RPT Realty - Annual Report: 2019 (Form 10-K)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

☐ 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 1-10093

RPT Realty

(Exact Name of Registrant as Specified in its Charter)

Maryland

13-6908486

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

19 W 44th Street,

Suite 1002

New York,

New York

10036

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 221-1261

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange
On Which Registered

Common Shares of Beneficial Interest, ($0.01 Par Value Per Share)

RPT

New York Stock Exchange

7.25% Series D Cumulative Convertible Perpetual Preferred

RPT.PRD

New York Stock Exchange

Shares of Beneficial Interest ($0.01 Par Value Per Share)

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to 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 ☐ No ☒

The aggregate market value of the common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter (June 28, 2019) was $964,595,796 based upon the last reported sale price of $12.11 per share on the New York Stock Exchange on June 28, 2019. As of February 14, 2020 there were outstanding 80,374,748 Common Shares of Beneficial Interest.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the annual meeting of shareholders to be held in 2020 are incorporated by reference into Part III.

TABLE OF CONTENTS


Item	PART I	Page
1.	Business	1
1A.	Risk Factors	7
1B.	Unresolved Staff Comments	17
2.	Properties	18
3.	Legal Proceedings	25
4.	Mine Safety Disclosures	25

	PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
6.	Selected Financial Data	27
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
7A.	Quantitative and Qualitative Disclosures About Market Risk	43
8.	Financial Statements and Supplementary Data	44
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	44
9A.	Controls and Procedures	44
9B.	Other Information	44

	PART III
10.	Directors, Executive Officers and Corporate Governance	45
11.	Executive Compensation	45
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	45
13.	Certain Relationships and Related Transactions, and Director Independence	45
14.	Principal Accountant Fees and Services	45

	PART IV
15.	Exhibits and Financial Statement Schedules	46
	Consolidated Financial Statements and Notes	F-1

Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These forward-looking statements represent our expectations, plans or beliefs concerning future events and may be identified by terminology such as “may,” “will,” “should,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” “predict,” or similar terms. Although the forward-looking statements made in this document are based on our good-faith beliefs, reasonable assumptions and our best judgment based upon current information, certain factors could cause actual results to differ materially from those in the forward-looking statements, including, among others: our success or failure in implementing our business strategy; economic conditions generally and in the commercial real estate and finance markets specifically; the cost and availability of capital, which depends in part on our asset quality and our relationships with lenders and other capital providers; our business prospects and outlook; changes in governmental regulations, tax rates and similar matters; our continuing to qualify as a real estate investment trust (“REIT”); and other factors detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”) and in particular those set forth under “Risk Factors” in this Annual Report on Form 10-K. Given these uncertainties, you should not place undue reliance on any forward-looking statements. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future.

PART I

Item 1. Business

The terms “Company,” “RPT,” “we,” “our,” or “us” refer to RPT Realty, RPT Realty, L.P., and/or their subsidiaries, as the context may require. The content of our website and the websites of third parties noted herein is not incorporated by reference in this Annual Report on Form 10-K.

General

RPT Realty owns and operates a national portfolio of open-air shopping destinations principally located in top U.S. markets. The Company's shopping centers offer diverse, locally-curated consumer experiences that reflect the lifestyles of their surrounding communities and meet the modern expectations of the Company's retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the New York Stock Exchange (the “NYSE”). The common shares of beneficial interest of the Company, par value $0.01 per share (the “common shares”), are listed and traded on the NYSE under the ticker symbol “RPT”. As of December 31, 2019, our property portfolio consisted of 49 shopping centers (including five shopping centers owned through a joint venture) (the "aggregate portfolio") representing 11.9 million square feet of gross leasable area (“GLA”). As of December 31, 2019, the Company's pro-rata share of the aggregate portfolio was 94.7% leased.

The Company's principal executive offices are located at 19 West 44th Street, Suite 1002, New York, New York 10036 and its telephone number is (212) 221-1261. The Company’s website is rptrealty.com. As of December 31, 2019, the Company had 104 full-time employees. None of our employees are represented by a collective bargaining unit, and we believe that our relations with our employees are good.

We conduct substantially all of our business through our operating partnership, RPT Realty, L.P., a Delaware limited partnership (the “Operating Partnership” or “OP”). The Operating Partnership, either directly or indirectly through partnerships or limited liability companies, holds fee title to all of our properties. As the sole general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership. As of December 31, 2019, we owned approximately 97.7% of the Operating Partnership. The interests of the limited partners are reflected as noncontrolling interests in our financial statements and the limited partners are generally individuals or entities that contributed interests in certain assets or entities to the Operating Partnership in exchange for units of limited partnership interest (“OP Units”). The holders of OP Units are entitled to exchange them for our common shares on a 1:1 basis or for cash. The form of payment is at our election.

We operate in a manner intended to qualify as a REIT pursuant to the provisions of the Internal Revenue Code of 1986, as amended (the “Code”). Certain of our operations, including property and asset management, as well as ownership of certain land parcels, are conducted through taxable REIT subsidiaries (“TRSs”), which are subject to federal and state income taxes.

Business Strategy

Our goal is to be a dominant shopping center owner, with a focus on the following:

•Own and manage high quality open-air shopping centers predominantly concentrated in the top U.S. metropolitan statistical areas (“MSA”);

•Curate our real estate to maximize its value while being aligned with the future of the shopping center industry by leveraging technology, optimizing distribution points for brick-and-mortar and e-commerce purchases, engaging in best-in-practice sustainability programs and developing a personalized appeal to attract and engage the next generation of shoppers;

•Maintain value creation redevelopment and expansion pipeline;

•Maximize balance sheet liquidity and flexibility; and

•Retain motivated, talented and high performing employees.

Key methods to achieve our strategy:

•Deliver above average relative shareholder return and generate outsized consistent and sustainable Consolidated Same Property Net Operating Income (“Same Property NOI”) and Operating Funds from Operations (“Operating FFO”) per share growth;

•Pursue selective redevelopment projects with significant pre-leasing for which we expect to achieve attractive returns on investment;

•Sell assets that no longer meet our long-term strategy and redeploy the proceeds to lease, redevelop and acquire assets in our core and target markets;

•Achieve lower leverage while maintaining low variable interest rate risk; and

•Retain access to diverse sources of capital, maintain liquidity through borrowing capacity under our unsecured line of credit and minimize the amount of debt maturities in a single year.

Our portfolio consists of community, lifestyle and power center properties tenanted by national and regional chain stores, market-leading supermarkets, as well as a strong lineup of smaller national, regional and local retailers that optimize the overall merchandise mix and reflect the community demographics of each center. Our centers also include entertainment components, including theaters, fitness centers and restaurants, which, in addition to supermarkets, are daily drivers of consumer traffic to our properties. National chain anchor tenants in our centers include, among others, TJ Maxx/Marshalls, Dick’s Sporting Goods, Ross Stores and ULTA Salon. Supermarket anchor tenants in our centers include, among others, Publix Super Market, Whole Foods, Kroger, Aldi, and Sprouts. Theater, fitness and restaurant tenants include, among others, Regal Cinema, LA Fitness, Starbucks and Panera. Our shopping centers are primarily located in key growth markets in the 40 largest MSAs in the United States such as Metro Detroit, Cincinnati, Miami, Jacksonville, Chicago, St. Louis, Minneapolis, Tampa/Lakeland and Nashville.

Operating Strategies and Significant Transactions

Our operating objective is to maximize the risk-adjusted return on invested capital at our shopping centers. We seek to do so by increasing the property operating income of our centers, controlling our capital expenditures, monitoring our tenants' credit risk and taking actions to mitigate our exposure to that tenant credit risk.

During 2019, our properties reported the following leasing activity, which is shown at pro-rata except for number of leasing transactions and square feet:


	Leasing Transactions	Square Footage	Base Rent/SF ⁽¹⁾	Prior Rent/SF ⁽²⁾	Tenant Improvements/SF ⁽³⁾	Leasing Commissions/SF
Renewals	131	766,892	$17.51	$16.12	$1.28	$0.12
New Leases - Comparable	34	88,197	$27.15	$21.94	$50.49	$11.08
New Leases - Non-Comparable⁽⁴⁾	45	303,757	$14.24	N/A	$36.76	$6.09
Total	210	1,158,846	$17.38	N/A	$14.35	$2.52

⁽¹⁾ Base rent represents contractual minimum rent under the new lease for the first 12 months of the term.

⁽²⁾ Prior rent represents minimum rent, if any, paid by the prior tenant in the final 12 months of the term.

⁽³⁾ Includes estimated tenant improvement cost, tenant allowances, and landlord costs. Excludes first generation space and leases related to development and redevelopment activity.

⁽⁴⁾ Non-comparable lease transactions include (i) leases for space vacant for greater than 12 months and (ii) leases signed where the previous and current lease do not have a consistent lease structure.

Investing Activities and Significant Transactions

Our investing objective is to generate an attractive risk-adjusted return on capital invested in acquisitions, developments, and redevelopments. In addition we seek to sell land or shopping centers that we deem to be fully valued or that no longer meet our investment criteria. We underwrite acquisitions based upon current cash flow, projections of future cash flow and scenario analyses that take into account the risks and opportunities of ownership. We underwrite development of new shopping centers on the same basis, but also take into account the unique risks of entitling land, constructing buildings and leasing newly built space.

In December 2019, we acquired a 76,000 square foot Target shadow-anchored shopping center in Austin, Texas for $33.9 million. We also sold two shopping centers and one land outparcel for aggregate gross proceeds of $69.4 million in the first half of 2019.

On December 10, 2019, we contributed five properties valued at $244.0 million to a newly formed joint venture with an affiliate of GIC Private Limited (“GIC”), Singapore's sovereign wealth fund, referred to as R2G Venture LLC (“R2G”), and received $118.3 million in gross proceeds for the 48.5% stake in R2G that was acquired by GIC. Additionally, GIC has committed up to $200.0 million of additional capital to R2G over the next three years to fund its 48.5% share of up to an aggregate of $412.4 million of potential future acquisitions by R2G of grocery-anchored shopping centers in target markets in the U.S. RPT retained a 51.5% stake in R2G and receives property management, construction management and leasing fees from R2G. The Company will also be responsible for the day-to-day management of the properties as well as sourcing future acquisitions for R2G. Both GIC and RPT will have consent rights for all future acquisitions, and GIC has approval rights in connection with annual budgets and other specified major decisions. During the investment period for R2G, RPT has agreed to present all opportunities above a specified size threshold to acquire grocery-anchored shopping centers in attractive-high growth markets in the United States to R2G and not to acquire, invest in or source any such opportunities that have not previously been presented to R2G and declined by GIC.

Unless specified events occur, neither RPT nor GIC will have the right to force a sale of R2G or its assets within the first five years following its formation. Thereafter, both RPT and GIC will have forced sale rights, subject to a right to participate in the purchase for the other member.

See Item 2. Properties, for information regarding the five properties contributed to R2G.

Refer to Note 4 of the notes to our consolidated financial statements in this report for additional information related to acquisitions and dispositions.

Financing Strategies and Significant Transactions

Our financing objective is to maintain a strong and flexible balance sheet to ensure access to capital at a competitive cost. In general, we seek to increase our financial flexibility by increasing our pool of unencumbered properties, maintaining a well-laddered debt maturity profile and primarily borrowing on an unsecured basis. In keeping with our objective, we routinely benchmark our balance sheet on a variety of measures to our peers in the shopping center sector and REITs in general.

Specifically, we completed the following financing transactions during 2019:

Debt

On April 30, 2019, we redeemed all of our outstanding junior subordinated notes due 2038, which accrued interest at a variable rate of LIBOR plus 3.30% for an aggregate purchase price of $28.6 million, consisting of the outstanding principal amount and accrued and unpaid interest as of the redemption date. In conjunction with this redemption, we wrote off unamortized deferred financing costs of $0.6 million.

On November 6, 2019, the Operating Partnership entered into the Fifth Amended and Restated Credit Agreement (the “credit agreement”), which consists of an unsecured revolving credit facility of up to $350.0 million (the “revolving credit facility”) and term loan facilities of $310.0 million (the “term loan facilities” and, together with the revolving credit facility, the “unsecured revolving line of credit”). The revolving credit facility matures on November 6, 2023 and can be extended up to one year to 2024 through two six-month options, subject to continued compliance with the terms of the credit agreement and the payment of an extension fee of 0.075%. Borrowings on the revolving credit facility are priced on a leverage grid ranging from LIBOR plus 105 basis points to LIBOR plus 150 basis points.

The term loan facilities mature in five separate tranches ranging from March 2023 to February 2027 and are priced on a leverage grid ranging from LIBOR plus 120 basis points to LIBOR plus 220 basis points. The credit agreement allows for the right to request increases in the revolving and term loan commitments or the making of additional term loans by up to an additional $340.0 million to a maximum aggregated amount not to exceed $1.0 billion. A portion of the proceeds from the credit agreement were used to repay our $75.0 million term loan due 2020 and our $75.0 million term loan due 2021 for an aggregate amount of $150.0 million. In conjunction with this early repayment, we wrote off deferred financing costs of $0.3 million.

Also on November 6, 2019, we repaid $100.0 million which constituted repayment in full of the Operating Partnership's $50.0 million 4.16% senior unsecured notes due 2024 and its $50.0 million 4.30% senior unsecured notes due 2026, each issued pursuant to the note purchase agreement dated September 8, 2014, as amended. Accordingly, on November 6, 2019, all outstanding notes and other obligations of the Operating Partnership and guarantors under such note purchase agreement were paid and satisfied in full. In conjunction with this early repayment, we wrote off unamortized deferred financings costs of $0.1 million.

On December 27, 2019, we entered into a note purchase agreement with the institutional investors named therein and closed a private placement of the Operating Partnership’s $50.0 million aggregate principal amount of 4.15% Senior Guaranteed Notes due December 27, 2029 pursuant thereto. Such notes are unsecured and are guaranteed by the Company and certain subsidiaries of the Operating Partnership. The notes have an annual fixed interest rate of 4.15% and mature on December 27, 2029. A portion of the proceeds were used to repay $25.0 million aggregate principal amount of our 4.13% Series A Notes due 2022 for an aggregate amount of $26.4 million, which included a prepayment penalty of $1.4 million. In conjunction with this early repayment, we wrote off unamortized deferred financings costs of $0.1 million. A portion of the proceeds was also used to repay the 6.50% fixed rate mortgage loan encumbering West Oaks II and Spring Meadows Place, with an aggregate principal balance of $24.9 million.

At each of December 31, 2019 and 2018 we had $349.8 million available to draw under our unsecured revolving line of credit, subject to compliance with applicable covenants.

Equity

During the first half of 2019, we had an at-the-market equity program pursuant to which we could sell up to an aggregate of 8.0 million common shares from time to time, in our sole discretion. For the year ended December 31, 2019, we did not issue any common shares under the program. The sale of such shares issuable pursuant to the program was registered with the SEC on our registration statement on Form S-3, which expired in June 2019.

Sustainability

We continue to advance our commitment to sustainability, with a focus on achieving goals in each of the Environmental, Social and Governance (“ESG”) areas of sustainability. We believe that sustainability initiatives are a vital part of supporting our primary goal to maximize value for our shareholders.

Our commitment to ESG principles starts with our employees. We are establishing a culture that intentionally attracts and retains talented employees to work in an engaging and energetic team environment that shares a passion for innovation, transparency and excellence. Our employees are awarded competitive compensation packages, including healthcare benefits for employees and their families, participation in a 401(k) plan, paid time-off benefits and employee referral bonuses. In addition, we strive to provide our employees with a healthy work-life balance through RPT Remote, our flexible work initiative, and our newly enacted Parental Leave Policy. We are also focused on creating healthy workspaces and promoting health and wellness for our employees and their families. In 2019, we won Michigan’s Best and Brightest in Wellness for the seventh year in a row. The Best and Brightest in Wellness awards program honors organizations that are making their workplaces, their employees and the community a healthier place to live and work. We are also devoted to philanthropy initiatives and partner with organizations that are committed to improving the overall quality of life in our communities. Each month, we support a local community organization through charitable giving or volunteerism.

In 2019, we created an ESG taskforce and enacted ESG polices aimed at providing the necessary framework to commence comprehensive sustainability initiatives. We established long-term sustainability goals with regard to the reduction of electricity consumption, water usage and waste diversion, focusing on our objectives of safeguarding the environment while improving the energy efficiency of our portfolio and lowering operating costs. In 2020, we intend to file RPT’s first Global Real Estate Sustainability Benchmark assessment, providing more transparency regarding our sustainability polices, initiatives and performance.

Competition

We compete with many other entities for the acquisition of shopping centers and land suitable for new developments, including other REITs, private institutional investors and other owner-operators of shopping centers. In particular, larger REITs may enjoy competitive advantages that result from, among other things, a lower cost of capital. These competitors may increase the market prices we would have to pay in order to acquire properties. If we are unable to acquire properties that meet our criteria at prices we deem reasonable, our ability to grow will be adversely affected.

Our tenants compete with alternate forms of retailing, including on-line shopping, home shopping networks and mail order catalogs. Alternate forms of retailing may reduce the demand for space in our shopping centers. Because our ability to generate revenue may be connected to the success of our tenants, we indirectly share exposure to these same competitive factors.

Further, our shopping centers generally compete for tenants with similar properties located in the same neighborhood, community or region. Although we believe we own high quality centers in desirable geographic locations, competing centers may be newer, better located or have a better tenant mix. We also believe we compete with other centers on the basis of rental rates and management and operational expertise. In addition, new centers or retail stores may be developed, increasing the supply of retail space competing with our centers or taking retail sales from our tenants. To remain competitive, we evaluate all of the factors affecting our centers and work to position them accordingly to enable us to compete effectively.

Environmental Matters

We are not aware of any contamination which may have been caused by us or any of our tenants that would have a material effect on our consolidated financial statements. As part of our risk management activities, we have applied and been accepted into state sponsored environmental programs, the purpose of which is to expedite and facilitate satisfactory compliance with environmental laws and regulations should contaminants need to be remediated. We also have an environmental insurance policy that covers us against third party liabilities and remediation costs. While we believe that we do not have any material exposure to environmental remediation costs, we cannot give assurance that changes in the law or new discoveries of contamination will not result in additional liabilities to us.

Available Information

All reports we electronically file with, or furnish to, the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to such reports, are available, free of charge, on our website at rptrealty.com, as soon as reasonably practicable after we electronically file such reports with, or furnish those reports to, the SEC. These filings are also available at the SEC's website at www.sec.gov. Our Corporate Governance Guidelines, Code of Business Conduct and Ethics and Board of Trustees’ committee charters also are available on our website.

Item 1A. Risk Factors

You should carefully consider each of the risks and uncertainties described below and elsewhere in this Annual Report on Form 10-K, as well as any amendments or updates reflected in subsequent filings with the SEC. We believe these risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations and financial condition. This list should not be considered to be a complete statement of all potential risks and uncertainties, and additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our results and business operations. We may update our risk factors from time to time in our future periodic reports.

Operating Risks

A shift in retail shopping from brick and mortar stores to online shopping may have an adverse impact on our cash flow, financial condition and results of operations.

In recent periods, sales by online retailers such as Amazon have increased, and many retailers operating brick and mortar stores have made online sales a vital piece of their businesses. Although many of the retailers operating in our properties sell groceries and other necessity-based soft goods or provide services, including entertainment and dining options, the shift to online shopping may cause declines in brick and mortar sales generated by certain of our tenants and/or may cause certain of our tenants to reduce the size or number of their retail locations in the future. As a result, our cash flow, financial condition and results of operations could be adversely affected.

National economic conditions and retail sales trends may adversely affect the performance of our properties.

Demand to lease space in our shopping centers generally fluctuates with the overall economy. Economic downturns often result in a lower rate of retail sales growth, or even declines in retail sales. In response, retailers that lease space in shopping centers typically reduce their demand for retail space during such downturns. As a result, economic downturns and unfavorable retail sales trends may diminish the income, cash flow, and value of our properties.

Our concentration of properties in Florida and Michigan makes us more susceptible to adverse market conditions in these states.

Our performance depends on the economic conditions in the markets in which we operate. As of December 31, 2019 and 2018, our wholly-owned properties located in Florida and Michigan accounted for approximately 19.5% and 20.2%, and 23.0% and 19.0%, respectively, of our annualized base rent. To the extent that market conditions in these or other states in which we operate deteriorate, the performance or value of our properties may be adversely affected.

Increasing sales through non-retail channels and changes in the supply and demand for the type of space we lease to our tenants could affect the income, cash flow and value of our properties.

Our tenants compete with alternate forms of retailing, including on-line shopping, home shopping networks and mail order catalogs. Alternate forms of retailing may reduce the demand for space in our shopping centers. Our shopping centers generally compete for tenants with similar properties located in the same neighborhood, community or region. Although we believe we own high quality centers, competing centers may be newer, better located or have a better tenant mix. In addition, new centers or retail stores may be developed, increasing the supply of retail space competing with our centers or taking retail sales from our tenants.

As a result, we may not be able to renew leases or attract replacement tenants as leases expire. When we do renew tenants or attract replacement tenants, the terms of renewals or new leases may be less favorable to us than current lease terms. In order to lease our vacancies, we often incur costs to reconfigure or modernize our properties to suit the needs of a particular tenant. Under competitive circumstances, such costs may exceed our budgets. If we are unable to lease vacant space promptly, if the rental rates upon a renewal or new lease are lower than expected, or if the costs incurred to lease space exceed our expectations, then the income and cash flow of our properties will decrease.

Our reliance on key tenants for significant portions of our revenues exposes us to increased risk of tenant bankruptcies that could adversely affect our income and cash flow.

As of December 31, 2019, we received 39.9% of our combined annualized base rents from our top 25 tenants, including our top five tenants: TJX Companies (4.5%), Dick's Sporting Goods (3.3%), Regal Cinemas (3.0%), Bed Bath & Beyond (2.9%) and LA Fitness (2.7%). No other tenant represented more than 2.0% of our total annualized base rent. The credit risk posed by our major tenants varies.

If any of our major tenants experiences financial difficulties, or if a significant number of our tenants experience financial difficulties, such that they are unable to make rental payments or file for bankruptcy protection, our operating results could be adversely affected. Bankruptcy filings by our tenants or lease guarantors generally delay our efforts to collect pre-bankruptcy receivables and could ultimately preclude full collection of these sums. If a tenant rejects a lease, we would have only a general unsecured claim for damages, which may be collectible only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims.

Our properties generally rely on anchor tenants (tenants greater than or equal to 10,000 square feet) to attract customers. The loss of anchor tenants may adversely impact the performance of our properties.

If any of our anchor tenants becomes insolvent, suffers a downturn in business, abandons occupancy or decides not to renew its lease, such event could adversely impact the performance of the affected center. An abandonment or lease termination by an anchor tenant may give other tenants in the same shopping center the right to terminate their leases or pay less rent pursuant to the terms of their leases. Our leases with anchor tenants may, in certain circumstances, permit them to transfer their leases to other retailers. The transfer to a new anchor tenant could result in lower customer traffic to the center, which would affect our other tenants. In addition, a transfer of a lease to a new anchor tenant could give other tenants the right to make reduced rental payments or to terminate their leases.

We may be restricted from leasing vacant space based on existing exclusivity lease provisions with some of our tenants.

In a number of cases, our leases give a tenant the exclusive right to sell clearly identified types of merchandise or provide specific types of services at a particular shopping center. In other cases, leases with a tenant may limit the ability of other tenants to sell similar merchandise or provide similar services to that tenant. When leasing a vacant space, these restrictions may limit the number and types of prospective tenants suitable for that space. If we are unable to lease space on satisfactory terms, our operating results would be adversely impacted.

Increases in operating expenses could adversely affect our operating results.

Our operating expenses include, among other items, property taxes, insurance, utilities, repairs and the maintenance of the common areas of our shopping centers. We may experience increases in our operating expenses, some or all of which may be out of our control. Most of our leases require that tenants pay for a share of property taxes, insurance and common area maintenance costs. However, if any property is not fully occupied or if recovery income from tenants is not sufficient to cover operating expenses, then we could be required to expend our own funds for operating expenses. In addition, we may be unable to renew leases or negotiate new leases with terms requiring our tenants to pay all the property tax, insurance and common area maintenance costs that tenants currently pay, which would adversely affect our operating results.

Our real estate assets may be subject to additional impairment provisions based on market and economic conditions.

On a periodic basis, we assess whether there are any indicators that the value of our real estate properties and other investments may be impaired. Under generally accepted accounting principles (“GAAP”) a property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. In our estimate of cash flows, we consider factors such as expected future operating income, trends and prospects, the effects of demand, competition and other factors. We are required to make subjective assessments as to whether there are impairments in the value of our real estate properties and other investments.

No assurance can be given that we will be able to recover the current carrying amount of all of our properties and those of our unconsolidated joint ventures. There can be no assurance that we will not take charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken. We recorded no impairment provisions in 2019 related to our real estate properties. Refer to Note 1 of the notes to the consolidated financial statements for further information related to impairment provisions.

Our redevelopment projects may not yield anticipated returns, which would adversely affect our operating results.

Our redevelopment activities generally call for a capital commitment and project scope greater than that required to lease vacant space. To the extent a significant amount of construction is required, we are susceptible to risks such as permitting, cost overruns and timing delays as a result of the lack of availability of materials and labor, the failure of tenants to commit or fulfill their commitments, weather conditions and other factors outside of our control. Any substantial unanticipated delays or expenses would adversely affect the investment returns from these redevelopment projects and adversely impact our operating results.

Current or future joint venture investments could be adversely affected by our lack of sole decision-making authority.

We have in the past, are currently and may in the future acquire and own properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures. Our existing joint ventures are subject to various risks, and any additional joint venture arrangements in which we may engage in the future are likely to be subject to various risks, including the following:

•lack of exclusive control over the joint venture, which may prevent us from taking actions that are in our best interest;

•future capital constraints of our partners or failure of our partners to fund their share of required capital contributions, which may require us to contribute more capital than we anticipated to fund developments and/or cover the joint venture's liabilities;

•our partners may at any time have business or economic goals that are inconsistent with ours;

•actions by our partners that could jeopardize our REIT status, require us to pay taxes or subject the properties owned by the joint venture to liabilities greater than those contemplated by the terms of the joint venture agreements;

•disputes between us and our partners that may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business;

•changes in economic and market conditions for any adjacent non-retail use that may adversely impact the cash flow of our retail property;

•joint venture agreements that may require prior consent of our joint venture partners for a sale or transfer to a third party of our interest in the joint venture, which would restrict our ability to dispose of our interest in such a joint venture; and

•joint venture agreements may include the right to trigger a buy-sell, put right or forced sale arrangement, which could cause us to sell our interest, or acquire our partner’s interest, or to sell the underlying asset, at a time when we otherwise would not have initiated such a transaction, without our consent or on unfavorable terms.

If any of the foregoing were to occur, our cash flow, financial condition and results of operations could be adversely affected.

If we suffer losses that are uninsured or in excess of our insurance coverage limits, we could lose invested capital and anticipated profits.

Catastrophic losses, such as losses resulting from wars, acts of terrorism, earthquakes, floods, hurricanes and tornadoes or other natural disasters, and pollution or environmental matters, generally are either uninsurable or not economically insurable, or may be subject to insurance coverage limitations, such as large deductibles or co-payments. Although we currently maintain “all risk” replacement cost insurance for our buildings, rents and personal property, commercial general liability insurance and pollution and environmental liability insurance, our insurance coverage may be inadequate if any of the events described above occurs to, or causes the destruction of, one or more of our properties. Under that scenario, we could lose both our invested capital and anticipated profits from that property.

Investing Risks

We face competition for the acquisition and development of real estate properties, which may impede our ability to grow our operations or may increase the cost of these activities.

We may be unable to complete acquisitions and, even if acquisitions are completed, our operating results at acquired properties may not meet our financial expectations.

We continue to evaluate the market of available properties and expect to continue to acquire properties when we believe strategic opportunities exist. Our ability to acquire properties on favorable terms and successfully operate or develop them is subject to the following risks:

•we may be unable to acquire a desired property because of competition from other real estate investors with substantial capital, including other REITs, real estate operating companies and institutional investment funds;

•even if we are able to acquire a desired property, competition from other potential investors may significantly increase the purchase price;

•we may incur significant costs and divert management’s attention in connection with the evaluation and negotiation of potential acquisitions, including ones that are subsequently not completed;

•we may be unable to finance acquisitions on favorable terms and in the time period we desire, or at all;

•we may be unable to quickly and efficiently integrate newly acquired properties, particularly the acquisition of portfolios of properties, into our existing operations;

•we may acquire properties that are not initially accretive to our results and we may not successfully manage and lease those properties to meet our expectations; and

•we may acquire properties that are subject to liabilities without any recourse, or with only limited recourse to former owners, with respect to unknown liabilities for clean-up of undisclosed environmental contamination, claims by tenants or other persons to former owners of the properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.

If we are unable to acquire properties on favorable terms, obtain financing in a timely manner and on favorable terms or operate acquired properties to meet our financial expectations, our cash flow, financial condition and results of operations could be adversely affected.

Commercial real estate investments are relatively illiquid, which could hamper our ability to dispose of properties that no longer meet our investment criteria or respond to adverse changes in the performance of our properties.

Our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment conditions is limited because real estate investments are relatively illiquid. The real estate market is affected by many factors, such as general economic conditions, supply and demand, availability of financing, interest rates and other factors that are beyond our control. We cannot be certain that we will be able to sell any property for the price and other terms we seek, or that any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot estimate with certainty the length of time needed to find a willing purchaser and to complete the sale of a property. We may be required to expend funds to correct defects or to make improvements before a property can be sold. Factors that impede our ability to dispose of properties could adversely affect our financial condition and operating results.

We are seeking to develop new properties or redevelop existing properties, an activity that has inherent risks that could adversely impact our cash flow, financial condition and results of operations. These activities are subject to the following risks:

•We may not be able to complete construction on schedule due to labor disruptions, construction delays, and delays or failure to receive zoning or other regulatory approvals;

•We may abandon our development, redevelopment and expansion opportunities after expending resources to determine feasibility and we may incur an impairment loss on our investment;

•Construction and other project costs may exceed our original estimates because of increases in material and labor costs, interest rates, operating costs, and leasing costs;

•We may not be able to obtain financing on favorable terms for construction;

•We might not be able to secure key anchor or other tenants;

•We may experience a decrease in customer traffic during the redevelopment period causing a decrease in tenant sales;

•Occupancy rates and rents at a completed project may not meet our projections; and

•The time frame required for development, constructions and lease-up of these properties means that we may have to wait years for a significant cash return.

If any of these events occur, our development activities may have an adverse effect on our results of operations, including additional impairment provisions. For a detailed discussion of development projects, refer to Notes 3 and 5 of the notes to the consolidated financial statements.

Financing Risks

Increases in interest rates may affect the cost of our variable-rate borrowings, our ability to refinance maturing debt and the cost of any such refinancings.

As of December 31, 2019, we had seven interest rate swap agreements in effect for an aggregate notional amount of $210.0 million converting our floating rate corporate debt to fixed rate debt. In addition, we have entered into five forward starting interest rate swap agreement for an aggregate notional amount of $150.0 million. After accounting for these interest rate swap agreements, we had $100.0 million of variable rate debt outstanding at December 31, 2019. Increases in interest rates on our existing indebtedness would increase our interest expense, which would adversely affect our cash flow and our ability to distribute cash to our shareholders. For example, if market rates of interest on our variable rate debt outstanding as of December 31, 2019 increased by 1.0%, the increase in interest expense on our existing variable rate debt would decrease future earnings and cash flows by approximately $1.0 million annually. Interest rate increases could also constrain our ability to refinance maturing debt because lenders may reduce their advance rates in order to maintain debt service coverage ratios.

Our debt must be refinanced upon maturity, which makes us reliant on the capital markets on an ongoing basis.

We are not structured in a manner to generate and retain sufficient cash flow from operations to repay our debt at maturity. Instead, we expect to refinance our debt by raising equity, debt or other capital prior to the time that it matures. As of December 31, 2019, we had $931.7 million of outstanding indebtedness, net of deferred financing costs, including $0.9 million of finance lease obligations. The availability, price and duration of capital can vary significantly. If we seek to refinance maturing debt when capital market conditions are restrictive, we may find capital scarce, costly or unavailable. Refinancing debt at a higher cost would affect our operating results and cash available for distribution. The failure to refinance our debt at maturity would result in default and the exercise by our lenders of the remedies available to them, including foreclosure and, in the case of recourse debt, liability for unpaid amounts.

We could increase our outstanding debt.

Our management and Board of Trustees (“Board”) generally have discretion to increase the amount of our outstanding debt at any time. Subject to existing financial covenants, we could become more highly leveraged, resulting in an increase in debt service costs that could adversely affect our cash flow and the amount available for distribution to our shareholders. If we increase our debt, we may also increase the risk of default on our debt.

Our mortgage debt exposes us to the risk of loss of property, which could adversely affect our financial condition.

As of December 31, 2019, we had $89.6 million of mortgage debt, net of unamortized premiums and deferred financing costs, encumbering our properties. A default on any of our mortgage debt may result in foreclosure actions by lenders and ultimately our loss of the mortgaged property. For federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure but would not receive any cash proceeds.

Financial covenants may restrict our operating, investing or financing activities, which may adversely impact our financial condition and operating results.

The financial covenants contained in our mortgages and debt agreements reduce our flexibility in conducting our operations and create a risk of default on our debt if we cannot continue to satisfy them. The mortgages on our properties contain customary negative covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage. In addition, if we breach covenants in our debt agreements, the lender can declare a default and require us to repay the debt immediately and, if the debt is secured, can ultimately take possession of the property securing the loan.

Our outstanding unsecured revolving line of credit contains customary restrictions, requirements and other limitations on our ability to incur indebtedness, including limitations on the maximum ratio of total liabilities to assets, the minimum fixed charge coverage and the minimum tangible net worth. Our ability to borrow under our unsecured revolving line of credit is subject to compliance with these financial and other covenants. We rely on our ability to borrow under our unsecured revolving line of credit to finance acquisition, development and redevelopment activities and for working capital. If we are unable to borrow under our unsecured revolving line of credit, our financial condition and results of operations would be adversely impacted.

We must distribute a substantial portion of our income annually in order to maintain our REIT status, and as a result we may not retain sufficient cash from operations to fund our investing needs.

As a REIT, we are subject to annual distribution requirements under the Code. In general, we must distribute at least 90% of our REIT taxable income annually, excluding net capital gains, to our shareholders to maintain our REIT status. We intend to make distributions to our shareholders to comply with the requirements of the Code.

Differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement. In addition, the distribution requirement reduces the amount of cash we retain for use in funding our capital requirements and our growth. As a result, we have historically funded our acquisition, development and redevelopment activities by any of the following: selling assets that no longer meet our investment criteria; selling common shares and preferred shares; borrowing from financial institutions; and entering into joint venture transactions with third parties. Our failure to obtain funds from these sources could limit our ability to grow, which could have a material adverse effect on the value of our securities.

There may be future dilution to holders of our common shares.

Our Articles of Restatement of Declaration of Trust (the “Declaration of Trust”) authorizes our Board to, among other things, issue additional common or preferred shares, or securities convertible or exchangeable into equity securities, without shareholder approval. We may issue such additional equity or convertible securities to raise additional capital. The issuance of any additional common or preferred shares or convertible securities could be dilutive to holders of our common shares. Moreover, to the extent that we issue restricted shares, options or warrants to purchase our common shares in the future and those options or warrants are exercised or the restricted shares vest, our shareholders will experience further dilution. Holders of our common shares have no preemptive rights that entitle them to purchase a pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution to our shareholders.

We may issue debt and equity securities or securities convertible into equity securities, any of which may be senior to our common shares as to distributions and in liquidation, which could negatively affect the value of our common shares.

There were 449,643 shares of unvested restricted common shares outstanding at December 31, 2019.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.

In July 2017, the Financial Conduct Authority, the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR, and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates or financing costs to borrowers. We have material contracts that are indexed to USD-LIBOR, and we are monitoring this activity and evaluating the related risks.

Corporate Risks

The price of our common shares may fluctuate significantly.

The market price of our common shares fluctuates based upon numerous factors, many of which are outside of our control. A decline in our share price, whether related to our operating results or not, may constrain our ability to raise equity in pursuit of our business objectives. In addition, a decline in price may affect the perceptions of lenders, tenants or others with whom we transact. Such parties may withdraw from doing business with us as a result. An inability to raise capital at a suitable cost or at any cost, or to do business with certain tenants or other parties, would affect our operations and financial condition.

Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our shareholders.

We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, investment, organizational, distribution, shareholder ownership and other requirements on a continuing basis. Our ability to satisfy the asset requirements depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination and for which we will not obtain independent appraisals. In addition, our compliance with the REIT income and asset requirements depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as debt or equity for federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements. Accordingly, there can be no assurance that the Internal Revenue Service (“IRS”) will not contend that our interests in subsidiaries or other issuers constitute a violation of the REIT requirements. Moreover, future economic, market, legal, tax or other considerations may cause us to fail to qualify as a REIT.

If we were to fail to qualify as a REIT in any taxable year, we would be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates and distributions to shareholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our shareholders, which in turn could have an adverse impact on the value of and trading prices for, our common shares. Unless entitled to relief under certain Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT.

If our subsidiary REITs failed to qualify as REITs, we could be subject to higher taxes and could fail to remain qualified as a REIT.

Our Operating Partnership indirectly owns 51.5% of the common shares of each of five subsidiary REITs that will elect to be taxed as REITs under the U.S. federal income tax law for their short taxable year ended December 31, 2019. Our subsidiary REITs are subject to the various REIT qualification requirements and other limitations described herein that are applicable to us. If any of our subsidiary REITs were to fail to qualify as a REIT, then (i) such subsidiary REITs would become subject to U.S. federal income tax and (ii) our ownership of shares in such subsidiary REITs would cease to be a qualifying asset for purposes of the asset tests applicable to REITs. If our subsidiary REITs were to fail to qualify as a REIT, it is possible that we would fail certain of the asset tests applicable to REITs, in which event we would fail to qualify as a REIT unless we could avail ourselves of certain relief provisions. We intend to implement certain protective arrangements intended to avoid such an outcome if our subsidiary REITs were not to qualify as a REIT, but there can be no assurance that such arrangements will be effective to avoid the resulting adverse consequences to us.

Even as a REIT, we may be subject to various federal income and excise taxes, as well as state and local taxes.

Even as a REIT, we may be subject to federal income and excise taxes in various situations, such as if we fail to distribute all of our REIT taxable income. We also will be required to pay a 100% tax on non-arm’s length transactions between us and our TRSs and on any net income from sales of property that the IRS successfully asserts was property held for sale to customers in the ordinary course of business. Additionally, we may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business. The state and local tax laws may not conform to the federal income tax treatment. Any taxes imposed on us would reduce our operating cash flow and net income.

The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the United States Treasury Department. Changes to tax laws, which may have retroactive application, could adversely affect our shareholders or us. We cannot predict how changes in tax laws might affect our shareholders or us.

We are party to litigation in the ordinary course of business, and an unfavorable court ruling could have a negative effect on us.

We are the defendant in a number of claims brought by various parties against us. Although we intend to exercise due care and consideration in all aspects of our business, it is possible additional claims could be made against us. We maintain insurance coverage including general liability coverage to help protect us in the event a claim is awarded; however, some claims may be uninsured. In the event that claims against us are successful and uninsured or underinsured, or we elect to settle claims that we determine are in our interest to settle, our operating results and cash flow could be adversely impacted. In addition, an increase in claims and/or payments could result in higher insurance premiums, which could also adversely affect our operating results and cash flow.

We are subject to various environmental laws and regulations which govern our operations and which may result in potential liability.

Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances disposed, stored, released, generated, manufactured or discharged from, on, at, onto, under or in such property. Environmental laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence or release of such hazardous or toxic substance. The presence of such substances, or the failure to properly remediate such substances when present, released or discharged, may adversely affect the owner’s ability to sell or rent such property or to borrow using such property as collateral. The cost of any required remediation and the liability of the owner or operator therefore as to any property is generally not limited under such environmental laws and could exceed the value of the property and/or the aggregate assets of the owner or operator. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the cost of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such persons. In addition to any action required by federal, state or local authorities, the presence or release of hazardous or toxic substances on or from any property could result in private plaintiffs bringing claims for personal injury or other causes of action.

In connection with ownership (direct or indirect), operation, management and development of real properties, we have the potential to be liable for remediation, releases or injury. In addition, environmental laws impose on owners or operators the requirement of ongoing compliance with rules and regulations regarding business-related activities that may affect the environment. Such activities include, for example, the ownership or use of transformers or underground tanks, the treatment or discharge of waste waters or other materials, the removal or abatement of asbestos-containing materials (“ACMs”) or lead-containing paint during renovations or otherwise, or notification to various parties concerning the potential presence of regulated matters, including ACMs. Failure to comply with such requirements could result in difficulty in the lease or sale of any affected property and/or the imposition of monetary penalties, fines or other sanctions in addition to the costs required to attain compliance. Several of our properties have or may contain ACMs or underground storage tanks; however, we are not aware of any potential environmental liability which could reasonably be expected to have a material impact on our financial position or results of operations. No assurance can be given that future laws, ordinances or regulations will not impose any material environmental requirement or liability, or that a material adverse environmental condition does not otherwise exist.

Our success depends on key personnel whose continued service is not guaranteed.

We depend on the efforts and expertise of our senior management team to manage our day-to-day operations and strategic business direction. While we have retention and severance agreements with certain members of our executive management team that provide for certain payments in the event of a change of control or termination without cause, we do not have

employment agreements with all of the members of our executive management team. Therefore, we cannot guarantee their continued service. The loss of their services, and our inability to find suitable replacements, could have an adverse effect on our operations.

Our business and operations would suffer in the event of system failures, security breaches, cyber security intrusions, cyber-attacks or other disruptions of our information technology systems.

We rely extensively upon information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage and support a variety of business processes and activities. Although we employ a number of security measures to prevent, detect and mitigate these risks, including a disaster recovery plan for our internal information technology systems, a dedicated IT team, employee training and background checks and password protection, along with purchasing cyber liability insurance coverage, there can be no assurance that these measures will be effective and our systems, networks and services remain vulnerable to damages from any number of sources, including system failures due to energy blackouts, natural disasters, terrorism, war or telecommunication failures, security breaches, cyber intrusions and cyber security attacks, such as computer viruses, malware or e-mail attachments or any unauthorized access to our data and/or computer systems. In recent years, there has been an increased number of significant cyber security attacks that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. A system failure, security breach, cyber intrusion, cyber-attack or other disruption of our information technology systems may cause interruptions in our operations and other negative consequences, which may include but are not limited to the following, any of which could have a material adverse effect on our cash flow, financial condition and results of operations:

•Compromising of confidential information;

•Manipulation and destruction of data;

•System downtime and operational disruptions;

•Remediation cost that may include liability for stolen assets or information, expenses related to repairing system damage, costs associated with damage to business relationships or due to legal requirements imposed;

•Loss of revenues resulting from unauthorized use of proprietary information;

•Cost to deploy additional protection strategies, training employees and engaging third party experts and consultants;

•Reputational damage adversely affecting investor confidence;

•Damage to tenant relationships;

•Violation of applicable privacy and other laws;

•Litigation; and

•Loss of trade secrets.

Restrictions on the ownership of our common shares are in place to preserve our REIT status.

Our Declaration of Trust restricts ownership by any one shareholder to no more than 9.8% of our outstanding common shares, subject to certain exceptions granted by our Board. The ownership limit is intended to ensure that we maintain our REIT status given that the Code imposes certain limitations on the ownership of the stock of a REIT. Not more than 50% in value of our outstanding shares of beneficial interest may be owned, directly or indirectly by five or fewer individuals (as defined in the Code) during the last half of any taxable year. If an individual or entity were found to own constructively more than 9.8% in value of our outstanding shares, then any excess shares would be transferred by operation of our Declaration of Trust to a charitable trust, which would sell such shares for the benefit of the shareholder in accordance with procedures specified in our Declaration of Trust.

The ownership limit may discourage a change in control, may discourage tender offers for our common shares and may limit the opportunities for our shareholders to receive a premium for their shares. Upon due consideration, our Board previously has granted limited exceptions to this restriction for certain shareholders who requested an increase in their ownership limit. However, the Board has no obligation to grant such limited exceptions in the future.

Certain anti-takeover provisions of our Declaration of Trust and Bylaws may inhibit a change of our control.

Certain provisions contained in our Declaration of Trust and Amended and Restated Bylaws (the “Bylaws”) and the Maryland General Corporation Law, as applicable to Maryland REITs, may discourage a third party from making a tender offer or acquisition proposal to us. These provisions and actions may delay, deter or prevent a change in control or the removal of existing management. These provisions and actions also may delay or prevent the shareholders from receiving a premium for their common shares of beneficial interest over then-prevailing market prices.

These provisions and actions include:

•the REIT ownership limit described above;

•authorization of the issuance of our preferred shares of beneficial interest with powers, preferences or rights to be determined by our Board;

•special meetings of our shareholders may be called only by the chairman of our Board, the president, one-third of the Trustees, or the secretary upon the written request of the holders of shares entitled to cast not less than a majority of all the votes entitled to be cast at such meeting;

•a two-thirds shareholder vote is required to approve some amendments to our Declaration of Trust;

•our Bylaws contain advance-notice requirements for proposals to be presented at shareholder meetings; and

•our Board, without the approval of our shareholders, may from time to time (i) amend our Declaration of Trust to increase or decrease the aggregate number of shares of beneficial interest, or the number of shares of beneficial interest of any class, that we have authority to issue, and (ii) reclassify any unissued shares of beneficial interest into one or more classes or series of shares of beneficial interest.

In addition, the Trust, by Board action, may elect to be subject to certain provisions of the Maryland General Corporation Law that inhibit takeovers such as the provision that permits the Board by way of resolution to classify itself, notwithstanding any provision our Declaration of Trust or Bylaws.

Changes in accounting standards may adversely impact our financial results.

The Financial Accounting Standards Board, in conjunction with the SEC, has several projects on its agenda, as well as recently issued updates that could impact how we currently account for material transactions. At this time, we are unable to predict with certainty which, if any, proposals may be passed or what level of impact that new standards may have on the presentation of our consolidated financial statements, results of operations and financial ratios required by our debt covenants. Refer to Note 2 of the notes to the consolidated financial statements in this report for further information related to the impact of the new leasing standard (ASC Topic 842).

U.S. federal tax reform legislation could affect REITs generally, the geographic markets in which we operate, our stock and our results of operations, both positively and negatively in ways that are difficult to anticipate.

Changes to the federal income tax laws are proposed regularly. Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Department of the Treasury, which may result in revisions to regulations and interpretations in addition to statutory changes. If enacted, certain such changes could have an adverse impact on our business and financial results. In particular, H.R. 1, which generally took effect for taxable years that began on or after January 1, 2018 (subject to certain exceptions), made many significant changes to the federal income tax laws that profoundly impacted the taxation of individuals, corporations (both regular C corporations as well as corporations that have elected to be taxed as REITs), and the taxation of taxpayers with overseas assets and operations. A number of changes that affect non-corporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. These changes will impact us and our shareholders in various ways, some of which are adverse or potentially adverse compared to prior law. To date, the IRS has issued guidance with respect to many of the new provisions but there are several interpretive issues that still require further guidance. It is likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent. There can be no assurance, however, that technical clarifications or further changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future. In addition, while certain elements of tax reform legislation do not impact us directly as a REIT, they could impact the geographic markets in which we operate, the tenants that populate our shopping centers and the customers who frequent our properties in ways, both positive and negative, that are difficult to anticipate.

Other legislative proposals could be enacted in the future that could affect REITs and their shareholders. Prospective investors are urged to consult their tax advisors regarding the effect of H.R. 1 and any other potential tax law changes on an investment in our common stock.

We may have to borrow funds or sell assets to meet our distribution requirements.

Subject to some adjustments that are unique to REITs, a REIT generally must distribute 90% of its taxable income. For the purpose of determining taxable income, we may be required to accrue interest, rent and other items treated as earned for tax purposes but that we have not yet received. In addition, we may be required not to accrue as expenses for tax purposes some that which actually have been paid, including, for example, payments of principal on our debt, or some of our deductions might be disallowed by the Internal Revenue Service. As a result, we could have taxable income in excess of cash available for distribution. If this occurs, we may have to borrow funds or liquidate some of our assets in order to meet the distribution requirement applicable to a REIT.

Liquidation of our assets may jeopardize our REIT qualification.

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any gain if we sell assets in transactions that are considered to be “prohibited transactions,” which are explained in the risk factor “Even as a REIT, we may be subject to various federal income and excise taxes, as well as state and local taxes”.

Dividends payable by REITs do not qualify for the reduced tax rates on dividend income from regular corporations.

The maximum federal income tax rate applicable to “qualified dividend income” payable by non-REIT corporations to certain non-corporate U.S. stockholders is generally 20%, and a 3.8% Medicare tax may also apply. Dividends paid by REITs, however, generally are not eligible for the reduced rates applicable to qualified dividend income. Commencing with taxable years beginning on or after January 1, 2018 and continuing through 2025, H.R. 1 temporarily reduces the effective tax rate on ordinary REIT dividends (i.e., dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us) for U.S. holders of our common stock that are individuals, estates or trusts by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive. Taking into account H.R. 1’s reduction in the maximum individual federal income tax rate from 39.6% to 37%, this results in a maximum effective rate of regular income tax on ordinary REIT dividends of 29.6% through 2025 (as compared to the 20% maximum federal income tax rate applicable to qualified dividend income received from a non-REIT corporation). The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay distributions. This could materially and adversely affect the value of the stock of REITs, including our common stock.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties

As of December 31, 2019, we owned and managed a portfolio of 49 shopping centers (including five shopping centers owned through R2G) with approximately 11.9 million square feet (“SF”) of GLA. Our wholly-owned properties consist of 44 shopping centers comprising approximately 11.1 million square feet of GLA.


Property Name	Location City	State	Ownership %	Year Built / Acquired / Redeveloped	Total GLA	% Leased		Average base rent per leased SF ⁽¹⁾		Anchor Tenants ⁽²⁾
Atlanta [MSA Rank 9]
Holcomb Center	Alpharetta	GA	100%	1986/1996/2010	106,143	89.6	%	$	12.83	Studio Movie Grill, Zoo Health Club
Peachtree Hill	Duluth	GA	100%	1986/2015/NA	154,700	98.3	%	14.19		Kroger, LA Fitness
Promenade at Pleasant Hill	Duluth	GA	100%	1993/2004/NA	265,398	98.1	%	10.87		K1 Speed, LA Fitness, Publix
Austin [MSA Rank 30]
Lake Hills Plaza	Austin	TX	100%	1980/2019/2019	75,926	96.3	%	25.69		TruFusion, (Target)
Baltimore [MSA Rank 21]
Crofton Centre	Crofton	MD	100%	1974/2015/NA	252,230	96.3	%	9.38		At Home, Gold's Gym, Shoppers Food Warehouse
Chicago [MSA Rank 3]
Deer Grove Centre	Palatine	IL	100%	1997/2013/2013	237,644	85.4	%	10.60		Aldi, Hobby Lobby, Ross Dress for Less, T.J. Maxx, (Target)
Market Plaza	Glen Ellyn	IL	100%	1965/2015/2009	166,572	90.0	%	15.49		Jewel-Osco, Ross Dress for Less
Mount Prospect Plaza	Mount Prospect	IL	100%	1958/2013/2013	227,690	94.2	%	14.10		Aldi, Burlington Coat Factory, LA Fitness, Marshalls, Ross Dress for Less, (Walgreens)
Webster Place	Lincoln Park	IL	100%	1987/2017/NA	134,918	95.0	%	25.83		Barnes & Noble, Regal Cinema
Cincinnati [MSA Rank 28]
Bridgewater Falls	Hamilton	OH	100%	2005/2014/NA	503,340	94.4	%	14.60		Bed Bath & Beyond, Best Buy, Dick's Sporting Goods, Five Below, J.C. Penney, Michaels, PetSmart, T.J. Maxx, (Target)
Buttermilk Towne Center	Crescent Springs	KY	100%	2005/2014/NA	290,033	100.0	%	10.22		Field & Stream, Home Depot, LA Fitness, Petco, Remke Market
Deerfield Towne Center	Mason	OH	100%	2004/2013/2018	469,209	90.7	%	21.80		Ashley Furniture HomeStore, Bed Bath & Beyond, buybuy Baby, CoHatch⁽³⁾, Crunch Fitness Dick's Sporting Goods, Five Below, Regal Cinemas, Whole Foods Market
Columbus [MSA Rank 33]
Olentangy Plaza	Columbus	OH	100%	1981/2015/1997	252,739	88.2	%	12.45		Aveda Institute Columbus, Eurolife Furniture, Marshalls, Micro Center, Tuesday Morning
The Shops on Lane Avenue	Upper Arlington	OH	100%	1952/2015/2004	183,130	93.4	%	25.14		Bed Bath & Beyond, CoHatch, Whole Foods Market
Denver [MSA Rank 19]
Front Range Village	Fort Collins	CO	100%	2008/2014/NA	504,008	89.3	%	19.83		2nd and Charles, Cost Plus World Market, DSW, Microsoft Corporation, Party City, Sprouts Farmers Market, Staples, TruFut Athletic Club, Ulta Beauty, Urban Air Adventure Park, (Fort Collins Library), (Lowes), (Target)



Property Name	Location City	State	Ownership %	Year Built /Acquired / Redeveloped	Total GLA	% Leased		Average base rent per leased SF ⁽¹⁾	Anchor Tenants⁽²⁾
Detroit [MSA Rank 14]
Clinton Pointe	Clinton Township	MI	100%	1992/2003/NA	135,450	93.9	%	9.98	Gibralter Rug, OfficeMax, T.J. Maxx, (Target)
Hunter's Square	Farmington Hills	MI	100%	1988/2013/NA	352,772	99.1	%	17.14	Bed Bath & Beyond, buybuy Baby, DSW Shoe Warehouse , Old Navy, Marshalls, Saks Fifth Avenue Off 5th, T.J. Maxx
Southfield Plaza	Southfield	MI	100%	1969/1996/2003	190,099	97.9	%	9.54	Big Lots, Burlington Coat Factory, Forman Mills
Tel-Twelve	Southfield	MI	100%	1968/1996/2005	523,382	100.0	%	11.76	Best Buy, DSW Shoe Warehouse, Lowe's, Meijer, Michaels, Office Depot, PetSmart, Ulta
Troy Marketplace	Troy	MI	100%	2000/2013/2010	245,130	100.0	%	20.55	Airtime, Golf Galaxy, LA Fitness, Nordstrom Rack, PetSmart, (REI)
West Oaks I Shopping Center	Novi	MI	100%	1979/1996/2004	284,973	91.0	%	17.30	Gardner White Furniture, Home Goods, Michaels, Nordstrom Rack, Old Navy, Rally House, The Container Store
West Oaks II Shopping Center	Novi	MI	100%	1986/1996/2000	167,954	98.7	%	18.59	Jo-Ann, Marshalls, (Art Van), (ABC Warehouse), (Bed Bath & Beyond), (Bob's Discount Furniture), (Kohl's), (Value City Furniture)
Winchester Center	Rochester Hills	MI	100%	1980/2013/NA	320,134	100.0	%	12.69	Bed Bath & Beyond, Dick's Sporting Goods, Marshalls, Michaels, Party City, PetSmart, Stein Mart
Indianapolis [MSA Rank 34]
Merchants' Square	Carmel	IN	100%	1970/2010/2014	248,461	88.9	%	14.04	Flix Brewhouse, Planet Fitness
Jacksonville [MSA Rank 40]
Parkway Shops	Jacksonville	FL	100%	2013/2008/NA	144,114	100.0	%	11.79	Dick's Sporting Goods, Hobby Lobby, Marshalls, (Wal-Mart Supercenter)
River City Marketplace	Jacksonville	FL	100%	2005/2005/NA	585,918	91.1	%	18.89	Ashley Furniture HomeStore, Bed Bath & Beyond, Best Buy, Burlington Coat Factory, Duluth Trading, Hollywood Theaters, Michaels, PetSmart, Ross Dress for Less, (Lowe's), (Wal-Mart Supercenter)
Miami [MSA Rank 8]
Marketplace of Delray	Delray Beach	FL	100%	1981/2013/2010	241,715	93.3	%	15.76	Office Depot, Ross Dress for Less, Winn-Dixie
Rivertowne Square	Deerfield Beach	FL	100%	1980/1998/2010	146,666	92.6	%	11.00	Bealls, Winn-Dixie
West Broward Shopping Center	Plantation	FL	100%	1965/2013/NA	152,973	88.0	%	11.97	Badcock, DD's Discounts, Save-A-Lot
Milwaukee [MSA Rank 39]
Nagawaukee Center	Delafield	WI	100%	1994/2012-13/NA	220,083	100.0	%	15.07	HomeGoods, Kohl's, Marshalls, Sierra Trading Post, (Sentry Foods)
West Allis Towne Centre	West Allis	WI	100%	1987/1996/2011	326,223	86.2	%	10.08	Burlington Coat Factory, Five Below, Hobby Lobby, Ross Dress for Less, Xperience Fitness
Minneapolis [MSA Rank 16]
Centennial Shops	Edina	MN	100%	2008/2016/NA	85,206	97.3	%	41.53	Pinstripes, The Container Store, West Elm
Woodbury Lakes	Woodbury	MN	100%	2005/2014/NA	360,028	88.1	%	21.34	Alamo Drafthouse Cinema, Athleta, DSW, H&M, Michaels, (Trader Joe's)



Property Name	Location City	State	Ownership %	Year Built /Acquired / Redeveloped	Total GLA	% Leased		Average base rent per leased SF ⁽¹⁾	Anchor Tenants⁽²⁾
Nashville [MSA Rank 36]
Providence Marketplace	Mt. Juliet	TN	100%	2006/2017/NA	632,552	98.5	%	13.42	Belk, Best Buy, Books A Million, Dick's Sporting Goods, J C Penney, JoAnn Fabrics, Old Navy, PetSmart, Regal Cinema, Ross Dress for Less, Staples, T.J. Maxx/HomeGoods, (Kroger), (Target)
St. Louis [MSA Rank 20]
Central Plaza	Ballwin	MO	100%	1970/2012/2012	163,625	91.6	%	12.77	buybuy Baby, Jo-Ann, Old Navy, Ross Dress for Less
Deer Creek Shopping Center	Maplewood	MO	100%	1975/2013/2013	208,122	96.9	%	10.55	buybuy Baby, Club Fitniess, GFS, Marshalls, Ross Dress for Less
Heritage Place	Creve Coeur	MO	100%	1989/2011/2005	269,127	98.9	%	14.80	Dierbergs Markets, Marshalls, Office Depot, T.J. Maxx
Tampa [MSA Rank 18]
Cypress Point	Clearwater	FL	100%	1983/2013/NA	168,736	98.9	%	12.76	At Home, The Fresh Market
Lakeland Park Center	Lakeland	FL	100%	2014/NA/NA	230,662	98.3	%	14.12	Dick's Sporting Goods, Floor & Décor, Northern Tool, Ross Dress for Less, (Target)
Shoppes of Lakeland	Lakeland	FL	100%	1985/1996/NA	183,702	100.0	%	13.45	Ashley Furniture HomeStore, Michaels, Staples, T.J. Maxx, (Target)
Village Lakes Shopping Center	Land O' Lakes	FL	100%	1987/1997/NA	167,735	99.4	%	9.99	Bealls Outlet, Marshalls, Ross Dress for Less
Properties Not in Top 40 MSA's
Spring Meadows Place	Holland	OH	100%	1987/1996/2005	314,514	90.3	%	11.16	Ashley Furniture HomeStore, Big Lots, DSW, Guitar Center, HomeGoods, Michaels, OfficeMax, PetSmart, T.J. Maxx, (Best Buy), (Dick's Sporting Goods), (Sam's Club), (Target), (Wal-Mart)
Treasure Coast Commons	Jensen Beach	FL	100%	1996/2013/NA	91,656	100.0	%	12.92	Barnes & Noble, Beall's Outlet Store, Dick's Sporting Goods
Vista Plaza	Jensen Beach	FL	100%	1998/2013/NA	109,761	100.0	%	14.83	Bed Bath & Beyond, Michaels, Total Wine & More
CONSOLIDATED SHOPPING CENTERS TOTAL/AVERAGE										11,095,153	94.6	%	$	15.03

JOINT VENTURE PORTFOLIO
Coral Creek Shops	Coconut Creek	FL	51.5%	1992/2002/NA	109,312	94.3	%	19.63	Publix
Mission Bay Plaza	Boca Raton	FL	51.5%	1989/2013/NA	262,701	98.4	%	25.23	Dick's Sporting Goods, Five Below, LA Fitness, OfficeMax, Tuesday Morning, The Fresh Market
The Crossroads	Royal Palm Beach	FL	51.5%	1988/2002/NA	121,509	100.0	%	17.72	Publix
The Shops at Old Orchard	West Bloomfield	MI	51.5%	1972/2013/2011	96,768	95.3	%	19.14	Plum Market
Town & Country Crossing	Town & Country	MO	51.5%	2008/2011/2011	186,557	97.0	%	24.98	HomeGoods, Starbucks, Stein Mart, Whole Foods Market, (Target)
AGGREGATE PORTFOLIO TOTAL/AVERAGE										11,872,000	94.7	%	$	15.29

⁽¹⁾Average base rent per leased SF is calculated based on annual minimum contractual base rent pursuant to the tenant lease, excluding percentage rent and recovery income from tenants, and is net of tenant concessions. Percentage rent and recovery income from tenants is presented separately in our consolidated statements of operations and comprehensive income (loss) statement.

⁽²⁾Anchor tenant is defined as any tenant leasing 10,000 square feet or more. Tenants in parenthesis represent non-company owned GLA.

⁽³⁾Space delivered to tenant.

Our leases for tenant space under 10,000 square feet generally have terms ranging from three to five years. Tenant leases greater than or equal to 10,000 square feet generally have lease terms of five years or longer, and are considered anchor leases. Many of the anchor leases provide tenants with the option of extending the lease term at expiration at contracted rental rates that often include fixed rent increases, consumer price index adjustments or other market rate adjustments from the prior base rent. The majority of our leases provide for monthly payment of base rent in advance, reimbursement of the tenant’s allocable real estate taxes, insurance and common area maintenance expenses and reimbursement for utility costs if not directly metered.

Major Tenants

The following table sets forth as of December 31, 2019 the breakdown of GLA between anchor and small shop tenants, of our wholly owned properties portfolio comprised of 44 properties and the pro-rata share of the five shopping centers owned through R2G (the “R2G Portfolio”):


Type of Tenant	Annualized Base Rent		% of Total Annualized Base Rent		GLA	% of Total GLA
Anchor ⁽¹⁾	$	95,217,318	57.4	%	8,085,365	70.3	%
Small Shop ⁽²⁾	70,639,309		42.6	%	3,409,864	29.7	%
Total	$	165,856,627	100.0	%	11,495,229	100.0	%

⁽¹⁾ Anchor tenant is defined as any tenant leasing 10,000 square feet or more.

⁽²⁾ Small shop tenant is defined as any tenant leasing less than 10,000 square feet.

The following table provides, as of December 31, 2019, information regarding leases with the 25 largest retail tenants (in terms of annualized base rent) for our wholly owned properties portfolio and the pro-rata share of the R2G Portfolio:


Tenant Name	Credit Rating S&P/Moody's ⁽¹⁾	Number of Leases	Number of Leases in the R2G Portfolio	GLA	% of Total Company Owned GLA		Total Annualized Base Rent		Annualized Base Rent / SF		% of Annualized Base Rent
TJX Companies⁽²⁾	A+/A2	23	1	709,770	6.1	%	$	7,520,936	$	10.60	4.5	%
Dick's Sporting Goods⁽³⁾	--/--	10	1	451,967	3.9	%	5,462,121		12.09		3.3	%
Regal Cinemas	--/Ba1	4	—	219,160	1.9	%	4,968,395		22.67		3.0	%
Bed Bath & Beyond⁽⁴⁾	BB/Baa3	14	—	418,062	3.6	%	4,824,941		11.54		2.9	%
LA Fitness	B+/B2	6	1	233,419	2.0	%	4,407,080		18.88		2.7	%
PetSmart	B-/B3	8	—	178,250	1.5	%	2,832,681		15.89		1.7	%
Michaels Stores	B+/Ba2	9	—	217,456	1.9	%	2,820,064		12.97		1.7	%
Ross Stores⁽⁵⁾	A-/A2	12	—	307,212	2.7	%	2,722,432		8.86		1.6	%
Gap, Inc. ⁽⁶⁾	BB/Baa2	13	1	155,336	1.3	%	2,682,821		17.27		1.6	%
DSW Designer Shoe Warehouse	--/--	6	—	119,656	1.0	%	2,295,617		19.19		1.4	%
Burlington Coat Factory	BB+/Bal	4	—	213,945	1.9	%	2,138,244		9.99		1.3	%
ULTA Salon	--/--	9	—	93,137	0.8	%	2,135,428		22.93		1.3	%
Office Depot ⁽⁷⁾	B/Ba3	7	1	155,341	1.3	%	2,135,201		13.75		1.3	%
Best Buy	BBB/Baa1	4	—	134,129	1.2	%	2,089,147		15.58		1.3	%
Dollar Tree	BBB-/Baa3	19	1	191,356	1.7	%	1,988,961		10.39		1.2	%
Ascena Retail ⁽⁸⁾	CCC/Caa2	18	—	95,236	0.8	%	1,912,223		20.08		1.2	%
Whole Foods	A+/A3	3	1	92,198	0.8	%	1,844,200		20.00		1.1	%
Jo-Ann Fabrics and Craft Stores	B-/B2	4	—	134,949	1.2	%	1,731,135		12.83		1.0	%
Meijer	--/--	1	—	189,635	1.7	%	1,530,650		8.07		0.9	%
Ashley Furniture HomeStore	--/--	4	—	147,778	1.3	%	1,463,243		9.90		0.9	%
Barnes & Noble	--/--	2	—	54,947	0.5	%	1,367,315		24.88		0.8	%
Pinstripes	--/--	1	—	32,414	0.3	%	1,365,926		42.14		0.8	%
At Home	--/--	2	—	177,946	1.6	%	1,362,504		7.66		0.8	%
Five Below		9	1	77,316	0.7	%	1,317,120		17.04		0.8	%
The Container Store	B/B2	2	—	45,011	0.4	%	1,251,856		27.81		0.8	%
Total top 25 tenants		194	8	4,845,626	42.1	%	$	66,170,241	$	13.66	39.9	%

⁽¹⁾Source: Latest Company filings, as of December 31, 2019, per CreditRiskMonitor. Data reflects credit rating of parent company.

⁽²⁾Marshalls (10) / TJ Maxx (8) / HomeGoods (4) / Sierra Trading Post (1)

⁽³⁾Dick's Sporting Goods (8) / Field & Stream (1) / Golf Galaxy (1)

⁽⁴⁾Bed Bath & Beyond (7) / Buy Buy Baby (5) / Cost Plus World Market (2)

⁽⁵⁾Ross Dress for Less (11) / DD's Discounts (1)

⁽⁶⁾Old Navy (7) / Gap (2) / Banana Republic (1) / Athleta (3)

⁽⁷⁾OfficeMax (4) / Office Depot (3)

⁽⁸⁾Ann Taylor (3) / Catherine's (3) / Dress Barn (2) / Justice (4) / Lane Bryant (6)

Lease Expirations

The following tables set forth a schedule of lease expirations for our wholly owned portfolio and the pro-rata share of the R2G Portfolio, for each of the next ten years and thereafter, assuming that no renewal options are exercised:

ALL TENANTS


Expiring Leases As of December 31, 2019
Year	Number of Leases	GLA	Average Annualized Base Rent		Total Annualized Base Rent ⁽¹⁾		% of Total Annualized Base Rent
			(per square foot)
2020	121	536,736	$	16.79	$	9,010,083	5.4	%
2021	208	1,493,756	16.58		24,761,122		14.9	%
2022	179	1,116,769	17.46		19,502,869		11.8	%
2023	192	1,695,308	15.12		25,625,898		15.5	%
2024	132	1,115,836	13.82		15,415,578		9.3	%
2025	80	1,096,799	13.90		15,246,718		9.2	%
2026	61	942,930	13.04		12,295,326		7.4	%
2027	58	485,283	16.85		8,178,038		4.9	%
2028	86	786,153	16.61		13,055,821		7.9	%
2029	91	777,376	13.52		10,506,914		6.3	%
2030+	48	713,621	15.05		10,742,647		6.5	%
Tenants month to month	21	83,402	18.17		1,515,613		0.9	%
Sub-Total	1,277	10,843,969	$	15.29	$	165,856,627	100.0	%
Leased ⁽²⁾	14	43,035	N/A		N/A		N/A
Vacant	156	608,225	N/A		N/A		N/A
Total	1,447	11,495,229	N/A		$	165,856,627	100.0	%

⁽¹⁾ Annualized Base Rent is based upon rents currently in place.

⁽²⁾ Includes signed leases where rent has not yet commenced.

ANCHOR TENANTS (greater than or equal to 10,000 square feet)


Expiring Anchor Leases As of December 31, 2019
Year	Number of Leases	GLA	Average Annualized Base Rent		Total Annualized Base Rent ⁽¹⁾		% of Total Annualized Base Rent
			(per square foot)
2020	9	236,447	$	10.24	$	2,421,840	2.5	%
2021	45	1,060,497	13.88		14,716,389		15.5	%
2022	30	691,206	13.50		9,329,354		9.9	%
2023	38	1,270,436	11.79		14,980,287		15.7	%
2024	30	791,673	10.65		8,434,365		8.9	%
2025	30	896,980	12.13		10,878,360		11.4	%
2026	17	807,859	10.83		8,752,607		9.2	%
2027	16	334,605	13.36		4,469,277		4.7	%
2028	18	590,955	12.97		7,662,949		8.0	%
2029	17	580,045	10.03		5,817,525		6.1	%
2030+	17	582,122	13.08		7,612,556		8.0	%
Tenants month to month	1	22,585	6.28		141,809		0.1	%
Sub-Total	268	7,865,410	$	12.11	$	95,217,318	100.0	%
Leased ⁽²⁾	1	13,318	N/A		N/A		N/A
Vacant	11	206,637	N/A		N/A		N/A
Total	280	8,085,365	N/A		$	95,217,318	100.0	%

⁽¹⁾ Annualized Base Rent is based upon rents currently in place.

⁽²⁾ Includes signed leases where rent has not yet commenced.

SMALL SHOP TENANTS (less than 10,000 square feet)


Expiring Small Shop Leases As of December 31, 2019
Year	Number of Leases	GLA	Average Annualized Base Rent		Total Annualized Base Rent ⁽¹⁾		% of Total Annualized Base Rent
			(per square foot)
2020	112	300,289	$	21.94	$	6,588,243	9.3	%
2021	163	433,259	23.18		10,044,733		14.2	%
2022	149	425,563	23.91		10,173,515		14.4	%
2023	154	424,872	25.06		10,645,611		15.1	%
2024	102	324,163	21.54		6,981,213		9.9	%
2025	50	199,819	21.86		4,368,358		6.2	%
2026	44	135,071	26.23		3,542,719		5.0	%
2027	42	150,678	24.61		3,708,761		5.3	%
2028	68	195,198	27.63		5,392,872		7.7	%
2029	74	197,331	23.76		4,689,389		6.6	%
2030+	31	131,499	23.80		3,130,091		4.4	%
Tenants month to month	20	60,817	22.59		1,373,804		1.9	%
Sub-Total	1,009	2,978,559	$	23.72	$	70,639,309	100.0	%
Leased ⁽²⁾	13	29,717	N/A		N/A		N/A
Vacant	145	401,588	N/A		N/A		N/A
Total	1,167	3,409,864	N/A		$	70,639,309	100.0	%

⁽¹⁾ Annualized Base Rent is based upon rents currently in place.

⁽²⁾ Includes signed leases where rent has not yet commenced.

Land Available for Development

At December 31, 2019, our three largest development sites, Parkway Shops, Lakeland Park Center and Hartland Towne Square, had environmental phase one assessments completed. It is our policy to start construction on new development projects only after the project has received entitlements, significant anchor commitments and construction financing, if appropriate. At December 31, 2019, we had received entitlements at our Parkway Shops site. We continue to evaluate the best use for land available for development, portions of which are adjacent to our existing shopping centers.

Our development and construction activities are subject to risks and uncertainties including, among others, our inability to obtain the necessary governmental approvals for a project, our determination that the expected return on a project is not sufficient to warrant continuation of the planned development, or our change in plan or scope for the development. If any of these events occur, we may record an impairment provision. See Item 1A . Risk Factors, for further information regarding our risk factors.

The Company evaluates these assets each reporting period and records an impairment charge equal to the difference between the current carrying value and fair value, when the fair value is determined to be less than the asset's carrying value. During 2019, we did not record any impairment charges on our land parcels. We recorded impairment provisions of $0.2 million and $1.0 million in 2018 and 2017, respectively, related to developable land that we decided to market for sale. Refer to Note 1 of the notes to the consolidated financial statements in this report for further information related to impairment provisions.

Insurance

Our tenants are generally responsible under their leases for providing adequate insurance on the spaces they lease. In addition, we believe our properties are adequately covered by commercial general liability, fire, flood, terrorism, environmental, and where necessary, hurricane and windstorm insurance coverages, which are all provided by reputable companies, with commercially reasonable exclusions, deductibles and limits.

Item 3. Legal Proceedings

From time to time, we are involved in certain litigation arising in the ordinary course of business. We do not believe that any of this litigation will have a material effect on our consolidated financial statements. There are no material pending governmental proceedings.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common shares are currently listed and traded on the NYSE under the symbol “RPT”. On February 14, 2020, the closing price of our common shares on the NYSE was $14.70.

Shareholder Return Performance Graph

The following line graph sets forth the cumulative total return on a $100 investment (assuming the reinvestment of dividends) in each of our common shares, the NAREIT Equity Index and the S&P 500 Index for the period December 31, 2014 through December 31, 2019. The stock price performance shown is not necessarily indicative of future price performance. The data shown is based on the share prices or index values, as applicable, at the end of each month shown.

Holders

The number of holders of record of our common shares was 1,035 at February 14, 2020. A substantially greater number of holders are beneficial owners whose shares of record are held by banks, brokers and other financial institutions.

Dividends

Under the Code, a REIT must meet requirements, including a requirement that it distribute to its shareholders at least 90% of its REIT taxable income annually, excluding net capital gain. Distributions paid by us are at the discretion of our Board and depend on our actual net income available to common shareholders, cash flow, financial condition, capital requirements, the annual distribution requirements under REIT provisions of the Code, and such other factors as the Board deems relevant. We do not believe that the preferential rights available to the holders of our preferred shares or the financial covenants contained in our debt agreements had or will have an adverse effect on our ability to pay dividends in the normal course of business to our common shareholders or to distribute amounts necessary to maintain our qualification as a REIT. See “Dividends and Equity” under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this report.

For information on our equity compensation plans as of December 31, 2019, refer to Item 12 of Part III of this report and Note 15 of the notes to the consolidated financial statements included in this report for further information regarding our share-based compensation and other benefit plans.

Item 6. Selected Financial Data

The following table sets forth our selected consolidated financial data and should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report.


	Year Ended December 31,
	2019		2018		2017		2016		2015
	(In thousands, except per share)
OPERATING DATA:
Total revenue	$	234,088	$	260,622	$	265,082	$	260,930	$	251,790
Operating income	54,022		52,260		63,399		70,908		65,497

Gain on sale of depreciable real estate	81,485		3,699		51,977		34,108		13,529
Gain on sale of land	371		295		787		1,673		4,041
Net income	93,686		18,036		70,719		61,112		66,895
Net (income) attributable to noncontrolling partner interest	(2,175)		(417)		(1,659)		(1,448)		(1,786)
Preferred share dividends	(6,701)		(6,701)		(6,701)		(6,701)		(6,838)
Net income available to common shareholders	84,810		10,918		62,359		52,963		57,771
Earnings per common share:
Basic	$	1.06	$	0.13	$	0.78	$	0.66	$	0.73
Diluted	1.04		0.13		0.78		0.66		0.73
Weighted average shares outstanding:
Basic	79,802		79,592		79,344		79,236		78,848
Diluted	87,722		80,088		79,530		79,435		79,035

Cash dividends declared per RPT preferred share	$	3.625	$	3.625	$	3.625	$	3.625	$	3.625
Cash dividends declared per RPT common share	$	0.880	$	0.880	$	0.880	$	0.860	$	0.820
Cash distributions to RPT preferred shareholders	$	6,701	$	6,701	$	6,701	$	6,701	$	6,977
Cash distributions to RPT common shareholders	$	70,652	$	70,458	$	70,225	$	67,710	$	63,972

BALANCE SHEET DATA (at December 31):
Investment in real estate (before accumulated depreciation)	$	1,818,103	$	2,025,773	$	2,130,779	$	2,132,670	$	2,184,481
Total assets	1,918,559		1,928,440		2,030,394		2,061,498		2,136,082
Total notes payable, net	930,808		963,149		999,215		1,021,223		1,083,711
Total liabilities	1,070,304		1,096,897		1,145,225		1,172,900		1,234,709
Total RPT shareholders' equity	828,240		811,962		864,322		867,701		879,391
Noncontrolling interest	20,015		19,581		20,847		20,897		21,982
Total shareholders' equity	848,255		831,543		885,169		888,598		904,466

OTHER DATA:

Net cash provided by operating activities	90,593		106,322		117,925		116,601		105,630
Net cash provided by (used in) investing activities	95,095		42,262		(16,675)		11,250		(154,333)
Net cash (used in) provided by financing activities	(115,858)		(116,753)		(103,085)		(128,477)		46,012

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements, the notes thereto, and the comparative summary of selected financial data included in this report.

Overview

Our goal is to be a dominant shopping center owner, with a focus on the following:

•Own and manage high quality open-air shopping centers predominantly concentrated in the top U.S. MSAs;

•Maintain value creation redevelopment and expansion pipeline;

•Maximize balance sheet liquidity and flexibility; and

•Retain motivated, talented and high performing employees.

Key methods to achieve our strategy:

•Deliver above average relative shareholder return and generate outsized consistent and sustainable Same Property NOI and Operating FFO per share growth;

•Pursue selective redevelopment projects with significant pre-leasing for which we expect to achieve attractive returns on investment;

•Sell assets that no longer meet our long-term strategy and redeploy the proceeds to lease, redevelop and acquire assets in our core and target markets;

•Achieve lower leverage while maintaining low variable interest rate risk; and

•Retain access to diverse sources of capital, maintain liquidity through borrowing capacity under our unsecured line of credit and minimize the amount of debt maturities in a single year.

The following highlights the Company's significant transactions, events and results that occurred during the year ended December 31, 2019:

Financial Results:

•Net income available to common shareholders was $84.8 million, or $1.04 per diluted share, for the year ended December 31, 2019, as compared to $10.9 million, or $0.13 per diluted share, for the same period in 2018.

•FFO was $88.0 million, or $1.00 per diluted share, for the year ended December 31, 2019, as compared to $109.4 million, or $1.23 per diluted share, for the same period in 2018.

•Operating FFO was $94.5 million, or $1.08 per diluted share, for the year ended December 31, 2019, as compared to $120.1 million, or $1.35 per diluted share, for the same period in 2018.

•Same property net operating income increased 4.1% for the year ended December 31, 2019, as compared to the same period in 2018.

•Executed 210 new leases and renewals, totaling approximately 1.2 million square feet in the aggregate portfolio.

•As of December 31, 2019, the Company's aggregate portfolio leased rate was 94.7%, as compared to 94.3% at December 31, 2018.

Acquisition Activity (See Note 4 of the notes to consolidated financial statements in this report):

•Acquired one operating property for a purchase price of $33.9 million.

Disposition Activity (See Note 4 of the notes to consolidated financial statements in this report):

•Disposed of two operating properties and one land outparcel for aggregate gross proceeds of $69.4 million. These transactions resulted in an aggregate gain on sale of real estate of $6.1 million.

•Contributed five properties valued at $244.0 million to a newly formed joint venture with GIC referred to herein as R2G Venture LLC (“R2G”), and received $118.3 million in gross proceeds for the 48.5% stake in R2G that was acquired by GIC. This transaction resulted in a gain on sale of real estate of $75.8 million.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies require our most subjective judgment and use of estimates in the preparation of our consolidated financial statements.

Revenue Recognition and Accounts Receivable

Most of our leases contain non-contingent rent escalations for which we recognize income on a straight-line basis over the non-cancelable lease term. This method results in rental income in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the “Other Assets” line item in our consolidated balance sheets. We review our unbilled straight-line rent receivable balance to determine the future collectability of revenue that will not be billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other factors. Our evaluation is based on our assessment of tenant credit risk changes indicating that expected future straight-line rent may not be realized. Depending on circumstances, we may provide a reserve against the previously recognized straight-line rent receivable asset for a portion, up to its full value, that we estimate may not be received.

Additionally, we monitor the collectability of our accounts receivable from specific tenants on an ongoing basis, analyze historical experience, customer creditworthiness, current economic trends and changes in tenant payment terms when evaluating the likelihood of tenant payment. For operating leases in which collectibility of rental income is not considered probable, rental income is recognized on a cash basis and allowances are taken for those balances that we have reason to believe may be uncollectible in the period it is determined not to be probable of collection.

For more information refer to Note 1 of the notes to the consolidated financial statements in this report.

Acquisitions

Acquisitions of properties are accounted for utilizing the acquisition method (which requires all assets acquired and liabilities assumed be measured at acquisition date fair value) and, accordingly, the results of operations of an acquired property are included in our results of operations from the date of acquisition. Estimates of fair values are based upon future cash flows and other valuation techniques in accordance with our fair value measurements policy, which are used to allocate the purchase price of acquired property among land, buildings on an “as if vacant” basis, tenant improvements, identifiable intangibles and any gain on purchase. Identifiable intangible assets and liabilities include the effect of above-and below-market leases, the value of having leases in place (“as-is” versus “as if vacant” and absorption costs), other intangible assets such as assumed tax increment revenue bonds and out-of-market assumed mortgages. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of 40 years for buildings, and over the remaining terms of any intangible asset contracts and the respective tenant leases, which may include bargain renewal options. The impact of these estimates, including

estimates in connection with acquisition values and estimated useful lives, could result in significant differences related to the purchased assets, liabilities and subsequent depreciation or amortization expense. For more information, refer to Note 1 of the notes to the consolidated financial statements in this report.

Impairment

We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable. These changes in circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income, geographic location, real estate values and expected holding period. The viability of all projects under construction or development, including those owned by unconsolidated joint ventures, is regularly evaluated under applicable accounting requirements, including requirements relating to abandonment of assets or changes in use. To the extent a project or an individual component of the project, is no longer considered to have value, the related capitalized costs are charged against operations.

Impairment provisions resulting from any event or change in circumstances, including changes in our intentions or our analysis of varying scenarios, could be material to our consolidated financial statements.

We recognize an impairment of an investment in real estate when the estimated undiscounted cash flow are less than the net carrying value of the property. If it is determined that an investment in real estate is impaired, then the carrying value is reduced to the estimated fair value as determined by cash flow models and discount rates or comparable sales in accordance with our fair value measurement policy. Refer to Note 1 of the notes to the consolidated financial statements in this report.

Results of Operations

Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018

The following summarizes certain line items from our audited statements of operations which we believe are important in understanding our operations and/or those items that have significantly changed during the year ended December 31, 2019 as compared to 2018:


	Year Ended December 31,
	2019		2018		Dollar Change		Percent Change
	(In thousands)
Total revenue	$	234,088	$	260,622	$	(26,534)	(10.2)	%
Real estate taxes	35,961		42,306		(6,345)		(15.0)	%
Recoverable operating expenses	25,256		26,177		(921)		(3.5)	%
Non-recoverable operating expense	10,292		7,286		3,006		41.3	%
Depreciation and amortization	78,647		87,327		(8,680)		(9.9)	%
Acquisition costs	—		233		(233)		NM
General and administrative expense	27,634		31,383		(3,749)		(11.9)	%
Provision for impairment	—		13,650		(13,650)		NM
Insured expenses, net	2,276		—		2,276		NM
Gain on sale of real estate	81,856		3,994		77,862		NM
Earnings from unconsolidated joint ventures	581		589		(8)		(1.4)	%
Interest expense	40,057		43,439		(3,382)		(7.8)	%
Other gain on unconsolidated joint ventures	237		5,208		(4,971)		(95.4)	%
Loss on extinguishment of debt	(2,571)		(134)		(2,437)		NM

NM - Not meaningful

Total revenue in 2019 decreased $26.5 million, or (10.2)%, from 2018. The decrease is primarily due to the following:

•$28.6 million decrease related to properties sold in 2019 and 2018;

•$5.2 million decrease from acceleration of a below market lease in the prior period attributable to a specific tenant who vacated prior to the original lease termination date; primarily offset by a

•$3.3 million increase from acceleration of below market leases in the current period attributable to tenants who vacated prior to the original estimated lease termination date; and a

•$3.8 million increase related to our existing centers largely attributable to higher minimum rent primarily from occupancy gains, contractual rent increases and lease renewals and higher recovery income mainly as a result of an increase in recoverable expenses at existing centers.

Real estate tax expense in 2019 decreased by $6.3 million, or (15.0)%, from 2018 primarily due to properties sold during 2019 and 2018.

Recoverable operating expense in 2019 decreased by $0.9 million, or (3.5)%, from 2018 primarily due to properties sold during 2019 and 2018, partially offset by higher common area maintenance expenses at existing properties.

Non-recoverable operating expense in 2019 increased by $3.0 million, or 41.3%, from 2018 primarily due to higher internal leasing costs as a result of the adoption of ASC 842 which eliminated the capitalization of these costs in the current year as well as higher legal fees associated with a tenant dispute, partially offset by properties sold during 2019 and 2018.

Depreciation and amortization expense in 2019 decreased by $8.7 million, or (9.9)%, from 2018. The decrease is primarily a result of properties sold during 2019 and 2018.

During 2018 we recorded acquisition costs of $0.2 million related to legal and professional fees associated with a potential shopping center acquisition that was not ultimately pursued during the prior year.

General and administrative expense in 2019 decreased by $3.7 million, or (11.9)%, from 2018. The net decrease is primarily a result of lower severance and management reorganization expense, which includes severance costs associated with former executives as well as sign-on bonuses and recruiting fees attributable to the new executive team, partially offset by an increase in bonus expense and higher share-based compensation expense.

During 2019 the Company wrote off real estate assets that were damaged by a hail storm at one property, which resulted in a charge of $2.3 million, net of $3.5 million of insurance proceeds received as of December 31, 2019. The damage incurred will be fully covered by insurance.

Gain on sale of real estate was $81.9 million in 2019. In the comparable period in 2018 we had a gain on sale of real estate of $4.0 million. The increase is primarily a result of properties sold during 2019. Refer to Note 4 of the notes to the consolidated financial statements in this report for further detail on dispositions.

Earnings from unconsolidated joint ventures in 2019 remained flat from 2018.

Interest expense in 2019 decreased by $3.4 million, or (7.8)%, from 2018. The decrease is primarily a result of a 9.2% decrease in our average outstanding debt, partially offset by lower capitalized interest. The decline in our average outstanding debt is the result of using proceeds from asset sales in the fourth quarter of 2018 and first quarter of 2019 to paydown our revolving credit line and redeem our junior subordinated notes.

Other gain on unconsolidated joint ventures in 2019 decreased by $5.0 million primarily due to the sale of the Martin Square property by our joint venture, Ramco/Lion Venture LP, in the prior period. The gain represents the difference between our share of the distributed proceeds and the carrying value of our equity investment in such joint venture.

During 2019 we recorded loss on extinguishment of debt of $2.6 million, which represented the write-off of unamortized deferred financing costs associated with the junior subordinated notes that were redeemed in full in April 2019 and term loans that were repaid in November 2019, as well as deferred financing costs and a prepayment penalty associated with our senior unsecured notes that were repaid in December 2019.

Comparison of the Year Ended December 31, 2018 to the Year Ended December 31, 2017

The following summarizes certain line items from our audited statements of operations which we believe are important in understanding our operations and/or those items which have significantly changed during the year ended December 31, 2018 as compared to 2017:


	Year Ended December 31,
	2018		2017		Dollar Change		Percent Change
	(In thousands)
Total revenue	$	260,622	$	265,082	$	(4,460)	(1.7)	%
Real estate taxes	42,306		42,683		(377)		(0.9)	%
Recoverable operating expenses	26,177		27,653		(1,476)		(5.3)	%
Non-recoverable operating expenses	7,286		8,044		(758)		(9.4)	%
Depreciation and amortization	87,327		91,335		(4,008)		(4.4)	%
Acquisition costs	233		—		233		NM
General and administrative expense	31,383		22,564		8,819		39.1	%
Provision for impairment	13,650		9,404		4,246		45.2	%
Gain on sale of real estate	3,994		52,764		(48,770)		(92.4)	%
Earnings from unconsolidated joint ventures	589		273		316		115.8	%
Interest expense	43,439		44,866		(1,427)		(3.2)	%
Other gain on unconsolidated joint ventures	5,208		—		5,208		NM

NM - Not meaningful

Total revenue in 2018 decreased by $4.5 million, or (1.7)%, from 2017. The decrease is primarily due to the following:

•$20.1 million increase related to acquisitions completed in 2018 and 2017; offset by

•$7.7 million increase related to our existing centers largely attributable to changes in estimates associated with recoveries of common areas maintenance and real estate taxes, and higher minimum rent;

•$5.2 million increase from acceleration of a below market lease attributable to a specific tenant who vacated prior to the original estimated lease termination date; and

•$2.7 million increase related to properties acquired in 2017 and a leasehold interest acquired in 2018.

Real estate tax expense in 2018 decreased by $0.4 million, or (0.9)%, from 2017 primarily due to properties sold during 2018 and 2017, partially offset by properties acquired in 2017 and higher net expense; specifically at two properties as a result of a change in estimates.

Recoverable operating expense in 2018 decreased by $1.5 million, or (5.3)%, from 2017 primarily due to properties sold during 2018 and 2017, partially offset by additional expense from properties acquired in 2017.

Non-recoverable operating expense in 2018 decreased by $0.8 million, or (9.4)%, from 2017 primarily due to a decrease in certain property related compensation, benefits, and travel expenses.

Depreciation and amortization expense in 2018 decreased by $4.0 million, or (4.4)%, from 2017. The decrease is primarily a result of properties sold during 2018 and 2017, partially offset by higher asset write offs in 2018 for tenant lease terminations prior to their original estimated term, and higher depreciation expense from acquisitions completed in 2017.

General and administrative expense in 2018 increased $8.8 million, or 39.1%, from 2017. The increase was primarily due to the following:

•$9.7 million of executive management reorganization expenses, which included severance costs associated with former executives as well as executive recruiting fees, sign-on bonuses and relocation fees associated with our new executive team;

•$0.8 million of severance costs resulting from the reduction-in-force associated with the reorganization of the Company's operating structure; offset by

•$0.8 million decrease in service-based and performance-based stock compensation expense; and

•$0.5 million decrease in other severance costs.

During 2018 we recorded an impairment provision totaling $13.7 million, of which $13.5 million was on shopping centers classified as income producing and $0.2 million on land held for development. The adjustments related to shopping centers were triggered by changes in associated market prices and expected hold period assumptions, as well as a purchase price reduction at one property. The provision related to land held for development was triggered by changes in the expected use of the land and higher costs. During 2017 we recorded an impairment provision totaling $9.4 million, of which $8.4 million was on shopping centers classified as income producing and $1.0 million on land held for development. The adjustments were triggered by changes in associated sales price assumptions, a purchase price reduction at one property and changes in the expected use of land. Refer to Note 1 of the notes to the consolidated financial statements included in this report for further information related to impairment provisions.

Gain on sale of real estate was $4.0 million in 2018. In the comparable period in 2017 we had a gain of $52.8 million. The increase is primarily a result of properties sold during 2018. Refer to Note 4 of the notes to the consolidated financial statements in this report for further detail on dispositions.

Earnings from unconsolidated joint ventures in 2018 increased $0.3 million from 2017. The increase was primarily due to our portion of the gain on sale of the Martin Square property which was disposed of by our joint venture, Ramco/Lion Venture LP, during the year compared to no dispositions by any of our unconsolidated joint ventures in the comparable period.

Interest expense in 2018 decreased by $1.4 million, or (3.2)%, from 2017. The decrease is primarily a result of an 8.0% decrease in our average outstanding debt, offset partially by a 45 basis point increase in our weighted average interest rate. The decline in our average outstanding debt is primarily a result of using proceeds from asset sales in the second half of 2017 to paydown our revolving credit line.

Other gain on unconsolidated joint ventures increased $5.2 million primarily due to the sale of the Martin Square property by our joint venture, Ramco/Lion Venture LP, during the year. The gain represents the difference between our share of the distributed proceeds and the carrying value of our equity investment in such joint venture.

Liquidity and Capital Resources

Our primary uses of capital include principal and interest payments on our outstanding indebtedness, ongoing capital expenditures such as leasing capital expenditures and building improvements, shareholder distributions, operating expenses of our business, debt maturities, acquisitions and discretionary capital expenditures such as targeted remerchandising, expansions, redevelopment and development. We generally strive to cover our principal and interest payments, operating expenses, shareholder distributions, and ongoing capital expenditures from cash flow from operations, although from time to time we have borrowed or sold assets to finance a portion of those uses. We believe the combination of cash flow from operations, cash balances, available borrowings under our unsecured revolving line of credit, issuance of long-term debt, property dispositions, and issuance of equity securities will provide adequate capital resources to fund all of our expected uses over at least the next 12 months. Although we believe that the combination of factors discussed above will provide sufficient liquidity, no such assurance can be given.

We believe our current capital structure provides us with the financial flexibility to fund our current capital needs. We intend to continue to enhance our financial and operational flexibility by extending the duration of our debt, laddering our debt maturities, expanding our unencumbered asset base and improving our leverage profile. In addition, we believe we have access to multiple forms of capital which includes unsecured corporate debt, secured mortgage debt, and preferred and common equity.

At December 31, 2019 and 2018, we had $114.6 million and $44.7 million, respectively, in cash and cash equivalents and restricted cash. Restricted cash generally consists of funds held in escrow by lenders to pay real estate taxes, insurance premiums and certain capital expenditures. As of December 31, 2019, we had no debt maturing in 2020 and we had $349.8 million available to be drawn on our $350.0 million unsecured revolving credit facility, subject to our compliance with certain covenants.

Our long-term liquidity needs consist primarily of funds necessary to pay indebtedness at maturity, potential acquisitions of properties, redevelopment of existing properties, the development of land and discretionary capital expenditures. We continually search for investment opportunities that may require additional capital and/or liquidity. We will continue to pursue the strategy of selling non-core properties or land that no longer meet our investment criteria or advance our business strategy. Our ability to obtain acceptable selling prices and satisfactory terms and financing will impact the timing of any future sales. We anticipate using net proceeds from the sale of properties or land to reduce outstanding debt and support current and future growth oriented initiatives. To the extent that asset sales are not sufficient to meet our long-term liquidity needs, we expect to meet such needs by raising debt or issuing equity.

We have on file with the SEC an automatic shelf registration statement relating to the offer and sale of an indeterminable amount of debt securities, preferred shares, common shares, depository shares, warrant and rights. From time to time, we may issue securities under this registration statement for working capital and other general corporate purposes.

The following is a summary of our cash flow activities:


	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Cash provided by operating activities	$	90,593	$	106,322	$	117,925
Cash provided by (used in) investing activities	95,095		42,262		(16,675)
Cash used in financing activities	(115,858)		(116,753)		(103,085)

Operating Activities

Net cash flow provided by operating activities decreased by $15.7 million in 2019 compared to 2018 primarily due to the following:

•Impact of shopping centers sold in 2018 and 2019; partially offset by

•Higher operating income at existing centers;

•Lower executive management and reorganization costs; and

•Reduction in interest expense.

Investing Activities

Net cash provided by investing activities was $95.1 million in 2019 compared to net cash provided by investing activities of $42.3 million in 2018. The $52.8 million change in net cash provided by investing activities was primarily due to:

•Net proceeds from the sale of real estate, including those completed by our joint ventures, increased $64.4 million; and

•Development and capital improvements decreased $21.3 million; partially offset by

•Acquisitions of real estate increased $27.6 million.

During 2019, we sold two shopping centers and one land parcel for aggregate net proceeds of $67.9 million. In addition, on December 10, 2019, we announced the formation of R2G. We contributed five properties valued at $244.0 million to R2G and received $118.3 million in gross proceeds ($117.3 million net) for the 48.5% stake in R2G that was acquired by GIC. In 2018 we sold six properties and three outparcels with aggregate net proceeds of $116.5 million. Refer to Note 4 of the notes to the consolidated financial statements in this report for additional information related to dispositions.

In 2019 we acquired one property, Lakehills Plaza in Austin, Texas for approximately $33.9 million. In 2018, we acquired the leasehold interest in a ground lease at our existing West Oaks shopping center for approximately $6.4 million.

Our development and capital improvements spend in 2019 decreased by $21.3 million compared to 2018. The decrease was primarily a result of lower discretionary capital expenditures such as targeted remerchandising, outlot and GLA expansion and redevelopments.

Financing Activities

Net cash used in financing activities decreased by $0.9 million compared to 2018 primarily because of:

•Redemption of all of our outstanding junior subordinated notes due 2038 for an aggregate purchase price of $28.6 million; and

•Payment in 2019 of deferred financing costs of $4.0 million related to the amendment and restatement of the credit agreement and a $50 million private placement of senior unsecured notes; partially offset by

•Net repayments in 2018 of $30.0 million on our unsecured revolving line of credit.

On November 6, 2019, the Operating Partnership entered into the credit agreement, which consists of an unsecured revolving credit facility of up to $350.0 million and term loan facilities of $310.0 million. A portion of the proceeds from the credit agreement were used to repay our $75.0 million term loan due 2020 and our $75.0 million term loan due 2021 for an aggregate amount of $150.0 million. Also on November 6, 2019, we repaid $100.0 million which constituted repayment in full of the Operating Partnership's $50.0 million 4.16% senior unsecured notes due 2024 and its $50.0 million 4.30% senior unsecured notes due 2026, each issued pursuant to the note purchase agreement dated September 8, 2014, as amended.

On December 27, 2019, we entered into a note purchase agreement with the institutional investors named therein and closed a private placement of the Operating Partnership’s $50.0 million aggregate principal amount of 4.15% Senior Guaranteed Notes due December 27, 2029 pursuant thereto. Such notes are unsecured and are guaranteed by the Company and certain subsidiaries of the Operating Partnership. A portion of the proceeds were used to repay $25.0 million aggregate principal amount of our 4.13% Series A Notes due 2022 for an aggregate amount of $26.4 million, which included a prepayment penalty of $1.4 million. A portion of the proceeds were also used to repay the 6.50% fixed rate mortgage loan encumbering West Oaks II and Spring Meadows Place, with an aggregate principal balance of $24.9 million.

As of December 31, 2019, $349.8 million was available to be drawn on our $350.0 million unsecured revolving credit facility, subject to our compliance with certain covenants. It is anticipated that additional funds borrowed under our unsecured revolving line of credit will be used for general corporate purposes, including working capital, capital expenditures, the repayment of indebtedness or other corporate activities. For further information on the unsecured revolving line of credit and other debt, refer to Note 8 of notes to the consolidated financial statements in this report.

Dividends and Equity

We currently qualify, and intend to continue to qualify in the future, as a REIT under the Code. As a REIT, we must distribute to our shareholders at least 90% of our REIT taxable income annually, excluding net capital gains. Distributions paid are at the discretion of our Board and depend on our actual net income available to common shareholders, cash flow, financial condition, capital requirements, restrictions in financing arrangements, the annual distribution requirements under REIT provisions of the Code and such other factors as our Board deems relevant.

We paid cash dividends of $0.88 per common share to shareholders in 2019 and 2018. Additionally, we paid cash dividends of $3.625 per share of our 7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest to preferred shareholders in 2019 and 2018. Our dividend policy is to make distributions to shareholders of at least 90% of our REIT taxable income, excluding net capital gains, in order to maintain qualification as a REIT. On an annualized basis, our current dividend is above our estimated minimum required distribution. Distributions paid by us are generally expected to be funded from cash flows from operating activities. To the extent that cash flows from operating activities are insufficient to pay total distributions for any period, alternative funding sources are used. Examples of alternative funding sources include proceeds from sales of real estate and bank borrowings. During 2019, the sum of our principal and interest payments, operating expenses, shareholder distributions and recurring capital expenditures exceeded our cash flow from operations by $16.7 million, and we used other sources of liquidity, including a portion of the proceeds from assets sales, to meet our cash requirements. The $16.7 million shortfall was primarily a result of selling non-core properties and using proceeds to strengthen the balance sheet and fund organic growth opportunities in the Company's core portfolio. At December 31, 2019, the Company's occupancy rate was 94.3%, up 260 basis points from 91.7% at December 31, 2018. We expect these investments to result in a continued increase in our cash flows from operating activities relative to our dividends, and by the end of 2021, we expect our cash flows from operating activities to exceed our dividends based on our current dividend rate.

We had an at-the-market equity program pursuant to which we could sell up to 8.0 million common shares from time to time, in our sole discretion. For the year ended December 31, 2019, we did not issue any common shares through the program. The sale of such common shares issuable pursuant to the program was registered with the SEC on our registration statement on Form S-3, which expired in June 2019.

Debt

At December 31, 2019, we had $932.6 million of debt outstanding consisting of $535.0 million in senior unsecured notes, $310.0 million of unsecured term loan facilities, and $87.6 million of fixed rate mortgage loans encumbering certain properties. We had no outstanding borrowings on our revolving credit facility as of December 31, 2019.

Our $845.0 million of senior unsecured notes and unsecured term loans have interest rates ranging from 2.66% to 4.74% and are due at various maturity dates from June 2021 through December 2029.

Our $87.6 million of fixed rate mortgages have interest rates ranging from 3.76% to 5.80% and are due at various maturity dates from February 2022 through June 2026. The fixed rate mortgage notes are secured by mortgages on properties that have an approximate net book value of $151.4 million as of December 31, 2019.

In addition, we had interest rate swap derivative instruments in effect for an aggregate notional amount of $360.0 million converting a portion of our floating rate corporate debt to fixed rate debt, including forward starting swaps totaling $150.0 million. After taking into account the impact of converting our variable rate debt to fixed rate debt by use of the interest rate swap agreements, at December 31, 2019, we had $100.0 million of variable rate debt outstanding.

Off Balance Sheet Arrangements

Real Estate Joint Ventures

We consolidate entities in which we own less than 100% equity interest if we have a controlling interest or are the primary beneficiary in a variable interest entity, as defined in the Consolidation Topic of FASB ASC 810. From time to time, we enter into joint venture arrangements from which we believe we can benefit by owning a partial interest in one or more properties.

As of December 31, 2019, our investments in unconsolidated joint ventures were approximately $130.3 million representing our ownership interest in four joint ventures. We accounted for these entities under the equity method. Refer to Note 6 of the notes to the consolidated financial statements in this report for further information regarding our equity investments in unconsolidated joint ventures.

We are engaged by certain of our joint ventures to provide asset management, property management, construction management, leasing and investing services for such ventures' respective properties. We receive fees for our services, including a property management fee calculated as a percentage of gross revenues received.

Guarantee

A redevelopment agreement was entered into between the City of Jacksonville, the Jacksonville Economic Development Commission and the Company, to construct and develop River City Marketplace in 2005. As part of the agreement, the city agreed to finance up to $12.2 million of bonds. Repayment of the bonds is to be made in accordance with a level-payment amortization schedule over 20 years, and repayments are made out of tax revenues generated by the redevelopment. The remaining debt service payments due over the life of the bonds, including principal and interest, are $9.1 million. As part of the redevelopment, the Company executed a guaranty agreement whereby the Company would fund debt service payments if incremental revenues were not sufficient to fund repayment. There have been no payments made by the Company under this guaranty agreement to date.

Contractual Obligations

The following are our contractual cash obligations as of December 31, 2019:


	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(In thousands)
Mortgages and notes payable:
Scheduled amortization	$	9,573	$	2,326	$	4,785	$	1,811	$	651
Payments due at maturity	923,008		—		216,508		306,500		400,000
Total mortgages and notes payable ⁽¹⁾	932,581		2,326		221,293		308,311		400,651
Interest expense ⁽²⁾	209,405		36,839		97,671		44,831		30,064
Finance lease ⁽³⁾	1,300		100		300		200		700
Operating leases	100,592		1,456		4,447		1,974		92,715
Construction commitments	6,494		6,494		—		—		—
Development obligations ⁽⁴⁾	2,842		431		611		382		1,418
Total contractual obligations	$	1,253,214	$	47,646	$	324,322	$	355,698	$	525,548

⁽¹⁾Excludes $2.0 million of unamortized mortgage debt premium and $3.8 million in deferred financing costs.

⁽²⁾Variable rate debt interest is calculated using rates at December 31, 2019.

⁽³⁾Includes interest payments associated with the finance lease obligation of $0.4 million.

⁽⁴⁾Includes interest payments associated with the development obligations of $0.6 million.

At December 31, 2019, we did not have any contractual obligations that required or allowed settlement, in whole or in part, with consideration other than cash.

Mortgages and Notes Payable

See the analysis of our debt included in “Liquidity and Capital Resources” above.

Operating and Finance Leases

We have an operating ground lease at Centennial Shops located in Edina, Minnesota. The lease includes rent escalations throughout the lease period and expires in April 2105.

We have an operating lease for our 5,629 square foot corporate office in New York, New York, and an operating lease for our 12,572 square foot office in Southfield, Michigan. These leases are set to expire in January 2024 and December 2024, respectively. Our New York, New York corporate office lease includes an additional five year renewal to extend the lease through January 2029 and our Southfield, Michigan office lease includes two additional five year renewal options to extend the lease through December 2034.

We also have a ground finance lease at our Buttermilk Towne Center with the City of Crescent Springs, Kentucky. The lease provides for fixed annual payments of $0.1 million through maturity in December 2032, at which time we can acquire the land for one dollar.

Construction Costs

In connection with the development and expansion of various shopping centers as of December 31, 2019, we have entered into agreements for construction activities with an aggregate cost of approximately $6.5 million.

Planned Capital Spending

We are focused on enhancing the value of our existing portfolio of shopping centers through successful leasing efforts, including the reconfiguration of anchor-space and small shop lease-up, and the completion of our redevelopment projects currently in process.

For 2020, we anticipate spending between $40.0 million and $50.0 million for capital expenditures, of which $6.5 million is reflected in the construction commitments in the above contractual obligations table. The total anticipated spending relates to leasing costs, building improvements, targeted remerchandising, outlots/expansion, and development/redevelopment. Estimates for future spending will change as new projects are approved.

Capitalization

At December 31, 2019 and 2018, our total market capitalization was $2.2 billion and $2.0 billion, respectively, and is detailed below:


	December 31,
	2019			2018
	(In thousands)
Notes payable, net	$	930,808		$	963,149
Unamortized premiums and deferred financing costs	1,773			110
Finance lease obligation	926			975
Cash, cash equivalents and restricted cash	(114,552)			(44,722)
Pro-rata share of unconsolidated entities cash, cash equivalents and restricted cash	(1,120)			—
Net debt	$	817,835		$	919,512

Common shares outstanding	79,850			79,734
OP Units outstanding	1,909			1,909
Restricted share awards (treasury method)	995			763
Total common shares and equivalents	82,754			82,406
Market price per common share	$	15.04		$	11.95
Equity market capitalization	$	1,244,620		$	984,752

7.25% Series D Cumulative Convertible Perpetual Preferred Shares	1,849			1,849
Market price per convertible preferred share	$	59.86		$	49.45
Convertible perpetual preferred shares (at market)	$	110,681		$	91,433

Total market capitalization	$	2,173,136		$	1,995,697

Net debt to total market capitalization	37.6		%	46.1		%

At December 31, 2019, noncontrolling interests represented a 2.3% ownership in the Operating Partnership. The OP Units may, under certain circumstances, be exchanged for our common shares on a one-for-one basis. We, as sole general partner of the Operating Partnership, have the option, but not the obligation, to settle exchanged OP Units held by others in cash. Assuming the exchange of all OP Units, there would have been approximately 81.8 million of our common shares outstanding at December 31, 2019, with a market value of approximately $1.2 billion.

Non-GAAP Financial Measures

Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operations results. We believe these additional measures provide additional and useful means to assess our performance. However, these measures do not represent alternatives to GAAP measures as indicators of performance and a comparison of the Company's presentations to similarly titled measures of other REITs may not necessarily be meaningful due to possible differences in definitions and application by such REITs.

Funds From Operations

We consider funds from operations, also known as “FFO,” to be an appropriate supplemental measure of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts (“NAREIT”) is an industry body public REITs participate in and provides guidance to its members. Under the NAREIT definition, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable property and impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We have adopted the NAREIT definition in our computation of FFO.

In addition to FFO, we include Operating FFO as an additional measure of our financial and operating performance. Operating FFO excludes acquisition costs and periodic items such as gains (or losses) from sales of land and impairment provisions on land, bargain purchase gains, severance expense, executive management reorganization costs, net, accelerated amortization of debt premiums, gains or losses on extinguishment of debt, and insured expenses, net and R2G Venture LLC related costs that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity.

While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable.

We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common shareholders. FFO and Operating FFO do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends. The following table illustrates the calculations of FFO and Operating FFO:


	Years Ended December 31,
	2019		2018		2017
	(In thousands, except per share data)
Net income	$	93,686	$	18,036	$	70,719
Net (income) attributable to noncontrolling partner interest	(2,175)		(417)		(1,659)
Preferred share dividends	(6,701)		(6,701)		(6,701)

Net income available to common shareholders	84,810		10,918		62,359
Adjustments:
Rental property depreciation and amortization expense	78,095		86,970		91,097
Pro-rata share of real estate depreciation from unconsolidated joint ventures	459		191		302
Gain on sale of depreciable real estate	(81,485)		(3,699)		(51,977)
Gain on sale of joint venture depreciable real estate	(385)		(307)		—
Provision for impairment on income-producing properties	—		13,434		8,422


Other gain on unconsolidated joint ventures	(237)		(5,208)		—
FFO available to common shareholders	81,257		102,299		110,203
Noncontrolling interest in Operating Partnership ⁽¹⁾	—		417		1,659
Preferred share dividends (assuming conversion) ⁽²⁾	6,701		6,701		6,701
FFO available to common shareholders and dilutive securities	$	87,958	$	109,417	$	118,563

Gain on sale of land	(371)		(295)		(787)
Provision for impairment on land	—		216		982
Loss on extinguishment of debt	2,571		134		—
Insured expenses, net	2,276		—		—
Accelerated amortization of debt premium	—		—		110
Severance expense ⁽³⁾	130		1,117		715
Executive management reorganization, net ⁽³⁾⁽⁴⁾	1,402		9,673		—
R2G Venture LLC related costs⁽³⁾⁽⁵⁾	499		—		—
Acquisition costs	—		233		—
Other gain	—		(398)		—

Operating FFO available to common shareholders and dilutive securities	$	94,465	$	120,097	$	119,583

Weighted average common shares	79,802		79,592		79,344
Shares issuable upon conversion of OP Units ⁽¹⁾	—		1,912		1,917
Dilutive effect of restricted stock	939		496		186
Shares issuable upon conversion of preferred shares⁽²⁾	6,981		6,858		6,740
Weighted average equivalent shares outstanding, diluted	87,722		88,858		88,187

Diluted earnings per share	$	1.04	$	0.13	$	0.78
Per share adjustments for FFO available to common shareholders and dilutive securities	(0.04)		1.10		0.56
FFO available to common shareholders and dilutive securities per share, diluted	$	1.00	$	1.23	$	1.34

Per share adjustments for Operating FFO available to common shareholders and dilutive securities	0.08		0.12		0.02
Operating FFO available to common shareholders and dilutive securities per share, diluted	$	1.08	$	1.35	$	1.36

⁽¹⁾The total noncontrolling interest reflects OP Units convertible on a one-for-one basis into common shares. The Company's net income for the year ended December 31, 2019 (largely driven by gain on sale of real estate), resulted in an income allocation to OP Units which drove an OP Unit ratio of $1.14 (based on 1,909 weighted average OP Units outstanding) as of December 31, 2019. In instances when the OP Unit ratio exceeds basic FFO, the OP Units are considered anti-dilutive, and as a result are not included in the calculation of fully diluted FFO and Operating FFO for the year ended December 31, 2019.

⁽²⁾7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest, $0.01 par value per share paid annual dividends of $6.7 million and are currently convertible into approximately 7.0 million common shares. They are dilutive only when earnings or FFO exceed approximately $0.96 per diluted share per year. The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earnings per share in future periods.

⁽³⁾Amounts noted are included in General and administrative expense.

⁽⁴⁾For 2019, largely comprised of severance to a former executive officer and performance award expense related to the Company's former Chief Executive Officer. For 2018, includes severance, accelerated vesting of restricted stock and performance award charges and the benefit from the forfeiture of unvested restricted stock and performance awards associated with our former executives, in addition to recruiting fees, relocation expenses and cash inducement bonuses related to the Company's current executive team.

⁽⁵⁾For 2019, comprised of special incentive expense related to the execution of the R2G Venture LLC joint venture agreement.

NOI, Same Property NOI and NOI from Other Investments

NOI consists of (i) rental income and other property income, before straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fees less (ii) real estate taxes and all recoverable and non-recoverable operating expenses other than straight-line ground rent expense, in each case, including our share of these items from our R2G Venture LLC unconsolidated joint venture.

NOI, Same Property NOI and NOI from Other Investments are supplemental non-GAAP financial measures of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable operating properties for the reporting period. Same Property NOI for the three and twelve months ended December 31, 2019 and 2018 represents NOI from the Company's same property portfolio consisting of 41 consolidated operating properties acquired or placed in service and stabilized prior to January 1, 2018 and five previously consolidated properties contributed to the newly formed joint venture, R2G Venture LLC, in December 2019. Same property NOI from these five properties includes 51.5% of their NOI as a consolidated property for the period January 1, 2018 through December 9, 2019 and 51.5% of their NOI as an unconsolidated property accounted for under the equity method for the period December 10, 2019 through December 31, 2019. Same Property NOI excludes properties under redevelopment or where activities have started in preparation for redevelopment. A property is designated as a redevelopment when planned improvements significantly impact the property. NOI from Other Investments for the three and twelve months ended December 31, 2019 and 2018 represents NOI primarily from (i) properties disposed of and acquired during 2018 and 2019, (ii) 48.5% of the NOI prior to December 10, 2019 from the five previously consolidated properties contributed to the R2G Venture LLC unconsolidated joint venture, (iii) Webster Place and Rivertowne Square where the Company has begun activities in anticipation of future redevelopment, (iv) certain property related employee compensation, benefits, and travel expense and (v) non-comparable operating income and expense adjustments.

Same Property NOI and NOI from Other Investments should not be considered alternatives to net income in accordance with GAAP or as measures of liquidity. Our method of calculating these measures may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

The following is a summary of our owned properties for the periods noted with consistent classification in the prior period for presentation of Same Property NOI:


	Three Months Ended December 31,			Twelve Months Ended December 31,
Property Designation	2019	2018	2019	2018
Same-property	46	46	46	46
Acquisitions ⁽¹⁾	1	—	1	—
Redevelopment ⁽²⁾	2	2	2	2
Total properties	49	48	49	48

⁽¹⁾Includes the following property for the three and twelve months ended December 31, 2019: Lakehills Plaza.

⁽²⁾Includes the following properties for the three months and twelve months ended December 31, 2019 and 2018: Rivertowne Square and Webster Place. The entire property indicated for each period is completely excluded from the Same Property NOI.

The following is a reconciliation of our Operating Income to Same Property NOI at Pro-Rata:


	Three Months Ended December 31,						Twelve Months Ended December 31,
	2019		2018		2019		2018
	(in thousands)
Net income (loss) available to common shareholders	$	71,055	$	(5,769)	$	84,810	$	10,918
Preferred share dividends	1,675		1,675		6,701		6,701
Net income (loss) attributable to noncontrolling partner interest	1,727		(97)		2,175		417
Income tax provision	97		51		179		198
Interest expense	9,707		11,085		40,057		43,439
Costs associated with early extinguishment of debt	1,949		134		2,571		134
Earnings from unconsolidated joint ventures	(128)		(19)		(581)		(589)
Gain on sale of real estate	(75,783)		(3,813)		(81,856)		(3,994)
Gain on remeasurement of unconsolidated joint venture	—		—		(237)		(5,208)
Insured expenses, net	2,276		—		2,276		—
Other (income) expense, net	(24)		189		203		244
Management and other fee income	(52)		(32)		(230)		(254)
Depreciation and amortization	18,782		21,608		78,647		87,327
Acquisition costs	—		—		—		233
General and administrative expenses	8,789		5,851		27,634		31,383
Provision for impairment	—		13,434		—		13,650
Pro-rata share of NOI from unconsolidated joint venture ⁽¹⁾	521		—		521		—
Lease termination fees	(409)		(53)		(743)		(161)
Amortization of lease inducements	160		43		519		173
Amortization of acquired above and below market lease intangibles, net	(1,218)		(1,147)		(6,762)		(9,880)
Straight-line ground rent expense	76		76		306		306
Straight-line rental income	(459)		(602)		(2,408)		(2,892)
NOI at Pro-Rata ⁽²⁾	38,741		42,614		153,782		172,145
NOI from Other Investments	(1,049)		(6,338)		(5,284)		(29,505)
Same Property NOI at Pro-Rata ⁽³⁾	$	37,692	$	36,276	$	148,498	$	142,640

⁽¹⁾ Represents 51.5% of the NOI from the five properties contributed to R2G Venture LLC after December 9, 2019.

⁽²⁾ Includes 100.0% of the NOI from the five properties contributed to R2G Venture LLC prior to December 10, 2019 and 51.5% of the NOI from the same five properties after December 9, 2019.

⁽³⁾ Includes 51.5% of the NOI from the five properties contributed to R2G Venture LLC for all periods presented.

Inflation

Inflation has been relatively low in recent years and has not had a significant impact on the results of our operations. Should inflation rates increase in the future, substantially all of our tenant leases contain provisions designed to partially mitigate the negative impact of inflation in the near term. Such lease provisions include clauses that require our tenants to reimburse us for real estate taxes and many of the operating expenses we incur. Also, many of our leases provide for periodic increases in base rent which are either of a fixed amount or based on changes in the consumer price index and/or percentage rents (where the tenant pays us rent based on a percentage of its sales). Significant inflation rate increases over a prolonged period of time may have a material adverse impact on our business.

Recent Accounting Pronouncements

Refer to Note 2 of the notes to the consolidated financial statements in this report for a discussion of Recent Accounting Pronouncements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We have exposure to interest rate risk on our variable rate debt obligations. Based on market conditions, we may manage our exposure to interest rate risk by entering into interest rate swap agreements to hedge our variable rate debt. We are not subject to any foreign currency exchange rate risk or commodity price risk, or other material rate or price risks. Based on our debt and interest rates and interest rate swap agreements in effect at December 31, 2019, a 100 basis point change in interest rates would impact our future earnings and cash flows by approximately $1.0 million annually. We believe that a 100 basis point increase in interest rates would decrease the fair value of our total outstanding debt by approximately $31.6 million at December 31, 2019.

We had interest rate swap agreements with an aggregate notional amount of $360.0 million as of December 31, 2019. The agreements provided for fixed rates ranging from 1.31% to 2.15% and had expirations ranging from 2020 to 2027. The following table sets forth information as of December 31, 2019 concerning our long-term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates of maturing amounts and fair market value. Net debt premium and unamortized deferred financing costs of approximately $1.8 million are excluded:


	2020			2021			2022			2023			2024			Thereafter			Total			Fair Market Value
(dollars in thousands)
Fixed-rate debt	$	2,326		$	39,508		$	52,397		$	129,388		$	75,879		$	533,083		$	832,581		$	848,170
Weighted average interest rate	5.3		%	3.8		%	5.7		%	3.5		%	4.5		%	3.9		%	4.0		%	3.6		%
Variable-rate debt	$	—		$	—		$	—		$	—		$	50,000		$	50,000		$	100,000		$	100,000
Weighted average interest rate	—		%	—		%	—		%	—		%	2.9		%	3.3		%	3.1		%	3.1		%

We estimated the fair market value of our fixed rate mortgages using a discounted cash flow analysis, based on borrowing rates for similar types of borrowing arrangements with the same remaining maturity. Considerable judgment is required to develop estimated fair values of financial instruments. The table incorporates only those exposures that exist at December 31, 2019 and does not consider those exposures or positions which could arise after that date or firm commitments as of such date. Therefore, the information presented therein has limited predictive value. Our actual interest rate fluctuations will depend on the exposures that arise during the period and on market interest rates at that time.

In July 2017, the Financial Conduct Authority, the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates, or financing costs to borrowers. We have material contracts that are indexed to USD-LIBOR, and we are monitoring this activity and evaluating the related risks.

Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements and supplementary data are included as a separate section in this Annual Report on Form 10-K commencing on page F-1 and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports under the Exchange Act, such as this report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the design control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We carried out an assessment as of December 31, 2019 of the effectiveness of the design and operation of our disclosure controls and procedures. This assessment was done under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on such evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that such disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2019.

Statement of Our Management

Our management has issued a report on its assessment of the Company’s internal control over financial reporting, which appears on page F-2 of this Annual Report on Form 10-K.

Statement of Our Independent Registered Public Accounting Firm

Grant Thornton LLP, our independent registered public accounting firm that audited the financial statements in this Annual Report on Form 10-K, has issued an attestation report on the Company’s internal control over financial reporting, which appears on page F-3 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance