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 September 30, 2024, our portfolio was comprised of 360 shopping centers (the "Portfolio") totaling approximately 63 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 September 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.

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 March 31, 2025, our portfolio was comprised of 361 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, 2025, 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, 2024, and intends to satisfy such requirements for subsequent taxable years.

Previous wording

As of September 30, 2024, billed and leased occupancy were 91.9% and 95.6%, respectively, as compared to 90.0% and 93.9%, respectively, as of September 30, 2023.

Current wording

As of March 31, 2025, billed and leased occupancy were 90.0% and 94.1%, respectively, as compared to 90.6% and 95.1%, respectively, as of March 31, 2024.

Previous wording

•During the nine months ended September 30, 2023, we acquired one land parcel for an aggregate purchase price of $1.9 million, including any transaction costs and closing credits.

Current wording

•During the three months ended March 31, 2025, we acquired one land parcel for an aggregate purchase price of $3.1 million, including transaction costs and closing credits.

Previous wording

•During the nine months ended September 30, 2023, we disposed of nine shopping centers and eight partial shopping centers for aggregate net proceeds of $161.9 million, resulting in aggregate gain of $58.9 million and aggregate impairment of $6.1 million. In addition, during the nine months ended September 30, 2023, we received aggregate net proceeds of $0.3 million related to a non-operating asset and resolved contingencies related to a previously disposed asset, resulting in net gain of $0.1 million.

Current 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.

Previous wording

The increase in rental income for the three months ended September 30, 2024 of $12.9 million, as compared to the corresponding period in 2023, was due to a $14.3 million increase for assets owned for the full period, partially offset by a $1.4 million decrease due to net transaction activity. The increase for assets owned for the full period was due to (i) an $11.1 million increase in base rent; (ii) a $5.1 million increase in expense reimbursements; (iii) a $3.0 million increase in straight-line rental income, net; and (iv) a $0.3 million increase in lease termination fees; partially offset by (v) a $4.2 million decrease in rental income associated with revenues deemed uncollectible; (vi) a $0.6 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements; (vii) a $0.3 million decrease in percentage rents; and (viii) a $0.1 million decrease in ancillary and other rental income. The $11.1 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 16.6% during the nine months ended September 30, 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 March 31, 2025 of $17.8 million, as compared to the corresponding period in 2024, was due to a $12.3 million increase for assets owned for the full period, in addition to a $5.5 million increase due to net transaction activity. The increase for assets owned for the full period was due to: (i) a $7.6 million increase in base rent; (ii) a $5.4 million increase in expense reimbursements; (iii) a $3.0 million increase in lease termination fees; and (iv) a $0.2 million increase in ancillary and other rental income; partially offset by (v) a $2.8 million decrease in rental income associated with revenues deemed uncollectible; (vi) a $0.4 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements; (vii) a $0.4 million decrease in percentage rents; and (viii) a $0.3 million decrease in straight-line rental income, net. The $7.6 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 15.0% during the three months ended March 31, 2025 and 16.5% during the year ended December 31, 2024, and an increase in weighted average billed occupancy.

Previous wording

The increase in other revenues for the three months ended September 30, 2024 of $0.5 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 March 31, 2025 of $0.5 million as compared to the corresponding period in 2024, was primarily due to a decrease in tax increment financing income.

Previous wording

The increase in operating costs for the three months ended September 30, 2024 of $1.4 million, as compared to the corresponding period in 2023, was due to a $2.0 million increase in operating costs for assets owned for the full period, primarily due to an increase in repairs and maintenance, partially offset by a $0.6 million decrease due to net transaction activity.

Current wording

The increase in operating costs for the three months ended March 31, 2025 of $2.1 million, as compared to the corresponding period in 2024, was due to a $1.9 million increase in operating costs for assets owned for the full period, primarily due to an increase in repairs and maintenance, in addition to a $0.2 million increase due to net transaction activity.

Previous wording

The decrease in real estate taxes for the nine months ended September 30, 2024 of $9.9 million, as compared to the corresponding period in 2023, was due to a $7.7 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 and a decrease in current year assessments, in addition to a $2.2 million decrease due to net transaction activity, partially offset by a decrease in real estate tax refunds.

Current wording

The increase in real estate taxes for the three months ended March 31, 2025 of $3.5 million, as compared to the corresponding period in 2024, was due to a $2.9 million increase in real estate taxes for assets owned for the full period primarily due to a decrease in favorable adjustments related to prior year assessments and an increase in current year assessments, partially offset by an increase in real estate tax refunds, in addition to a $0.6 million increase due to net transaction activity.

Previous wording

The decrease in depreciation and amortization for the three months ended September 30, 2024 of $1.4 million, as compared to the corresponding period in 2023, was due to a $1.9 million decrease for assets owned for the full period, primarily due to a decrease in accelerated depreciation and amortization related to tenant move-outs, partially offset by an increase in capital expenditures and a $0.5 million increase due to net transaction activity.

Current wording

The increase in depreciation and amortization for the three months ended March 31, 2025 of $14.4 million, as compared to the corresponding period in 2024, was due to a $7.7 million increase for assets owned for the full period, primarily due to an increase in accelerated depreciation and amortization related to tenant move-outs, an increase in capital expenditures, and a $6.7 million increase due to net transaction activity.

Previous wording

The increase in general and administrative costs of $1.6 million for the nine months ended September 30, 2024, as compared to the corresponding period in 2023, was primarily due to an increase in net compensation costs, including one-time severance costs of $2.4 million associated with the realignment of the Company's regional operating structure, partially offset by a decrease in office rent expenses.

Current wording

The decrease in general and administrative costs of $0.3 million for the three months ended March 31, 2025, as compared to the corresponding period in 2024, was primarily due to a decrease in net compensation costs, partially offset by an increase in office rent expense.

Previous wording

During the three months ended September 30, 2024 and 2023, construction compensation costs of $4.5 million and $4.7 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.8 million and $0.9 million, respectively, and leasing commission costs of $2.0 million and $1.9 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Current wording

During the three months ended March 31, 2025 and 2024, construction compensation costs of $4.5 million and $4.9 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.3 million and $1.0 million, respectively, and leasing commission costs of $1.8 million and $2.1 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Previous wording

The increase in dividends and interest for the three months ended September 30, 2024 of $5.0 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 decrease in dividends and interest for the three months ended March 31, 2025 of $2.2 million, as compared to the corresponding period in 2024, was primarily due to a decrease in interest income associated with lower cash and cash equivalent balances and a lower weighted average interest rate return.

Previous wording

The increase in interest expense for the three months ended September 30, 2024 of $8.0 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 March 31, 2025 of $2.6 million, as compared to the corresponding period in 2024, was primarily due to a higher weighted average interest rate, partially offset by lower overall debt obligations.

Previous wording

During the three months ended September 30, 2024, two shopping centers and three partial shopping centers were disposed of resulting in aggregate gain of $37.0 million. In addition, during the three months ended September 30, 2024, we resolved contingencies related to previously disposed assets, resulting in net loss of less than $0.1 million. During the three months ended September 30, 2023, one shopping center and one partial shopping center were disposed of resulting in aggregate gain of $6.8 million. In addition, during the three months ended September 30, 2023, we resolved contingencies related to previously disposed assets, resulting in a net loss of $0.1 million.

Current wording

During the three months ended March 31, 2025, two shopping centers and two partial shopping centers were disposed of, resulting in aggregate gain of $3.1 million. 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.

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 September 30, 2024, we had $1.70 billion of available liquidity, including $1.25 billion available under our Revolving Facility and $452.4 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.

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 March 31, 2025, we had $1.36 billion of available liquidity, including $1.25 billion available under our Revolving Facility and $107.4 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. See Note 18 included elsewhere on this Quarterly Report on Form 10-Q for additional information on the Unsecured Credit Facility.

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 third and fourth 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 first and second quarters of 2025:

Previous wording

During the nine months ended September 30, 2024, our net cash provided by operating activities increased $16.0 million as compared to the corresponding period in 2023. The increase was primarily due to (i) an increase in same property net operating income; and (ii) an increase in cash inflows for dividends and interest income; partially offset by (iii) a decrease in cash from net working capital; (iv) an increase in cash outflows for interest expense; (v) a decrease in net operating income due to net transaction activity and other non-same property net operating income; (vi) a decrease in lease termination fees; and (vii) an increase in cash outflows for general and administrative expense.

Current wording

During the three months ended March 31, 2025, our net cash provided by operating activities increased $1.6 million as compared to the corresponding period in 2024. The increase was primarily due to (i) an increase in cash from net working capital; (ii) an increase in same property net operating income; (iii) an increase in lease termination fees; (iv) a decrease in cash outflows for general and administrative expense; and (v) an increase in net operating income due to net transaction activity and other non-same property net operating income; partially offset by (vi) an increase in cash outflows for interest expense; and (vii) a decrease in cash inflows for dividends and interest income.

Previous wording

During the nine months ended September 30, 2024, our net cash used in investing activities increased $103.2 million as compared to the corresponding period in 2023. The increase was primarily due to (i) an increase of $80.0 million in acquisitions of real estate assets; (ii) a decrease of $20.3 million in net proceeds from sales of real estate assets; (iii) an increase of $1.9 million in purchases of marketable securities, net of sales; and (iv) an increase of $1.0 million in improvements to and investments in real estate assets.

Current wording

During the three months ended March 31, 2025, our net cash used in investing activities increased $54.3 million as compared to the corresponding period in 2024. The increase was primarily due to (i) a decrease of $45.6 million in net proceeds from sales of real estate assets; (ii) an increase of $5.7 million in improvements to and investments in real estate assets; and (iii) an increase of $3.1 million in acquisitions of real estate assets; partially offset by (iv) an increase of $0.1 million in sales of marketable securities, net of purchases.

Previous wording

During the nine months ended September 30, 2024 and 2023, we expended $255.4 million and $254.4 million, respectively, on improvements to and investments in real estate assets. Included in these amounts are insurance proceeds of $4.5 million and $0.5 million, respectively, which were received during the nine months ended September 30, 2024 and 2023.

Current wording

During the three months ended March 31, 2025 and 2024, we expended $82.5 million and $76.9 million, respectively, on improvements to and investments in real estate assets. Included in these amounts are insurance proceeds of $0.6 million and $2.3 million, respectively, which were received during the three months ended March 31, 2025 and 2024.

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 September 30, 2024, we had 43 in-process anchor space repositioning, redevelopment, and outparcel development projects with an aggregate anticipated cost of $506.8 million, of which $246.4 million had been incurred as of September 30, 2024. In addition, we have identified a pipeline of future redevelopment projects aggregating approximately $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 March 31, 2025, we had 37 in-process anchor space repositioning, redevelopment, and outparcel development projects with an aggregate anticipated cost of $390.9 million, of which $195.6 million had been incurred as of March 31, 2025. In addition, we have identified a pipeline of future redevelopment projects, 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 individual shopping centers or portfolios of 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 nine months ended September 30, 2024, we acquired three shopping centers and one land parcel for an aggregate purchase price of $81.9 million, including transaction costs and closing credits. During the nine months ended September 30, 2023, we acquired one land parcel for an aggregate purchase price of $1.9 million, including transaction costs and closing credits.

Current wording

We continue to evaluate the market for acquisition opportunities and we may acquire individual shopping centers or portfolios of 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, 2025, we acquired one land parcel for an aggregate purchase price of $3.1 million, including transaction costs and closing credits. During the three months ended March 31, 2024, we did not acquire any assets.

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 nine months ended September 30, 2024, we disposed of five shopping centers, four partial shopping centers, and two land parcels for aggregate net proceeds of $140.0 million. In addition, during the nine months ended September 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 nine months ended September 30, 2023, we disposed of nine shopping centers and eight partial shopping centers for aggregate net proceeds of $161.9 million. In addition, during the nine months ended September 30, 2023, we received aggregate net proceeds of $0.3 million related to a non-operating asset.

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 three months ended March 31, 2025, we disposed of two shopping centers and two partial shopping centers for aggregate net proceeds of $21.6 million. 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.

Previous wording

During the nine months ended September 30, 2024, our net cash provided by (used in) financing activities increased $523.3 million as compared to the corresponding period in 2023. The increase was primarily due to (i) a $524.4 million increase in debt borrowings, net of repayments; and (ii) a $19.3 million increase in issuances of common stock; partially offset by (iii) an $11.7 million increase in distributions to our common stockholders; (iv) a $7.0 million increase in deferred financing costs; and (v) a $1.7 million increase in repurchases of common stock.

Current wording

During the three months ended March 31, 2025, our net cash provided by (used in) financing activities decreased $618.1 million as compared to the corresponding period in 2024. The decrease was primarily due to (i) a $613.8 million increase in debt repayments, net of borrowings; (ii) a $5.5 million increase in distributions to our common stockholders; and (iii) a $0.1 million decrease in issuances of common stock; partially offset by (iv) a $1.3 million decrease in repurchases of common stock; and (v) a less than $0.1 million decrease in deferred financing costs.

Previous wording

Nareit FFO (defined hereafter) is a supplemental, non-GAAP performance measure utilized to evaluate the operating and financial performance of real estate companies. Nareit defines funds from operations ("FFO") as net income (loss), calculated in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated joint ventures calculated to reflect FFO on the same basis.

Current wording

Nareit FFO (defined hereafter) is a supplemental, non-GAAP performance measure utilized to evaluate the operating and financial performance of real estate companies. Nareit defines funds from operations ("FFO") as net income (calculated in accordance with GAAP) excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated joint ventures calculated to reflect FFO on the same basis.

Previous wording

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

Current wording

Our reconciliation of net income (calculated in accordance with GAAP) to Nareit FFO for the three months ended March 31, 2025 and 2024 is as follows (in thousands, except per share amounts):

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2024 to the Three and Nine Months Ended September 30, 2023

Current wording

Comparison of the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024

Previous wording

We continue to monitor the impacts of inflation on our operating and financial performance. Although recent inflationary pressures have begun to abate, inflation may increase in the future. With respect to our shopping centers, our long-term leases generally contain provisions designed to mitigate the adverse impact of inflation, including contractual rent escalations and requirements for tenants to pay a portion of property operating expenses, including common area expenses, utilities, insurance, and real estate taxes, and certain capital expenditures related to the maintenance of our properties, thereby reducing our exposure to increases in property operating expenses resulting from inflation; however, we have exposure to increases in certain non-reimbursable property operating expenses, including expenses incurred on vacant units. We believe that many of our existing rental rates are below current market rates for comparable space and that upon renewal or re-leasing, such rates may be increased to be consistent with, or closer to, current market rates, which may also offset certain non-reimbursed inflationary expense pressures. With respect to our outstanding indebtedness, we periodically evaluate our exposure to interest rate fluctuations, and have and may continue to enter into interest rate protection agreements that mitigate, but do not eliminate, the impact of changes in interest rates on our variable rate loans. With respect to general and administrative costs, we continually seek opportunities to offset inflationary cost pressures through routine evaluations of our spending levels and through ongoing efforts to utilize technology to enhance our operational efficiency.

Current wording

We continue to monitor the impacts of inflation on our operating and financial performance. Although recent inflationary pressures have begun to abate, inflation may increase in the future, and recent tariff activity has introduced additional uncertainty into the macroeconomic environment. With respect to our shopping centers, our long-term leases generally contain provisions designed to mitigate the adverse impact of inflation, including contractual rent escalations and requirements for tenants to pay a portion of property operating expenses, including common area expenses, utilities, insurance, and real estate taxes, and certain capital expenditures related to the maintenance of our properties, thereby reducing our exposure to increases in property operating expenses resulting from inflation. However, we have exposure to increases in certain non-reimbursable property operating expenses, including expenses incurred on vacant units. In addition, tariffs may contribute to rising construction and redevelopment costs and tariffs on imported goods may impact many of our tenants, particularly those who rely on international supply chains, by increasing their cost of goods sold or delaying inventory deliveries. If tenants are unable to pass these increased costs on to customers, it could adversely affect their financial performance and ability to meet lease obligations. We believe that many of our existing rental rates are below current market rates for comparable space and that upon renewal or re-leasing, such rates may be increased to be consistent with, or closer to, current market rates, which may also offset certain non-reimbursed inflationary and trade-related expense pressures. With respect to our outstanding indebtedness, we periodically evaluate our exposure to interest rate fluctuations and have entered, and may continue to, enter into interest rate protection agreements that mitigate, but do not eliminate, the impact of changes in interest rates on our variable rate loans. With respect to general and administrative costs, we continually seek opportunities to offset inflationary cost pressures through routine evaluations of our spending levels and through ongoing efforts to utilize technology to enhance our operational efficiency.