FEDERAL REALTY INVESTMENT TRUST - Quarter Report: 2017 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO THE SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-07533

FEDERAL REALTY INVESTMENT TRUST

(Exact Name of Registrant as Specified in its Declaration of Trust)



Maryland		52-0782497
(State of Organization)		(IRS Employer Identification No.)

1626 East Jefferson Street, Rockville, Maryland		20852
(Address of Principal Executive Offices)		(Zip Code)

(301) 998-8100

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes ¨ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	ý	Accelerated filer	¨

Non-Accelerated Filer	o (Do not check if a smaller reporting company)	Smaller reporting company	¨

		Emerging growth company	¨

If an emerging growth company, indicate by checkmark if the registrant has elected not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes ý No

The number of Registrant’s common shares outstanding on April 28, 2017 was 72,238,754.

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FEDERAL REALTY INVESTMENT TRUST

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED MARCH 31, 2017

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PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of March 31, 2017 (unaudited) and December 31, 2016	4
	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2017 and 2016	5
	Consolidated Statement of Shareholders' Equity (unaudited) for the three months ended March 31, 2017	6
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2017 and 2016	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	25

PART II. OTHER INFORMATION		26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27

SIGNATURES		28

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PART I—FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

The following consolidated balance sheet as of December 31, 2016, which has been derived from audited financial statements, and unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been omitted pursuant to those rules and regulations, although Federal Realty Investment Trust (the "Trust") believes that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Trust’s latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the full year.

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Federal Realty Investment Trust

Consolidated Balance Sheets



	March 31,			December 31,
	2017			2016
	(In thousands, except share and per share data)
	(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,235,147 and $1,226,918 of consolidated variable interest entities, respectively)	$	6,294,142		$	6,125,957
Construction-in-progress	687,356			599,260
Asset held for sale	33,856			33,856
	7,015,354			6,759,073
Less accumulated depreciation and amortization (including $217,449 and $209,239 of consolidated variable interest entities, respectively)	(1,766,239		)	(1,729,234		)
Net real estate	5,249,115			5,029,839
Cash and cash equivalents	20,112			23,368
Accounts and notes receivable, net	115,775			116,749
Mortgage notes receivable, net	29,904			29,904
Investment in real estate partnerships	14,540			14,864
Prepaid expenses and other assets	226,754			208,555
TOTAL ASSETS	$	5,656,200		$	5,423,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable (including $436,494 and $439,120 of consolidated variable interest entities, respectively)	$	468,284		$	471,117
Capital lease obligations	71,582			71,590
Notes payable	496,311			279,151
Senior notes and debentures	1,977,192			1,976,594
Accounts payable and accrued expenses	191,901			201,756
Dividends payable	71,647			71,440
Security deposits payable	16,499			16,285
Other liabilities and deferred credits	144,979			115,817
Total liabilities	3,438,395			3,203,750
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	141,003			143,694
Shareholders’ equity
Preferred shares, authorized 15,000,000 shares, $.01 par: 5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding	9,997			9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 72,236,981 and 71,995,897 shares issued and outstanding, respectively	725			722
Additional paid-in capital	2,736,921			2,718,325
Accumulated dividends in excess of net income	(764,458		)	(749,734		)
Accumulated other comprehensive loss	(1,493		)	(2,577		)
Total shareholders’ equity of the Trust	1,981,692			1,976,733
Noncontrolling interests	95,110			99,102
Total shareholders’ equity	2,076,802			2,075,835
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,656,200		$	5,423,279

The accompanying notes are an integral part of these consolidated statements.

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Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended March 31,
	2017			2016
	(In thousands, except per share data)
REVENUE
Rental income	$	204,447		$	195,308
Other property income	2,190			2,312
Mortgage interest income	752			724
Total revenue	207,389			198,344
EXPENSES
Rental expenses	41,109			42,819
Real estate taxes	25,090			22,794
General and administrative	8,267			8,010
Depreciation and amortization	51,379			47,799
Total operating expenses	125,845			121,422
OPERATING INCOME	81,544			76,922
Other interest income	106			103
Interest expense	(23,758		)	(23,729		)
Income from real estate partnerships	—			41
INCOME FROM CONTINUING OPERATIONS	57,892			53,337
Gain on sale of real estate and change in control of interests	178			25,726
NET INCOME	58,070			79,063
Net income attributable to noncontrolling interests	(1,880		)	(2,108		)
NET INCOME ATTRIBUTABLE TO THE TRUST	56,190			76,955
Dividends on preferred shares	(135		)	(135		)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	56,055		$	76,820
EARNINGS PER COMMON SHARE, BASIC
Continuing operations	$	0.78		$	0.73
Gain on sale of real estate and change in control of interests, net	—			0.37
	$	0.78		$	1.10
Weighted average number of common shares, basic	71,862			69,771
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations	$	0.78		$	0.73
Gain on sale of real estate and change in control of interests, net	—			0.37
	$	0.78		$	1.10
Weighted average number of common shares, diluted	72,005			69,957

COMPREHENSIVE INCOME	$	59,154		$	76,288

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	$	57,274		$	74,180

The accompanying notes are an integral part of these consolidated statements.

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Federal Realty Investment Trust

Consolidated Statement of Shareholders’ Equity

For the Three Months Ended March 31, 2017

(Unaudited)



	Shareholders’ Equity of the Trust
	Preferred Shares			Common Shares				Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders' Equity
	Shares	Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders' Equity
	(In thousands, except share data)
BALANCE AT DECEMBER 31, 2016	399,896	$	9,997	71,995,897		$	722	$	2,718,325		$	(749,734	)	$	(2,577	)	$	99,102		$	2,075,835
January 1, 2017 adoption of new accounting standard - See Note 2	—	—		—		—		83			(83		)	—			—			—
Net income, excluding $806 attributable to redeemable noncontrolling interests	—	—		—		—		—			56,190			—			1,074			57,264
Other comprehensive income - change in value of interest rate swaps	—	—		—		—		—			—			1,084			—			1,084
Dividends declared to common shareholders	—	—		—		—		—			(70,696		)	—			—			(70,696		)
Dividends declared to preferred shareholders	—	—		—		—		—			(135		)	—			—			(135		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(1,482		)	(1,482		)
Common shares issued	—	—		98,674		1		13,414			—			—			—			13,415
Exercise of stock options	—	—		52,307		1		3,830			—			—			—			3,831
Shares issued under dividend reinvestment plan	—	—		4,660		—		654			—			—			—			654
Share-based compensation expense, net of forfeitures	—	—		105,824		1		3,548			—			—			—			3,549
Shares withheld for employee taxes	—	—		(28,411	)	—		(4,061		)	—			—			—			(4,061		)
Conversion and redemption of OP units	—	—		8,030		—		951			—			—			(951		)	—
Contributions from noncontrolling interests	—	—		—		—		—			—			—			114			114
Purchase of noncontrolling interest	—	—		—		—		177			—			—			(2,747		)	(2,570		)
BALANCE AT MARCH 31, 2017	399,896	$	9,997	72,236,981		$	725	$	2,736,921		$	(764,458	)	$	(1,493	)	$	95,110		$	2,076,802

The accompanying notes are an integral part of these consolidated statements.

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Federal Realty Investment Trust

Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended March 31,
	2017			2016
	(In thousands)
OPERATING ACTIVITIES
Net income	$	58,070		$	79,063
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	51,379			47,799
Gain on sale of real estate and change in control of interests	(178		)	(25,726		)
Income from real estate partnerships	—			(41		)
Other, net	(1,524		)	698
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable	4,390			(836		)
Decrease in prepaid expenses and other assets	297			1,181
Increase in accounts payable and accrued expenses	4,359			5,066
Increase (decrease) in security deposits and other liabilities	4,273			(2,325		)
Net cash provided by operating activities	121,066			104,879
INVESTING ACTIVITIES
Acquisition of real estate	(140,222		)	(129,776		)
Capital expenditures - development and redevelopment	(119,084		)	(55,554		)
Capital expenditures - other	(16,366		)	(12,377		)
Proceeds from sale of real estate partnership interests	622			—
Investment in real estate partnerships	(118		)	(697		)
Leasing costs	(3,113		)	(3,285		)
Repayment of mortgage and other notes receivable, net	5			2
Net cash used in investing activities	(278,276		)	(201,687		)
FINANCING ACTIVITIES
Net borrowings (repayments) under revolving credit facility	217,000			(500		)
Repayment of mortgages and capital leases	(1,567		)	(1,423		)
Issuance of common shares, net of costs	17,359			181,757
Dividends paid to common and preferred shareholders	(70,117		)	(64,884		)
Shares withheld for employee taxes	(4,061		)	(4,353		)
Distributions to and redemptions of noncontrolling interests, net	(4,660		)	(2,096		)
Redemption of redeemable noncontrolling interests	—			(13,023		)
Net cash provided by financing activities	153,954			95,478
Decrease in cash and cash equivalents	(3,256		)	(1,330		)
Cash and cash equivalents at beginning of year	23,368			21,046
Cash and cash equivalents at end of period	$	20,112		$	19,716

The accompanying notes are an integral part of these consolidated statements.

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Federal Realty Investment Trust

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

NOTE 1—BUSINESS AND ORGANIZATION

Federal Realty Investment Trust (the “Trust”) is an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of retail and mixed-use properties. Our properties are located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of March 31, 2017, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 98 predominantly retail real estate projects.

We operate in a manner intended to enable us to qualify as a REIT for federal income tax purposes. A REIT that distributes at least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders. Therefore, federal income taxes on our taxable income have been and are generally expected to be immaterial. We are obligated to pay state taxes, generally consisting of franchise or gross receipts taxes in certain states. Such state taxes also have not been material.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Our consolidated financial statements include the accounts of the Trust, its corporate subsidiaries, and all entities in which the Trust has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). The equity interests of other investors are reflected as noncontrolling interests or redeemable noncontrolling interests. All significant intercompany transactions and balances are eliminated in consolidation. We account for our interests in joint ventures, which we do not control, using the equity method of accounting. Certain 2016 amounts have been reclassified to conform to current period presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP,” requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements

In February 2017, the FASB issued ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets." ASU 2017-05 clarifies that ASC 610-20 applies to all nonfinancial assets (including real estate) for which the counterparty is not a customer and also clarifies that all businesses are derecognized using the deconsolidation guidance. Additionally, it defines an insubstance nonfinancial asset as a financial asset that is promised to a counterparty in a contract in which substantially all of the fair value of the assets promised in the contract is concentrated in nonfinancial assets, which excludes cash or cash equivalents and liabilities. The new guidance is expected to impact the gain recognized when a real estate asset is sold to a non-customer and a noncontrolling interest is retained. Under the current guidance, a partial sale is recognized and carryover basis is used for the retained interest, however, the new guidance eliminates the use of carryover basis and generally requires a full gain to be recognized. ASU 2017-05 is effective for us in the first quarter of 2018, and we are currently assessing the impact of this standard to our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation." ASU 2016-09 simplifies the accounting for share-based payment transactions, including a policy election option with respect to accounting for forfeitures either as they occur or estimating forfeitures (as is currently required), as well as increasing the amount an employer can withhold to cover income taxes on equity awards. Additionally, ASU 2016-09 requires the cash paid to a taxing authority when shares are withheld to pay employee taxes to be classified as a "financing activity" rather than an "operating activity," as was done previously on the Statement of Cash Flows. We adopted this standard effective January 1, 2017, and as a result, we are now accounting for forfeitures as they occur, and have recorded the cumulative impact on the adoption date as a $0.1 million adjustment to additional paid in capital and retained earnings. The amount reclassified from "operating activities" to "financing activities" for shares withheld for employee taxes was $4.4 million.

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In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business." ASU 2017-01 changes the definition of a business to exclude acquisitions where substantially all of the fair value of the assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets. Given this change in definition, we believe most of our shopping center acquisitions will no longer be considered business combinations but rather asset acquisitions. While there are various differences between the accounting for an asset acquisition and a business combination, the largest impact will be that transaction costs are capitalized for asset acquisitions rather than expensed when they were considered business combinations. Based on acquisitions in the past several years, transaction costs for a single shopping center acquisition have typically ranged from $0.2 million to $2.4 million with significantly higher transaction costs expected for an acquisition of a larger portfolio. We adopted this standard effective January 1, 2017, and are applying the new guidance prospectively. Our acquisitions in first quarter 2017 (further discussed in Note 3 below) both qualified as asset acquisitions and consequently, all transaction costs were capitalized.

Consolidated Statements of Cash Flows—Supplemental Disclosures

The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows:



	Three Months Ended
	March 31,
	2017			2016
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	29,209		$	27,559
Interest capitalized	(5,451		)	(3,830		)
Interest expense	$	23,758		$	23,729
Cash paid for interest, net of amounts capitalized	$	25,089		$	20,635
Cash paid for income taxes	$	197		$	141
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Mortgage loans assumed with acquisition	$	—		$	34,385
DownREIT operating partnership units issued with acquisition of noncontrolling interest	$	5,918		$	—
DownREIT operating partnership units redeemed for common shares	$	951		$	4,281
Shares issued under dividend reinvestment plan	$	541		$	537

NOTE 3—REAL ESTATE

On February 1, 2017, we acquired a leasehold interest in Hastings Ranch Plaza, a 274,000 square foot shopping center in Pasadena, California for $29.5 million. The land is subject to a long-term ground lease that expires on April 30, 2054. Approximately $21.5 million of assets acquired were allocated to lease intangibles and included within other assets. Approximately $15.2 million of net assets acquired were allocated to lease liabilities and included in other liabilities.

On March 31, 2017, we acquired the fee interest in Riverpoint Center, a 211,000 square foot shopping center in the Lincoln Park neighborhood of Chicago, Illinois for $107.0 million. Approximately $1.0 million and $12.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

Assets Held for Sale

We lease three parcels of land at our Assembly Row property to two ground lessees. During 2016, both lessees exercised purchase options under the related ground leases. The sale transaction related to one of the land parcels was completed on April 4, 2017 for a sales price of $36.0 million and the gain was approximately $18 million. We expect the other two sale transactions to close in the second quarter of 2017. The total cost basis of the related land at March 31, 2017 was $33.9 million, and is included in "assets held for sale" on our consolidated balance sheets.

NOTE 4—DEBT

During the three months ended March 31, 2017, the maximum amount of borrowings outstanding under our $800.0 million revolving credit facility was $217.0 million, the weighted average borrowings outstanding was $93.4 million, and the weighted average interest rate, before amortization of debt fees, was 1.6%. At March 31, 2017, the outstanding balance was $217.0 million. Our revolving credit facility, term loan and certain notes require us to comply with various financial covenants,

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including the maintenance of minimum shareholders’ equity and debt coverage ratios and a maximum ratio of debt to net worth. As of March 31, 2017, we were in compliance with all debt covenants.

NOTE 5—FAIR VALUE OF FINANCIAL INSTRUMENTS

Except as disclosed below, the carrying amount of our financial instruments approximates their fair value. The fair value of our mortgages payable, notes payable and senior notes and debentures is sensitive to fluctuations in interest rates. Quoted market prices (Level 1) were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis (Level 2) is generally used to estimate the fair value of our mortgages and notes payable. Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:



	March 31, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	964,595	$	975,520	$	750,268	$	760,260
Senior notes and debentures	$	1,977,192	$	2,020,304	$	1,976,594	$	2,015,973

As of March 31, 2017, we have two interest rate swap agreements with a notional amount of $275.0 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the variable portion of our $275.0 million term loan at 1.72% through November 1, 2018. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into interest expense as interest is incurred on the related variable rate debt. Within the next 12 months, we expect to reclassify an estimated $1.3 million as an increase to interest expense. Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. In addition, we evaluate the default risk of the counterparty by monitoring the credit-worthiness of the counterparty. When ineffectiveness exists, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recognized in earnings in the period affected. Hedge ineffectiveness has not impacted earnings as of March 31, 2017, and we do not anticipate it will have a significant effect in the future.

The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair value of our swaps at March 31, 2017 was a liability of $1.5 million and is included in "accounts payable and accrued expenses" on our consolidated balance sheet. For the three months ended March 31, 2017, the change in valuation on our interest rate swaps resulted in a $1.1 million decrease in our derivative liability (including $0.6 million reclassified from other comprehensive loss to interest expense). The change in valuation on our interest rate swaps is included in "accumulated other comprehensive loss."

A summary of our financial liabilities that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:



	March 31, 2017								December 31, 2016
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Interest rate swaps	$	—	$	1,493	$	—	$	1,493	$	—	$	2,577	$	—	$	2,577

NOTE 6—COMMITMENTS AND CONTINGENCIES

We are sometimes involved in lawsuits, warranty claims, and environmental matters arising in the ordinary course of business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.

We are currently a party to various legal proceedings. We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss

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is a range, we accrue the best estimate within the range; however, if no amount within the range is a better estimate than any other amount, the minimum within the range is accrued. Legal fees related to litigation are expensed as incurred. Other than as described below, we do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties. Also under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us (1) as owner of the properties due to certain matters relating to the operation of the properties by the tenant, and (2) where appropriate, due to certain matters relating to the ownership of the properties prior to their acquisition by us.

Under the terms of certain partnership agreements, the partners have the right to exchange their operating partnership units for cash or the same number of our common shares, at our option. A total of 799,962 downREIT operating partnership units are outstanding which have a total fair value of $106.8 million, based on our closing stock price on March 31, 2017.

On January 12, 2017, we exercised our purchase option on non-controlling interests in San Antonio Center for $2.6 million of cash and 44,195 of downREIT operating partnership units.

NOTE 7—SHAREHOLDERS’ EQUITY

The following table provides a summary of dividends declared and paid per share:



	Three Months Ended March 31,
	2017				2016
	Declared		Paid		Declared		Paid
Common shares	$	0.980	$	0.980	$	0.940	$	0.940
5.417% Series 1 Cumulative Convertible Preferred shares	$	0.339	$	0.339	$	0.339	$	0.339

We have an at the market (“ATM”) equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $400.0 million. We intend to use the net proceeds to fund potential acquisition opportunities fund our development and redevelopment pipeline, repay amounts outstanding under our revolving credit facility and/or for general corporate purposes. For the three months ended March 31, 2017, we issued 98,658 common shares at a weighted average price per share of $137.90 for net cash proceeds of $13.4 million and paid $0.1 million in commissions and less than $0.1 million in additional offering expenses related to the sales of these common shares. As of March 31, 2017, we had the capacity to issue up to $357.3 million in common shares under our ATM equity program.

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NOTE 8—COMPONENTS OF RENTAL INCOME

The principal components of rental income are as follows:



	Three Months Ended
	March 31,
	2017		2016
	(In thousands)
Minimum rents
Retail and commercial	$	142,143	$	134,586
Residential	13,503		11,449
Cost reimbursement	41,518		41,802
Percentage rents	2,823		3,069
Other	4,460		4,402
Total rental income	$	204,447	$	195,308

Minimum rents include the following:



	Three Months Ended
	March 31,
	2017			2016
	(In millions)
Straight-line rents	$	3.6		$	2.0
Amortization of above market leases	$	(1.4	)	$	(1.9	)
Amortization of below market leases	$	2.5		$	2.2

NOTE 9—SHARE-BASED COMPENSATION PLANS

A summary of share-based compensation expense included in net income is as follows:



	Three Months Ended
	March 31,
	2017			2016
	(In thousands)
Grants of common shares and options	$	3,549		$	3,529
Capitalized share-based compensation	(317		)	(302		)
Share-based compensation expense	$	3,232		$	3,227

NOTE 10—EARNINGS PER SHARE

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating securities is calculated according to dividends declared and participation rights in undistributed earnings. For the three months ended March 31, 2017 and 2016, we had 0.2 million weighted average unvested shares outstanding, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares; the portion of earnings allocated to the unvested shares is reflected as “earnings allocated to unvested shares” in the reconciliation below.

In the dilutive EPS calculation, dilutive stock options were calculated using the treasury stock method consistent with prior periods. There were no anti-dilutive stock options for the three months ended March 31, 2017 and 2016. The conversions of downREIT operating partnership units and 5.417% Series 1 Cumulative Convertible Preferred Shares are anti-dilutive for all periods presented and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.

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	Three Months Ended
	March 31,
	2017			2016
	(In thousands, except per share data)
NUMERATOR
Income from continuing operations	$	57,892		$	53,337
Less: Preferred share dividends	(135		)	(135		)
Less: Income from continuing operations attributable to noncontrolling interests	(1,772		)	(2,108		)
Less: Earnings allocated to unvested shares	(235		)	(236		)
Income from continuing operations available for common shareholders	55,750			50,858
Gain on sale of real estate and change in control of interests, net	70			25,726
Net income available for common shareholders, basic and diluted	$	55,820		$	76,584
DENOMINATOR
Weighted average common shares outstanding—basic	71,862			69,771
Stock options	143			186
Weighted average common shares outstanding—diluted	72,005			69,957

EARNINGS PER COMMON SHARE, BASIC
Continuing operations	$	0.78		$	0.73
Gain on sale of real estate and change in control of interests, net	—			0.37
	$	0.78		$	1.10
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations	$	0.78		$	0.73
Gain on sale of real estate and change in control of interests, net	—			0.37
	$	0.78		$	1.10
Income from continuing operations attributable to the Trust	$	56,120		$	51,229

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion should be read in conjunction with the consolidated interim financial statements and notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on February 13, 2017.

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. When we refer to forward-looking statements or information, sometimes we use words such as “may,” “will,” “could,” “should,” “plans,” “intends,” “expects,” “believes,” “estimates,” “anticipates” and “continues.” Forward-looking statements are not historical facts or guarantees of future performance and involve certain known and unknown risks, uncertainties, and other factors, many of which are outside our control, that could cause actual results to differ materially from those we describe.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Quarterly Report on Form 10-Q. Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise. You should carefully review the risks and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2016 and under Part II, Item 1A in this Quarterly Report on Form 10-Q, before making any investments in us.

Overview

We are an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. As of March 31, 2017, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 98 predominantly retail real estate projects comprising approximately 23.1 million square feet. In total, the real estate projects were 94.6% leased and 93.1% occupied at March 31, 2017.

2017 Significant Property Acquisitions & Disposition

On April 4, 2017, the sale transaction related to the purchase option on our Partners HealthCare ground lease closed at our Assembly Row property in Somerville, Massachusetts. The sales price was $36.0 million, and the gain was approximately $18 million.

2017 Significant Equity Transactions

We have an at the market (“ATM”) equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $400.0 million. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts outstanding under our revolving credit facility and/or for general corporate purposes. For the three months ended March 31, 2017, we issued 98,658 common shares at a weighted average price per share of $137.90 for net cash proceeds of $13.4 million and paid $0.1 million in commissions and less than $0.1 million in additional offering expenses related to the sales of these common shares. As of March 31, 2017, we had the capacity to issue up to $357.3 million in common shares under our ATM equity program.

Capitalized Costs

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capitalized. We capitalized certain external and internal costs related to both development and redevelopment activities of $104 million and $2 million, respectively, for the three months ended March 31, 2017, and $68 million and $2 million, respectively, for the three months ended March 31, 2016. We capitalized external and internal costs related to other property

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improvements of $12 million and $1 million, respectively, for the three months ended March 31, 2017, and $8 million and $1 million for the three months ended March 31, 2016. We capitalized external and internal costs related to leasing activities of $2 million and $2 million, respectively, for the three months ended March 31, 2017, and $2 million and $1 million, respectively, for the three months ended March 31, 2016. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $2 million, $1 million, and $1 million, respectively, for the three months ended March 31, 2017, and $2 million, less than $1 million, and $1 million, respectively, for the three months ended March 31, 2016. Total capitalized costs were $122 million and $82 million for the three months ended March 31, 2017 and 2016, respectively.

Recently Issued and Recently Adopted Accounting Pronouncements

See Note 2 to the consolidated financial statements.

Outlook

We seek growth in earnings, funds from operations, and cash flows primarily through a combination of the following:


•	growth in our same-center portfolio,


•	growth in our portfolio from property development and redevelopments, and


•	expansion of our portfolio through property acquisitions.

Our same-center growth is primarily driven by increases in rental rates on new leases and lease renewals, changes in portfolio occupancy, and the redevelopment of those assets. Over the long-term, the infill nature and strong demographics of our properties provide a strategic advantage allowing us to maintain relatively high occupancy and increase rental rates. We continue to see strong levels of interest from prospective tenants for our retail spaces; however, the time it takes to complete new lease deals is longer, as tenants have become more selective and more deliberate in their decision-making process. We have also experienced extended periods of time for some government agencies to process permits and inspections further delaying rent commencement on newly leased spaces. Additionally, we have seen an overall decrease in the number of tenants available to fill anchor spaces, and have seen a recent uptick in the number of retail tenants closing early and/or filing for bankruptcy. We believe the locations of our centers and diverse tenant base partially mitigates any potential negative changes in the economic environment. However, any significant reduction in our tenants' abilities to pay base rent, percentage rent or other charges will adversely affect our financial condition and results of operations. We seek to maintain a mix of strong national, regional, and local retailers. At March 31, 2017, no single tenant accounted for more than 3.0% of annualized base rent.

Our properties are located primarily in densely populated and/or affluent areas with high barriers to entry which allow us to take advantage of redevelopment opportunities that enhance our operating performance through renovation, expansion, reconfiguration, and/or retenanting. We evaluate our properties on an ongoing basis to identify these types of opportunities. We currently have redevelopment projects underway with a projected cost of approximately $198 million that we expect to stabilize in the next several years.

We continue our ongoing redevelopment efforts at Santana Row and are proceeding with an eight story 284,000 square foot office building which will include 29,000 square feet of retail space and 1,300 parking spaces. The building is expected to cost between $205 million and $215 million and to deliver in 2019. After current phases, we have approximately 4 acres remaining for further redevelopment and entitlements in place for an additional 395 residential units and 321,000 square feet of commercial space. Additionally, we control 12 acres of land adjacent to Santana Row.

We continue to invest in our long-term multi-phased mixed-use development projects at Assembly Row in Somerville, Massachusetts and Pike & Rose in North Bethesda, Maryland which we expect to be involved in over the coming years.

Construction of Phase II of Assembly Row which will include 161,000 square feet of retail space, a 159 room boutique hotel and 447 residential units is underway. The hotel will be owned and operated by a joint venture in which we are a partner. Total expected costs range from $280 million to $295 million and delivery is expected in 2017/2018. Phase II will also include 122 for-sale condominium units with an expected total cost of $70 million to $75 million. Additionally, as part of the second phase, we entered into a ground lease agreement with Partners HealthCare to bring 741,500 square feet of office space to Assembly Row. The ground lease agreement includes a purchase option, which was exercised and the related sale closed on April 4, 2017.

Construction of Phase II of Pike & Rose is also underway. Phase II will include approximately 216,000 square feet of retail space, a 177 room select-service hotel and 272 residential units. Total expected costs range from $200 million to $207 million and delivery is expected in 2017/2018. The hotel will be owned and operated by a joint venture in which we are a partner. Phase II will also include 99 for-sale condominium units with an expected cost of $53 million to $58 million.

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Including costs incurred in the first three months of 2017, we expect to invest between $270 million and $300 million at Assembly Row and Pike & Rose in 2017, net of public funding.

The development of future phases of Assembly Row, Pike & Rose and Santana Row will be pursued opportunistically based on, among other things, market conditions, tenant demand, and our evaluation of whether those phases will generate an appropriate financial return.

We continue to review acquisition opportunities in our primary markets that complement our portfolio and provide long-term growth opportunities. Initially, some of our acquisitions do not contribute significantly to earnings growth; however, we believe they provide long-term re-leasing growth, redevelopment opportunities, and other strategic opportunities. Any growth from acquisitions is contingent on our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance the property acquisition. Generally, our acquisitions are initially financed by available cash and/or borrowings under our revolving credit facility which may be repaid later with funds raised through the issuance of new equity or new long-term debt. We may also finance our acquisitions through the issuance of common shares, preferred shares, or downREIT units as well as through new or assumed mortgages and property sales.

At March 31, 2017, the leasable square feet in our properties was 94.6% leased and 93.1% occupied. The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant closings and bankruptcies.

Lease Rollovers

For the first quarter of 2017, we signed leases for a total of 592,000 square feet of retail space including 524,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 11% on a cash basis and 23% on a straight-line basis. New leases for comparable spaces were signed for 288,000 square feet at an average rental increase of 17% on a cash basis and 31% on a straight-line basis. Renewals for comparable spaces were signed for 235,000 square feet at an average rental increase of 5% on a cash basis and 14% on a straight-line basis. Tenant improvements and incentives for comparable spaces were $66.67 per square foot for new leases and $1.89 per square foot for renewals for the three months ended March 31, 2017.

The rental increases associated with comparable spaces generally include all leases signed in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between average rent for expiring leases and new leases is determined by including minimum rent and percentage rent paid on the expiring lease and minimum rent and in some instances, projections of first lease year percentage rent, to be paid on the new lease. In atypical circumstances, management may exercise judgment as to how to most effectively reflect the comparability of spaces reported in this calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease and, except for redevelopments, may also include base building costs (i.e. expansion, escalators or new entrances) which are required to make the space leasable. Incentives include amounts paid to tenants as inducement to sign a lease that do not represent building improvements.

The leases signed in 2017 generally become effective over the following two years though some may not become effective until 2020 and beyond. Further, there is risk that some new tenants will not ultimately take possession of their space and that tenants for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other matters. However, these increases do provide information about the tenant/landlord relationship and the potential increase we may achieve in rental income over time.

Historically, we have executed comparable space leases for 1.2 to 1.5 million square feet of retail space each year, and expect that volume for 2017 will be in line with our historical averages with overall positive increases in rental income. However, changes in rental income associated with individual signed leases on comparable spaces may be positive or negative, and we can provide no assurance that the rents on new leases will continue to increase at the above disclosed levels, if at all.

Same-Center

Throughout this section, we have provided certain information on a “same-center” basis. Information provided on a same-center basis includes the results of properties that we owned and operated for the entirety of both periods being compared

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except for properties for which significant redevelopment or expansion occurred during either of the periods being compared. For the three months ended March 31, 2017, all or a portion of 79 properties were considered same-center and 15 were considered redevelopment or expansion. For the three months ended March 31, 2017, one property and one portion of a property were moved from redevelopment to same-center, compared to the designations as of December 31, 2016. While there is judgment surrounding changes in designations, we typically move redevelopment properties to same-center once they have stabilized, which is typically considered 95% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from same center when the redevelopment has or is expected to have a significant impact to property operating income within the calendar year. Acquisitions are moved to same-center once we have owned the property for the entirety of comparable periods and the property is not under significant redevelopment or expansion.

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RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2017 AND 2016



							Change
	2017			2016			Dollars			%
	(Dollar amounts in thousands)
Rental income	$	204,447		$	195,308		$	9,139		4.7	%
Other property income	2,190			2,312			(122		)	(5.3	)%
Mortgage interest income	752			724			28			3.9	%
Total property revenue	207,389			198,344			9,045			4.6	%
Rental expenses	41,109			42,819			(1,710		)	(4.0	)%
Real estate taxes	25,090			22,794			2,296			10.1	%
Total property expenses	66,199			65,613			586			0.9	%
Property operating income (1)	141,190			132,731			8,459			6.4	%
General and administrative expense	(8,267		)	(8,010		)	(257		)	3.2	%
Depreciation and amortization	(51,379		)	(47,799		)	(3,580		)	7.5	%
Operating Income	81,544			76,922			4,622			6.0	%
Other interest income	106			103			3			2.9	%
Income from real estate partnerships	—			41			(41		)	(100.0	)%
Interest expense	(23,758		)	(23,729		)	(29		)	0.1	%
Total other, net	(23,652		)	(23,585		)	(67		)	0.3	%
Income from continuing operations	57,892			53,337			4,555			8.5	%
Gain on sale of real estate and change in control of interests	178			25,726			(25,548		)	(99.3	)%
Net income	58,070			79,063			(20,993		)	(26.6	)%
Net income attributable to noncontrolling interests	(1,880		)	(2,108		)	228			(10.8	)%
Net income attributable to the Trust	$	56,190		$	76,955		$	(20,765	)	(27.0	)%

(1)

Property operating income is a non-GAAP measure that consists of rental income, other property income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.

Property Revenues

Total property revenue increased $9.0 million, or 4.6%, to $207.4 million in the three months ended March 31, 2017 compared to $198.3 million in the three months ended March 31, 2016. The percentage occupied at our shopping centers increased to 93.1% at March 31, 2017 compared to 92.7% at March 31, 2016. Changes in the components of property revenue are discussed below.

Rental Income

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent. Rental income increased $9.1 million, or 4.7%, to $204.4 million in the three months ended March 31, 2017 compared to $195.3 million in the three months ended March 31, 2016 due primarily to the following:


•	an increase of $5.0 million at redevelopment properties due to the opening of our new office building at Santana Row in late 2016, the lease-up of three of our other retail redevelopments, and the lease-up of the new residential building at Congressional Plaza throughout 2016,


•	an increase of $1.5 million from Assembly Row and Pike & Rose due primarily to the lease-up of residential units at Pike & Rose,


•	an increase of $1.2 million from the acquisition of six previously unconsolidated Clarion joint venture properties in January 2016,


•	an increase of $0.8 million at same-center properties due primarily to higher rental rates of approximately $2.0 million, partially offset by lower recoveries of $1.0 million primarily the net result

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of lower snow removal expense partially offset by higher real estate tax expense, and lower average occupancy of approximately $0.3 million, and


•	an increase of $0.8 million from 2017 and late 2016 acquisitions, primarily related to Hastings Ranch Plaza.

Property Expenses

Total property expenses increased $0.6 million, or 0.9%, to $66.2 million in the three months ended March 31, 2017 compared to $65.6 million in the three months ended March 31, 2016. Changes in the components of property expenses are discussed below.

Rental Expenses

Rental expenses decreased $1.7 million, or 4.0%, to $41.1 million in the three months ended March 31, 2017 compared to $42.8 million in the three months ended March 31, 2016. This decrease is primarily due to the following:


•	a decrease of $2.0 million at same-center properties primarily due to lower snow removal costs and lower bad debt expense,

partially offset by


•	an increase of $0.3 million from the acquisitions in 2017 and 2016.

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income plus other property income decreased to 19.9% in the three months ended March 31, 2017 from 21.7% in the three months ended March 31, 2016.

Real Estate Taxes

Real estate tax expense increased $2.3 million, or 10.1%, to $25.1 million in the three months ended March 31, 2017 compared to $22.8 million in the three months ended March 31, 2016 due primarily to:


•	an increase of $1.0 million due primarily to higher assessments at same-center properties,


•	an increase of $0.6 million from Assembly Row and Pike & Rose,


•	an increase of $0.5 million from redevelopment properties, primarily related to our new office building at Santana Row, and


•	an increase of $0.2 million from the acquisitions of Hastings Ranch Plaza in February 2017 and six previously unconsolidated Clarion joint venture properties in January 2016.

Property Operating Income

Property operating income increased $8.5 million, or 6.4%, to $141.2 million in the three months ended March 31, 2017 compared to $132.7 million in the three months ended March 31, 2016. This increase is primarily due to growth in earnings at redevelopment and same-center properties, Assembly Row and Pike & Rose, the acquisition of the six previously unconsolidated Clarion joint venture properties in January 2016, and the acquisition of Hastings Ranch Plaza in February 2017.

Other Operating Expenses

Depreciation and Amortization

Depreciation and amortization expense increased $3.6 million, or 7.5%, to $51.4 million in the three months ended March 31, 2017 from $47.8 million in the three months ended March 31, 2016. This increase is primarily due to redevelopment properties (largely the new office building at Santana Row), Assembly Row, and Pike & Rose.

Operating Income

Operating income increased $4.6 million, or 6.0%, to $81.5 million in the three months ended March 31, 2017 compared to $76.9 million in the three months ended March 31, 2016. This increase is primarily due to growth in earnings at redevelopment and same-center properties, the acquisition of the six previously unconsolidated Clarion joint venture properties in January 2016, and earnings growth at Assembly Row and Pike & Rose.

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Other

Interest Expense

Interest expense increased to $23.8 million in the three months ended March 31, 2017 compared to $23.7 million in the three months ended March 31, 2016. This increase is due primarily to the following:


•	an increase of $1.2 million due to higher borrowings primarily attributable to the 3.625% senior notes issued in July 2016, and


•	an increase of $0.4 million due to a higher overall weighted average borrowing rate,

partially offset by


•	an increase of $1.6 million in capitalized interest.

Gross interest costs were $29.2 million and $27.6 million in the three months ended March 31, 2017 and 2016, respectively. Capitalized interest was $5.5 million and $3.8 million in the three months ended March 31, 2017 and 2016, respectively.

Gain on Sale of Real Estate and Change in Control of Interests

The $0.2 million gain on sale of real estate for the three months ended March 31, 2017 is the result of the sale of a building in Coconut Grove, Florida.

The $25.7 million gain on change in control of interests for the three months ended March 31, 2016 is the result of our obtaining control of six properties when we acquired Clarion’s 70% interest in the partnership that owned those properties. The properties were previously accounted for under the equity method of accounting. We consolidated these assets effective January 13, 2016, and consequently recognized a gain on obtaining the controlling interest.

Liquidity and Capital Resources

Due to the nature of our business and strategy, we typically generate significant amounts of cash from operations. The cash generated from operations is primarily paid to our common and preferred shareholders in the form of dividends. As a REIT, we must generally make annual distributions to shareholders of at least 90% of our taxable income.

Our short-term liquidity requirements consist primarily of normal recurring operating expenses, obligations under our capital and operating leases, regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities), recurring expenditures, non-recurring expenditures (such as tenant improvements and redevelopments) and dividends to common and preferred shareholders. Our long-term capital requirements consist primarily of maturities under our long-term debt agreements, development and redevelopment costs and potential acquisitions.

We intend to operate with and maintain a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings. In the short and long term, we may seek to obtain funds through the issuance of additional equity, unsecured and/or secured debt financings, joint venture relationships relating to existing properties or new acquisitions, and property dispositions that are consistent with this conservative structure.

At March 31, 2017, we had cash and cash equivalents of $20.1 million and $217.0 million of borrowings outstanding on our $800.0 million unsecured revolving credit facility which matures on April 20, 2020, subject to two six-month extensions at our option. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.5 billion. Our $275.0 million unsecured term loan, which matures on November 21, 2018, subject to a one-year extension at our option, also has an option (subject to bank approval) to increase the term loan through an accordion feature to $350.0 million. As of March 31, 2017, we had the capacity to issue up to $357.3 million in common shares under our ATM equity program.

For the three months ended March 31, 2017, the maximum amount of borrowings outstanding under our revolving credit facility was $217.0 million, the weighted average amount of borrowings outstanding was $93.4 million and the weighted average interest rate, before amortization of debt fees, was 1.6%. For the remainder of 2017, we have $217.3 million of mortgage debt maturing which we expect to refinance primarily with new mortgage loans on Plaza El Segundo and The Grove at Shrewsbury. We currently believe that cash flows from operations, cash on hand, our ATM program, our revolving credit facility and our general ability to access the capital markets will be sufficient to finance our operations and fund our debt service requirements (including maturities) and capital expenditures.

Our overall capital requirements for the remainder of 2017 will depend upon acquisition opportunities, the level of improvements and redevelopments on existing properties and the timing and cost of development of Assembly Row, Pike &

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Rose and future phases of Santana Row. While the amount of future expenditures will depend on numerous factors, we expect to continue to see higher levels of capital investments in our properties under development and redevelopment which is the result of construction on Phase II at both Assembly Row and Pike & Rose, the construction of our next phase of Santana Row, and our redevelopment pipeline. With respect to other capital investments related to our existing properties, we expect to incur levels consistent with prior years. Our capital investments will be funded on a short-term basis with cash flow from operations, cash on hand and/or our revolving credit facility, and on a long-term basis, with long-term debt or equity including shares issued under our ATM equity program. If necessary, we may access the debt or equity capital markets to finance significant acquisitions. Given our past ability to access the capital markets, we expect debt or equity to be available to us. Although there is no intent at this time, if market conditions deteriorate, we may delay the timing of certain development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy.

In addition to conditions in the capital markets which could affect our ability to access those markets, the following factors could affect our ability to meet our liquidity requirements:


•	restrictions in our debt instruments or preferred shares may limit us from incurring debt or issuing equity at all, or on acceptable terms under then-prevailing market conditions; and


•	we may be unable to service additional or replacement debt due to increases in interest rates or a decline in our operating performance.

Summary of Cash Flows



	Three Months Ended March 31,
	2017			2016
	(In thousands)
Cash provided by operating activities	$	121,066		$	104,879
Cash used in investing activities	(278,276		)	(201,687		)
Cash provided by financing activities	153,954			95,478
Decrease in cash and cash equivalents	(3,256		)	(1,330		)
Cash and cash equivalents, beginning of year	23,368			21,046
Cash and cash equivalents, end of period	$	20,112		$	19,716

Net cash provided by operating activities increased $16.2 million to $121.1 million during the three months ended March 31, 2017 from $104.9 million during the three months ended March 31, 2016. The increase was primarily attributable to higher net income before certain non-cash items and timing of payments from tenants.

Net cash used in investing activities increased $76.6 million to $278.3 million during the three months ended March 31, 2017 from $201.7 million during the three months ended March 31, 2016. The increase was primarily attributable to:


•	a $67.3 million increase in capital investments and leasing costs as we continue to invest in Pike & Rose, Assembly Row, Santana Row, and other current redevelopments, and


•	a $10.4 million increase in acquisitions of real estate.

Net cash provided by financing activities increased $58.5 million to $154.0 million during the three months ended March 31, 2017 from $95.5 million during the three months ended March 31, 2016. The increase was primarily attributable to:


•	$217.0 million in net borrowings in 2017 on our revolving credit facility, and


•	$13.0 million 2016 acquisition of the 10% noncontrolling interest of a partnership which owns a project in Southern California,

partially offset by


•	a $164.4 million decrease in net proceeds from the issuance of common shares primarily due to our March 2016 issuance of 1.0 million common shares at $149.43 per share in an underwritten public offering,


•	a $5.2 million increase in dividends paid to shareholders due to an increase in the dividend rate and an increased number of shares outstanding.

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Debt Financing Arrangements

The following is a summary of our total debt outstanding as of March 31, 2017:



Description of Debt	Original Debt Issued	Principal Balance as of March 31, 2017			Stated Interest Rate as of March 31, 2017		Maturity Date
	(Dollar amounts in thousands)
Mortgages payable
Secured fixed rate
Plaza El Segundo	Acquired	$	175,000		6.33	%	August 5, 2017
The Grove at Shrewsbury (East)	Acquired	42,272			5.82	%	October 1, 2017
The Grove at Shrewsbury (West)	Acquired	10,732			6.38	%	March 1, 2018
Rollingwood Apartments	24,050	21,165			5.54	%	May 1, 2019
The Shops at Sunset Place	Acquired	68,124			5.62	%	September 1, 2020
29th Place	Acquired	4,501			5.91	%	January 31, 2021
The AVENUE at White Marsh	52,705	52,705			3.35	%	January 1, 2022
Montrose Crossing	80,000	72,314			4.20	%	January 10, 2022
Brook 35	11,500	11,500			4.65	%	July 1, 2029
Chelsea	Acquired	6,500			5.36	%	January 15, 2031
Subtotal		464,813
Net unamortized premium and debt issuance costs		3,471
Total mortgages payable		468,284
Notes payable
Unsecured fixed rate
Term loan (1)	275,000	275,000			LIBOR + 0.90%		November 21, 2018
Various	7,239	5,271			11.31%		Various through 2028
Unsecured variable rate
Revolving credit facility (2)	800,000	217,000			LIBOR + 0.825%		April 20, 2020
Subtotal		497,271
Net unamortized debt issuance costs		(960		)
Total notes payable		496,311

Senior notes and debentures
Unsecured fixed rate
5.90% notes	150,000	150,000			5.90	%	April 1, 2020
2.55% notes	250,000	250,000			2.55	%	January 15, 2021
3.00% notes	250,000	250,000			3.00	%	August 1, 2022
2.75% notes	275,000	275,000			2.75	%	June 1, 2023
3.95% notes	300,000	300,000			3.95	%	January 15, 2024
7.48% debentures	50,000	29,200			7.48	%	August 15, 2026
6.82% medium term notes	40,000	40,000			6.82	%	August 1, 2027
4.50% notes	450,000	450,000			4.50	%	December 1, 2044
3.625% notes	250,000	250,000			3.625	%	August 1, 2046
Subtotal		1,994,200
Net unamortized discount and debt issuance costs		(17,008		)
Total senior notes and debentures		1,977,192
Capital lease obligations
Various		71,582			Various		Various through 2106
Total debt and capital lease obligations		$	3,013,369

_____________________


1)	We entered into two interest rate swap agreements that fix the LIBOR portion of the interest rate on the term loan at 1.72%. The spread on the term loan is 90 basis points resulting in a fixed rate of 2.62%.


2)	The maximum amount drawn under our revolving credit facility during the three months ended March 31, 2017 was $217.0 million, and the weighted average interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was 1.6%.

Our revolving credit facility, term loan and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of March 31, 2017, we were in compliance with all of the financial and other covenants. If we were to breach any of our debt covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of

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the property securing the loan. Many of our debt arrangements, including our public notes, term loan and our revolving credit facility, are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations and the market value of our shares. Our organizational documents do not limit the level or amount of debt that we may incur.

The following is a summary of our scheduled principal repayments as of March 31, 2017:



	Unsecured			Secured		Capital Lease		Total
	(In thousands)
2017	$	486		$	220,953	$	30	$	221,469
2018	275,513		(1)	15,477		37		291,027
2019	567			25,006		42		$	25,615
2020	367,629		(2)	64,687		46		432,362
2021	250,700			$	5,984	51		$	256,735
Thereafter	1,596,576			132,706		71,376		1,800,658
	$	2,491,471		$	464,813	$	71,582	$	3,027,866	(3)

_____________________


1)	Our $275.0 million unsecured term loan matures on November 21, 2018, subject to a one-year extension at our option.


2)	Our $800.0 million revolving credit facility matures on April 20, 2020, subject to two six-month extensions at our option. As of March 31, 2017, there was $217.0 million outstanding under this credit facility.


3)	The total debt maturities differs from the total reported on the consolidated balance sheet due to the unamortized net premium/(discount) and debt issuance costs on mortgage loans, notes payable, and senior notes as of March 31, 2017.

Interest Rate Hedging

We may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative instruments for speculative purposes.

The interest rate swaps associated with our cash flow hedges are recorded at fair value on a recurring basis. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in other comprehensive income/loss which is included in accumulated other comprehensive loss on our consolidated balance sheet and our consolidated statement of shareholders' equity. Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. In addition, we evaluate the default risk of the counterparty by monitoring the credit-worthiness of the counterparty which includes reviewing debt ratings and financial performance. However, management does not anticipate non-performance by the counterparty. If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recognized in earnings in the period affected.

As of March 31, 2017, we are party to two interest rate swap agreements that effectively fixed the rate on the term loan at 2.62%. Both swaps were designated and qualified as cash flow hedges and were recorded at fair value. Hedge ineffectiveness has not impacted earnings as of March 31, 2017, and we do not anticipate it will have a significant effect in the future.

REIT Qualification

We intend to maintain our qualification as a REIT under Section 856(c) of the Code. As a REIT, we generally will not be subject to corporate federal income taxes on income we distribute to our shareholders as long as we satisfy certain technical requirements of the Code, including the requirement to distribute at least 90% of our taxable income to our shareholders.

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Funds From Operations

Funds from operations (“FFO”) is a supplemental non-GAAP financial measure of real estate companies’ operating performance. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as follows: net income, computed in accordance with U.S. GAAP, plus real estate related depreciation and amortization and excluding extraordinary items, gains and losses on the sale of real estate, and impairment write-downs of depreciable real estate. We compute FFO in accordance with the NAREIT definition, and we have historically reported our FFO available for common shareholders in addition to our net income and net cash provided by operating activities. It should be noted that FFO:


•	does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income);


•	should not be considered an alternative to net income as an indication of our performance; and


•	is not necessarily indicative of cash flow as a measure of liquidity or ability to fund cash needs, including the payment of dividends.

We consider FFO available for common shareholders a meaningful, additional measure of operating performance primarily because it excludes the assumption that the value of the real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation. We use FFO primarily as one of several means of assessing our operating performance in comparison with other REITs. Comparison of our presentation of FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.

An increase or decrease in FFO available for common shareholders does not necessarily result in an increase or decrease in aggregate distributions because our Board of Trustees is not required to increase distributions on a quarterly basis unless necessary for us to maintain REIT status. However, we must distribute at least 90% of our taxable income to remain qualified as a REIT. Therefore, a significant increase in FFO will generally require an increase in distributions to shareholders although not necessarily on a proportionate basis.

The reconciliation of net income to FFO available for common shareholders is as follows:



	Three Months Ended March 31,
	2017			2016
	(In thousands, except per share data)
Net income	$	58,070		$	79,063
Net income attributable to noncontrolling interests	(1,880		)	(2,108		)
Gain on sale of real estate and change in control of interests, net	(70		)	(25,726		)
Depreciation and amortization of real estate assets	44,682			41,728
Amortization of initial direct costs of leases	4,684			4,204
Funds from operations	105,486			97,161
Dividends on preferred shares	(135		)	(135		)
Income attributable to operating partnership units	784			855
Income attributable to unvested shares	(340		)	(292		)
Funds from operations available for common shareholders	$	105,795		$	97,589
Weighted average number of common shares, diluted (1)	72,805			70,867

Funds from operations available for common shareholders, per diluted share	$	1.45		$	1.38

_____________________


(1)	The weighted average common shares used to compute FFO per diluted common share includes operating partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted EPS for the periods presented.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our use of financial instruments, such as debt instruments, subjects us to market risk which may affect our future earnings and cash flows, as well as the fair value of our assets. Market risk generally refers to the risk of loss from changes in interest rates and market prices. We manage our market risk by attempting to match anticipated inflow of cash from our operating, investing and financing activities with anticipated outflow of cash to fund debt payments, dividends to common and preferred shareholders, investments, capital expenditures and other cash requirements.

We may enter into certain types of derivative financial instruments to further reduce interest rate risk. We use interest rate protection and swap agreements, for example, to convert some of our variable rate debt to a fixed-rate basis or to hedge anticipated financing transactions. We use derivatives for hedging purposes rather than speculation and do not enter into financial instruments for trading purposes. As of March 31, 2017, we were party to two interest rate swap agreements that effectively fixed the rate on the term loan at 2.62%.

Interest Rate Risk

The following discusses the effect of hypothetical changes in market rates of interest on interest expense for our variable rate debt and on the fair value of our total outstanding debt, including our fixed-rate debt. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our debt. Quoted market prices were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis is generally used to estimate the fair value of our mortgages and notes payable. Considerable judgment is necessary to estimate the fair value of financial instruments. This analysis does not purport to take into account all of the factors that may affect our debt, such as the effect that a changing interest rate environment could have on the overall level of economic activity or the action that our management might take to reduce our exposure to the change. This analysis assumes no change in our financial structure.

Fixed Interest Rate Debt

The majority of our outstanding debt obligations (maturing at various times through 2046 or, with respect to capital lease obligations, through 2106) have fixed interest rates which limit the risk of fluctuating interest rates. However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments. At March 31, 2017, we had $2.7 billion of fixed-rate debt outstanding, including our $275.0 million term loan as the rate is effectively fixed by two interest rate swap agreements; we also had $71.6 million of capital lease obligations. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at March 31, 2017 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $174.2 million. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at March 31, 2017 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $202.1 million.

Variable Interest Rate Debt

Generally, we believe that our primary interest rate risk is due to fluctuations in interest rates on our outstanding variable rate debt. At March 31, 2017, we had $217.0 million of variable rate debt outstanding on our revolving credit facility. Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase by approximately $2.2 million with a corresponding decrease in our net income and cash flows for the year. Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by approximately $2.2 million with a corresponding increase in our net income and cash flows for the year.

ITEM 4. CONTROLS AND PROCEDURES

Periodic Evaluation and Conclusion of Disclosure Controls and Procedures

An evaluation has been performed, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2017. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of March 31, 2017 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

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Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the quarterly period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material developments in any of our legal proceedings since the disclosure contained in our Annual Report to Form 10-K for the fiscal year ended December 31, 2016.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in our Annual Report for the year ended December 31, 2016 filed with the SEC on February 13, 2017. These factors include, but are not limited to, the following:


•	risks that our tenants will not pay rent, may vacate early or may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire;


•	risks that we may not be able to proceed with or obtain necessary approvals for any redevelopment or renovation project, and that completion of anticipated or ongoing property redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;


•	risk that we are investing a significant amount in ground-up development projects that may be dependent on third parties to deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;


•	risks normally associated with the real estate industry, including risks that:


•	occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected,


•	new acquisitions may fail to perform as expected,


•	competition for acquisitions could result in increased prices for acquisitions,


•	that costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase,


•	environmental issues may develop at our properties and result in unanticipated costs, and


•	because real estate is illiquid, we may not be able to sell properties when appropriate;


•	risks that our growth will be limited if we cannot obtain additional capital;


•	risks associated with general economic conditions, including local economic conditions in our geographic markets;


•	risks of financing, such as our ability to consummate additional financings or obtain replacement financing on terms which are acceptable to us, our ability to meet existing financial covenants and the limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense; and


•	risks related to our status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax regulations relating to our status as a REIT, the effect of future changes in REIT requirements as a result of new legislation, and the adverse consequences of the failure to qualify as a REIT.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Under the terms of various partnership agreements of certain of our affiliated limited partnerships, the interest of limited partners in those limited partnerships may be redeemed, subject to certain conditions, for cash or an equivalent number of common shares, at our option. During the three months ended March 31, 2017, we redeemed 8,030 downREIT operating partnership units for common shares.

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From time to time, we could be deemed to have repurchased shares as a result of shares withheld for tax purposes upon a stock compensation related vesting event.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.


ITEM 6.	EXHIBITS

A list of exhibits to this Quarterly Report on Form 10-Q is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized.



		FEDERAL REALTY INVESTMENT TRUST

May 3, 2017		/s/ Donald C. Wood
		Donald C. Wood,
		President, Chief Executive Officer and Trustee
		(Principal Financial and Executive Officer)



		FEDERAL REALTY INVESTMENT TRUST

May 3, 2017		/s/ Daniel Guglielmone
		Daniel Guglielmone,
		Executive Vice President
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit No.		Description

3.1		Declaration of Trust of Federal Realty Investment Trust dated May 5, 1999 as amended by the Articles of Amendment of Declaration of Trust of Federal Realty Investment Trust dated May 6, 2004, as corrected by the Certificate of Correction of Articles of Amendment of Declaration of Trust of Federal Realty Investment Trust dated June 17, 2004, as amended by the Articles of Amendment of Declaration of Trust of Federal Realty Investment Trust dated May 6, 2009 (previously filed as Exhibit 3.1 to the Trust’s Registration Statement on Form S-3 (File No. 333-160009) and incorporated herein by reference)

3.2		Amended and Restated Bylaws of Federal Realty Investment Trust dated February 12, 2003, as amended October 29, 2003, May 5, 2004, February 17, 2006, May 6, 2009, and November 2, 2016 (previously filed as Exhibit 3.2 to the 2016 10-K (File No. 1-07533) and incorporated herein by reference)

4.1		Specimen Common Share certificate (previously filed as Exhibit 4(i) to the Trust’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-07533) and incorporated herein by reference)

4.2		Articles Supplementary relating to the 5.417% Series 1 Cumulative Convertible Preferred Shares of Beneficial Interest (previously filed as Exhibit 4.1 to the Trust’s Current Report on Form 8-K filed on March 13, 2007, (File No. 1-07533) and incorporated herein by reference)

4.3		Indenture dated December 1, 1993 related to the Trust’s 7.48% Debentures due August 15, 2026; and 6.82% Medium Term Notes due August 1, 2027; (previously filed as Exhibit 4(a) to the Trust’s Registration Statement on Form S-3 (File No. 33-51029), and amended on Form S-3 (File No. 33-63687), filed on December 13, 1993 and incorporated herein by reference)

4.4		Indenture dated September 1, 1998 related to the Trust’s 5.65% Notes due 2016; 6.20% Notes due 2017; 5.95% Notes due 2014 and the 5.90% Notes due 2020; 3.00% Notes due 2022; 2.75% Notes due 2023; 3.95% Notes due 2024; 4.50% Notes due 2044; 2.55% Notes due 2021; and 3.625% Notes due 2046 (previously filed as Exhibit 4(a) to the Trust’s Registration Statement on Form S-3 (File No. 333-63619) filed on September 17, 1998 and incorporated herein by reference)

10.1		Severance Agreement between the Trust and Donald C. Wood dated February 22, 1999 (previously filed as a portion of Exhibit 10 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-07533) (the “1999 1Q Form 10-Q”) and incorporated herein by reference)

10.2		Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 22, 1999 (previously filed as a portion of Exhibit 10 to the 1999 1Q Form 10-Q and incorporated herein by reference)

10.3		Amendment to Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 16, 2005 (previously filed as Exhibit 10.12 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 1-07533) (the “2004 Form 10-K”) and incorporated herein by reference)

10.4		2001 Long-Term Incentive Plan (previously filed as Exhibit 99.1 to the Trust’s S-8 Registration Number 333-60364 filed on May 7, 2001 and incorporated herein by reference)

10.5		Health Coverage Continuation Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 16, 2005 (previously filed as Exhibit 10.26 to the 2004 Form 10-K and incorporated herein by reference)

10.6		Severance Agreement between the Trust and Dawn M. Becker dated April 19, 2000 (previously filed as Exhibit 10.26 to the Trust’s 2005 2Q Form 10-Q and incorporated herein by reference)

10.7		Amendment to Severance Agreement between the Trust and Dawn M. Becker dated February 16, 2005 (previously filed as Exhibit 10.27 to the 2004 Form 10-K and incorporated herein by reference)

10.8		Form of Restricted Share Award Agreement for awards made under the Trust’s 2003 Long-Term Incentive Award Program for shares issued out of 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.28 to the 2004 Form 10-K and incorporated herein by reference)

10.9		Form of Restricted Share Award Agreement for long term vesting and retention awards for shares issued out of the 2010 Plan (previously filed as Exhibit 10.35 to the Trust's Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-07533) (the "2010 Form 10-K") and incorporated herein by reference)

10.10		Form of Option Award Agreement for awards made under the Trust’s 2003 Long-Term Incentive Award Program for shares issued out of the 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.32 to the 2005 Form 10-K and incorporated herein by reference)

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EXHIBIT INDEX

Exhibit No.		Description
10.11		Amended and Restated 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.34 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 1-07533) and incorporated herein by reference)

10.12		Amendment to Severance Agreement between the Trust and Donald C. Wood dated January 1, 2009 (previously filed as Exhibit 10.26 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-07533) (“the 2008 Form 10-K”) and incorporated herein by reference)

10.13		Second Amendment to Executive Agreement between the Trust and Donald C. Wood dated January 1, 2009 (previously filed as Exhibit 10.27 to the Trust’s 2008 Form 10-K and incorporated herein by reference)

10.14		Amendment to Health Coverage Continuation Agreement between the Trust and Donald C. Wood dated January 1, 2009 (previously filed as Exhibit 10.28 to the Trust’s 2008 Form 10-K and incorporated herein by reference)

10.15		Second Amendment to Severance Agreement between the Trust and Dawn M. Becker dated January 1, 2009 (previously filed as Exhibit 10.30 to the Trust’s 2008 Form 10-K and incorporated herein by reference)

10.16		2010 Performance Incentive Plan (previously filed as Appendix A to the Trust’s Definitive Proxy Statement for the 2010 Annual Meeting of Shareholders (File No. 01-07533) and incorporated herein by reference)

10.17		Amendment to 2010 Performance Incentive Plan (“the 2010 Plan”) (previously filed as Appendix A to the Trust’s Proxy Supplement for the 2010 Annual Meeting of Shareholders (File No. 01-07533) and incorporated herein by reference)

10.18		Restricted Share Award Agreement between the Trust and Donald C. Wood dated October 12, 2010 (previously filed as Exhibit 10.36 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 01-07533) and incorporated herein by reference)

10.19		Form of Restricted Share Award Agreement for awards made under the Trust’s Long-Term Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting for shares issued out of the 2010 Plan (previously filed as Exhibit 10.34 to the 2010 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.20		Form of Option Award Agreement for awards made under the Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.38 to the Trust’s 2010 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.21		Form of Option Award Agreement for front loaded awards made under the Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.39 to the Trust’s 2010 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.22		Form of Option Award Agreement for basic options awarded out of the 2010 Plan (previously filed as Exhibit 10.40 to the Trust’s 2010 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.23		Form of Restricted Share Award Agreement, dated as of February 10, 2011, between the Trust and Dawn M. Becker (previously filed as Exhibit 10.41 to the Trust’s 2010 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.24		Credit Agreement dated as of July 7, 2011, by and among the Trust, as Borrower, the financial institutions party thereto and their permitted assignees under Section 12.6., as Lenders, Wells Fargo Bank, National Association, as Administrative Agent, PNC Bank, National Association, as Syndication Agent, Wells Fargo Securities, LLC, as a Lead Arranger and Book Manager, and PNC Capital Markets LLC, as a Lead Arranger and Book Manager (previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K (File No. 1-07533), filed on July 11, 2011 and incorporated herein by reference)

10.25		Term Loan Agreement dated as of November 22, 2011, by and among the Trust, as Borrower, the financial institutions party thereto and their permitted assignees under Section 12.6., as Lenders, PNC Bank, National Association, as Administrative Agent, Capital One, N.A., as Syndication Agent, PNC Capital Markets, LLC, as a Lead Arranger and Book Manager, and Capital One, N.A., as a Lead Arranger and Book Manager (previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K (File No. 1-07533), filed on November 28, 2011 and incorporated herein by reference)

10.26		Revised Form of Restricted Share Award Agreement for front loaded awards made under the Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.35 to the Trust's Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-07533) (the "2012 Form 10-K") and incorporated herein by reference)

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EXHIBIT INDEX

Exhibit No.		Description
10.27		Revised Form of Restricted Share Award Agreement for long-term vesting and retention awards made under the Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.36 to the Trust's 2012 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.28		Revised Form of Performance Share Award Agreement for shares awarded out of the 2010 Plan (previously filed as Exhibit 10.37 to the Trust's 2012 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.29		Revised Form of Restricted Share Award Agreement for awards made under the Trust’s Long-Term Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting for shares issued out of the 2010 Plan (previously filed as Exhibit 10.38 to the Trust's 2012 Form 10-K (File No. 1-07533) and incorporated herein by reference)

10.30		First Amendment to Credit Agreement, dated as of April 22, 2013, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No. 1-07533), filed on April 26, 2013 and incorporated herein by reference)

10.31		First Amendment to Term Loan Agreement, dated as of April 22, 2013, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.40 to the Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (File No. 1-07533) and incorporated herein by reference)

10.32		Second Amendment to Term Loan Agreement, dated as of August 28, 2014, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No. 1-07533), filed on September 2, 2014 and incorporated herein by reference)

10.33		Second Amendment to Credit Agreement, dated as of April 20, 2016, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No. 1-07533), filed on April 26, 2016 and incorporated herein by reference)

10.34		Third Amendment to Term Loan Agreement, dated as of April 20, 2016, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No. 1-07533), filed on April 26, 2016 and incorporated herein by reference)

10.35		Severance Agreement between the Trust and Daniel Guglielmone dated August 15, 2016 previously filed as Exhibit 10.36 to the Trust's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 1-07533 and incorporated herein by reference)

31.1		Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)

31.2		Rule 13a-14(a) Certification of Principal Financial Officer (filed herewith)

32.1		Section 1350 Certification of Chief Executive Officer (filed herewith)

32.2		Section 1350 Certification of Principal Financial Officer (filed herewith)

101		The following materials from Federal Realty Investment Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.