FEDERAL REALTY INVESTMENT TRUST

Previous wording

Federal Realty Investment Trust (the "Parent Company" or the “Trust”) is an equity real estate investment trust (“REIT”). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its operations and owns substantially all of its assets. The Trust owns 100% of the limited liability company interests of, and is sole member and exercises exclusive control over Federal Realty GP LLC ("the General Partner"), which in turn, is the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. We specialize in the ownership, management, and redevelopment of high quality retail and mixed-use properties.

Current wording

Federal Realty Investment Trust (the "Parent Company" or the "Trust") is an equity real estate investment trust ("REIT"). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its operations and owns substantially all of its assets. The Trust owns 100% of the limited liability company interests of, and is sole member and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which in turn, is the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. We specialize in the ownership, management, and redevelopment of high quality retail and mixed-use properties. As of September 30, 2024, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 102 predominantly retail real estate projects comprising approximately 26.8 million commercial square feet. In total, the real estate projects were 95.9% leased and 94.0% occupied at September 30, 2024.

Previous wording

The heightened levels of inflation, higher interest rates, andpotentially worsening economic conditions present risks for our business and tenants. We continue to monitor and address risks related to the general state of the economy. We believe that the actions we have taken to improve our financial position and maximize our liquidity, as described further in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K, will continue to mitigate the impact to our cash flow caused by tenants not timely paying contractual rent.

Current wording

The economy continues to face several issues including inflation risk, high interest rates, andpotentially worsening economic conditions present risks for our business and tenants. We continue to monitor and address risks related to the general state of the economy. We believe that the actions we have taken to improve our financial position and maximize our liquidity, as described further in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K, will continue to mitigate the impact to our cash flow caused by tenants not timely paying contractual rent.

Previous wording

On July 31, 2024, we acquired the fee interest in Pinole Vista Crossing, a 216,000 square foot retail shopping center in Pinole, California for $60.0 million.

Current wording

On July 31, 2024, we acquired the fee interest in Pinole Vista Crossing, a 216,000 square foot retail shopping center in Pinole, California for $60.0 million. Approximately $4.2 million of net assets acquired were allocated to other assets for "acquired lease costs," and $4.0 million of net assets acquired were allocated to other liabilities for "below market leases."

Previous wording

During the six months ended June 30, 2024, we sold our Third Street Promenade property for $103.0 million, resulting in a gain on sale of $52.0 million.

Current wording

During the nine months ended September 30, 2024, we sold our Third Street Promenade property for $103.0 million, resulting in a gain on sale of $52.0 million.

Previous wording

On January 11, 2024, our Operating Partnership issued $485.0 million aggregate principal amount of 3.25% Exchangeable Senior Notes due 2029 (the “Notes”) in a private placement. The notes bear interest at an annual rate of 3.25%, payable semiannually in arrears on January 15 th and July 15 th of each year, beginning July 15, 2024. The notes mature on January 15, 2029, unless earlier exchanged, purchased or redeemed. Net proceeds after the initial purchaser’s discount and offering costs were approximately $471.5 million. Interest expense related to these Notes for the three and six months ended June 30, 2024 was $4.6 million and $8.7 million, respectively, including debt issuance cost amortization.

Current wording

On January 11, 2024, our Operating Partnership issued $485.0 million aggregate principal amount of 3.25% Exchangeable Senior Notes due 2029 (the “Notes”) in a private placement. The notes bear interest at an annual rate of 3.25%, payable semiannually in arrears on January 15 th and July 15 th of each year, beginning July 15, 2024. The notes mature on January 15, 2029, unless earlier exchanged, purchased or redeemed. Net proceeds after the initial purchaser’s discount and offering costs were approximately $471.5 million. Interest expense related to these Notes for the three and nine months ended September 30, 2024 was $4.6 million and $13.3 million, respectively, including debt issuance cost amortization.

Previous wording

For the three months ended June 30, 2024, we sold 713,821 common shares (of which, 76,000 settled on July 1, 2024) at a weighted average price per share of $102.25 for net cash proceeds of $72.1 million including paying $0.7 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. For the six months ended June 30, 2024, we issued an additional 62,895 common shares, which were sold during 2023 under our previous ATM equity program. Including these common shares, for the six months ended June 30, 2024, the weighted average price per share was $102.47 for net cash proceeds of $78.6 million, including paying $0.8 million in commissions and $0.2 million in additional offering expenses related to the sales of these common shares. As of June 30, 2024, we have the capacity to issue up to $427.0 million in common shares under our ATM equity program.

Current wording

For the three months ended September 30, 2024, we issued 1,282,938 common shares at a weighted average price per share of $113.27 for net cash proceeds of $143.8 million including paying $1.5 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. For the nine months ended September 30, 2024, we issued 2,059,654 common shares (of which, 62,895 were sold during 2023 under our previous ATM equity program) at a weighted average price per share of $109.20 for net cash proceeds of $222.4 million, including paying $2.2 million in commissions and $0.3 million in additional offering expenses related to the sales of these common shares.

Previous wording

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capitalized. We capitalized certain external and internal costs related to both development and redevelopment activities of $65 million and $4 million, respectively, for the six months ended June 30, 2024, and $100 million and $5 million for the six months ended June 30, 2023. We capitalized external and internal costs related to other property improvements of $53 million and $2 million, respectively, for the six months ended June 30, 2024, and $45 million and $2 million, respectively, for the six months ended June 30, 2023. We capitalized external and internal costs related to leasing activities of $11 million and $2 million, respectively, for the six months ended June 30, 2024, and $7 million and $2 million, respectively, for the six months ended June 30, 2023. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $4 million, $2 million, and $2 million, respectively, for the six months ended June 30, 2024, and $5 million, $2 million, and $2 million, respectively, for the six months ended June 30, 2023. Total capitalized costs were $137 million and $161 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capitalized. We capitalized certain external and internal costs related to both development and redevelopment activities of $102 million and $6 million, respectively, for the nine months ended September 30, 2024, and $155 million and $7 million for the nine months ended September 30, 2023. We capitalized external and internal costs related to other property improvements of $74 million and $4 million, respectively, for the nine months ended September 30, 2024, and $66 million and $3 million, respectively, for the nine months ended September 30, 2023. We capitalized external and internal costs related to leasing activities of $14 million and $3 million, respectively, for the nine months ended September 30, 2024, and $13 million and $3 million, respectively, for the nine months ended September 30, 2023. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $6 million, $3 million, and $3 million, respectively, for the nine months ended September 30, 2024, and $7 million, $3 million, and $3 million, respectively, for the nine months ended September 30, 2023. Total capitalized costs were $204 million and $247 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Our comparable property growth is primarily driven by increases in rental rates on new leases and lease renewals, changes in portfolio occupancy, and the redevelopment of those assets. Over the long-term, the infill nature and strong demographics of our properties provide a strategic advantage allowing us to maintain relatively high occupancy and generally increase rental rates. We continue to experience strong demand for our commercial space as evidenced by the 2.1 million square feet of comparable retail space leasing we've completed in the last twelve months, and the 2.2% spread between our leased rate of 95.3% and our occupied rate of 93.1%. However, the effects of high levels of inflation and interest rates continue to negatively impact our business with the largest impacts being higher interest costs, increased material costs, and higher operating costs. We continue to see impacts of increased costs for certain construction and other materials that support our development and redevelopment activities. Worsening supply chain disruptions could also result in extended timeframes and/or increased costs for completion of our projects and tenant build-outs, which could delay the commencement of rent payments under new leases. Similarly, if our tenants experience significant disruptions in supply chains supporting their own products, staffing issues due to labor shortages, or are otherwise impacted by worsening economic conditions, their ability to pay rent may be adversely affected. We continue to monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our business.

Current wording

Our comparable property growth is primarily driven by increases in rental rates on new leases and lease renewals, changes in portfolio occupancy, and the redevelopment of those assets. Over the long-term, the infill nature and strong demographics of our properties provide a strategic advantage allowing us to maintain relatively high occupancy and generally increase rental rates. We continue to experience strong demand for our commercial space as evidenced by the 2.1 million square feet of comparable retail space leasing we've completed in the last twelve months, and the 1.9% spread between our leased rate of 95.9% and our occupied rate of 94.0%. However, the effects of high levels of inflation and interest rates continue to negatively impact our business with the largest impacts being higher interest costs, increased material costs, and higher operating costs. We continue to see impacts of increased costs for certain construction and other materials that support our development and redevelopment activities. Worsening supply chain disruptions could also result in extended timeframes and/or increased costs for completion of our projects and tenant build-outs, which could delay the commencement of rent payments under new leases. Similarly, if our tenants experience significant disruptions in supply chains supporting their own products, staffing issues due to labor shortages, or are otherwise impacted by worsening economic conditions, their ability to pay rent may be adversely affected. We continue to monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our business.

Previous wording

•Phase IV at Pike & Rose is a 276,000 square foot office building (which includes 10,000 square feet of ground floor retail space). Approximately 201,000 square feet of the office space is leased, and all of the retail space is leased. The building is expected to cost between $185 million and $200 million, and began delivering in late September 2023. As of June 30, 2024, approximately 164,000 square feet of office space and 5,000 square feet of retail space is open.

Current wording

•Phase IV at Pike & Rose is a 276,000 square foot office building (which includes 10,000 square feet of ground floor retail space). Approximately 204,000 square feet of the office space is leased, and all of the retail space is leased. The building is expected to cost between $180 million and $190 million, and began delivering in late September 2023. As of September 30, 2024, approximately 164,000 square feet of office space and 5,000 square feet of retail space is open.

Previous wording

•Construction on Santana West includes an eight story 369,000 square foot office building, which is expected to cost between $315 million and $330 million. Approximately 170,000 square feet of space is leased, of which 29,000 square feet of space is open as of June 30, 2024.

Current wording

•Construction on Santana West includes an eight story 369,000 square foot office building, which is expected to cost between $325 million and $335 million. Approximately 193,000 square feet of space is leased, of which 29,000 square feet of space is open as of September 30, 2024.

Previous wording

At June 30, 2024, the leasable commercial square feet in our properties was 95.3% leased and 93.1% occupied. The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant closings and bankruptcies.

Current wording

At September 30, 2024, the leasable commercial square feet in our properties was 95.9% leased and 94.0% occupied. The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant closings and bankruptcies.

Previous wording

For the second quarter of 2024, we signed retail leases for a total of 601,000 square feet of retail space including 594,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 10% on a cash basis. New leases for comparable spaces were signed for 313,000 square feet, with an average rental increase of 12% on a cash basis. Renewals for comparable spaces were signed for 281,000 square feet at a 8% average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $25.31 per square foot, of which $45.35 per square foot was for new leases and $2.97 per square foot was for renewals for the three months ended June 30, 2024.

Current wording

For the third quarter of 2024, we signed retail leases for a total of 593,000 square feet of retail space including 581,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 14% on a cash basis. New leases for comparable spaces were signed for 230,000 square feet, with an average rental increase of 20% on a cash basis. Renewals for comparable spaces were signed for 351,000 square feet at a 11% average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $26.28 per square foot, of which $65.91 per square foot was for new leases and $0.36 per square foot was for renewals for the three months ended September 30, 2024.

Previous wording

For the six months ended June 30, 2024, we signed retail leases for a total of 1,188,000 square feet of retail space including 1,161,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 10% on a cash basis. New leases for comparable spaces were signed for 536,000 square feet, with an average rental increase of 15% on a cash basis. Renewals for comparable spaces were signed for 625,000 square feet at a 5% average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $26.65 per square foot, of which $53.24 per square foot was for new leases and $3.88 per square foot was for renewals for the six months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2024, we signed retail leases for a total of 1,781,000 square feet of retail space including 1,742,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 11% on a cash basis. New leases for comparable spaces were signed for 766,000 square feet, with an average rental increase of 17% on a cash basis. Renewals for comparable spaces were signed for 977,000 square feet at a 7% average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $26.53 per square foot, of which $57.04 per square foot was for new leases and $2.61 per square foot was for renewals for the nine months ended September 30, 2024.

Previous wording

The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period, excluding leases at properties sold or under contract to be sold. The comparison between the rent for expiring leases and new leases is determined by including contractual rent on the expiring lease, including percentage rent, and the comparable annual rent and in some instances, projections of percentage rent, to be paid on the new lease. In atypical circumstances, management may exercise judgment as to how to most effectively reflect the comparability of spaces reported in this calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease. Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. Costs related to tenant improvements require judgement by management in determining what are costs specific to the tenant and not deferred maintenance on the space.

Current wording

The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period, excluding leases at properties sold or under contract to be sold. The comparison between the rent for expiring leases and new leases is determined by including contractual rent on the expiring lease, including percentage rent considered to part of base rent, and the comparable annual rent and in some instances, projections of percentage rent, to be paid on the new lease. In atypical circumstances, management may exercise judgment as to how to most effectively reflect the comparability of spaces reported in this calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease. Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. Costs related to tenant improvements require judgement by management in determining what are costs specific to the tenant and not deferred maintenance on the space.

Previous wording

In the past five years, we have executed comparable space leases for 1.6 to 2.1 million square feet of retail space each year and expect the volume in 2024 will be in line with these historical averages. Although we expect overall positive increases in annual rent for comparable spaces, changes in annual rent for any individual lease or combinations of individual leases reported in any particular period may be positive or negative and we can provide no assurance that the annual rents on comparable space leases will continue to increase at historical levels, if at all. A decline in current economic conditions could adversely impact our volume of leasing activity and the amount of rent we are able to charge to new or renewing tenants.

Current wording

In the past five years, we have executed comparable space leases for 1.6 to 2.1 million square feet of retail space each year and expect the volume in 2024 will be in line with or slightly above these historical averages. Although we expect overall positive increases in annual rent for comparable spaces, changes in annual rent for any individual lease or combinations of individual leases reported in any particular period may be positive or negative and we can provide no assurance that the annual rents on comparable space leases will continue to increase at historical levels, if at all. A decline in current economic conditions could adversely impact our volume of leasing activity and the amount of rent we are able to charge to new or renewing tenants.

Previous wording

Throughout this section, we have provided certain information on a “comparable property” basis. Information provided on a comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for significant redevelopment and investment. For the three and six months ended June 30, 2024, all or a portion of 96 properties were considered comparable properties and seven properties were considered non-comparable properties. For the six months ended June 30, 2024, one property and two portions of properties were moved from non-comparable properties to comparable properties, two properties and one portion of a property were moved from acquisitions to comparable properties, and one property was removed from comparable properties, as it was sold; all compared to the designations as of December 31, 2023. While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from comparable properties when the repositioning of the asset has commenced and has or is expected to have a significant impact on property operating income within the calendar year. Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment and investment.

Current wording

Throughout this section, we have provided certain information on a “comparable property” basis. Information provided on a comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for significant redevelopment and investment. For the three and nine months ended September 30, 2024, all or a portion of 96 and 95 properties, respectively, were considered comparable properties and seven properties were considered non-comparable properties. For the nine months ended September 30, 2024, one property and two portions of properties were moved from non-comparable properties to comparable properties, two properties and one portion of a property were moved from acquisitions to comparable properties, one property was moved from other to comparable properties, as it was reconsolidated, and two properties were removed from comparable as we no longer own the properties; all compared to the designations as of December 31, 2023. While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from comparable properties when the repositioning of the asset has commenced and has or is expected to have a significant impact on property operating income within the calendar year. Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment and investment.

Previous wording

Total property revenue increased $15.4 million, or 5.5%, to $296.1 million in the three months ended June 30, 2024 compared to $280.7 million in the three months ended June 30, 2023. The percentage occupied at our shopping centers was 93.1% and 92.8% at June 30, 2024 and 2023, respectively. Changes in the components of property revenue are discussed below.

Current wording

Total property revenue increased $17.0 million, or 5.9%, to $303.6 million in the three months ended September 30, 2024 compared to $286.6 million in the three months ended September 30, 2023. The percentage occupied at our shopping centers was 94.0% and 92.3% at September 30, 2024 and 2023, respectively. Changes in the components of property revenue are discussed below.

Previous wording

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $15.4 million, or 5.5%, to $295.8 million in the three months ended June 30, 2024 compared to $280.4 million in the three months ended June 30, 2023 due primarily to the following:

Current wording

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $17.0 million, or 5.9%, to $303.4 million in the three months ended September 30, 2024 compared to $286.3 million in the three months ended September 30, 2023 due primarily to the following:

Previous wording

•an increase of $8.4 million from comparable properties primarily related to higher rental rates of approximately $5.3 million and a $3.6 million increase in recoveries from tenants on higher expenses,

Current wording

•an increase of $7.9 million from comparable properties primarily related to higher rental rates of approximately $5.6 million, a $2.2 million increase in recoveries from tenants on higher expenses, and higher average occupancy of approximately $1.5 million, partially offset by a $1.3 million decrease in lease termination fee income,

Previous wording

•an increase of $4.4 million from non-comparable properties primarily driven by occupancy increases at Pike & Rose Phase IV, Darien Commons, and Huntington Shopping Center,

Current wording

•an increase of $4.7 million from non-comparable properties primarily driven by occupancy increases at Pike & Rose Phase IV, Huntington Shopping Center, and Darien Commons,

Previous wording

Total property expenses increased $6.2 million, or 7.0%, to $94.2 million in the three months ended June 30, 2024 compared to $88.0 million in the three months ended June 30, 2023. Changes in the components of property expenses are discussed below.

Current wording

Total property expenses increased $8.3 million, or 9.1%, to $100.0 million in the three months ended September 30, 2024 compared to $91.6 million in the three months ended September 30, 2023. Changes in the components of property expenses are discussed below.

Previous wording

•an increase of $2.2 million from comparable properties due primarily to higher repairs and maintenance costs and other operating costs driven by inflationary impacts, higher insurance costs, and an increase in management fees on higher revenues, and

Current wording

•an increase of $3.1 million from comparable properties due primarily to higher repairs and maintenance costs, utilities, and insurance costs,

Previous wording

•an increase of $0.9 million from non-comparable properties due primarily to openings at Darien Commons, Pike & Rose Phase IV, and Huntington Shopping Center,

Current wording

•an increase of $0.9 million from non-comparable properties due primarily to openings at Pike & Rose Phase IV and Huntington Shopping Center,

Previous wording

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to 19.9% in the three months ended June 30, 2024 from 19.8% in the three months ended June 30, 2023.

Current wording

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to 21.1% in the three months ended September 30, 2024 from 20.5% in the three months ended September 30, 2023.

Previous wording

Real estate tax expense increased $2.9 million, or 9.0%, to $35.3 million in the three months ended June 30, 2024 compared to $32.4 million in the three months ended June 30, 2023. This increase is primarily due to the following:

Current wording

Real estate tax expense increased $3.0 million, or 9.1%, to $36.1 million in the three months ended September 30, 2024 compared to $33.0 million in the three months ended September 30, 2023. This increase is primarily due to the following:

Previous wording

Depreciation and amortization expense increased $6.1 million, or 7.7%, to $85.0 million in the three months ended June 30, 2024 compared to $79.0 million in the three months ended June 30, 2023. This increase is due primarily to our investment in comparable properties, the reconsolidation of Escondido Promenade during the second quarter of 2023, our 2024 acquisition, the opening of Pike & Rose Phase IV, and placing redevelopment properties into service.

Current wording

Depreciation and amortization expense increased $5.3 million, or 6.5%, to $87.0 million in the three months ended September 30, 2024 compared to $81.7 million in the three months ended September 30, 2023. This increase is due primarily to 2024 acquisitions, our investment in comparable properties, the opening of Pike & Rose Phase IV, and placing redevelopment properties into service, partially offset by property dispositions.

Previous wording

•a decrease of $0.6 million in capitalized interest,

Current wording

•a decrease of $0.8 million in capitalized interest,

Previous wording

•an increase of $1.7 million due to a higher overall weighted average borrowing rate, and

Current wording

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

Previous wording

•an increase of $1.0 million due to higher weighted average borrowings, and

Current wording

•an increase of $0.3 million due to higher weighted average borrowings.

Previous wording

Gross interest costs were $49.5 million and $48.6 million in the three months ended June 30, 2024 and 2023, respectively. Capitalized interest was $5.2 million and $5.8 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Gross interest costs were $49.5 million and $48.7 million in the three months ended September 30, 2024 and 2023, respectively. Capitalized interest was $5.2 million and $6.0 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

(1)Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the six months ended June 30, 2024 and 2023 is as follows:

Current wording

(1)Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the nine months ended September 30, 2024 and 2023 is as follows:

Previous wording

Total property revenue increased $33.6 million, or 6.1%, to $587.4 million in the six months ended June 30, 2024 compared to $553.7 million in the six months ended June 30, 2023. The percentage occupied at our shopping centers was 93.1% and 92.8% at June 30, 2024 and 2023, respectively. Changes in the components of property revenue are discussed below.

Current wording

Total property revenue increased $50.7 million, or 6.0%, to $891.0 million in the nine months ended September 30, 2024 compared to $840.3 million in the nine months ended September 30, 2023. The percentage occupied at our shopping centers was 94.0% and 92.3% at September 30, 2024 and 2023, respectively. Changes in the components of property revenue are discussed below.

Previous wording

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $33.6 million, or 6.1%, to $586.8 million in the six months ended June 30, 2024 compared to $553.2 million in the six months ended June 30, 2023 due primarily to the following:

Current wording

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $50.7 million, or 6.0%, to $890.2 million in the nine months ended September 30, 2024 compared to $839.5 million in the nine months ended September 30, 2023 due primarily to the following:

Previous wording

•an increase of $19.1 million from comparable properties primarily related to higher rental rates of approximately $11.9 million, and an $8.5 million increase in recoveries from tenants on higher expenses, partially offset by a $1.6 million increase in collectibility related adjustments and a $1.0 million decrease in lease termination fee income,

Current wording

•an increase of $26.8 million from comparable properties primarily related to higher rental rates of approximately $17.4 million, a $10.6 million increase in recoveries from tenants on higher expenses, and higher average occupancy of approximately $1.6 million, partially offset by a $2.3 million decrease in lease termination fee income and a $1.7 million increase in collectibility related adjustments,

Previous wording

•an increase of $8.3 million from non-comparable properties primarily driven by occupancy increases at Pike & Rose Phase IV, Darien Commons, and Huntington Shopping Center,

Current wording

•an increase of $13.0 million from non-comparable properties primarily driven by occupancy increases at Pike & Rose Phase IV, Huntington Shopping Center, and Darien Commons,

Previous wording

•an increase of $1.9 million from Escondido Promenade, which was reconsolidated in the second quarter of 2023 after we gained control of the property (see our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information), and

Current wording

•an increase of $5.0 million from Escondido Promenade, which was reconsolidated in the second quarter of 2023 after we gained control of the property (see our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information),

Previous wording

Total property expenses increased $14.1 million, or 8.0%, to $189.9 million in the six months ended June 30, 2024 compared to $175.8 million in the six months ended June 30, 2023. Changes in the components of property expenses are discussed below.

Current wording

Total property expenses increased $22.4 million, or 8.4%, to $289.9 million in the nine months ended September 30, 2024 compared to $267.4 million in the nine months ended September 30, 2023. Changes in the components of property expenses are discussed below.

Previous wording

•an increase of $6.8 million from comparable properties due primarily to higher snow removal costs, higher repairs and maintenance costs and other operating costs driven by inflationary impacts, higher insurance costs and an increase in management fees on higher revenues,

Current wording

•an increase of $9.6 million from comparable properties due primarily to higher snow removal costs, higher repairs and maintenance costs and other operating costs, higher utilities and insurance costs, and an increase in management fees on higher revenues,

Previous wording

•an increase of $1.7 million from non-comparable properties due primarily to openings at Pike & Rose Phase IV, Darien Commons, and Huntington Shopping Center,

Current wording

•an increase of $1.7 million from 2024 and 2023 acquisitions, and

Previous wording

•a decrease of $0.9 million due to lower weighted average borrowings.

Current wording

•a decrease of $0.9 million from property dispositions.