue as to three of the children until each reaches age twenty-five and as to one of the children, until her death. The continued medical coverage is required to be at least the same level as provided to Mr. Wood and his family at the time of his termination and such coverage will be secondary to certain other coverages that may be available to Mr. Wood and his family. The Compensation Committee has determined that these perquisites and other personal benefits are a relatively small portion of Mr. Wood’s overall compensation, are reasonable in light of the total compensation package for Mr. Wood and are consistent with our compensation objectives of creating programs that will allow us to retain talented executives.

Compensation of Mr. BerkesChief Financial Officer Transition and Compensation:

From January 1 through June 30, 2011,On August 15, 2012, Mr. Berkes servedTaylor replaced Mr. Blocher as our Chief Investment OfficerFinancial Officer. Mr. Taylor had been an outside advisor to the Trust for more than a decade and as such, was very familiar with the company and well known to the Board and the senior management team. Given this level of familiarity, Mr. Taylor’s skill set, and market data for compensation of a Section 16 reporting officer. During that period, he received achief financial officer position as reflected in the NAREIT Survey, the Committee approved the following target compensation package for Mr. Taylor: (a) base salary of $400,000; (b) annual bonus target equal to 75% of his base salary resulting in a payout range of $0 to $375,000 unchanged from 2010. In addition,with a target of $300,000; (c) a target LTIAP award of $750,000 with a total potential payout range of $0 to $900,000; (d) a sign-on and make whole bonus of $1,500,000 which was intended to replace a portion of the value of unvested compensation and other benefits at his prior employer that Mr. BerkesTaylor was eligiblerequired to receiveforfeit in order to join the Trust. $1,000,000 of this bonus was paid in cash and the remaining $500,000 was paid in the form of 4,612 Shares issued at a bonus under a non-equity incentive plan for 2011 basedprice of $108.42, the closing price of our Shares on the volumeNYSE on July 30, 2012 which was Mr. Taylor’s first day of qualifying acquisitions completedemployment with the Trust. Those Shares vested immediately on issuance; and (e) a severance arrangement on terms consistent with those in place with Ms. Becker which are described in more detail in the “Potential Payments on Termination of Employment and Change-in-Control” section below. As an inducement for Mr. Taylor to leave his former employer and forfeit certain compensation and other benefits that had been earned for 2012 and given the depth of the experience the Board had with Mr. Taylor during his more than a decade as an outside advisor to the Trust, the Committee agreed that Mr. Taylor’s annual bonus and LTIAP award for 2012 would not be pro-rated.

As part of the transition of the chief financial officer position to Mr. Taylor, Mr. Blocher’s last day with the Trust was September 30, 2012 and on his exit from the Trust, Mr. Blocher was paid in accordance with his Severance Agreement as described in more detail in the “Potential Payments on Termination of Employment and Change-in-Control” section below. Because Mr. Blocher was not employed by the Trust duringat the year. The bonus is calculated as follows:

1. No bonus is earned on the first $100 millionend of qualifying acquisitions;

2. For the amount of qualifying acquisitions made between $100 million and $200 million, a production bonus equal to 0.250% of such amount will be paid; and

3. For the amount of qualifying acquisitions in excess of $200 million, a production bonus equal to 0.125% of such total excess amount will be paid.

During calendar year 2011, we made qualifying acquisitions for which Mr. Berkes was entitled to receive a production bonus totaling $297.7 million resulting in a production bonus payout to Mr. Berkes of $372,063.

Effective July 1, 2011, Mr. Berkes’ position changed from Chief Investment Officer to President of our West Coast region. Concurrently with that change, the Compensation Committee increased his base salary to $400,000. No adjustment was made to his bonus program or his eligibility to receive equity awards at that time. The compensation program for Mr. Berkes’ new responsibilities2012, he was not determined until Februaryeligible for a 2012 when he was no longer a Section 16 reporting officer.bonus or an equity award under the LTIAP.

Timing of Equity Grants:

Equity awards to our employees under our Annual Bonus Plan and LTIAP described above are made at the Compensation Committee’s meeting that occurs in February of each calendar year. Whether these awards are made before or after we release financial results for the prior fiscal year depends solely on when the Compensation Committee meets in relation to the meetings of the Board and the Audit Committee, the dates for all of which are set during the preceding year. We have no policy that times the granting of equity awards relative to the release of material non-public information. Equity awards to new hires are generally made on the first day on which the employee starts work and equity awards to employees who are promoted generally are made on the day on which the promotion has been fully approved. All of our options are awarded at the closing price of our Shares on the NYSE on the date the award is made. The Compensation Committee has never re-priced options, granted options with an exercise price that is less than the closing price on the NYSE on the date of the grant or granted options which are priced on a date other than the grant date. Equity awards for Vice Presidents and above for performance through 20112012 were made at the Compensation Committee’s meeting on February 9, 20127, 2013 based on the closing price of our Shares on the NYSE on that date.

Termination and Change-in-Control Arrangements:

We have agreements in place with each of our named executive officers providing for various payments and benefits to be made to them if there is a change in control or their employment with us is terminated for certain reasons. The circumstances in which payments may be made and the potential amounts of those payments are described in more detail in the “Potential Payments on Termination of Employment and Change-in-Control” section below. We believe that the payments provided for in these agreements are reasonable and appropriate as part of the total compensation packages available for our named executive officers.

Deductibility of Executive Compensation in Excess of $1.0 Million:

Section 162(m) of the Internal Revenue Code generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation in excess of $1 million in any taxable year to an executive officer who is named in the Summary Compensation Table. Exceptions are made for qualified performance-based compensation, among other things. In structuring our compensation programs, the Compensation Committee considers this Section 162(m) exception; however, the Compensation Committee does not believe that it is necessarily in our best interests and the best interests of our shareholders for all compensation to meet the requirements of Section 162(m) for deductibility. As a result, the Compensation Committee has determined that it is appropriate at times to make compensation awards that are non-deductible under Section 162(m). Further, because of ambiguities and uncertainties under Section 162(m), we cannot give any assurance that compensation that we intend to satisfy the requirements for deductibility under Section 162(m) will in fact be deductible.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by:

David W. Faeder, Chairman

Kristin Gamble

Gail P. Steinel

Joseph S. Vassalluzzo

SUMMARY COMPENSATION TABLE

The following table summarizes the total compensation earned by each of the named executive officers for the fiscal years ended December 31, 2012, 2011 2010 and 2009,2010, in accordance with current SEC rules. The Summary Compensation Table below does not include the value of the Shares issued to our named executive officers on February 9, 20127, 2013 for the performance period ending December 31, 2011.2012. Those awards will appear in next year’s proxy statement in the Grants of Plan-Based Awards Table as well as the “Stock Awards” column of the Summary Compensation Table. The cash portion of the annual bonuses awarded pursuant to the Annual Bonus Plan in February 20122013 based on 20112012 performance is included below in the “Non-Equity Incentive Plan Compensation” column.