RETAIL PROPERTIES OF AMERICA, INC.
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Quarterly Report on
Form 10-Q may constitute "forward-looking statements" within the meaning of the
safe harbor from civil liability provided for such statements by the Private
Securities Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and Section 21E of
the Securities Exchange Act of 1934, as amended, or the Exchange Act).
Forward-looking statements involve numerous risks and uncertainties and you
should not rely on them as predictions of future events. Forward-looking
statements depend on assumptions, data or methods which may be incorrect or
imprecise and we may not be able to realize them. We do not guarantee that the
transactions and events described will happen as described or that they will
happen at all. You can identify forward-looking statements by the use of
forward-looking terminology such as "believes," "expects," "may," "should,"
"intends," "plans," "estimates" or "anticipates" and variations of such words or
similar expressions or the negative of such words. You can also identify
forward-looking statements by discussions of strategies, plans or intentions.
Risks, uncertainties and changes in the following factors, among others, could
cause actual results and future events to differ materially from those set forth
or contemplated in the forward-looking statements:
• economic, business and financial conditions, and changes in our industry
and changes in the real estate markets in particular;
• economic and other developments in markets where we have a high
concentration of properties;
• our business strategy;
• our projected operating results;
• rental rates and/or vacancy rates;
• frequency and magnitude of defaults on, early terminations of or
non-renewal of leases by tenants;
• bankruptcy, insolvency or general downturn in the business of a major
tenant or a significant number of smaller tenants;
• adverse impact of e-commerce developments and shifting consumer retail
behavior on our tenants;
• interest rates or operating costs;
• the discontinuation of London Interbank Offered Rate (LIBOR);
• real estate and zoning laws and changes in real property tax rates;
• real estate valuations; • our leverage;
• our ability to generate sufficient cash flows to service our outstanding
indebtedness and make distributions to our shareholders;
• changes in the dividend policy for our Class A common stock and our
ability to pay dividends at current levels;
• our ability to obtain necessary outside financing;
• the availability, terms and deployment of capital;
• general volatility of the capital and credit markets and the market price
of our Class A common stock;
• risks generally associated with real estate acquisitions and dispositions,
including our ability to identify and pursue acquisition and disposition
opportunities;
• risks generally associated with redevelopment, including the impact of
construction delays and cost overruns, our ability to lease redeveloped
space and our ability to identify and pursue redevelopment opportunities;
• composition of members of our senior management team;
• our ability to attract and retain qualified personnel;
• our ability to continue to qualify as a real estate investment trust (REIT);
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• governmental regulations, tax laws and rates and similar matters;
• our compliance with laws, rules and regulations;
• environmental uncertainties and exposure to natural disasters;
• pandemics or other public health crises, such as the novel coronavirus
(COVID-19) outbreak, and the related impact on (i) our ability to manage
our properties, finance our operations and perform necessary
administrative and reporting functions and (ii) our tenants' ability to
operate their businesses, generate sales and meet their financial
obligations, including the obligation to pay rent and other charges as
specified in their leases;
• insurance coverage; and
• the likelihood or actual occurrence of terrorist attacks in the
The extent to which COVID-19 impacts us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Part II, "Item 1A. Risk Factors" in this document and in our Annual Report on Form 10-K for the year endedDecember 31, 2019 , which you should interpret as being heightened as a result of the numerous and ongoing adverse impacts of COVID-19. Readers should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements). We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes included in this report. Impact of the COVID-19 Pandemic InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 a global pandemic. COVID-19 has caused significant disruptions to theU.S. and global economy and has contributed to significant volatility and negative pressure in the financial markets. The global impact of the COVID-19 outbreak has been rapidly evolving and manyU.S. states and cities, including where we own properties and/or have development sites, have imposed measures intended to control its spread, such as instituting "shelter-in-place" rules and restrictions on the types of businesses that may continue to operate and/or the types of construction projects that may continue. While we did not incur significant disruptions to our lease income and occupancy during the three months endedMarch 31, 2020 from COVID-19, we continue to closely monitor the impact of the pandemic on all aspects of our business. Due to numerous uncertainties, it is not possible to accurately predict the impact the pandemic will have on our financial condition, results of operations and cash flows. To date, as a result of the pandemic and the measures noted above to mitigate its impact, a number of our tenants have announced temporary closures of their stores or modifications of their operations. Certain other tenants are considered essential businesses which remain open and continue to operate during this time. Essential businesses and office represent approximately 37% of our annualized base rent (ABR), including 8% from grocery/warehouse clubs and 6% from office tenants. We have collected more than 52% of April rent charges as ofApril 30, 2020 . 24
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The following table, based on ABR of leases in effect as ofMarch 31, 2020 , sets forth information regarding the percent of April rent collected by tenant type as ofApril 30, 2020 . This information is being provided to assist with analysis of the potential impact of COVID-19. April rental receipts may not be indicative of collections in future periods. The classification of tenant type, including the classification between essential and non-essential, is based on management's understanding of the tenant operations and may not be comparative to similarly titled classifications by other companies. % of
April
Resiliency Category/Tenant Type ABR % of Total ABR Rent Collected Essential Grocery/Warehouse Clubs$ 30,333 8.3 % 99.9 % Financial Services/Banks 13,673 3.7 % 99.6 % Medical 12,211 3.3 % 67.2 % Electronics 10,241 2.8 % 72.7 % Hardware 10,136 2.8 % 95.6 % Auto and Other Essentials 9,936 2.7 % 96.2 % Pet/Animal Supplies 9,832 2.7 % 71.9 % Office Supplies 6,396 1.7 % 100.0 % Wireless Communications 6,308 1.7 % 87.6 % Drug Stores 3,190 0.9 % 99.0 % Total Essential 112,256 30.6 % 90.1 % Non-Essential Apparel 36,856 10.1 % 9.8 % Housewares 28,172 7.7 % 31.2 % Soft Goods/Discount Stores 25,619 7.0 % 57.8 % Services 22,600 6.2 % 32.3 % Sporting Goods/Hobby 14,218 3.9 % 41.6 % Movie Theaters 10,294 2.8 % 0.0 % Specialty 10,205 2.8 % 39.6 % Health Clubs 10,035 2.7 % 27.9 % Other 7,763 2.1 % 13.9 % Book Stores 4,621 1.2 % 8.1 % Amusement/Play Centers 2,116 0.6 % 18.8 % Total Non-Essential 172,499 47.1 % 28.5 % Restaurants Restaurants - Full Service 31,908 8.8 % 31.4 % Restaurants - Quick Service 26,543 7.2 % 50.8 %Total Restaurants 58,451 16.0 % 40.6 % Office 23,079 6.3 % 75.7 % Total Retail Operating Portfolio$ 366,285 100.0 %
52.4 %
While working to preserve our profitability and cash flow, we are also working with our tenants regarding requests for lease concessions and other forms of assistance available to them, including small business loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law onMarch 27, 2020 and provides small businesses access to loan programs to cover monthly expenses such as payroll, rent and utilities. Generally, we have not yet reached agreement with tenants regarding concession requests, as discussions are ongoing. While seeking to work toward a mutually agreeable outcome with tenants directly impacted by COVID-19, we believe that certain tenants, which remain open and hold an ability to pay, have elected to withhold April rent unnecessarily. We are not forgoing our contractual rights under our lease agreements and our tenants do not have a clear contractual right to cease paying rent due to government closures. However, COVID-19 and the related governmental orders present fairly novel situations and it is possible government action could impact our rights. Except for a small, enclosed portion of one property, we have not closed any of our properties and continue to operate them for the benefit of the communities and the customers that our tenants serve. 25
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In response to current macroeconomic conditions related to the COVID-19 pandemic, we halted plans for vertical construction at our Carillon redevelopment during the three months endedMarch 31, 2020 and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately$75,000 to$100,000 . As ofMarch 31, 2020 , we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to complete the site work preparation during 2020 for an expected additional capital investment of approximately$4,500 . In addition, we terminated the joint venture related to the multi-family rental portion of the redevelopment. Subsequent toMarch 31, 2020 , we terminated the joint venture related to the medical office building portion of the redevelopment at Carillon. During the three months endedMarch 31, 2020 , we elected to increase our borrowings under our unsecured revolving line of credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets. As a result, as ofMarch 31, 2020 , our$850,000 unsecured revolving line of credit was nearly fully drawn and the proceeds were deposited into accounts atFDIC -insured institutions. As ofMarch 31, 2020 , we have$769,241 of cash on hand and the ability to repay the vast majority of the amount drawn on our unsecured revolving line of credit; however, we may elect to not repay it for some time, which will increase our interest expense. In order to preserve and enhance liquidity and capital positioning, our board of directors has temporarily suspended future quarterly dividend payments on our outstanding Class A common stock. Our board of directors will evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on our operating cash flow performance as well as other factors. During this period, our employees, except for a small number that are considered essential to be on-site for the safe operation of our properties, have successfully transitioned to working remotely, and we have not furloughed any employees nor significantly modified our key processes or internal controls over financial reporting. In addition, we expect to reduce our 2020 capital expenditures, including tenant improvements, and certain expenses, including overhead, from the original budget. Executive SummaryRetail Properties of America, Inc. (we, our, us) is a REIT that owns and operates high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As ofMarch 31, 2020 , we owned 102 retail operating properties inthe United States representing 19,961,000 square feet of gross leasable area (GLA) and had four expansion and redevelopment projects. Our retail operating portfolio includes (i) neighborhood and community centers, (ii) power centers, and (iii) lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties. The following table summarizes our portfolio as ofMarch 31, 2020 : Percent Leased Number of GLA Including Leases Property Type Properties (in thousands) Occupancy Signed (a) Retail operating portfolio: Multi-tenant retail: Neighborhood and community centers 62 10,337 94.7 % 96.0 % Power centers 22 4,816 95.2 % 96.4 % Lifestyle centers and mixed-use properties (b) 16 4,547 91.4 % 92.4 % Total multi-tenant retail 100 19,700 94.0 % 95.3 % Single-user retail 2 261 100.0 % 100.0 % Total retail operating properties 102 19,961 94.1 % 95.3 % Expansion and redevelopment projects: Circle East 1 One Loudoun Downtown - Pads G & H (c) - Carillon 1 The Shoppes at Quarterfield 1 Total number of properties 105
(a) Includes leases signed but not commenced.
(b) Excludes the 18 multi-family rental units at
2020, 16 multi-family rental units were leased at an average monthly rental
rate per unit of $1,339 .
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(c) The operating portion of this property is included in the property count of
lifestyle centers and mixed-use properties within our retail operating
portfolio.
In 2018, we completed our portfolio transformation and are now a prominent owner of multi-tenant retail properties, many with a mixed-use component, primarily located in the following markets:Dallas ,Washington, D.C. /Baltimore ,New York ,Chicago ,Seattle ,Atlanta ,Houston ,San Antonio ,Phoenix andAustin . As a result, our portfolio is better focused and since our inaugural investor day in 2013, we have (i) improved our retail ABR by 35% to$19.50 per square foot as ofMarch 31, 2020 from$14.46 per square foot as ofMarch 31, 2013 , (ii) increased our concentration in lifestyle and mixed-use properties based on multi-tenant retail ABR by 1,900 basis points to 35% as ofMarch 31, 2020 from 16% as ofMarch 31, 2013 , (iii) reduced our top 20 retail tenant concentration of total ABR by 1,130 basis points to 26.6% as ofMarch 31, 2020 from 37.9% as ofMarch 31, 2013 , and (iv) reduced our indebtedness by 5% to$2,463,989 as ofMarch 31, 2020 , which includes our nearly fully drawn$850,000 unsecured revolving line of credit, from$2,601,912 as ofMarch 31, 2013 . Additionally, as ofMarch 31, 2020 , approximately 88.1% of our multi-tenant retail ABR was generated in the top 25 metropolitan statistical areas (MSAs), as determined by theUnited States Census Bureau and ranked based on the most recently available population estimates. In addition to addressing tenant lease concession requests stemming from COVID-19 in the near term, we are focused on optimizing our tenancy, asset level configurations and merchandising through (i) accretive leasing activity and (ii) mixed-use expansion and redevelopment projects. For the three months endedMarch 31, 2020 , we achieved positive comparable cash leasing spreads of 4.8% on signed new leases and 4.9% on signed renewal leases for a blended re-leasing spread of 4.9%. During this period, we achieved average annual contractual rent increases on signed new leases of approximately 170 basis points. As ofMarch 31, 2020 , we have$16,272 of ABR related to 647,000 square feet of GLA pertaining to 2020 lease expirations and$4,545 of ABR related to 245,000 square feet of GLA pertaining to leases signed but not commenced. In light of the COVID-19 pandemic, we are unable to project the impact on our leasing volume or other leasing trends. However, while existing tenants are continuing to pursue renewals, we have to a certain extent experienced, and may continue to experience, a slowdown in (i) rent commencing on signed leases, (ii) the volume of renewal leases and (iii) our ability to finalize the execution of new leases given current uncertainty. Our active and near-term expansion and redevelopment projects consist of approximately$178,000 to$192,000 of expected investment through 2022, equivalent to approximately 6% of the net book value of our investment properties as ofMarch 31, 2020 . These predominantly mixed-use-focused projects include the redevelopment at Circle East, the expansion projects of Pads G & H at One Loudoun Downtown and site and building reconfiguration at The Shoppes at Quarterfield as well as the vacant pad development atSouthlake Town Square . In response to current macroeconomic conditions due to the impact of the COVID-19 pandemic, we halted plans for vertical construction at our Carillon redevelopment during the three months endedMarch 31, 2020 and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately$75,000 to$100,000 . As ofMarch 31, 2020 , we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to complete the site work preparation during 2020 for an expected additional capital investment of approximately$4,500 . In addition, we terminated the joint venture related to the multi-family rental portion of the redevelopment. Subsequent toMarch 31, 2020 , we terminated the joint venture related to the medical office building portion of the redevelopment at Carillon. Our current portfolio of assets contains numerous additional projects in the longer-term pipeline, including, among others, redevelopment at Carillon, additional pad developments at One Loudoun Downtown, pad developments and expansions atMain Street Promenade and Downtown Crown, and future projects atMerrifield Town Center , Tysons Corner,Southlake Town Square , Lakewood Towne Center and One Loudoun Uptown. Company Highlights - Three Months EndedMarch 31, 2020 Developments in Progress During the three months endedMarch 31, 2020 , we invested$12,715 in our expansion and redevelopment projects at Circle East, One Loudoun Downtown, Carillon, The Shoppes at Quarterfield andSouthlake Town Square . We expect that the majority of our additional 2020 project spend will be for the One Loudoun Downtown project. 27
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The following table summarizes the carrying amount of developments in progress
as of
Property Name MSA March 31, 2020
Expansion and redevelopment projects:
Circle East Baltimore $ 34,665
One Loudoun Downtown Washington, D.C. 36,346
Carillon Washington, D.C. 29,517
The Shoppes at Quarterfield Baltimore 524
Pad development projects:
Southlake Town Square Dallas 259
101,311
Land held for future development:
One Loudoun Uptown Washington, D.C. 25,450
Total developments in progress $ 126,761 Acquisitions
The following table summarizes our acquisition activity during the three months endedMarch 31, 2020 : Square Acquisition Date Property Name MSA Property Type Footage Price February Fullerton 6, 2020 Metrocenter Los Angeles Fee interest (a) 154,700$ 55,000 154,700$ 55,000
(a) We acquired the fee interest in an existing multi-tenant retail operating
property. In connection with this acquisition, we also assumed the lessor
position in a ground lease with a shadow anchor. The total number of
properties in our portfolio was not affected by this transaction.
Dispositions
The following table summarizes our disposition activity during the three months
ended
Square
Date Property Name Property Type Footage Consideration
February 13, 2020 King Philip's Crossing Multi-tenant retail 105,900$ 13,900 105,900$ 13,900 28
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Market Summary The following table summarizes our retail operating portfolio by market as ofMarch 31, 2020 : GLA % of Total ABR per (in % of Total % Leased Property Number of Multi-Tenant Occupied thousands) Multi-Tenant Including Type/Market Properties ABR (a) Retail ABR (a) Sq. Ft. (a) Retail GLA (a) Occupancy Signed Multi-Tenant Retail: Top 25 MSAs (b) Dallas 19$ 83,234 23.1 %$ 22.88 3,943 20.0 % 92.2 % 92.9 % Washington, D.C. 8 39,300 10.9 % 29.32 1,388 7.0 % 96.5 % 96.8 % New York 9 36,638 10.1 % 29.77 1,292 6.6 % 95.2 % 95.2 % Chicago 8 29,603 8.2 % 24.08 1,358 6.9 % 90.5 % 90.5 % Seattle 9 24,450 6.8 % 16.69 1,548 7.9 % 94.6 % 97.6 % Baltimore 4 21,963 6.1 % 16.02 1,543 7.8 % 88.9 % 93.8 % Atlanta 9 20,874 5.8 % 14.00 1,513 7.7 % 98.6 % 98.6 % Houston 9 16,199 4.5 % 14.97 1,141 5.8 % 94.9 % 96.1 % San Antonio 3 12,729 3.5 % 17.95 721 3.7 % 98.3 % 98.4 % Phoenix 3 11,019 3.0 % 18.02 632 3.2 % 96.8 % 98.1 % Los Angeles 1 6,742 1.9 % 18.06 396 2.0 % 94.3 % 96.2 % Riverside 1 4,584 1.3 % 15.99 292 1.5 % 98.1 % 98.1 % St. Louis 1 4,275 1.2 % 9.60 453 2.3 % 98.3 % 98.3 % Charlotte 1 3,691 1.0 % 14.06 320 1.6 % 82.1 % 96.2 % Tampa 1 2,401 0.7 % 19.69 126 0.6 % 97.0 % 97.0 % Subtotal 86 317,702 88.1 % 20.29 16,666 84.6 % 93.9 % 95.3 % Non-Top 25 MSAs (b) 14 42,719 11.9 % 14.90 3,034 15.4 % 94.5 % 95.0 % Total Multi-Tenant Retail 100 360,421 100.0 % 19.46 19,700 100.0 % 94.0 % 95.3 % Single-User Retail 2 5,864 22.49 261 100.0 % 100.0 % Total Retail Operating Portfolio (c) 102$ 366,285 $ 19.50 19,961 94.1 % 95.3 %
(a) Excludes
multi-tenant retail GLA attributable to Circle East and The Shoppes at
Quarterfield, located in the Baltimore MSA, and Carillon, located in the
these amounts, 88.2% of our multi-tenant retail ABR and 84.7% of our
multi-tenant retail GLA is located in the top 25 MSAs.
(b) Top 25 MSAs are determined by the
based on the most recently available population estimates.
(c) Excludes the 18 multi-family rental units at
2020, 16 multi-family rental units were leased at an average monthly rental
rate per unit of $1,339 .
Leasing Activity
The following table summarizes the leasing activity in our retail operating
portfolio and our active and near-term expansion and redevelopment projects
during the three months ended March 31, 2020 . Leases with terms of less than 12
months have been excluded from the table.
New
Number of Contractual Prior % Change Weighted Tenant
Leases GLA Signed Rent per Square Contractual over Prior Average Allowances
Signed (in thousands) Foot (PSF) (a) Rent PSF (a) ABR (a) Lease Term PSF (b)
Comparable Renewal
Leases 62 195 $ 22.29 $ 21.25 4.9 % 4.8 $ 8.73
Comparable New
Leases 5 33 $ 23.01 $ 21.95 4.8 % 9.4 $ 41.30
Non-Comparable New
and
Renewal Leases (c) 15 57 $ 26.62 N/A N/A 8.7 $ 47.57
Total 82 285 $ 22.39 $ 21.35 4.9 % 6.2 $ 18.51 (a) Total excludes the impact of Non-Comparable New and Renewal Leases.
(b) Excludes tenant allowances and related square foot amounts at our active and
near-term expansion and redevelopment projects. These tenant allowances, if
any, are included in the expected investment for each project.
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(c) Includes (i) leases signed on units that were vacant for over 12 months, (ii)
leases signed without fixed rental payments and (iii) leases signed where the
previous and current lease do not have a consistent lease structure.
Our near-term efforts are primarily focused on reaching resolution of tenant lease concession requests. In addition, our leasing efforts are focused on (i) vacant anchor and small shop space, (ii) upcoming lease expirations and (iii) spaces within our expansion and redevelopment projects. Through these collective efforts, we look to situationally focus on stability, tenancy and to optimize the mix of operators and unique retailers at our properties. As ofMarch 31, 2020 , we have$16,272 of ABR related to 647,000 square feet of GLA pertaining to 2020 lease expirations and$4,545 of ABR related to 245,000 square feet of GLA pertaining to leases signed but not commenced. In light of the COVID-19 pandemic, we are unable to project the impact on our leasing volume or other leasing trends. However, while existing tenants are continuing to pursue renewals, we have to a certain extent experienced, and may continue to experience, a slowdown in (i) rent commencing on signed leases, (ii) the volume of renewal leases and (iii) our ability to finalize the execution of new leases given current uncertainty. Capital Markets During the three months endedMarch 31, 2020 , we: • borrowed$831,704 , net of repayments, on our unsecured revolving line of
credit to enhance our liquidity and provide maximum financial flexibility
as the effects of the COVID-19 pandemic continue to evolve and impact the
global financial markets; and
• made scheduled principal payments of
Distributions
We declared a quarterly distribution of$0.165625 per share of common stock during the three months endedMarch 31, 2020 . Results of Operations Comparison of Results for the Three Months EndedMarch 31, 2020 and 2019 Three Months Ended March 31, 2020 2019 Change Revenues: Lease income$ 118,695 $ 122,703 $ (4,008 ) Expenses: Operating expenses 16,414 17,686 (1,272 ) Real estate taxes 18,533 18,403 130 Depreciation and amortization 40,173 43,267 (3,094 ) Provision for impairment of investment properties 346 - 346 General and administrative expenses 9,165 10,499 (1,334 ) Total expenses 84,631 89,855 (5,224 ) Other (expense) income: Interest expense (17,046 ) (17,430 ) 384 Gain on sales of investment properties - 8,449 (8,449 ) Gain on litigation settlement 6,100 - 6,100 Other expense, net (761 ) (659 ) (102 ) Net income 22,357 23,208 (851 ) Net income attributable to noncontrolling interests - - -
Net income attributable to common shareholders
23,208
Net income attributable to common shareholders was$22,357 for the three months endedMarch 31, 2020 compared to$23,208 for the three months endedMarch 31, 2019 . The$851 decrease was primarily due to the following: • an$8,449 decrease in gain on sales of investment properties related to
the sale of one investment property consisting of approximately 105,900
square feet of GLA that was impaired during the three months ended
March 31, 2020 compared
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to the sale of one investment property consisting of approximately 94,600 square feet of GLA that was sold for a gain during the three months endedMarch 31, 2019 ; and • a$4,008 decrease in lease income primarily consisting of: • a$1,358 decrease in amortization from acquired below market lease intangibles primarily as a result of the write-off of an acquired lease intangible liability associated with a lease that was not renewed at
one of our operating properties during the three months ended
2019;
• a
• a
• a
• a
partially offset by
• an
same store portfolio and the operating properties acquired during 2019
and 2020, partially offset by the operating properties sold during 2019
and 2020.
partially offset by
• a
ended March 31, 2020 related to litigation with a former tenant. No such
gain was recognized during the three months ended March 31, 2019 ;
• a
improvement and in-place lease intangible assets becoming fully
depreciated or amortized upon reaching the end of the asset's estimated
useful life during the three months ended
• a
a decrease in comparative cash bonus expense resulting from a significant
reduction in cash bonus expectations for 2020; and
• a $1,272 decrease in operating expenses primarily due to lower
snow-related expenses in 2020.
Net operating income (NOI)
We define NOI as all revenues other than (i) straight-line rental income
(non-cash), (ii) amortization of lease inducements, (iii) amortization of
acquired above and below market lease intangibles and (iv) lease termination fee
income, less real estate taxes and all operating expenses other than lease
termination fee expense and non-cash ground rent expense, which is comprised of
amortization of right-of-use lease assets and amortization of lease liabilities.
NOI consists of same store NOI (Same Store NOI) and NOI from other investment
properties (NOI from Other Investment Properties ). We believe that NOI, Same
Store NOI and NOI from Other Investment Properties , which are supplemental
non-GAAP financial measures, provide an additional and useful operating
perspective not immediately apparent from "Net income" or "Net income
attributable to common shareholders" in accordance with accounting principles
generally accepted in the United States (GAAP). We use these measures to
evaluate our performance on a property-by-property basis because they allow
management to evaluate the impact that factors such as lease structure, lease
rates and tenant base have on our operating results. NOI, Same Store NOI and NOI
from Other Investment Properties do not represent alternatives to "Net income"
or "Net income attributable to common shareholders" in accordance with GAAP as
indicators of our financial performance. Comparison of our presentation of NOI,
Same Store NOI and NOI from Other Investment Properties to similarly titled
measures for other REITs may not necessarily be meaningful due to possible
differences in definition and application by such REITs. For reference and as an
aid in understanding our computation of NOI, a reconciliation of net income
attributable to common shareholders as computed in accordance with GAAP to Same
Store NOI has been presented for each comparable period presented.
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Same store portfolio For the three months endedMarch 31, 2020 , our same store portfolio consisted of 101 retail operating properties acquired or placed in service and stabilized prior toJanuary 1, 2019 . The number of properties in our same store portfolio decreased to 101 as ofMarch 31, 2020 from 102 as ofDecember 31, 2019 as a result of the following: • the removal ofKing Philip's Crossing, a same store investment property that was sold during the three months endedMarch 31, 2020 ; and • the removal of The Shoppes at Quarterfield, which was reclassified to active redevelopment during the three months endedMarch 31, 2020 ;
partially offset by
• the addition of
reclassified into our retail operating portfolio during 2018.
The properties and financial results reported in "Other investment properties" primarily include the following: • properties acquired during 2019 and 2020;
• the multi-family rental units at
that was placed in service during 2019;
• Circle East, which is in active redevelopment;
• One Loudoun Downtown - Pads G & H, which are in active development;
• Carillon, a redevelopment project where we halted plans for vertical
construction during the three months ended
current macroeconomic conditions due to the impact of the COVID-19
pandemic; however, we are actively completing site work preparation at the
property in anticipation of potential future development at the site;
• The Shoppes at Quarterfield, which is in active redevelopment;
• investment properties that were sold or classified as held for sale during
2019 and 2020; and
• the net income from our wholly owned captive insurance company.
The following tables present a reconciliation of net income attributable to
common shareholders to Same Store NOI and details of the components of Same
Store NOI for the three months ended
Three Months Ended March 31,
2020 2019 Change
Net income attributable to common shareholders $ 22,357 $ 23,208 $ (851 )
Adjustments to reconcile to Same Store NOI:
Gain on sales of investment properties - (8,449 ) 8,449
Gain on litigation settlement (6,100 ) - (6,100 )
Depreciation and amortization 40,173 43,267 (3,094 )
Provision for impairment of investment
properties 346 - 346
General and administrative expenses 9,165 10,499 (1,334 )
Interest expense 17,046 17,430 (384 )
Straight-line rental income, net (341 ) (1,500 ) 1,159
Amortization of acquired above and below
market lease intangibles, net (976 ) (2,334 ) 1,358
Amortization of lease inducements 419 296 123
Lease termination fees, net (124 ) (1,188 ) 1,064
Non-cash ground rent expense, net 333 358 (25 )
Other expense, net 761 659 102
NOI 83,059 82,246 813
NOI from Other Investment Properties (1,318 ) (1,484 ) 166
Same Store NOI $ 81,741 $ 80,762 $ 979
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Three Months Ended March 31,
2020 2019 Change
Same Store NOI:
Base rent $ 89,323 $ 86,591 $ 2,732
Percentage and specialty rent 1,035 1,280 (245 )
Tenant recoveries 25,445 26,818 (1,373 )
Other lease-related income 1,466 1,289 177
Bad debt, net (1,505 ) (428 ) (1,077 )
Property operating expenses (15,718 ) (16,365 ) 647
Real estate taxes (18,305 ) (18,423 ) 118
Same Store NOI $ 81,741 $ 80,762 $ 979 Same Store NOI increased
from occupancy growth, (ii) $996 from contractual rent changes and (iii)
$552 from re-leasing spreads;
partially offset by
• a $1,077 increase in bad debt, net; and
• a
of tenant recoveries, due to a positive impact from the common area
maintenance and real estate tax reconciliation process in 2019, increases
in certain non-recoverable property operating expenses and higher net real
estate taxes, partially offset by decreases in net recoverable property
operating expenses primarily driven by lower snow-related expenses.
Funds From Operations Attributable to Common ShareholdersThe National Association of Real Estate Investment Trusts , or NAREIT, an industry trade group, has promulgated a financial measure known as funds from operations (FFO). As defined by NAREIT, FFO means net income computed in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains from sales of real estate assets, (iii) gains and losses from change in control and (iv) impairment write-downs of real estate assets and investments in entities directly attributable to decreases in the value of real estate held by the entity. We have adopted the NAREIT definition in our computation of FFO attributable to common shareholders. Management believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing our performance and operations to those of other REITs. We define Operating FFO attributable to common shareholders as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the impact on earnings from gains or losses associated with the early extinguishment of debt or other liabilities, litigation involving the Company, including gains recognized as a result of settlement and costs to engage outside counsel related to litigation with former tenants, the impact on earnings from executive separation and the excess of redemption value over carrying value of preferred stock redemption, which are not otherwise adjusted in our calculation of FFO attributable to common shareholders. We believe that FFO attributable to common shareholders and Operating FFO attributable to common shareholders, which are supplemental non-GAAP financial measures, provide an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders and Operating FFO attributable to common shareholders do not represent alternatives to (i) "Net Income" or "Net income attributable to common shareholders" as indicators of our financial performance, or (ii) "Cash flows from operating activities" in accordance with GAAP as measures of our capacity to fund cash needs, including the payment of dividends. Comparison of our presentation of Operating FFO attributable to common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs. 33
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The following table presents a reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders and Operating FFO attributable to common shareholders:
Three Months
Ended
2020 2019
Net income attributable to common shareholders$ 22,357 $ 23,208 Depreciation and amortization of real estate 39,838
42,913
Provision for impairment of investment properties 346 - Gain on sales of investment properties - (8,449 ) FFO attributable to common shareholders$ 62,541
FFO attributable to common shareholders per common share outstanding - diluted
$ 0.29
FFO attributable to common shareholders$ 62,541 $ 57,672 Gain on litigation settlement (6,100 ) - Other (a) 1,011 711
Operating FFO attributable to common shareholders
Operating FFO attributable to common shareholders per common share outstanding - diluted
$ 0.27
(a) Primarily consists of the impact on earnings from litigation involving the
Company, including costs to engage outside counsel related to litigation with
former tenants, which are included within "Other expense, net" in the
accompanying condensed consolidated statements of operations and other
comprehensive loss.
Liquidity and Capital Resources
We anticipate that cash flows from the below-listed sources will provide
adequate capital for the next 12 months and beyond for all scheduled principal
and interest payments on our outstanding indebtedness, including maturing debt,
current and anticipated tenant allowances or other capital obligations, the
shareholder distributions required to maintain our REIT status and compliance
with the financial covenants of our unsecured debt agreements.
Our primary expected sources and uses of liquidity are as follows:
SOURCES USES
? Operating cash flow ? Tenant allowances and leasing costs
? Cash and cash equivalents ? Improvements made to individual
properties, certain of which are not? Proceeds from capital markets recoverable through common area
transactions maintenance charges to tenants
? Proceeds from asset dispositions ? Debt repayments ? Proceeds from the sales of air ? Distribution payments
rights
? Redevelopment, expansion and pad
development activities
? Acquisitions
? New development
? Repurchases of our common stock
During the three months ended March 31, 2020 , we elected to nearly fully draw on
our $850,000 unsecured revolving line of credit to enhance our liquidity and
provide maximum financial flexibility as the effects of the COVID-19 pandemic
continue to evolve and impact the global financial markets. As of March 31,
2020 , we have $769,241 of cash on hand and the ability to repay the vast
majority of the amount drawn on our unsecured revolving line of credit; however,
we may elect to not repay it for some time, which will increase our interest
expense. Over the last several years, we have made substantial progress in
strengthening our balance sheet, as demonstrated by our reduced leverage,
improved financial flexibility and higher unencumbered asset ratio. We believe
this progress places us in a position to be able to better withstand the current
unprecedented macroeconomic environment. However, there can be no assurances in
this regard or that additional financing or capital will be available to us
going forward, on favorable terms or at all. Additionally, through April 30,
2020 , we have collected more than 52% of billed rent from our tenants. If such a
trend continues, or possibly deteriorates, and if we agree with certain tenants
that rent may be deferred until a later date, our operating cash flows and
liquidity will be negatively impacted. As we worked to fortify our balance
sheet, we funded debt maturities primarily through asset dispositions and
capital markets transactions, including the public offering of our common stock
and private and public offerings of senior unsecured notes. As of March 31,
2020 , we have no scheduled debt maturities and $1,875
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of principal amortization due through the end of 2020, which we plan on satisfying through a combination of cash flows from operations and working capital, including cash on hand of$769,241 as ofMarch 31, 2020 . The table below summarizes our consolidated indebtedness as ofMarch 31, 2020 : Aggregate Weighted Weighted Principal Average Average Years Debt Amount Interest Rate Maturity Date to Maturity Fixed rate mortgages payable (a)$ 94,285 4.37 % Various 4.8 years Unsecured notes payable: Senior notes - 4.12% due 2021 100,000 4.12 % June 30, 2021 1.2 years Senior notes - 4.58% due 2024 150,000 4.58 % June 30, 2024 4.3 years Senior notes - 4.00% due 2025 250,000 4.00 % March 15, 2025 5.0 years Senior notes - 4.08% due 2026 100,000 4.08 % September 30, 2026 6.5 years Senior notes - 4.24% due 2028 100,000 4.24 % December 28, 2028 8.8 years Senior notes - 4.82% due 2029 100,000 4.82 % June 28, 2029 9.2 years Total unsecured notes payable (a) 800,000 4.27 % 5.6 years Unsecured credit facility: Term loan due 2021 - fixed rate (b) 250,000 3.20 % January 5, 2021 0.8 years Revolving line of credit - variable rate 849,704 2.04 % April 22, 2022 (c) 2.1 years Total unsecured credit facility (a) 1,099,704 2.30 % 1.8 years Unsecured term loans: Term Loan Due 2023 - fixed rate (d) 200,000 4.05 % November 22, 2023 3.6 years Term Loan Due 2024 - fixed rate (e) 120,000 2.88 % July 17, 2024 4.3 years Term Loan Due 2026 - fixed rate (f) 150,000 3.27 % July 17, 2026 6.3 years Total unsecured term loans (a) 470,000 3.50 % 4.7 years Total consolidated indebtedness$ 2,463,989 3.25 % 3.7 years
(a) Fixed rate mortgages payable excludes mortgage discount of
capitalized loan fees of
capitalized loan fees of
loan fees related to the revolving line of credit are included within "Other
assets, net" in the accompanying condensed consolidated balance sheets.
(b) Reflects
a fixed rate of 2.00% plus a credit spread based on a leverage grid ranging
from 1.20% to 1.70% through
1.20% as of
(c) We have two six-month extension options on the revolving line of credit,
which we may exercise as long as we are in compliance with the terms of the
unsecured credit agreement and we pay an extension fee equal to 0.075% of the
commitment amount being extended.
(d) Reflects
a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging
from 1.20% to 1.85% through
was 1.20% as of
(e) Reflects
a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging
from 1.20% to 1.70% through
1.20% as of
(f) Reflects
a fixed rate of 1.77% plus a credit spread based on a leverage grid ranging
from 1.50% to 2.20% through
1.50% as of
Mortgages Payable During the three months endedMarch 31, 2020 , we made scheduled principal payments of$619 related to amortizing loans. Unsecured Term Loans and Revolving Line of Credit Unsecured Credit Facility We have a$1,100,000 unsecured credit facility consisting of an$850,000 unsecured revolving line of credit and a$250,000 unsecured term loan (Unsecured Credit Facility) that is priced on a leverage grid at a rate of LIBOR plus a credit spread. In accordance with the unsecured credit agreement, we may elect to convert to an investment grade pricing grid. As ofMarch 31 , 35
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2020, making such an election would have resulted in a higher interest rate and,
as such, we have not made the election to convert to an investment grade pricing
grid.
The following table summarizes the key terms of the Unsecured Credit Facility:
Leverage-Based Pricing Investment Grade Pricing
Unsecured Credit Extension
Facility Maturity Date Option Extension Fee Credit Spread Facility Fee Credit Spread Facility Fee
$250,000 unsecured
term loan due 2021 1/5/2021 N/A N/A 1.20%-1.70% N/A 0.90%-1.75% N/A
$850,000 unsecured
revolving line of 2-six
credit 4/22/2022 month 0.075% 1.05%-1.50% 0.15%-0.30% 0.825%-1.55% 0.125%-0.30%
The Unsecured Credit Facility has a $500,000 accordion option that allows us, at
our election, to increase the total Unsecured Credit Facility up to $1,600,000 ,
subject to (i) customary fees and conditions including, but not limited to, the
absence of an event of default as defined in the unsecured credit agreement and
(ii) our ability to obtain additional lender commitments.
As of March 31, 2020 , we had letters of credit outstanding totaling $291 that
serve as collateral for certain capital improvements at one of our properties
and reduce the available borrowings on our unsecured revolving line of credit.
Unsecured Term Loans
As of March 31, 2020 , we have the following unsecured term loans: (i) a
seven-year $200,000 unsecured term loan (Term Loan Due 2023), (ii) a five-year
$120,000 unsecured term loan (Term Loan Due 2024), and (iii) a seven-year
$150,000 unsecured term loan (Term Loan Due 2026) each of which bears interest
at a rate of LIBOR, adjusted based on applicable reserve percentages established
by the Federal Reserve , plus a credit spread based on a leverage grid. In
accordance with the respective term loan agreements, we may elect to convert to
an investment grade pricing grid. As of March 31, 2020 , making such an election
would have resulted in a higher interest rate and, as such, we have not made the
election to convert to an investment grade pricing grid.
The following table summarizes the key terms of the unsecured term loans:
Investment Grade
Leverage-Based Pricing Pricing
Unsecured Term Loans Maturity Date Credit Spread Credit Spread
$200,000 unsecured term
loan due 2023 11/22/2023 1.20% - 1.85% 0.85% - 1.65%
$120,000 unsecured term
loan due 2024 7/17/2024 1.20% - 1.70% 0.80% - 1.65%
$150,000 unsecured term
loan due 2026 7/17/2026 1.50% - 2.20% 1.35% - 2.25%
The Term Loan Due 2024 has a $130,000 accordion option and the Term Loan Due
2026 has a $100,000 accordion option that, collectively, allow us, at our
election, to increase the total of the Term Loan Due 2024 and Term Loan Due 2026
up to $500,000 , subject to (i) customary fees and conditions, including the
absence of an event of default as defined in the term loan agreement and (ii)
our ability to obtain additional lender commitments.
The Term Loan Due 2023 has a $100,000 accordion option that allows us, at our
election, to increase the Term Loan Due 2023 up to $300,000 , subject to (i)
customary fees and conditions, including the absence of an event of default as
defined in the amended term loan agreement and (ii) our ability to obtain
additional lender commitments.
Our unsecured revolving line of credit and unsecured term loans each bear
interest at a rate of LIBOR plus a credit spread, which is based on leverage
grids. To the extent that our leverage ratio increases, the applicable credit
spread will increase according to the tiers of each respective leverage grid.
Based on our unsecured revolving line of credit and unsecured term loans balance
of $1,569,704 as of March 31, 2020 , the resulting increase in our leverage ratio
and related movement to a higher tier on each respective leverage grid is
expected to increase the weighted average credit spread portion of the interest
rate by 0.11% applicable to the $1,569,704 balance for, at a minimum, the next
quarterly compliance period under our debt agreements. Additionally, the
facility fee on our unsecured revolving line of credit is expected to increase
by 0.05% due to the increase in our leverage ratio and related movement to a
higher tier on the leverage grid.
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Debt Maturities The following table summarizes the scheduled maturities and principal amortization of our indebtedness as ofMarch 31, 2020 for the remainder of 2020, each of the next four years and thereafter, and the weighted average interest rates by year, as well as the fair value of our indebtedness as ofMarch 31, 2020 . The table does not reflect the impact of any debt activity that occurred afterMarch 31, 2020 . 2020 2021 2022 2023 2024 Thereafter Total Fair Value Debt: Fixed rate debt: Mortgages payable (a)$ 1,875 $ 2,626 $ 26,678 $ 31,758 $ 1,737 $ 29,611 $ 94,285 $ 95,831 Fixed rate term loans (b) - 250,000 - 200,000 120,000 150,000 720,000 711,013 Unsecured notes payable (c) - 100,000 - -
150,000 550,000 800,000 788,109 Total fixed rate debt 1,875 352,626 26,678 231,758
271,737 729,611 1,614,285 1,594,953
Variable rate debt:
Variable rate revolving
line of credit - - 849,704 - - - 849,704 841,529
Total debt (d) $ 1,875 $ 352,626 $ 876,382 $ 231,758 $ 271,737 $ 729,611 $ 2,463,989 $ 2,436,482
Weighted average
interest rate on debt:
Fixed rate debt 4.39 % 3.47 % 4.81 % 4.06 % 3.83 % 4.02 % 3.89 %
Variable rate debt (e) - - 2.04 % - - - 2.04 %
Total 4.39 % 3.47 % 2.12 % 4.06 % 3.83 % 4.02 % 3.25 %
(a) Excludes mortgage discount of
of accumulated amortization, as of
(b) Excludes capitalized loan fees of
as of
swapped to fixed rate debt: (i)
has been swapped to a fixed rate of 2.00% plus a credit spread based on a
leverage grid through
rate debt has been swapped to a fixed rate of 2.85% plus a credit spread
based on a leverage grid through
LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus
a credit spread based on a leverage grid through
of 1.77% plus a credit spread based on a leverage grid through
As of
was 1.20% and for (iv) was 1.50%.
(c) Excludes discount of
accumulated amortization, as of
(d) The weighted average years to maturity of consolidated indebtedness was 3.7
years as of
(e) Represents interest rate as of
Our unsecured debt agreements, consisting of the (i) unsecured credit agreement governing the Unsecured Credit Facility, (ii) amended term loan agreement governing the Term Loan Due 2023, (iii) term loan agreement governing the Term Loan Due 2024 and Term Loan Due 2026, (iv) note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024), (v) indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025), (vi) note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), and (vii) note purchase agreement governing the 4.82% senior unsecured notes due 2029 (Notes Due 2029), contain customary representations, warranties and covenants, and events of default. These include financial covenants such as (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage ratios; (iii) minimum fixed charge coverage ratios; (iv) minimum unencumbered interest coverage ratios; (v) minimum debt service coverage ratio; and (vi) minimum unencumbered assets to unsecured debt ratio. All financial covenants that include operating results, or derivations thereof, in the covenant calculations are based on the most recent four fiscal quarters of activity. As such, the impact of short-term relative adverse operating results, if any, on our financial covenants is partially mitigated by previous and/or subsequent operating results. As ofMarch 31, 2020 , management believes we were in compliance with the financial covenants and default provisions under the unsecured debt agreements. We plan on addressing our debt maturities through a combination of (i) cash flows from operations, (ii) working capital, including cash on hand of$769,241 as ofMarch 31, 2020 , and (iii) capital markets transactions. Distributions and Equity Transactions Our distributions of current and accumulated earnings and profits forU.S. federal income tax purposes are taxable to shareholders, generally, as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction 37
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of the shareholders' basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. We intend to continue to qualify as a REIT forU.S. federal income tax purposes. The Internal Revenue Code of 1986, as amended (the Code) generally requires that a REIT annually distributes to its shareholders at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains. The Code imposes tax on any undistributed REIT taxable income. To satisfy the requirements for qualification as a REIT and generally not be subject toU.S. federal income and excise tax, we intend to make distributions of all, or substantially all, of our taxable income to shareholders. Our future distributions will be at the discretion of our board of directors and are required to be declared 10 days prior to the record date. When determining the amount of future distributions, we expect to consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future cash flow, (iii) our determination of near-term cash needs for debt repayments and potential future share repurchases, (iv) the market of available acquisitions of new properties and redevelopment, expansion and pad development opportunities, (v) the timing of significant re-leasing activities and the establishment of additional cash reserves for anticipated tenant allowances and general property capital improvements, (vi) our ability to continue to access additional sources of capital, and (vii) the amount required to be distributed to maintain our status as a REIT, which is a requirement of our unsecured credit agreement, and to avoid or minimize any income and excise taxes that we otherwise would be required to pay. Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements. In order to preserve and enhance liquidity and capital positioning, our board of directors has temporarily suspended future quarterly dividend payments on our outstanding Class A common stock. Our board of directors will evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on our operating cash flow performance as well as other factors. We have an existing common stock repurchase program under which we may repurchase, from time to time, up to a maximum of$500,000 of shares of our Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions and are canceled upon repurchase. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of our assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program may be suspended or terminated at any time without prior notice. We did not repurchase any shares during the three months endedMarch 31, 2020 . As ofMarch 31, 2020 ,$189,105 remained available for repurchases of shares of our common stock under our common stock repurchase program. Capital Expenditures and Redevelopment Activity We anticipate that obligations related to capital improvements and redevelopments, including expansions and pad developments, can be met with (i) cash flows from operations, (ii) working capital, including cash on hand of$769,241 as ofMarch 31, 2020 , and (iii) capital markets transactions. As ofMarch 31, 2020 , we have active expansion and redevelopment projects at Circle East, One Loudoun Downtown, The Shoppes at Quarterfield and a vacant pad development atSouthlake Town Square . To date, we have invested a total of approximately$45,000 in these projects, which is net of proceeds of$11,820 from the sale of air rights at Circle East and net of contributions from our joint venture partner at One Loudoun Downtown. These projects are at various stages of completion, and based on our current plans and estimates, we anticipate that it will require approximately$133,000 to$147,000 of additional investment from us to complete these projects. During the three months endedMarch 31, 2020 , we halted plans for vertical construction at our Carillon redevelopment in response to current macroeconomic conditions due to the impact of the COVID-19 pandemic and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately$75,000 to$100,000 . As ofMarch 31, 2020 , we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to complete the site work preparation during 2020 for an expected additional capital investment of approximately$4,500 . We capitalized$626 and$675 of internal salaries and related benefits of personnel directly involved in capital upgrades and tenant improvements during the three months endedMarch 31, 2020 and 2019, respectively. We also capitalized$60 and$54 of internal leasing incentives, all of which were incremental to signed leases, during the three months endedMarch 31, 2020 and 2019, respectively. 38
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In addition, we capitalized$1,316 and$574 of indirect project costs, which includes, among other costs,$372 and$365 of internal salaries and related benefits of personnel directly involved in the redevelopment projects and$785 and$144 of interest, related to expansion and redevelopment projects during the three months endedMarch 31, 2020 and 2019, respectively. Dispositions The following table highlights our property dispositions during 2019 and the three months endedMarch 31, 2020 : Aggregate Number of Square Proceeds, Net Debt Properties Sold Footage Consideration (a) Extinguished 2020 Disposition (through March 31, 2020) 1 105,900$ 13,900 $ 11,343 $ - 2019 Dispositions 2 236,100$ 44,750 $ 39,594 $ -
(a) Represents total consideration net of transaction costs, as well as capital
and tenant-related costs credited to the buyer at close, as applicable.
In addition to the transactions presented in the preceding table, during the year endedDecember 31, 2019 , we received net proceeds of$5,062 in connection with the second and third phases of the sale of a land parcel, which included rights to develop 22 residential units, at One Loudoun Downtown. Acquisitions The following table highlights our asset acquisitions during 2019 and the three months endedMarch 31, 2020 : Number of Assets Acquired Square Footage Acquisition Price Mortgage Debt 2020 Acquisition (through March 31, 2020) (a) 1 154,700 $ 55,000 $ - 2019 Acquisitions (b) 3 73,600 $ 29,976 $ -
(a) 2020 acquisition is the fee interest in our Fullerton Metrocenter
multi-tenant retail operating property. In connection with this acquisition,
we also assumed the lessor position in a ground lease with a shadow anchor.
The total number of properties in our portfolio was not affected by this
transaction.
(b) In addition to the acquisition of one multi-tenant retail operating property,
2019 acquisitions include the purchase of the following that did not affect
our property count: (i) a parcel adjacent to our
multi-tenant retail operating property and (ii) a single-user parcel at our
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