# Urban Edge Properties (UE) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Urban Edge Properties's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1611547/000161154725000018/ue-20241231.htm
Accession: 0001611547-25-000018
Filing date: 2025-02-12
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/UE/
All MD&A years: /company/UE/mda/
Previous year: /company/UE/mda/fy2023/ (FY 2023)
Next year: /company/UE/mda/fy2025/ (FY 2025)

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 and notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K.

This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and provides a year-to-year comparison between 2024 and 2023. A discussion of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Annual Report on Form 10-K but can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Executive Overview

Our Company

Urban Edge Properties (“UE”, “Urban Edge”, or the “Company”) (NYSE: UE) is a Maryland real estate investment trust that owns, manages, acquires, develops, and redevelops retail real estate, primarily in the Washington, D.C. to Boston corridor. Urban Edge Properties LP (“UELP” or the “Operating Partnership”) is a Delaware limited partnership formed to serve as UE’s majority-owned partnership subsidiary and to own, through affiliates, all of our real estate properties and other assets. Unless the context otherwise requires, references to “we”, “us” and “our” refer to Urban Edge Properties and UELP and their consolidated entities/subsidiaries.

The Operating Partnership’s capital includes general and common limited partnership interests in the operating partnership (“OP Units”). As of December 31, 2024, Urban Edge owned approximately 95.2% of the outstanding common OP Units with the remaining limited OP Units held by members of management, Urban Edge’s Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership. The third-party unitholders have limited rights over the Operating Partnership such that they do not have characteristics of a controlling financial interest. As such, the Operating Partnership is considered a variable interest entity (“VIE”), and the Company is the primary beneficiary that consolidates it. The Company’s only investment is the Operating Partnership. The VIE’s assets can be used for purposes other than the settlement of the VIE’s obligations and the Company’s partnership interest is considered a majority voting interest.

As of December 31, 2024, our portfolio was comprised of 17.4 million square feet including 71 shopping centers, two outlet centers and two malls.

Economic Considerations

In recent years, microeconomic and macroeconomic conditions have caused volatility in the financial markets. Inflation began to increase rapidly during 2021 through 2022, resulting in increased costs for certain goods and services. The Federal Reserve took measures to mitigate the impact of inflation by raising its benchmark interest rate several times between 2022 and 2023, resulting in significant increases in the cost of borrowing. These interest rate increases proved to be successful in reducing inflation as inflation rates began to fall beginning in the second quarter of 2023 and continued to fall through most of 2024.

In September 2024, the Federal Reserve cut rates by 50 basis points, driven in part by positive economic reports and the decrease in inflation levels. This was followed by additional rate cuts in November and December of 2024, lowering the target rate to a range of 4.25% to 4.50%. While interest rates and inflation have decreased compared to the prior year, both remain at elevated levels relative to the years preceding 2021 and could remain at these levels in the near-term and long-term. The current levels of inflation could also result in reduced discretionary spending by consumers, putting pricing pressure on rents and limiting the amounts we are able to charge new tenants or tenants up for renewals.

Notwithstanding the foregoing, the Company continued to see strong demand from grocers, discounters, quick-service restaurants and other tenants wanting to operate in our core market of the Washington, D.C. to Boston corridor. The Company was also able to pay off, finance and refinance several mortgage loans during the year and continues to maintain a strong balance sheet that we believe provides us with financial flexibility. Our debt consists primarily of well-laddered, single asset, non-recourse mortgages with approximately 9% of debt maturing through 2026. We expect to continue to add value to our portfolio through executing our leasing pipeline, active development, redevelopment and anchor repositioning projects, commencing leases signed but not yet opened and identifying additional accretive capital recycling opportunities.

2024 Highlights

Set forth below are highlights of our leasing activities, completed and activated development, redevelopment and anchor repositioning projects, financings, refinancings, and property acquisitions and dispositions:

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•Signed 79 new leases totaling 485,153 square feet, including 55 new leases on a same-space(1) basis totaling 334,972 square feet at an average rental rate of $31.34 per square foot on a GAAP basis and $27.95 per square foot on a cash basis, generating average rent spreads of 47.3% on a GAAP basis and 25.7% on a cash basis;

•Renewed or extended 86 leases totaling 1,910,688 square feet, including 84 leases on a same-space(1) basis totaling 1,682,610 square feet, at an average rental rate of $19.92 per square foot on a GAAP basis and $19.60 per square foot on a cash basis, generating average rent spreads of 11.3% on a GAAP basis and 9.3% on a cash basis;

•Acquired three properties in our core market of the Washington, D.C. to Boston corridor, totaling 917,000 square feet, for an aggregate purchase price of $245.3 million, inclusive of transaction costs, at an average capitalization rate of 7%;

•Sold three single-tenant and non-core properties, totaling 454,000 square feet, for an aggregate gross price of $108.9 million at an average capitalization rate of 5%;

•Completed five development, redevelopment and anchor repositioning projects, aggregating $29.7 million, expected to generate an approximate 16% unleveraged yield;

•Activated eight development, redevelopment, and anchor repositioning projects aggregating $14.7 million, expected to generate an approximate 25% unleveraged yield;

•Paid off three single-asset, non-recourse, variable rate mortgage loans aggregating $75.7 million in January 2024 that were due to mature in the fourth quarter of 2024 and had interest rates of 7.34% on the date of repayment;

•Refinanced two single-asset, non-recourse mortgages with two new loans aggregating $100 million with a weighted average interest rate of 5.8%;

•Financed three assets with individual non-recourse mortgages aggregating $111 million with a weighted average interest rate of 5.9%;

•Assumed a $60 million fixed rate mortgage with a below-market interest rate of 3.76% in connection with the acquisition of The Village at Waugh Chapel, partially financing the purchase; and

•Issued 7,097,124 common shares at a weighted average gross price of $18.71 per share under our $250 million at-the-market equity offering program (the “ATM program”), generating cash proceeds of $131.1 million, net of commissions paid to distribution agents.

(1) Same-space leases represent those leases signed on spaces for which there was a previous lease.

2025 Outlook

We intend to create value and grow earnings, funds from operations, and cash flows by:

•Adding essential tenants to our properties and positioning our retail assets with a mix of high-quality, credit tenants including grocers, discounters, premium healthcare operators and elevated food offerings;

•Managing our balance sheet to allow for flexibility and execution on financing, refinancing, or prepayment opportunities when identified;

•Managing and monitoring property operating and general and administrative expenses and identifying opportunities for savings;

•Leasing vacant spaces, proactively extending leases, managing the exercise of tenant options and, when possible, replacing underperforming tenants with operators that can pay higher rents and positively impact our properties;

•Expediting the delivery of space to tenants and the collection of rents from executed leases that have not yet rent commenced;

•Generating additional income from our existing assets by redeveloping underutilized existing space, repositioning anchors, and monetizing unused land by developing new spaces and pad sites and researching additional income producing uses; and

•Recycling capital by divesting non-retail and smaller assets in non-core markets and single-tenant assets with low growth, and acquiring assets that meet our investment criteria in our target markets.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP”, requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenue and expenses. These estimates are prepared using management’s best judgment, after considering past and current events and economic conditions. In addition, certain information relied upon by management in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from

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consultations with third-party experts. Actual results could differ from these estimates. A discussion of possible risks which may affect these estimates is included in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K. Management considers an accounting estimate to be critical if changes in the estimate could have a material impact on our consolidated results of operations or financial condition.

Our significant accounting policies are more fully described in Note 3 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. The following accounting estimates are considered critical because they are particularly dependent on management’s judgment about matters that have a significant level of uncertainty at the time the accounting estimates are made, and changes to those estimates could have a material impact on our financial condition or operating results.

Real Estate - Estimates Related to Valuing Acquired Assets and Liabilities

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities. We assess fair value based on estimated cash flow projections utilizing appropriate discount and capitalization rates and available market information, including market-based rental revenues. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities based on their relative fair values at date of acquisition.

In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases is estimated based on the present value of the difference between the contractual amounts, including fixed rate below-market renewal options, to be paid pursuant to the in-place leases and our estimate of the market lease rates and other lease provisions for comparable leases measured over a period equal to the estimated remaining term of the lease. Tenant related intangibles and improvements are amortized on a straight-line basis over the related lease term, including any bargain renewal options. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in the calculation of in-place leases. If the value of below-market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a lease terminates prior to its stated expiration, all unamortized amounts relating to that lease are written off.

Since the assessment of fair value and allocation of these amounts is made at the time of acquisition, they are subject to future changes in market conditions and tenants’ ability to continue operations and their exercise of options and renewals. In the case that these assumptions change materially, they could have a material impact on our results and financial statements. During 2024, we acquired three properties and utilized the above factors, including the use of a third party, to allocate the purchase price of these properties among various assets and liabilities. Further information on these allocations can be found in Part II, Item 8, Note 4 of this Annual Report on Form 10-K. We have had no changes to our methods of fair value assessment and allocations during the year ended December 31, 2024.

Real Estate - Estimates Related to Impairments

Our properties are individually evaluated for impairment quarterly, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis taking into account the appropriate capitalization rate in determining a future terminal value. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimated fair value may be based on discounted future cash flows utilizing appropriate discount and capitalization rates, future market rental rates and, in addition to available market information, third-party appraisals, broker selling estimates or sale agreements under negotiation. Impairment assessments are based on our current plans, intended holding periods and available market information at the time the assessments are prepared. If our estimates of the projected future cash flows change based on uncertain market conditions, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The carrying value of a property may also be individually reassessed in the event a casualty occurs at that property. Casualty events may include property damage from a natural disaster or fire. When such an event occurs, management estimates the net book value of assets damaged over the property’s total gross leasable area and adjusts the property’s carrying value to reflect the damages. Estimates are subjective and may change if additional damage is later assessed or if future cash flows are revised.

During the year ended December 31, 2024, we have had no changes to the methods or assumptions used in our assessment of fair value of our real estate assets and have not incurred any material impairments. During 2023, we recognized a $34.1 million impairment charge related to one of our properties located in Brooklyn, NY. Further information on impairments can be found in Part II, Item 8, Note 9 of this Annual Report on Form 10-K. We operate in a business that has significant investments in real

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estate and our estimates of valuation are subject to current market conditions and tenant operations, which drive future cash flows, and are beyond our control. As these factors can result in changes to our estimates and result in material impairment losses, this is deemed a critical accounting estimate.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses which provides an update to improve the disclosures about a public business entity’s expenses and provide more detailed information about the types of expenses, including purchase of inventory, employee compensation, depreciation and amortization in commonly presented expense captions such as cost of sales, selling, general and administrative expenses and research and development. The Company is evaluating the impact of this update and will adopt the amendments in our December 31, 2025 Annual Report on Form 10-K.

In March 2024, FASB issued ASU 2024-01 Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards which provides clarity on how an entity determines whether a profits interest or similar award is within the scope of ASC 718. It also offers guidance on identifying whether such an award is not a share-based payment arrangement and therefore within the scope of other guidance. The Company has reviewed the update and determined it does not issue any profits interest or similar awards and therefore is not impacted by this ASU.

In December 2023, FASB issued ASU 2023-09 Income Tax (Topic 740): Improvements to Income Tax Disclosures which provides for additional disclosures for rate reconciliations, disaggregation of income taxes paid, and other disclosures. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2024. The Company is evaluating the impact of this update and will adopt the amendments in its December 31, 2025 Annual Report on Form 10-K.

In November 2023, FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which provides for additional disclosures as they relate to a Company’s segments. Additional requirements per the update include disclosures for significant segment expenses, measures of profit or loss used by the Chief Operating Decision Maker (the “CODM”) and how these measures are used to allocate resources and assess segment performance. The amendments in this ASU will also apply to entities with a single reportable segment and are effective for all public entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company has evaluated the impact of this update on its disclosures and has applied the required amendments in this Annual report on Form 10-K for the year ended December 31, 2024.

In August 2023, FASB issued ASU 2023-05 Business Combinations - Joint Venture Formation (Subtopic 805-60): Recognition and Initial Measurement, which provides an update to the accounting treatment of joint ventures upon formation. This update requires companies to measure assets and liabilities contributed to joint ventures at fair value at the time of formation and has an effective date of January 1, 2025. The update is to be applied prospectively, with a retrospective option for previously formed joint ventures. The Company has not elected retrospective application for its previously formed joint ventures and will adopt the provisions of this ASU for any future joint venture formations.

Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company or the Operating Partnership, or they are not expected to have a material impact on our consolidated financial statements.

Recent SEC Reporting Updates

On March 6, 2024, the SEC issued its final ruling on The Enhancement and Standardization of Climate-Related Disclosures for Investors (Release No. 34-99678). Provisions of the final rule require registrants to include climate-related disclosures that are both qualitative and quantitative in their annual reports and registration statements. These disclosures include, but are not limited to, governance, risk management, strategy, emissions, capital expenditures, and climate-related targets and goals. Subsequent to issuance, the rules became the subject of litigation, and the SEC issued an order staying the rules to allow the legal process to proceed. At this time it is not easily determined what the timeline for resolution is and it is uncertain whether the rules will be upheld, amended or abolished. The Company is continuing to review the final rule and monitoring the litigation progress for possible impacts on the disclosure requirements.

See Note 3 to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recent accounting pronouncements that may affect us. Additionally, see Note 7 to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recent amendments to the Code.

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Results of Operations

We derive substantially all of our revenue from rents received from tenants under existing leases on each of our properties. This revenue includes fixed base rents, recoveries of expenses that we have incurred and that we pass through to the individual tenants and percentage rents that are based on specified percentages of tenants’ revenue, in each case as provided in the respective leases.

Our primary cash expenditures consist of our property operating and capital costs, general and administrative expenses, and interest and debt expense. Property operating expenses include real estate taxes, repairs and maintenance, management expenses, insurance and utilities; general and administrative expenses, which include payroll, professional fees, information technology, office expenses and other administrative expenses; and interest and debt expense primarily consists of interest on our mortgage debt and our line of credit under the Revolving Credit Agreement (our “line of credit”). In addition, we incur substantial non-cash charges for depreciation and amortization on our properties. We also capitalize certain expenses, such as taxes, interest and salaries related to properties under development or redevelopment until the property is ready for its intended use.

Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions, dispositions, developments, redevelopments and changes in accounting policies. The results of operations of any acquired properties are included in our financial statements as of the date of acquisition. Our results of operations are affected by national, regional and local economic conditions, as well as macroeconomic conditions, which are at times subject to volatility and uncertainty. In recent years, inflation levels were elevated resulting in increased costs for certain goods and services. Most of our leases require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation, although some larger tenants have capped the amount of these operating expenses they are responsible for under their lease.

In response to the rising rate of inflation, the Federal Reserve raised benchmark interest rates several times between 2022 and 2023, resulting in an increase in the cost of borrowing. In 2024, the Federal Reserve cut rates driven in part by positive economic reports and a decrease in inflation levels. Interest rates still remain at elevated levels compared to the years preceding 2021, and could remain at this level in the near-term and long-term. We occasionally utilize interest rate derivative agreements to hedge the effect of rising interest rates on our variable rate debt. As of December 31, 2024, all of our outstanding mortgage debt is fixed rate or hedged with interest rate derivative agreements. Our only variable rate debt exposure is related to our line of credit which has an outstanding balance of $50 million as of December 31, 2024 and is indexed to SOFR, plus an applicable margin per the Revolving Credit Agreement. As of December 31, 2024, we were counterparty to one interest rate swap agreement and one interest rate cap agreement, both of which qualify for, and are designated as, hedging instruments. We are actively managing our business to respond to the economic and social impacts from events and circumstances such as those described above. See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for more information.

The following provides an overview of our key non-GAAP measures based on our consolidated results of operations (refer to NOI, same-property NOI and Funds From Operations applicable to diluted common shareholders (“FFO”) described later in this section):

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(Amounts in thousands)","2024","","2023"],["Net income","$","75,442","","","$","259,876"],["FFO applicable to diluted common shareholders(1)","186,732","","","184,438"],["NOI(2)","273,268","","","250,129"],["Same-property NOI(2)","216,836","","","207,841"]]
[[/GREPCENT_TABLE]]

(1) Refer to page 36 for a reconciliation to the nearest generally accepted accounting principles (“GAAP”) measure.

(2) Refer to page 35 for a reconciliation to the nearest GAAP measure.

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Comparison of the Year Ended December 31, 2024 to December 31, 2023

Net income for the year ended December 31, 2024 was $75.4 million, compared to net income of $259.9 million for the year ended December 31, 2023. The following table summarizes certain line items from our consolidated statements of income and comprehensive income that we believe are important in understanding our operations and/or those items which changed significantly in the year ended December 31, 2024 as compared to the same period in 2023:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["(Amounts in thousands)","2024","","2023","","$ Change"],["Total revenue","$","444,966","","","$","416,922","","","$","28,044"],["Depreciation and amortization","150,389","","","108,979","","","41,410"],["Real estate taxes","68,651","","","64,889","","","3,762"],["Property operating expenses","78,776","","","68,563","","","10,213"],["General and administrative","37,474","","","37,070","","","404"],["Real estate impairment loss","\u2014","","","34,055","","","(34,055)"],["Gain on sale of real estate","38,818","","","217,708","","","(178,890)"],["Interest income","2,667","","","3,037","","","(370)"],["Interest and debt expense","81,587","","","74,945","","","6,642"],["Gain on extinguishment of debt","21,423","","","41,144","","","(19,721)"],["Income tax expense","2,386","","","17,800","","","(15,414)"]]
[[/GREPCENT_TABLE]]

Total revenue increased by $28.0 million to $445.0 million in the year ended December 31, 2024 from $416.9 million in the year ended December 31, 2023. The increase is primarily attributable to:

•$20.6 million increase as a result of property acquisitions net of dispositions;

•$17.5 million increase in property rentals and tenant reimbursements due to rent commencements and contractual rent increases, partially offset by tenant vacates; and

•$1.2 million decrease in rental revenue deemed uncollectible; offset by

•$9.9 million decrease in other income primarily driven by a litigation settlement payment received in the fourth quarter of 2023; and

•$1.4 million decrease in non-cash revenues driven by accelerated amortization of below-market intangible liabilities in the fourth quarter of 2023 related to a tenant termination.

Depreciation and amortization increased by $41.4 million to $150.4 million in the year ended December 31, 2024 from $109.0 million in the year ended December 31, 2023. The increase is primarily attributable to:

•$26.4 million increase as a result of property acquisitions net of dispositions; and

•$15.0 million increase due to assets placed in service for completion of redevelopment projects during the year.

Real estate tax expense increased by $3.8 million to $68.7 million in the year ended December 31, 2024 from $64.9 million in the year ended December 31, 2023. The increase is primarily attributable to:

•$4.5 million increase as a result of property acquisitions net of dispositions; offset by

•$0.4 million increase in capitalized real estate taxes due to the commencement of development, redevelopment and anchor repositioning projects, offset by project completions; and

•$0.3 million decrease as a result of successful tax appeals and lower assessments.

Property operating expenses increased by $10.2 million to $78.8 million in the year ended December 31, 2024 from $68.6 million in the year ended December 31, 2023. The increase is primarily attributable to:

•$7.3 million higher expenses incurred for increased insurance premiums, snow removal, and higher common area maintenance expenses across the portfolio as compared to 2023; and

•$2.9 million increase as a result of property acquisitions net of dispositions.

General and administrative expenses increased by $0.4 million to $37.5 million in the year ended December 31, 2024 from $37.1 million in the year ended December 31, 2023. The increase is primarily attributable to higher employment expenses.

We recognized a real estate impairment loss of $34.1 million in the first quarter of 2023, reducing the carrying value of an office and retail property located in Brooklyn, NY.

We recognized a gain on sale of real estate of $38.8 million in 2024 primarily related to the sale of three properties. We recognized a gain on sale of real estate of $217.7 million in 2023 related to the sale of two properties and one property parcel.

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Interest income decreased by $0.4 million to $2.7 million in the year ended December 31, 2024 from $3.0 million in the year ended December 31, 2023. The decrease is attributable to lower average cash balances and lower interest rates on our deposits.

Interest and debt expense increased by $6.6 million to $81.6 million in the year ended December 31, 2024 from $74.9 million in the year ended December 31, 2023. The increase is primarily attributable to:

•$4.1 million increase due to the balance on our line of credit, used to finance several acquisitions in 2023 and 2024;

•$3.3 million increase due to new financings and refinancings since the fourth quarter of 2023, net of loan repayments;

•$1.1 million increase in amortization of deferred financing costs; and

•$0.6 million decrease in capitalized interest expense due to the completion of development, redevelopment, and anchor repositioning projects, offset by project commencements; offset by

•$2.5 million decrease in interest expense due to the mortgage debt forgiven in connection with the foreclosure of Kingswood Center.

We recognized a $21.7 million gain on the extinguishment of debt for the year ended December 31, 2024 attributable to the foreclosure settlement of Kingswood Center; partially offset by a $0.3 million loss on extinguishment of debt as a result of the early payoff of three variable rate loans in January 2024. During the year ended December 31, 2023, we recognized a $41.1 million gain on the extinguishment of debt attributable to the refinancing of the Shops at Caguas loan in August 2023, partially offset by a $0.5 million loss on extinguishment of debt recognized in the second quarter of 2023 related to the early payoff of the mortgage loan secured by Plaza at Cherry Hill.

Income tax expense decreased by $15.4 million to $2.4 million in the year ended December 31, 2024 from $17.8 million in the year ended December 31, 2023. The decrease is primarily attributable to the income tax impact of the Shops at Caguas loan refinancing in August 2023.

Comparison of the Year Ended December 31, 2023 to December 31, 2022

Discussions of 2023 items and comparisons between the years ended December 31, 2023 and 2022 that are not included in this Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Non-GAAP Financial Measures

We use NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from net income. The most directly comparable GAAP financial measure to NOI is net income. NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. We calculate NOI by adjusting net income to add back depreciation and amortization expense, general and administrative expenses, casualty and real estate impairment losses, interest and debt expense, income tax expense and non-cash lease expense, and deduct management and development fee income from non-owned properties, gains on sale of real estate, interest income, non-cash rental income resulting from the straight-lining of rents and amortization of acquired below market leases net of above market leases. NOI should not be considered a substitute for net income and may not be comparable to similarly titled measures employed by others.

We calculate same-property NOI using net income as defined by GAAP reflecting only those income and expense items that are reflected in NOI (as described above) and excluding properties that were under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service, and also excluding properties acquired, sold, or that are in the foreclosure process during the periods being compared. We also exclude for the following items in calculating same-property NOI: lease termination fees, bankruptcy settlement income, and income and expenses that we do not believe are representative of ongoing operating results, if any. As such, same-property NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition, disposition or foreclosure of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company’s properties, which the Company believes to be useful to investors. Same-property NOI should not be considered a substitute for net income and may not be comparable to similarly titled measures employed by others.

Throughout this section, we have provided certain information on a “same-property” basis which includes the results of operations that were owned and operated for the entirety of the reporting periods being compared, which total 65 properties for the years ended December 31, 2024 and 2023. Information provided on a same-property basis excludes properties that were under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired, sold, or that are in the foreclosure process during the periods being compared. While there is judgment surrounding changes in designations, a property is removed from the same-property pool

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when a property is considered to be a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan and is expected to have a significant impact on property operating income based on the retenanting that is occurring. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally one year after at least 80% of the expected NOI from the project is realized on a cash basis. Acquisitions are moved into the same-property pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment.

Same-property NOI increased by $9.0 million, or 4.3%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. Same-property NOI, including properties in redevelopment, increased by $11.6 million, or 5.1%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The following table reconciles net income to NOI, same-property NOI and same-property NOI including properties in redevelopment for the years ended December 31, 2024 and 2023.

[[GREPCENT_TABLE]]
[["","For the year ended December 31,"],["(Amounts in thousands)","2024","","2023"],["Net income","$","75,442","","","$","259,876"],["Other expense (income)","897","","","(9,097)"],["Depreciation and amortization","150,389","","","108,979"],["General and administrative expense","37,474","","","37,070"],["Real estate impairment loss","\u2014","","","34,055"],["Gain on sale of real estate","(38,818)","","","(217,708)"],["Interest income","(2,667)","","","(3,037)"],["Interest and debt expense","81,587","","","74,945"],["Gain on extinguishment of debt","(21,423)","","","(41,144)"],["Income tax expense","2,386","","","17,800"],["Non-cash revenue and expenses","(11,999)","","","(11,610)"],["NOI","273,268","","","250,129"],["Adjustments:"],["Sunrise Mall net operating loss","1,733","","","2,427"],["Tenant bankruptcy settlement income and lease termination income","(1,762)","","","(1,428)"],["Non-same property NOI and other(1)","(56,403)","","","(43,287)"],["Same-property NOI","$","216,836","","","$","207,841"],["NOI related to properties being redeveloped","22,668","","","20,017"],["Same-property NOI including properties in redevelopment","$","239,504","","","$","227,858"]]
[[/GREPCENT_TABLE]]

(1) Non-same property NOI includes NOI related to properties being redeveloped and properties acquired, disposed, or that are in the foreclosure process during the periods being compared.

35

Funds From Operations

FFO applicable to diluted common shareholders for the year ended December 31, 2024 was $186.7 million compared to $184.4 million for the year ended December 31, 2023.

We calculate FFO in accordance with the National Association of Real Estate Investment Trusts’ (‘‘Nareit’’) definition. Nareit defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable real estate and land when connected to the main business of a REIT, impairments on depreciable real estate or land related to a REIT's main business, earnings from consolidated partially owned entities, and rental property depreciation and amortization expense. We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period to period both internally and among our peers because this non-GAAP measure excludes net gains on sales of depreciable real estate, real estate impairment losses, rental property depreciation and amortization expense which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. We believe the presentation of comparable period operating results generated from FFO provides useful information to investors because the definition excludes items included in net income that do not relate to, or are not, indicative of our operating and financial performance, such as depreciation and amortization related to real estate, and items which can make periodic and peer analyses of operating and financial performance more difficult, such as gains (or losses) from sales of depreciable real estate and land when connected to the main business of a REIT and impairments on depreciable real estate or land related to a REIT's main business. FFO does not represent cash flows from operating activities in accordance with GAAP, should not be considered an alternative to net income as an indication of our performance, and is not indicative of cash flow as a measure of liquidity or our ability to make cash distributions. FFO may not be comparable to similarly titled measures employed by others.

The following table reflects the reconciliation of net income to FFO for the years ended December 31, 2024 and 2023.

[[GREPCENT_TABLE]]
[["","For the year ended December 31,"],["(Amounts in thousands)","2024","","2023"],["Net income","$","75,442","","","$","259,876"],["Less: net (income) loss attributable to noncontrolling interests in:"],["Operating partnership","(3,978)","","","(11,899)"],["Consolidated subsidiaries","1,099","","","520"],["Net income attributable to common shareholders","72,563","","","248,497"],["Adjustments:"],["Rental property depreciation and amortization","149,009","","","107,695"],["Gain on sale of real estate","(38,818)","","","(217,708)"],["Real estate impairment loss","\u2014","","","34,055"],["Limited partnership interests in operating partnership(1)","3,978","","","11,899"],["FFO applicable to diluted common shareholders","$","186,732","","","$","184,438"]]
[[/GREPCENT_TABLE]]

(1) Represents earnings allocated to Long-Term Incentive Plan (“LTIP”) and OP unitholders for unissued common shares. LTIP and OP units are excluded for purposes of calculating earnings per diluted share when their effect is anti-dilutive.

36

Liquidity and Capital Resources

Due to the nature of our business, the cash generated from operations is primarily paid to our shareholders and unitholders of the Operating Partnership in the form of distributions. Our status as a REIT requires that we generally distribute at least 90% of our REIT’s ordinary taxable income each year. Our Board of Trustees declared a quarterly dividend of $0.17 per common share and OP unit for each of the four quarters in 2024, or an annual rate of $0.68. Historically, we have paid regular cash dividends; however, the timing, declaration, amount and payment of distributions to shareholders and unitholders of the Operating Partnership fall within the discretion of our Board of Trustees. Our Board of Trustees’ decisions regarding the payment of dividends depend on many factors, such as maintaining our REIT status, our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other factors.

Property rental income is our primary source of cash flow and is dependent on a number of factors, including our occupancy level and rental rates, as well as our tenants’ ability to pay rent. Our properties have historically provided us with a relatively consistent stream of cash flow that enables us to pay operating expenses, debt service and recurring capital expenditures. Other sources of liquidity to fund cash requirements include proceeds from financings, equity offerings and asset sales.

We have an $800 million line of credit under the Revolving Credit Agreement which has a maturity date of February 9, 2027 and includes two six-month extension options. The Company has obtained seven letters of credit issued under the Revolving Credit Agreement, aggregating $32.1 million, and provided them to mortgage lenders and other entities to secure its obligations in relation to certain reserves and capital requirements. The letters of credit issued under the Revolving Credit Agreement have reduced the amount available under the facility commensurate with their face values but remain undrawn and no separate liability has been recorded in association with them. As of December 31, 2024, there was $50 million drawn under the Revolving Credit Agreement with an available remaining balance of $717.9 million under the facility, including undrawn letters of credit. See Note 6 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on our Revolving Credit Agreement.

In August 2022, in connection with the launch of the ATM Program, the Company entered into an equity distribution agreement with various financial institutions acting as agents, forward sellers, and forward purchasers (the “Equity Distribution Agreement”). Pursuant to the Equity Distribution Agreement, the Company may from time to time offer and sell, through the agents and forward sellers, the Company’s common shares, par value $0.01 per share, having an aggregate offering price of up to $250 million. During the year ended December 31, 2024, the Company issued 7,097,124 common shares at a weighted average gross price of $18.71 per share under the ATM Program, generating cash proceeds of $131.1 million, net of commissions paid to distribution agents. See Note 14 in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding the ATM Program.

Our short-term cash requirements consist of normal recurring operating expenses, lease obligations, regular debt service requirements, general and administrative expenses, expenditures related to leasing activity and distributions to shareholders and unitholders of the Operating Partnership. Our long-term capital requirements consist primarily of maturities under our long-term debt agreements, development and redevelopment costs and potential acquisitions. As of the date of this filing, we have approximately $23.7 million of debt maturing within the next 12 months related to a mortgage loan encumbering one of our properties and are actively exploring our options to refinance or pay at maturity.

At December 31, 2024, we had cash and cash equivalents, including restricted cash, of $90.6 million and $717.9 million available under our Revolving Credit Agreement. These amounts are readily available to fund the debt obligations discussed above which are coming due within the next year.

Summary of Cash Flows

Cash and cash equivalents, including restricted cash, was $90.6 million at December 31, 2024, compared to $174.2 million as of December 31, 2023, a decrease of $83.6 million.

Our cash flow activities are summarized as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["(Amounts in thousands)","","2024","","2023"],["Net cash provided by operating activities","","$","153,177","","","$","163,015"],["Net cash used in investing activities","","(234,697)","","","(117,702)"],["Net cash (used in) provided by financing activities","","(2,088)","","","161"]]
[[/GREPCENT_TABLE]]

37

Operating Activities

Net cash provided by operating activities primarily consists of cash inflows from rental revenue and cash outflows for property operating expenses, general and administrative expenses and interest and debt expense.

Net cash provided by operating activities for the year ended December 31, 2024 decreased by $9.8 million as compared to December 31, 2023. The decrease is attributed to a $10 million litigation settlement payment received in the fourth quarter of 2023, offset by higher rental revenue from new tenant rent commencements and the timing of cash receipts and payments related to tenant collections and operating expenses.

Investing Activities

Net cash used in investing activities is impacted by the timing and extent of our real estate development, capital improvements, and acquisition and disposition activities during the period.

Net cash used in investing activities for the year ended December 31, 2024 increased by $117.0 million compared to December 31, 2023. The increase is attributed to:

•$252.5 million decrease in proceeds from the sale of real estate; offset by

•$130.4 million decrease in cash used for acquisitions of real estate; and

•$5.1 million decrease in cash used for real estate development and capital improvements.

The Company has 26 active development, redevelopment or anchor repositioning projects with total estimated costs of $162.6 million, of which $73.1 million has been incurred and $89.5 million remains to be funded as of December 31, 2024.

The following summarizes capital expenditures presented on a cash basis for the years ended December 31, 2024 and 2023:

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["(Amounts in thousands)","","2024","","2023"],["Capital expenditures:"],["Development and redevelopment costs","","$","78,230","","","$","83,397"],["Capital improvements","","26,650","","","27,487"],["Tenant improvements and allowances","","5,222","","","4,840"],["Total capital expenditures","","$","110,102","","","$","115,724"]]
[[/GREPCENT_TABLE]]

Financing Activities

Net cash provided by or used in financing activities is impacted by the timing and extent of issuances of debt and equity securities, distributions paid to common shareholders and unitholders of the Operating Partnership as well as principal and other payments associated with our outstanding indebtedness.

Net cash provided by financing activities of $0.2 million for the year ended December 31, 2023 decreased by $2.3 million to $2.1 million used in financing activities for the year ended December 31, 2024. The decrease is primarily due to:

•$136.2 million decrease in proceeds from mortgage loan and credit facility borrowings, net of repayments; and

•$8.9 million increase in distributions to shareholders and unitholders of the Operating Partnership; offset by

•$136.2 million increase in proceeds from the issuance of common shares;

•$4.4 million decrease in deferred financing fees paid in connection with financings and refinancings; and

•$2.2 million increase in cash contributed by noncontrolling interests.

Financing activity for the year included:

•On November 21, 2024, the Company refinanced the mortgage secured by Brick Commons, with a new 7-year, $50 million mortgage loan bearing interest at a fixed rate of 5.20%. The proceeds from the refinancing were used to pay off the previous mortgage loan on the property, which had an outstanding balance of $46.8 million;

•On October 29, 2024, the Company assumed a $60 million mortgage loan in connection with the acquisition of The Village at Waugh Chapel. The mortgage bears interest at a fixed rate of 3.76% and has a remaining term of approximately 7 years;

•On September 13, 2024, the Company obtained a 10-year, $30 million mortgage loan secured by Briarcliff Commons, located in Morris Plains, NJ. The loan bears interest at a fixed rate of 5.47%;

38

•On August 29, 2024, the Company obtained a 5-year $31 million mortgage loan secured by Greenbrook Commons, located in Watchung, NJ. The loan bears interest at a fixed rate of 6.03%;

•On June 27, 2024, the foreclosure process for Kingswood Center was completed and the corresponding $68.6 million mortgage loan secured by the property was forgiven, resulting in a $21.7 million gain on extinguishment of debt;

•On May 3, 2024, the Company obtained a 5-year, $50 million mortgage loan secured by Ledgewood Commons located in Roxbury Township, NJ. The loan bears interest at a fixed rate of 6.03%;

•On March 28, 2024, the Company refinanced the mortgage secured by Yonkers Gateway Center, with a new 5-year, $50 million mortgage loan bearing interest at a fixed rate of 6.30%. The proceeds from the refinancing were used to pay off the previous mortgage loan on the property, which had an outstanding balance of $22.7 million;

•On January 2, 2024, the Company repaid three variable rate mortgage loans aggregating $75.7 million with interest rates of 7.34% on the payoff date. The loans were secured by Hudson Commons, Greenbrook Commons, and Gun Hill Commons and were due to mature in the fourth quarter of 2024; and

•During the year ended December 31, 2024, the Company issued 7,097,124 common shares at a weighted average gross price of $18.71 per share under the ATM Program, generating cash proceeds of $131.1 million, net of commissions paid to distribution agents. See Note 14, Equity and Noncontrolling Interest in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding the ATM Program.

Contractual Obligations

We have contractual obligations related to our mortgage loans and unsecured line of credit that are both fixed and variable. Our variable rate loans bear interest at a floating rate based on SOFR plus an applicable margin ranging from 1.03% to 2.26%. In connection with reference rate reform and the discontinuation of LIBOR, all of our LIBOR-indexed debt has been transitioned to SOFR effective July 2023. The discontinuation of LIBOR did not have an impact on our ability to borrow or maintain already outstanding borrowings. Further information on our mortgage loans can be found in Note 6 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. In addition, we have contractual obligations for certain properties that are subject to long-term ground and building leases where a third party owns and has leased the underlying land to us. We also have non-cancelable operating leases pertaining to office space from which we conduct our business. Below is a summary of our contractual obligations as of December 31, 2024:

[[GREPCENT_TABLE]]
[["","","Commitments Due by Period"],["(Amounts in thousands)","","Total","","Less than 1 year","","1 to 3 years","","3 to 5 years","","More than 5 years"],["Contractual cash obligations"],["Long-term debt obligations(1)","","$","1,993,430","","","$","112,055","","","$","580,259","","","$","503,614","","","$","797,502"],["Operating lease obligations(2)","","75,174","","","8,730","","","16,352","","","13,884","","","36,208"],["Finance lease obligations(2)","","6,531","","","109","","","251","","","254","","","5,917"],["","","$","2,075,135","","","$","120,894","","","$","596,862","","","$","517,752","","","$","839,627"]]
[[/GREPCENT_TABLE]]

(1) Includes interest and principal payments. Interest on variable rate debt is computed using rates in effect as of December 31, 2024. See Note 6 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information.

(2) See Note 8 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information.

Additional contractual obligations that have been excluded from this table are as follows:

•Obligations related to construction and development contracts, since amounts are not fixed or determinable. Such contracts will generally be due over the next two years;

•Obligations related to maintenance contracts, since these contracts typically can be canceled upon 30 to 60 days’ notice without penalty;

•Obligations related to employment contracts with certain executive officers, since all agreements are subject to cancellation by either the Company or the executive without cause upon notice; and

•Recorded debt premiums or discounts that are not obligations.

We believe that cash flows from our current operations, cash on hand, our line of credit, the potential to refinance our loans and our general ability to access the capital markets will be sufficient to finance our operations and fund our obligations in both the short-term and long-term.

39