Brixmor Property Group Inc

Previous wording

Brixmor Property Group Inc. and subsidiaries (collectively, "BPG") is an internally-managed corporation that has elected to be taxed as a real estate investment trust ("REIT"). Brixmor Operating Partnership LP and subsidiaries (collectively, the "Operating Partnership") is the entity through which BPG conducts substantially all of its operations and owns substantially all of its assets. BPG owns 100% of the limited liability company interests of BPG Subsidiary LLC ("BPG Sub"), which, in turn, is the sole member of Brixmor OP GP LLC (the "General Partner"), the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" mean BPG and the Operating Partnership, collectively. We own and operate one of the largest publicly-traded open-air retail portfolios by gross leasable area ("GLA") in the United States ("U.S."), comprised primarily of community and neighborhood shopping centers. As of March 31, 2024, our portfolio was comprised of 359 shopping centers (the "Portfolio") totaling approximately 64 million square feet of GLA. Our high-quality national Portfolio is primarily located within established trade areas in the top 50 Core-Based Statistical Areas in the U.S., and our shopping centers are primarily anchored by non-discretionary and value-oriented retailers, as well as consumer-oriented service providers. As of March 31, 2024, our three largest tenants by annualized base rent ("ABR") were The TJX Companies, Inc. ("TJX"), The Kroger Co. ("Kroger"), and Burlington Stores, Inc. ("Burlington"). BPG has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under U.S. federal income tax laws, commencing with our taxable year ended December 31, 2011, has maintained such requirements through our taxable year ended December 31, 2023, and intends to satisfy such requirements for subsequent taxable years.

Current wording

Brixmor Property Group Inc. and subsidiaries (collectively, "BPG") is an internally-managed corporation that has elected to be taxed as a real estate investment trust ("REIT"). Brixmor Operating Partnership LP and subsidiaries (collectively, the "Operating Partnership") is the entity through which BPG conducts substantially all of its operations and owns substantially all of its assets. BPG owns 100% of the limited liability company interests of BPG Subsidiary LLC ("BPG Sub"), which, in turn, is the sole member of Brixmor OP GP LLC (the "General Partner"), the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" mean BPG and the Operating Partnership, collectively. We own and operate one of the largest publicly-traded open-air retail portfolios by gross leasable area ("GLA") in the United States ("U.S."), comprised primarily of community and neighborhood shopping centers. As of June 30, 2024, our portfolio was comprised of 360 shopping centers (the "Portfolio") totaling approximately 64 million square feet of GLA. Our high-quality national Portfolio is primarily located within established trade areas in the top 50 Core-Based Statistical Areas in the U.S., and our shopping centers are primarily anchored by non-discretionary and value-oriented retailers, as well as consumer-oriented service providers. As of June 30, 2024, our three largest tenants by annualized base rent ("ABR") were The TJX Companies, Inc. ("TJX"), The Kroger Co. ("Kroger"), and Burlington Stores, Inc. ("Burlington"). BPG has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under U.S. federal income tax laws, commencing with our taxable year ended December 31, 2011, has maintained such requirements through our taxable year ended December 31, 2023, and intends to satisfy such requirements for subsequent taxable years.

Previous wording

As of March 31, 2024, billed and leased occupancy were 90.6% and 95.1%, respectively, as compared to 90.0% and 94.0%, respectively, as of March 31, 2023.

Current wording

As of June 30, 2024, billed and leased occupancy were 91.4% and 95.4%, respectively, as compared to 90.4% and 94.1%, respectively, as of June 30, 2023.

Previous wording

•During the three months ended March 31, 2024, we disposed of three shopping centers for aggregate net proceeds of $67.2 million, resulting in aggregate gain of $15.0 million. In addition, during the three months ended March 31, 2024, we resolved contingencies related to previously disposed assets for aggregate net proceeds of $0.1 million, resulting in aggregate gain of $0.1 million.

Current wording

•During the six months ended June 30, 2024, we disposed of three shopping centers, one partial shopping center, and one land parcel for aggregate net proceeds of $67.4 million, resulting in aggregate gain of $15.0 million and aggregate impairment of $0.2 million. In addition, during the six months ended June 30, 2024, we received aggregate net proceeds of $1.9 million related to land at one shopping center previously seized through eminent domain and resolved contingencies related to previously disposed assets, resulting in aggregate gain of $1.9 million.

Previous wording

The increase in rental income for the three months ended March 31, 2024 of $8.4 million, as compared to the corresponding period in 2023, was due to a $12.7 million increase for assets owned for the full period, partially offset by a $4.3 million decrease due to net transaction activity. The increase for assets owned for the full period was due to (i) an $8.2 million increase in base rent; (ii) a $3.6 million increase in straight-line rental income, net; (iii) a $1.5 million increase in expense reimbursements; (iv) a $1.3 million increase in rental income associated with revenues deemed uncollectible; (v) a $0.5 million increase in percentage rents; (vi) a $0.4 million increase in ancillary and other rental income; partially offset by (vii) a $1.9 million decrease in lease termination fees; and (viii) a $0.9 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements. The $8.2 million increase in base rent for assets owned for the full period was primarily due to contractual rent increases, positive rent spreads for new and renewal leases and option exercises of 14.1% during the three months ended March 31, 2024 and 15.3% during the year ended December 31, 2023, and an increase in weighted average billed occupancy.

Current wording

The increase in rental income for the three months ended June 30, 2024 of $6.4 million, as compared to the corresponding period in 2023, was due to a $9.4 million increase for assets owned for the full period, partially offset by a $3.0 million decrease due to net transaction activity. The increase for assets owned for the full period was due to (i) an $8.2 million increase in base rent; (ii) a $0.6 million increase in rental income associated with revenues deemed uncollectible; (iii) a $0.5 million increase in straight-line rental income, net; (iv) a $0.4 million increase in percentage rents; (v) a $0.3 million increase in lease termination fees; (vi) a $0.2 million increase in ancillary and other rental income; and (vii) a $0.2 million increase in accretion of below-market leases, net of amortization of above-market leases and tenant inducements; partially offset by (viii) a $1.0 million decrease in expense reimbursements. The $8.2 million increase in base rent for assets owned for the full period was primarily due to contractual rent increases, positive rent spreads for new and renewal leases and option exercises of 16.8% during the six months ended June 30, 2024 and 15.3% during the year ended December 31, 2023, and an increase in weighted average billed occupancy.

Previous wording

The increase in Other revenues for the three months ended March 31, 2024 of $0.4 million as compared to the corresponding period in 2023, was primarily due to an increase in tax increment financing income.

Current wording

The decrease in other revenues for the three months ended June 30, 2024 of $0.5 million as compared to the corresponding period in 2023, was primarily due to a decrease in tax increment financing income.

Previous wording

The increase in operating costs for the three months ended March 31, 2024 of $1.3 million, as compared to the corresponding period in 2023, was due to a $2.1 million increase in operating costs for assets owned for the full period, primarily due to increases in repairs and maintenance and insurance, partially offset by a $0.8 million decrease due to net transaction activity.

Current wording

The increase in operating costs for the three months ended June 30, 2024 of $1.2 million, as compared to the corresponding period in 2023, was due to a $2.2 million increase in operating costs for assets owned for the full period, primarily due to increases in repairs and maintenance and insurance, partially offset by a $1.0 million decrease due to net transaction activity.

Previous wording

The decrease in real estate taxes for the three months ended March 31, 2024 of $3.3 million, as compared to the corresponding period in 2023, was due to a $2.5 million decrease in real estate taxes for assets owned for the full period, primarily due to an increase in favorable adjustments related to prior year assessments, an increase in real estate tax refunds, and a decrease in current year assessments, in addition to a $0.8 million decrease due to net transaction activity.

Current wording

The decrease in real estate taxes for the three months ended June 30, 2024 of $7.4 million, as compared to the corresponding period in 2023, was due to a $6.4 million decrease in real estate taxes for assets owned for the full period, primarily due to an increase in favorable adjustments related to prior year assessments, a decrease in current year assessments, and an increase in real estate tax refunds, in addition to a $1.0 million decrease due to net transaction activity.

Previous wording

The increase in depreciation and amortization for the three months ended March 31, 2024 of $3.5 million, as compared to the corresponding period in 2023, was due to a $4.8 million increase for assets owned for the full period associated with an increase in capital expenditures and accelerated depreciation and amortization related to tenant move-outs, partially offset by a $1.3 million decrease attributable to net transaction activity.

Current wording

The increase in depreciation and amortization for the three months ended June 30, 2024 of $3.2 million, as compared to the corresponding period in 2023, was due to a $3.9 million increase for assets owned for the full period primarily due to an increase in capital expenditures, partially offset by a $0.7 million decrease attributable to net transaction activity and a decrease in accelerated depreciation and amortization related to tenant move-outs.

Previous wording

During the three months ended March 31, 2024, impairment was not recognized on any operating properties. During the three months ended March 31, 2023, aggregate impairment of $1.1 million was recognized on one operating property. Impairments recognized were due to changes in anticipated hold periods primarily in connection with our capital recycling program.

Current wording

During the three months ended June 30, 2024, aggregate impairment of $5.3 million was recognized on one partial shopping center, as a result of disposition activity, and one operating property. During the three months ended June 30, 2023, aggregate impairment of $16.7 million was recognized on two shopping centers and two partial shopping centers, as a result of disposition activity, and one operating property. Impairments recognized were due to changes in anticipated hold periods primarily in connection with our capital recycling program.

Previous wording

The decrease in general and administrative costs of $0.7 million for the three months ended March 31, 2024, as compared to the corresponding period in 2023, was primarily due to a decrease in office rent expenses, partially offset by an increase in net compensation costs.

Current wording

The increase in general and administrative costs of $1.2 million for the three months ended June 30, 2024, as compared to the corresponding period in 2023, was primarily due to an increase in net compensation costs, partially offset by a decrease in office rent expenses.

Previous wording

During the three months ended March 31, 2024 and 2023, construction compensation costs of $4.9 million and $4.6 million, respectively, were capitalized to building and improvements and leasing legal costs of $1.0 million and $1.4 million, respectively, and leasing commission costs of $2.1 million and $2.2 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Current wording

During the three months ended June 30, 2024 and 2023, construction compensation costs of $5.0 million and $4.3 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.7 million and $1.0 million, respectively, and leasing commission costs of $2.0 million and $1.8 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Previous wording

The increase in dividends and interest for the three months ended March 31, 2024 of $3.9 million, as compared to the corresponding period in 2023 was primarily due to an increase in interest income associated with higher cash and cash equivalent balances and a higher weighted average interest rate return.

Current wording

The increase in dividends and interest for the three months ended June 30, 2024 of $6.6 million, as compared to the corresponding period in 2023 was primarily due to an increase in interest income associated with higher cash and cash equivalent balances and a higher weighted average interest rate return.

Previous wording

The increase in interest expense for the three months ended March 31, 2024 of $2.8 million, as compared to the corresponding period in 2023, was primarily due to higher overall debt obligations, in addition to a higher weighted average interest rate.

Current wording

The increase in interest expense for the three months ended June 30, 2024 of $6.2 million, as compared to the corresponding period in 2023, was primarily due to higher overall debt obligations, in addition to a higher weighted average interest rate.

Previous wording

During the three months ended March 31, 2024, three shopping centers were disposed of resulting in aggregate gain of $15.0 million. In addition, during the three months ended March 31, 2024, we resolved contingencies related to previously disposed assets, resulting in aggregate gain of $0.1 million. During the three months ended March 31,

Current wording

During the six months ended June 30, 2024, three shopping centers and one land parcel were disposed of resulting in aggregate gain of $15.0 million. In addition, during the six months ended June 30, 2024, we received aggregate net proceeds of $1.9 million related to land at one shopping center previously seized through eminent domain and resolved contingencies related to previously disposed assets, resulting in aggregate gain of $1.9 million. During the six months ended June 30, 2023, six shopping centers and five partial shopping centers were disposed of resulting in aggregate gain of $52.1 million. In addition, during the six months ended June 30, 2023, we received aggregate net proceeds of $0.3 million related to a non-operating asset, resulting in net gain of $0.2 million.

Previous wording

Other expense remained generally consistent for the three months ended March 31, 2024 as compared to the corresponding period in 2023.

Current wording

Other expense remained generally consistent for the six months ended June 30, 2024 as compared to the corresponding period in 2023.

Previous wording

We believe our capital structure provides us with the financial flexibility and capacity to fund our current capital needs as well as future growth opportunities. We generate significant operating cash flow and have access to multiple forms of external capital, including secured property level debt, unsecured corporate level debt, preferred equity, and common equity, which will allow us to efficiently execute on our strategic and operational objectives. We have investment grade credit ratings from all three major credit rating agencies. Our unsecured credit facility as amended and restated April 28, 2022 (the "Unsecured Credit Facility") is comprised of a $1.25 billion revolving loan facility (the "Revolving Facility") and a $500.0 million term loan facility (the "Term Loan Facility"). As of March 31, 2024, we had $1.67 billion of available liquidity, including $1.25 billion available under our Revolving Facility and $418.4 million of cash and cash equivalents and restricted cash. We intend to continue to enhance our financial and operational flexibility through periodic extensions of the duration of our debt.

Current wording

We believe our capital structure provides us with the financial flexibility and capacity to fund our current capital needs as well as future growth opportunities. We generate significant operating cash flow and have access to multiple forms of external capital, including secured property level debt, unsecured corporate level debt, preferred equity, and common equity, which will allow us to efficiently execute on our strategic and operational objectives. We have investment grade credit ratings from all three major credit rating agencies. Our unsecured credit facility as amended and restated April 28, 2022 (the "Unsecured Credit Facility") is comprised of a $1.25 billion revolving loan facility (the "Revolving Facility") and a $500.0 million term loan facility (the "Term Loan Facility"). As of June 30, 2024, we had $1.72 billion of available liquidity, including $1.25 billion available under our Revolving Facility and $475.0 million of cash, cash equivalents and restricted cash. We intend to continue to enhance our financial and operational flexibility through periodic extensions of the duration of our debt.

Previous wording

In order to continue to qualify as a REIT for federal income tax purposes, we must meet several organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We intend to continue to satisfy these requirements and maintain our REIT status. Our board of directors evaluates our dividend on a quarterly basis, taking into account a variety of relevant factors, including REIT taxable income. The following table summarizes our dividend activity for the first and second quarters of 2024:

Current wording

In order to continue to qualify as a REIT for federal income tax purposes, we must meet several organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We intend to continue to satisfy these requirements and maintain our REIT status. Our board of directors evaluates our dividend on a quarterly basis, taking into account a variety of relevant factors, including REIT taxable income. The following table summarizes our dividend activity for the second and third quarters of 2024:

Previous wording

During the three months ended March 31, 2024, our net cash provided by operating activities decreased $6.5 million as compared to the corresponding period in 2023. The decrease was primarily due to (i) a decrease from net working capital (ii) a decrease in net operating income due to net transaction activity and other non-same property net operating income; (iii) a decrease in lease termination fees; and (iv) an increase in cash outflows for general and administrative expense; partially offset by (v) an increase in same property net operating income; and (vi) a decrease in cash outflows for interest expense.

Current wording

During the six months ended June 30, 2024, our net cash provided by operating activities increased $17.1 million as compared to the corresponding period in 2023. The increase was primarily due to (i) an increase in same property net operating income; (ii) an increase in cash inflows for dividends and interest income; (iii) a decrease in cash outflows for interest expense; and (iv) a decrease in cash outflows for general and administrative expense; partially offset by (v) a decrease in cash from net working capital; (vi) a decrease in net operating income due to net transaction activity and other non-same property net operating income; and (vii) a decrease in lease termination fees.

Previous wording

During the three months ended March 31, 2024, our net cash provided by (used in) investing activities decreased $57.7 million as compared to the corresponding period in 2023. The decrease was primarily due to (i) a decrease of $52.4 million in net proceeds from sales of real estate assets; (ii) an increase of $4.5 million in improvements to and investments in real estate assets; and (iii) a decrease of $0.8 million in sales of marketable securities, net of purchases.

Current wording

During the six months ended June 30, 2024, our net cash used in investing activities increased $105.2 million as compared to the corresponding period in 2023. The increase was primarily due to (i) a decrease of $76.2 million in net proceeds from sales of real estate assets; (ii) an increase of $15.6 million in acquisitions of real estate assets; (iii) an increase of $11.0 million in improvements to and investments in real estate assets; and (iv) a decrease of $2.4 million in sales of marketable securities, net of purchases.

Previous wording

During the three months ended March 31, 2024 and 2023, we expended $76.9 million and $72.4 million, respectively, on improvements to and investments in real estate assets. Included in these amounts are insurance proceeds of $2.3 million and less than $0.1 million, respectively, which were received during the three months ended March 31, 2024 and 2023.

Current wording

During the six months ended June 30, 2024 and 2023, we expended $167.0 million and $156.1 million, respectively, on improvements to and investments in real estate assets. Included in these amounts are insurance proceeds of $3.1 million and $0.2 million, respectively, which were received during the six months ended June 30, 2024 and 2023.

Previous wording

Maintenance capital expenditures represent costs to fund major replacements and betterments to our properties. Leasing related capital expenditures represent tenant specific costs incurred to lease or renew space, including tenant improvements, tenant allowances, and external leasing commissions. In addition, we evaluate our Portfolio on an ongoing basis to identify value-enhancing reinvestment opportunities. Such initiatives are tenant driven and focus on upgrading our centers with strong, best-in-class retailers and enhancing the overall merchandise mix and tenant quality of our Portfolio. As of March 31, 2024, we had 45 in-process anchor space repositioning, redevelopment, and outparcel development projects with an aggregate anticipated cost of $431.0 million, of which $216.3 million had been incurred as of March 31, 2024. In addition, we have identified a pipeline of future redevelopment projects aggregating over $700 million of potential capital investment, which we expect to execute over the coming years. We expect to fund these projects with cash and cash equivalents, net cash provided by operating activities, proceeds from sales of real estate assets, and/or proceeds from capital markets transactions.

Current wording

Maintenance capital expenditures represent costs to fund major replacements and betterments to our properties. Leasing related capital expenditures represent tenant specific costs incurred to lease or renew space, including tenant improvements, tenant allowances, and external leasing commissions. In addition, we evaluate our Portfolio on an ongoing basis to identify value-enhancing reinvestment opportunities. Such initiatives are tenant driven and focus on upgrading our centers with strong, best-in-class retailers and enhancing the overall merchandise mix and tenant quality of our Portfolio. As of June 30, 2024, we had 44 in-process anchor space repositioning, redevelopment, and outparcel development projects with an aggregate anticipated cost of $509.6 million, of which $231.0 million had been incurred as of June 30, 2024. In addition, we have identified a pipeline of future redevelopment projects aggregating over $600 million of potential capital investment, which we expect to execute over the coming years. We expect to fund these projects with cash and cash equivalents, net cash provided by operating activities, proceeds from sales of real estate assets, and/or proceeds from capital markets transactions.

Previous wording

We continue to evaluate the market for acquisition opportunities and we may acquire shopping centers when we believe strategic opportunities exist, to further concentrate our Portfolio in attractive retail submarkets and optimize the quality and long-term growth rate of our asset base. During the three months ended March 31, 2024 and 2023, we did not acquire any assets.

Current wording

We continue to evaluate the market for acquisition opportunities and we may acquire shopping centers when we believe strategic opportunities exist, to further concentrate our Portfolio in attractive retail submarkets and optimize the quality and long-term growth rate of our asset base. During the six months ended June 30, 2024, we acquired one shopping center for an aggregate purchase price of $17.5 million, including transaction costs and closing credits. During the six months ended June 30, 2023, we acquired one land parcel for an aggregate purchase price of $1.9 million, including transaction costs and closing credits.

Previous wording

We may also dispose of properties when we believe value has been maximized, where there is downside risk, or where we have limited ability or desire to build critical mass in a particular submarket. During the three months ended March 31, 2024, we disposed of three shopping centers for aggregate net proceeds of $67.2 million. In addition, during the three months ended March 31, 2024, we resolved contingencies related to previously disposed assets for aggregate net proceeds of $0.1 million. During the three months ended March 31, 2023, we disposed of six shopping centers and two partial shopping centers for aggregate net proceeds of $119.7 million.

Current wording

We may also dispose of properties when we believe value has been maximized, where there is downside risk, or where we have limited ability or desire to build critical mass in a particular submarket. During the six months ended June 30, 2024, we disposed of three shopping centers, one partial shopping center, and one land parcel for aggregate net proceeds of $67.4 million. In addition, during the six months ended June 30, 2024, we received aggregate net proceeds of $1.9 million related to land at one shopping center previously seized through eminent domain and resolved contingencies related to previously disposed assets. During the six months ended June 30, 2023, we disposed of eight shopping centers and seven partial shopping centers for aggregate net proceeds of $145.3 million.

Previous wording

During the three months ended March 31, 2024, our net cash provided by (used in) financing activities increased $449.5 million as compared to the corresponding period in 2023. The increase was primarily due to (i) a $458.7 million increase in debt borrowings, net of repayments; partially offset by (ii) a $3.8 million increase in distributions to our common stockholders; (iii) a $3.7 million increase in deferred financing and debt extinguishment costs; and (iv) a $1.7 million increase in repurchases of common stock.

Current wording

During the six months ended June 30, 2024, our net cash provided by (used in) financing activities increased $550.5 million as compared to the corresponding period in 2023. The increase was primarily due to (i) a $566.8 million increase in debt borrowings, net of repayments; partially offset by (ii) a $7.7 million increase in distributions to our common stockholders; (iii) a $6.9 million increase in deferred financing and debt extinguishment costs; and (iv) a $1.7 million increase in repurchases of common stock.

Previous wording

Our reconciliation of net income to Nareit FFO for the three months ended March 31, 2024 and 2023 is as follows (in thousands, except per share amounts):

Current wording

Our reconciliation of net income to Nareit FFO for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands, except per share amounts):

Previous wording

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 to the Three and Six Months Ended June 30, 2023