KITE REALTY GROUP TRUST MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (FORM 10-Q)

The following discussion should be read in conjunction with the accompanying
historical financial statements and related notes thereto. In this discussion,
unless the context suggests otherwise, references to "our Company," "we," "us,"
and "our" mean Kite Realty Group Trust and its direct and indirect subsidiaries,
including Kite Realty Group, L.P.

                CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, together with other statements and
information publicly disseminated by us, contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such statements are based on
assumptions and expectations that may not be realized and are inherently subject
to risks, uncertainties and other factors, many of which cannot be predicted
with accuracy and some of which might not even be anticipated. Future events and
actual results, performance, transactions or achievements, financial or
otherwise, may differ materially from the results, performance, transactions or
achievements, financial or otherwise, expressed or implied by the
forward-looking statements.

Currently, one significant factor that could cause actual outcomes to differ
significantly from our forward-looking statements is the adverse effect of the
current pandemic of the novel coronavirus ("COVID-19"), including possible
resurgences, variants and mutations, on the financial condition, results of
operations, cash flows and performance of the Company and its tenants, the real
estate market and the global economy and financial markets. Moreover, investors
are cautioned to interpret many of the risks identified under the section titled
"Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 as being heightened as a result of the ongoing and numerous
adverse effects of COVID-19.

Additional risks, uncertainties and other factors that may cause such differences, some of which may be material, include, but are not limited to:

• Risks associated with company incorporation (defined below) America’s Retail Properties, Inc. (“RPAI”), including the business integration of the combined Company, the ability to achieve anticipated synergies or cost savings and potential disruptions to the Company’s plans and operations;

•national and local economic, business, real estate and other market conditions,
particularly in connection with low or negative growth in the U.S. economy as
well as economic uncertainty (including the potential effects of inflation and
increases in interest rates);

• Funding risks, including the availability of liquidity sources and the costs associated with them.

• Our ability to refinance our debts or extend their maturities.

• The level and volatility of interest rates.

• Financial stability of the tenants.

• the competitive environment in which we operate, including increasing the potential supply and reducing the demand for rental space;

• Risks of acquisition, disposal, development and joint ventures.

•property ownership and management risks, including the relative illiquidity of
real estate investments, and expenses, vacancies or the inability to rent space
on favorable terms or at all;

• Our ability to maintain our position as a Real Estate Investment Trust (“REIT”) we Federal income tax purposes;

• environmental and other potential responsibilities;

• The depreciation of the real estate we own.

• the attractiveness of our properties to tenants, the actual and perceived impact of e-commerce on the value of shopping center assets and changing demographics and customer movement patterns;

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•business continuity disruptions and a deterioration in our tenant's ability to
operate in affected areas or delays in the supply of products or services to us
or our tenants from vendors that are needed to operate efficiently, causing
costs to rise sharply and inventory to fall;

• Risks related to the current geographical concentration of our properties in
TexasAnd the Florida, New Yorkand Maryland and North Carolina;

•civil unrest, acts of terrorism or war, acts of God, climate change, epidemics,
pandemics (including COVID-19), natural disasters and severe weather conditions,
including such events that may result in underinsured or uninsured losses or
other increased costs and expenses;

• changes in government laws and regulations including government orders that affect the use of our property or the ability of our tenants to work, and the costs of complying with such changing government laws and regulations;

• Possible short- or long-term changes in consumer behavior due to COVID-19 and the fear of future pandemics;

• Our ability to meet the environmental, social or governance standards set by the various target groups.

• Insurance costs and coverage.

• risks associated with cyber security attacks, loss of confidential information and other business disruptions;

• Other factors that affect the real estate industry in general. And the

•other risks identified in this Quarterly Report on Form 10-Q and, from time to
time, in other reports we file with the Securities and Exchange Commission (the
"SEC") or in other documents that we publicly disseminate, including, in
particular, the section titled "Risk Factors" in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2021.

We undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

Our Business and Properties

Kite Realty Group Trust is a publicly held REIT which, through its
majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various
operating subsidiaries and joint ventures engaged in the ownership, operation,
acquisition, development, and redevelopment of high-quality, open-air shopping
centers and mixed-use assets in select markets in the United States. We derive
revenues primarily from activities associated with the collection of contractual
rents and reimbursement payments from tenants at our properties. Therefore, our
operating results depend materially on, among other things, the ability of our
tenants to make required lease payments, the health and resilience of the U.S.
retail sector, interest rate volatility, job growth and real estate market and
overall economic conditions.

As of June 30, 2022, we owned interests in 181 operating retail properties
totaling approximately 28.8 million square feet and one office property with 0.3
million square feet. Of the 181 operating retail properties, 11 contain an
office component. We also owned five development projects under construction as
of this date.

Merger with RPAI

On October 22, 2021, we completed a merger with RPAI in accordance with the
Agreement and Plan of Merger dated July 18, 2021 (the "Merger Agreement"), by
and among the Company, its wholly owned subsidiary KRG Oak, LLC ("Merger Sub")
and RPAI, pursuant to which RPAI merged with and into Merger Sub (the "Merger").
Immediately following the closing of the Merger, Merger Sub merged with and into
the Operating Partnership so that all of the assets and liabilities of the
Company continue to be held at or below the Operating Partnership level. As a
result of the Merger, we acquired 100 operating retail properties and five
development projects along with multiple parcels of entitled land for future
value creation, creating a top five open-air shopping center REIT. The combined
high-quality, open-air portfolio is a mixture of predominantly necessity-based,
grocery-anchored neighborhood and community centers, combined with vibrant
mixed-use assets. The Merger more than doubled the Company's presence in
high-growth markets that have mild or temperate climates and no or relatively
low income taxes, while also introducing and/or enhancing its presence in
strategic gateway markets. In addition, the combined company

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has additional opportunities to further increase shareholder value, including
leasing of pandemic-related vacancies, optimizing net operating income ("NOI")
margins, lowering the Company's cost of capital, and completing select
development projects. Pursuant to the terms of the Merger Agreement, each
outstanding share of RPAI common stock converted into the right to receive 0.623
common shares of the Company plus cash in lieu of fractional Company shares. The
Operating Partnership issued an equivalent amount of General Partner Units to
the Parent Company.

Inflation

Most of our leases contain provisions designed to mitigate the adverse impact of
inflation, including stated rent increases and requirements for tenants to pay a
share of operating expenses, including common area maintenance, real estate
taxes, insurance or other operating expenses related to the maintenance of our
properties, including escalation clauses in certain leases. Most of our leases
also include clauses that allow us to collect additional rent based on a
percentage of tenants' gross sales over stated thresholds, which sales generally
increase as prices rise. In addition, we believe that the rental rates in many
of our leases are below current market rates for comparable space and that upon
renewal, such rates may be increased to be in line with current rates, which may
offset certain inflationary expense pressures. We also periodically evaluate our
exposure to interest rate fluctuations and enter into interest rate protection
agreements to mitigate the impact of changes in interest rates on our variable
rate debt.

Impacts on business from COVID-19

In 2020, the COVID-19 pandemic had a significant adverse impact on many of our
tenants and on our business. The effects of COVID-19, including related
government restrictions, mandatory quarantines, "shelter in place" orders,
border closures, "social distancing" practices, masking requirements and other
travel and gathering restrictions and practices, have caused many of our tenants
to close stores, reduce hours or significantly limit service, each of which may
continue to create headwinds for our tenants. Since we cannot estimate when the
containment measures will roll back, end, or be reinstated, we cannot estimate
the ultimate operational and financial impact of COVID-19 on our business.

As the domestic economy recovered from many of the effects of COVID-19,
retailers improved their operations to account for the pandemic, including using
open-air centers as convenient shopping destinations and last-mile fulfillment
through the use of in-store pickup, curbside pickup, and shipping from stores.
Historically, economic indicators such as GDP growth, consumer confidence and
employment have been correlated with demand for certain of our tenants' products
and services. If an economic recession returns, it could increase the number of
our tenants that are unable to meet their lease obligations to us and could
limit the demand for our space from new tenants.

We expect the significance of the COVID-19 pandemic, including the extent of its
effects on our business, financial performance and condition, operating results
and cash flows and the economic slowdown, to be dictated by, among other things,
the duration of the COVID-19 pandemic, including possible resurgences and
mutations, the success of efforts to contain it, the efficacy of vaccines,
including against variants of COVID-19, public adoption rates of vaccines and
the impact of other actions taken in response to the pandemic. These
uncertainties make it difficult to predict operating results for our business;
therefore, there can be no assurances that we will not experience further
declines in revenues, net income, Funds From Operations ("FFO") or other
operating metrics, which could be material.

Operating activity

During the second quarter of 2022, we executed new and renewal leases on 206
individual spaces totaling 1,198,263 square feet (13.2% cash leasing spread on
145 comparable leases). New leases were signed on 68 individual spaces for
277,184 square feet of gross leasable area ("GLA") (49.1% cash leasing spread on
26 comparable leases), while renewal leases were signed on 138 individual spaces
for 921,079 square feet of GLA (8.0% cash leasing spread on 119 comparable
leases). Comparable new and renewal leases are defined as those for which the
space was occupied by a tenant within the last 12 months.

Operations results

The comparability of results of operations for the three and six months ended
June 30, 2022 and 2021 is affected by our Merger with RPAI that was completed on
October 22, 2021, in which we acquired 100 operating retail properties as well
as five development projects, along with our development, redevelopment, and
operating property acquisition and disposition activities during these
periods. Therefore, we believe it is most useful to review the comparisons of
our results of operations for these periods in conjunction with the discussion
of our activities during those periods, which is set forth below.

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real estate acquisition

In addition to the properties we acquired in the Merger, the following
properties were acquired at various times during the period from January 1, 2021
through June 30, 2022:

                                                  Metropolitan
         Property Name                       Statistical Area (MSA)                  Acquisition Date                   Owned GLA
Nora Plaza outparcel                            Indianapolis, IN                       December 2021                       23,722
Pebble Marketplace                               Las Vegas, NV                         February 2022                       85,796
MacArthur Crossing two-tenant
building                                           Dallas, TX                           April 2022                         56,077

Dispositions of operating property

The following operating properties were sold during the period from January 1,
2021 through June 30, 2022:

              Property Name            MSA            Disposition Date        Owned GLA
           Westside Market          Dallas, TX          October 2021          93,377
           Plaza Del Lago(1)       Chicago, IL           June 2022           100,016

(1)Plaza del Lago It also contains 8800 square feet of residential space that consists of 18 multi-family rental units.

Development and redevelopment projects

The following properties were under development or redevelopment at different times during the period from January 1, 2021 Across 30 June 2022 And remove them from our play wallet:

     Transition to                          Transition to                  

owned

          Project Name                           MSA                    Development or Redevelopment(1)              Operating Portfolio              Commercial GLA
Hamilton Crossing Centre(2)(3)             Indianapolis, IN                        June 2014                               Pending                        92,283
The Corner(2)                              Indianapolis, IN                      December 2015                             Pending                        24,000
Eddy Street Commons - Phase III             South Bend, IN                      September 2020                           March 2022                       18,600
Glendale Town Center(2)                    Indianapolis, IN                       March 2019                            December 2021                    199,021
The Landing at Tradition - Phase
II                                        Port St. Lucie, FL                    September 2021                             Pending                        39,900
Carillon MOB(4)                            Washington, D.C.                      October 2021                              Pending                       126,000
Circle East(4)                              Baltimore, MD                        October 2021                              Pending                        82,000
One Loudoun Downtown -
Residential                                                                                                        Residential: June 2022
and Pads G&H Commercial(4)                 Washington, D.C.                      October 2021                        Commercial: Pending                  67,000
Shoppes at Quarterfield(4)                  Baltimore, MD                        October 2021                             June 2022                       58,000


(1)Transition date represents the date the property was transferred from our
operating portfolio into redevelopment status. For legacy RPAI projects, the
transition date represents the later of the date of the closing of the Merger
and the date the project was transferred into redevelopment status.

(2)This property has been identified as a redevelopment property and is not
included in the operating portfolio or the same property pool. The redevelopment
projects at Hamilton Crossing Centre and The Corner will include the creation of
a mixed-used development.

(3) A portion of the redevelopment of the Hamilton Crossing Center in . was sold January 2022.

(4) The project was assumed as part of the merger with RPAI in October 2021.

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Comparison of operating results for the three months ended 30 June 2022 For the three months ending June 30, 2021

The following table reflects changes in the components of our consolidated statements of operations for the three months ended 30 June 2022 and 2021.

                                                           Three Months Ended June 30,
($ in thousands)                                             2022                  2021              Change
Revenue:
Rental income                                         $      194,261           $  67,990          $ 126,271
Other property-related revenue                                 5,673               1,027              4,646
Fee income                                                     2,671                 515              2,156
Total revenue                                                202,605              69,532            133,073

Expenses:
Property operating                                            26,123              10,227             15,896
Real estate taxes                                             27,883               8,550             19,333
General, administrative and other                             13,809               8,159              5,650
Merger and acquisition costs                                     (27)                760               (787)
Depreciation and amortization                                119,761              29,798             89,963

Total expenses                                               187,549              57,494            130,055

Gain on sales of operating properties, net                    23,958                  50             23,908

Operating income                                              39,014              12,088             26,926
Other (expense) income:
Interest expense                                             (25,709)            (12,266)           (13,443)
Income tax benefit of taxable REIT subsidiary                    188                 100                 88

Equity in earnings (loss) of unconsolidated
subsidiaries                                                     114                (244)               358
Other (expense) income, net                                     (162)                227               (389)
Net income (loss)                                             13,445                 (95)            13,540
Net income attributable to noncontrolling interests             (314)               (147)              (167)

Net income (loss) attributable to ordinary shareholders 13,131 dollars

$ (242) 13,373 dollars

Property operating expense to total revenue ratio               12.9  %     

14.7%



Rental income (including tenant reimbursements) increased $126.3 million, or
185.7%, due to the following:

                                                                               Net change
                                                                           three months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $             63

Real estate under development or acquisition during 2021 and/or 2022

1,663

Properties acquired in the Merger with RPAI                                 

122.735

Properties fully operational during 2021 and 2022 and other                           1,810
Total                                                                      $        126,271


The net increase of $1.8 million in rental income for properties fully
operational during 2021 and 2022 is primarily due to higher base minimum rent of
$0.4 million due to improved tenant performance and an increase in tenant
reimbursements due to higher recoverable common area maintenance expenses and
real estate taxes. These variances were partially offset by a decrease in lease
termination income of $0.3 million. The occupancy of the fully operational
properties increased from 88.8% for 2021 to 90.5% for 2022.

Other property-related revenue primarily consists of parking revenues, gains on
the sale of land and other miscellaneous activity. This revenue increased by
$4.6 million primarily as a result of an increase in ancillary income of $1.9
million, higher gains on sales of undepreciated assets of $1.3 million
recognized during the three months ended June 30, 2022, and an increase in
parking revenue of $0.3 million.

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We recorded fee income of $2.7 million and $0.5 million during the three months
ended June 30, 2022 and 2021, respectively, from property management and
development services provided to third parties and unconsolidated joint
ventures. The increase in fee income is primarily related to development fee
services for the development of a corporate campus for Republic Airways.

Property operating expenses increased $15.9 million, or 155.4%, due to the
following:

                                                                               Net change
                                                                           three months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $            (22)

Real estate under development or acquisition during 2021 and/or 2022

             236
Properties acquired in the Merger with RPAI                                 

13556

Properties fully operational during 2021 and 2022 and other                           2,126
Total                                                                      $         15,896


The net increase of $2.1 million in property operating expenses for properties
fully operational during 2021 and 2022 is primarily due to increases in
insurance expense of $1.5 million and utilities of $0.4 million, partially
offset by a reduction in non-recoverable operating expenses. As a percentage of
revenue, property operating expenses decreased from 14.7% to 12.9% due to an
increase in revenue in 2022.

Increase property taxes $19.3 millionor 226.1% for the following reasons:

                                                                               Net change
                                                                           three months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $            231

Real estate under development or acquisition during 2021 and/or 2022

             157
Properties acquired in the Merger with RPAI                                 

18,380

Properties fully operational during 2021 and 2022 and other                             565
Total                                                                      $         19,333


The net increase of $0.6 million in real estate taxes for properties that were
fully operational during 2021 and 2022 is primarily due to a slight increase in
real estate tax assessments at certain properties in the portfolio. The majority
of real estate tax expense is recoverable from tenants and such recovery is
reflected within rental income.

General, administrative and other expenses increased $5.7 million, or 69.2%.
This increase is primarily due to incremental head count as part of the Merger
and higher share-based compensation expense.

The Company did not incur any significant merger and acquisition costs related
to the Merger with RPAI during the three months ended June 30, 2022 compared to
$0.8 million of merger and acquisition costs incurred during the three months
ended June 30, 2021.

Increase in depreciation and amortization expenses $90.0 millionor 301.9%, primarily as a result of the merger with RPAI as detailed below:

                                                                               Net change
                                                                           three months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $            325

Real estate under development or acquisition during 2021 and/or 2022

1,259

Properties acquired in the Merger with RPAI                                 

87470

Properties fully operational during 2021 and 2022 and other                             909
Total                                                                      $         89,963

net increase $0.9 million in depreciation and amortization of fully operating properties during 2021 and 2022 mainly due to the timing of additions and disposals in operating properties.

Increase in interest expense $13.4 millionor 109.6%, mainly due to interest costs $13.0 million relating to debts incurred in conjunction with the merger.

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Comparison of operating results for the six months ended 30 June 2022 Six months ended June 30, 2021

The following table reflects changes in the components of our consolidated operations data for the six months ended 30 June 2022 and 2021.

                                                             Six Months Ended June 30,
($ in thousands)                                            2022                     2021              Change
Revenue:
Rental income                                         $    384,119               $ 135,880          $ 248,239
Other property-related revenue                               7,897                   2,078              5,819
Fee income                                                   4,980                     948              4,032
Total revenue                                              396,996                 138,906            258,090

Expenses:
Property operating                                          52,051                  20,496             31,555
Real estate taxes                                           54,742                  17,950             36,792
General, administrative and other                           27,118                  15,435             11,683
Merger and acquisition costs                                   898                     760                138
Depreciation and amortization                              241,265                  60,431            180,834

Total expenses                                             376,074                 115,072            261,002

Gain on sales of operating properties, net                  27,126                  26,258                868

Operating income                                            48,048                  50,092             (2,044)
Other (expense) income:
Interest expense                                           (51,223)                (24,508)           (26,715)
Income tax benefit of taxable REIT subsidiary                  259                     218                 41

Equity in loss of unconsolidated subsidiaries                 (200)                   (562)               362
Other (expense) income, net                                   (265)                     19               (284)
Net (loss) income                                           (3,381)                 25,259            (28,640)
Net income attributable to noncontrolling interests           (292)                   (926)               634

Net (loss) income attributable to ordinary shareholders $ (3,673)

$24333 $ (28,006)

Property operating expense to total revenue ratio             13.1  %       

14.8%



Rental income (including tenant reimbursements) increased $248.2 million, or
182.7%, due to the following:

                                                                               Net change
                                                                            six months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $            506

Real estate under development or acquisition during 2021 and/or 2022

2546

Properties acquired in the Merger with RPAI                                 

245100

Properties fully operational during 2021 and 2022 and other                              87
Total                                                                      $        248,239


The net increase of $0.1 million in rental income for properties fully
operational during 2021 and 2022 is primarily due to higher base minimum rent of
$0.9 million due to improved tenant performance, higher overage rent of $0.4
million, and an increase in tenant reimbursements due to higher recoverable
common area maintenance expenses. These variances were partially offset by a
$1.3 million decrease in lease termination income.

Other property-related revenue primarily consists of parking revenues, gains on
the sale of land and other miscellaneous activity. This revenue increased by
$5.8 million primarily as a result of an increase in ancillary income of $3.0
million, higher gains on sales of undepreciated assets of $1.1 million
recognized during the six months ended June 30, 2022, and an increase in parking
revenue of $0.8 million.

We recorded fee income in the amount of 5.0 million dollars And the $0.9 million During the six months ending 30 June 2022 and 2021, respectively, from property management, development services to third parties and non-consolidation joint ventures.

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The increase in fee income is mainly related to the development fee services for the development of the company’s campus Republic Airlines.

Property operating expenses increased $31.6 million, or 154.0%, due to the
following:

                                                                               Net change
                                                                            six months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $            (26)

Real estate under development or acquisition during 2021 and/or 2022

             252
Properties acquired in the Merger with RPAI                                 

26.534

Properties fully operational during 2021 and 2022 and other                           4,795
Total                                                                      $         31,555


The net increase of $4.8 million in property operating expenses for properties
fully operational during 2021 and 2022 is primarily due to increases in
insurance expense of $1.5 million and utilities of $0.4 million, as well as an
increase in non-recoverable operating expenses. As a percentage of revenue,
property operating expenses decreased from 14.8% to 13.1% due to an increase in
revenue in 2022.

Increase property taxes $36.8 millionor 205.0% for the following reasons:

                                                                               Net change
                                                                            six months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $            516

Real estate under development or acquisition during 2021 and/or 2022

             214
Properties acquired in the Merger with RPAI                                 

37.073

Properties fully operational during 2021 and 2022 and other                          (1,011)
Total                                                                      $         36,792

net decrease $1.0 million in property taxes on properties that were operating at full capacity during 2021 and 2022, mainly due to successful property tax appeals on some properties in the portfolio, most notably for some Texas Properties. Most property tax expenses are recoverable from tenants and this refund is reflected in rental income.

General, administrative and other expenses increased $11.7 million, or 75.7%.
This increase is primarily due to incremental head count as part of the Merger
and higher share-based compensation expense.

The Company incurred $0.9 million and $0.8 million of merger and acquisition
costs related to the Merger with RPAI during the six months ended June 30, 2022
and 2021, respectively. These costs primarily consist of professional fees and
technology costs.

Increase in depreciation and amortization expenses $180.8 millionor 299.2%, primarily as a result of the merger with RPAI as detailed below:

                                                                               Net change
                                                                            six months ended
                                                                            June 30, 2021 to
($ in thousands)                                                                  2022
Properties or components of properties sold during 2021 or 2022            $          3,599
Properties under redevelopment or acquired during 2021 and/or 2022          

1,722

Properties acquired in the Merger with RPAI                                 

179,814

Properties fully operational during 2021 and 2022 and other                          (4,301)
Total                                                                      $        180,834

net decrease $4.3 million in depreciation and amortization of fully operating properties during 2021 and 2022 mainly due to the timing of additions and disposals in operating properties.

Increase in interest expense $26.7 millionor 109.0%, mainly due to interest costs $26.5 million relating to debts incurred in conjunction with the merger.

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Net operating income and the same operating income of the property

We use property NOI, a non-GAAP financial measure, to evaluate the performance
of our properties. We define NOI as income from our real estate, including lease
termination fees received from tenants, less our property operating expenses.
NOI excludes amortization of capitalized tenant improvement costs and leasing
commissions and certain corporate level expenses, including merger and
acquisition costs. We believe that NOI is helpful to investors as a measure of
our operating performance because it excludes various items included in net
income that do not relate to or are not indicative of our operating performance,
such as depreciation and amortization, interest expense, and impairment, if any.

We also use same property NOI ("Same Property NOI"), a non-GAAP financial
measure, to evaluate the performance of our properties. Same Property NOI is net
income excluding properties that have not been owned for the full periods
presented. However, due to the size of the RPAI portfolio acquired in the Merger
with RPAI, which closed in October 2021, the legacy RPAI properties have been
deemed to qualify for the same property pool beginning in 2022 if they had a
full first quarter of operations in 2021 within the legacy RPAI portfolio prior
to the Merger. Same Property NOI also excludes (i) net gains from outlot sales,
(ii) straight-line rent revenue, (iii) lease termination income in excess of
lost rent, (iv) amortization of lease intangibles, and (v) significant prior
period expense recoveries and adjustments, if any. When the Company receives
payments in excess of any accounts receivable for terminating a lease, Same
Property NOI will include such excess payments as monthly rent until the earlier
of the expiration of 12 months or the start date of a replacement tenant. The
Company believes that Same Property NOI is helpful to investors as a measure of
our operating performance because it includes only the NOI of properties that
have been owned for the full periods presented. The Company believes such
presentation eliminates disparities in net income due to the acquisition or
disposition of properties during the particular periods presented and thus
provides a more consistent metric for the comparison of our properties. Same
Property NOI includes the results of properties that have been owned for the
entire current and prior year reporting periods. In order to provide meaningful
comparative information across periods that, in some cases, predate the Merger,
all information regarding the performance of the same property pool is presented
as though the Merger was consummated on January 1, 2021 (i.e., as though the
properties owned by RPAI prior to the Merger that are included in our same
property pool had been owned by the Company for the entirety of all comparison
periods for which same property pool information is presented).

NOI and Same Property NOI should not, however, be considered as alternatives to
net income (calculated in accordance with GAAP) as indicators of our financial
performance. Our computation of NOI and Same Property NOI may differ from the
methodology used by other REITs, and therefore may not be comparable to such
other REITs.

When evaluating the properties that are included in the same property pool, we
have established specific criteria for determining the inclusion of properties
acquired or those recently under development. An acquired property is included
in the same property pool when there is a full quarter of operations in both
years subsequent to the acquisition date. The properties acquired in the Merger
with RPAI qualify for the same property pool beginning in 2022 if they had a
full first quarter of operations in 2021 within the legacy RPAI portfolio prior
to the Merger. Development and redevelopment properties are included in the same
property pool four full quarters after the properties have been transferred to
the operating portfolio. A redevelopment property is first excluded from the
same property pool when the execution of a redevelopment plan is likely and we
(a) begin recapturing space from tenants or (b) the contemplated plan
significantly impacts the operations of the property. For the three and six
months ended June 30, 2022, the same property pool excludes (i) Glendale Town
Center and Shoppes at Quarterfield, which were reclassified from active
redevelopment into our operating portfolio in December 2021 and June 2022,
respectively, (ii) the multifamily rental units at One Loudoun Downtown - Pads G
& H, (iii) five active development and redevelopment projects, (iv) Arcadia
Village and Pebble Marketplace, which were acquired subsequent to January 1,
2021, and (v) office properties.

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The following table reflects the same property NOI and adjustment with net income (loss) attributable to common shareholders for the three and six months ended 30 June 2022 and 2021:

                                                       Three Months Ended June 30,                                       Six Months Ended June 30,
($ in thousands)                            2022                       2021              Change                 2022                 2021              % Change
Number of properties in same property
pool
for the period(1)                               177                      177                                       177                 177

Leased percentage at period end                93.8  %                  92.2  %                                   93.8  %             92.2  %
Economic occupancy percentage(2)               91.2  %                  90.1  %                                   90.8  %             89.9  %

Same Property NOI                     $     132,116                $ 127,246                 3.8  %       $    261,312           $ 249,165                  4.9  %

Reconciliation of Same Property NOI
to most
directly comparable GAAP measure:
Net operating income - same
properties                            $     132,116                $ 127,246                              $    261,312           $ 249,165
Prior period collection impact - same
properties                                    1,078                    4,007                                     3,042               9,996
Net operating income - non-same
activity(3)                                  12,734                  (81,013)                                   20,869            (159,649)
Total property NOI                          145,928                   50,240               190.5  %            285,223              99,512                186.6  %
Other income, net                             2,811                      598                                     4,774                 623
General, administrative and other           (13,809)                  (8,159)                                  (27,118)            (15,435)
Merger and acquisition costs                     27                     (760)                                     (898)               (760)
Depreciation and amortization              (119,761)                 (29,798)                                 (241,265)            (60,431)
Interest expense                            (25,709)                 (12,266)                                  (51,223)            (24,508)
Gain on sales of operating
properties, net                              23,958                       50                                    27,126              26,258
Net income attributable to
noncontrolling interests                       (314)                    (147)                                     (292)               (926)
Net income (loss) attributable to
common
shareholders                          $      13,131                $    (242)                             $     (3,673)          $  24,333


(1)Same Property NOI excludes (i) Glendale Town Center and Shoppes at
Quarterfield, which were reclassified from active redevelopment into our
operating portfolio in December 2021 and June 2022, respectively, (ii) the
multifamily rental units at One Loudoun Downtown - Pads G & H, (iii) five active
development and redevelopment projects, (iv) Arcadia Village and Pebble
Marketplace, which were acquired subsequent to January 1, 2021, and (v) office
properties.

(2)Excludes leases that are signed but for which tenants have not yet commenced
the payment of cash rent. Calculated as a weighted average based on the timing
of cash rent commencement and expiration during the period.

(3) Non-cash activity across the portfolio includes plus NOI of unlisted real estate in the same property pool, including real estate sold during both periods.

Our NOI increased by 3.8% for the three months ended 30 June 2022
Compared to the same period in the previous year, mainly due to improved occupancy as a result of continued strong rental activity.

Funds from operations

FFO is a widely used performance measure for real estate companies and is
provided here as a supplemental measure of operating performance. We calculate
FFO, a non-GAAP financial measure, in accordance with the best practices
described in the April 2002 National Policy Bulletin of the National Association
of Real Estate Investment Trusts ("NAREIT"), as restated in 2018. The NAREIT
white paper defines FFO as net income (calculated in accordance with GAAP),
excluding depreciation and amortization related to real estate, gains and losses
from the sale of certain real estate assets, gains and losses from change in
control, and 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.

Considering the nature of our business as a real estate owner and operator, the
Company believes that FFO is helpful to investors in measuring our operational
performance because it excludes various items included in net income that do not
relate to or are not indicative of our operating performance, such as gains or
losses from sales of depreciated property and depreciation and amortization,
which can make periodic and peer analyses of operating performance more
difficult. FFO excludes the 2021 gain on sale of the ground lease portfolios as
these sales were part of our capital strategy distinct from our ongoing
operating strategy of selling individual land parcels from time to time. FFO (a)
should not be considered as an alternative to net income (calculated in
accordance with GAAP) for the purpose of measuring our financial performance,
(b) is

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not an alternative to cash flow from operating activities (calculated in
accordance with GAAP) as a measure of our liquidity, and (c) is not indicative
of funds available to satisfy our cash needs, including our ability to make
distributions. Our computation of FFO may not be comparable to FFO reported by
other REITs that do not define the term in accordance with the current NAREIT
definition or that interpret the current NAREIT definition differently than we
do.

From time to time, the Company may report or provide guidance with respect to
"NAREIT FFO as adjusted," which removes the impact of certain non-recurring and
non-operating transactions or other items the Company does not consider to be
representative of its core operating results including, without limitation,
gains or losses associated with the early extinguishment of debt, gains or
losses associated with litigation involving the Company that is not in the
normal course of business, merger and acquisition costs, the impact on earnings
from employee severance, the excess of redemption value over carrying value of
preferred stock redemption, and the impact of prior period bad debt or the
collection of accounts receivable previously written off ("prior period
collection impact"), which are not otherwise adjusted in the Company's
calculation of FFO.

Our accounts for FFO (1) and reconciliation with consolidated net income and FFO, as adjusted, for the three and six month period ended 30 June 2022 and 2021 (unaudited) as follows:

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