Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Potential environmental liabilities from hazardous substances at properties.
• Risks associated with real estate assets and the real estate industry (e.g., economic downturns, tenant bankruptcies, increased operating costs, interest rate volatility, competition).
• High level of indebtedness and constraints on credit.
• Failure of tenants to pay rent or delays in leasing.
• Risks related to cybersecurity attacks and loss of confidential information.
• Competition for tenants and re-leasing space.
• Financial covenants in loan agreements restricting operating or acquisition activities.
• Geographic concentration of properties in the Washington DC to Boston corridor.
• Reliance on key personnel.
• Natural disasters and severe weather conditions.
• Redevelopment activities may not yield anticipated returns.
• Potential losses not covered by insurance.
• Future terrorist attacks.
• Significant costs related to government regulation and litigation.
• Compliance with the Americans with Disabilities Act (ADA).
• Failure to continue as a REIT.

Mitigation Strategies

• Environmental studies conducted at the time of acquisition.
• Tenant leases with provisions for expense reimbursements.
• Diversification of tenant base (no single tenant exceeding 10% of GLA or 10% of revenue, except for Giant Food Stores and Stop & Shop, which together accounted for approximately 11% of GLA and 14% of revenue).
• Implementation of cybersecurity measures.
• Tenant and capital improvements to properties.
• Refinancing of debt.
• Comprehensive liability, fire, flood, extended coverage, and rental loss insurance.
• Compliance with environmental laws and regulations.
• Intention to make distributions to shareholders to comply with REIT requirements.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Diversity
• Environmental Compliance
• Employee Health and Safety

Social Achievements

• 64% of the Company’s mid-level, non-executive managers were female, as well as 36% of the Company’s executive team. In addition, as of December 31, 2021, 58% of the Company’s employee population was female.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on tenant ability to meet lease obligations.
• Geographic concentration of properties in Washington, D.C. to Boston corridor.
• Vacated anchor space affecting rental revenues.
• Risks associated with real estate assets and the real estate industry.
• Potential material adverse effects from tenant bankruptcies.
• Development and redevelopment activities may not yield anticipated returns.
• Property ownership through joint ventures could limit control and reduce expected return.
• New technology developments may negatively impact tenants and business.
• Competition may impede lease renewals or re-letting of spaces.
• Mortgage debt obligations could expose us to foreclosure.
• Properties may be subject to impairment charges.
• Capital migration strategy entails various risks.
• Future acquisitions may result in business disruptions.
• Commercial real estate investments are relatively illiquid.
• Stockholder activism could impact trading price and volatility of common stock.
• High level of indebtedness and constraints on credit may impede operating performance.
• Changes in LIBOR reporting practices may adversely affect the Company.
• Volatility or instability in credit markets could affect ability to obtain new financing.
• Financial covenants in loan agreements may restrict operating or acquisition activities.
• Strategic alternatives process may not result in a successful corporate transaction.
• Exploring strategic alternatives could adversely impact business.
• Natural disasters and severe weather conditions could have an adverse impact.
• Potential losses may not be covered by insurance.
• Future terrorist attacks and shooting incidents could harm demand for and value of properties.
• Government regulation and litigation over environmental matters could incur significant costs.
• Failure to continue to qualify as a REIT could reduce earnings available for distribution.
• Complying with REIT requirements may cause the Company to forego otherwise attractive opportunities.
• Property taxes could increase due to property tax rate changes or reassessment.
• Frequent asset sales could trigger adverse tax consequences.
• Changes to tax laws could have a significant negative impact.
• Charter and Maryland law provisions may delay or prevent a change of control transaction.
• Ability to pay dividends is limited by Maryland law.
• Board of Directors may change strategy without stockholder approval.
• Rights of stockholders to take action against directors and officers are limited.
• Market value of debt and equity securities is subject to various factors.
• Economic conditions could adversely affect ability to pay dividends.
• Future offerings of debt or equity securities may adversely affect market prices.
• Risks relating to cybersecurity attacks and business disruptions.
• Success depends on key personnel whose continued service is not guaranteed.
• Company could be subject to litigation.
• Increased scrutiny and expectations regarding ESG practices could cause additional costs and risks.

Mitigation Strategies

• Entered into lease modifications to defer and waive rental income.
• Collected approximately 96% of contractual base rents and monthly tenant reimbursements for 2021.
• Exploring strategic alternatives, including potential sale or merger.
• Amended existing unsecured credit facility and term loan.
• Closed a non-recourse mortgage for $114.0 million.
• Reduced common quarterly dividend to preserve cash.
• Employs measures to prevent, detect and mitigate cybersecurity threats.
• Carries comprehensive liability, fire, flood, extended coverage and rental loss insurance.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Catastrophic weather and other natural events

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change.
• Cybersecurity attacks.
• Potential losses from natural disasters that may not be covered by insurance.
• Future terrorist attacks and shooting incidents.
• Increased inflation rates.
• Increased interest rates.

Mitigation Strategies

• Comprehensive liability, fire, extended coverage, business interruption and rental loss insurance.
• Cybersecurity coverage in its insurance policies.
• Lease provisions that require tenants to reimburse the Company for inflation-sensitive costs.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Catastrophic weather and other natural events