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Retail Properties of America, Inc. (the Company) was formed on March 5, 2003 and its primary purpose is to own and operate high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of March 31, 2020, the Company owned 102 retail operating properties in the United States.

The Company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended (the Code). The Company believes it qualifies for taxation as a REIT and, as such, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax on its taxable income. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and U.S. federal income and excise taxes on its undistributed income. The Company has one wholly owned subsidiary that has jointly elected to be treated as a taxable REIT subsidiary (TRS) and is subject to U.S. federal, state and local income taxes at regular corporate tax rates. The income tax expense incurred by the TRS did not have a material impact on the Company’s accompanying condensed consolidated financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates and assumptions have been made with respect to capitalization of development costs, provision for impairment, including estimates of holding periods, capitalization rates and discount rates (where applicable), and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions and initial recognition of right-of-use lease assets and lease liabilities. Actual results could differ from these estimates.

All share amounts and dollar amounts in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and notes thereto, are stated in thousands with the exception of per share, per square foot and per unit amounts.

The accompanying condensed consolidated financial statements include the accounts of the Company, as well as all wholly owned subsidiaries and consolidated variable interest entities (VIEs). All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries generally consist of limited liability companies, limited partnerships and statutory trusts.

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a global pandemic. COVID-19 has caused significant disruptions to the U.S. and global economy and has contributed to significant volatility and negative pressure in the financial markets. The global impact of the COVID-19 outbreak has been rapidly evolving and many U.S. states and cities, including where the Company owns properties and/or has development sites, have imposed measures intended to control its spread, such as instituting “shelter-in-place” rules and restrictions on the types of businesses that may continue to operate and/or the types of construction projects that may continue. While the Company did not incur significant disruptions to its lease income and occupancy during the three months ended March 31, 2020 from COVID-19, the Company continues to closely monitor the impact of the pandemic on all aspects of its business. Due to numerous uncertainties, it is not possible to accurately predict the impact the pandemic will have on the Company’s financial condition, results of operations and cash flows. To date, as a result of the pandemic and the measures noted above to mitigate its impact, a number of the Company’s tenants have announced temporary closures of their stores or modifications of their operations and requested lease concessions. Generally, the Company has not yet reached agreement with tenants regarding concession requests, as discussions are ongoing. Certain other tenants are considered essential businesses which remain open and continue to operate during this time. Except for a small, enclosed portion of one property, the Company has not closed any of its properties and continues to operate them for the benefit of the communities and customers that the Company’s tenants serve.

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The Company’s property ownership as of March 31, 2020 is summarized below:

	Property Count
Retail operating properties	102
Expansion and redevelopment projects:
Circle East	1
One Loudoun Downtown – Pads G & H (a)	—
Carillon	1
The Shoppes at Quarterfield	1
Total number of properties	105

(a)	The operating portion of this property is included within the property count for retail operating properties.

Refer to the Company’s 2019 Annual Report on Form 10-K for a summary of its significant accounting policies. Except as disclosed below, there have been no changes to the Company’s significant accounting policies in the three months ended March 31, 2020.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses. This new guidance was effective January 1, 2020 and replaced the incurred loss impairment methodology with a methodology that reflects expected credit losses. Financial assets that are measured at amortized cost are required to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. In addition, an entity must consider broader information in developing its expected credit loss estimate, including the use of forecasted information. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of this new guidance. Generally, the pronouncement requires a modified retrospective method of adoption. The adoption of this pronouncement on January 1, 2020 did not have any effect on the Company’s consolidated financial statements as it did not have any financial assets within the scope of this guidance.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement. This new guidance was effective January 1, 2020 and provides new and, in some cases, eliminates or modifies the previously existing disclosure requirements on fair value measurements. Public entities are now required to disclose the following: (i) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. In addition, public entities are no longer required to disclose the following: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. The new pronouncement also clarifies and modifies certain existing provisions to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and clarifies that materiality is an appropriate consideration when evaluating disclosure requirements. As permitted by the new pronouncement, the Company removed the discussion of its valuation processes for Level 3 fair value measurements. The Company did not remove any other disclosures as it did not have any transfers between levels of the fair value hierarchy during the current and comparative periods. The adoption of this pronouncement on January 1, 2020 did not have any effect on the Company’s consolidated financial statements. The amended disclosure guidance will be applied prospectively.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. This temporary guidance is effective as of March 12, 2020 through December 31, 2022 to ease potential burdens related to the accounting for, or recognizing the effects of, reference rate reform on financial reporting. The guidance provides optional expedients for applying existing GAAP to contract modifications and hedging relationships affected by the move of global capital markets away from interbank offered rates, most notably the London Interbank Offered Rate (LIBOR). Specifically, the guidance allows for certain changes in critical terms of a designated hedging instrument or hedged item as a result of reference rate reform to not result in the dedesignation of the hedging relationship. In addition, the optional expedients related to probability and effectiveness assessments allow companies to disregard certain economic mismatches in a hedging relationship arising due to reference rate reform until both the derivative and hedged transactions have completed the transition, where current GAAP requires those mismatches to be modeled into the assessment of effectiveness.

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The Company adopted this guidance as of the effective date and elected to apply the optional expedients related to probability and effectiveness prospectively. The Company has not modified any hedging relationship and has disregarded the potential economic mismatches in hedging relationships due to reference rate reform during the three months ended March 31, 2020.

Recently Issued Accounting Pronouncements

In April 2020, the FASB staff issued a question-and-answer (Q&A) document focusing on the application of the lease guidance in ASC 842, Leases, for lease concessions related to the effects of the COVID-19 pandemic. The FASB staff noted that due to the business disruptions and challenges caused by the COVID-19 pandemic, many lessors are, or will be, providing lease concessions such as payment forgiveness and deferral of payments. Changes to lease payments that are not stipulated in the original lease contract are generally accounted for as lease modifications under ASC 842. Within the Q&A, the FASB staff provides relief for lease concessions offered as a result of the effects of the COVID-19 pandemic and does not require these concessions to be accounted for in accordance with the lease modification guidance in ASC 842. Under existing lease guidance, the Company would determine, on a lease by lease basis, if a lease concession was the result of a new arrangement with the tenant or if it was under the enforceable rights and obligations within the lease agreement. Under the relief guidance, a company can account for the concessions (i) as if no changes to the existing lease contract were made or (ii) as a variable lease adjustment. The Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. This election is optional and available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than the total payments required by the existing contract. The Company expects to apply the lease modification relief, however, the Q&A has not had a material impact on the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2020 as the Company has not yet reached agreement with tenants regarding any concession requests, as discussions are ongoing. The future impact is dependent upon the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering such concessions.

Acquisitions

The Company closed on the following acquisition during the three months ended March 31, 2020:

Date

Property Name

Metropolitan Statistical Area (MSA)

Property Type

Square Footage

Acquisition Price

February 6, 2020

Fullerton Metrocenter

Los Angeles

Fee interest (a)

154,700

$

55,000

154,700

$

55,000

(b)

(a)	The Company acquired the fee interest in an existing multi-tenant retail operating property. In connection with this acquisition, the Company also assumed the lessor position in a ground lease with a shadow anchor.

(b)	Acquisition price does not include capitalized closing costs and adjustments totaling $240.

The Company closed on the following acquisition during the three months ended March 31, 2019:

Date

Property Name

MSA

Property Type

Square Footage

Acquisition Price

March 7, 2019

North Benson Center

Seattle

Multi-tenant retail

70,500

$

25,340

70,500

$

25,340

(a)

(a)	Acquisition price does not include capitalized closing costs and adjustments totaling $90.

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The following table summarizes the acquisition date values, before prorations, the Company recorded in conjunction with the acquisitions discussed above:

	Three Months Ended March 31,
	2020				2019
Land	$	57,137			$	13,275
Building and other improvements, net	1,623				10,619
Acquired lease intangible assets (a)	2,014				1,770
Acquired lease intangible liabilities (b)	(5,534		)		(234		)
Net assets acquired	$	55,240			$	25,430

(a)	The weighted average amortization period for acquired lease intangible assets is 17 years and five years for acquisitions completed during the three months ended March 31, 2020 and 2019, respectively.

(b)	The weighted average amortization period for acquired lease intangible liabilities is 17 years and five years for acquisitions completed during the three months ended March 31, 2020 and 2019, respectively.

These acquisitions were funded using a combination of available cash on hand, proceeds from dispositions and proceeds from the Company’s unsecured revolving line of credit. All of the acquisitions completed during 2020 and 2019 were considered asset acquisitions and, as such, transaction costs were capitalized upon closing.

In addition, the Company capitalized $626 and $675 of internal salaries and related benefits of personnel directly involved in capital upgrades and tenant improvements during the three months ended March 31, 2020 and 2019, respectively. The Company also capitalized $60 and $54 of internal leasing incentives, all of which were incremental to signed leases, during the three months ended March 31, 2020 and 2019, respectively.

Developments in Progress

The carrying amount of the Company’s developments in progress are as follows:

Property Name		MSA		March 31, 2020				December 31, 2019
Expansion and redevelopment projects:
Circle East (a)		Baltimore		$	34,665			$	33,628
One Loudoun Downtown		Washington, D.C.		36,346				27,868
Carillon		Washington, D.C.		29,517				26,407
The Shoppes at Quarterfield		Baltimore		524				—
Pad development projects:
Southlake Town Square		Dallas		259				—
				101,311				87,903
Land held for future development:
One Loudoun Uptown		Washington, D.C.		25,450				25,450
Total developments in progress				$	126,761			$	113,353

(a)	During the year ended December 31, 2018, the Company received net proceeds of $11,820 in connection with the sale of air rights to a third party to develop multi-family rental units at Circle East, which is shown net in the “Developments in progress” balance as of March 31, 2020 and December 31, 2019 in the accompanying condensed consolidated balance sheets.

In response to current macroeconomic conditions related to the COVID-19 pandemic, the Company halted plans for vertical construction at its Carillon redevelopment during the three months ended March 31, 2020 and has materially reduced the planned scope and spend for the project. As of March 31, 2020, the Company was actively completing site work preparation at the property in anticipation of potential future development at the site. The Company expects to complete the site work preparation during 2020 for an expected additional capital investment of approximately $4,500.

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The Company capitalized $1,316 and $574 of indirect project costs related to redevelopment projects during the three months ended March 31, 2020 and 2019, respectively, including, among other costs, $372 and $365 of internal salaries and related benefits of personnel directly involved in the redevelopment projects and $785 and $144 of interest, respectively.

Variable Interest Entities

As of January 1, 2020, the Company had joint ventures related to the development, ownership and operation of the (i) multi-family rental portion of the expansion project at One Loudoun Downtown – Pads G & H, of which joint venture the Company owned 90%; (ii) multi-family rental portion of the redevelopment project at Carillon, of which joint venture the Company owned 95%, and (iii) medical office building portion of the redevelopment project at Carillon, of which joint venture the Company owned 95%.

The joint ventures are considered VIEs primarily because the Company’s joint venture partners do not have substantive kick-out rights or substantive participating rights. The Company is considered the primary beneficiary as it has a controlling financial interest in each joint venture. As such, the Company has consolidated these joint ventures and presented the joint venture partners’ interests as noncontrolling interests.

As a result of halting the planned vertical construction at Carillon, the Company terminated the joint venture related to the multi-family rental portion of the redevelopment during the three months ended March 31, 2020. In accordance with the terms of the joint venture agreement, costs incurred prior to the termination were funded evenly by the partners and there was no payment between the partners upon termination. Subsequent to the termination, if the Company commences the redevelopment and uses the materials developed, or approvals obtained, by the joint venture, the Company is required to reimburse the partner’s costs incurred in connection with such materials or approvals. As a result of the termination, the Company reclassified the noncontrolling interest balance of $1,661 related to this multi-family rental joint venture from noncontrolling interests to additional paid-in capital within equity. There was no gain or loss recognized in connection with the termination. Subsequent to March 31, 2020, the Company terminated the joint venture related to the medical office building portion of the redevelopment at Carillon.

As of March 31, 2020 and December 31, 2019, the Company had recorded the following related to the consolidated joint ventures:

	March 31, 2020																December 31, 2019
	One Loudoun Downtown – Pads G & H				Carillon – Phase One Multi-family Rental				Carillon – Phase One Medical Office				Total				One Loudoun Downtown – Pads G & H				Carillon – Phase One Multi-family Rental				Carillon – Phase One Medical Office				Total
Net investment properties	$	29,715			$	—			$	885			$	30,600			$	8,830			$	2,940			$	675			$	12,445
Other assets, net	$	344			$	—			$	—			$	344			$	164			$	—			$	—			$	164
Other liabilities	$	3,066			$	—			$	167			$	3,233			$	1,546			$	32			$	129			$	1,707
Noncontrolling interests	$	2,699			$	—			$	359			$	3,058			$	1,869			$	1,454			$	273			$	3,596

Development costs are funded by the partners, including the Company, and/or construction loan financing throughout the construction period. Under terms defined in the joint venture agreements, after construction completion and stabilization of the respective development project, the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the respective joint venture at fair value. The Company has not provided financial support to these VIEs in excess of any amounts that it is contractually required to provide. There was no income from the joint venture projects during the three months ended March 31, 2020 and 2019 and, as such, no income was attributed to the noncontrolling interests.

The Company closed on the following disposition during the three months ended March 31, 2020:

Date		Property Name		Property Type		Square Footage			Consideration				Aggregate Proceeds, Net (a)				Gain
February 13, 2020		King Philip’s Crossing		Multi-tenant retail		105,900			$	13,900			$	11,343			$	—
						105,900			$	13,900			$	11,343			$	—

(a)	Aggregate proceeds are net of transaction costs.

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The Company closed on the following disposition during the three months ended March 31, 2019:

Date		Property Name		Property Type		Square Footage			Consideration				Aggregate Proceeds, Net (a)				Gain
March 8, 2019		Edwards Multiplex – Fresno (a)		Single-user retail		94,600			$	25,850			$	21,605			$	8,449
						94,600			$	25,850			$	21,605			$	8,449

(a)	Aggregate proceeds are net of transaction costs. Prior to the disposition, the Company was subject to a ground lease whereby it leased the underlying land from a third party. The ground lease was assumed by the purchaser in connection with the disposition.

None of the dispositions completed during the three months ended March 31, 2020 and 2019 qualified for discontinued operations treatment and none are considered individually significant.

As of March 31, 2020 and December 31, 2019, no properties qualified for held for sale accounting treatment.

The Company’s Amended and Restated 2014 Long-Term Equity Compensation Plan, subject to certain conditions, authorizes the issuance of incentive and non-qualified stock options, restricted stock and restricted stock units, stock appreciation rights and other similar awards to the Company’s employees, non-employee directors, consultants and advisors in connection with compensation and incentive arrangements that may be established by the Company’s board of directors or executive management.

The following table summarizes the Company’s unvested restricted shares as of and for the three months ended March 31, 2020:

	Unvested Restricted Shares			Weighted Average Grant Date Fair Value per Restricted Share
Balance as of January 1, 2020	535			$	12.46
Shares granted (a)	493			$	12.87
Shares vested	(213	)		$	13.08
Balance as of March 31, 2020 (b)	815			$	12.55

(a)	Shares granted vest over periods ranging from 0.9 years to three years in accordance with the terms of applicable award agreements.

(b)	As of March 31, 2020, total unrecognized compensation expense related to unvested restricted shares was $4,937, which is expected to be amortized over a weighted average term of 1.5 years.

The following table summarizes the Company’s unvested performance restricted stock units (RSUs) as of and for the three months ended March 31, 2020:

	Unvested RSUs			Weighted Average Grant Date Fair Value per RSU
RSUs eligible for future conversion as of January 1, 2020	839			$	13.10
RSUs granted (a)	331			$	13.67
Conversion of RSUs to common stock and restricted shares (b)	(196	)		$	15.52
RSUs eligible for future conversion as of March 31, 2020 (c)	974			$	12.81

(a)

Assumptions and inputs as of the grant date included a risk-free interest rate of 1.54%, the Company’s historical common stock performance relative to the peer companies within the National Association of Real Estate Investment Trusts (NAREIT) Shopping Center Index and the Company’s common stock dividend yield of 5.07%. Subject to continued employment, in 2023, following the performance period which concludes on December 31, 2022, one-third of the RSUs that are earned will convert into shares of common stock and two-thirds will convert into restricted shares with a one year vesting term.

(b)

On February 10, 2020, 196 RSUs converted into 105 shares of common stock and 175 restricted shares that will vest on December 31, 2020, subject to continued employment through such date, after applying a conversion rate of 142.5% based upon the Company’s Total Shareholder Return (TSR) relative to the TSRs of its peer companies for the performance period that concluded on December 31, 2019. An additional 43 shares of common stock were also issued, representing the dividends that would have been paid on the earned awards during the performance period.

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(c)	As of March 31, 2020, total unrecognized compensation expense related to unvested RSUs was $7,892, which is expected to be amortized over a weighted average term of 2.4 years.

During the three months ended March 31, 2020 and 2019, the Company recorded compensation expense of $2,233 and $1,966, respectively, related to the amortization of unvested restricted shares and RSUs. The total fair value of restricted shares that vested during the three months ended March 31, 2020 was $2,513. In addition, the total fair value of RSUs that converted into common stock during the three months ended March 31, 2020 was $1,321.

Prior to 2013, non-employee directors had been granted options to acquire shares under the Company’s Third Amended and Restated Independent Director Stock Option and Incentive Plan. As of March 31, 2020, options to purchase 16 shares of common stock remained outstanding and exercisable pursuant to such plan. The Company did not grant any options in 2020 or 2019 and did not record any compensation expense related to stock options during the three months ended March 31, 2020 and 2019.

Leases as Lessor

Lease income related to the Company’s operating leases is comprised of the following:

	Three Months Ended March 31,
	2020				2019
Lease income related to fixed lease payments	$	91,147			$	90,434
Lease income related to variable lease payments	28,495				30,631
Other (a)	(947		)		1,638
Lease income	$	118,695			$	122,703

(a)	“Other” is comprised of revenue adjustments related to changes in collectibility and amortization of above and below market lease intangibles and lease inducements.

Leases as Lessee

During the three months ended March 31, 2020, the Company extended the term of one office lease resulting in an additional lease liability and right-of-use lease asset of $383.

The Company has the following types of indebtedness: (i) mortgages payable, (ii) unsecured notes payable, (iii) unsecured term loans and (iv) an unsecured revolving line of credit.

Mortgages Payable

The following table summarizes the Company’s mortgages payable:

	March 31, 2020									December 31, 2019
	Balance				Weighted Average Interest Rate			Weighted Average Years to Maturity		Balance				Weighted Average Interest Rate			Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	94,285			4.37	%		4.8		$	94,904			4.37	%		5.1
Discount, net of accumulated amortization	(483		)							(493		)
Capitalized loan fees, net of accumulated amortization	(240		)							(256		)
Mortgages payable, net	$	93,562								$	94,155

(a)	The fixed rate mortgages had interest rates ranging from 3.75% to 7.48% as of March 31, 2020 and December 31, 2019.

During the three months ended March 31, 2020, the Company made scheduled principal payments of $619 related to amortizing loans.

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Unsecured Notes Payable

The following table summarizes the Company’s unsecured notes payable:

				March 31, 2020							December 31, 2019
Unsecured Notes Payable		Maturity Date		Balance				Interest Rate/ Weighted Average Interest Rate			Balance				Interest Rate/ Weighted Average Interest Rate
Senior notes – 4.12% due 2021		June 30, 2021		$	100,000			4.12	%		$	100,000			4.12	%
Senior notes – 4.58% due 2024		June 30, 2024		150,000				4.58	%		150,000				4.58	%
Senior notes – 4.00% due 2025		March 15, 2025		250,000				4.00	%		250,000				4.00	%
Senior notes – 4.08% due 2026		September 30, 2026		100,000				4.08	%		100,000				4.08	%
Senior notes – 4.24% due 2028		December 28, 2028		100,000				4.24	%		100,000				4.24	%
Senior notes – 4.82% due 2029		June 28, 2029		100,000				4.82	%		100,000				4.82	%
				800,000				4.27	%		800,000				4.27	%
Discount, net of accumulated amortization				(586		)					(616		)
Capitalized loan fees, net of accumulated amortization				(2,994		)					(3,137		)
		Total		$	796,420						$	796,247

Unsecured Term Loans and Revolving Line of Credit

The following table summarizes the Company’s term loans and revolving line of credit:

				March 31, 2020							December 31, 2019
		Maturity Date		Balance				Interest Rate			Balance				Interest Rate
Unsecured credit facility term loan due 2021 – fixed rate (a)		January 5, 2021		$	250,000			3.20	%		$	250,000			3.20	%
Unsecured term loan due 2023 – fixed rate (b)		November 22, 2023		200,000				4.05	%		200,000				4.05	%
Unsecured term loan due 2024 – fixed rate (c)		July 17, 2024		120,000				2.88	%		120,000				2.88	%
Unsecured term loan due 2026 – fixed rate (d)		July 17, 2026		150,000				3.27	%		150,000				3.27	%
Subtotal				720,000							720,000
Capitalized loan fees, net of accumulated amortization				(3,208		)					(3,477		)
Term loans, net				$	716,792						$	716,523
Unsecured credit facility revolving line of credit – variable rate (e)		April 22, 2022		$	849,704			2.04	%		$	18,000			2.85	%

(a)	$250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through January 5, 2021. The applicable credit spread was 1.20% as of March 31, 2020 and December 31, 2019.

(b)	$200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging from 1.20% to 1.85% through November 22, 2023. The applicable credit spread was 1.20% as of March 31, 2020 and December 31, 2019.

(c)	$120,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2024. The applicable credit spread was 1.20% as of March 31, 2020 and December 31, 2019.

(d)	$150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid ranging from 1.50% to 2.20% through July 17, 2026. The applicable credit spread was 1.50% as of March 31, 2020 and December 31, 2019.

(e)

Excludes capitalized loan fees, which are included within “Other assets, net” in the accompanying condensed consolidated balance sheets. The revolving line of credit has two six-month extension options that the Company can exercise, at its election, subject to (i) customary representations and warranties, including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) payment of an extension fee equal to 0.075% of the revolving line of credit capacity.

Unsecured Credit Facility

The Company has a $1,100,000 unsecured credit facility consisting of an $850,000 unsecured revolving line of credit and a $250,000 unsecured term loan (Unsecured Credit Facility) that is priced on a leverage grid at a rate of LIBOR plus a credit spread. In accordance with the unsecured credit agreement, the Company may elect to convert to an investment grade pricing grid. As of March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, the Company has not made

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the election to convert to an investment grade pricing grid. During the three months ended March 31, 2020, the Company elected to increase its borrowings under its unsecured revolving line of credit to enhance its liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets. As a result, as of March 31, 2020, the Company’s $850,000 unsecured revolving line of credit was nearly fully drawn.

The following table summarizes the key terms of the Unsecured Credit Facility:

Leverage-Based Pricing

Investment Grade Pricing

Unsecured Credit Facility

Maturity Date

Extension Option

Extension Fee

Credit Spread

Facility Fee

Credit Spread

Facility Fee

$250,000 unsecured term loan due 2021

1/5/2021

N/A

N/A

1.20%–1.70%

N/A

0.90%–1.75%

N/A

$850,000 unsecured revolving line of credit

4/22/2022

2-six month

0.075%

1.05%–1.50%

0.15%–0.30%

0.825%–1.55%

0.125%–0.30%

The Unsecured Credit Facility has a $500,000 accordion option that allows the Company, at its election, to increase the total Unsecured Credit Facility up to $1,600,000, subject to (i) customary fees and conditions including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) the Company’s ability to obtain additional lender commitments.

Unsecured Term Loans

As of March 31, 2020, the Company has the following unsecured term loans: (i) a seven-year $200,000 unsecured term loan (Term Loan Due 2023), (ii) a five-year $120,000 unsecured term loan (Term Loan Due 2024) and (iii) a seven-year $150,000 unsecured term loan (Term Loan Due 2026) each of which bears interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit spread based on a leverage grid. In accordance with the respective term loan agreements, the Company may elect to convert to an investment grade pricing grid. As of March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid.

The following table summarizes the key terms of the unsecured term loans:

Unsecured Term Loans		Maturity Date		Leverage-Based Pricing Credit Spread					Investment Grade Pricing Credit Spread
$200,000 unsecured term loan due 2023		11/22/2023		1.20	%	–	1.85%		0.85	%	–	1.65%
$120,000 unsecured term loan due 2024		7/17/2024		1.20	%	–	1.70%		0.80	%	–	1.65%
$150,000 unsecured term loan due 2026		7/17/2026		1.50	%	–	2.20%		1.35	%	–	2.25%

The Term Loan Due 2024 has a $130,000 accordion option and the Term Loan Due 2026 has a $100,000 accordion option that, collectively, allow the Company, at its election, to increase the total of the Term Loan Due 2024 and Term Loan Due 2026 up to $500,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the term loan agreement and (ii) the Company’s ability to obtain additional lender commitments.

The Term Loan Due 2023 has a $100,000 accordion option that allows the Company, at its election, to increase the Term Loan Due 2023 up to $300,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the amended term loan agreement and (ii) the Company’s ability to obtain additional lender commitments.

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Debt Maturities

The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of March 31, 2020 for the remainder of 2020, each of the next four years and thereafter, and the weighted average interest rates by year. The table does not reflect the impact of any debt activity that occurred after March 31, 2020.

	2020				2021				2022				2023				2024				Thereafter				Total
Debt:
Fixed rate debt:
Mortgages payable (a)	$	1,875			$	2,626			$	26,678			$	31,758			$	1,737			$	29,611			$	94,285
Fixed rate term loans (b)	—				250,000				—				200,000				120,000				150,000				720,000
Unsecured notes payable (c)	—				100,000				—				—				150,000				550,000				800,000
Total fixed rate debt	1,875				352,626				26,678				231,758				271,737				729,611				1,614,285
Variable rate debt:
Variable rate revolving line of credit	—				—				849,704				—				—				—				849,704
Total debt (d)	$	1,875			$	352,626			$	876,382			$	231,758			$	271,737			$	729,611			$	2,463,989
Weighted average interest rate on debt:
Fixed rate debt	4.39		%		3.47		%		4.81		%		4.06		%		3.83		%		4.02		%		3.89		%
Variable rate debt (e)	—				—				2.04		%		—				—				—				2.04		%
Total	4.39		%		3.47		%		2.12		%		4.06		%		3.83		%		4.02		%		3.25		%

(a)	Excludes mortgage discount of $(483) and capitalized loan fees of $(240), net of accumulated amortization, as of March 31, 2020.

(b)

Excludes capitalized loan fees of $(3,208), net of accumulated amortization, as of March 31, 2020. The following variable rate term loans have been swapped to fixed rate debt: (i) $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid through January 5, 2021; (ii) $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid through November 22, 2023; (iii) $120,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid through July 17, 2024; and (iv) $150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid through July 17, 2026. As of March 31, 2020, the applicable credit spread for (i), (ii) and (iii) was 1.20% and for (iv) was 1.50%.

(c)	Excludes discount of $(586) and capitalized loan fees of $(2,994), net of accumulated amortization, as of March 31, 2020.

(d)	The weighted average years to maturity of consolidated indebtedness was 3.7 years as of March 31, 2020.

(e)	Represents interest rate as of March 31, 2020.

The Company’s unsecured debt agreements, consisting of the (i) unsecured credit agreement governing the Unsecured Credit Facility, (ii) amended term loan agreement governing the Term Loan Due 2023, (iii) term loan agreement governing the Term Loan Due 2024 and Term Loan Due 2026, (iv) note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024), (v) indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025), (vi) note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), and (vii) note purchase agreement governing the 4.82% senior unsecured notes due 2029 (Notes Due 2029), contain customary representations, warranties and covenants, and events of default. These include financial covenants such as (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage ratios; (iii) minimum fixed charge coverage ratios; (iv) minimum unencumbered interest coverage ratios; (v) minimum debt service coverage ratio; and (vi) minimum unencumbered assets to unsecured debt ratio. All financial covenants that include operating results, or derivations thereof, in their calculations are based on the most recent four fiscal quarters of activity. As of March 31, 2020, management believes the Company was in compliance with the financial covenants and default provisions under the unsecured debt agreements.

The Company plans on addressing its debt maturities through a combination of (i) cash flows generated from operations, (ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and (iii) capital markets transactions.

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The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount.

As of March 31, 2020, the Company has 11 interest rate swaps to hedge the variable cash flows associated with variable rate debt. Changes in fair value of the derivatives that are designated and that qualify as cash flow hedges are recorded in “Accumulated other comprehensive loss” and are reclassified into interest expense as interest payments are made on the Company’s variable rate debt. Over the next 12 months, the Company estimates that an additional $12,010 will be reclassified as an increase to interest expense.

The following table summarizes the Company’s interest rate swaps as of March 31, 2020, which effectively convert one-month floating rate LIBOR to a fixed rate:

Number of Instruments		Effective Date		Aggregate Notional				Fixed Interest Rate			Maturity Date
Three		December 29, 2017		$	250,000			2.00	%		January 5, 2021
Two		November 23, 2018		$	200,000			2.85	%		November 22, 2023
Three		August 15, 2019		$	120,000			1.68	%		July 17, 2024
Three		August 15, 2019		$	150,000			1.77	%		July 17, 2026

The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:

		Number of Instruments						Notional
Interest Rate Derivatives		March 31, 2020			December 31, 2019			March 31, 2020				December 31, 2019
Interest rate swaps		11			11			$	720,000			$	720,000

The table below presents the estimated fair value of the Company’s derivative financial instruments, which are presented within “Other liabilities” in the accompanying condensed consolidated balance sheets. The valuation techniques used are described in Note 12 to the condensed consolidated financial statements.

		Fair Value
		March 31, 2020				December 31, 2019
Derivatives designated as cash flow hedges:
Interest rate swaps		$	39,870			$	12,288

The following table presents the effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations and other comprehensive loss for the three months ended March 31, 2020 and 2019:

Derivatives in Cash Flow Hedging Relationships		Amount of Loss Recognized in Other Comprehensive Income on Derivative								Location of Loss (Gain) Reclassified from Accumulated Other Comprehensive Income (AOCI) into Income		Amount of Loss (Gain) Reclassified from AOCI into Income								Total Interest Expense Presented in the Statements of Operations in which the Effects of Cash Flow Hedges are Recorded
		2020				2019						2020				2019				2020				2019
Interest rate swaps		$	28,653			$	3,386			Interest expense		$	1,071			$	(128	)		$	17,046			$	17,430

The Company has an existing common stock repurchase program under which it may repurchase, from time to time, up to a maximum of $500,000 of shares of its Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions and are canceled upon repurchase. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of the Company’s assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program

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may be suspended or terminated at any time without prior notice. The Company did not repurchase any shares during the three months ended March 31, 2020 and 2019. As of March 31, 2020, $189,105 remained available for repurchases of shares of the Company’s common stock under its common stock repurchase program.

The following table summarizes the components used in the calculation of basic and diluted earnings per share (EPS):

	Three Months Ended March 31,
	2020				2019
Numerator:
Net income attributable to common shareholders	$	22,357			$	23,208
Earnings allocated to unvested restricted shares	(109		)		(80		)
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	22,248			$	23,128
Denominator:
Denominator for earnings per common share – basic:
Weighted average number of common shares outstanding	213,215			(a)	212,850			(b)
Effect of dilutive securities:
Stock options	—			(c)	—			(c)
RSUs	—			(d)	373			(e)
Denominator for earnings per common share – diluted:
Weighted average number of common and common equivalent shares outstanding	213,215				213,223

(a)	Excludes 815 shares of unvested restricted common stock as of March 31, 2020, which equate to 677 shares on a weighted average basis for the three months ended March 31, 2020. These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the shares are released.

(b)	Excludes 667 shares of unvested restricted common stock as of March 31, 2019, which equate to 602 shares on a weighted average basis for the three months ended March 31, 2019. These shares were excluded from the computation of basic EPS as the contingencies remained and the shares had not been released as of the end of the reporting period.

(c)

There were outstanding options to purchase 16 and 22 shares of common stock as of March 31, 2020 and 2019, respectively, at a weighted average exercise price of $15.87 and $17.34, respectively. Of these totals, outstanding options to purchase 16 and 18 shares of common stock as of March 31, 2020 and 2019, respectively, at a weighted average exercise price of $15.87 and $18.58, respectively, have been excluded from the common shares used in calculating diluted EPS as including them would be anti-dilutive.

(d)

As of March 31, 2020, there were 974 RSUs eligible for future conversion upon completion of the performance periods (see Note 5 to the condensed consolidated financial statements), which equate to 969 RSUs on a weighted average basis for the three months ended March 31, 2020. These contingently issuable shares have been excluded from the common shares used in calculating diluted EPS as including them would be anti-dilutive.

(e)	As of March 31, 2019, there were 839 RSUs eligible for future conversion upon completion of the performance periods, which equate to 832 RSUs on a weighted average basis for the three months ended March 31, 2019. These contingently issuable shares are a component of calculating diluted EPS.

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As of March 31, 2020, the Company identified indicators of impairment at certain of its properties. Such indicators included a low occupancy rate, difficulty in leasing space and related cost of re-leasing, or significant change in the scope, cost or timing of planned redevelopment. As of March 31, 2019, the Company did not identify indicators of impairment at any of its properties. The following table summarizes the results of these analyses as of March 31, 2020.

	March 31, 2020
Number of properties for which indicators of impairment were identified	2
Less: number of properties for which an impairment charge was recorded	—
Less: number of properties that were held for sale as of the date the analysis was performed for which indicators of impairment were identified but no impairment charge was recorded	—
Remaining properties for which indicators of impairment were identified but no impairment charge was considered necessary	2
Weighted average percentage by which the projected undiscounted cash flows exceeded its respective carrying value for each of the remaining properties (a)	58	%

(a)	Based upon the estimated holding period for each asset where an undiscounted cash flow analysis was performed.

The Company recorded the following investment property impairment charge during the three months ended March 31, 2020:

Property Name		Property Type		Impairment Date		Square Footage			Provision for Impairment of Investment Properties
King Philip’s Crossing (a)		Multi-tenant retail		February 13, 2020		105,900			$	346
									$	346
		Estimated fair value of impaired property as of impairment date							$	11,644

(a)	The Company recorded an impairment charge on December 31, 2019 based upon the terms and conditions of an executed sales contract. This property was sold on February 13, 2020, at which time additional impairment was recognized pursuant to the terms and conditions of an executed sales contract.

The Company did not record any investment property impairment charges during the three months ended March 31, 2019.

The extent to which COVID-19 impacts the Company and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence. If the effects of COVID-19 cause economic and market conditions to continue to deteriorate or if the Company’s expected holding period for assets change, subsequent tests for impairment could result in impairment charges in the future. As of March 31, 2020, the Company does not consider the impacts of COVID-19, including tenant requests for lease concessions, to be impairment indicators. However, indications of a tenant’s inability to continue as a going concern, changes in the Company’s view or strategy relative to a tenant’s business or industry as a result of COVID-19, or changes in the Company’s long-term hold strategies could change in future periods. The Company will continue to monitor circumstances and events in future periods and can provide no assurance that material impairment charges with respect to its investment properties will not occur in future periods.

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Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments:

	March 31, 2020								December 31, 2019
	Carrying Value				Fair Value				Carrying Value				Fair Value
Financial liabilities:
Mortgages payable, net	$	93,562			$	95,831			$	94,155			$	98,082
Unsecured notes payable, net	$	796,420			$	788,109			$	796,247			$	822,883
Unsecured term loans, net	$	716,792			$	711,013			$	716,523			$	720,000
Unsecured revolving line of credit	$	849,704			$	841,529			$	18,000			$	18,000
Derivative liability	$	39,870			$	39,870			$	12,288			$	12,288

The carrying value of the derivative liability is included within “Other liabilities” in the accompanying condensed consolidated balance sheets.

Recurring Fair Value Measurements

The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.

	Fair Value
	Level 1				Level 2				Level 3				Total
March 31, 2020
Derivative liability	$	—			$	39,870			$	—			$	39,870
December 31, 2019
Derivative liability	$	—			$	12,288			$	—			$	12,288

Derivatives:  The fair value of the derivative liability is determined using a discounted cash flow analysis on the expected future cash flows of each derivative. This analysis uses observable market data including forward yield curves and implied volatilities to determine the market’s expectation of the future cash flows of the variable component. The fixed and variable components of the derivative are then discounted using calculated discount factors developed based on the LIBOR swap rate and are aggregated to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2020 and December 31, 2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation. As a result, the Company has determined that its derivative valuations in their entirety are classified within Level 2 of the fair value hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements. The Company’s derivative instruments are further described in Note 8 to the condensed consolidated financial statements.

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Nonrecurring Fair Value Measurements

The Company did not remeasure any assets to fair value on a nonrecurring basis as of March 31, 2020. The following table presents the Company’s assets measured at fair value on a nonrecurring basis as of December 31, 2019, aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to properties remeasured to fair value as a result of impairment charges recorded during the year ended December 31, 2019, except for those properties sold prior to December 31, 2019. Methods and assumptions used to estimate the fair value of these assets as of December 31, 2019 are described after the table.

	Fair Value
	Level 1				Level 2				Level 3				Total				Provision for Impairment
December 31, 2019
Investment properties	$	—			$	11,644		(a)	$	5,300		(b)	$	16,944			$	12,298

(a)	Represents the fair value of the Company’s King Philip’s Crossing investment property as of December 31, 2019, the date the asset was measured at fair value. The estimated fair value of King Philip’s Crossing was based upon the expected sales price from an executed sales contract and determined to be a Level 2 input.

(b)

Represents the fair value of the Company’s Streets of Yorktown investment property as of September 30, 2019, the date the asset was measured at fair value. The estimated fair value of Streets of Yorktown was determined using the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding period to a present value at a risk-adjusted rate. The discount rates and third-party comparable sales prices used in this approach are derived from property-specific information, market transactions and other industry data and are considered significant inputs to this valuation. The reversion value of the property was based upon third-party comparable sales prices, which contain unobservable inputs used by these third parties. A weighted average discount rate of 6.89% was used to (i) present value the estimated income stream over the estimated holding period and (ii) present value the reversion value.

Fair Value Disclosures

The following table presents the Company’s financial liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which those measurements fall.

	Fair Value
	Level 1				Level 2				Level 3				Total
March 31, 2020
Mortgages payable, net	$	—			$	—			$	95,831			$	95,831
Unsecured notes payable, net	$	242,485			$	—			$	545,624			$	788,109
Unsecured term loans, net	$	—			$	—			$	711,013			$	711,013
Unsecured revolving line of credit	$	—			$	—			$	841,529			$	841,529
December 31, 2019
Mortgages payable, net	$	—			$	—			$	98,082			$	98,082
Unsecured notes payable, net	$	255,965			$	—			$	566,918			$	822,883
Unsecured term loans, net	$	—			$	—			$	720,000			$	720,000
Unsecured revolving line of credit	$	—			$	—			$	18,000			$	18,000

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The Company estimates the fair value of its Level 3 financial liabilities using a discounted cash flow model that incorporates future contractual principal and interest payments. The Company estimates the fair value of its mortgages payable, net and Level 3 unsecured notes payable, net by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The Company estimates the fair value of its unsecured term loans, net and unsecured revolving line of credit by discounting the anticipated future cash flows at a reference rate, currently one-month LIBOR, plus an applicable credit spread currently offered to the Company by its lenders for similar instruments of comparable maturities. The following rates were used in the discounted cash flow model to calculate the fair value of the Company’s Level 3 financial liabilities:

	March 31, 2020		December 31, 2019
Mortgages payable, net – range of discount rates used	3.6% to 4.1%		3.2% to 3.6%
Unsecured notes payable, net – weighted average discount rate used	4.72%		3.79%
Unsecured term loans, net – weighted average credit spread portion of discount rate used	1.75%		1.26%
Unsecured revolving line of credit – credit spread portion of discount rate used	1.63%		1.05%

There were no transfers between the levels of the fair value hierarchy during the three months ended March 31, 2020 and the year ended December 31, 2019.

As of March 31, 2020, the Company had letters of credit outstanding totaling $291 that serve as collateral for certain capital improvements at one of its properties and reduce the available borrowings on its unsecured revolving line of credit.

The following table summarizes the Company’s active expansion and redevelopment projects as of March 31, 2020:

				Estimated Net Investment								Net Investment as of March 31, 2020
Project Name		MSA		Low				High
Circle East (a)		Baltimore		$	42,000			$	44,000			$	22,804
One Loudoun Downtown – Pads G & H (b)		Washington, D.C.		$	125,000			$	135,000			$	21,542
The Shoppes at Quarterfield		Baltimore		$	9,000			$	10,000			$	524
Southlake Town Square – Pad		Dallas		$	2,000			$	2,500			$	259

(a)	Investment amounts are net of proceeds of $11,820 received from the sale of air rights.

(b)	Investment amounts are net of expected contributions from the Company’s joint venture partners.

In response to current macroeconomic conditions, the Company halted plans for vertical construction at its Carillon redevelopment during the three months ended March 31, 2020 and has materially reduced the planned scope and spend for the project. As of March 31, 2020, the Company was actively completing site work preparation at the property in anticipation of potential future development at the site. The Company expects to complete the site work preparation during 2020 for an expected additional capital investment of approximately $4,500. In addition, the Company terminated the joint venture related to the multi-family rental portion of the redevelopment and subsequent to March 31, 2020, the Company terminated the joint venture related to the medical office building portion of the redevelopment at Carillon.

The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the Company’s condensed consolidated financial statements. During the three months ended March 31, 2020, the Company entered into a settlement agreement related to litigation with a former tenant and received $6,100 in proceeds.

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Subsequent to March 31, 2020, the Company:

•	terminated the joint venture related to the medical office building portion of the redevelopment at Carillon; and

•

executed amendments to its unsecured debt agreements for its Unsecured Credit Facility, Term Loan Due 2023, Term Loan Due 2024 and Term Loan Due 2026 that changed the covenant calculation for the unencumbered interest coverage ratio to include operating results from the most recent four fiscal quarters. Prior to these amendments, the calculation only included operating results from the most recent fiscal quarter. As a result, the updated calculation applies to all unsecured debt instruments to which this covenant relates, including the Company’s unsecured revolving line of credit, all unsecured term loans and all unsecured private placement notes payable.

On May 1, 2020, the Company’s board of directors temporarily suspended future quarterly dividend payments on the Company’s outstanding Class A common stock in order to preserve and enhance liquidity and capital positioning. The Company’s board of directors will evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on the Company’s operating cash flow performance as well as other factors.

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•	economic, business and financial conditions, and changes in our industry and changes in the real estate markets in particular;

•	economic and other developments in markets where we have a high concentration of properties;

•	our business strategy;

•	our projected operating results;

•	rental rates and/or vacancy rates;

•	frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants;

•	bankruptcy, insolvency or general downturn in the business of a major tenant or a significant number of smaller tenants;

•	adverse impact of e-commerce developments and shifting consumer retail behavior on our tenants;

•	interest rates or operating costs;

•	the discontinuation of London Interbank Offered Rate (LIBOR);

•	real estate and zoning laws and changes in real property tax rates;

•	real estate valuations;

•	our leverage;

•	our ability to generate sufficient cash flows to service our outstanding indebtedness and make distributions to our shareholders;

•	changes in the dividend policy for our Class A common stock and our ability to pay dividends at current levels;

•	our ability to obtain necessary outside financing;

•	the availability, terms and deployment of capital;

•	general volatility of the capital and credit markets and the market price of our Class A common stock;

•	risks generally associated with real estate acquisitions and dispositions, including our ability to identify and pursue acquisition and disposition opportunities;

•	risks generally associated with redevelopment, including the impact of construction delays and cost overruns, our ability to lease redeveloped space and our ability to identify and pursue redevelopment opportunities;

•	composition of members of our senior management team;

•	our ability to attract and retain qualified personnel;

•	our ability to continue to qualify as a real estate investment trust (REIT);

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•	governmental regulations, tax laws and rates and similar matters;

•	our compliance with laws, rules and regulations;

•	environmental uncertainties and exposure to natural disasters;

•

pandemics or other public health crises, such as the novel coronavirus (COVID-19) outbreak, and the related impact on (i) our ability to manage our properties, finance our operations and perform necessary administrative and reporting functions and (ii) our tenants’ ability to operate their businesses, generate sales and meet their financial obligations, including the obligation to pay rent and other charges as specified in their leases;

•	insurance coverage; and

•	the likelihood or actual occurrence of terrorist attacks in the U.S.

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(a)	Includes leases signed but not commenced.

(b)	Excludes the 18 multi-family rental units at Plaza del Lago. As of March 31, 2020, 16 multi-family rental units were leased at an average monthly rental rate per unit of $1,339.

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(c)	The operating portion of this property is included in the property count of lifestyle centers and mixed-use properties within our retail operating portfolio.

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(a)	We acquired the fee interest in an existing multi-tenant retail operating property. In connection with this acquisition, we also assumed the lessor position in a ground lease with a shadow anchor. The total number of properties in our portfolio was not affected by this transaction.

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(a)

Excludes $2,025 of multi-tenant retail ABR and 167 square feet of multi-tenant retail GLA attributable to Circle East and The Shoppes at Quarterfield, located in the Baltimore MSA, and Carillon, located in the Washington, D.C. MSA, all three of which are in redevelopment. Including these amounts, 88.2% of our multi-tenant retail ABR and 84.7% of our multi-tenant retail GLA is located in the top 25 MSAs.

(b)	Top 25 MSAs are determined by the United States Census Bureau and ranked based on the most recently available population estimates.

(c)	Excludes the 18 multi-family rental units at Plaza del Lago. As of March 31, 2020, 16 multi-family rental units were leased at an average monthly rental rate per unit of $1,339.

(a)	Total excludes the impact of Non-Comparable New and Renewal Leases.

(b)	Excludes tenant allowances and related square foot amounts at our active and near-term expansion and redevelopment projects. These tenant allowances, if any, are included in the expected investment for each project.

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(c)	Includes (i) leases signed on units that were vacant for over 12 months, (ii) leases signed without fixed rental payments and (iii) leases signed where the previous and current lease do not have a consistent lease structure.

•	borrowed $831,704, net of repayments, on our unsecured revolving line of credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets; and

•	made scheduled principal payments of $619 related to amortizing loans.

•	an $8,449 decrease in gain on sales of investment properties related to the sale of one investment property consisting of approximately 105,900 square feet of GLA that was impaired during the three months ended March 31, 2020 compared

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•	a $4,008 decrease in lease income primarily consisting of:

•	a $1,358 decrease in amortization from acquired below market lease intangibles primarily as a result of the write-off of an acquired lease intangible liability associated with a lease that was not renewed at one of our operating properties during the three months ended March 31, 2019;

•	a $1,159 decrease in straight-line rent;

•	a $1,104 increase in bad debt;

•	a $1,064 decrease in lease termination fee income; and

•	a $1,007 decrease in tenant recovery income;

•	an $1,872 increase in base rent primarily due to the growth from our same store portfolio and the operating properties acquired during 2019 and 2020, partially offset by the operating properties sold during 2019 and 2020.

•	a $6,100 gain on litigation settlement recognized during the three months ended March 31, 2020 related to litigation with a former tenant. No such gain was recognized during the three months ended March 31, 2019;

•	a $3,094 decrease in depreciation and amortization primarily due to site improvement and in-place lease intangible assets becoming fully depreciated or amortized upon reaching the end of the asset’s estimated useful life during the three months ended March 31, 2020;

•	a $1,334 decrease in general and administrative expenses primarily due to a decrease in comparative cash bonus expense resulting from a significant reduction in cash bonus expectations for 2020; and

•	a $1,272 decrease in operating expenses primarily due to lower snow-related expenses in 2020.

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•	the removal of King Philip’s Crossing, a same store investment property that was sold during the three months ended March 31, 2020; and

•	the removal of The Shoppes at Quarterfield, which was reclassified to active redevelopment during the three months ended March 31, 2020;

•	the addition of Reisterstown Road Plaza, a redevelopment project that was reclassified into our retail operating portfolio during 2018.

•	properties acquired during 2019 and 2020;

•	the multi-family rental units at Plaza del Lago, a redevelopment project that was placed in service during 2019;

•	Circle East, which is in active redevelopment;

•	One Loudoun Downtown – Pads G & H, which are in active development;

•	Carillon, a redevelopment project where we halted plans for vertical construction during the three months ended March 31, 2020 in response to current macroeconomic conditions due to the impact of the COVID-19 pandemic; however, we are actively completing site work preparation at the property in anticipation of potential future development at the site;

•	The Shoppes at Quarterfield, which is in active redevelopment;

•	investment properties that were sold or classified as held for sale during 2019 and 2020; and

•	the net income from our wholly owned captive insurance company.

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•	a $2,732 increase in base rent primarily driven by increases of (i) $1,093 from occupancy growth, (ii) $996 from contractual rent changes and (iii) $552 from re-leasing spreads;

•	a $1,077 increase in bad debt, net; and

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a $608 increase in property operating expenses and real estate taxes, net of tenant recoveries, due to a positive impact from the common area maintenance and real estate tax reconciliation process in 2019, increases in certain non-recoverable property operating expenses and higher net real estate taxes, partially offset by decreases in net recoverable property operating expenses primarily driven by lower snow-related expenses.

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(a)	Primarily consists of the impact on earnings from litigation involving the Company, including costs to engage outside counsel related to litigation with former tenants, which are included within “Other expense, net” in the accompanying condensed consolidated statements of operations and other comprehensive loss.

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(a)

Fixed rate mortgages payable excludes mortgage discount of $(483) and capitalized loan fees of $(240), net of accumulated amortization, as of March 31, 2020. Unsecured notes payable excludes discount of $(586) and capitalized loan fees of $(2,994), net of accumulated amortization, as of March 31, 2020. Unsecured term loans exclude capitalized loan fees of $(3,208), net of accumulated amortization, as of March 31, 2020. Capitalized loan fees related to the revolving line of credit are included within “Other assets, net” in the accompanying condensed consolidated balance sheets.

(b)	Reflects $250,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through January 5, 2021. The applicable credit spread was 1.20% as of March 31, 2020.

(c)	We have two six-month extension options on the revolving line of credit, which we may exercise as long as we are in compliance with the terms of the unsecured credit agreement and we pay an extension fee equal to 0.075% of the commitment amount being extended.

(d)	Reflects $200,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging from 1.20% to 1.85% through November 22, 2023. The applicable credit spread was 1.20% as of March 31, 2020.

(e)	Reflects $120,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2024. The applicable credit spread was 1.20% as of March 31, 2020.

(f)	Reflects $150,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid ranging from 1.50% to 2.20% through July 17, 2026. The applicable credit spread was 1.50% as of March 31, 2020.

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(a)	Excludes mortgage discount of $(483) and capitalized loan fees of $(240), net of accumulated amortization, as of March 31, 2020.

(b)

Excludes capitalized loan fees of $(3,208), net of accumulated amortization, as of March 31, 2020. The following variable rate term loans have been swapped to fixed rate debt: (i) $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid through January 5, 2021; (ii) $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid through November 22, 2023; (iii) $120,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid through July 17, 2024; and (iv) $150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid through July 17, 2026. As of March 31, 2020, the applicable credit spread for (i), (ii) and (iii) was 1.20% and for (iv) was 1.50%.

(c)	Excludes discount of $(586) and capitalized loan fees of $(2,994), net of accumulated amortization, as of March 31, 2020.

(d)	The weighted average years to maturity of consolidated indebtedness was 3.7 years as of March 31, 2020.

(e)	Represents interest rate as of March 31, 2020.

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(a)	Represents total consideration net of transaction costs, as well as capital and tenant-related costs credited to the buyer at close, as applicable.

(a)	2020 acquisition is the fee interest in our Fullerton Metrocenter multi-tenant retail operating property. In connection with this acquisition, we also assumed the lessor position in a ground lease with a shadow anchor. The total number of properties in our portfolio was not affected by this transaction.

(b)	In addition to the acquisition of one multi-tenant retail operating property, 2019 acquisitions include the purchase of the following that did not affect our property count: (i) a parcel adjacent to our Paradise Valley Marketplace multi-tenant retail operating property and (ii) a single-user parcel at our Southlake Town Square multi-tenant retail operating property.

•	a $937 increase in cash paid for leasing fees and inducements;

•	a $337 increase in cash bonuses paid related to the results of 2019; and

•	ordinary course fluctuations in working capital accounts;

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•	a $1,953 decrease in cash paid for interest; and

•	an $813 increase in NOI, consisting of an increase in Same Store NOI of $979, partially offset by a decrease in NOI from properties that were sold or held for sale in 2019 and 2020 and other properties not included in our same store portfolio of $166.

•	a $29,766 increase in cash paid to purchase investment properties;

•	a $10,262 decrease in proceeds from the sales of investment properties; and

•	a $6,874 increase in investment in developments in progress;

•	a $4,581 decrease in capital expenditures and tenant improvements.

•	an $805,704 change in the activity on our unsecured revolving line of credit from net proceeds of $26,000 during the three months ended March 31, 2019 compared to net proceeds of $831,704 during the three months ended March 31, 2020; and

•	a $145 decrease in principal payments on mortgages payable.

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•	terminated the joint venture related to the medical office building portion of the redevelopment at Carillon; and

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executed amendments to our unsecured debt agreements for our Unsecured Credit Facility, Term Loan Due 2023, Term Loan Due 2024 and Term Loan Due 2026 that changed the covenant calculation for the unencumbered interest coverage ratio to include operating results from the most recent four fiscal quarters. Prior to these amendments, the calculation only included operating results from the most recent fiscal quarter. As a result, the updated calculation applies to all unsecured debt instruments to which this covenant relates, including our unsecured revolving line of credit, all unsecured term loans and all unsecured private placement notes payable.

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•	a complete or partial closure of, or a decrease in customer traffic at, one or more of our properties, which has and could continue to adversely affect our operations and those of our tenants;

•	reduced economic activity impacting the businesses, financial condition and liquidity of our tenants, which has caused and could continue to cause one or more of our tenants, including certain significant tenants, to be unable to meet their rent payment or other obligations to us in full, or at all, or to otherwise seek modifications of such obligations or declare bankruptcy;

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decreases in consumer discretionary spending and consumer confidence during the pandemic, as well as a decrease in individuals’ willingness to frequent our properties once reopened as a result of the public health risks and social impacts of such outbreak, which could affect the ability of our properties to generate sufficient revenues to meet operating and other expenses in the short and long term;

•	inability to renew leases, lease vacant space or re-let space as leases expire on favorable terms, or at all, which could cause interruptions or delays in the receipt of rental payments or the non-receipt of rental payments;

•	state, local or industry-initiated efforts, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions, which may affect our ability to collect rent or enforce remedies for the failure to pay rent;

•	severe disruption and instability in the U.S. and global financial markets or deteriorations in credit and financing conditions, which may affect our ability to access capital on attractive terms or at all;

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•	a reduction in cash flows, which could impact our ability to pay dividends to our stockholders;

•	our ability to remain in compliance with the financial covenants set forth in our unsecured credit agreement and other debt agreements, which non-compliance could result in a default and, potentially, an acceleration of such indebtedness;

•	a general decline in business activity and demand for real estate transactions, which could adversely affect the value of our portfolio and our ability or desire to make strategic acquisitions or dispositions;

•	disruptions in the supply of materials or products or the inability of contractors to perform on a timely basis or at all, including as a result of restrictions on construction activity due to containment measures, which could cause delays in completing ongoing or future construction, expansion or redevelopment projects;

•	the potential negative impact on the health of our employees or the employees of our tenants, particularly if a significant number of our or their executive management team or key employees are impacted, which could result in a deterioration in our and our tenants’ ability to ensure business continuity during a disruption;

•	any inability to effectively manage our portfolio and operations while working remotely during the COVID-19 pandemic and for a time after such pandemic, which could adversely impact our business; and

•	the limited access to our facilities, management, tenants, support staff and professional advisors, which could decrease the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, increase our susceptibility to security breaches, or hamper our ability to comply with regulatory obligations leading to reputational harm and regulatory issues or fines.

(a)	Not applicable.

(b)	Not applicable.

(c)	Issuer Purchases of Equity Securities

(a)	As disclosed on the Current Reports on Form 8-K dated December 15, 2015 and December 14, 2017, this value represents the amount outstanding under our $500,000 common stock repurchase program, which has no scheduled expiration date.

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