

Retail Opportunity Investments Corp.	Yes ☒ No ☐
Retail Opportunity Investments Partnership, LP	Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site,~~ if any, every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).



Retail Opportunity Investments Corp.	Yes ☒ No ☐
Retail Opportunity Investments Partnership, LP	Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Retail Opportunity Investments Corp.



Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐ ~~(Do not check if a smaller~~ ~~reporting company)~~	Smaller reporting company ☐
Emerging growth company ☐	If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Retail Opportunity Investments Partnership, LP



Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒ ~~(Do not check if a smaller~~ ~~reporting company)~~	Smaller reporting company ☐
Emerging growth company ☐	If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a Shell Company (as defined in rule 12b-2 of the Exchange Act).



Retail Opportunity Investments Corp.	Yes ☐ No ☒
Retail Opportunity Investments Partnership, LP	Yes ☐ No ☒

The aggregate market value of the common equity held by non-affiliates of Retail Opportunity Investments Corp. as of June 30, ~~2015,~~ 2018, the last business day of its most recently completed second fiscal quarter, was ~~$1.4~~$2.1 billion (based on the closing sale price of ~~$15.62~~$19.16 per share of Retail Opportunity Investments Corp. common stock on that date as reported on the NASDAQ Global Select Market).

There is no public trading market for the operating partnership units of Retail Opportunity Investments Partnership, LP. As a result the aggregate market value of common equity securities held by non-affiliates of this registrant cannot be determined.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: ~~99,590,468~~113,996,474 shares of common stock, par value $0.0001 per share, of Retail Opportunity Investments Corp. outstanding as of February ~~19, 2016.~~

15, 2019.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Retail Opportunity Investments Corp.’s definitive proxy statement for its ~~2015~~2019 Annual Meeting, to be filed within 120 days after its fiscal year, are incorporated by reference into Part III of this Annual Report on Form 10-K.

EXPLANATORY PARAGRAPH

~~EXPLANATORY PARAGRAPH~~

This report combines the annual reports on Form 10-K for the year ended December 31, ~~2015~~2018 of Retail Opportunity Investments Corp., a Maryland corporation (“ROIC”), and Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”) of which Retail Opportunity Investments Corp. is the parent company and through its wholly owned subsidiary, acts as general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “the Company,” “we,” “us,” “our,” or “our company” refer to ROIC together with its consolidated subsidiaries, including Retail Opportunity Investments Partnership, LP. Unless otherwise indicated or unless the context requires otherwise, all references in this report to the Operating Partnership refer to Retail Opportunity Investments Partnership, LP together with its consolidated subsidiaries.

ROIC operates as a real estate investment trust and as of December 31, ~~2015,~~2018, ROIC owned an approximate ~~89.0%~~90.8% partnership interest in the Operating Partnership. Retail Opportunity Investments GP, LLC, ROIC’s wholly-owned subsidiary, is the sole general partner of the Operating Partnership. Through this subsidiary, ROIC has full and complete authority and control over the Operating Partnership’s business.

The Company believes that combining the annual reports on Form 10-K of ROIC and the Operating Partnership into a single report will result in the following benefits:

•facilitate a better understanding by the investors of ROIC and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business;

•remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both ROIC and the Operating Partnership; and

•create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

Management operates ROIC and the Operating Partnership as one enterprise. The management of ROIC and the Operating Partnership are the same.

There are few differences between ROIC and the Operating Partnership, which are reflected in the disclosures in this report. The Company believes it is important to understand the differences between ROIC and the Operating Partnership in the context of how these entities operate as an interrelated consolidated company. ROIC is a real estate investment trust, whose only material assets are its direct or indirect partnership interests in the Operating Partnership and membership interest in Retail Opportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does not conduct business itself, other than acting as the parent company and through Retail Opportunity Investments Partnership GP, LLC as the sole general partner of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownership interests in the Company’s real estate ventures. The Company conducts its business through the Operating Partnership, which is structured as a partnership with no publicly traded equity. Except for net proceeds from ~~warrants exercised and~~ equity issuances by ROIC, which are contributed to the Operating Partnership, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance of operating partnership units (“OP Units”) of the Operating Partnership.

Non-controlling interests is the primary difference between the Consolidated Financial Statements for ROIC and the Operating Partnership. The OP Units in the Operating Partnership that are not owned by ROIC are accounted for as partners’ capital in the Operating Partnership’s financial statements and as non-controlling interests in ROIC’s financial statements. Accordingly, this report presents the Consolidated Financial Statements for ROIC and the Operating Partnership separately, as required, as well as Earnings Per Share / Earnings Per Unit and Capital of the Partnership.

This report also includes separate Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources, Item 9A. Controls and Procedures sections and separate Chief Executive Officer and Chief Financial Officer certifications for each of ROIC and the Operating Partnership as reflected in Exhibits 31 and 32.


RETAIL OPPORTUNITY INVESTMENTS CORP.

TABLE OF CONTENTS

		Page
PART I		64
Item 1.	Business	65
Item 1A.	Risk Factors	109
Item 1B.	Unresolved Staff Comments	2122
Item 2.	Properties	2122
Item 3.	Legal Proceedings	2526
Item 4.	Mine Safety ~~Disclosures.~~Disclosures	2527
PART II		2627
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2627
Item 6.	Selected Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3031
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	4546
Item 8.	Financial Statements and Supplementary Data	4648
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	7886
Item 9A.	Controls and Procedures	7886
Item 9B.	Other Information	7987
PART III		7987
Item 10.	Directors, Executive Officers and Corporate Governance	7987
Item 11.	Executive Compensation	7987
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7987
Item 13.	Certain Relationships and Related Transactions, and Director Independence	7987
Item 14.	Principal Accounting Fees and Services	7987
PART IV		8088
Item 15.	Exhibits and Financial Statement ~~Schedules~~Schedule	8088
SIGNATURES		8392

Statements Regarding Forward-Looking Information

When used in this discussion and elsewhere in this Annual Report on Form 10-K, the words “believes,” “anticipates,” “projects,” “should,” “estimates,” “expects,” and similar expressions are intended to identify forward-looking statements with the meaning of that term in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and in Section 21F of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Actual results may differ materially due to uncertainties including:

•the Company’s ability to identify and acquire retail real estate that meet its investment standards in its markets;

•the level of rental revenue the Company achieves from its assets;

•the market value of the Company’s assets and the supply of, and demand for, the retail real estate in which it invests;

•the state of the U.S. economy generally, or in specific geographic regions;

•the impact of economic conditions on the Company’s business;

the conditions in the local markets in which the Company operates and its concentration in those markets, as well as changes in national economic and market conditions;

•consumer spending and confidence trends;

the Company’s ability to enter into new leases or to renew leases with existing tenants at the properties it owns or acquires at favorable rates;

•the Company’s ability to anticipate changes in consumer buying practices and the space needs of tenants;

•the competitive landscape impacting the properties the Company owns or acquires and their tenants;

•the Company’s relationships with its tenants and their financial condition and liquidity;

•ROIC’s ability to continue to qualify as a real estate investment trust for U.S. federal income tax ~~purposes~~ (a “REIT”);

the Company’s use of debt as part of its financing strategy and its ability to make payments or to comply with any covenants under its senior unsecured notes, its unsecured credit ~~facility~~facilities or other debt facilities it currently has or subsequently obtains;

•the Company’s level of operating expenses, including amounts it is required to pay to its management team;

changes in interest rates that could impact the market price of ROIC’s common stock and the cost of the Company’s borrowings; and

•legislative and regulatory changes (including changes to laws governing the taxation of REITs).

Forward-looking statements are based on estimates as of the date of this Annual Report on Form 10-K. The Company disclaims any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this Annual Report on Form 10-K.

The risks included here are not exhaustive. Other sections of this Annual Report on Form 10-K may include additional factors that could adversely affect the Company’s business and financial performance. Moreover, the Company operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

PART I

In this Annual Report on Form 10-K, unless otherwise indicated or the context requires otherwise, all references to “the Company,” “we,” “us,” “our,” or “our company” refer to ROIC together with its consolidated subsidiaries, including the Operating Partnership.

Item 1. Business

Overview

Retail Opportunity Investments Corp., a Maryland corporation (“ROIC”) commenced operations in October 2009 as a fully integrated, self-managed REIT, and as of December 31, ~~2015,~~2018, ROIC owned an approximate ~~89.0%~~90.8% partnership interest and other limited partners owned the remaining ~~11.0%~~9.2% partnership interest in the Operating Partnership. The Company specializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States, anchored by supermarkets and drugstores.

~~From the commencement of its operations through December 31, 2015, the~~The Company has completed approximately $2.2 billion of shopping center investments. As of December 31, 2015, the Company’s portfolio consisted of 73 retail properties totaling approximately 8.6 million square feet of gross leasable area (“GLA”).

~~ROIC~~ is organized in a traditional umbrella partnership real estate investment trust (“UpREIT”) format pursuant to which Retail Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as the sole general partner of, and ROIC conducts substantially all of its business through, its operating partnership, Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), together with its subsidiaries.

As of December 31, 2018, the Company’s portfolio consisted of 92 properties (91 retail and one office) totaling approximately 10.5 million square feet of gross leasable area (“GLA”).

ROIC’s only material assets are its direct or indirect partnership interests in the Operating Partnership and membership interest in Retail Opportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does not conduct business itself, other than acting as the parent company and through this subsidiary, acts as the sole general partner of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from ~~warrant exercises and~~ equity issuances by ROIC, which are contributed to the Operating Partnership, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance of operating partnership units (“OP Units”) of the Operating Partnership.

Investment Strategy

The Company seeks to acquire shopping centers located in densely populated, supply-constrained metropolitan markets on the west coast of the United States, which exhibit income and population growth and high barriers to entry. The Company’s senior management team has operated in the Company’s markets for over 25 years and has established an extensive network of relationships in these markets with key institutional and private property owners, brokers and financial institutions and other real estate operators. The Company’s in-depth local and regional market knowledge and expertise provides a distinct competitive advantage in identifying and accessing attractive acquisition opportunities, including properties that are not widely marketed.

The Company seeks to acquire high quality necessity-based community and neighborhood shopping centers anchored by national and regional supermarkets and drugstores that are well-leased, with stable cash flows. Additionally, the Company acquires shopping centers which it believes are candidates for attractive near-term re-tenanting or present other value-enhancement opportunities.

Upon acquiring a shopping center, the Company normally commences leasing initiatives aimed at enhancing long-term value through re-leasing below market space and improving the tenant mix. The Company focuses on leasing to retailers that provide necessity-based, non-discretionary goods and services, catering to the basic and daily needs of the surrounding community. The Company believes necessity-based retailers draw consistent, regular traffic to its shopping centers, which results in stronger sales for its tenants and a more consistent revenue base. Additionally, the Company seeks to maintain a strong and diverse tenant base with a balance of large, long-term leases to major national and regional retailers, including supermarkets, drugstores and discount stores, with small, shorter-term leases to a broad mix of national, regional and local retailers. The Company believes the long-term anchor tenants provide a reliable, stable base of rental revenue, while the shorter-term leases afford the Company the opportunity to drive rental growth, as well as the ongoing flexibility to adapt to evolving consumer trends.

The Company believes that the current market environment continues to present opportunities for it to further build its portfolio and add additional necessity-based community and neighborhood shopping centers that meet its investment profile. The Company’s long-term objective is to prudently build and maintain a diverse portfolio of necessity-based community and

neighborhood shopping centers aimed at providing stockholders with sustainable, long-term growth and value through all economic cycles.

In implementing its investment strategy and selecting an asset for acquisition, the Company analyzes the fundamental qualities of the asset, the inherent strengths and weaknesses of its market, sub-market drivers and trends, and potential risks and risk mitigants facing the property. The Company believes that its acquisition process and operational expertise provide it with the capability to identify and properly underwrite investment opportunities.

The Company’s aim is to seek to provide diversification of assets, tenant exposures, lease terms and locations asin its ~~portfolio expands.~~portfolio. In order to capitalize on the changing sets of investment opportunities that may be present in the various points of an economic cycle, the Company may expand or refocus its investment strategy. The Company’s investment strategy may be amended from time to time, if approved by its board of directors. The Company is not required to seek stockholder approval when amending its investment strategy.

Transactions During ~~2015~~

2018

Investing Activity

Property Asset Acquisitions

On ~~January 6, 2015,~~February 23, 2018, the Company acquired the property known as ~~Park Oaks Shopping~~Stadium Center located in ~~Thousand Oaks, California,~~Tacoma, Washington, within the Seattle metropolitan area, for aan adjusted purchase price of approximately ~~$47.7~~$19.3 million. ~~Park Oaks Shopping~~Stadium Center is approximately ~~110,000~~49,000 square feet and is anchored by ~~Safeway (Vons)~~Thriftway Supermarket. The property was acquired with borrowings under the ~~Company’s~~ credit ~~facility.~~

facility and restricted cash that was previously held by a qualified intermediary for the acquisition of a replacement property in a tax-free exchange under Section 1031 of the Code.

On ~~January 6, 2015,~~May 18, 2018, the Company acquired the property known as ~~Ontario~~King City Plaza located in Ontario, California, for a purchase price of approximately $31.0 million. Ontario Plaza is approximately 150,000 square feet and is anchored by El Super Supermarket and Rite Aid Pharmacy. The property was acquired with borrowings under the Company’s credit facility.

On January 7, 2015, the Company acquired the property known as Winston Manor Shopping Center located in South San Francisco, California, for a purchase price of approximately $20.5 million. Winston Manor Shopping Center is approximately 50,000 square feet and is anchored by Grocery Outlet Supermarket, a west coast based grocer. The property was acquired with borrowings under the Company’s credit facility.

On May 6, 2015, the Company acquired key anchor spaces at two of its existing shopping centers for a purchase price of approximately $23.1 million including Lucky Supermarket at its Pinole Vista Shopping Center, located in Pinole, California, and Petco at its Canyon Park Shopping Center, located in Bothell, Washington. These anchor spaces were acquired with borrowings under the Company’s credit facility.

On July 1, 2015, the Company acquired the property known as Jackson Square located in Hayward, California, within the San Francisco metropolitan area, for a purchase price of approximately $32.5 million. Jackson Square is approximately 114,000 square feet and is anchored by Safeway Supermarket, CVS Pharmacy and 24 Hour Fitness. The property was acquired with borrowings under the Company’s credit facility.

On July 28, 2015, the Company acquired the property known as Sunnyside Village Square located in Happy Valley, Oregon, within the Portland metropolitan area, for a purchase price of approximately $17.5 million. Sunnyside Village Square is approximately 85,000 square feet and is anchored by Haggen Supermarket. The property was acquired with borrowings under the Company’s credit facility.

On July 28, 2015, the Company acquired the property known as Tigard Promenade located in Tigard, Oregon, within the Portland metropolitan area, for a purchase price of approximately $21.0 million. Tigard Promenade is approximately 88,000 square feet and is anchored by Safeway Supermarket. The property was acquired with borrowings under the Company’s credit facility.

On September 1, 2015, the Company acquired the property known as Gateway Centre located in San Ramon, California, within the San Francisco metropolitan area, for a purchase price of approximately $42.5 million. Gateway Centre is approximately 110,000 square feet and is anchored by SaveMart (Lucky) Supermarket and Walgreens. The property was acquired with borrowings under the Company’s credit facility.

~~On November 9, 2015, the Company acquired the property known as Johnson Creek Center located in Happy Valley,~~King City, Oregon, within the Portland metropolitan area, for an adjusted purchase price of approximately ~~$31.4~~$15.7 million. ~~Johnson Creek~~King City Plaza is approximately ~~109,000~~63,000 square feet and is anchored by ~~Trader Joe’s and Walgreens.~~Grocery Outlet Supermarket. The property was acquired with borrowings under the ~~Company’s~~ credit facility.

Property Dispositions

On September 27, 2018, the Company sold Round Hill Square, a non-core shopping center located in Zephyr Cove, Nevada. The sales price of $28.0 million, less costs to sell, resulted in net proceeds of approximately $26.9 million. The Company recorded a gain on sale of real estate of approximately $5.9 million during the year ended December 31, 2018 related to this property disposition.

On December 4, 2015, the Company acquired the property known as Iron Horse Plaza located in Danville, California, within the San Francisco metropolitan area, for an adjusted purchase price of approximately $45.6 million. Iron Horse Plaza is approximately 62,000 square feet and is anchored by Lunardi’s Markets, a San Francisco based grocer. The acquisition was funded through the issuance of 1,232,394 OP Units with a fair value of approximately $22.4 million, the assumption of a $19.0 million mortgage loan on the property and cash on hand. The $19.0 million mortgage loan was defeased in conjunction with the closing of the property, which was funded with borrowings under the Company’s credit facility.

On December 10, 2015, the Company acquired the property known as Sternco Shopping Center located in Bellevue, Washington, within the Seattle metropolitan area, for an adjusted purchase price of approximately $49.4 million. Sternco Shopping Center is approximately 114,000 square feet and is anchored by Asian Food Center, a Seattle based grocer. The acquisition was funded through the issuance of 2,823,790 OP Units with a fair value of $49.3 million and cash on hand.

On December 21, 2015, the Company acquired the property known as Four Corner Square located in Maple Valley, Washington, within the Seattle metropolitan area, for a purchase price of approximately $41.8 million. Four Corner Square is approximately 120,000 square feet and is anchored by Grocery Outlet Supermarket, a west coast based grocer, and Walgreens. The property was acquired with borrowings under the Company’s credit facility.

On December 31, 2015, the Company acquired the property known as Warner Plaza located in Woodland Hills, California, within the Los Angeles metropolitan area, for an adjusted purchase price of approximately $78.9 million. Warner Plaza is approximately 114,000 square feet and is anchored by Sprouts Market. The acquisition was funded through the issuance of 4,393,064 OP Units with a fair value of $78.6 million and cash on hand.

Financing Activities

The Company employs prudent amounts of leverage and uses debt as a means of providing funds for the acquisition of its properties and the diversification of its portfolio. The Company seeks to primarily utilize unsecured debt in order to maintain liquidity and flexibility in its capital structure.

Term Loan and Credit Facility

On September 29, 2015, the Company entered into a term loan agreement ~~(the “Term Loan Agreement”) with KeyBank National Association, as Administrative Agent, and U.S. Bank National Association, as Syndication Agent and the other lenders party thereto,~~ under which the lenders agreed to provide a $300.0 million unsecured term loan ~~facility~~facility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the ~~“term loan”~~“Term Loan Agreement”). pursuant to which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term Loan Agreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions set forth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. The initial maturity date of the term loan is January 31, 2019, subject to two one-year extension options, which may be exercised upon satisfaction of certain conditions including the payment of extension fees. Borrowings under the Term Loan Agreement accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the relevant period (the “Eurodollar Rate”), or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the Administrative Agent as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%.

The Operating Partnership has an unsecured revolving credit facility ~~(the “credit facility”)~~ with several ~~banks~~banks. Effective September 8, 2017, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which ~~provides for borrowings~~the borrowing capacity was increased from $500.0 million to $600.0 million. The maturity date of upthe credit facility was extended from January 31, 2019 to ~~$500.0 million.~~September 8, 2021, with two six-month extension options, which may be exercised by the Operating Partnership upon

satisfaction of certain conditions including the payment of extension fees. Additionally, the credit facility contains an accordion feature, which allows the Operating Partnership to increase the ~~facility amount~~borrowing capacity up to an aggregate of ~~$1.0~~$1.2 billion, subject to lender consents and other conditions. The maturity date of the credit facility has been extended to January 31, 2019, subject to a further one-year extension option, which may be exercised by the Operating Partnership upon satisfaction of certain conditions. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank, National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. ~~The Company obtained investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services (BBB-) during the second quarter of 2013.~~ Additionally, the Operating Partnership is obligated to pay a facility fee at a rate based on the credit rating level of the Company, currently 0.20%, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the credit facility.

The Company has investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services (BBB-).

Both the term loan and credit facility contain customary representations, financial and other covenants. The Operating Partnership’s ability to borrow under the term loan and credit facility are subject to its compliance with financial covenants and other restrictions on an ongoing basis. The Operating Partnership was in compliance with such covenants at December 31, ~~2015.~~

2018.

As of December 31, ~~2015,~~2018, $300.0 million and ~~$135.5~~$156.0 million were outstanding under the term loan and credit facility, respectively. The average interest rates on the term loan and the credit facility during the year ended December 31, ~~2015~~2018 were ~~1.3%~~3.1% and ~~1.2%~~3.0%, respectively. The Company had no available borrowings under the term loan at December 31, ~~2015.~~2018. The Company had ~~$364.5~~$444.0 million available to borrow under the credit facility at December 31, ~~2015.~~

2018.

Mortgage Notes Payable

~~During the year ended December 31, 2015,~~

On February 1, 2018, the Company repaid in full the ~~outstanding principal balance on the Renaissance Towne Center and Crossroads Shopping Center~~Santa Teresa Village mortgage ~~notes payable~~note related to Santa Teresa Village for a total of ~~$16.1~~approximately $10.1 million, ~~and $48.3 million, respectively,~~ without penalty, in accordance with the prepayment provisions of the ~~notes.~~

Onnote. Further, on September ~~1, 2015,~~28, 2018, the Company entered into a $35.5 million loan with PNC Bank, National Association. The loan is secured by the Diamond Hills Plaza property and bears interest at 3.55% annually. The loan matures on October 1, 2025, is interest only through September 30, 2021 and amortizes thereafter, on a 30-year amortization.

~~Equity Issuance~~

~~On August 10, 2015, ROIC issued 5,520,000 shares of common stock in a registered public offering, including shares issued upon the exercise~~repaid in full the Magnolia Shopping Center mortgage note related to Magnolia Shopping Center for a total of approximately $8.8 million, without penalty, in accordance with the repayment provisions of the underwriters’ option to purchase additional shares, resulting in net proceeds of approximately $87.4 million, after deducting the underwriters’ discounts and commissions and offering expenses. The net proceeds were used to reduce borrowings under the Operating Partnership’s $500.0 million unsecured revolving credit facility.

note.

ATM Equity Offering

~~During the year ended December 31, 2014,~~

On May 1, 2018, ROIC entered into ~~four~~five separate Sales Agreements (the ~~“2014 sales agreements”~~“Sales Agreements”) with each of Capital One Securities, Inc., Jefferies LLC, KeyBanc Capital Markets Inc., ~~MLV & Co. LLC and~~ Raymond James & Associates, Inc., and Robert W. Baird & Co. Incorporated (each individually, an “Agent” and collectively, the “Agents”) pursuant to which ROIC may sell, from time to time, shares of ROIC’s common stock, par value $0.0001 per share, having an aggregate offering price of up to ~~$100.0~~$250.0 million through the Agents either as agents or principals. In addition, on April 30, 2018, the Company terminated sales agreements with Jefferies, KeyBanc and Raymond James, dated as of September 19, 2014 and with Baird, dated as of May 23, 2016 (the “Prior Sales Agreements”), which the Company entered into in connection with its prior “at the market” offering.

During the year ended December 31, ~~2015,~~2018, ROIC sold a total of ~~544,567~~1,251,376 shares under ~~one of~~ the ~~2014 sales agreements,~~Sales Agreements, which resulted in gross proceeds of approximately ~~$9.9~~$24.2 million and commissions of approximately ~~$149,000~~$242,000 paid to the ~~agent.~~

Agents. During the year ended December 31, 2018, ROIC sold a total of 75,314 shares of common stock under the Prior Sales Agreements, which resulted in gross proceeds of approximately $1.5 million and commissions of approximately $19,000 paid to the Agents. During the year ended December 31, 2017, ROIC sold a total of 34,001 shares under the Prior Sales Agreements, which resulted in gross proceeds of approximately $681,000 and commissions of approximately $9,000 paid to the Agents.

offerings, and the potential sale of existing assets.

Business Segments

The Company’s primary business is the ownership, management, and redevelopment of retail real estate properties. The Company reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, defined as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes). The Company has aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes.

Regulation

The following discussion describes certain material U.S. federal laws and regulations that may affect the Company’s operations and those of its tenants. However, the discussion does not address state laws and regulations, except as otherwise indicated. These state laws and regulations, like the U.S. federal laws and regulations, could affect the Company’s operations and those of its tenants.

Generally, real estate properties are subject to various laws, ordinances and regulations. Changes in any of these laws or regulations, such as the Comprehensive Environmental Response and Compensation, and Liability Act of 1980, as amended, increase the potential liability for environmental conditions or circumstances existing or created by tenants or others on the properties. In addition, laws affecting development, construction, operation, upkeep, safety and taxation requirements may result in significant unanticipated expenditures, loss of real estate property sites or other impairments, which would adversely affect its cash flows from operating activities.

Under the Americans with Disabilities Act of 1990 (the “Americans with Disabilities Act”) all places of public accommodation are required to meet certain U.S. federal requirements related to access and use by disabled persons. A number of additional U.S. federal, state and local laws also exist that may require modifications to properties, or restrict certain further renovations thereof, with respect to access thereto by disabled persons. Noncompliance with the Americans with Disabilities Act could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature and in substantial capital expenditures. To the extent the Company’s properties are not in compliance, the Company may incur additional costs to comply with the Americans with Disabilities Act.

Property management activities are often subject to state real estate brokerage laws and regulations as determined by the particular real estate commission for each state.

Environmental Matters

Pursuant to U.S. federal, state and local environmental laws and regulations, a current or previous owner or operator of real property may be required to investigate, remove and/or remediate a release of hazardous substances or other regulated materials at or emanating from such property. Further, under certain circumstances, such owners or operators of real property may be held liable for property damage, personal injury and/or natural resource damage resulting from or arising in connection with such releases. Certain of these laws have been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. The failure to properly remediate the property may also adversely affect the owner’s ability to lease, sell or rent the property or to borrow funds using the property as collateral.

In connection with the ownership, operation and management of the Company’s current properties and any properties that it may acquire and/or manage in the future, the Company could be legally responsible for environmental liabilities or costs relating to a release of hazardous substances or other regulated materials at or emanating from such property. In order to assess the potential for such liability, the Company conducts an environmental assessment of each property prior to acquisition and manages its properties in accordance with environmental laws while it owns or operates them. All of its leases contain a comprehensive environmental provision that requires tenants to conduct all activities in compliance with environmental laws and to indemnify the owner for any harm caused by the failure to do so. In addition, the Company has engaged qualified, reputable and adequately insured environmental consulting firms to perform environmental site assessments of its properties and is not aware of any environmental issues that are expected to materially impact the financial condition of the Company.

Competition

The Company believes that competition for the acquisition, operation and development of retail properties is highly fragmented. The Company competes with numerous owners, operators and developers for acquisitions and development of retail properties, including institutional investors, other REITs and other owner-operators of necessity-based community and neighborhood shopping centers, primarily anchored by supermarkets and drugstores, some of which own or may in the future own properties similar to the Company’s in the same markets in which its properties are located. The Company also faces competition in leasing available space to prospective tenants at its properties. The actual competition for tenants varies depending upon the characteristics of each local market (including current economic conditions) in which the Company owns and manages property. The Company believes that the principal competitive factors in attracting tenants in its market areas are location, demographics, price, the presence of anchor stores and the appearance of properties.

Many of the Company’s competitors are substantially larger and have considerably greater financial, marketing and other resources than the Company. Other entities may raise significant amounts of capital, and may have investment objectives that overlap with those of the Company, which may create additional competition for opportunities to acquire assets. In the future, competition

from these entities may reduce the number of suitable investment opportunities offered to the Company or increase the bargaining power of property owners seeking to sell. Further, as a result of their greater resources, such entities may have more flexibility than the Company does in their ability to offer rental concessions to attract tenants. If the Company’s competitors offer space at rental rates below current market rates, or below the rental rates the Company currently charges its tenants, the Company may lose potential tenants and it may be pressured to reduce its rental rates below those it currently charges in order to retain tenants when its tenants’ leases expire.

Employees

As of December 31, ~~2015,~~2018, the Company had 6971 employees, including three executive officers, one of whom is also a member of its board of ~~directors.~~

directors and 19 maintenance employees at the shopping centers.

Available Information

The Company files its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports with the Securities and Exchange Commission (the “SEC”). ~~You may obtain copies of these documents by visiting the SEC’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330.~~ The SEC ~~also~~ maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Company’s website is www.roireit.net. The Company’s reports on Forms 10-K, 10-Q and 8-K, and all amendments to those reports are available free of charge on its Website as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC. The contents of the Company’s website are not incorporated by reference herein.

Item 1A. Risk Factors

Risks Related to the Company’s Business and Operations

There are risks relating to investments in real estate.

Real property investments are subject to varying degrees of risk. Real estate values are affected by a number of factors, including: changes in the general economic climate, local conditions (such as an oversupply of space or a reduction in demand for real estate in an area), the quality and philosophy of management, competition from other available space, the ability of the owner to provide adequate maintenance and insurance and to control variable operating ~~costs.~~costs, adverse weather conditions, natural disasters, terrorist activities and other factors in the areas in which the properties are located. Shopping centers, in particular, may be affected by changing perceptions of retailers or shoppers regarding the safety, convenience and attractiveness of the shopping center, increasing consumer purchases through online retail websites and catalogs, the ongoing consolidation in the retail sector and by the overall climate for the retail industry generally. Real estate values are also affected by such factors as government regulations, interest rate levels, the availability of financing and potential liability under, and changes in, environmental, zoning, tax and other laws. A significant portion of the Company’s income is derived from rental income from real property. The Company’s income, cash flow, results of operations, financial condition, liquidity and ability to service its debt obligations could be materially and adversely affected if a significant number of its tenants were unable to meet their obligations, or if it were unable to lease on economically favorable terms a significant amount of space in its properties. In the event of default by a tenant, the Company may experience delays in enforcing, and incur substantial costs to enforce, its rights as a landlord. In addition, certain significant expenditures associated with each equity investment (such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced when circumstances cause a reduction in income from the investment.

The Company operates in a highly competitive market and competition may limit its ability to acquire desirable assets and to attract and retain tenants.

The Company operates in a highly competitive market. The Company’s profitability depends, in large part, on its ability to acquire its assets at favorable prices and on trends impacting the retail industry in general, national, regional and local economic conditions, financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends. Many of the Company’s competitors are substantially larger and have considerably greater financial, marketing and other resources than it does. Other entities may raise significant amounts of capital, and may have investment objectives that overlap with the Company’s. In addition, the properties that the Company acquires may face competition from similar properties in the same market, as well as from e-commerce websites. At the time of the commencement of the Company’s operations, conditions in the capital markets and the credit markets reduced competitors’ ability to finance acquisitions. As access to capital and credit have improved and the number of competitors operating in the Company’s markets have increased, the Company has faced increased competition for opportunities to acquire assets and to attract and retain tenants. The presence of competitive alternatives affects the Company’s ability to lease space and the level of rents it can obtain. New construction, renovations and expansions at competing sites could also negatively affect the Company’s properties.

The Company may change any of its strategies, policies or procedures without stockholder consent, which could materially and adversely affect its business.

The Company may change any of its strategies, policies or procedures with respect to acquisitions, asset allocation, growth, operations, indebtedness, financing strategy and distributions, including those related to maintaining its REIT qualification, at any time without the consent of its stockholders, which could result in making acquisitions that are different from, and possibly riskier than, the types of acquisitions described in this Annual Report on Form 10-K. A change in the Company’s strategy may increase its exposure to real estate market fluctuations, financing risk, default risk and interest rate risk. Furthermore, a change in the Company’s asset allocation could result in the Company making acquisitions in asset categories different from those described in this Annual Report on Form 10-K. These changes could materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

The Company’s directors are subject to potential conflicts of interest.

The Company’s executive officers and directors may face conflicts of interest. Except for Messrs. Tanz, Haines and Schoebel, none of the Company’s executive officers or directors are required to commit substantially all of their ~~full~~business time to ~~its affairs and, accordingly, they may have conflicts of interest~~the Company. Also, in allocating management time among various business activities. In addition, except for Mr. Tanz, each of the Company’s directors (including the Company’s non-Executive Chairman) is engaged in several other business endeavors. In the course of their other business activities, the Company’s directors may become aware of investment and business opportunities that may be appropriate for presentation to the Company as well as the other entities with which they are affiliated. They may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

As a result of multiple business affiliations, the Company’s non-management directors may have legal obligations relating to presenting opportunities to acquire one or more properties, portfolios or real estate-related debt investments to other entities. The Company’s non-management directors (including the Company’s non-executive Chairman) may present such opportunities to the other entities to which they owe pre-existing fiduciary duties before presenting such opportunities to the Company. In addition, conflicts of interest may arise when the Company’s board of directors evaluates a particular opportunity.

Capital markets and economic conditions can materially affect the Company’s financial condition, its results of operations and the value of its assets.

There are many factors that can affect the value of the Company’s assets, including the state of the capital markets and economy. The great recession negatively affected consumer spending and retail sales, which adversely impacted the performance and value of retail properties in most regions in the United States. In addition, loans backed by real estate were difficult to obtain and that difficulty, together with a tightening of lending policies, resulted in a significant contraction in the amount of debt available to fund retail properties. Although there has been improvement in the credit and real estate markets, any reduction in available financing may materially and adversely affect the Company’s ability to achieve its financial objectives. Concern about the stability of the markets generally may limit the Company’s ability and the ability of its tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs. Although the Company will factor in these conditions in acquiring its assets, its long term success depends in part on general economic conditions and the stability and dependability of the financing market for retail real estate. If the national economy or the local economies in which the Company operates ~~continue~~were to experience uncertainty, or if general economic conditions were to worsen, the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders~~stockholders could be materially and adversely affected.

Bankruptcy or insolvency of tenants may decrease the Company’s revenues and available cash.

In the case of many retail properties, the bankruptcy or insolvency of a major tenant could cause the Company to suffer lower revenues and operational difficulties, and could allow other tenants to exercise so-called “kick-out” clauses in their leases and terminate their lease or reduce their rents prior to the normal expiration of their lease terms. As a result, the bankruptcy or insolvency of major tenants could materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Inflation or deflation may materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and distributions to its ~~securityholders.~~

stockholders.

Increased inflation could have a pronounced negative impact on the Company’s property operating expenses and general and administrative expenses, as these costs could increase at a rate higher than the Company’s rents. Inflation could also have an adverse effect on consumer spending which could impact the Company’s tenants’ sales and, in turn, the Company’s percentage rents, where applicable, and the willingness and ability of tenants to enter into or renew leases and/or honor their obligations under existing leases. Conversely, deflation could lead to downward pressure on rents and other sources of income.

Compliance or failure to comply with safety regulations and requirements could result in substantial costs.

The Company’s properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If the Company fails to comply with these requirements, it could incur fines or private damage awards. The Company does not know whether compliance with the requirements will require significant unanticipated expenditures that could affect its income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

The Company expects to acquire additional properties and this may create risks.

The Company expects to acquire additional properties consistent with its investment strategies. The Company may not, however, succeed in consummating desired acquisitions on time, within budget or at all. In addition, the Company may face competition in pursuing acquisition opportunities, which could result in increased acquisition costs. When the Company does pursue a project or acquisition, it may not succeed in leasing newly acquired properties at rents sufficient to cover its costs of acquisition. Difficulties in integrating acquisitions may prove costly or time-consuming and could result in poorer than anticipated performance. The Company may also abandon acquisition opportunities that it has begun pursuing and consequently fail to recover expenses already incurred. Furthermore, acquisitions of new properties will expose the Company to the liabilities of those properties, including, for example, liabilities for clean-up of disclosed or undisclosed environmental contamination, claims by persons in respect of events transpiring or conditions existing before the Company’s acquisition and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of properties.

In the event we seek to redevelop existing properties, these projects could be subject to delays or other risks and might not yield the returns we anticipate, which would harm our financial condition and operating results.

We may selectively engage in redevelopment projects at certain of our properties. To the extent we enter into redevelopment projects, they will be subject to a number of risks that could negatively affect our return on investment, financial condition, results of operations and our ability to make distributions to stockholders, including, among others:

higher than anticipated construction costs, including labor and material costs;

delayed ability or inability to reach projected occupancy, rental rates, profitability, and investment return;

timing delays due to weather, labor disruptions, zoning or other regulatory approvals, tenant decision delays, delays in anchor approvals of redevelopment plans, where required, acts of God (such as fires, significant storms, earthquakes or floods) and other factors outside our control, which might make a project less profitable or unprofitable, or delay profitability; and

expenditure of money and time on projects that might be significantly delayed before stabilization.

If a project is unsuccessful, either because it is not meeting our expectations when operational or was not completed according to the project planning, we could lose our investment in the project or have to incur an impairment charge relating to the asset or development which could then adversely impact our financial condition and operating results.

Factors affecting the general retail environment could adversely affect the financial condition of the Company’s retail tenants and the willingness of retailers to lease space in its shopping centers, and in turn, materially and adversely affect the Company.

The Company’s properties are focused on the retail real estate market. This means that the performance of the Company’s properties will be impacted by general retail market conditions, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from online retail websites and catalog companies. In addition, the retail business is highly competitive and our tenants may fail to differentiate their shopping experiences, create an attractive value proposition or execute their business strategies. Furthermore, we believe that the increase in digital and mobile technology usage has increased the speed of the transition from shopping at physical locations to web-based purchases and that our tenants may be negatively affected by these changing consumer spending habits. These conditions could adversely affect the financial condition of the Company’s retail tenants and the willingness and ability of retailers to lease space, or renew existing leases, in the Company’s shopping centers and to honor their obligations under existing leases, and in turn, materially and adversely affect the Company.

The Company’s growth depends on external sources of capital, which may not be available in the future.

In order to maintain its qualification as a REIT, the Company is required under the ~~Internal Revenue~~ Code ~~of 1986, as amended (the “Code”),~~ to annually distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. After the Company invests its cash on hand, it expects to depend primarily on ~~its~~the credit facility and other external financing (including debt

and equity financings) to fund the growth of its business. The Company’s access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. As a result of changing economic conditions, the Company may be limited in its ability to obtain additional financing or to refinance existing debt maturities on favorable terms or at all and there can be no assurances as to when financing conditions will improve.

The Company does not have a formal policy limiting the amount of debt it may incur and its board of directors may change its leverage policy without stockholder consent, which could result in a different risk profile.

Although the Company’s ~~Charter~~charter and ~~Bylaws~~bylaws do not limit the amount of indebtedness the Company can incur, the Company’s policy is to employ prudent amounts of leverage and use debt as a means of providing additional funds for the acquisition of its assets and the diversification of its portfolio. The amount of leverage the Company will deploy for particular investments will depend upon its management team’s assessment of a variety of factors, which may include the anticipated liquidity and price volatility of the assets in its portfolio, the potential for losses, the availability and cost of financing the assets, the Company’s opinion of the creditworthiness of its financing counterparties, the health of the U.S. economy and commercial mortgage markets, the Company’s outlook for the level, slope and volatility of interest rates, the credit quality of the tenants occupying space at the Company’s properties, and the need for the Company to comply with financial covenants contained in the Company’s credit ~~facility.~~agreements. The Company’s board of directors may change its leverage policies at any time without the consent of its stockholders, which could result in an investment portfolio with a different risk profile.

The Company could be adversely affected if it or any of its subsidiaries are required to register as an investment company under the Investment Company Act of 1940 as amended (the “1940 Act”).

The Company conducts its operations so that neither it, nor the Operating Partnership nor any of the Company’s other subsidiaries, is required to register as investment companies under the 1940 Act. If the Company, the Operating Partnership or the Company’s other subsidiaries are required to register as an investment company but fail to do so, the unregistered entity would be prohibited from engaging in certain business, and criminal and civil actions could be brought against such entity. In addition, the contracts of such entity would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of the entity and liquidate its business.

Real estate investments’ value and income fluctuate due to conditions in the general economy and the real estate business, which may materially and adversely affect the Company’s ability to service its debt and expenses.

The value of real estate fluctuates depending on conditions in the general and local economy and the real estate business. These conditions may also limit the Company’s revenues and available cash. The rents the Company receives and the occupancy levels at its properties may decline as a result of adverse changes in conditions in the general economy and the real estate business. If rental revenues and/or occupancy levels decline, the Company generally would expect to have less cash available to pay indebtedness and for distribution to its ~~securityholders.~~stockholders. In addition, some of the Company’s major expenses, including mortgage payments, real estate taxes and maintenance costs, generally do not decline when the related rents decline.

The lack of liquidity of the Company’s assets could materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders,~~stockholders, and could materially and adversely affect the Company’s ability to value and sell its assets.

Real estate investments are relatively difficult to buy and sell quickly. As a result, the Company expects many of its investments will be illiquid and if it is required to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the value at which it had previously recorded its investments.

The Company depends on leasing space to tenants on economically favorable terms and collecting rent from tenants, some of whom may not be able to pay.

The Company’s financial results depend significantly on leasing space in its properties to tenants on economically favorable terms. In addition, as a substantial majority of the Company’s revenue comes from renting real property, the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders~~stockholders could be materially and adversely affected if a significant number of its tenants cannot pay their rent or if the Company is not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, the Company may not be able to enforce its rights as landlord without delays and may incur substantial legal costs.

Some of the Company’s properties depend on anchor stores or major tenants to attract shoppers and could be materially and adversely affected by the loss of or a store closure by one or more of these tenants.

The Company’s shopping centers are primarily anchored by national and regional supermarkets and drug stores. The value of the retail properties the Company acquires could be materially and adversely affected if these tenants fail to comply with their contractual obligations, seek concessions in order to continue operations or cease their operations. Adverse economic conditions may result in the closure of existing stores by tenants which may result in increased vacancies at the Company’s properties. Any periods of significant vacancies for the Company’s properties could materially and adversely impact the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Loss of revenues from major tenants could reduce the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

The Company derives significant revenues from anchor tenants such as Albertson’s/Safeway Supermarkets, Kroger Supermarkets and Rite Aid Pharmacy. As of December 31, ~~2015,~~2018, these tenants are the Company’s three largest tenants and accounted for ~~5.0%~~5.6%, ~~2.4%~~3.5% and ~~1.9%~~1.6%, respectively, of its annualized base rent on a pro-rata basis. The Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders~~stockholders could be materially and adversely affected by the loss of revenues in the event a major tenant becomes bankrupt or insolvent, experiences a downturn in its business, materially defaults on its leases, does not renew its leases as they expire, or renews at lower rental rates.

The Company’s inability to receive reimbursements of Common Area Maintenance (“CAM”) ~~contributions may not allow it to recover~~costs from tenants could adversely affect the ~~majority of its operating expenses from tenants.~~

Company’s cash flow.

CAM costs typically include allocable energy costs, repairs, maintenance and capital improvements to common areas, janitorial services, administrative, property and liability insurance costs and security costs. The Company may acquire properties with leases with variable CAM provisions that adjust to reflect inflationary increases or leases with a fixed CAM payment methodology which fixes its tenants’ CAM contributions. With respect to both variable and fixed payment methodologies, the amount of reimbursements for CAM ~~charges~~costs that the Company ~~bills~~is entitled to receive from its tenants ~~based on~~pursuant to the terms of the respective lease agreements may ~~not allow it~~be less than the actual CAM costs at the Company’s properties. The Company’s inability to recover or pass on ~~all these operating expenses~~CAM costs to its tenants, ~~which may reduce operating cash flow from its properties. Such a reduction could result in a material and adverse effect on~~whether due to the terms of the Company’s ~~income,~~leases or vacancies at the Company’s properties could adversely affect the Company’s cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its securityholders.

flow.

The Company may incur costs to comply with environmental laws.

The Company’s operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may impair the Company’s ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (“PCBs”) and underground storage tanks are also regulated by federal and state laws. The Company is also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. The Company could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure to contamination at or from its properties. Identification of compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, discovery of additional sites, human exposure to the contamination or changes in cleanup or compliance requirements could result in significant costs to the Company.

Moreover, compliance with new laws or regulations such as those related to climate change, including compliance with “green” building codes, or more stringent laws or regulations or stricter interpretations of existing laws may require material expenditures by the Company.

The Company faces risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of its information technology (“IT”) networks and related systems.

The Company faces risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside the Company or persons with access to systems inside the Company, and other significant disruptions of the Company’s IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. The Company’s IT networks and related systems are essential to the operation of its business and its ability to perform day-to-day operations (including managing its building systems)~~, and, in some cases, may be critical to the operations of certain of its tenants.~~. There can be no assurance that the Company’s efforts to maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving the Company’s IT networks and related systems could materially and adversely impact the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Our business and operations would suffer in the event of system failures.

Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damage from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions.

A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could impair the Company’s assets and have a material and adverse effect on its income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

The Company believes the risks associated with its business will be more severe during periods of economic slowdown or recession if these periods are accompanied by declining real estate values. Declines in real estate values, among other factors, could result in a determination that the Company’s assets have been impaired. If the Company determines that an impairment has occurred, the Company would be required to make an adjustment to the net carrying value of the asset which could have an adverse effect on its results of operations in the period in which the impairment charge is recorded. Although the Company will take current economic conditions into account in acquiring its assets, the Company’s long term success, and the value of its assets, depends in part on general economic conditions and other factors beyond the Company’s control. If the national economy or the local economies in which the Company operates experience uncertainty, or if general economic conditions were to worsen, the value of the Company’s properties could decline, and the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders,~~stockholders, could be materially and adversely affected.

Loss of key personnel could harm the Company’s operations.

The Company is dependent on the efforts of certain key personnel of its senior management team. While the Company has employment contracts with each of Messrs. Tanz, Haines and Schoebel, the loss of the services of any of these individuals could harm the Company’s operations and have a material and adverse effect on its income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Under their employment agreements, certain members of the Company’s senior management team will have certain rights to terminate their employment and receive severance in connection with a change in control of the Company.

The Company’s employment agreements with each of Messrs. Tanz, Haines and Schoebel, which provide that, upon termination of his employment (i) by the applicable officer within 12 months following the occurrence of a change in control (as defined in the employment agreement), (ii) by the Company without cause (as defined in the employment agreement), (iii) by the applicable officer for good reason (as defined in the employment agreement), (iv) by non-renewal of the applicable officer’s employment agreement or (v) by reason of the applicable officer’s death or disability (as defined in the employment agreement), such executive officers would be entitled to certain termination or severance payments made by the Company (which may include a lump sum payment equal to defined percentages of annual salary and prior years’ average bonuses, paid in accordance with the terms and

conditions of the respective agreement). In addition, the vesting of all his outstanding unvested equity-based incentives and awards would accelerate. These provisions make it costly to terminate their employment and could delay or prevent a transaction or a change in control of the Company that might involve a premium paid for shares of its common stock or otherwise be in the best interests of its stockholders.

Joint venture investments could be materially and adversely affected by the Company’s lack of sole decision-making authority or reliance on a joint venture partner’s financial condition.

The Company may enter into joint venture arrangements in the future. Investments in joint ventures involve risks that are not otherwise present with properties which the Company owns entirely. In a joint venture investment, the Company may not have exclusive control or sole decision-making authority over the development, financing, leasing, management and other aspects of these investments. As a result, the joint venture partner might have economic or business interests or goals that are inconsistent with the Company’s goals or interests, take action contrary to the Company’s interests or otherwise impede the Company’s objectives. Joint venture investments involve risks and uncertainties, including the risk of the joint venture partner failing to provide capital and fulfill its obligations, which may result in certain liabilities to the Company for guarantees and other commitments, the risk of conflicts arising between the Company and its partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring such business arrangements. The joint venture partner also might become insolvent or bankrupt, which may result in significant losses to the Company. Further, although the Company may own a controlling interest in a joint venture and may have authority over major decisions such as the sale or refinancing of investment properties, the Company may have fiduciary duties to the joint venture partners or the joint venture itself that may cause, or require, it to take or refrain from taking actions that it would otherwise take if it owned the investment properties outright.

Uninsured losses or a loss in excess of insured limits could materially and adversely affect the Company.

The Company carries comprehensive general liability, fire, extended coverage, loss of rent insurance, and environmental liability where applicable on its properties, with policy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, the Company generally does not maintain loss of rent insurance. In addition, thereThere are certain types of losses, such as losses resulting from wars ~~terrorism~~ or acts of God that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, the Company could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness, or other financial obligations or liabilities related to the property. Any loss of these types could materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

The Company could be materially and adversely affected by poor market conditions where its properties are geographically concentrated.

The Company’s performance depends on the economic conditions in markets in which its properties are concentrated. During the year ended December 31, ~~2015,~~2018, the Company’s properties in California, Washington and Oregon accounted for ~~68%~~62%, ~~20%~~23% and ~~12%~~15%, respectively, of its consolidated property operating income. The Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders~~stockholders could be materially and adversely affected by this geographic concentration if market conditions, such as an oversupply of space or a reduction in demand for real estate in an area, deteriorate in California, Washington and Oregon. Moreover, due to the geographic concentration of its properties, the Company may be disproportionately affected by general risks such as natural disasters, including major fires, floods and earthquakes, severe or inclement weather, and acts of terrorism should such developments occur in or near the markets in California, Washington and Oregon ~~and Washington.~~

in which the Company’s properties are located.

Should the Company decide at some point in the future to expand into new markets, it may not be successful, which could materially and adversely affect its business, financial condition, liquidity and results of operations.

The Company’s properties are concentrated in California, ~~Oregon~~Washington and ~~Washington.~~Oregon. If the opportunity arises, the Company may explore acquisitions of properties in new markets inside or outside of these states. Each of the risks applicable to the Company’s ability to successfully acquire, integrate and operate properties in its current markets may also apply to its ability to successfully acquire, integrate and operate properties in new markets. In addition to these risks, the Company’s management team may not possess the same level of knowledge with respect to market dynamics and conditions of any new market in which the Company may attempt to expand, which could materially and adversely affect its ability to operate in any such markets. The Company may be unable to obtain the desired returns on its investments in these new markets, which could materially and adversely affect the

Company’s income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Risks Related to Financing

The Company’s term loan, credit facility and unsecured senior notes contain restrictive covenants relating to its operations, which could limit the Company’s ability to respond to changing market conditions and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

The Company’s term loan, credit facility and unsecured senior notes contain restrictive ~~covenants which are described in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations-Liquidity and Capital Resources”.~~covenants. These or other limitations, including those that may apply to future ~~company~~Company borrowings, may materially and adversely affect the Company’s flexibility and its ability to achieve its operating plans and could result in the Company being limited in the amount of dividends and distributions it would be permitted to pay to its ~~securityholders.~~

stockholders.

In addition, failure to comply with these covenants could cause a default under the applicable debt instrument, and the Company may then be required to repay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to the Company, or may be available only on unattractive terms.

Certain of the Company’s mortgage financing arrangements and other indebtedness contain provisions that could limit the Company’s operating flexibility.

The Company’s existing mortgage financing contains, and future mortgage financing may in the future contain, customary covenants and provisions that limit the Company’s ability to pre-pay such mortgages before their scheduled maturity date or to transfer the underlying asset. Additionally, the Company’s ability to satisfy prospective mortgage lenders’ insurance requirements may be materially and adversely affected if lenders generally insist upon greater insurance coverage against certain risks than is available to the Company in the marketplace or on commercially reasonable terms. In addition, because a mortgage is secured by a lien on the underlying real property, mortgage defaults subject the Company to the risk of losing the property through foreclosure.

The Company’s access to financing may be limited and thus its ability to potentially enhance its returns may be materially and adversely affected.

The Company intends, when appropriate, to employ prudent amounts of leverage and use debt as a means of providing additional funds for the acquisition of its assets and the diversification of its portfolio. ~~To the extent market conditions improve and markets stabilize over time, the Company expects to increase its borrowing levels.~~ As of December 31, ~~2015,~~2018, the Company’s outstanding principal mortgage indebtedness was approximately ~~$61.7~~$86.7 million, and the Company may incur significant additional debt to finance future acquisition and development activities. The ~~Company’s~~ credit facility consists of a ~~$500.0~~$600.0 million unsecured revolving credit facility and the Company has a $300.0 million term loan, of which ~~$135.5~~$156.0 million and $300.0 million, respectively, were outstanding as of December 31, ~~2015.~~

2018.

In addition, the Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December ~~2013~~2017 (the “Senior Notes Due ~~2023”~~2027”) ~~and~~, $200.0 million aggregate principal amount of unsecured senior notes in September 2016 (the “Senior Notes Due 2026”), $250.0 million aggregate principal amount of unsecured senior notes in December 2014 (the “Senior Notes Due 2024”) and $250.0 million aggregate principal amount of unsecured senior notes in December 2013 (the “Senior Notes Due 2023” and collectively with the Senior Notes Due 2024, the Senior Notes Due 2026 and the Senior Notes Due 2027, the “unsecured senior notes”), each of which were fully and unconditionally guaranteed by ROIC.

The Company’s access to financing will depend upon a number of factors, over which it has little or no control, including:

~~general market conditions;~~

~~the market’s view of the quality of the Company’s assets;~~

~~the market’s perception of the Company’s growth potential;~~

~~the Company’s eligibility to participate in and access capital from programs established by the U.S. government;~~

~~the Company’s current and potential future earnings and cash distributions; and~~

~~the market price of the shares of the Company’s common stock.~~

general market conditions;

the market’s view of the quality of the Company’s assets;

the market’s perception of the Company’s growth potential;

the Company’s eligibility to participate in and access capital from programs established by the U.S. government;

the Company’s current and potential future earnings and cash distributions; and

the market price of the shares of the Company’s common stock.

Although ~~there has been improvement in~~ the credit markets and real estate have recovered from the great recession, any reduction in available financing may materially and adversely affect the Company’s ability to achieve its financial objectives. Concern about the stability of the markets generally could adversely affect one or more private lenders and could cause one or more private lenders to be unwilling or unable to provide the Company with financing or to increase the costs of that financing. In addition, if regulatory capital requirements imposed on the Company’s private lenders change, they may be required to limit, or increase the cost of, financing they provide to the Company. In general, this could potentially increase the Company’s financing costs and reduce its liquidity or require it to sell assets at an inopportune time or price.

During times when interest rates on mortgage loans are high or financing is otherwise unavailable on a timely basis, the Company ~~has and~~ may ~~continue to~~ purchase certain properties for cash or equity securities, including OP Units, or a combination thereof. Consequently, depending on market conditions at the relevant time, the Company may have to rely more heavily on additional equity issuances, which may be dilutive to its stockholders, or on less efficient forms of debt financing that require a larger portion of its cash flow from operations, thereby reducing funds available for its operations, future business opportunities, cash distributions to its ~~securityholders~~stockholders and other purposes. The Company cannot assure you that it will have access to such equity or debt capital on favorable terms (including, without limitation, cost and term) at the desired times, or at all, which may cause it to curtail its asset acquisition activities and/or dispose of assets, which could materially and adversely affect its income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Increases in interest rates could increase the amount of the Company’s debt payments and materially and adversely affect its business, financial condition, liquidity and results of operations.

Interest the Company pays could reduce cash available for distributions. As of December 31, ~~2015,~~2018, the Company had approximately ~~$135.5~~$156.0 million and $300.0 million outstanding under the Company’s ~~$500.0~~$600.0 million unsecured revolving credit facility and $300.0 million term loan, respectively, that bear interest at a variable rate. In addition, the Company may incur variable rate debt in the future, including mortgage debt, borrowings under the ~~unsecured revolving~~ credit facility or new credit facilities. An increase in interest rates would increase the Company’s interest costs, which could adversely affect the Company’s cash flow, results of operations, ability to pay principal and interest on debt and pay dividends and other distributions to its ~~securityholders,~~stockholders, and reduce the Company’s access to capital markets. In addition, if the Company needs to repay existing debt during periods of rising interest rates, it may be required to incur additional indebtedness at higher rates. From time to time, the Company may enter into interest rate swap agreements and other interest rate hedging contracts with the intention of lessening the impact of rising interest rates. However, increased interest rates may increase the risk that the counterparties to such agreements may not be able to fulfill their obligations under these agreements, and there can be no assurance that these arrangements will be effective in reducing the Company’s exposure to interest rate changes. These risks could materially and adversely affect the Company’s cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Changes to, or the elimination of, LIBOR may adversely affect our financing costs.

In July 2017, the U.K. Financial Conduct Authority (the “FCA”) announced that it intends to stop persuading or compelling banks to submit the London Interbank Offered Rate (“LIBOR”) after 2021. As of December 31, 2018, we had outstanding approximately $456.0 million of variable rate debt that was indexed LIBOR. It is not possible to predict the further effect of the rules of the FCA, any changes in the methods by which LIBOR is determined, or any other reforms to LIBOR that may be enacted in the United Kingdom, the European Union or elsewhere. Any such developments may cause LIBOR to perform differently than in the past, or cease to exist or may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination, and, in certain situations, could result in LIBOR no longer being determined and published. If a published LIBOR rate is unavailable after 2021, the interest rates on our debt which is indexed to LIBOR will be determined using various alternative methods, any of which may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on such debt if LIBOR was available in its current form. Further, the same costs and risks that may lead to the discontinuation or unavailability of LIBOR may make one or more of the alternative methods impossible or impracticable to determine. Any of these proposals or consequences could have a material adverse effect on our financing costs.

Financing arrangements that the Company may use to finance its assets may require it to provide additional collateral or pay down debt.

The Company, when appropriate, uses traditional forms of financing including secured debt. In the event the Company utilizes such financing arrangements, they would involve the risk that the market value of its assets which are secured may decline in value, in which case the lender may, in connection with a refinancing, require it to provide additional collateral, provide additional equity, or to repay all or a portion of the funds advanced. The Company may not have the funds available to repay its debt or provide additional equity at that time, which would likely result in defaults unless it is able to raise the funds from alternative sources, which it may not be able to achieve on favorable terms or at all. Providing additional collateral or equity would reduce the Company’s liquidity and limit its ability to leverage its assets. If the Company cannot meet these requirements, the lender could accelerate the Company’s indebtedness, increase the interest rate on advanced funds and terminate its ability to borrow funds from them, which could materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~stockholders. The providers of secured debt may also require the Company to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position. As a result, the Company may not be able to leverage its assets as fully as it would choose which could reduce its return on assets. There can be no assurance that the Company will be able to utilize such arrangements on favorable terms, or at all.

A downgrade in the Company’s or the Operating Partnership’s credit ratings could materially adversely affect the Company’s business and financial condition.

The credit ratings assigned to the Company’s obligations or to the debt securities of the Operating Partnership could change based upon, among other things, the Company’s and the Operating Partnership’s results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and there can be no assurance that any rating will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. Moreover, these credit ratings do not apply to the Company’s common stock and are not recommendations to buy, sell or hold any other securities. If any of the credit rating agencies that have rated the obligations of the Company or the debt securities of the Operating Partnership downgrades or lowers its credit ratings, or if any credit rating agency indicates that it has placed any such rating on a so-called “watch list” for a possible downgrading or lowering or otherwise indicates that its outlook for that rating is negative, it could have a material adverse effect on the Company’s costs and availability of capital, which could in turn materially and adversely impact the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its ~~securityholders.~~

stockholders.

Risks Related to the Company’s Organization and Structure

The Company depends on dividends and distributions from its direct and indirect subsidiaries. The creditors and any preferred equity holders of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to the Company.

Substantially all of the Company’s assets are held through the Operating Partnership, which holds substantially all of the Company’s properties and assets through subsidiaries. The Operating Partnership’s cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of the Company’s cash flow is dependent on cash distributions to it by the Operating Partnership. The creditors and any preferred equity holders of the Company’s direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its common equity holders. Thus, the Operating Partnership’s ability to make distributions to the Company and therefore the Company’s ability to make distributions to its stockholders will depend on its subsidiaries’ ability first to satisfy their obligations to creditors and any preferred equity holders and then to make distributions to the Operating Partnership.

In addition, the Company’s participation in any distribution of the assets of any of its direct or indirect subsidiaries upon the liquidation, reorganization or insolvency, is only after the claims of the creditors, including the holders of the unsecured senior notes and trade creditors, and preferred equity holders are satisfied.

Certain provisions of Maryland law may limit the ability of a third party to acquire control of the Company.

Certain provisions of the Maryland General Corporation Law ~~or the MGCL,~~(the “MGCL”) may have the effect of delaying, deferring or preventing a transaction or a change in control of the Company that might involve a premium price for holders of the Company’s common stock or otherwise be in their best interests, including:

“business combination” provisions that, subject to certain limitations, prohibit certain business combinations between the Company and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of the Company’s shares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose special minimum price provisions and special stockholder voting requirements on these combinations; and

“control share” provisions that provide that “control shares” of the Company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by the Company’s stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

However, the provisions of the MGCL relating to business combinations do not apply to business combinations that are approved or exempted by the Company’s board of directors prior to the time that the interested stockholder becomes an interested stockholder. In addition, the Company’s ~~Bylaws~~bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of the Company’s common stock. There can be no assurance that such exemption will not be amended or eliminated at any time in the future.

Additionally, Title 3, Subtitle 8 of the MGCL permits the Company’s board of directors, without stockholder approval and regardless of what is currently provided in the Company’s charter or bylaws, to take certain actions that may have the effect of delaying, deferring or preventing a transaction or a change in control of the Company that might involve a premium to the market price of its common stock or otherwise be in the stockholders’ best interests. These provisions of the MGCL permit the Company, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to adopt:

~~a classified board;~~

~~a two-thirds vote requirement for removing a director;~~

~~a requirement that the number of directors be fixed only by vote of the board of directors;~~

a requirement that a vacancy on the board be filled only by the remaining directors in office and (if the board is classified) for the remainder of the full term of the class of directors in which the vacancy occurred; and

~~a majority requirement for the calling of a stockholder-requested special meeting of stockholders.~~

a classified board;

a two-thirds vote requirement for removing a director;

a requirement that the number of directors be fixed only by vote of the board of directors;

a majority requirement for the calling of a stockholder-requested special meeting of stockholders.

The authorized but unissued shares of preferred stock and the ownership limitations contained in the Company’s Charter may prevent a change in control.

The ~~Charter~~Company’s charter authorizes the Company to issue authorized but unissued shares of preferred stock. In addition, the ~~Charter~~Company’s charter provides that the Company’s board of directors has the power, without stockholder approval, to authorize the Company to issue any authorized but unissued shares of stock, to classify any unissued shares of preferred stock and to reclassify any unissued shares of common stock or previously-classified shares of preferred stock into other classes or series of stock. As a result, the Company’s board of directors may establish a series of shares of preferred stock or use such preferred stock to create a stockholder’s rights plan or so-called “poison pill” that could delay or prevent a transaction or a change in control that might involve a premium price for shares of the Company’s common stock or otherwise be in the best interests of the Company’s stockholders.

In addition, the Company’s ~~Charter~~charter contains restrictions limiting the ownership and transfer of shares of the Company’s common stock and other outstanding shares of capital stock. The relevant sections of the Company’s ~~Charter~~charter provide that, subject to certain exceptions, ownership of shares of the Company’s common stock by any person is limited to 9.8% by value or by number of shares, whichever is more restrictive, of the outstanding shares of common stock (the common share ownership limit), and no more than 9.8% by value or number of shares, whichever is more restrictive, of the outstanding capital stock (the aggregate share ownership limit). The common share ownership limit and the aggregate share ownership limit are collectively referred to herein as the “ownership limits.” These provisions will restrict the ability of persons to purchase shares in excess of the relevant ownership limits. The Company’s board of directors has established exemptions from this ownership limit which permit certain institutional investors to hold additional shares of the Company’s common stock. The Company’s board of directors may in the future, in its sole discretion, establish additional exemptions from this ownership limit.

The Company’s failure to qualify as a REIT would subject it to U.S. federal income tax and potentially increased state and local taxes, which would reduce the amount of cash available for distribution to its stockholders.

The Company intends to operate in a manner that will enable it to continue to qualify as a REIT for U.S. federal income tax purposes. The Company has not requested and does not intend to request a ruling from the U.S. Internal Revenue Service that it will continue to qualify as a REIT. The U.S. federal income tax laws governing REITs are complex. The complexity of these provisions and of the applicable U.S. Treasury Department regulations that have been promulgated under the Code (“Treasury Regulations”) is greater in the case of a REIT that holds assets through a partnership, such as the Company, and judicial and administrative interpretations of the U.S. federal income tax laws governing REIT qualification are limited. To qualify as a REIT, the Company must meet, on an ongoing basis, various tests regarding the nature of its assets and its income, the ownership of its outstanding shares, and the amount of its distributions. Moreover, new legislation, court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or impossible for the Company to qualify as a REIT. Thus, while the Company believes that it has operated and intends to continue to operate so that it will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in the Company’s circumstances, no assurance can be given that it has qualified or will continue to so qualify for any particular year.

If the Company fails to qualify as a REIT in any taxable year, and does not qualify for certain statutory relief provisions, it would be required to pay U.S. federal income tax on its taxable income, and distributions to its stockholders would not be deductible by it in determining its taxable income. In such a case, the Company might need to borrow money or sell assets in order to pay its taxes. The Company’s payment of income tax would decrease the amount of its income available for distribution to its stockholders. Furthermore, if the Company fails to maintain its qualification as a REIT, it would no longer be required to distribute substantially all of its net taxable income to its stockholders. In addition, unless the Company were eligible for certain statutory relief provisions, it would not be eligible to re-elect to qualify as a REIT for four taxable years following the year in which it failed to qualify as a REIT.

Failure to make required distributions would subject the Company to tax, which would reduce the cash available for distribution to its stockholders.

In order to qualify as a REIT, the Company must distribute to its stockholders each calendar year at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain. To the extent that the Company satisfies the 90% distribution requirement, but distributes less than 100% of its taxable income, it is subject to U.S. federal corporate income tax on its undistributed income. In addition, the Company will incur a 4% non-deductible excise tax on the amount, if any, by which its distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. The Company intends to distribute its net income to its stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid the 4% non-deductible excise tax.

The Company’s taxable income may exceed its net income as determined by the U.S. generally accepted accounting principles (“GAAP”) because, for example, realized capital losses will be deducted in determining its GAAP net income, but may not be deductible in computing its taxable income. In addition, the Company may invest in assets that generate taxable income in excess of economic income or in advance of the corresponding cash flow from the assets. For example, the Company may be required to accrue interest income on mortgage loans or other types of debt securities or interests in debt securities before it receives any payments of interest or principal on such assets. Similarly, some of the debt securities that the Company acquires may have been issued with original issue discount. The Company will generally be required to include such original issue discount in income based on a constant yield to maturity method. As a result of the foregoing, the Company may generate less cash flow than taxable income in a particular year. To the extent that the Company generates such non-cash taxable income in a taxable year, it may incur corporate income tax and the 4% non-deductible excise tax on that income if it does not distribute such income to stockholders in that year. In that event, the Company may be required to use cash reserves, incur debt or liquidate assets at rates or times that it regards as unfavorable or make a taxable distribution of its shares in order to satisfy the REIT 90% distribution requirement and to avoid U.S. federal corporate income tax and the 4% non-deductible excise tax in that year.

In order to qualify as a REIT, prior to the end of each taxable year, the Company is required to distribute any earnings and profits of any corporation acquired by the Company in certain tax-deferred transactions to the extent that such earnings accrued at a time when such corporation did not qualify as a REIT. The Company has entered into certain transactions involving the tax-deferred acquisition of target corporations. The Company believes that it did not inherit any earnings and profits of such target corporations attributable to any period that such corporations did not qualify as a REIT. However, no assurance can be provided in this regard, and if the Company were determined to have inherited and retained any such earnings and profits, the Company’s qualification as a REIT could be adversely impacted.

To maintain its REIT qualification, the Company may be forced to borrow funds during unfavorable market conditions.

In order to qualify as a REIT and avoid the payment of income and excise taxes, the Company may need to borrow funds on a short-term basis, or possibly on a long-term basis, to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, a difference in timing between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes, the effect of non-deductible capital expenditures, the creation of reserves or required debt amortization payments.

Even if the Company qualifies as a REIT, it may be required to pay certain taxes.

Even if the Company qualifies for taxation as a REIT, it may be subject to certain U.S. federal, state and local taxes on its income and assets, including taxes on any undistributed income, ~~tax~~taxes on income from some activities conducted as a result of a foreclosure and state or local income, franchise, property and transfer taxes, including mortgage recording taxes. In addition, the Company may hold some of its assets through taxable REIT subsidiary (“TRS”) corporations. Any TRSs or other taxable corporations in which the Company owns an interest will be subject to U.S. federal, state and local corporate taxes. Furthermore, the Company has entered into certain transactions in which the Company has acquired target entities in tax-deferred transactions. To the extent that such entities had outstanding U.S. federal income tax or other tax liabilities, the Company would succeed to such liabilities.

Payment of these taxes generally would ~~materially and adversely affect~~decrease the cash available for distribution to the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its securityholders.

stockholders.

Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income from regular corporations, which could materially and adversely affect the value of the Company’s shares.

The maximum U.S. federal income tax rate for certain qualified dividends payable to ~~domestic~~U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, are generally not eligible for these reduced qualified dividend rates. However, for taxable years beginning after December 31, 2017 and before January 1, 2026, under the ~~reduced rates~~recently enacted Tax Cuts and ~~therefore~~Jobs Act (H.R. 1, the “TCJA”), noncorporate taxpayers may bededuct up to 20% of certain qualified business income, including “qualified REIT dividends” (generally, REIT dividends received by a shareholder that are not designated as capital gain dividends or qualified dividend income), subject to ~~a 39.6%~~certain limitations, resulting in an effective maximum U.S. federal income tax rate of 29.6% on ~~ordinary~~such income. Although the reduced U.S. federal income tax rate applicable to qualified dividends from C corporations does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate ~~qualified~~ dividends, together with the recently reduced corporate tax rate (currently, 21%), could cause investors who are individuals, trusts and estates to perceive investments in REITs to be ~~relatively~~ less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could ~~materially and~~ adversely affect the value of the shares of REITs, including the Company’s ~~shares.~~

common stock.

Legislative, regulatory or administrative changes could adversely affect the Company.

The ~~Company~~U.S. federal income tax laws and regulations governing REITs and their stockholders, as well as the administrative interpretations of those laws and regulations, are constantly under review and may be ~~subject~~changed at any time, possibly with retroactive effect. No assurance can be given as to ~~adverse legislative~~whether, when, or ~~regulatory tax changes that could reduce the market price of its shares of common stock.~~

~~At any time,~~in what form, the U.S. federal income tax laws ~~or regulations governing REITs or~~applicable to the ~~administrative interpretations of those laws or regulations~~Company and its stockholders may be ~~changed, possibly with retroactive effect. The Company cannot predict if or when any new~~enacted. Changes to the U.S. federal income tax laws and interpretations of U.S. federal tax laws could adversely affect an investment in the Company’s common stock.

The recently enacted TCJA, which was signed into law ~~regulation or administrative interpretation, or any amendment to any existing~~on December 22, 2017, significantly changes U.S. federal income tax ~~law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation~~laws applicable to businesses and their owners, including REITs and their stockholders, and may ~~take effect retroactively. The Company and its stockholders could be materially and adversely affected by any such change in, or any new,~~lessen the relative competitive advantage of operating as a REIT rather than as a C corporation. For additional discussion, see “Recent U.S. ~~federal income tax law, regulation or administrative interpretation.~~

Federal Income Tax Legislation”.

In certain circumstances, the Company may be liable for certain tax obligations of certain limited partners.

In certain circumstances, the Company may be liable for certain tax obligations of certain limited partners. The Company has entered into tax protection agreements under which it has agreed to minimize the tax consequences to certain limited partners resulting from the sale or other disposition of certain of the Company’s assets. The obligation to indemnify such limited partners against adverse tax consequences is expected to continue until ~~2025.~~2027. The Company may enter into additional tax protection agreements in the ~~future.~~future, which could extend the period of time during which the Company may be liable for tax obligations of certain limited partners. During the period of these obligations, the Company’s flexibility to dispose of the related assets will be limited. In addition, the amount of any indemnification obligations may be significant.

The Company cannot assure you of its ability to pay distributions in the future.

The Company intends to pay quarterly distributions and to make distributions to its stockholders in an amount such that it distributes all or substantially all of its REIT taxable income in each year, subject to certain adjustments. The Company’s ability to pay distributions may be materially and adversely affected by a number of factors, including the risk factors described in this Annual Report on Form 10-K. All distributions will be made, subject to Maryland law (or Delaware law, in the case of distributions by the Operating Partnership), at the discretion of the Company’s board of directors and will depend on the Company’s earnings, its financial condition, any debt covenants, maintenance of its REIT qualification and other factors as its board of directors may deem relevant from time to time. The Company believes that a change in any one of the following factors could materially and adversely affect its income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and its ability to pay distributions to its ~~securityholders:~~

~~the profitability of the assets acquired;~~

~~the Company’s ability to make profitable acquisitions;~~

~~margin calls or other expenses that reduce the Company’s cash flow;~~

~~defaults in the Company’s asset portfolio or decreases in the value of its portfolio; and~~

~~the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.~~

stockholders:

the profitability of the assets acquired;

the Company’s ability to make profitable acquisitions;

unforeseen expenses that reduce the Company’s cash flow;

defaults in the Company’s asset portfolio or decreases in the value of its portfolio; and

the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.

The Company cannot assure you that it will achieve results that will allow it to make a specified level of cash distributions or year-to-year increases in cash distributions in the future. In addition, some of the Company’s distributions may include a return of capital.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company maintains its executive office at ~~8905 Towne Centre Drive,~~11250 El Camino Real, Suite ~~108,~~200, San Diego, CA ~~92122.~~

92130.

As of December 31, ~~2015,~~2018, the Company’s portfolio consisted of 7392 properties (91 retail ~~properties~~and one office) totaling approximately ~~8.6~~10.5 million square feet of gross leasable ~~area which were~~area. As of December 31, 2018, the Company’s retail portfolio was approximately ~~97.2%~~96.9% leased. During the year ended December 31, ~~2015,~~2018, the Company leased or renewed a total of approximately ~~1.3~~1.5 million square feet in its portfolio. The Company has committed approximately ~~$20.8~~$20.9 million, or ~~$37.60~~$47.29 per square foot, in tenant improvements, including building and site improvements, for new leases that occurred during the year ended December 31, ~~2015.~~2018. The Company has committed approximately ~~$1.5~~$1.1 million, or ~~$2.66~~$2.39 per square foot, in leasing commissions, for the new leases that occurred during the year ended December 31, ~~2015.~~2018. Additionally, the Company has committed approximately ~~$186,000,~~$958,000, or ~~$0.27~~$0.88 per square foot, in tenant improvements for renewed leases that occurred during the year ended December 31, ~~2015.~~2018. Leasing commission commitments for renewed leases were not material for the year ended December 31, ~~2015.~~

2018.

The following table provides information regarding the Company’s retail properties as of December 31, ~~2015.~~

Property, State
Year
Completed/ Renovated

Year
Acquired

Gross
Leasable
Sq. Feet

Number
of
Tenants
% Leased Principal Tenants

Southern California
Paramount Plaza, CA 1966/2010 2009 95,062 14 100.0% Grocery Outlet Supermarket, 99¢ Only Stores, Rite Aid Pharmacy
Santa Ana Downtown Plaza, CA 1987/2010 2010 100,305 28 100.0% Kroger (Food 4 Less) Supermarket, Marshall’s
Claremont Promenade, CA 1982/2011 2010 91,529 26 100.0% Super King Supermarket
Sycamore Creek, CA 2008 2010 74,198 17 98.2% Safeway (Vons) Supermarket, CVS Pharmacy ⁽¹⁾
Gateway Village, CA 2003/2005 2010 96,959 28 96.1% Sprouts Market
Marketplace Del Rio, CA 1990/ 2004 2011 177,142 41 90.4% Stater Brothers Supermarket, Walgreens
Desert Springs Marketplace, CA 1993-94 / 2013 2011 105,111 18 100.0% Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy
Renaissance Towne Centre, CA 1991/2011 2011 53,074 28 98.2% CVS Pharmacy
Euclid Plaza, CA 1982/2012 2012 77,044 10 100.0% Vallarta Supermarket, Walgreens
Seabridge Marketplace, CA 2006 2012 93,630 21 100.0% Safeway (Vons) Supermarket
Glendora Shopping Center, CA 1992/2012 2012 106,535 22 98.4% Albertson’s Supermarket
Bay Plaza, CA 1986/2013 2012 73,324 30 99.9% Seafood City Supermarket
Cypress Center West, CA 1970/1978 / 2014 2012 106,451 32 97.3% Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy
Redondo Beach Plaza, CA 1993/2004 2012 110,509 16 100.0% Safeway (Von’s) Supermarket, Petco
Harbor Place Center, CA 1994 2012 119,821 10 100.0% AA Supermarket, Ross Dress For Less
Diamond Bar Town Center, CA 1981 2013 100,342 24 100.0% Walmart Neighborhood Market, Crunch Fitness
Bernardo Heights Plaza, CA 1983/2006 2013 37,729 5 100.0% Sprouts Market
Diamond Hills Plaza, CA 1973/2008 2013 139,505 37 98.2% H-Mart Supermarket, Rite Aid Pharmacy
Hawthorne Crossings, CA 1993/1999 2013 141,288 18 100.0% Mitsuwa Supermarket, Ross Dress For Less, Staples
Five Points Plaza, CA 1961-62 / 2012 / 2015 2013 160,536 38 99.0% Trader Joes, Pier 1
Peninsula Marketplace, CA 2000 2013 95,416 15 98.8% Kroger (Ralph’s) Supermarket, CVS Pharmacy
Plaza de la Canada, CA 1968/2010 2013 100,408 14 100.0% Gelson’s Supermarket, TJ Maxx, Rite Aid Pharmacy
Creekside Plaza, CA 1993/2005 2014 128,852 27 100.0% Stater Brothers Supermarket, DigiPlex Theatre
Fallbrook Shopping Center, CA 1966/1986/ 2003/2015 2014 758,074 44 99.8% Sprouts Market, Trader Joe’s, Kroger (Ralph’s) Supermarket⁽¹⁾, TJ Maxx
Moorpark Town Center, CA 1984/2014 2014 133,538 27 98.4% Kroger (Ralph’s) Supermarket, CVS Pharmacy
Mission Foothill Marketplace, CA 1996 2014 110,678 20 94.4% Haggen Supermarket, CVS Pharmacy
Ontario Plaza, CA 1997-1999 2015 149,651 24 99.1% El Super Supermarket, Rite Aid Pharmacy
Park Oaks Shopping Center, CA 1959/2005 2015 110,092 33 100.0% Safeway (Vons) Supermarket, Dollar Tree
Warner Plaza, CA 1973-1974 2015 114,242 58 87.9% Sprouts Market

Northern California
Norwood Shopping Center, CA 1993/1999 2010 88,851 13 87.9% Viva Supermarket, Rite Aid Pharmacy, Citi Trends
Pleasant Hill Marketplace, CA 1980 2010 69,715 3 100.0% Buy Buy Baby, Office Depot, Basset Furniture
Pinole Vista Shopping Center, CA 1981/2012 2011 223,502 29 95.9% SaveMart (Lucky) Supermarket, Kmart
Mills Shopping Center, CA 1959/1996 2011 239,081 29 87.0% Viva Supermarket, dd’s Discounts, Dollar Tree, Planet Fitness
Morada Ranch, CA 2006 2011 101,842 18 99.4% Raleys Supermarket
Country Club Gate Center, CA 1974/2012 2011 109,331 25 91.8% SaveMart (Lucky) Supermarket, Rite Aid Pharmacy
Round Hill Square Shopping Center, NV 1998 2011 115,984 26 99.2% Safeway Supermarket, Dollar Tree, U.S. Postal Service
Marlin Cove Shopping Center, CA 1972/2001 2012 73,186 24 99.2% 99 Ranch Market
Green Valley Station, CA 2006/2007 2012 52,245 14 87.8% CVS Pharmacy
The Village at Novato, CA 2006 2012 20,081 4 100.0% Trader Joe’s
Santa Teresa Village, CA 1974-79 / 2013 2012 125,162 34 91.2% Raleys (Nob Hill) Supermarket, Dollar Tree
Granada Shopping Center, CA 1962/1994 2013 69,325 15 100.0% SaveMart (Lucky) Supermarket
Country Club Village, CA 1995 2013 111,093 24 100.0% Walmart Neighborhood Market, CVS Pharmacy

2018.

North Park Plaza, CA 1997 2014 76,697 14 98.2% SF Supermarket
Winston Manor, CA 1977/1988/ 2011/2015 2015 49,852 14 100.0% Grocery Outlet Supermarket
Jackson Square, CA 1972/1997 2015 114,220 16 100.0% Safeway Supermarket, CVS Pharmacy, 24 Hour Fitness
Gateway Centre, CA 1996 2015 110,440 22 95.2% SaveMart (Lucky) Supermarket, Walgreens
Iron Horse Plaza, CA 1998-1999 2015 61,860 10 100.0% Lunardi’s Markets

Portland Metropolitan
Vancouver Market Center, WA 1996/2012 2010 118,385 17 79.2% Skyzone
Happy Valley Town Center, OR 2007 2010 138,696 37 98.4% New Seasons Supermarket
Wilsonville Old Town Square, OR 2011 2010/2012 49,937 20 100.0% Kroger (Fred Meyer) Supermarket ⁽¹⁾
Cascade Summit Town Square, OR 2000 2010 95,508 31 100.0% Safeway Supermarket
Heritage Market Center, WA 2000 2010 107,468 17 94.9% Safeway Supermarket, Dollar Tree
Division Crossing, OR 1992 2010 103,561 20 100.0% Rite Aid Pharmacy, Ross Dress For Less, Ace Hardware
Halsey Crossing, OR 1992 2010 99,428 18 100.0% Safeway Supermarket, Dollar Tree
Hillsboro Market Center, OR 2001-2002 2011 156,021 21 100.0% Albertson’s Supermarket, Dollar Tree, Marshall’s
Robinwood Shopping Center, OR 1980 / 2012 2013 70,831 15 98.3% Walmart Neighborhood Market
Tigard Marketplace, OR 1988/2005 2014 136,889 18 99.3% H-Mart Supermarket, Bi-Mart Pharmacy
Wilsonville Town Center, OR 1991/1996 2014 167,829 38 95.9% Thriftway Supermarket, Rite Aid Pharmacy, Dollar Tree
Tigard Promenade, OR 1996 2015 88,043 13 94.2% Safeway Supermarket
Sunnyside Village Square, OR 1996-1997 2015 84,870 12 98.6% Haggen Supermarket, Ace Hardware
Johnson Creek Center, OR 2003/2009 2015 108,588 13 98.4% Trader Joe’s, Walgreens, Sportsman’s Warehouse

Seattle Metropolitan
Meridian Valley Plaza, WA 1978/2011 2010 51,597 13 93.0% Kroger (QFC) Supermarket
The Market at Lake Stevens, WA 2000 2010 74,130 9 100.0% Haggen Supermarket
Canyon Park Shopping Center, WA 1980/2012 2011 123,627 24 100.0% PCC Natural Markets, Rite Aid Pharmacy, Petco
Hawks Prairie Shopping Center, WA 1988/2012 2011 154,781 20 84.1% Safeway Supermarket, Dollar Tree, Big Lots
The Kress Building, WA 1924/2005 2011 74,616 7 100.0% IGA Supermarket, TJ Maxx
Gateway Shopping Center, WA 2007 2012 106,104 16 97.1% WinCo Foods ⁽¹⁾, Rite Aid Pharmacy, Ross Dress For Less
Aurora Square, WA 1980 2012 38,030 4 100.0% Central Supermaket
Canyon Crossing, WA 2008-2009 2013 120,510 24 94.3% Safeway Supermarket
Crossroads Shopping Center, WA 1962/2004/ 2015 2010/2013 463,436 92 100.0% Kroger (QFC) Supermarket, Bed Bath & Beyond, Sports Authority
Aurora Square II, WA 1987 2014 65,680 11 100.0% Marshall’s, Pier 1 Imports
Sternco Shopping Center, WA 1971/1982 2015 113,758 19 100.0% Asian Food Center
Four Corner Square, WA 1983/2015 2015 119,560 26 94.8% Grocery Outlet Supermarket, Walgreens, Johnsons Home & Garden



Property	Year Completed/ Renovated	Year Acquired	Gross Leasable Sq. Feet	Number of Tenants	% Leased		Principal Tenants
Southern California
Los Angeles metro area
Paramount Plaza	1966/2010	2009	95,062	14	98.0	%	Grocery Outlet Supermarket, 99¢ Only Stores, Rite Aid Pharmacy
Claremont Promenade	1982/2011	2010	92,297	26	98.8	%	Super King Supermarket
Gateway Village	2003/2005	2010	96,959	28	96.9	%	Sprouts Market
Seabridge Marketplace	2006	2012	98,348	22	97.4	%	Safeway (Vons) Supermarket
Glendora Shopping Center	1992/2012	2012	106,535	19	94.8	%	Albertson’s Supermarket
Redondo Beach Plaza	1993/2004	2012	110,509	16	100.0	%	Safeway (Vons) Supermarket, Petco



Diamond Bar Town Center	1981	2013	100,342	21	95.5	%	Walmart Neighborhood Market, Crunch Fitness
Diamond Hills Plaza	1973/2008	2013	139,505	37	97.4	%	H-Mart Supermarket, Rite Aid Pharmacy
Plaza de la Canada	1968/2010	2013	101,031	13	100.0	%	Gelson’s Supermarket, TJ Maxx, Rite Aid Pharmacy
Fallbrook Shopping Center	1966/1986/ 2003/2015	2014	755,299	47	99.2	%	Sprouts Market, Trader Joe’s, Kroger (Ralph’s) Supermarket ⁽¹⁾, TJ Maxx
Moorpark Town Center	1984/2014	2014	133,547	23	95.5	%	Kroger (Ralph’s) Supermarket, CVS Pharmacy
Ontario Plaza	1997-1999	2015	150,149	26	99.1	%	El Super Supermarket, Rite Aid Pharmacy
Park Oaks Shopping Center	1959/2005	2015	110,092	25	89.8	%	Safeway (Vons) Supermarket, Dollar Tree
Warner Plaza	1973-1974/ 2016-2017	2015	110,918	67	98.6	%	Sprouts Market, Kroger (Ralph’s) Supermarket ⁽¹⁾, Rite Aid Pharmacy ⁽¹⁾
Magnolia Shopping Center	1962/1972/ 1987/2016	2016	116,360	23	88.2	%	Kroger (Ralph’s) Supermarket
Casitas Plaza Shopping Center	1972/1982	2016	105,098	27	97.4	%	Albertson’s Supermarket, CVS Pharmacy
Bouquet Center	1985	2016	148,903	26	94.1	%	Safeway (Vons) Supermarket, CVS Pharmacy, Ross Dress For Less
North Ranch Shopping Center	1977-1990	2016	146,625	31	88.1	%	Kroger (Ralph’s) Supermarket, Trader Joe’s, Rite Aid Pharmacy, Petco
The Knolls	2000/2016	2016	52,021	7	100.0	%	Trader Joe’s, Pet Food Express
The Terraces	1958/1970/ 1989	2017	172,922	28	94.5	%	Trader Joe’s, Marshall’s, LA Fitness
Orange County metro area
Santa Ana Downtown Plaza	1987/2010	2010	105,536	27	95.0	%	Kroger (Food 4 Less) Supermarket, Marshall’s
Sycamore Creek	2008	2010	74,198	18	100.0	%	Safeway (Vons) Supermarket, CVS Pharmacy ⁽¹⁾
Desert Springs Marketplace	1993-94 / 2013	2011	113,718	19	96.3	%	Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy
Cypress Center West	1970/1978 / 2014	2012	107,246	33	100.0	%	Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy
Harbor Place Center	1994	2012	119,821	9	97.4	%	AA Supermarket, Ross Dress For Less
5 Points Plaza	1961-62 / 2012 / 2015	2013	160,536	35	95.0	%	Trader Joe’s, Pier 1
Peninsula Marketplace	2000	2013	95,416	15	100.0	%	Kroger (Ralph’s) Supermarket, Planet Fitness
Mission Foothill Marketplace	1996	2014	110,678	10	15.9	%
Fullerton Crossroads	1977/1997/ 2010-2011	2017	219,785	24	98.2	%	Kroger (Ralph’s) Supermarket, Kohl’s, Jo-Ann Fabrics and Crafts
The Village at Nellie Gail Ranch	1897 / 2014-2015	2017	88,486	24	99.4	%	Smart & Final Extra Supermarket
San Diego metro area
Marketplace Del Rio	1990/ 2004	2011	177,203	43	89.1	%	Stater Brothers Supermarket, Walgreens
Renaissance Towne Centre	1991/2011	2011	52,998	30	98.5	%	CVS Pharmacy
Euclid Plaza	1982/2012	2012	77,044	8	95.4	%	Vallarta Supermarket, Walgreens
Bay Plaza	1986/2013	2012	73,324	29	100.0	%	Seafood City Supermarket
Bernardo Heights Plaza	1983/2006	2013	37,729	4	96.3	%	Sprouts Market
Hawthorne Crossings	1993/1999	2013	141,288	18	100.0	%	Mitsuwa Supermarket, Ross Dress For Less, Staples
Creekside Plaza	1993/2005	2014	128,852	24	97.1	%	Stater Brothers Supermarket, AMC Theatres
Northern California
San Francisco metro area
Pleasant Hill Marketplace	1980	2010	69,715	3	100.0	%	Total Wine and More, Buy Buy Baby, Basset Furniture
Pinole Vista Shopping Center	1981/2012	2011/2018	223,369	28	98.7	%	SaveMart (Lucky) Supermarket, Planet Fitness, Kmart
Country Club Gate Center	1974/2012	2011	109,331	32	98.7	%	SaveMart (Lucky) Supermarket, Rite Aid Pharmacy
Marlin Cove Shopping Center	1972/2001	2012	73,943	26	100.0	%	99 Ranch Market
The Village at Novato	2006	2012	20,081	4	100.0	%	Trader Joe’s, Pharmaca Pharmacy



Santa Teresa Village	1974-79 / 2013	2012	124,306	36	98.9	%	Grocery Outlet Supermarket, Dollar Tree
Granada Shopping Center	1962/1994	2013	69,325	15	100.0	%	SaveMart (Lucky) Supermarket
Country Club Village	1995	2013	111,093	24	100.0	%	Walmart Neighborhood Market, CVS Pharmacy
North Park Plaza	1997	2014	76,697	15	100.0	%	H-Mart Supermarket
Winston Manor	1977/1988/ 2011/2015	2015	49,852	14	100.0	%	Grocery Outlet Supermarket
Jackson Square	1972/1997	2015	114,220	16	100.0	%	Safeway Supermarket, CVS Pharmacy, 24 Hour Fitness
Gateway Centre	1996	2015	112,553	25	98.9	%	SaveMart (Lucky) Supermarket, Walgreens
Iron Horse Plaza	1998-1999	2015	61,860	10	98.1	%	Lunardi’s Market
Monterey Center	2007	2016	25,798	7	87.3	%	Trader Joe’s, Pharmaca Pharmacy
Santa Rosa Southside Shopping Center	1983-1984	2017	88,535	11	100.0	%	REI, Cost Plus World Market
Monta Loma Plaza	1973/ 2009-2010	2017	48,078	11	100.0	%	Safeway Supermarket
Sacramento metro area
Norwood Shopping Center	1993/1999	2010	85,693	16	92.1	%	Viva Supermarket, Rite Aid Pharmacy, Citi Trends
Mills Shopping Center	1959/1996	2011	235,314	30	87.0	%	Viva Supermarket, Ross Dress For Less (dd’s Discounts), Dollar Tree
Morada Ranch	2006	2011	101,842	19	97.5	%	Raleys Supermarket
Green Valley Station	2006/2007	2012	52,245	17	82.3	%	CVS Pharmacy
Pacific Northwest
Seattle Metropolitan
Meridian Valley Plaza	1978/2011	2010	51,597	16	100.0	%	Kroger (QFC) Supermarket
The Market at Lake Stevens	2000	2010	74,130	9	100.0	%	Albertson’s (Haggen) Supermarket
Canyon Park Shopping Center	1980/2012	2011	123,592	24	100.0	%	PCC Community Markets, Rite Aid Pharmacy, Petco
Hawks Prairie Shopping Center	1988/2012	2011	157,529	24	100.0	%	Safeway Supermarket, Dollar Tree, Big Lots
The Kress Building	1924/2005	2011	74,616	8	100.0	%	IGA Supermarket, TJMaxx
Gateway Shopping Center	2007	2012	104,298	18	90.4	%	WinCo Foods ⁽¹⁾, Rite Aid Pharmacy, Ross Dress For Less
Aurora Square	1980/1987	2012/2014	108,558	15	98.2	%	Central Supermarket, Marshall’s, Pier 1 Imports
Canyon Crossing	2008-2009	2013	120,398	28	100.0	%	Safeway Supermarket
Crossroads Shopping Center	1962/2004/ 2015	2010/2013	463,813	96	100.0	%	Kroger (QFC) Supermarket, Bed Bath & Beyond, Dick’s Sporting Goods
Bellevue Marketplace	1971/1982/ 2017	2015	113,758	20	100.0	%	Asian Family Market
Four Corner Square	1983/2015	2015	119,560	30	100.0	%	Grocery Outlet Supermarket, Walgreens, Johnsons Home & Garden
Bridle Trails Shopping Center	1980/1984/ 1987	2016	108,377	31	100.0	%	Grocery Outlet Supermarket, Bartell Drugs, Dollar Tree
PCC Community Markets Plaza	1981/2007	2017	34,459	1	100.0	%	PCC Community Markets
Highland Hill Shopping Center	1956/1989/ 2006	2017	163,926	20	100.0	%	Safeway Supermarket, LA Fitness, Dollar Tree, Petco
North Lynnwood Shopping Center	1963/1965/ 2003	2017	63,606	9	95.8	%	Kroger (QFC) Supermarket
Stadium Center	1926/2016	2018	48,888	7	100.0	%	Thriftway Supermarket
Portland metro area
Vancouver Market Center	1996/2012	2010	118,385	19	98.8	%	Skyzone
Happy Valley Town Center	2007	2010	138,662	37	100.0	%	New Seasons Supermarket
Wilsonville Old Town Square	2011	2010/2012	49,937	19	100.0	%	Kroger (Fred Meyer) Supermarket ⁽¹⁾
Cascade Summit Town Square	2000	2010	94,934	31	100.0	%	Safeway Supermarket
Heritage Market Center	2000	2010	107,468	17	97.3	%	Safeway Supermarket, Dollar Tree
Division Crossing	1992	2010	103,561	20	100.0	%	Rite Aid Pharmacy, Ross Dress For Less, Ace Hardware



Halsey Crossing	1992	2010	99,428	19	100.0	%	24 Hour Fitness, Dollar Tree
Hillsboro Market Center	2001-2002	2011	156,021	23	100.0	%	Albertson’s Supermarket, Dollar Tree, Ace Hardware
Robinwood Shopping Center	1980/2012	2013	70,831	16	100.0	%	Walmart Neighborhood Market
Tigard Marketplace	1988/2005	2014	136,889	18	99.3	%	H-Mart Supermarket, Bi-Mart Pharmacy
Wilsonville Town Center	1991/1996	2014	167,829	41	100.0	%	Safeway Supermarket, Rite Aid Pharmacy, Dollar Tree
Tigard Promenade	1996	2015	88,043	16	100.0	%	Safeway Supermarket
Sunnyside Village Square	1996-1997	2015	92,278	15	100.0	%	Grocery Outlet Supermarket, 24 Hour Fitness, Ace Hardware
Johnson Creek Center	2003/2009	2015	108,588	15	100.0	%	Trader Joe’s, Walgreens, Sportsman’s Warehouse
Rose City Center	1993/2012	2016	60,680	3	100.0	%	Safeway Supermarket
Division Center	1986-1987/ 2013-2014	2017	121,904	23	100.0	%	Grocery Outlet Supermarket, Rite Aid Pharmacy, Petco
Riverstone Marketplace	2002-2004	2017	95,774	23	98.5	%	Kroger (QFC) Supermarket
King City Plaza	1970/1980/ 1990	2018	62,676	20	100.0	%	Grocery Outlet Supermarket
Total Properties			10,485,223	1,986	96.9	%

_______________


(1)	Retailer ~~owns their own space and~~ is not a tenant of the Company.

As illustrated by the following tables, the Company’s shopping centers are substantially diversified by both tenant mix and by the staggering of its major tenant lease expirations. For the year ended December 31, ~~2015,~~2018, no single tenant comprised more than ~~5.0%~~5.6% of the total annual base rent of the Company’s portfolio.

The following table sets forth a summary schedule of the Company’s ten largest tenants by percent of total annual base rent, as of December 31, ~~2015.~~

Tenant Number of Leases
% of Total Annual
Base Rent ⁽¹⁾
Albertson’s / Safeway Supermarkets 14 5.0 %
Kroger Supermarkets 7 2.4 %
Rite Aid Pharmacy 12 1.9 %
SaveMart Supermarkets 4 1.7 %
Marshall’s / TJMaxx 6 1.6 %
Sprouts Market 4 1.6 %
JP Morgan Chase 17 1.5 %
Ross Dress For Less / dd’s Discounts 6 1.3 %
Haggen Supermarkets 3 1.2 %
CVS Pharmacy 7 1.1 %
80 19.3 %

2018.



Tenant	Number of Leases	% of Total Annual Base Rent ⁽¹⁾
Albertson’s / Safeway Supermarkets	19	5.6	%
Kroger Supermarkets	12	3.5	%
Rite Aid Pharmacy	14	1.6	%
JP Morgan Chase	22	1.5	%
Marshall’s / TJMaxx	6	1.3	%
SaveMart Supermarkets	4	1.3	%
Sprouts Markets	4	1.3	%
Ross Dress For Less / dd’s Discounts	7	1.2	%
Trader Joe’s	8	1.2	%
H-Mart Supermarkets	3	1.1	%
	99	19.6	%

___________________

~~(1)~~
(1)	Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, ~~2015~~2018 (including initial cash rent for new leases).

The following table sets forth a summary schedule of the annual lease expirations for leases in place across the Company’s total retail portfolio at December 31, ~~2015~~2018 (Annual Base Rent in thousands).

Year of Expiration
Number of
Leases
Expiring ⁽¹⁾
Leased Square
Footage
Annual Base
Rent ⁽²⁾
Annual Base
Rent%
2016 242 601,789 $ 13,655 8.6 %
2017 294 893,045 19,001 12.0 %
2018 258 1,048,239 22,905 14.5 %
2019 202 871,986 17,917 11.4 %
2020 225 1,013,794 18,967 12.0 %
2021 108 665,651 11,175 7.0 %
2022 61 522,309 9,157 5.8 %
2023 43 553,196 9,626 6.1 %
2024 56 406,249 7,190 4.6 %
2025 54 469,536 8,457 5.3 %
Thereafter 77 1,315,727 20,404 12.7 %
Total 1,620 8,361,521 $ 158,454 100.0 %



Year of Expiration	Number of Leases Expiring ⁽¹⁾	Leased Square Footage	Annual Base Rent ⁽²⁾		Annual Base Rent %
2019	238	697,859	$	14,747	7.0	%
2020	288	1,095,037	22,686		10.7	%
2021	317	1,064,462	23,755		11.2	%
2022	299	1,188,809	26,611		12.6	%
2023	296	1,472,780	32,617		15.4	%
2024	168	1,035,679	20,591		9.8	%
2025	72	578,480	10,937		5.2	%
2026	75	591,794	11,408		5.4	%
2027	67	407,670	8,963		4.3	%
2028	77	689,795	15,452		7.3	%
Thereafter	89	1,327,542	23,417		11.1	%
Total	1,986	10,149,907	$	211,184	100	%

___________________


(1)	Assumes no tenants exercise renewal options or cancellation options.


(2)	Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, ~~2015~~2018 (including initial cash rent for new leases).

The following table sets forth a summary schedule of the annual lease expirations for leases in place with the Company’s retail anchor tenants at December 31, ~~2015~~2018 (Annual Base Rent in thousands). Anchor tenants are tenants with leases occupying at least 15,000 square feet or more.

Year of Expiration
Number of
Leases
Expiring ⁽¹⁾
Leased Square
Footage
Annual Base
Rent ⁽²⁾
Annual Base
Rent %
2016 5 178,469 $ 1,967 1.2 %
2017 10 297,698 3,163 2.0 %
2018 18 527,083 8,323 5.3 %
2019 13 409,429 6,262 4.0 %
2020 13 473,930 5,253 3.3 %
2021 11 379,294 4,143 2.6 %
2022 12 348,440 4,676 3.0 %
2023 12 450,562 7,007 4.4 %
2024 5 246,034 3,092 2.0 %
2025 9 309,001 4,417 2.8 %
Thereafter 21 1,024,931 13,397 8.4 %
Total 129 4,644,871 $ 61,700 39.0 %



Year of Expiration	Number of Leases Expiring ⁽¹⁾	Leased Square Footage	Annual Base Rent ⁽²⁾		Annual Base Rent %
2019	7	286,462	$	2,811	1.3	%
2020	15	491,570	5,768		2.7	%
2021	14	425,104	5,107		2.4	%
2022	18	530,799	7,043		3.3	%
2023	26	836,758	13,312		6.3	%
2024	16	580,199	8,731		4.2	%
2025	11	367,230	5,301		2.5	%
2026	11	389,933	5,302		2.5	%
2027	8	212,350	3,336		1.6	%
2028	14	493,876	8,634		4.1	%
Thereafter	25	1,023,248	15,315		7.3	%
Total	165	5,637,529	$	80,660	38.2	%

____________________


(1)	Assumes no tenants exercise renewal or cancellation options.


(2)	Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, ~~2015~~2018 (including initial cash rent for new leases).

Item 3. Legal Proceedings

In the normal course of business, from time to time, the Company is involved in routine legal actions incidental to its business of the ownership and operations of its properties. In management’s opinion, the liabilities, if any, that ultimately may result from

such legal actions are not expected to have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company.

Item 4. Mine Safety Disclosures

~~Not applicable.~~

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

ROIC Market Information

ROIC’s common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “ROIC”. ~~The following table sets forth, for the period indicated, the high and low sales price for ROIC’s common stock as reported by the NASDAQ and the per share dividends declared:~~

Period High Low Dividends
Declared
2015
First Quarter $ 18.73 $ 16.60 $ 0.17
Second Quarter $ 18.47 $ 15.44 $ 0.17
Third Quarter $ 17.42 $ 15.30 $ 0.17
Fourth Quarter $ 18.68 $ 16.39 $ 0.17
2014
First Quarter $ 15.18 $ 13.85 $ 0.16
Second Quarter $ 16.30 $ 14.82 $ 0.16
Third Quarter $ 16.26 $ 14.50 $ 0.16
Fourth Quarter $ 17.22 $ 14.61 $ 0.16

~~On February 19, 2016, the closing price of ROIC’s common stock as reported by the NASDAQ was $18.47.~~

~~Dividends Declared on Common Stock and Tax Status~~

ROIC intends to make regular quarterly distributions to holders of its common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regular quarterly dividends to stockholders in an amount not less than its net taxable income, including capital gains, if any, if and to the extent authorized by its board of directors. Before ROIC pays any dividend, whether for U.S. federal income tax purposes or otherwise, it must first meet both its operating requirements and its debt service on debt. If ROIC’s cash available for distribution is less than its net taxable income, it could be required to sell assets or borrow funds to make cash distributions or it may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.

The following table sets forth the dividends declared per share of ROIC’s common stock and the tax status for U.S. federal income tax purposes of such dividends declared during the years ended December 31, 2015 and 2014:

~~Year Ended December 31, 2015~~

Record Date Payable Date
Total Dividend per
Share

Ordinary Income per
Share⁽¹⁾

Return of Capital per
Share
3/16/2015 3/30/2015 $0.170000 $0.12951 $0.04049
6/16/2015 6/30/2015 $0.170000 $0.12951 $0.04049
9/15/2015 9/29/2015 $0.170000 $0.12951 $0.04049
12/15/2015 12/29/2015 $0.170000 $0.12951 $0.04049

~~_________________~~

~~(1)~~

~~Ordinary Income per Share is non-qualified dividend income.~~

~~Year Ended December 31, 2014~~

Record Date Payable Date
Total Dividend per
Share

Ordinary Income per
Share⁽¹⁾

Return of Capital per
Share
Total Capital
Gain per Share
Section 1250 Recapture per Share
3/14/2014 3/28/2014 $0.160000 $0.09568 $0.04423 $0.02009 $0.00127
6/13/2014 6/27/2014 $0.160000 $0.09568 $0.04423 $0.02009 $0.00127
9/15/2014 9/29/2014 $0.160000 $0.09568 $0.04423 $0.02009 $0.00127
12/15/2014 12/29/2014 $0.160000 $0.09568 $0.04423 $0.02009 $0.00127

~~_________________~~

~~(1)~~

~~Ordinary Income per Share is non-qualified dividend income.~~

~~As of December 31, 2015, 89.0% of the outstanding interests in the Operating Partnership were owned by the Company.~~

Holders

As of February ~~19, 2016,~~15, 2019, ROIC had 5661 registered holders. Such information was obtained through the registrar and transfer agent.

Operating Partnership

~~There is no established trading market for the Operating Partnership's OP Units. The following table sets forth the distributions per OP Unit with respect to the periods indicated:~~

Period Distributions
2015
First Quarter $ 0.17
Second Quarter $ 0.17
Third Quarter $ 0.17
Fourth Quarter $ 0.17
2014
First Quarter $ 0.16
Second Quarter $ 0.16
Third Quarter $ 0.16
Fourth Quarter $ 0.16

~~The Operating Partnership intends to make regular quarterly distributions to holders of OP Units, to the extent authorized by ROIC's board of directors.~~

As of December 31, ~~2015,~~2018, the Operating Partnership had 51 registered holders, including Retail Opportunity Investments GP, LLC.

Stockholder Return Performance

The above graph compares the cumulative total return on the Company’s common stock with that of the Standard and Poor’s 500 Stock Index (“S&P 500”) and the National Association of Real Estate Investment Trusts Equity Index (“FTSE NAREIT Equity REITs”) from December 31, ~~2010~~2013 through December 31, ~~2015.~~2018. The stock price performance graph assumes that an investor invested $100 in each of ROIC and the indices, and the reinvestment of any dividends. The comparisons in the graph are provided in accordance with the SEC disclosure requirements and are not intended to forecast or be indicative of the future performance of ROIC’s shares of common stock.

Period Ending
Index 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15
Retail Opportunity Investments Corp. 100.00 123.74 140.26 167.85 199.47 221.47
S&P500 100.00 102.11 118.45 156.82 178.28 180.75
FTSE NAREIT Equity REITs 100.00 108.29 127.85 131.01 170.49 175.94



	Period Ending
Index	12/31/2013		12/31/2014		12/31/2015		12/31/2016		12/31/2017		12/31/2018
Retail Opportunity Investments Corp.	$	100.00	$	118.83	$	131.98	$	161.32	$	158.13	$	131.34
S&P500	$	100.00	$	113.69	$	115.26	$	129.05	$	157.22	$	150.33
FTSE NAREIT Equity REITs	$	100.00	$	128.03	$	131.65	$	143.01	$	155.41	$	149.12

Except to the extent that the Company specifically incorporates this information by reference, the foregoing Stockholder Return Performance information shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act or under the Exchange Act. This information shall not otherwise be deemed filed under such Acts.

Securities Authorized For Issuance Under Equity Compensation Plans

During 2009, ROIC adopted the 2009 Equity Incentive Plan. Following stockholder approval at the 2018 Annual Meeting, on April 25, 2018, ROIC adopted the Amended and Restated 2009 Equity Incentive Plan (the ~~“2009~~“Equity Incentive Plan”). For a description of the 2009 Equity Incentive Plan and the Equity Incentive Plan, see Note 98 to the consolidated financial statements in this Annual Report on Form 10-K.

The following table presents certain information about the Company’s equity compensation ~~plans~~plan as of December 31, ~~2015:~~

Plan Category Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights (1) Weighted-average
exercise price of
outstanding options,
warrants and rights Number of securities remaining available for future issuance
under equity compensation plans (excluding securities reflected in the first column of this table)
Equity compensation plans approved by stockholders 282,500 $ 10.74 1,864,095
Equity compensation plans not approved by stockholders — — —
Total 282,500 $ 10.74 1,864,095

~~_________________~~

~~(1)~~

~~Includes 1,500 and 5,500 options granted during the years ended December 31, 2014, and 2013, respectively.~~

2018:



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in the first column of this table)
Equity compensation plan approved by stockholders	254,500	$	10.75	4,207,442
Equity compensation plan not approved by stockholders	—	—		—
Total	254,500	$	10.75	4,207,442

Item 6. Selected Financial Data

The following tables set forth selected financial and operating information on a historical basis for ROIC and the Operating Partnership, and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and the Company’s financial statements, including the notes, included elsewhere herein.

RETAIL OPPORTUNITY INVESTMENTS CORP.

CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

(in thousands, except share data)

Year Ended December 31,
Retail Opportunity Investments Corp. 2015 2014 2013 2012 2011
Statement of Operations Data:
Total revenues $ 192,699 $ 155,864 $ 111,232 $ 75,096 $ 51,737
Operating expenses 133,364 112,090 83,457 63,542 46,782
Operating income 59,335 43,774 27,775 11,554 4,955
Gain on consolidation of joint venture — — 20,382 2,145 —
Gain on bargain purchase — — — 3,864 9,449
Gain on sale of real estate — 4,869 — — —
Interest expense 34,243 27,593 15,855 11,380 6,225
Income from continuing operations 25,092 21,050 34,692 7,893 9,657
Loss from discontinued operations — — (714 ) — —
Net income 25,092 21,050 33,978 7,893 9,656
Net income attributable to Retail Opportunity Investments Corp. 23,864 20,301 33,813 7,893 9,656
Weighted average shares outstanding – Basic: 95,651,780 83,411,230 67,419,497 51,059,408 42,477,007
Weighted average shares outstanding – Diluted: 100,017,781 87,453,409 71,004,380 52,371,168 42,526,288
Income per share – Basic:
Income from continuing operations $ 0.25 $ 0.24 $ 0.51 $ 0.15 $ 0.23
Net income attributable to Retail Opportunity Investments Corp. $ 0.25 $ 0.24 $ 0.50 $ 0.15 $ 0.23
Income per share – Diluted:
Income from continuing operations $ 0.25 $ 0.24 $ 0.49 $ 0.15 $ 0.23
Net income attributable to Retail Opportunity Investments Corp. $ 0.25 $ 0.24 $ 0.48 $ 0.15 $ 0.23
Dividends per common share $ 0.68 $ 0.64 $ 0.60 $ 0.53 $ 0.39
Balance Sheet Data:
Real estate investments, net $ 2,162,306 $ 1,697,725 $ 1,314,934 $ 864,624 $ 602,624
Cash and cash equivalents $ 8,844 $ 10,773 $ 7,920 $ 4,692 $ 34,318
Total assets $ 2,310,635 $ 1,851,696 $ 1,439,090 $ 950,912 $ 694,433
Total liabilities $ 1,145,619 $ 888,914 $ 733,680 $ 484,370 $ 243,944
Non-controlling interests – redeemable OP Units $ 33,674 $ — $ — $ — $ —
Total equity $ 1,131,342 $ 962,782 $ 705,410 $ 466,542 $ 450,489



	Year Ended December 31,
Retail Opportunity Investments Corp.	2018		2017		2016		2015		2014
Statement of Operations Data:
Total revenues	$	295,798	$	273,260	$	237,189	$	192,699	$	155,864
Operating expenses	192,434		179,595		160,018		133,364		112,090
Gain on sale of real estate	5,890		—		—		—		4,869
Operating income	109,254		93,665		77,171		59,335		48,643
Interest expense and other finance expenses	62,113		50,977		40,741		34,243		27,593
Net income	47,141		42,688		36,430		25,092		21,050
Net Income Attributable to Retail Opportunity Investments Corp.	42,736		38,477		32,754		23,864		20,301
Weighted average shares outstanding – Basic:	112,645,490		109,400,123		104,072,222		95,651,780		83,411,230
Weighted average shares outstanding – Diluted:	124,558,893		121,743,831		116,039,940		100,017,781		87,453,409
Income per share – Basic and Diluted
Net Income Attributable to Retail Opportunity Investments Corp.	$	0.38	$	0.35	$	0.31	$	0.25	$	0.24
Dividends per common share	$	0.78	$	0.75	$	0.72	$	0.68	$	0.64
Balance Sheet Data:
Real Estate Investments, net	$	2,831,265	$	2,849,282	$	2,493,997	$	2,162,306	$	1,697,725
Cash and cash equivalents	6,076		11,553		13,125		8,844		10,773
Total assets	3,003,071		3,039,198		2,662,969		2,301,448		1,861,028
Total liabilities	1,694,643		1,709,557		1,347,404		1,136,432		898,246
Non-controlling interests – redeemable OP Units	—		—		—		33,674		—
Total equity	1,308,428		1,329,641		1,315,565		1,131,342		962,782

RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP

CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

(in thousands, except share data)

Year Ended December 31,
Retail Opportunity Investments Partnership, LP 2015 2014 2013 2012 2011
Statement of Operations Data:
Total Revenues $ 192,699 $ 155,864 $ 111,232 $ 75,096 $ 51,737
Operating expenses 133,364 112,090 83,457 63,542 46,782
Operating income 59,335 43,774 27,775 11,554 4,955
Gain on consolidation of joint venture — — 20,382 2,145 —
Gain on bargain purchase — — — 3,864 9,449
Gain on sale of real estate — 4,869 — — —
Interest expense 34,243 27,593 15,855 11,380 6,225
Income from continuing operations 25,092 21,050 34,692 7,893 9,657
Loss from discontinued operations — — (714 ) — —
Net income 25,092 21,050 33,978 7,893 9,657
Net income attributable to the Operating Partnership 25,092 21,050 33,978 7,893 9,657
Weighted average units outstanding – Basic: 99,738,504 86,573,888 68,258,005 51,059,408 42,477,007
Weighted average units outstanding – Diluted: 100,017,781 87,453,409 71,004,380 52,371,168 42,526,288
Income per unit – Basic:
Income from continuing operations $ 0.25 $ 0.24 $ 0.51 $ 0.15 $ 0.23
Net income attributable to the Operating Partnership $ 0.25 $ 0.24 $ 0.50 $ 0.15 $ 0.23
Income per unit – Diluted:
Income from continuing operations $ 0.25 $ 0.24 $ 0.49 $ 0.15 $ 0.23
Net income attributable to the Operating Partnership $ 0.25 $ 0.24 $ 0.48 $ 0.15 $ 0.23
Distributions per unit $ 0.68 $ 0.64 $ 0.60 $ 0.53 $ 0.39
Balance Sheet Data:
Real estate investments, net $ 2,162,306 $ 1,697,725 $ 1,314,934 $ 864,624 $ 602,624
Cash and cash equivalents $ 8,844 $ 10,773 $ 7,920 $ 4,692 $ 34,318
Total assets $ 2,310,635 $ 1,851,696 $ 1,439,090 $ 950,912 $ 694,433
Total liabilities $ 1,145,619 $ 888,914 $ 733,680 $ 484,370 $ 243,944
Redeemable limited partners $ 33,674 $ — $ — $ — $ —
Total capital $ 1,131,342 $ 962,782 $ 705,410 $ 466,542 $ 450,489



	Year Ended December 31,
Retail Opportunity Investments Partnership, LP	2018		2017		2016		2015		2014
Statement of Operations Data:
Total revenues	$	295,798	$	273,260	$	237,189	$	192,699	$	155,864
Operating expenses	192,434		179,595		160,018		133,364		112,090
Gain on sale of real estate	5,890		—		—		—		4,869
Operating income	109,254		93,665		77,171		59,335		48,643
Interest expense and other finance expenses	62,113		50,977		40,741		34,243		27,593
Net Income Attributable to Retail Opportunity Investments Partnership, LP	47,141		42,688		36,430		25,092		21,050
Weighted average units outstanding – Basic:	124,271,802		121,460,958		115,819,731		99,738,504		86,573,888
Weighted average units outstanding – Diluted:	124,558,893		121,743,831		116,039,940		100,017,781		87,453,409
Income per unit – Basic and Diluted
Net Income Attributable to Retail Opportunity Investments Partnership, LP	$	0.38	$	0.35	$	0.31	$	0.25	$	0.24
Distributions per unit	$	0.78	$	0.75	$	0.72	$	0.68	$	0.64
Balance Sheet Data:
Real Estate Investments, net	$	2,831,265	$	2,849,282	$	2,493,997	$	2,162,306	$	1,697,725
Cash and cash equivalents	6,076		11,553		13,125		8,844		10,773
Total assets	3,003,071		3,039,198		2,662,969		2,301,448		1,861,028
Total liabilities	1,694,643		1,709,557		1,347,404		1,136,432		898,246
Redeemable limited partners	—		—		—		33,674		—
Total capital	1,308,428		1,329,641		1,315,565		1,131,342		962,782

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Retail Opportunity Investments Corp. Consolidated Financial Statements and Notes thereto appearing elsewhere in this Annual Report on Form 10-K. The Company makes statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Annual Report on Form 10-K entitled “Statements Regarding Forward-Looking Information.” Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in this Annual Report on Form 10-K entitled “Risk Factors.”

Overview

~~ROIC~~

The Company is organized in an UpREIT format pursuant to which Retail Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as the general partner of, and ROIC conducts substantially all of its business through, its Operating Partnership, Retail Opportunity Investments Partnership, LP, a Delaware limited partnership, together with its subsidiaries.

ROIC commenced operations in October 2009 as a fully integrated and self-managed REIT, and as of December 31, ~~2015,~~2018, ROIC owned an approximate ~~89.0%~~90.8% partnership interest and other limited partners owned the remaining ~~11.0%~~9.2% partnership interest in the Operating Partnership. ROIC specializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States, anchored by supermarkets and drugstores.

~~From the commencement of its operations through December 31, 2015, the Company has completed approximately $2.2 billion of shopping center investments.~~

As of December 31, ~~2015,~~2018, the Company’s portfolio consisted of 7392 properties (91 retail ~~properties~~and one office) totaling approximately ~~8.6~~10.5 million square feet of GLA.

As of December 31, ~~2015,~~2018, the Company’s retail portfolio was approximately ~~97.2%~~96.9% leased.

During the year ended December 31, ~~2015,~~2018, the Company leased and renewed approximately ~~554,000~~441,000 and ~~699,000~~1.1 million square feet, respectively, in its portfolio.

The table below provides a reconciliation of beginning of year vacant space to end of year vacant space for its retail portfolio as of December 31, ~~2015.~~

2018.



	Vacant Space Square Footage
Vacant space at December 31, ~~2014~~2017	303,098	~~253,223~~
Square footage vacated	196,264	~~242,615~~
Vacant space in ~~acquired~~sold properties	(3,668	~~60,485~~	)
Square footage leased		(~~317,921~~219,043	)
Vacant space at December 31, ~~2015~~2018	276,651	~~238,402~~

The Company has committed approximately ~~$20.8~~$20.9 million, or ~~$37.60~~$47.29 per square foot, in tenant improvements, including building and site improvements, for new leases that occurred during the year ended December 31, ~~2015.~~2018. The Company has committed approximately ~~$1.5~~$1.1 million, or ~~$2.66~~$2.39 per square foot, in leasing commissions for the new leases that occurred during the year ended December 31, ~~2015.~~2018. Additionally, the Company has committed approximately ~~$186,000,~~$958,000, or ~~$0.27~~$0.88 per square foot, in tenant improvements for renewed leases that occurred during the year ended December 31, ~~2015.~~2018. Leasing commission commitments for renewed leases were not material for the year ended December 31, ~~2015.~~

2018.

Results of Operations

At December 31, ~~2015,~~2018, the Company had 7392 properties (91 retail and one office), all of which are consolidated ~~(“consolidated properties”)~~ in the accompanying financial statements. The Company believes, because of the location of the properties in densely populated areas, the nature of its investments provides for relatively stable revenue flows even during difficult economic times. The Company has a strong capital structure with manageable debt as of December 31, ~~2015.~~2018. The Company expects to continue to actively explore acquisition opportunities consistent with its business strategy.

Property operating income is a non-GAAP financial measure of performance. The Company defines property operating income as operating revenues (base rent, recoveries from tenants and other income), less property and related expenses (property operating expenses and property taxes). Property operating income excludes general and administrative expenses, mortgage interest income, depreciation and amortization, acquisition transaction costs, other expense, interest expense, gains and losses from property acquisitions and dispositions, equity in earnings from unconsolidated joint ventures, extraordinary items, and amortization of tenant improvements and leasing commissions. Other REITs may use different methodologies for calculating property operating income, and accordingly, the Company’s property operating income may not be comparable to other REITs.

Property operating income is used by management to evaluate and compare the operating performance of the Company’s properties, to determine trends in earnings and to compute the fair value of the Company’s properties as this measure is not affected by the cost of our funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to our ownership of our properties. The Company believes the exclusion of these items from net income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the Company’s properties as well as trends in occupancy rates, rental rates and operating costs.

Property operating income is a measure of the operating performance of the Company’s properties but does not measure the Company’s performance as a whole. Property operating income is therefore not a substitute for net income or operating income as computed in accordance with GAAP.

Results of Operations for the year ended December 31, ~~2015~~2018 compared to the year ended December 31, ~~2014.~~

2017.

Property Operating Income

The table below provides a reconciliation of consolidated operating income in accordance with GAAP to consolidated property operating income for the years ended December 31, ~~2015~~2018 and ~~2014.~~

Year Ended December 31,
2015 2014

Operating income per GAAP $ 59,335 $ 43,774
Plus: Depreciation and amortization 70,957 58,435
General and administrative expenses 12,650 11,200
Acquisition transaction costs 965 961
Other expenses 627 505
Property operating income $ 144,534 $ 114,875

2017 (in thousands).



		Year Ended December 31,
		2018			2017
Operating income per GAAP		$	109,254		$	93,665
Plus:	Depreciation and amortization	100,838			96,256
	General and administrative expenses	14,918			14,103
	Acquisition transaction costs	—			4
	Other expenses	478			418
Less:	Gain on sale of real estate	(5,890		)	—
Property operating income		$	219,598		$	204,446

The following comparison for the year ended December 31, ~~2015~~2018 compared to the year ended December 31, ~~2014,~~2017, makes reference to the effect of the same-center properties. Same-center properties, which totaled 5378 of the Company’s 7392 properties as of December 31, ~~2015,~~2018, represent all operating properties owned by the Company during the entirety of both periods presented and consolidated into the Company’s financial statements during such ~~periods.~~

periods, except for one shopping center that is currently under contract to be sold and is slated for new multi-family development and is no longer being managed as a retail asset and the Company’s corporate office headquarters.

The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year ended December 31, ~~2015~~2018 related to the 5378 same-center properties owned by the Company during the entirety of both the years ended December 31, ~~2015~~2018 and ~~2014~~2017 and consolidated into the Company’s financial statements during such ~~periods.~~

Year Ended December 31, 2015
Same-center Non Same-Center Total

Operating income per GAAP $ 58,758 $ 577 $ 59,335
Plus: Depreciation and amortization 48,660 22,297 70,957
General and administrative expenses ⁽¹⁾ — 12,650 12,650
Acquisition transaction costs 53 912 965
Other expenses ⁽¹⁾ — 627 627
Property operating income $ 107,471 $ 37,063 $ 144,534

periods (in thousands).



		Year Ended December 31, 2018
		Same-Center		Non Same-Center			Total
Operating income per GAAP		$	101,121	$	8,133		$	109,254
Plus:	Depreciation and amortization	86,317		14,521			100,838
	General and administrative expenses ⁽¹⁾	—		14,918			14,918
	Other expenses ⁽¹⁾	—		478			478
Less:	Gain on sale of real estate	—		(5,890		)	(5,890		)
Property operating income		$	187,438	$	32,160		$	219,598

______________________


(1)	For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does not allocate these types of expenses between same-center and non ~~same-center.~~same-center properties.

The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year ended December 31, ~~2014~~2017 related to the 5378 same-center properties owned by the Company during the entirety of both the years ended December 31, ~~2015~~2018 and ~~2014~~2017 and consolidated into the Company’s financial statements during such ~~periods.~~

Year Ended December 31, 2014
Same-Center Non Same-Center Total

Operating income per GAAP $ 51,569 $ (7,795 ) $ 43,774
Plus: Depreciation and amortization 49,967 8,468 58,435
General and administrative expenses ⁽¹⁾ — 11,200 11,200
Acquisition transaction costs 94 867 961
Other expenses ⁽¹⁾ — 505 505
Property operating income $ 101,630 $ 13,245 $ 114,875

periods (in thousands).



		Year Ended December 31, 2017
		Same-Center		Non Same-Center			Total
Operating income (loss) per GAAP		$	101,072	$	(7,407	)	$	93,665
Plus:	Depreciation and amortization	87,978		8,278			96,256
	General and administrative expenses ⁽¹⁾	—		14,103			14,103
	Acquisition transaction costs	—		4			4
	Other expenses⁽¹⁾	—		418			418
Property operating income		$	189,050	$	15,396		$	204,446

______________________


(1)	For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does not allocate these types of expenses between same-center and non ~~same-center.~~same-center properties.

During the year ended December 31, ~~2015,~~2018, the Company generated property operating income of approximately ~~$144.5~~$219.6 million compared to property operating income of ~~$114.9~~$204.4 million generated during the year ended December 31, ~~2014.~~2017. Property operating income increased by ~~$29.7~~approximately $15.2 million during the year ended December 31, ~~2015~~2018 primarily as a result of an increase in the number of properties owned by the Company in ~~2015~~2018 compared to ~~2014~~2017 as well as $2.2 million of lease settlement income received in connection with a property that is currently under contract to be sold and ~~an increase in same-center properties’ operating income.~~is slated for new multi-family development. As of December 31, ~~2015,~~2018, the Company owned ~~73 consolidated~~92 properties as compared to 6191 properties at December 31, ~~2014.~~2017. The properties acquired during ~~2015~~2018 and ~~2014~~2017 increased property operating income in ~~2015~~the year ended December 31, 2018 by approximately ~~$23.8 million.~~$16.8 million compared to the year ended December 31, 2017. The ~~53 same-center properties increased~~ property operating income byfor the 78 same-center properties decreased approximately ~~$5.8 million. This increase is~~$1.6 million primarily due to a $2.7 million accelerated recognition of a below-market lease intangible liability resulting from a lease termination during the year ended December 31, 2017, offset by an increase in ~~base rents and other property income.~~

rental revenue during the year ended December 31, 2018.

Depreciation and amortization

The Company incurred depreciation and amortization expenses during the year ended December 31, ~~2015~~2018 of approximately ~~$71.0~~$100.8 million compared to ~~$58.4~~$96.3 million incurred during the year ended December 31, ~~2014.~~2017. Depreciation and amortization expenses were higher in ~~2015~~2018 as a result of an increase in the number of properties owned by the Company in ~~2015~~2018 compared to ~~2014.~~

2017.

General and administrative expenses

The Company incurred general and administrative expenses during the year ended December 31, ~~2015~~2018 of approximately ~~$12.7~~$14.9 million compared to ~~$11.2~~$14.1 million incurred during the year ended December 31, ~~2014.~~2017. General and administrative expenses increased approximately ~~$1.5 million~~$815,000 primarily as a result of an increase in compensation-related expenses.

~~Acquisition transaction costs~~

The Company incurred property acquisition costs during the year ended December 31, 2015 of approximately $965,000, which is consistent with the $961,000 incurred during the year ended December 31, 2014.

~~Interest expense and other finance expenses~~

During the year ended December 31, 2015, the Company incurred approximately $34.2 million of interest expense compared to approximately $27.6 million during the year ended December 31, 2014. Interest expense increased approximately $6.7 million primarily due to a higher debt level as a result of acquisitions, interest incurred related to the Senior Notes Due 2024 issued in December 2014, slightly offset by a decrease in interest related to the Company’s interest rate swaps, as the Company’s remaining swaps were cash settled in 2014.

Gain on sale of ~~property~~

real estate

On ~~June 5, 2014,~~September 27, 2018, the Company sold ~~Phillips Village Shopping Center,~~Round Hill Square, a non-core shopping center located in ~~Pomona, California with an occupancy rate of approximately 10.4% as of May 31, 2014.~~Zephyr Cove, Nevada. The sales price of this property of approximately $16.0 million, less costs to sell, resulted in net proceeds to the Company of approximately $15.6 million. The Company recorded a gain on sale of approximately $3.3 million for the year ended December 31, 2014. Additionally, on August 25, 2014, the Company sold the Oregon City Point Shopping Center, a non-core shopping center located in Oregon City, Oregon. The sales price of this property of approximately $12.4$28.0 million, less costs to sell, resulted in net proceeds of approximately ~~$12.0~~$26.9 million. The Company recorded a gain on sale of real estate of approximately ~~$1.6~~$5.9 million for the year ended December 31, ~~2014.~~2018. There were no ~~comparable gains recorded~~property sales in the year ended December 31, 2017.

Interest expense and other finance expenses

During the year ended December 31, 2018, the Company incurred approximately $62.1 million of interest expense compared to approximately $51.0 million during the year ended December 31, ~~2015.~~

2017. Interest expense increased approximately $11.1 million primarily due to the incremental increase in interest expense recognized on the Senior Notes Due 2027 issued in December 2017 and increased interest rates payable on the credit facility.

Results of Operations for the year ended December 31, ~~2014~~2017 compared to the year ended December 31, ~~2013.~~

2016.

Property Operating Income

Year Ended December 31,
2014 2013

Operating income per GAAP $ 43,774 $ 27,775
Plus: Depreciation and amortization 58,435 40,398
General and administrative expenses 11,200 10,059
Acquisition transaction costs 961 1,688
Other expenses 505 315
Less: Mortgage interest income — (624 )
Property operating income $ 114,875 $ 79,611

2016 (in thousands).



		Year Ended December 31,
		2017		2016
Operating income per GAAP		$	93,665	$	77,171
Plus:	Depreciation and amortization	96,256		88,359
	General and administrative expenses	14,103		13,120
	Acquisition transaction costs	4		824
	Other expenses	418		456
Property operating income		$	204,446	$	179,930

The following comparison for the year ended December 31, ~~2014~~2017 compared to the year ended December 31, ~~2013,~~2016, makes reference to the effect of the same-center properties. Same-center properties, which totaled 4171 of the Company’s 6191 properties as of December 31, ~~2014,~~2017, represent all operating properties owned by the Company during the entirety of both periods presented and consolidated into the Company’s financial statements during such periods.

The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year ended December 31, ~~2014~~2017 related to the 4171 same-center properties owned by the Company during the entirety of both the years ended December 31, ~~2014~~2017 and ~~2013~~2016 and consolidated into the Company’s financial statements during such periods (in thousands).

Year Ended December 31, 2014
Same-Center Non Same-Center Total

Operating income per GAAP $ 36,474 $ 7,300 $ 43,774
Plus: Depreciation and amortization 32,105 26,330 58,435
General and administrative expenses ⁽¹⁾ — 11,200 11,200
Acquisition transaction costs 6 955 961
Other expenses ⁽¹⁾ — 505 505
Property operating income $ 68,585 $ 46,290 $ 114,875



		Year Ended December 31, 2017
		Same-Center		Non Same-Center		Total
Operating income per GAAP		$	92,114	$	1,551	$	93,665
Plus:	Depreciation and amortization	76,147		20,109		96,256
	General and administrative expenses ⁽¹⁾	—		14,103		14,103
	Acquisition transaction costs	—		4		4
	Other expenses ⁽¹⁾	—		418		418
Property operating income		$	168,261	$	36,185	$	204,446

______________________


(1)	For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does not allocate these types of expenses between same-center and non ~~same-center.~~same-center properties.

The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year ended December 31, ~~2013~~2016 related to the 4171 same-center properties owned by the Company during the entirety of both the years ended December 31, ~~2014~~2017 and ~~2013~~2016 and consolidated into the Company’s financial statements during such periods (in thousands).

Year Ended December 31, 2013
Same-Center Non Same-Center Total

Operating income per GAAP $ 35,757 $ (7,982 ) $ 27,775
Plus: Depreciation and amortization 31,487 8,911 40,398
General and administrative expenses ⁽¹⁾ — 10,059 10,059
Acquisition transaction costs 229 1,459 1,688
Other expenses ⁽¹⁾ — 315 315
Less: Mortgage interest income — (624 ) (624 )
Property operating income $ 67,473 $ 12,138 $ 79,611



		Year Ended December 31, 2016
		Same-Center		Non Same-Center			Total
Operating income per GAAP		$	85,378	$	(8,207	)	$	77,171
Plus:	Depreciation and amortization	79,909		8,450			88,359
	General and administrative expenses ⁽¹⁾	—		13,120			13,120
	Acquisition transaction costs	201		623			824
	Other expenses ⁽¹⁾	—		456			456
Property operating income		$	165,488	$	14,442		$	179,930

______________________


(1)	For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does not allocate these types of expenses between same-center and non ~~same-center.~~same-center properties.

During the year ended December 31, ~~2014,~~2017, the Company generated property operating income of approximately ~~$114.9~~$204.4 million compared to property operating income of ~~$79.6~~$179.9 million generated during the year ended December 31, ~~2013.~~2016. Property operating income increased by ~~$35.3~~$24.5 million during the year ended December 31, ~~2014~~2017 primarily as a result of an increase in the number of properties owned by the Company in ~~2014~~2017 compared to ~~2013~~2016 and an increase in same-center properties’ operating income. As of December 31, ~~2014,~~2017, the Company owned ~~61 consolidated~~91 properties as compared to 5581 properties at December 31, ~~2013.~~2016. The properties acquired during ~~2014~~2017 and ~~2013~~2016 increased property operating income in ~~2014~~2017 by approximately ~~$34.2~~$21.7 million. The 4171 same-center properties increased property operating income by approximately ~~$1.1~~$2.8 million.

~~Mortgage interest income~~

The Company generated interest income from mortgage notes receivable during the year ended December 31, 2013 of approximately $624,000 and no comparable income was recorded during the year ended December 31, 2014. This ~~decrease was a result of the cancellation of the Company’s loan~~increase is primarily due to ~~the Crossroads joint venture~~an increase in connection with the Company’s acquisition of the remaining partnership interests in the Crossroads Shopping Center from its joint venture partner in September 2013. As of December 31, 2014, the Company has no remaining investments in mortgage loans on real estate.

base rents.

Depreciation and amortization

The Company incurred depreciation and amortization expenses during the year ended December 31, ~~2014~~2017 of approximately ~~$58.4~~$96.3 million compared to ~~$40.4~~$88.4 million incurred during the year ended December 31, ~~2013.~~2016. Depreciation and amortization expenses were higher in ~~2014~~2017 as a result of an increase in the number of properties owned by the Company in ~~2014~~2017 compared to ~~2013.~~

2016.

General and administrative expenses

The Company incurred general and administrative expenses during the year ended December 31, ~~2014~~2017 of approximately ~~$11.2~~$14.1 million compared to ~~$10.1~~$13.1 million incurred during the year ended December 31, ~~2013.~~2016. General and administrative expenses increased approximately ~~$1.1 million~~$983,000 primarily as a result of an increase in compensation-related expenses.

Acquisition transaction costs

The Company incurred property acquisition costs during the year ended December 31, ~~2014~~2017 of approximately ~~$961,000~~$4,000 compared to ~~$1.7 million~~$824,000 incurred during the year ended December 31, ~~2013. Property~~2016. Acquisition costs decreased approximately $820,000 as a result of the Company’s prospective adoption of Accounting Standards Update No. 2017-1, “Business Combinations: Clarifying the Definition of a Business” on October 1, 2016. The standard issued by the FASB redefined the definition of a business, whereby an acquisition ~~costs were lower~~ in ~~2014 primarily due to decreased legal and other professional fees incurred~~which substantially all of the fair value of the assets acquired are concentrated in a single identifiable asset is accounted for as an asset acquisition. As a result, transaction costs related to such an acquisition ~~activity in 2014 compared to 2013, as well as a reduction in the number of assets acquired period over period.~~

~~Interest expense and other finance expenses~~

are capitalized. During the year ended December 31, ~~2014,~~2017 and the three months ended December 31, 2016, the Company concluded that its acquisitions did not meet the definition of a business and accounted for such acquisitions as asset acquisitions and capitalized all transactions costs related to completed and in-process acquisitions.

Interest expense and other finance expenses

During the year ended December 31, 2017, the Company incurred approximately ~~$27.6~~$51.0 million of interest expense compared to approximately ~~$15.9~~$40.7 million during the year ended December 31, ~~2013.~~2016. Interest expense increased approximately ~~$11.7~~$10.2 million primarily due to a higher debt level as a result of acquisitions and interest incurred related to the Senior Notes Due ~~2023~~2026 issued in ~~December 2013~~September 2016 and the Senior Notes Due ~~2024~~2027 issued in December ~~2014, slightly offset by a decrease in interest related to the Company’s interest rate swaps, as the Company’s remaining swaps were cash settled in 2014.~~

~~Gain on consolidation of joint venture~~

During the year ended December 31, 2013, the Company acquired the remaining partnership interests in Terranomics Crossroads Associates from its joint venture partner. Prior to the acquisition date, the Company accounted for its 49% interest in the Terranomics Crossroads Associates, LP as an equity method investment. In accordance with the authoritative accounting guidance for business combinations, as the Company obtained control of the Crossroads joint venture, the Company determined that it should re-measure the fair value of its previously held equity interest. The Company, with the assistance of a third party valuation firm, calculated the fair value of its historical ownership interest in the Crossroads joint venture to be $36.0 million based on the $13.79 value per OP Unit issued as of the date the Company obtained control of Crossroads on September 27, 2013. In accordance with the accounting guidance for business combinations, the Company then compared the fair value of the equity of $36.0 million to the carrying value of its investment in Crossroads of $15.6 million, which resulted in a gain of $20.4 million that was included in earnings on the date the acquisition closed. There was no comparable gain recorded during the year ended December 31, 2014.

~~Equity in earnings from unconsolidated joint venture~~

During the year ended December 31, 2013, the Company recorded equity in earnings from unconsolidated joint venture of approximately $2.4 million and no comparable income was recorded during the year ended December 31, 2014. This decrease was a result of the consolidation of Crossroads Shopping Center in September 2013. As of December 31, 2014, the Company has no remaining unconsolidated joint ventures.

~~Gain on sale of property~~

On June 5, 2014, the Company sold Phillips Village Shopping Center, a non-core shopping center located in Pomona, California with an occupancy rate of approximately 10.4% as of May 31, 2014. The sales price of this property of approximately $16.0 million, less costs to sell, resulted in net proceeds to the Company of approximately $15.6 million. The Company recorded a gain on sale of approximately $3.3 million for the year ended December 31, 2014. Additionally, on August 25, 2014, the Company sold the Oregon City Point Shopping Center, a non-core shopping center located in Oregon City, Oregon. The sales price of this property of approximately $12.4 million, less costs to sell, resulted in net proceeds of approximately $12.0 million. The Company recorded a gain on sale of approximately $1.6 million for the year ended December 31, 2014. There were no comparable gains recorded during the year ended December 31, 2013.

~~Loss from discontinued operations~~

In June 2013, the Company sold the Nimbus Village Shopping Center, a non-grocery anchored, non-core shopping center located in Rancho Cordova, California. The sales price of this property of approximately $6.3 million, less costs to sell, resulted in proceeds to the Company of approximately $5.6 million. Accordingly, the Company recorded a loss on sale of property of approximately $714,000 for the year ended December 31, 2013, which has been included in discontinued operations. There was no comparable loss recorded during the year ended December 31, 2014.

2017.

Funds From Operations

Funds from operations (“FFO”), is a widely-recognized non-GAAP financial measure for REITs that the Company believes when considered with financial statements presented in accordance with GAAP, provides additional and useful means to assess its financial performance. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP.

The Company computes FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income attributable to common stockholders (determined in accordance with GAAP) excluding gains or losses from debt restructuring, sales of depreciable property, and impairments, plus real estate related depreciation and amortization, and after adjustments for partnerships and unconsolidated joint ventures.

However, FFO:

~~However, FFO:~~

does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income); and

~~should not be considered an alternative to net income as an indication of our performance.~~

•does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income); and

•should not be considered an alternative to net income as an indication of our performance.

FFO as defined by the Company may not be comparable to similarly titled items reported by other REITs due to possible differences in the application of the NAREIT definition used by such REITs.

~~The Financial Accounting Standards Board (“FASB”) guidance relating to business combinations requires, among other things, an acquirer~~

As previously discussed, effective October 1, 2016, the Company prospectively adopted ASU No. 2017-1. Accordingly, during the years ended December 31, 2018 and 2017 and the three months ended December 31, 2016, the Company concluded that its acquisitions did not meet the definition of a business ~~(or investment property) to expense~~and accounted for such acquisitions as asset acquisitions and capitalized all ~~acquisition~~transaction costs related to ~~the acquisition, the amount of which will vary based on each specific acquisition~~completed and ~~the volume of~~in-process acquisitions. ~~Accordingly, the~~Acquisition costs ~~of acquisitions~~that are expensed will reduce our FFO. For the years ended December 31, ~~2015, 2014~~2017 and ~~2013,~~2016, the Company expensed ~~$1.0 million, $1.0 million~~$4,000 and ~~$1.7 million,~~$824,000, respectively, relating to real estate acquisitions.

~~While the~~ The Company ~~does~~did not ~~have~~expense any joint ventures as of December 31, 2015, in the future, the Company may acquire the remaining interests from its joint venture partners it does not already own. At that time, a gain or loss may be recorded, in accordance with GAAP, based on the Company’s determination of the fair value of the properties at the time of any such purchase of the remaining interests in the properties. Accordingly, the amount of the gain or loss will increase or decrease, respectively, our FFO. Duringacquisition costs during the year ended December 31, 2013, the Company acquired the remaining interests in its joint venture from certain of its joint venture partners. The gain recorded upon consolidation of joint ventures for the year ended December 31, 2013 was approximately $20.4 million. The Company did not record any such gain or loss during the years ended December 31, 2015 or 2014.

2018.

The table below provides a reconciliation of net income applicable to stockholders in accordance with GAAP to FFO for the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013~~2016 (in thousands).

Year Ended December 31,
2015 2014 2013

Net income attributable to ROIC $ 23,864 $ 20,301 $ 33,813
Plus: Depreciation and amortization 70,957 58,435 40,398
Depreciation and amortization attributable to unconsolidated joint ventures — — 1,060
Gain on sale of real estate — (4,869 ) —
Loss from discontinued operations — — 714
Funds from operations – basic 94,821 73,867 75,985
Net income attributable to non-controlling interests 1,228 749 165
Funds from operations – diluted $ 96,049 $ 74,616 $ 76,150



	Year Ended December 31,
	2018			2017		2016
Net income attributable to ROIC	$	42,736		$	38,477	$	32,754
Plus: Depreciation and amortization	100,838			96,256		88,359
Less: Gain on sale of real estate	(5,890		)	—		—
Funds from operations – basic	137,684			134,733		121,113
Net income attributable to non-controlling interests	4,405			4,211		3,676
Funds from operations – diluted	$	142,089		$	138,944	$	124,789

Cash Net Operating Income (“NOI”)

Cash NOI is a non-GAAP financial measure of the Company’s performance. The most directly comparable GAAP financial measure is operating income. The Company defines cash NOI as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes), adjusted for non-cash revenue and operating expense items such as straight-line rent and amortization of lease intangibles, debt-related expenses, and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, acquisition transaction costs, other expense, interest expense, gains and losses from property acquisitions and dispositions, extraordinary items, tenant improvements and leasing commissions. Other REITs may use different methodologies for calculating cash NOI, and accordingly, the Company’s cash NOI may not be comparable to other REITs.

Cash NOI is used by management internally to evaluate and compare the operating performance of the Company’s properties. The Company believes cash NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those cash income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the Company’s properties as this measure is not affected

by non-cash revenue and expense recognition items, the cost of the Company’s funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to the Company’s ownership of properties. The Company believes the exclusion of these items from operating income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the Company’s properties as well as trends in occupancy rates, rental rates and operating costs.

Cash NOI is a measure of the operating performance of the Company’s properties but does not measure the Company’s performance as a whole and is therefore not a substitute for net income or operating income as computed in accordance with GAAP.

Same-Center Cash NOI

The table below provides a reconciliation of same-center cash NOI to consolidated operating income in accordance with GAAP for the years ended December 31, ~~2015~~2018 and ~~2014.~~2017. The table makes reference to the effect of the same-center properties. Same-center properties, which totaled 5378 of the Company’s 7392 properties as of December 31, ~~2015,~~2018, represent all operating properties owned by the Company during the entirety of both periods presented and consolidated into the Company’s financial statements during such ~~periods.~~

Year Ended December 31,
2015 2014

Same-center cash NOI $ 95,058 $ 90,786
Non same-center cash NOI 33,253 12,516
Total Company cash NOI 128,311 103,302
Adjustments
Depreciation and amortization (70,957 ) (58,435 )
General and administrative expenses (12,650 ) (11,200 )
Acquisition transaction costs (965 ) (961 )
Other expense (627 ) (505 )
Property revenues and expenses ⁽¹⁾ 16,223 11,573
Operating income $ 59,335 $ 43,774

~~______________________~~

~~(1) Includes straight-line rents, amortization of above~~periods, except for one shopping center that is currently under contract to be sold and ~~below-market lease intangibles, anchor lease termination fees, net of contractual amounts,~~is slated for new multi-family development and ~~expense~~is no longer being managed as a retail asset and ~~recovery adjustments related to prior periods.~~

the Company’s corporate office headquarters (in thousands).



	Year Ended December 31,
	2018			2017
GAAP operating income	$	109,254		$	93,665
Depreciation and amortization	100,838			96,256
General and administrative expenses	14,918			14,103
Acquisition transaction costs	—			4
Other expense	478			418
Gain on sale of real estate	(5,890		)	—
Property revenues and other expenses ⁽¹⁾	(18,907		)	(22,492		)
Total Company cash NOI	200,691			181,954
Non same-center cash NOI	(28,163		)	(13,642		)
Same-center cash NOI	$	172,528		$	168,312

______________________


(1)	Includes straight-line rents, amortization of above-market and below-market lease intangibles, anchor lease termination fees, net of contractual amounts, and expense and recovery adjustments related to prior periods.

During the year ended December 31, ~~2015,~~2018, the Company generated same-center cash NOI of approximately ~~$95.1~~$172.5 million compared to same-center cash NOI of approximately ~~$90.8~~$168.3 million generated during the year ended December 31, ~~2014,~~2017, representing a ~~4.7%~~2.5% increase. This increase is primarily due to an increase in base rents and ~~other property income, and a decrease in bad debt expense.~~

recoveries.

The table below provides a reconciliation of same-center cash NOI to consolidated operating income in accordance with GAAP for the years ended December 31, ~~2014~~2017 and ~~2013.~~2016. The table makes reference to the effect of the same-center properties. Same-center properties, which totaled 4171 of the Company’s 6191 properties as of December 31, ~~2014,~~2017, represent all operating properties owned by the Company during the entirety of both periods presented and consolidated into the Company’s financial statements during such ~~periods.~~

Year Ended December 31,
2014 2013

Same-center cash NOI $ 62,542 $ 60,355
Non same-center cash NOI 41,149 11,971
Total Company cash NOI 103,691 72,326
Adjustments
Depreciation and amortization (58,435 ) (40,398 )
General and administrative expenses (11,200 ) (10,059 )
Acquisition transaction costs (961 ) (1,688 )
Other expense (505 ) (315 )
Property revenues and expenses ⁽¹⁾ 11,184 7,909
Operating income $ 43,774 $ 27,775

periods (in thousands).



	Year Ended December 31,
	2017			2016
GAAP operating income	$	93,665		$	77,171
Depreciation and amortization	96,256			88,359
General and administrative expenses	14,103			13,120
Acquisition transaction costs	4			824
Other expense	418			456
Property revenues and other expenses ⁽¹⁾	(22,404		)	(17,636		)
Total Company cash NOI	182,042			162,294
Non same-center cash NOI	(27,337		)	(12,171		)
Same-center cash NOI	$	154,705		$	150,123

______________________

(1) Includes straight-line rents, amortization of above and below-market lease intangibles, anchor lease termination fees, net of contractual amounts, and expense and recovery adjustments related to prior periods.


(1)	Includes straight-line rents, amortization of above-market and below-market lease intangibles, anchor lease termination fees, net of contractual amounts, and expense and recovery adjustments related to prior periods.

During the year ended December 31, ~~2014,~~2017, the Company generated same-center cash NOI of approximately ~~$62.5~~$154.7 million compared to same-center cash NOI of approximately ~~$60.4~~$150.1 million generated during the year ended December 31, ~~2013,~~2016, representing a ~~3.6%~~3.1% increase. This increase is primarily due to an increase in ~~same-center occupancy~~base rents, recoveries and ~~base rents.~~

other income.

Critical Accounting Estimates

Critical accounting estimates are those that are both important to the presentation of the Company’s financial condition and results of operations and require management’s most difficult, complex or subjective judgments. Set forth below is a summary of the accounting estimates that management believes are critical to the preparation of the consolidated financial statements. This summary should be read in conjunction with the more complete discussion of the Company’s accounting policies included in Note 1 to the Company’s consolidated financial statements.

Revenue Recognition

~~Revenue Recognition~~

The Company records base rents on a straight-line basis over the term of each lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is included in tenant and other receivables on the accompanying consolidated balance sheets. Most leases contain provisions that require tenants to reimburse a pro-rata share of real estate taxes and certain common area expenses. Adjustments are also made throughout the year to tenant and other receivables and the related cost recovery income based upon the Company’s best estimate of the final amounts to be billed and collected. In addition, the Company also provides an allowance for future credit losses in connection with the deferred straight-line rent receivable.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is established based on a quarterly analysis of the risk of loss on specific accounts. The analysis places particular emphasis on past-due accounts and considers information such as the nature and age of the receivables, the payment history of the tenants or other debtors, the financial condition of the tenants and any guarantors and management’s assessment of their ability to meet their lease obligations, the basis for any disputes and the status of related negotiations, among other things. Management’s estimates of the required allowance is subject to revision as these factors change and is sensitive to the effects of economic and market conditions on tenants, particularly those at retail properties. Estimates are used to establish reimbursements from tenants for common area maintenance, real estate tax and insurance costs. The Company analyzes the balance of its estimated accounts receivable for real estate taxes, common area maintenance and insurance for each of its properties by comparing actual recoveries versus actual expenses and any actual write-offs. Based on its analysis, the Company may record an additional amount in its allowance for doubtful accounts related to these items. In addition, the Company also provides an allowance for future credit losses in connection with the deferred straight-line rent receivable.

Real Estate Investments

Land, buildings, property improvements, furniture/fixtures and tenant improvements are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and/or replacements, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.

~~Upon~~

The Company recognizes the acquisition of real estate properties, ~~the fair value of the real estate purchased is allocated to the~~including acquired tangible ~~assets~~ (consisting of land, buildings and improvements), and acquired intangible assets and liabilities (consisting of above-market and below-market leases and acquired in-place leases) at their fair value (for acquisitions meeting the definition of a business) and relative fair value (for acquisitions not meeting the definition of a business). Acquired lease intangible assets include above-market leases and acquired in-place leases, and acquired lease intangible liabilities represent below-market leases, in the accompanying consolidated balance sheets. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the relative fair values of these assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, and estimates of lost rental revenue during the expected lease-up periods based on its evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs.

The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market lease values are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of acquisition. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fair values associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances that existed at the time of the acquisitions. The value of the above-market and below-market leases associated with the original lease term is amortized to rental income, over the terms of the respective leases. The value of in-place leases are amortized to expense over the remaining non-cancellable terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized in operations at that time. The Company may record a bargain purchase gain if it determines that the purchase price for the acquired assets was less than the fair value. The Company will record a liability in situations where any part of the cash consideration is deferred. The amounts payable in the future are discounted to their present value. The liability is subsequently re-measured to fair value with changes in fair value recognized in the consolidated statements of operations. If, up to one year from the acquisition date, information regarding fair value of assets acquired and liabilities assumed as of the acquisition date is received and estimates are refined, appropriate property adjustments are made to the purchase price allocation on a retrospective basis.

The Company is required to make subjective assessments as to the useful life of its properties for purposes of determining the amount of depreciation. These assessments have a direct impact on its net income.

Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:



Buildings	39-40 years
Property Improvements	10-20 years
Furniture/Fixtures	3-10 years
Tenant Improvements	Shorter of lease term or their useful life

Asset Impairment

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value. ~~Management does not believe that the value of any of the Company’s real estate investments was impaired at December 31, 2015.~~

REIT Qualification Requirements

The Company elected to be taxed as a REIT under the Code, and believes that it has been organized and has operated in a manner that will allow it to continue to qualify for taxation as a REIT under the Code.

The Company is subject to a number of operational and organizational requirements to qualify and then maintain qualification as a REIT. If the Company does not qualify as a REIT, its income would become subject to U.S. federal, state and local income taxes at regular corporate rates that would be substantial and the Company may not be permitted to re-elect to qualify as a REIT for four taxable years following the year that it failed to qualify as a REIT. The ~~resulting adverse effects on the~~ Company’s results of operations, liquidity and amounts distributable to stockholders would be ~~material.~~

significantly reduced.

Recent U.S. Federal Income Tax Legislation

On December ~~18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016, an omnibus spending bill, with a division referred to~~22, 2017, Congress enacted H.R. 1, also known as the ~~Protecting Americans From~~ Tax ~~Hikes~~Cuts and Jobs Act of ~~2015 (the “PATH Act”~~2017 (“TCJA”). The ~~PATH Act~~TCJA made major changes ~~certain~~to the Internal Revenue Code, including the reduction of the ~~rules affecting REIT qualification~~tax rates applicable to individuals and subchapter C corporations, a reduction or elimination of certain deductions (including new limitations on the deductibility of interest expense), permitting immediate expensing of capital expenditures and significant changes in the taxation of ~~REITs~~earnings from non-U.S. sources. The effect of the significant changes made by the TCJA is highly uncertain, and ~~REIT shareholders, which~~additional administrative guidance is still required in order to fully evaluate the effect of many provisions. Technical corrections or other amendments to the new rules, and additional administrative guidance interpreting these new rules, may be forthcoming at any time but may also be significantly delayed. While we do not currently expect this reform to have a significant impact to the Company's consolidated financial statements, stockholders are ~~briefly summarized below.~~

~~For taxable years beginning after 2017, the percentage of a REIT's total assets that may be represented by securities of one or more TRSs is reduced from 25% to 20%.~~

“Publicly offered REITs” (which generally include any REIT required to file annual and periodic reports with the SEC, including us) are no longer subject to the preferential dividend rules for taxable years beginning after 2014.

For taxable years beginning after 2015, debt instruments issued by publicly offered REITs are qualifying assets for purposes of the 75% REIT asset test. However, no more than 25% of the value of a REIT's assets may consist of debt instruments that are issued by publicly offered REITs that are not otherwise treated as real estate assets, and interest on debt of a publicly offered REIT will not be qualifying income under the 75% REIT gross income test unless the debt is secured by real property.

For taxable years beginning after 2015, to the extent rent attributable to personal property is treated as rents from real property (because rent attributable to the personal property for the taxable year does not exceed 15% of the total rent for the taxable year for such real and personal property), the personal property will be treated as a real estate asset for purposes of the 75% REIT asset test. Similarly, a debt obligation secured by a mortgage on both real and personal property will be treated as a real estate asset for purposes of the 75% asset test, and interest thereon will be treated as interest on an obligation secured by real property, if the fair market value of the personal property does not exceed 15% of the fair market value of all property securing the debt.

For taxable years beginning after 2014, the period during which dispositions of properties with net built-in gains from C corporations in carry-over basis transactions will trigger the built-in gains tax is reduced from ten years to five years.

For taxable years beginning after 2015, a 100% excise tax will apply to “redetermined services income,” i.e., non-arm’s-length income of a REIT’s TRS attributable to services provided to, or on behalf of, the REIT (other than services provided to REIT tenants, which are potentially taxed as redetermined rents).

The rate of withholding tax applicable under FIRPTA to certain sales and other dispositions of U.S. real property interests (“USRPIs”) by non-U.S. persons, and certain distributions from corporations whose stock may constitute a USRPI, is increased from 10% to 15% for dispositions and distributions occurring after February 16, 2016.

For dispositions and distributions on or after December 18, 2015, the stock ownership thresholds for exemption from FIRPTA taxation on sale of stock of a publicly traded REIT and for recharacterizing capital gain dividends received from a publicly traded REIT as ordinary dividends is increased from not more than 5% to not more than 10%.

~~Effective December 18, 2015, certain look-through, presumption, and other rules will apply for purposes of determining if we qualify as domestically controlled.~~

For dispositions and distributions after December 18, 2015, certain “qualified foreign pension funds” satisfying certain requirements, as well as entities that are wholly owned by a qualified foreign pension fund, are exempt from income and withholding taxes applicable under FIRPTA. In addition, new FIRPTA rules apply to ownership of REIT shares by “qualified shareholders,” which generally include publicly traded non-U.S. stockholders meeting certain requirements.

urged to consult with their tax advisors regarding the effects of the TCJA or other legislative, regulatory or administrative developments on an investment in the Company's common stock.

Liquidity and Capital Resources of the Company

In this “Liquidity and Capital Resources of the Company” section and in the “Liquidity and Capital Resources of the Operating Partnership” section, the term “the Company” refers to Retail Opportunity Investments Corp. on an unconsolidated basis, excluding the Operating Partnership.

The Company’s business is operated primarily through the Operating Partnership, of which the Company is the parent company, and which it consolidates for financial reporting purposes. Because the Company operates on a consolidated basis with the Operating Partnership, the section entitled “Liquidity and Capital Resources of the Operating Partnership” should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.

The Company issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses in operating as a public company. The Company itself does not hold any indebtedness other than guarantees of indebtedness of the Operating Partnership, and its only material assets are its ownership of direct or indirect partnership interests in the Operating Partnership and membership interest in Retail Opportunity Investments GP, LLC, the sole general partner of the Operating Partnership. Therefore, the consolidated assets and liabilities and the consolidated revenues and expenses of the Company and the Operating Partnership are the same on their respective financial statements. However, all debt is held directly or indirectly by the Operating Partnership. The Company’s principal funding requirement is the payment of dividends on its common stock. The Company’s principal source of funding for its dividend payments is distributions it receives from the Operating Partnership.

As the parent company of the Operating Partnership, the Company, indirectly, has the full, exclusive and complete responsibility for the Operating Partnership’s day-to-day management and control. The Company causes the Operating Partnership to distribute such portion of its available cash as the Company may in its discretion determine, in the manner provided in the Operating Partnership’s partnership agreement.

The Company is a well-known seasoned issuer with an effective shelf registration statement filed in ~~June 2013~~May 2016 that allows the Company to register unspecified various classes of debt and equity securities. As circumstances warrant, the Company may issue equity from time to time on an opportunistic basis, dependent upon market conditions and available pricing. Any proceeds from such equity issuances would be contributed to the Operating Partnership. The Operating Partnership may use the proceeds to acquire additional properties, pay down debt, and for general working capital purposes.

Liquidity is a measure of the Company’s ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain its assets and operations, make distributions to its stockholders and meet other general business needs. The liquidity of the Company is dependent on the Operating Partnership’s ability to make sufficient distributions to the Company. The primary cash requirement of the Company is its payment of dividends to its stockholders.

During the year ended December 31, ~~2015,~~2018, the Company’s primary ~~source~~sources of cash ~~was~~were distributions from the Operating Partnership and proceeds from the issuance of common ~~stock and distributions from the Operating Partnership.~~stock. As of December 31, ~~2015,~~2018, the Company has determined that it has adequate working capital to meet its dividend funding obligations for the next twelve months.

On August 10, 2015, ROIC issued 5,520,000 shares of common stock in a registered public offering, including shares issued upon the exercise in full of the underwriters’ option to purchase additional shares, resulting in net proceeds of approximately $87.4 million, after deducting the underwriters’ discounts and commissions and offering expenses.

~~During the year ended December 31, 2014,~~May 1, 2018, ROIC entered into ~~four~~five separate Sales Agreements (the ~~“2014 sales agreements”~~“Sales Agreements”) with each of Capital One Securities, Inc., Jefferies LLC, KeyBanc Capital Markets Inc., ~~MLV & Co. LLC and~~ Raymond James & Associates, Inc., and Robert W. Baird & Co. Incorporated (each individually, an “Agent” and collectively, the “Agents”) pursuant to which ROIC may sell, from time to time, shares of ROIC’s common stock, par value $0.0001 per share, having an aggregate offering price of up to ~~$100.0~~$250.0 million through the Agents

either as agents or principals. In addition, on April 30, 2018, the Company terminated sales agreements with Jefferies, KeyBanc and Raymond James, dated as of September 19, 2014 and with Baird, dated as of May 23, 2016 (the “Prior Sales Agreements”), which the Company entered into in connection with its prior “at the market” offering.

For the year ended December 31, ~~2015,~~2018, dividends paid to stockholders totaled approximately ~~$65.8~~$88.5 million. Additionally, for the year ended December 31, ~~2015,~~2018, the Operating Partnership made distributions of approximately ~~$2.8~~$9.1 million to the non-controlling interest OP Unitholders. On a consolidated basis, cash flows from operations for the same period totaled approximately ~~$86.9~~$130.9 million. For the year ended December 31, ~~2014,~~2017, dividends paid to stockholders totaled approximately ~~$53.6~~$82.9 million. Additionally, for the year ended December 31, ~~2014,~~2017, the Operating Partnership made distributions of approximately ~~$2.0~~$8.7 million to the non-controlling interest OP Unitholders. On a consolidated basis, cash flows from operations for the same period totaled approximately ~~$65.2~~$128.9 million. ~~In the future, it is expected that the cash flows from stabilized properties will be sufficient to cover the dividends paid to stockholders.~~

Potential future sources of capital include equity issuances and distributions from the Operating Partnership.

Liquidity and Capital Resources of the Operating Partnership

In this “Liquidity and Capital Resources of the Operating Partnership” section, the terms the “Operating Partnership,” “we”, “our” and “us” refer to the Operating Partnership together with its consolidated subsidiaries or the Operating Partnership and the Company together with their respective consolidated subsidiaries, as the context requires.

During the year ended December 31, ~~2015,~~2018, the Operating Partnership’s primary sources of cash were (i) cash flow from operations, (ii) proceeds from bank borrowings ~~on its term loan and revolving~~under the credit facility, ~~(ii) proceeds~~and (iii) cash contributed by ROIC from the ~~sale~~issuance of common ~~stock that were contributed to the Operating Partnership, (iii) proceeds from a property level secured financing, and (iv) cash flow from operations.~~stock. As of December 31, ~~2015,~~2018, the Operating Partnership has determined that it has adequate working capital to meet its debt obligations and operating expenses for the next twelve months.

On September 29, 2015, the Company entered into a term loan agreement ~~with KeyBank National Association, as Administrative Agent, and U.S. Bank National Association, as Syndication Agent and the other lenders party thereto,~~ under which the lenders agreed to provide a $300.0 million unsecured term loan facility. ~~The~~Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term Loan Agreement”) pursuant to which the maturity date of the term loan ~~agreement~~was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term Loan Agreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions set forth in the ~~term loan agreement,~~Term Loan Agreement, including the consent of the lenders for the additional commitments. The initial maturity date of the term loan is January 31, 2019, subject to two one-year extension options, which may be exercised upon satisfaction of certain conditions including the payment of extension fees. Borrowings under the ~~term loan agreement bear~~Term Loan Agreement accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the relevant period (the “Eurodollar Rate”), or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the Administrative Agent as its ~~"prime~~“prime rate,"” and (c) the Eurodollar Rate plus 1.10%.

The Operating Partnership has an unsecured revolving credit facility with several ~~banks~~banks. Effective September 8, 2017, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which ~~provides for borrowings~~the borrowing capacity was increased from $500.0 million to $600.0 million. The maturity date of upthe credit facility was extended from January 31, 2019 to ~~$500.0 million.~~September 8, 2021, with two six-month extension options, which may be exercised by the Operating Partnership upon satisfaction of certain conditions including the payment of extension fees. Additionally, the credit facility contains an accordion feature, which allows the Operating Partnership to increase the ~~facility amount~~borrowing capacity up to an aggregate of ~~$1.0~~$1.2 billion, subject to lender consents and other conditions. The maturity date of the credit facility has been extended to January 31, 2019, subject to a further one-year extension option, which may be exercised by the Operating Partnership upon satisfaction of certain conditions. The Company obtained investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services (BBB-) during the second quarter of 2013. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank, National Association atas its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. Additionally, the Operating Partnership is obligated to pay a facility fee at a rate based on the credit rating level of the Company, currently 0.20%, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the credit facility.

Both the term loan and credit facility contain customary representations, financial and other covenants. The Operating Partnership’s ability to borrow under the credit facility and term loan is subject to its compliance with financial covenants and other restrictions on an ongoing basis. The Operating Partnership was in compliance with such covenants at December 31, ~~2015.~~

2018.

As of December 31, ~~2015,~~2018, $300.0 million and ~~$135.5~~$156.0 million were outstanding under the term loan and credit facility, respectively. The average interest rates on the term loan and the credit facility during the year ended December 31, ~~2015~~2018 were ~~1.3%~~3.1% and ~~1.2%~~3.0%, respectively. ~~The Company had $364.5 million available to borrow under the credit facility at December 31, 2015.~~ The Company had no available borrowings under the term loan at December 31, ~~2015.~~

2018. The Company had $444.0 million available to borrow under the credit facility at December 31, 2018.

~~On September 1, 2015,~~

Further, the Company entered into a $35.5 million loan with PNC Bank, National Association. The loan is secured by the Diamond Hills Plaza property and bears interest at 3.55% annually. The loan matures on October 1, 2025, is interest only through September 30, 2021 and amortizes thereafter, on a 30-year amortization.

~~The~~ Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2017, $200.0 million aggregate principal amount of unsecured senior notes in September 2016, $250.0 million aggregate principal amount of unsecured senior notes in December 2014 and $250.0 million aggregate principal amount of unsecured senior notes in December 2013, each of which were fully and unconditionally guaranteed by ~~the Company.~~

ROIC.

While the Operating Partnership generally intends to hold its assets as long term investments, certain of its investments may be sold in order to manage the Operating Partnership’s interest rate risk and liquidity needs, meet other operating objectives and adapt to market conditions. The timing and impact of future sales of its investments, if any, cannot be predicted with any certainty.

Cash Flows

The following table summarizes, for the periods indicated, selected items in our consolidated statements of cash flows (in thousands):

Year ended December 31,
2015 2014 2013

Net Cash Provided by (Used in):
Operating activities $ 86,917 $ 65,207 $ 37,753
Investing activities $ (337,115 ) $ (399,856 ) $ (344,977 )
Financing activities $ 248,269 $ 337,502 $ 310,452

Year Ended December 31,
2018 2017 2016
Net Cash Provided by (Used in):

Operating activities $ 130,918
$ 128,938
$ 114,615
Investing activities $ (56,055 ) $ (317,963 ) $ (325,125 )
Financing activities $ (84,379 ) $ 192,740
$ 214,689

Net Cash Flows from:

Operating Activities

Increase in cash flows provided by operating activities from ~~2014~~2017 to ~~2015:~~

2018:

Net cash flows provided by operating activities amounted to ~~$86.9~~$130.9 million during the year ended December 31, ~~2015,~~2018, compared to ~~$65.2~~$128.9 million during the year ended December 31, ~~2014.~~2017. During the year ended December 31, ~~2015,~~2018, cash flows provided by operating activities increased by approximately ~~$21.7~~$2.0 million primarily due to an increase in property operating income of approximately ~~$29.7~~$15.2 million, offset by an increase in interest expense of approximately ~~$6.7~~$11.1 million due to ~~higher borrowing amounts~~interest incurred related to the Senior Notes Due 2027 issued in ~~2015 as compared to 2014.~~

December 2017 and increased interest rates payable on the credit facility and term loan and the timing of collections and payments of working capital accounts.

Increase in cash flows provided by operating activities from ~~2013~~2016 to ~~2014:~~

2017:

Net cash flows provided by operating activities amounted to ~~$65.2~~$128.9 million during the year ended December 31, ~~2014,~~2017, compared to ~~$37.8~~$114.6 million during the year ended December 31, ~~2013.~~2016. During the year ended December 31, ~~2014,~~2017, cash flows provided by operating activities increased by approximately ~~$27.5~~$14.3 million primarily due to an increase in property operating income of approximately ~~$35.3~~$24.5 million, ~~the decrease of approximately $5.5 million related to the settlement of the Company’s interest rate swaps year over year,~~ offset by an increase in interest expense of approximately ~~$11.7~~$10.2 million due to higher borrowing amounts in ~~2014~~2017 as compared to ~~2013.~~

2016.

Investing Activities

~~Investing Activities~~

Decrease in cash flows used in investing activities from ~~2014~~2017 to ~~2015:~~

2018:

Net cash flows used by investing activities amounted to ~~$337.1~~$56.1 million during the year ended December 31, ~~2015,~~2018, compared to ~~$399.9~~$318.0 million during the year ended December 31, ~~2014.~~2017. During the year ended December 31, ~~2015,~~2018, cash flows used in investing activities decreased approximately ~~$62.7~~$261.9 million, primarily due to the decrease in investments in real estate of approximately ~~$84.6~~$219.2 million, ~~and a decrease in deposits on real estate acquisitions of approximately $7.7 million, offset by a decrease in proceeds from the sale of real estate of approximately $27.6 million.~~

~~Increase in cash flows used in investing activities from 2013 to 2014:~~

Net cash flows used by investing activities amounted to $399.9 million during the year ended December 31, 2014, compared to $345.0 million during the year ended December 31, 2013. During the year ended December 31, 2014, cash flows used in investing activities increased approximately $54.9 million, primarily due to the increase in investments in real estate of approximately $65.4 million, an increase in improvements to properties of approximately $7.1 million, and an increase in deposits on real estate acquisitions of approximately $5.0 million, offset by an increase in proceeds from the sale of real estate of approximately ~~$22.0~~$26.9 million and a decrease in improvements to properties of approximately $14.9 million.

Decrease in cash flows used in investing activities from 2016 to 2017:

Net cash flows used by investing activities amounted to $318.0 million during the year ended December 31, 2017, compared to $325.1 million during the year ended December 31, 2016. During the year ended December 31, 2017, cash flows used in investing activities decreased approximately $7.2 million, primarily due to the decrease in investments in real estate of approximately $21.5 million, offset by an increase in improvements to properties of approximately $13.3 million.

Financing Activities

Decrease in cash flows provided by financing activities from ~~2014~~2017 to ~~2015:~~

2018:

Net cash flows used in financing activities amounted to $84.4 million during the year ended December 31, 2018, compared to net cash flows provided by financing activities of $192.7 million during the year ended December 31, 2017. This decrease of approximately $277.1 million for the year ended December 31, 2018 is primarily due to proceeds received during the year ended December 31, 2017 of $250.0 million related to the issuance of the Senior Notes Due 2027, the net decrease in proceeds from draws on the credit facility of $33.0 million, the increase in repayments on mortgages of approximately $10.8 million and the increase in dividend and distribution payments of approximately $5.9 million. These decreases were offset by the increase in proceeds from the sale of common stock of approximately $21.2 million.

Decrease in cash flows provided by financing activities from 2016 to 2017:

Net cash flows provided by financing activities amounted to ~~$248.3~~$192.7 million during the year ended December 31, ~~2015,~~2017, compared to ~~$337.5~~$214.7 million during the year ended December 31, ~~2014.~~2016. During the year ended December 31, ~~2015,~~2017, cash flows provided by financing activities decreased approximately ~~$89.2~~$21.9 million, primarily due to a decrease of $246.5 million of net proceeds from the issuance of senior notes with no issuance in 2015, the decrease of approximately $70.7 million in proceeds from the exercise of warrants in 2014, the decrease of approximately $113.6$180.4 million in proceeds from the sale of common stock, ~~an increase of approximately $62.3 million in principal repayments on mortgages, a net decrease of approximately $119.3 million in proceeds from draws on the credit facility,~~ and an increase ~~of approximately $13.0 million~~ in ~~distributions~~dividends paid to common shareholders ~~and OP unit holders. These decreases were~~of approximately $7.2 million, offset by ~~a $500.0 million~~an increase ~~related to the term loan for $300.0~~of $50.0 million in proceeds received during the year ended December 31, 2015 and $200.0 million in payments made during the year ended December 31, 2014, and an increase of $35.5 million in proceeds from a new mortgage loan received during the year ended December 31, 2015.

~~Increase in cash flows provided by financing activities from 2013 to 2014:~~

Net cash flows provided by financing activities amounted to $337.5 million during the year ended December 31, 2014, compared to $310.5 million during the year ended December 31, 2013. During the year ended December 31, 2014, cash flows provided by financing activities increased approximately $27.0 million, primarily due to the receipt of $205.5 million of net proceeds from the issuance of ~~common stock and~~senior notes, a ~~reduction in payments made to acquire warrants~~decrease of approximately ~~$32.8 million. These increases were offset by a decrease in proceeds from the exercise of warrants of approximately $155.8~~$83.0 million ~~an increase~~ in net payments on the credit facility, and ~~term loan~~a $38.7 million decrease in cash redemption of approximately $38.4 million, an increase in dividends paid to shareholders of approximately $11.1 million, and a $7.1 million increase in the principal repayment on mortgages primarily due to the principal repayments on two mortgage notes.

OP Units.

Contractual Obligations

The following table presents the Company’s operating lease obligations and the principal and interest amounts of the Company’s long-term debt maturing each year, including amortization of principal based on debt outstanding, at December 31, ~~2015~~2018 (in thousands):

2016 2017 2018 2019 2020 Thereafter Total
Contractual obligations:
Mortgage Notes Payable Principal ⁽¹⁾ $ 7,586 $ 8,460 $ 10,137 $ — $ — $ 35,500 $ 61,683
Mortgage Notes Payable Interest 2,636 2,189 1,382 1,278 1,281 5,988 14,754
Term loan ⁽²⁾ — — — 300,000 — — 300,000
Credit facility ⁽³⁾ — — — 135,500 — — 135,500
Senior Notes Due 2024 ⁽⁴⁾ 10,000 10,000 10,000 10,000 10,000 290,000 340,000
Senior Notes Due 2023 ⁽⁴⁾ 12,500 12,500 12,500 12,500 12,500 287,500 350,000
Operating lease obligations 981 1,049 1,054 1,059 1,067 36,204 41,414
Total $ 33,703 $ 34,198 $ 35,073 $ 460,337 $ 24,848 $ 655,192 $ 1,243,351



	2019		2020		2021		2022		2023		Thereafter		Total
Contractual obligations:
Mortgage Notes Payable Principal ⁽¹⁾	$	551	$	577	$	717	$	24,132	$	686	$	60,045	$	86,708
Mortgage Notes Payable Interest	3,796		3,774		3,737		3,170		2,482		2,618		19,577
Term loan ⁽²⁾	—		—		—		300,000		—		—		300,000
Credit facility ⁽³⁾	—		—		156,000		—		—		—		156,000
Senior Notes Due 2027 ⁽⁴⁾	10,475		10,475		10,475		10,475		10,475		291,900		344,275
Senior Notes Due 2026 ⁽⁴⁾	7,900		7,900		7,900		7,900		7,900		223,700		263,200
Senior Notes Due 2024 ⁽⁴⁾	10,000		10,000		10,000		10,000		10,000		260,000		310,000
Senior Notes Due 2023 ⁽⁴⁾	12,500		12,500		12,500		12,500		262,500		—		312,500
Operating lease obligations	1,280		1,287		1,283		1,304		1,330		33,939		40,423
Total	$	46,502	$	46,513	$	202,612	$	369,481	$	295,373	$	872,202	$	1,832,683

__________________


(1)	Does not include unamortized mortgage premium of approximately ~~$0.9~~$2.1 million as of December 31, ~~2015.~~2018.

(2)

For the purpose of the above table, the Company has assumed that borrowings under the term loan accrue interest at the ~~average~~ interest rate on the term loan ~~during the year ended~~as of December 31, ~~2015~~2018 which was ~~1.3%~~3.6%. Borrowings under the term loan accrue interest at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the Administrative Agent as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%.

or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the Administrative Agent as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%.

(3)

For the purpose of the above table, the Company has assumed that borrowings under the credit facility accrue interest at the ~~average~~ interest rate on the credit facility ~~during the year ended~~as of December 31, ~~2015~~2018 which was ~~1.2%~~3.5%. Borrowings under the credit facility accrue interest at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank, National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%.


(4)	Represents payments of interest only in years ~~2016~~2019 through ~~2020~~2022 and payments of both principal and interest thereafter.

The Company has committed approximately ~~$21.0~~$21.8 million and ~~$1.5~~$1.1 million in tenant improvements (including building and site improvements) and leasing commissions, respectively, for the new leases and renewals that occurred during the year ended December 31, ~~2015.~~2018. As of December 31, ~~2015,~~2018, the Company did not have any capital lease obligations.

The Company has entered into several lease agreements with an officer of the Company. Pursuant to the lease agreements, the Company is provided the use of storage space.

Off-Balance Sheet Arrangements

As of December 31, ~~2015,~~2018, the Company does not have any off-balance sheet arrangements.

Real Estate Taxes

The Company’s leases generally require the tenants to be responsible for a ~~pro rata~~pro-rata portion of the real estate taxes.

Inflation

The Company’s long-term leases contain provisions to mitigate the adverse impact of inflation on its operating results. Such provisions include clauses entitling the Company to receive (a) scheduled base rent increases and (b) percentage rents based upon tenants’ gross sales which generally increase as prices rise. In addition, many of the Company’s non-anchor leases are for terms of less than ten years, which permits the Company to seek increases in rents upon renewal at then-current market rates if rents provided in the expiring leases are below then-existing market rates. Most of the Company’s leases require tenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Company’s exposure to increases in costs and operating expenses resulting from inflation.

Leverage Policies

The Company employs prudent amounts of leverage and uses debt as a means of providing additional funds for the acquisition of its properties and the diversification of its portfolio. The Company seeks to primarily utilize unsecured debt in order to maintain liquidity and flexibility in its capital structure.

On September 29, 2015, the Company entered into ~~the Term Loan Agreement with KeyBank National Association, as Administrative Agent, and U.S. Bank National Association, as Syndication Agent and the other lenders party thereto,~~a term loan agreement under which the lenders agreed to provide a $300.0 million unsecured term loan facility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term Loan Agreement”) pursuant to which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term Loan Agreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions set forth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. The ~~initial~~Operating Partnership has an unsecured revolving credit facility with several banks. Effective September 8, 2017, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which the borrowing capacity was increased from $500.0 million to $600.0 million. The maturity date of the ~~term loan is~~credit facility was extended from January 31, 2019 ~~subject~~ to September 8, 2021, with two ~~one-year~~six-month extension options, which may be exercised by the Operating Partnership upon satisfaction of certain conditions including the payment of extension fees. ~~The Operating Partnership has an unsecured revolving credit facility with several banks which provides for borrowings of up to $500.0 million.~~ Additionally, the credit facility contains an accordion feature, which allows the Operating Partnership to increase the ~~facility amount~~borrowing capacity up to an aggregate of ~~$1.0~~$1.2 billion, subject to lender consents and other conditions. ~~The maturity date of the credit facility has been extended to January 31, 2019, subject to a further one-year extension option, which may be exercised by~~

Further, the Operating Partnership ~~upon satisfaction~~issued $250.0 million aggregate principal amount of ~~certain conditions.~~

~~In addition, the Operating Partnership issued~~unsecured senior notes in December 2017, $200.0 million aggregate principal amount of unsecured senior notes in September 2016, $250.0 million aggregate principal amount of unsecured senior notes in December 2014 and $250.0 million aggregate principal amount of unsecured senior notes in December 2013, ~~each~~all of which were fully and unconditionally guaranteed by ROIC.

The Company may borrow on a non-recourse basis or at the corporate level or Operating Partnership level. Non-recourse indebtedness means the indebtedness of the borrower or its subsidiaries is secured only by specific assets without recourse to other assets of the borrower or any of its subsidiaries. Even with non-recourse indebtedness, however, a borrower or its subsidiaries will likely be required to guarantee against certain breaches of representations and warranties such as those relating to the absence of fraud, misappropriation, misapplication of funds, environmental conditions and material misrepresentations. Because non-recourse financing generally restricts the lender’s claim on the assets of the borrower, the lender generally may only proceed against the asset securing the debt. This may protect the Company’s other assets.

The Company plans to evaluate each investment opportunity and determine the appropriate leverage on a case-by-case basis and also on a Company-wide basis. The Company may seek to refinance indebtedness, such as when a decline in interest rates makes it beneficial to prepay an existing mortgage, when an existing mortgage matures or if an attractive investment becomes available and the proceeds from the refinancing can be used to purchase the investment.

The Company plans to finance future acquisitions through a combination of ~~cash,~~operating cashflow, borrowings under ~~its~~the credit facility, the assumption of existing mortgage debt, the issuance of OP Units, ~~and~~ equity and debt ~~offerings.~~offerings, and the potential sale of existing assets. In addition, the Company may acquire retail properties indirectly through joint ventures with third parties as a means of increasing the funds available for the acquisition of properties.

Distributions

~~Distributions~~

The Operating Partnership and ROIC intend to make regular quarterly distributions to holders of their OP Units and common stock, respectively. The Operating Partnership pays distributions to ROIC directly as a holder of units of the Operating Partnership, and indirectly to ROIC through distributions to Retail Opportunity Investments GP, LLC, a wholly owned subsidiary of ROIC. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regular quarterly dividends to its stockholders in an amount not less than its net taxable income, if and to the extent authorized by its board of directors. If ROIC’s cash available for distribution is less than its net taxable income, ROIC could be required to sell assets or borrow funds to make cash distributions or the Company may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company’s primary market risk exposure is to changes in interest rates related to its debt. There is inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and the Company’s future financing requirements.

As of December 31, ~~2015,~~2018, the Company had ~~$435.5~~$456.0 million of variable rate debt outstanding. The Company has primarily used fixed-rate debt and forward starting interest rate swaps to manage its interest rate risk. See the discussion under Note ~~12,~~11, “Derivative and Hedging Activities,” to the accompanying consolidated financial statements for certain quantitative details related to the interest rate swaps.

The Company ~~previously~~ entered into ~~five~~ interest rate swaps in order to economically hedge against the risk of rising interest rates that would affect the Company’s interest expense related to its future anticipated debt issuances as part of its overall borrowing program. ~~During~~The sensitivity analysis table presented below shows the ~~years ended December 31, 2014~~estimated instantaneous parallel shift in the yield curve up and ~~2013,~~down by 50 and 100 basis points, respectively, on the ~~Company settled three and two~~clean market value of its interest rate ~~swaps in accordance with their settlement dates, respectively, and there are no interest rate swaps outstanding~~derivatives as of December 31, ~~2015.~~

2018, exclusive of non-performance risk (in thousands).



Swap Notional	Less 100 basis points			Less 50 basis points			December 31, 2018 Value			Increase 50 basis points		Increase 100 basis points
$50,000	$	67		$	67		$	67		$	67	$	67
$50,000	$	71		$	71		$	71		$	71	$	71
$100,000	$	(1,010	)	$	715		$	2,404		$	4,060	$	5,683
$100,000	$	(1,010	)	$	715		$	2,404		$	4,060	$	5,683
$50,000	$	(2,026	)	$	(1,149	)	$	(291	)	$	551	$	1,376
$50,000	$	(2,032	)	$	(1,155	)	$	(297	)	$	545	$	1,370

See Note 1211 of the accompanying consolidated financial statements for a discussion on how the Company values derivative financial instruments. The Company calculates the value of its interest rate swaps based upon the present value of the future cash flows expected to be paid and received on each leg of the swap. The cash flows on the fixed leg of the swap are agreed to at inception and the cash flows on the floating leg of a swap change over time as interest rates change. To estimate the floating cash flows at each valuation date, the Company utilizes a forward curve which is constructed using LIBOR fixings, Eurodollar futures, and swap rates, which are observable in the market. Both the fixed and floating legs’ cash flows are discounted at market discount factors. For purposes of adjusting its derivative valuations, the Company incorporates the nonperformance risk for both itself and its counterparties to these contracts based upon management’s estimates of credit spreads, credit default swap spreads (if available) or ~~Moody’s KMV~~IHS Markit ratings in order to derive a curve that considers the term structure of credit.

As a corporation that has elected to qualify as a REIT for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2010, ROIC’s future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The Company will be exposed to interest rate changes primarily as a result of long-term debt used to acquire properties. The Company’s interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, the Company expects to borrow primarily at fixed rates or variable rates with the lowest margins available and, in some cases, with the ability to convert variable rates to fixed rates. In addition, the Company can use derivative financial instruments to manage interest rate risk. The Company will not use derivatives for trading or speculative purposes and will only enter into contracts with major financial institutions based on their credit rating and other factors. Currently, the Company ~~has no~~uses interest rate swaps ~~outstanding.~~to manage its interest rate risk. See Note 1211 of the accompanying consolidated financial statements.

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements and Financial Statement ~~Schedules~~

Schedule



	Page
Reports of Independent Registered Public Accounting Firm	4749

Consolidated Financial Statements of Retail Opportunity Investments Corp.:
Consolidated Balance Sheets ~~at December 31, 2015 and 2014~~	5052
Consolidated Statements of Operations and Comprehensive Income ~~for the years ended December 31, 2015, 2014 and 2013~~	5153
Consolidated Statements of Equity ~~for the years ended December 31, 2015, 2014 and 2013~~	5254
Consolidated Statements of Cash Flows ~~for the years ended December 31, 2015, 2014 and 2013~~	5355

Consolidated Financial Statements of Retail Opportunity Investments Partnership, LP:
Consolidated Balance Sheets ~~at December 31, 2015 and 2014~~	5456
Consolidated Statements of Operations and Comprehensive Income ~~for the years ended December 31, 2015, 2014 and 2013~~	5557
Consolidated Statements of Partners’ Capital ~~for the years ended December 31, 2015, 2014 and 2013~~	5658
Consolidated Statements of Cash Flows ~~for the years ended December 31, 2015, 2014 and 2013~~	5759

Notes to Consolidated Financial Statements	5860

~~Schedules~~Schedule

III Real Estate and Accumulated Depreciation ~~– December 31, 2015~~	7682

~~IV Mortgage Loans on Real Estate – December 31, 2015~~	77

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Retail Opportunity Investments Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Retail Opportunity Investments Corp. (the “Company”) as of December 31, ~~2015~~2018 and ~~2014, and~~2017, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, ~~2015. Our audits also included~~2018 and the related notes and financial statement ~~schedules~~schedule listed in the Index at Item ~~8. These~~8 (collectively referred to as the “consolidated financial ~~statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.~~

~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States)~~statements”). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the ~~consolidated~~ financial position of ~~Retail Opportunity Investments Corp.~~the Company at December 31, ~~2015~~2018 and ~~2014,~~2017, and the ~~consolidated~~ results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2015,~~2018, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, the Company changed its reporting of discontinued operations as a result of the adoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), ~~Retail Opportunity Investments Corp.’s~~the Company’s internal control over financial reporting as of December 31, ~~2015,~~2018, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February ~~24, 2016~~20, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2010

San Diego, California

February ~~24, 2016~~

20, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Retail Opportunity Investments Corp.

Opinion on Internal Control over Financial Reporting

We have audited Retail Opportunity Investments Corp.’s (the “Company”) internal control over financial reporting as of December 31, ~~2015,~~2018, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Retail Opportunity Investments Corp.’s maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based onthe COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Retail Opportunity Investments Corp. as of December 31, 2018 and 2017, and the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2018 and the related notes and financial statement schedule listed in the index at Item 8 and our report dated February 20, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial ~~Reporting.~~Reporting (Retail Opportunity Investments Corp). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~In our opinion, Retail Opportunity Investments Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based onthe COSO criteria~~.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Retail Opportunity Investments Corp. as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2015 of Retail Opportunity Investments Corp. and our report dated February 24, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

San Diego, California

February ~~24, 2016~~

20, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Partners of Retail Opportunity Investments Partnership, LP

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Retail Opportunity Investments Partnership, LP (the “Operating Partnership”) as of December 31, ~~2015~~2018 and ~~2014, and~~2017, the related consolidated statements of operations and comprehensive income, Partners’ capital, and cash flows for each of the three years in the period ended December 31, ~~2015. Our audits also included~~2018 and the related notes and financial statement ~~schedules~~schedule listed in the Index at Item 8. 8 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements ~~and schedules~~ are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on ~~these~~the Operating Partnership’s financial statements ~~and schedules~~ based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Parntership’s internal control over financial reporting. Accordingly, we express no such opinion.

We conducted our audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material ~~misstatement. An audit includes~~misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial statements. ~~An audit~~Our audits also ~~includes assessing~~included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial ~~statement presentation.~~statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Retail Opportunity Investments Partnership, LP at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, the Operating Partnership changed its reporting of discontinued operations as a result of the adoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”.

/s/ Ernst & Young LLP

We have served as the Operating Partnership’s auditor since 2013

San Diego, California

February ~~24, 2016~~

20, 2019

RETAIL OPPORTUNITY INVESTMENTS CORP.

Consolidated Balance Sheets

(In thousands, except share ~~data~~)

data)

December 31, 2015 December 31, 2014
ASSETS
Real Estate Investments:
Land $ 669,307 $ 550,078
Building and improvements 1,627,310 1,235,820
2,296,617 1,785,898
Less: accumulated depreciation 134,311 88,173
Real Estate Investments, net 2,162,306 1,697,725
Cash and cash equivalents 8,844 10,773
Restricted cash 227 514
Tenant and other receivables, net 28,652 23,025
Deposits 500 4,500
Acquired lease intangible assets, net of accumulated amortization 66,942 71,433
Prepaid expenses 1,953 2,454
Deferred charges, net of accumulated amortization 39,316 39,731
Other 1,895 1,541
Total assets $ 2,310,635 $ 1,851,696

LIABILITIES AND EQUITY
Liabilities:
Term loan $ 300,000 $ —
Credit facility 135,500 156,500
Senior Notes Due 2024 246,809 246,521
Senior Notes Due 2023 246,518 246,174
Mortgage notes payable 62,605 94,183
Acquired lease intangible liabilities, net of accumulated amortization 124,861 118,359
Accounts payable and accrued expenses 13,205 12,173
Tenants’ security deposits 5,085 3,961
Other liabilities 11,036 11,043
Total liabilities 1,145,619 888,914
Commitments and contingencies
— —

Non-controlling interests – redeemable OP Units 33,674 —

Equity:
Preferred stock, $.0001 par value 50,000,000 shares authorized; none issued and outstanding — —
Common stock, $.0001 par value 500,000,000 shares authorized; and 99,531,034 and 92,991,333 shares issued and outstanding at December 31, 2015 and 2014, respectively 10 9
Additional paid-in-capital 1,166,395 1,013,561
Dividends in excess of earnings (122,991 ) (80,976 )
Accumulated other comprehensive loss (6,743 ) (8,882 )
Total Retail Opportunity Investments Corp. stockholders' equity 1,036,671 923,712
Non-controlling interests 94,671 39,070
Total equity 1,131,342 962,782
Total liabilities and equity $ 2,310,635 $ 1,851,696



	December 31,
	2018			2017
ASSETS
Real Estate Investments:
Land	$	894,240		$	878,797
Building and improvements	2,266,232			2,230,600
	3,160,472			3,109,397
Less: accumulated depreciation	329,207			260,115
Real Estate Investments, net	2,831,265			2,849,282
Cash and cash equivalents	6,076			11,553
Restricted cash	1,373			5,412
Tenant and other receivables, net	46,832			43,257
Deposits	—			500
Acquired lease intangible assets, net	72,109			82,778
Prepaid expenses	4,194			2,853
Deferred charges, net	33,857			37,167
Other	7,365			6,396
Total assets	$	3,003,071		$	3,039,198

LIABILITIES AND EQUITY
Liabilities:
Term loan	$	299,076		$	298,816
Credit facility	153,689			140,329
Senior Notes	941,449			940,086
Mortgage notes payable	88,511			107,915
Acquired lease intangible liabilities, net	166,146			178,984
Accounts payable and accrued expenses	15,488			18,638
Tenants’ security deposits	7,065			6,771
Other liabilities	23,219			18,018
Total liabilities	1,694,643			1,709,557

Commitments and contingencies

Equity:
Preferred stock, $0.0001 par value 50,000,000 shares authorized; none issued and outstanding	—			—
Common stock, $0.0001 par value, 500,000,000 shares authorized; 113,992,837 and 112,347,451 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively	11			11
Additional paid-in capital	1,441,080			1,412,590
Dividends in excess of earnings	(256,438		)	(210,490		)
Accumulated other comprehensive income	3,561			1,856
Total Retail Opportunity Investments Corp. stockholders’ equity	1,188,214			1,203,967
Non-controlling interests	120,214			125,674
Total equity	1,308,428			1,329,641
Total liabilities and equity	$	3,003,071		$	3,039,198

See accompanying notes to consolidated financial statements.

RETAIL OPPORTUNITY INVESTMENTS CORP.

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except per share ~~data~~)

data)

Year Ended December 31,
2015 2014 2013
Revenues
Base rents $ 148,622 $ 119,842 $ 86,195
Recoveries from tenants 40,562 32,945 22,497
Mortgage interest income — — 624
Other income 3,515 3,077 1,916
Total revenues 192,699 155,864 111,232

Operating expenses
Property operating 28,475 25,036 19,750
Property taxes 19,690 15,953 11,247
Depreciation and amortization 70,957 58,435 40,398
General and administrative expenses 12,650 11,200 10,059
Acquisition transaction costs 965 961 1,688
Other expenses 627 505 315
Total operating expenses 133,364 112,090 83,457

Operating income 59,335 43,774 27,775
Non-operating income (expenses)
Interest expense and other finance expenses (34,243 ) (27,593 ) (15,855 )
Gain on consolidation of joint venture — — 20,382
Equity in earnings from unconsolidated joint ventures — — 2,390
Gain on sale of real estate — 4,869 —
Income from continuing operations 25,092 21,050 34,692
Loss from discontinued operations — — (714 )
Net income 25,092 21,050 33,978
Net income attributable to non-controlling interest (1,228 ) (749 ) (165 )
Net Income Attributable to Retail Opportunity Investments Corp. $ 23,864 $ 20,301 $ 33,813

Net income per share – basic:
Income from continuing operations $ 0.25 $ 0.24 $ 0.51
Loss from discontinued operations — — (0.01 )
Net income per share $ 0.25 $ 0.24 $ 0.50

Net income per share – diluted:
Income from continuing operations $ 0.25 $ 0.24 $ 0.49
Loss from discontinued operations — — (0.01 )
Net income per share $ 0.25 $ 0.24 $ 0.48

Dividends per common share $ 0.68 $ 0.64 $ 0.60

Comprehensive income:
Net income $ 25,092 $ 21,050 $ 33,978
Other comprehensive income
Unrealized gain on swap derivative
Unrealized swap derivative (loss) gain arising during the period — (3,132 ) 4,565
Reclassification adjustment for amortization of interest expense included in net income 2,139 3,219 4,621
Other comprehensive income 2,139 87 9,186
Comprehensive income 27,231 21,137 43,164
Comprehensive income attributable to non-controlling interests (1,228 ) (749 ) (165 )
Comprehensive income attributable to Retail Opportunity Investments Corp $ 26,003 $ 20,388 $ 42,999



	Year Ended December 31,
	2018			2017			2016
Revenues
Base rents	$	223,797		$	210,564		$	183,330
Recoveries from tenants	65,804			58,818			51,454
Other income	6,197			3,878			2,405
Total revenues	295,798			273,260			237,189

Operating expenses
Property operating	43,851			39,151			32,201
Property taxes	32,349			29,663			25,058
Depreciation and amortization	100,838			96,256			88,359
General and administrative expenses	14,918			14,103			13,120
Acquisition transaction costs	—			4			824
Other expense	478			418			456
Total operating expenses	192,434			179,595			160,018

Gain on sale of real estate	5,890			—			—

Operating income	109,254			93,665			77,171

Non-operating expenses
Interest expense and other finance expenses	(62,113		)	(50,977		)	(40,741		)
Net income	47,141			42,688			36,430
Net income attributable to non-controlling interests	(4,405		)	(4,211		)	(3,676		)
Net Income Attributable to Retail Opportunity Investments Corp.	$	42,736		$	38,477		$	32,754

Earnings per share – basic and diluted	$	0.38		$	0.35		$	0.31

Dividends per common share	$	0.78		$	0.75		$	0.72

Comprehensive income:
Net income	$	47,141		$	42,688		$	36,430
Other comprehensive income:
Unrealized swap derivative gain arising during the period	1,648			3,665			541
Reclassification adjustment for amortization of interest expense included in net income	57			1,920			2,473
Other comprehensive income	1,705			5,585			3,014
Comprehensive income	48,846			48,273			39,444
Comprehensive income attributable to non-controlling interests	(4,405		)	(4,211		)	(3,676		)
Comprehensive income attributable to Retail Opportunity Investments Corp.	$	44,441		$	44,062		$	35,768

See accompanying notes to consolidated financial statements.

RETAIL OPPORTUNITY INVESTMENTS CORP.

~~CONSOLIDATED STATEMENTS OF EQUITY~~

Consolidated Statements of Equity

(In thousands, except share ~~data~~)

data)

Common Stock
Shares Amount Additional
paid-in capital Retained
earnings
(Accumulated
deficit) Accumulated
other
comprehensive
loss Non-
controlling
interests Equity
Balance at December 31, 2012 52,596,754 $ 5 $ 523,541 $ (38,851 ) $ (18,155 ) $ 2 $ 466,542
Shares issued under the 2009 Plan 313,364 — — — — — —
Repurchase of common stock (30,333 ) — (407 ) — — — (407 )
Retirement of options — — (275 ) — — — (275 )
Stock based compensation expense — — 2,856 — — — 2,856
Proceeds from the exercise of warrants 18,877,482 2 226,528 — — — 226,530
Exercise of Sponsor warrants 688,500 — — — — — —
Buyback of warrants — — (32,786 ) — — — (32,786 )
Issuance of OP Units to non-controlling interests — — — — — 45,373 45,373
Distributions to non-controlling interests — — — — — (277 ) (277 )
Cash redemption for non-controlling interests — — — — — (2,190 ) (2,190 )
Adjustment to non-controlling interests ownership in Operating Partnership — — 13,314 — — (13,314 ) —
Purchase of non-controlling interests — — — — — (2 ) (2 )
Registration expenditures — — (69 ) — — — (69 )
Cash dividends ($0.60 per share) — — — (42,469 ) — (470 ) (42,939 )
Dividends payable to officers — — — (110 ) — — (110 )
Net income attributable to Retail Opportunity Investments Corp. — — — 33,813 — — 33,813
Net income attributable to non-controlling interests — — — — — 165 165
Other comprehensive loss — — — — 9,186 — 9,186
Balance at December 31, 2013 72,445,767 7 732,702 (47,617 ) (8,969 ) 29,287 705,410
Shares issued under the 2009 Plan 340,621 — — — — — —
Repurchase of common stock (42,438 ) — (631 ) — — — (631 )
Cancellation of restricted stock (5,833 ) — — — — — —
Stock based compensation expense — — 3,662 — — — 3,662
Proceeds from the exercise of warrants 5,878,216 1 70,538 — — — 70,539
Issuance of OP Units to non-controlling interests — — — — — 16,343 16,343
Cash redemption for non-controlling interests — — — — — (3,280 ) (3,280 )
Adjustment to non-controlling interests ownership in Operating Partnership — — 2,020 — — (2,020 ) —
Proceeds from the issuance of common stock 14,375,000 1 214,905 — — — 214,906
Registration expenditures — — (9,635 ) — — — (9,635 )
Cash dividends ($0.64 per share) — — — (53,522 ) — (2,009 ) (55,531 )
Dividends payable to officers — — — (138 ) — — (138 )
Net income attributable to Retail Opportunity Investments Corp. — — — 20,301 — — 20,301
Net income attributable to non-controlling interests — — — — — 749 749
Other comprehensive income — — — — 87 — 87
Balance at December 31, 2014 92,991,333 9 1,013,561 (80,976 ) (8,882 ) 39,070 962,782
Shares issued under the 2009 Plan 381,577 — — — — — —
Repurchase of common stock (78,570 ) — (1,317 ) — — — (1,317 )
Cancellation of restricted stock (2,832 ) — — — — — —
Stock based compensation expense — — 4,684 — — — 4,684
Redemption of OP Units 174,959 — 3,184 — — (3,184 ) —
Issuance of OP Units to non-controlling interests — — — — — 116,640 116,640
Adjustment to non-controlling interests ownership in Operating Partnership — — 49,609 — — (49,609 ) —
Proceeds from the issuance of common stock 6,064,567 1 101,292 — — — 101,293
Registration expenditures — — (4,618 ) — — — (4,618 )
Cash dividends ($0.68 per share) — — — (65,718 ) — (2,764 ) (68,482 )
Dividends payable to officers — — — (161 ) — — (161 )
Net income attributable to Retail Opportunity Investments Corp. — — — 23,864 — — 23,864
Net income attributable to non-controlling interests — — — — — 1,228 1,228
Other comprehensive income — — — — 2,139 — 2,139
Total 99,531,034 $ 10 $ 1,166,395 $ (122,991 ) $ (6,743 ) $ 101,381 $ 1,138,052
Less: Promissory note secured by equity — — — — — (6,710 ) (6,710 )
Balance at December 31, 2015 99,531,034 $ 10 $ 1,166,395 $ (122,991 ) $ (6,743 ) $ 94,671 $ 1,131,342



	Common Stock				Additional paid-in capital			Accumulated dividends in excess of earnings			Accumulated other comprehensive (loss) income			Non- controlling interests			Equity
	Shares		Amount		Additional paid-in capital			Accumulated dividends in excess of earnings			Accumulated other comprehensive (loss) income			Non- controlling interests			Equity
Balance at December 31, 2015	99,531,034		$	10	$	1,166,395		$	(122,991	)	$	(6,743	)	$	94,671		$	1,131,342
Shares issued under the 2009 Equity Incentive Plan	341,306		—		—			—			—			—			—
Shares withheld for employee taxes	(76,262	)	—		(1,368		)	—			—			—			(1,368		)
Cancellation of restricted stock	(7,332	)	—		—			—			—			—			—
Stock based compensation expense	—		—		4,916			—			—			—			4,916
Issuance of OP Units to non-controlling interests	—		—		—			—			—			48,175			48,175
Redemption of OP Units	755,762		—		15,990			—			—			(15,990		)	—
Cash redemption for non-controlling interests	—		—		—			—			—			(7,182		)	(7,182		)
Adjustment to non-controlling interests ownership in Operating Partnership	—		—		(5,627		)	—			—			5,627			—
Proceeds from the issuance of common stock	8,757,254		1		184,880			—			—			—			184,881
Registration expenditures	—		—		(7,276		)	—			—			—			(7,276		)
Cash dividends ($0.72 per share)	—		—		—			(75,537		)	—			(8,363		)	(83,900		)
Dividends payable to officers	—		—		—			(177		)	—			—			(177		)
Net income attributable to Retail Opportunity Investments Corp.	—		—		—			32,754			—			—			32,754
Net income attributable to non-controlling interests	—		—		—			—			—			3,676			3,676
Other comprehensive income	—		—		—			—			3,014			—			3,014
Total	109,301,762		11		1,357,910			(165,951		)	(3,729		)	120,614			1,308,855
Proceeds from repayment of promissory note receivable secured by equity	—		—		—			—			—			6,710			6,710
Balance at December 31, 2016	109,301,762		11		1,357,910			(165,951		)	(3,729		)	127,324			1,315,565
Shares issued under the 2009 Equity Incentive Plan	353,261		—		44			—			—			—			44
Shares withheld for employee taxes	(74,331	)	—		(1,571		)	—			—			—			(1,571		)
Cancellation of restricted stock	(1,999	)	—		—			—			—			—			—
Stock based compensation expense	—		—		6,190			—			—			—			6,190
Issuance of OP Units to non-controlling interests	—		—		—			—			—			49,599			49,599
Redemption / Exchange of OP Units	2,555,933		—		50,155			—			—			(50,155		)	—
Cash redemption for non-controlling interests	—		—		—			—			—			(150		)	(150		)
Adjustment to non-controlling interests ownership in Operating Partnership	—		—		(3,574		)	—			—			3,574			—
Proceeds from the issuance of common stock	212,825		—		4,481			—			—			—			4,481
Registration expenditures	—		—		(1,045		)	—			—			—			(1,045		)
Cash dividends ($0.75 per share)	—		—		—			(82,781		)	—			(8,729		)	(91,510		)
Dividends payable to officers	—		—		—			(235		)	—			—			(235		)
Net income attributable to Retail Opportunity Investments Corp.	—		—		—			38,477			—			—			38,477
Net income attributable to non-controlling interests	—		—		—			—			—			4,211			4,211
Other comprehensive income	—		—		—			—			5,585			—			5,585
Balance at December 31, 2017	112,347,451		11		1,412,590			(210,490		)	1,856			125,674			1,329,641
Shares issued under the 2009 Equity Incentive Plan	397,861		—		269			—			—			—			269
Shares withheld for employee taxes	(70,168	)	—		(1,400		)	—			—			—			(1,400		)
Cancellation of restricted stock	(8,997	)	—		—			—			—			—			—
Stock based compensation expense	—		—		7,392			—			—			—			7,392
Cash redemption for non-controlling interests	—		—		—			—			—			(3,713		)	(3,713		)
Adjustment to non-controlling interests ownership in Operating Partnership	—		—		(2,904		)	—			—			2,904			—
Proceeds from the issuance of common stock	1,326,690		—		25,703			—			—			—			25,703
Registration expenditures	—		—		(570		)	—			—			—			(570		)
Cash dividends ($0.78 per share)	—		—		—			(88,417		)	—			(9,056		)	(97,473		)
Dividends payable to officers	—		—		—			(267		)	—			—			(267		)
Net income attributable to Retail Opportunity Investments Corp.	—		—		—			42,736			—			—			42,736
Net income attributable to non-controlling interests	—		—		—			—			—			4,405			4,405
Other comprehensive income	—		—		—			—			1,705			—			1,705
Balance at December 31, 2018	113,992,837		$	11	$	1,441,080		$	(256,438	)	$	3,561		$	120,214		$	1,308,428

See accompanying notes to consolidated financial statements.

RETAIL OPPORTUNITY INVESTMENTS CORP.

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Consolidated Statements of Cash Flows

(In ~~thousands~~)

thousands)

Year Ended December 31,
2015 2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 25,092 $ 21,050 $ 33,978
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 70,957 58,435 40,398
Amortization of deferred financing costs and mortgage premiums, net 662 (432 ) (144 )
Gain on consolidation of joint venture — — (20,382 )
Straight-line rent adjustment (5,013 ) (3,795 ) (3,734 )
Amortization of above and below market rent (9,890 ) (6,945 ) (4,444 )
Amortization relating to stock based compensation 4,684 3,662 2,856
Provisions for tenant credit losses 1,984 2,316 1,623
Equity in earnings from unconsolidated joint ventures — — (2,390 )
Other noncash interest expense 2,139 1,848 —
Gain on sale of real estate — (4,869 ) —
Loss on sale of discontinued operations — — 714
Settlement of interest rate swap agreements — (3,230 ) (8,750 )
Other — — 792
Change in operating assets and liabilities
Restricted cash 264 190 74
Tenant and other receivables (2,599 ) (1,605 ) (4,820 )
Prepaid expenses 501 (1,106 ) (105 )
Accounts payable and accrued expenses 512 (1,164 ) 2,943
Other assets and liabilities, net (2,376 ) 852 (856 )
Net cash provided by operating activities 86,917 65,207 37,753

CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate (313,623 ) (398,205 ) (289,399 )
Acquisition of entities — — (43,378 )
Proceeds from sale of real estate and land — 27,622 5,608
Investments in mortgage notes receivables — — (294 )
Improvements to properties (27,515 ) (26,142 ) (19,067 )
Deposits on real estate acquisitions, net 4,000 (3,725 ) 1,225
Construction escrows and other 23 594 328
Net cash used in investing activities (337,115 ) (399,856 ) (344,977 )

CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments on mortgages (84,308 ) (21,982 ) (14,902 )
Proceeds from new mortgage loan 35,500 — —
Proceeds from term loan 300,000 — —
Payments on term loan — (200,000 ) —
Proceeds from draws on credit facility 430,000 549,300 342,950
Payments on credit facility (451,000 ) (449,750 ) (405,000 )
Proceeds from issuance of Senior Notes Due 2024 — 246,500 —
Proceeds from issuance of Senior Notes Due 2023 — — 245,825
Payment of contingent consideration — — (1,864 )
Proceeds from exercise of warrants — 70,723 226,530
Payments to acquire warrants — — (32,786 )
Issuance of promissory note (6,710 ) — —
Proceeds from the sale of common stock 101,293 214,906 —
Purchase of non-controlling interest — — (2 )
Redemption of OP Units — (3,280 ) (2,190 )
Distributions to Operating Partnership (2,764 ) (2,009 ) (747 )
Deferred financing and other costs (1,849 ) (3,188 ) (4,098 )
Registration expenditures (4,739 ) (9,513 ) (69 )
Dividends paid to common shareholders (65,837 ) (53,574 ) (42,513 )
Repurchase of common stock (1,317 ) (631 ) (407 )
Retirement of options — — (275 )
Net cash provided by financing activities 248,269 337,502 310,452
Net (decrease) increase in cash and cash equivalents (1,929 ) 2,853 3,228
Cash and cash equivalents at beginning of period 10,773 7,920 4,692
Cash and cash equivalents at end of period $ 8,844 $ 10,773 $ 7,920

Supplemental disclosure of cash activities:
Cash paid on gross receipts and income for federal and state purposes $ 241 $ 331 $ 242
Interest paid $ 31,996 $ 26,006 $ 14,579

Other non-cash investing and financing activities – increase (decrease):
Issuance of OP Units in connection with acquisitions $ 150,315 $ 16,343 $ 45,373
Assumed mortgage upon acquisition $ 19,024 $ — $ 62,750
Intangible lease liabilities $ 20,925 $ 44,264 $ 35,039
Transfer of equity investment in property to real estate investment $ — $ — $ 15,991
Interest rate swap asset $ — $ (1,948 ) $ 1,948
Interest rate swap liabilities $ — $ (2,529 ) $ 6,734
Accrued real estate improvement costs $ 590 $ 1,372 $ 592



	Year Ended December 31,
	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	47,141		$	42,688		$	36,430
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	100,838			96,256			88,359
Amortization of deferred financing costs and mortgage premiums, net	1,899			2,026			2,088
Straight-line rent adjustment	(5,380		)	(6,176		)	(4,560		)
Amortization of above and below market rent	(13,965		)	(17,078		)	(13,847		)
Amortization relating to stock based compensation	7,392			6,190			4,916
Provisions for tenant credit losses	1,729			1,191			1,805
Other noncash interest expense	1,674			2,139			2,139
Gain on sale of real estate	(5,890		)	—			—
Change in operating assets and liabilities:
Tenant and other receivables	(57		)	(2,452		)	(4,412		)
Prepaid expenses	(1,344		)	464			(1,363		)
Accounts payable and accrued expenses	(1,622		)	456			4,417
Other assets and liabilities, net	(1,497		)	3,234			(1,357		)
Net cash provided by operating activities	130,918			128,938			114,615

CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate	(44,195		)	(263,366		)	(284,867		)
Proceeds from sale of real estate	26,880			—			—
Improvements to properties	(39,240		)	(54,097		)	(40,758		)
Deposits on real estate acquisitions, net	500			(500		)	500
Net cash used in investing activities	(56,055		)	(317,963		)	(325,125		)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments on mortgages	(19,612		)	(8,848		)	(7,816		)
Proceeds from draws on credit facility	177,000			327,500			332,500
Payments on credit facility	(164,500		)	(282,000		)	(370,000		)
Proceeds from issuance of Senior Notes	—			250,000			200,000
Proceeds on repayment of promissory note receivable	—			—			6,710
Redemption of OP Units	(3,713		)	(150		)	(38,820		)
Distributions to OP Unitholders	(9,056		)	(8,729		)	(8,363		)
Deferred financing and other costs	—			(3,845		)	(266		)
Proceeds from the sale of common stock	25,703			4,481			184,881
Registration expenditures	(570		)	(1,225		)	(7,097		)
Dividends paid to common shareholders	(88,500		)	(82,917		)	(75,672		)
Common shares issued under the 2009 Equity Incentive Plan	269			44			—
Shares withheld for employee taxes	(1,400		)	(1,571		)	(1,368		)
Net cash (used in) provided by financing activities	(84,379		)	192,740			214,689
Net (decrease) increase in cash, cash equivalents and restricted cash	(9,516		)	3,715			4,179
Cash, cash equivalents and restricted cash at beginning of period	16,965			13,250			9,071
Cash, cash equivalents and restricted cash at end of period	$	7,449		$	16,965		$	13,250

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statement of cash flows:



	Year Ended December 31,
	2018		2017		2016
Cash and cash equivalents	$	6,076	$	11,553	$	13,125
Restricted cash	1,373		5,412		125
Total cash, cash equivalents and restricted cash shown in Statements of Cash Flows	$	7,449	$	16,965	$	13,250

See accompanying notes to consolidated financial statements.

RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP

Consolidated Balance Sheets

(In ~~thousands~~)

thousands)

December 31, 2015 December 31, 2014
ASSETS
Real Estate Investments:
Land $ 669,307 $ 550,078
Building and improvements 1,627,310 1,235,820
2,296,617 1,785,898
Less: accumulated depreciation 134,311 88,173
Real Estate Investments, net 2,162,306 1,697,725
Cash and cash equivalents 8,844 10,773
Restricted cash 227 514
Tenant and other receivables, net 28,652 23,025
Deposits 500 4,500
Acquired lease intangible assets, net of accumulated amortization 66,942 71,433
Prepaid expenses 1,953 2,454
Deferred charges, net of accumulated amortization 39,316 39,731
Other 1,895 1,541
Total assets $ 2,310,635 $ 1,851,696

LIABILITIES AND CAPITAL
Liabilities:
Term loan $ 300,000 $ —
Credit facility 135,500 156,500
Senior Notes Due 2024 246,809 246,521
Senior Notes Due 2023 246,518 246,174
Mortgage notes payable 62,605 94,183
Acquired lease intangible liabilities, net of accumulated amortization 124,861 118,359
Accounts payable and accrued expenses 13,205 12,173
Tenants’ security deposits 5,085 3,961
Other liabilities 11,036 11,043
Total liabilities 1,145,619 888,914

Commitments and contingencies
— —

Redeemable limited partners 33,674 —

Capital:
Partners’ capital, unlimited partnership units authorized:
ROIC capital (consists of general and limited partnership interests held by ROIC) 1,043,414 932,594
Limited partners’ capital (consists of limited partnership interests held by third parties) 94,671 39,070
Accumulated other comprehensive loss (6,743 ) (8,882 )
Total capital 1,131,342 962,782
Total liabilities and capital $ 2,310,635 $ 1,851,696



	December 31,
	2018		2017
ASSETS
Real Estate Investments:
Land	$	894,240	$	878,797
Building and improvements	2,266,232		2,230,600
	3,160,472		3,109,397
Less: accumulated depreciation	329,207		260,115
Real Estate Investments, net	2,831,265		2,849,282
Cash and cash equivalents	6,076		11,553
Restricted cash	1,373		5,412
Tenant and other receivables, net	46,832		43,257
Deposits	—		500
Acquired lease intangible assets, net	72,109		82,778
Prepaid expenses	4,194		2,853
Deferred charges, net	33,857		37,167
Other	7,365		6,396
Total assets	$	3,003,071	$	3,039,198

LIABILITIES AND CAPITAL
Liabilities:
Term loan	$	299,076	$	298,816
Credit facility	153,689		140,329
Senior Notes	941,449		940,086
Mortgage notes payable	88,511		107,915
Acquired lease intangible liabilities, net	166,146		178,984
Accounts payable and accrued expenses	15,488		18,638
Tenants’ security deposits	7,065		6,771
Other liabilities	23,219		18,018
Total liabilities	1,694,643		1,709,557

Commitments and contingencies

Capital:
Partners’ capital, unlimited partnership units authorized:
ROIC capital	1,184,653		1,202,111
Limited partners’ capital	120,214		125,674
Accumulated other comprehensive income	3,561		1,856
Total capital	1,308,428		1,329,641
Total liabilities and capital	$	3,003,071	$	3,039,198

See accompanying notes to consolidated financial statements.

RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP

Consolidated Statements of Operations and Comprehensive Income

(In ~~thousands~~)

thousands)

Year Ended December 31,
2015 2014 2013
Revenues
Base rents $ 148,622 $ 119,842 $ 86,195
Recoveries from tenants 40,562 32,945 22,497
Mortgage interest income — — 624
Other income 3,515 3,077 1,916
Total revenues 192,699 155,864 111,232

Operating expenses
Property operating 28,475 25,036 19,750
Property taxes 19,690 15,953 11,247
Depreciation and amortization 70,957 58,435 40,398
General and administrative expenses 12,650 11,200 10,059
Acquisition transaction costs 965 961 1,688
Other expenses 627 505 315
Total operating expenses 133,364 112,090 83,457

Operating income 59,335 43,774 27,775
Non-operating income (expenses)
Interest expense and other finance expenses (34,243 ) (27,593 ) (15,855 )
Gain on consolidation of joint venture — — 20,382
Equity in earnings from unconsolidated joint ventures — — 2,390
Gain on sale of real estate — 4,869 —
Income from continuing operations 25,092 21,050 34,692
Loss from discontinued operations — — (714 )
Net Income Attributable to Retail Opportunity Investments Partnership, LP $ 25,092 $ 21,050 $ 33,978

Net income per unit – basic:
Income from continuing operations $ 0.25 $ 0.24 $ 0.51
Loss from discontinued operations — — (0.01 )
Net income per unit $ 0.25 $ 0.24 $ 0.50

Net income per unit – diluted:
Income from continuing operations
$ 0.25 $ 0.24 $ 0.49
Loss from discontinued operations — — (0.01 )
Net income per unit $ 0.25 $ 0.24 $ 0.48

Distributions per unit $ 0.68 $ 0.64 $ 0.60

Comprehensive income:
Net income attributable to Retail Opportunity Investments Partnership, LP $ 25,092 $ 21,050 $ 33,978
Other comprehensive income
Unrealized gain on swap derivative
Unrealized swap derivative (loss) gain arising during the period — (3,132 ) 4,565
Reclassification adjustment for amortization of interest expense included in net income 2,139 3,219 4,621
Other comprehensive income 2,139 87 9,186
Comprehensive income attributable to Retail Opportunity Investments Partnership, LP $ 27,231 $ 21,137 $ 43,164



	Year Ended December 31,
	2018			2017			2016
Revenues
Base rents	$	223,797		$	210,564		$	183,330
Recoveries from tenants	65,804			58,818			51,454
Other income	6,197			3,878			2,405
Total revenues	295,798			273,260			237,189

Operating expenses
Property operating	43,851			39,151			32,201
Property taxes	32,349			29,663			25,058
Depreciation and amortization	100,838			96,256			88,359
General and administrative expenses	14,918			14,103			13,120
Acquisition transaction costs	—			4			824
Other expense	478			418			456
Total operating expenses	192,434			179,595			160,018

Gain on sale of real estate	5,890			—			—

Operating income	109,254			93,665			77,171
Non-operating expenses
Interest expense and other finance expenses	(62,113		)	(50,977		)	(40,741		)
Net Income Attributable to Retail Opportunity Investments Partnership, LP	$	47,141		$	42,688		$	36,430

Earnings per unit - basic and diluted	$	0.38		$	0.35		$	0.31

Distributions per unit	$	0.78		$	0.75		$	0.72

Comprehensive income:
Net income attributable to Retail Opportunity Investments Partnership, LP	$	47,141		$	42,688		$	36,430
Other comprehensive income:
Unrealized swap derivative gain arising during the period	1,648			3,665			541
Reclassification adjustment for amortization of interest expense included in net income	57			1,920			2,473
Other comprehensive income	1,705			5,585			3,014
Comprehensive income attributable to Retail Opportunity Investments Partnership, LP	$	48,846		$	48,273		$	39,444

See accompanying notes to consolidated financial statements.

RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP

~~CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL~~

Consolidated Statements of Partners’ Capital

(In thousands, except unit ~~data~~)

data)

Limited Partner’s Capital (1) ROIC Capital (2)
Units Amount Units Amount Accumulated
other
comprehensive
loss Non-
controlling
interests Capital
Balance at December 31, 2012 — $ — 52,596,754 $ 484,695 $ (18,155 ) $ 2 $ 466,542
OP Units issued under the 2009 Plan — — 313,364 — — — —
Repurchase of OP Units — — (30,333 ) (407 ) — — (407 )
Retirement of options — — — (275 ) — — (275 )
Stock based compensation expense — — — 2,856 — — 2,856
Issuance of OP Units upon exercise of warrants — — 18,877,482 226,530 — — 226,530
Issuance of OP Units upon exercise of Sponsor warrants — — 688,500 — — — —
Repurchase of warrants — — — (32,786 ) — — (32,786 )
Issuance of OP Units in connection with acquisition 3,290,263 45,373 — — — — 45,373
Limited Partner distributions — (277 ) — — — — (277 )
Cash redemption of OP Units (158,221 ) (2,190 ) — — — — (2,190 )
Adjustment to non-controlling interests — (13,314 ) — 13,314 — — —
Purchase of non-controlling interests — — — — — (2 ) (2 )
Registration expenditures — — — (69 ) — — (69 )
Cash distributions ($0.60 per unit) — (470 ) — (42,469 ) — — (42,939 )
Dividends payable to officers — — — (110 ) — — (110 )
Net income attributable to Retail Opportunity Investments Partnership, LP — 165 — 33,813 — — 33,978
Other comprehensive income — — — — 9,186 — 9,186
Balance at December 31, 2013 3,132,042 29,287 72,445,767 685,092 (8,969 ) — 705,410
OP Units issued under the 2009 Plan — — 340,621 — — — —
Repurchase of OP Units — — (42,438 ) (631 ) — — (631 )
Cancellation of OP Units — — (5,833 ) — — — —
Stock based compensation expense — — — 3,662 — — 3,662
Issuance of OP Units upon exercise of warrants — — 5,878,216 70,539 — — 70,539
Issuance of OP Units in connection with acquisition 989,272 16,343 — — — — 16,343
Cash redemption of OP Units (200,000 ) (3,280 ) — — — — (3,280 )
Adjustment to non-controlling interests — (2,020 ) — 2,020 — — —
Issuance of OP Units in connection with common stock offering — — 14,375,000 214,906 — — 214,906
Registration expenditures — — — (9,635 ) — — (9,635 )
Cash distributions ($0.64 per unit) — (2,009 ) — (53,522 ) — — (55,531 )
Dividends payable to officers — — — (138 ) — — (138 )
Net income attributable to Retail Opportunity Investments Partnership, LP — 749 — 20,301 — — 21,050
Other comprehensive income — — — — 87 — 87
Balance at December 31, 2014 3,921,314 39,070 92,991,333 932,594 (8,882 ) — 962,782
OP Units issued under the 2009 Plan — — 381,577 — — — —
Repurchase of OP Units — — (78,570 ) (1,317 ) — — (1,317 )
Cancellation of OP Units — — (2,832 ) — — — —
Stock based compensation expense — — — 4,684 — — 4,684
Redemption of OP Units (174,959 ) (3,184 ) 174,959 3,184 — — —
Issuance of OP Units in connection with acquisition 8,449,248 116,640 — — — — 116,640
Adjustment to non-controlling interests — (49,609 ) — 49,609 — — —
Issuance of OP Units in connection with sale of common stock — — 6,064,567 101,293 — — 101,293
Registration expenditures — — — (4,618 ) — — (4,618 )
Cash distributions ($0.68 per unit) — (2,764 ) — (65,718 ) — — (68,482 )
Dividends payable to officers — — — (161 ) — — (161 )
Net income attributable to Retail Opportunity Investments Partnership, LP — 1,228 — 23,864 — — 25,092
Other comprehensive income — — — — 2,139 — 2,139
Total 12,195,603 $ 101,381 99,531,034 $ 1,043,414 $ (6,743 ) $ — $ 1,138,052
Less: Promissory note secured by capital — (6,710 ) — — — — (6,710 )
Balance at December 31, 2015 12,195,603 $ 94,671 99,531,034 $ 1,043,414 $ (6,743 ) $ — $ 1,131,342



	Limited Partner’s Capital⁽¹⁾					ROIC Capital ⁽²⁾
	Units		Amount			Units		Amount			Accumulated other comprehensive (loss) income			Capital
Balance at December 31, 2015	12,195,603		$	94,671		99,531,034		$	1,043,414		$	(6,743	)	$	1,131,342
OP Units issued under the 2009 Equity Incentive Plan	—		—			341,306		—			—			—
OP Units withheld for employee taxes	—		—			(76,262	)	(1,368		)	—			(1,368		)
Cancellation of OP Units	—		—			(7,332	)	—			—			—
Stock based compensation expense	—		—			—		4,916			—			4,916
Issuance of OP Units in connection with acquisitions	2,434,833		48,175					—			—			48,175
Equity redemption of OP Units	(755,762	)	(15,990		)	755,762		15,990			—			—
Cash redemption of OP Units	(2,206,613	)	(7,182		)	—		—						(7,182		)
Adjustment to non-controlling interests ownership in Operating Partnership	—		5,627			—		(5,627		)	—			—
Issuance of OP Units in connection with sale of common stock	—		—			8,757,254		184,881			—			184,881
Registration expenditures	—		—			—		(7,276		)	—			(7,276		)
Cash distributions ($0.72 per unit)	—		(8,363		)	—		(75,537		)	—			(83,900		)
Distributions payable to officers	—		—			—		(177		)	—			(177		)
Net income attributable to Retail Opportunity Investments Partnership, LP	—		3,676			—		32,754			—			36,430
Other comprehensive income	—		—			—		—			3,014			3,014
Total	11,668,061		120,614			109,301,762		1,191,970			(3,729		)	1,308,855
Proceeds from repayment of promissory note receivable secured by capital	—		6,710			—		—			—			6,710
Balance at December 31, 2016	11,668,061		127,324			109,301,762		1,191,970			(3,729		)	1,315,565
OP units issued under the 2009 Equity Incentive Plan	—		—			353,261		44			—			44
OP Units withheld for employee taxes	—		—			(74,331	)	(1,571		)	—			(1,571		)
Cancellation of OP Units	—		—			(1,999	)	—			—			—
Stock based compensation expense	—		—			—		6,190			—			6,190
Issuance of OP Units in connection with acquisitions	2,573,927		49,599			—		—			—			49,599
Equity redemption of OP Units	(2,555,933	)	(50,155		)	2,555,933		50,155			—			—
Cash redemption of OP Units	(7,064	)	(150		)	—		—			—			(150		)
Adjustment to non-controlling interests ownership in Operating Partnership	—		3,574			—		(3,574		)	—			—
Issuance of OP Units in connection with sale of common stock	—		—			212,825		4,481			—			4,481
Registration expenditures	—		—			—		(1,045		)	—			(1,045		)
Cash distributions ($0.75 per unit)	—		(8,729		)	—		(82,781		)	—			(91,510		)
Distributions payable to officers	—		—			—		(235		)	—			(235		)
Net income attributable to Retail Opportunity Investments Partnership, LP	—		4,211			—		38,477			—			42,688
Other comprehensive income	—		—			—		—			5,585			5,585
Balance at December 31, 2017	11,678,991		125,674			112,347,451		1,202,111			1,856			1,329,641
OP units issued under the 2009 Equity Incentive Plan	—		—			397,861		269			—			269
OP Units withheld for employee taxes	—		—			(70,168	)	(1,400		)	—			(1,400		)
Cancellation of OP Units	—		—			(8,997	)	—			—			—
Stock based compensation expense	—		—			—		7,392			—			7,392
Cash redemption of OP Units	(201,950	)	(3,713		)	—		—			—			(3,713		)
Adjustment to non-controlling interests ownership in Operating Partnership	—		2,904			—		(2,904		)	—			—
Issuance of OP Units in connection with sale of common stock	—		—			1,326,690		25,703			—			25,703
Registration expenditures	—		—			—		(570		)	—			(570		)
Cash distributions ($0.78 per unit)	—		(9,056		)	—		(88,417		)	—			(97,473		)
Distributions payable to officers	—		—			—		(267		)	—			(267		)
Net income attributable to Retail Opportunity Investments Partnership, LP	—		4,405			—		42,736			—			47,141
Other comprehensive income	—		—			—		—			1,705			1,705
Balance at December 31, 2018	11,477,041		$	120,214		113,992,837		$	1,184,653		$	3,561		$	1,308,428


(1)	Consists of limited partnership interests held by third parties.


(2)	Consists of general and limited partnership interests held by ROIC.

See accompanying notes to consolidated financial statements.

RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Consolidated Statements of Cash Flows

(In ~~thousands~~)

thousands)

Year Ended December 31,
2015 2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 25,092 $ 21,050 $ 33,978
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 70,957 58,435 40,398
Amortization of deferred financing costs and mortgage premiums, net 662 (432 ) (144 )
Gain on consolidation of joint venture — — (20,382 )
Straight-line rent adjustment (5,013 ) (3,795 ) (3,734 )
Amortization of above and below market rent (9,890 ) (6,945 ) (4,444 )
Amortization relating to stock based compensation 4,684 3,662 2,856
Provisions for tenant credit losses 1,984 2,316 1,623
Equity in earnings from unconsolidated joint ventures — — (2,390 )
Other noncash interest expense 2,139 1,848 —
Gain on sale of real estate — (4,869 ) —
Loss on sale of discontinued operations — — 714
Settlement of interest rate swap agreements — (3,230 ) (8,750 )
Other — — 792
Change in operating assets and liabilities
Restricted cash 264 190 74
Tenant and other receivables (2,599 ) (1,605 ) (4,820 )
Prepaid expenses 501 (1,106 ) (105 )
Accounts payable and accrued expenses 512 (1,164 ) 2,943
Other assets and liabilities, net (2,376 ) 852 (856 )
Net cash provided by operating activities 86,917 65,207 37,753

CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate (313,623 ) (398,205 ) (289,399 )
Acquisition of entities — — (43,378 )
Proceeds from sale of real estate and land — 27,622 5,608
Investments in mortgage notes receivables — — (294 )
Improvements to properties (27,515 ) (26,142 ) (19,067 )
Deposits on real estate acquisitions, net 4,000 (3,725 ) 1,225
Construction escrows and other 23 594 328
Net cash used in investing activities (337,115 ) (399,856 ) (344,977 )

CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments on mortgages (84,308 ) (21,982 ) (14,902 )
Proceeds from new mortgage loan 35,500 — —
Proceeds from term loan 300,000 — —
Payments on term loan — (200,000 ) —
Proceeds from draws on credit facility 430,000 549,300 342,950
Payments on credit facility (451,000 ) (449,750 ) (405,000 )
Proceeds from issuance of Senior Notes Due 2024 — 246,500 —
Proceeds from issuance of Senior Notes Due 2023 — — 245,825
Payment of contingent consideration — — (1,864 )
Proceeds from the issuance of OP Units upon exercise of warrants — 70,723 226,530
Payments to acquire warrants — — (32,786 )
Issuance of promissory note (6,710 ) — —
Proceeds from the issuance of OP Units in connection with issuance of common stock 101,293 214,906 —
Purchase of non-controlling interest — — (2 )
Redemption of OP Units — (3,280 ) (2,190 )
Deferred financing and other costs (1,849 ) (3,188 ) (4,098 )
Registration expenditures (4,739 ) (9,513 ) (69 )
Distributions to OP Unitholders (68,601 ) (55,583 ) (43,260 )
Repurchase of OP Units (1,317 ) (631 ) (407 )
Retirement of options — — (275 )
Net cash provided by financing activities 248,269 337,502 310,452
Net (decrease) increase in cash and cash equivalents (1,929 ) 2,853 3,228
Cash and cash equivalents at beginning of period 10,773 7,920 4,692
Cash and cash equivalents at end of period $ 8,844 $ 10,773 $ 7,920

Supplemental disclosure of cash activities:
Cash paid on gross receipts and income for federal and state purposes $ 241 $ 331 $ 242
Interest paid $ 31,996 $ 26,006 $ 14,579

Other non-cash investing and financing activities:
Issuance of OP Units in connection with acquisitions $ 150,315 $ 16,343 $ 45,373
Assumed mortgage upon acquisition $ 19,024 $ — $ 62,750
Intangible lease liabilities $ 20,925 $ 44,264 $ 35,039
Transfer of equity investment in property to real estate investment $ — $ — $ 15,991
Interest rate swap asset $ — $ (1,948 ) $ 1,948
Interest rate swap liabilities $ — $ (2,529 ) $ 6,734
Accrued real estate improvement costs $ 590 $ 1,372 $ 592



	Year Ended December 31,
	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	47,141		$	42,688		$	36,430
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	100,838			96,256			88,359
Amortization of deferred financing costs and mortgage premiums, net	1,899			2,026			2,088
Straight-line rent adjustment	(5,380		)	(6,176		)	(4,560		)
Amortization of above and below market rent	(13,965		)	(17,078		)	(13,847		)
Amortization relating to stock based compensation	7,392			6,190			4,916
Provisions for tenant credit losses	1,729			1,191			1,805
Other noncash interest expense	1,674			2,139			2,139
Gain on sale of real estate	(5,890		)	—			—
Change in operating assets and liabilities:
Tenant and other receivables	(57		)	(2,452		)	(4,412		)
Prepaid expenses	(1,344		)	464			(1,363		)
Accounts payable and accrued expenses	(1,622		)	456			4,417
Other assets and liabilities, net	(1,497		)	3,234			(1,357		)
Net cash provided by operating activities	130,918			128,938			114,615

CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate	(44,195		)	(263,366		)	(284,867		)
Proceeds from sale of real estate	26,880			—			—
Improvements to properties	(39,240		)	(54,097		)	(40,758		)
Deposits on real estate acquisitions, net	500			(500		)	500
Net cash used in investing activities	(56,055		)	(317,963		)	(325,125		)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments on mortgages	(19,612		)	(8,848		)	(7,816		)
Proceeds from draws on credit facility	177,000			327,500			332,500
Payments on credit facility	(164,500		)	(282,000		)	(370,000		)
Proceeds from issuance of Senior Notes	—			250,000			200,000
Proceeds on repayment of promissory note receivable	—			—			6,710
Redemption of OP Units	(3,713		)	(150		)	(38,820		)
Deferred financing and other costs	—			(3,845		)	(266		)
Proceeds from the issuance of OP Units in connection with issuance of common stock	25,703			4,481			184,881
Registration expenditures	(570		)	(1,225		)	(7,097		)
Distributions to OP Unitholders	(97,556		)	(91,646		)	(84,035		)
Issuance of OP Units under the 2009 Equity Incentive Plan	269			44			—
OP Units withheld for employee taxes	(1,400		)	(1,571		)	(1,368		)
Net cash (used in) provided by financing activities	(84,379		)	192,740			214,689
Net (decrease) increase in cash, cash equivalents and restricted cash	(9,516		)	3,715			4,179
Cash, cash equivalents and restricted cash at beginning of period	16,965			13,250			9,071
Cash, cash equivalents and restricted cash at end of period	$	7,449		$	16,965		$	13,250



	Year Ended December 31,
	2018		2017		2016
Cash and cash equivalents	$	6,076	$	11,553	$	13,125
Restricted cash	1,373		5,412		125
Total cash, cash equivalents and restricted cash shown in Statements of Cash Flows	$	7,449	$	16,965	$	13,250

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Business

Retail Opportunity Investments Corp., a Maryland corporation (“ROIC”), is a fully integrated and self-managed real estate investment trust (“REIT”). ROIC specializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States anchored by supermarkets and drugstores.

ROIC is organized in a traditional umbrella partnership real estate investment trust (“UpREIT”) format pursuant to which Retail Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as the general partner of, and ROIC conducts substantially all of its business through, its operating partnership subsidiary, Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), together with its subsidiaries. Unless otherwise indicated or unless the context requires otherwise, all references to the “Company”, “we,” “us,” “our,” or “our company” refer to ROIC together with its consolidated subsidiaries, including the Operating Partnership.

With the approval of its stockholders, ROIC reincorporated as a Maryland corporation on June 2, 2011. ROIC began operations as a Delaware corporation, known as NRDC Acquisition Corp., which was incorporated on July 10, 2007, for the purpose of acquiring assets or operating businesses through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination with one or more assets or control of one or more operating businesses. On October 20, 2009, ROIC’s stockholders and warrantholders approved each of the proposals presented at the special meetings of stockholders and warrantholders, respectively, in connection with the transactions contemplated by the Framework Agreement (the “Framework Agreement”) ROIC entered into on August 7, 2009 with NRDC Capital Management, LLC, which, among other things, ~~sets~~set forth the steps to be taken by ROIC to continue its business as a corporation that has elected to qualify as a REIT for U.S. federal income tax purposes.

ROIC’s only material asset is its ownership of direct or indirect partnership interests in the Operating Partnership and membership interest in Retail Opportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does not conduct business itself, other than acting as the parent company and issuing equity from time to time. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from ~~warrants exercised and~~ equity issuances by ROIC, which are contributed to the Operating Partnership, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance of operating partnership units (“OP Units”) of the Operating Partnership.

Recent Accounting Pronouncements

In ~~September 2015,~~November 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standards~~Standard Update (“ASU”) No. ~~2015-16,~~2016-18, Restricted Cash. ASU No. 2016-18 requires companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Additionally, ASU No. 2016-18 requires a disclosure of a reconciliation between the statement of financial position and the statement of cash flows when the balance sheet includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. ASU No. 2016-18 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. The Company adopted ASU No. 2016-18 effective January 1, 2018. The adoption of ASU No. 2016-18 impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods.

In January 2017, the FASB issued ASU No. 2017-1, “Business Combinations: ~~Simplifying~~Clarifying the ~~Accounting for Measurement-Period Adjustments.~~Definition of a Business.” The pronouncement ~~simplifies~~changes the ~~accounting for adjustments made to provisional amounts recognized in~~definition of a business ~~combination by eliminating the requirement~~ to ~~retrospectively account for those adjustments.~~assist entities with evaluating when a set of transferred assets and activities is a business. The pronouncement requires ~~any adjustments~~an entity to ~~provisional amounts to be applied prospectively.~~evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2015,~~2018, with early adoption permitted. The Company ~~does~~adopted the provisions of ASU No. 2017-1 effective October 1, 2016. For the period from October 1, 2016 through December 31, 2018, for the Company’s acquisitions it was concluded substantially all of the fair value of the assets acquired with each property acquisition was concentrated in a single identifiable asset and did not ~~expect that~~meet the ~~adoption~~definition of ~~this pronouncement will have~~ a ~~material impact on the consolidated financial statements.~~

business under ASU No. 2017-1. Acquisition transaction costs associated with these property acquisitions were capitalized to real estate investments.

In ~~April 2015,~~February 2016, the FASB issued ASU No. ~~2015-03, “Interest – Imputation~~2016-2, “Leases.” ASU No. 2016-2 is expected to result in the recognition of ~~Interest: Simplifying~~a right-to-use asset and related liability to account for future obligations under ground lease agreements for which the ~~Presentation~~Company is the lessee. In addition, this ASU will require that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of ~~Debt Issuance Costs.”~~a lease. Allocated payroll costs and other costs that are incurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred.

As a lessor, under current accounting standards, the Company recognizes rental revenue from its operating leases on a straight-line basis over the respective lease terms. The ~~pronouncement requires reporting entities to present debt issuance costs~~Company commences recognition of rental revenue at the date the property is ready for its intended use and the tenant takes possession of or controls the physical use of the property. Under current accounting standards, tenant recoveries related to ~~a note~~payments of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses are considered lease components. The Company recognizes these tenant recoveries as revenue when services are rendered in an amount equal to the related operating expenses incurred that are recoverable under the terms of the applicable lease.

Under ASU No. 2016-2, each lease agreement will be evaluated to identify the lease components and nonlease components at lease inception. The total consideration in the lease agreement will be allocated to the lease and nonlease components based on their relative standalone selling prices. Lessors will continue to recognize the lease revenue component using an approach that is substantially equivalent to existing guidance for operating leases (straight-line basis). In July 2018, the FASB issued an amendment to ASU No. 2016-2 that allows lessors to elect, as a ~~direct deduction from~~practical expedient, not to allocate the ~~face amount~~total consideration to lease and nonlease components based on their relative standalone selling prices. This practical expedient allows lessors to elect a combined single lease component presentation if (i) the timing and pattern of ~~that note presented in~~ the ~~balance sheet.~~ revenue recognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would be classified as an operating lease.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2015,~~2018, with early adoption permitted. ~~A reporting entity may apply the amendments in the ASU retrospectively to all prior periods.~~ The Company plans to adopt the provisions of ASU No. 2016-2 effective January 1, 2019 using the modified retrospective approach and expects to elect certain practical expedients permitted under the transition guidance. The Company currently estimates total assets and liabilities will increase approximately $18.0 million upon adoption. Further upon adoption, payroll-related costs that are incurred regardless of whether the ~~adoption of~~lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred. These costs amounted to approximately $1.3 million during the pronouncement will result in the presentation of debt issuance costs associated with its term loan, credit facility, Senior Notes Due 2024, Senior Notes Due 2023, and mortgage notes payable which are currently included in deferred charges in its consolidated balance sheets, as a direct reduction from the carrying amount of the related debt instrument.

year ended December 31, 2018.

In May 2014, the FASB issued ASU No. ~~2014-09,~~2014-9, “Revenue from Contracts with Customers.” The pronouncement was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and International Financial Reporting Standards. The pronouncement is effective for reporting periods beginning after December 15, 2017. The Company isadopted the provisions of ASU No. 2014-9 effective January 1, 2018 using the modified retrospective approach. The Company evaluated the revenue recognition for all contracts within this scope under existing accounting standards and under ASU No. 2014-9 and confirmed that there were no differences in the ~~process~~amounts recognized or the pattern of ~~evaluating~~recognition. Therefore, the ~~impact this pronouncement will have on~~adoption of ASU No. 2014-9 did not result in an adjustment to the Company’s ~~consolidated financial statements.~~

retained earnings on January 1, 2018.

Principles of Consolidation

The accompanying consolidated financial statements are prepared on the accrual basis in accordance with GAAP. In the opinion of management, the consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and the results of operations and cash flows for the periods presented.

The consolidated financial statements include the accounts of the Company and those of its subsidiaries, which are wholly-owned or controlled by the Company. Entities which the Company does not control through its voting interest and entities which are variable interest entities (“VIEs”), but where it is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated.

The Company follows the FASB guidance for determining whether an entity is a VIE and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

Effective January 1, 2016, the Company adopted the provisions of ASU No. 2015-2, and as a result, concluded that the Operating

Partnership is a VIE. The Company has concluded that because they have both the power and the rights to control the Operating Partnership, they are the primary beneficiary and are required to continue to consolidate the Operating Partnership.

A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheet and modifies the presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the purchase price allocations, depreciable lives, revenue recognition and the collectability of tenant receivables, other receivables, notes receivables, the valuation of performance-based restricted stock, ~~stock options~~ and derivatives. Actual results could differ from these estimates.

Federal Income Taxes

The Company has elected to qualify as a REIT under Sections 856-860 of the Internal Revenue Code (the “Code”). Under those sections, a REIT that, among other things, distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains) and meets certain other qualifications prescribed by the Code, will not be taxed on that portion of its taxable income that is distributed.

Although it may qualify as a REIT for U.S. federal income tax purposes, the Company is subject to state income or franchise taxes in certain states in which some of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”), if any, is fully subject to U.S. federal, state and local income taxes. For all periods from inception through September 26, 2013 the Operating Partnership ~~has~~had been an entity disregarded from its sole owner, ROIC, for U.S. federal income tax purposes and as such ~~has~~had not been subject to U.S. federal income taxes. Effective September 27, 2013, the Operating Partnership issued ~~3,290,263~~ OP Units in connection with the acquisitions of two shopping ~~centers, Crossroads Shopping Center and Five Points Plaza.~~centers. Accordingly, the Operating Partnership ceased being a disregarded entity and instead is being treated as a partnership for U.S. federal income tax purposes.

The Company follows the FASB guidance that defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The FASB also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company records interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of December 31, ~~2015,~~2018, the statute of limitations for tax years ~~2012~~2015 through and including ~~2014~~2017 remain open for examination by the Internal Revenue Service (“IRS”) and state taxing authorities.

ROIC intends to make regular quarterly distributions to holders of its common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regular quarterly dividends to stockholders in an amount not less than its net taxable income, if and to the extent authorized by its board of directors. Before ROIC pays any dividend, whether for U.S. federal income tax purposes or otherwise, it must first meet both its operating requirements and its debt service on debt. If ROIC’s cash available for distribution is less than its net taxable income, it could be required to sell assets or borrow funds to make cash distributions or it may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.

Real Estate Investments

All costs related to the improvement or replacement of real estate properties are capitalized. Additions, renovations and improvements that enhance and/or extend the useful life of a property are also capitalized. Expenditures for ordinary maintenance, repairs and improvements that do not materially prolong the normal useful life of an asset are charged to operations as incurred. ~~The Company expenses transaction costs associated with business combinations in the period incurred.~~ During the years ended December 31, ~~2015~~2018 and ~~2014,~~2017, capitalized costs related to the improvements or replacement of real estate properties were approximately ~~$28.1~~$40.3 million and ~~$27.5~~$54.5 million, respectively.

~~Upon~~

The Company expenses transaction costs associated with business combinations and unsuccessful property asset acquisitions in the period incurred and capitalizes transaction costs associated with successful property asset acquisitions. In conjunction with the Company’s pursuit and acquisition of real estate investments, the Company expensed acquisition transaction costs during the years ended December 31, 2017 and 2016 of approximately $4,000 and $824,000, respectively. The Company did not expense any acquisition transaction costs during the year ended December 31, 2018.

The Company evaluates each acquisition of real estate to determine if the acquired property meets the definition of a business and needs to be accounted for as a business combination. Under ASU No. 2017-1, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If this threshold is met, the acquired property does not meet the definition of a business and is accounted for as an asset acquisition. The Company expects that acquisitions of real estate properties will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related intangible assets).

Acquired lease intangible assets include above-market leases and acquired in-place leases, and acquired lease intangible liabilities represent below-market leases, in the accompanying consolidated balance sheets. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, which value is then allocated to land, buildings and improvements based on ~~management's~~management’s determination of the relative fair values of these assets. In valuing an acquired ~~property's~~property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, and estimates of lost rental revenue during the expected lease-up periods based on management’s evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs. Leasing commissions, legal and other related costs (“lease origination costs”) are classified as deferred charges in the accompanying consolidated balance sheets.

The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market lease values are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received and ~~management's~~management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of acquisition. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fair values associated with below-market rental renewal options are determined based on the ~~Company's~~Company’s experience and the relevant facts and circumstances that existed at the time of the acquisitions. The value of the above-market and below-market leases is amortized to rental income, over the terms of the respective leases including option periods, if applicable. The value of in-place leases are amortized to expense over the remaining non-cancellable terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized in operations at that time. The Company may record a bargain purchase gain if it determines that the purchase price for the acquired assets was less than the fair value. The Company will record a liability in situations where any part of the cash consideration is deferred. The amounts payable in the future are discounted to their present value. The liability is subsequently re-measured to fair value with changes in fair value recognized in the consolidated statements of operations. If, up to one year from the acquisition date, information regarding fair value of assets acquired and liabilities assumed as of the acquisition date is received and estimates are refined, appropriate property adjustments are made to the purchase price allocation on a retrospective basis.

In conjunction with the Company’s pursuit and acquisition of real estate investments, the Company expensed acquisition transaction costs during the years ended December 31, 2015, 2014 and 2013 of approximately $1.0 million, $1.0 million and $1.7 million, respectively.

Regarding certain of the Company’s 2015 and all of the Company’s 2014 property acquisitions (see Note 2), the fair value of in-place leases and other intangibles have been allocated to intangible asset and liability accounts.

Sales of real estate are recognized only when sufficient down payments have been obtained, possession and other attributes of ownership have been transferred to the buyer and the Company has no significant continuing involvement. The application of these criteria can be complex and requires the Company to make assumptions. Management has determined that all of these criteria were met for all real estate sold during the periods presented.

Any reference to square footage or occupancy is unaudited and outside the scope of our independent registered public accounting firm’s audit of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board.

Asset Impairment

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value. Management does not believe that the value of any of the Company’s real estate investments was impaired at December 31, ~~2015.~~

2018 or December 31, 2017.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed the federally insured limit by the Federal Deposit Insurance Corporation. The Company has not experienced any losses related to these balances.

Restricted Cash

The terms ~~of several~~ of the Company’s mortgage loans payable may require the Company to deposit certain replacement and other reserves with its lenders. Such “restricted cash” is generally available only for property-level requirements for which the reserves have been established and is not available to fund other ~~property-level~~property level or ~~Company-level~~Company level obligations.

Revenue Recognition

Management has determined that all of the Company’s leases with its various tenants are operating leases. Rental income is generally recognized based on the terms of leases entered into with tenants. In those instances in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition and lease incentive amortization when possession or control of the space is turned over to the tenant for tenant work to begin. Minimum rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved. Property operating expense recoveries from tenants of common area maintenance, real estate taxes and other recoverable costs are recognized in the period the related expenses are incurred. Lease incentives are amortized as a reduction of rental revenue over the respective tenant lease terms.

Termination fees (included in other income) are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate their lease prior to the contractual expiration date. The Company recognizes termination fees ~~in accordance with Securities and Exchange Commission’s guidance~~ when the following conditions are met: (a) the termination agreement is executed; (b) the termination fee is determinable; (c) all landlord services pursuant to the terminated lease have been rendered; and (d) ~~collectivity~~collectability of the termination fee is assured. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses under ~~generally accepted accounting principles~~GAAP have been met.

The Company must make estimates as to the collectability of its accounts receivable related to base rent, straight-line rent, expense reimbursements and other revenues. Management analyzes accounts receivable ~~and the allowance for bad debts~~ by considering tenant creditworthiness, current economic trends, and changes in tenants’ payment patterns when evaluating the adequacy of the allowance for doubtful accounts receivable. The Company also provides an allowance for future credit losses of the deferred straight-line rents receivable. The provision for doubtful accounts at December 31, ~~2015~~2018 and December 31, ~~2014~~2017 was approximately ~~$4.5~~$6.9 million and ~~$3.6~~$6.4 million, respectively.

Depreciation and Amortization

The Company uses the straight-line method for depreciation and amortization. Buildings are depreciated over the estimated useful lives which the Company estimates to be 39-40 years. Property improvements are depreciated over the estimated useful lives that range from 10 to 20 years. Furniture and fixtures are depreciated over the estimated useful lives that range from 3 to 10 years. Tenant improvements are amortized over the shorter of the life of the related leases or their useful life.

Deferred ~~Charges~~

~~Deferred charges consist principally of~~Leasing and Financing Costs

Costs incurred in obtaining tenant leases (principally leasing commissions and acquired lease origination ~~costs (which~~costs) are amortized ratably over the life of the tenant ~~leases) and~~leases. Costs incurred in obtaining long-term financing ~~fees (which~~ are amortized ratably over ~~the term of~~ the related debt ~~obligation). Deferred charges~~agreement. The amortization of deferred leasing and financing costs is included in Depreciation and amortization and Interest expense and other finance expenses, respectively, in the ~~accompanying consolidated balance sheets are shown at cost, net~~Consolidated Statements of ~~accumulated amortization of approximately $24.1 million and $18.8 million, as of December 31, 2015 and 2014, respectively.~~

Operations.

The unamortized balances of deferred leasing costs included in deferred charges in the Consolidated Balance Sheets as of December 31, ~~2015~~2018 that will be charged to future operations are as follows (in thousands):

Lease Origination Costs Financing Costs Total
2016 $ 6,697 $ 2,089 $ 8,786
2017 5,384 2,068 7,452
2018 4,138 2,036 6,174
2019 3,168 647 3,815
2020 2,544 521 3,065
Thereafter 8,164 1,860 10,024
$ 30,095 $ 9,221 $ 39,316



	Lease Origination Costs
2019	$	7,041
2020	5,802
2021	4,867
2022	4,029
2023	3,098
Thereafter	9,020
	$	33,857

Internal Capitalized Leasing Costs

~~The~~

Through December 31, 2018, the Company ~~capitalizes~~capitalized a portion of payroll-related costs related to its leasing personnel associated with new leases and lease renewals. These costs are amortized over the life of the respective leases. During the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013,~~2016, the Company capitalized approximately ~~$1.1~~$1.3 million, ~~$947,000~~$1.2 million and ~~$742,000,~~$1.2 million, respectively, of such payroll-related costs.

Beginning January 1, 2019, in accordance with the adoption of ASU No. 2016-2, the Company will begin expensing these costs as incurred.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenant receivables. The Company places its cash and cash equivalents in excess of insured amounts with high quality financial institutions. The Company performs ongoing credit evaluations of its tenants and requires tenants to provide security deposits.

Earnings Per Share

Basic earnings per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock and then shared in the earnings of the Company.

During the years ended December 31, 2014 and 2013, the effect of approximately 41,400,000 warrants to purchase the Company’s common stock (the “Public Warrants”) issued in connection with the Company’s initial public offering (the “IPO”), and the 8,000,000 warrants (the “Private Placement Warrants”) purchased by NRDC Capital Management, LLC simultaneously with the consummation of the IPO, for the time these were outstanding during these periods, were included in the calculation of diluted EPS since the weighted average share price was greater than the exercise price during these periods. No warrants were outstanding during the year ended December 31, 2015.

For the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013,~~2016, basic EPS was determined by dividing net income allocable to common stockholders for the applicable period by the weighted average number of shares of common stock outstanding during such period. Net income during the applicable period is also allocated to the time-based unvested restricted stock as these grants are entitled to receive dividends and are therefore considered a participating security. Time-based unvested restricted stock is not allocated net losses and/or any excess of dividends declared over net income; such amounts are allocated entirely to the common stockholders other than the holders of time-based unvested restricted stock. The performance-based restricted stock grants awarded under the 2009 Equity Incentive Plan described in Note 98 are excluded from the basic EPS calculation, as these units are not participating ~~securities.~~

securities until they vest.

The following table sets forth the reconciliation between basic and diluted EPS for ROIC (in thousands, except share data):

Year Ended December 31,
2015 2014 2013
Numerator:
Income from continuing operations $ 25,092 $ 21,050 $ 34,692
Less income from continuing operations attributable to non-controlling interests (1,228 ) (749 ) (165 )
Less earnings allocated to unvested shares (229 ) (160 ) (78 )
Income from continuing operations available for common shareholders, basic 23,635 20,141 34,449
Loss from discontinued operations available to common shareholders, basic — — (714 )
Net income available to common stockholders, basic $ 23,635 $ 20,141 $ 33,735

Numerator:
Income from continuing operations $ 25,092 $ 21,050 $ 34,692
Less earnings allocated to unvested shares (229 ) (160 ) (78 )
Income from continuing operations available for common shareholders, diluted 24,863 20,890 34,614
Loss from discontinued operations available to common shareholders, diluted — — (714 )
Net income available to common stockholders, diluted $ 24,863 $ 20,890 $ 33,900

Denominator:
Denominator for basic EPS – weighted average common equivalent shares 95,651,780 83,411,230 67,419,497
Warrants — 631,086 2,568,822
OP Units 4,086,724 3,162,658 838,508
Restricted stock awards – performance-based 174,198 162,327 113,066
Stock options 105,079 86,108 64,487
Denominator for diluted EPS – weighted average common equivalent shares 100,017,781 87,453,409 71,004,380



	Year Ended December 31,
	2018			2017			2016
Numerator:
Net income	$	47,141		$	42,688		$	36,430
Less income attributable to non-controlling interests	(4,405		)	(4,211		)	(3,676		)
Less earnings allocated to unvested shares	(401		)	(319		)	(270		)
Net income available for common stockholders, basic	$	42,335		$	38,158		$	32,484
Numerator:
Net income	$	47,141		$	42,688		$	36,430
Less earnings allocated to unvested shares	(401		)	(319		)	(270		)
Net income available for common stockholders, diluted	$	46,740		$	42,369		$	36,160
Denominator:
Denominator for basic EPS – weighted average common equivalent shares	112,645,490			109,400,123			104,072,222
OP units	11,626,312			12,060,835			11,747,509
Restricted stock awards – performance-based	183,683			153,807			86,996
Stock options	103,408			129,066			133,213
Denominator for diluted EPS – weighted average common equivalent shares	124,558,893			121,743,831			116,039,940

Earnings Per Unit

The following table sets forth the reconciliation between basic and diluted earnings per unit for the Operating Partnership (in thousands, except unit data):

Year Ended December 31,
2015 2014 2013
Numerator:
Income from continuing operations $ 25,092 $ 21,050 $ 34,692
Less earnings allocated to unvested units (229 ) (160 ) (78 )
Income from continuing operations available for unitholders, basic and diluted 24,863 20,890 34,614
Loss from discontinued operations available to unitholders, basic and diluted — — (714 )
Net income available to unitholders, basic and diluted $ 24,863 $ 20,890 $ 33,900

Denominator:
Denominator for basic EPS – weighted average common equivalent units 99,738,504 86,573,888 68,258,005
Warrants — 631,086 2,568,822
Restricted stock awards – performance-based 174,198 162,327 113,066
Stock Options 105,079 86,108 64,487
Denominator for diluted EPS – weighted average common equivalent units 100,017,781 87,453,409 71,004,380



	Year Ended December 31,
	2018			2017			2016
Numerator:
Net income	$	47,141		$	42,688		$	36,430
Less earnings allocated to unvested shares	(401		)	(319		)	(270		)
Net income available to unitholders, basic and diluted	$	46,740		$	42,369		$	36,160
Denominator:
Denominator for basic earnings per unit – weighted average common equivalent units	124,271,802			121,460,958			115,819,731
Restricted stock awards – performance-based	183,683			153,807			86,996
Stock options	103,408			129,066			133,213
Denominator for diluted earnings per unit – weighted average common equivalent units	124,558,893			121,743,831			116,039,940

Stock-Based Compensation

The Company has a stock-based employee compensation plan, which is more fully described in Note 9.

The Company accounts for its stock-based compensation ~~plans~~plan based on the FASB guidance which requires that compensation expense be recognized based on the fair value of the stock awards less estimated forfeitures. Restricted stock grants vest based upon the completion of a service period (“~~time-based~~time based grants”) and/or the Company meeting certain established market specific financial performance criteria (“~~performance-based~~performance based grants”). ~~Time-based~~Time based grants are valued according to the market price for the Company’s common stock at the date of grant. For ~~performance-based~~performance based grants, a Monte Carlo valuation model is used, taking into account the underlying contingency risks associated with the performance criteria. It is the Company’s policy to grant options with an exercise price equal to the quoted closing market price of stock on the grant date. Awards of stock options and ~~time-based~~time based grants of stock are expensed as compensation on a straight-line basis over the vesting period. Awards of performance-based grants

are expensed as compensation under anthe accelerated attribution method and are recognized in income regardless of the results of the performance criteria.

~~Non-Controlling Interests – Redeemable OP Units / Redeemable Limited Partners~~

OP Units are classified as either mezzanine equity or permanent equity. If ROIC could be required to deliver cash in exchange for the OP Units upon redemption, such OP Units are differentiated and referred to as Redeemable OP Units. OP Units that could require settlement in cash result in presentation in the mezzanine section of the balance sheet. See Note 10 for further discussion.

Derivatives

The Company records all derivatives on the balance ~~sheet~~sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged ~~risk in a fair value hedge or the earnings effect of the hedged~~ forecasted transactions in a cash flow hedge. When the Company terminates a derivative for which cash flow hedging was being applied, the balance which was recorded in Other Comprehensive Income is amortized to interest expense over the remaining contractual term of the ~~swap.~~derivative as long as the hedged forecasted transactions continue to be probable of occurring. The Company includes cash payments made to terminate interest rate ~~swaps~~derivatives as an operating activity on the statement of cash flows, given the nature of the underlying cash flows that the derivative was hedging.

Segment Reporting

The Company’s primary business is the ownership, management, and redevelopment of retail real estate properties. The Company reviews operating and ~~financing~~financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, defined as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes). The Company has aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes.

Consolidated Statements of Cash Flows - Supplemental Disclosures

The following tables provides supplemental disclosures related to the Consolidated Statements of Cash Flows (in thousands):



	Year Ended December 31,
	2018			2017		2016
Supplemental disclosure of cash activities:
Cash paid on gross receipts and income for federal and state purposes	$	291		$	253	$	206
Interest paid	$	60,494		$	46,271	$	34,275
Other non-cash investing and financing activities:
Issuance of OP Units in connection with acquisitions	$	—		$	49,599	$	46,140
Fair value of assumed mortgages upon acquisition	$	—		$	46,801	$	17,618
Intangible lease liabilities	$	1,680		$	48,684	$	32,615
Interest rate swap asset	$	610		$	3,446	$	875
Interest rate swap liabilities	$	580		$	—	$	—
Accrued real estate improvement costs	$	(1,367	)	$	383	$	601
Redemption / exchange of OP Units	$	—		$	50,155	$	15,990

Reclassifications

Certain reclassifications have been made to the prior period consolidated financial statements and notes to conform to the current year presentation.

2. Real Estate Investments

The following real estate investment transactions occurred during the years ended December 31, ~~2015~~2018 and ~~2014.~~

2017.

Property Asset Acquisitions in ~~2015~~

2018

The Company evaluated each of the following acquisitions and determined that substantially all of the fair value related to each acquisition was concentrated in a single identifiable asset. In each of these acquisitions, the Company allocated the total consideration for each acquisition to the individual assets and liabilities acquired on a relative fair value basis. All transaction costs incurred in these acquisitions were capitalized.

facility and restricted cash that was previously held by a qualified intermediary for the acquisition of a replacement property in a tax-free exchange under Section 1031 of the Code.

~~On December 4, 2015, the Company acquired the property known as Iron Horse Plaza located~~

Property Asset Acquisitions in Danville, California, within the San Francisco metropolitan area, for an adjusted purchase price of approximately $45.6 million. Iron Horse Plaza is approximately 62,000 square feet and is anchored by Lunardi’s Markets, a San Francisco based grocer. The acquisition was funded through the issuance of 1,232,394 OP Units with a fair value of approximately $22.4 million, the assumption of a $19.0 million mortgage loan on the property and cash on hand. The $19.0 million mortgage loan was defeased in conjunction with the closing of the property, which was funded with borrowings under the Company’s credit facility. Further, in connection with this acquisition, the Company issued a promissory note for a total of approximately $6.7 million, secured by the OP Units of a Unitholder. It is the Company’s policy to treat all promissory notes that are secured by OP Units as a reduction of equity.

2017

~~Property Acquisitions in 2014~~

During the year ended December 31, ~~2014,~~2017, the Company acquired ~~eight~~ten properties throughout the west coast with a total of approximately ~~1.6~~1.1 million square feet for a net adjusted purchase price of approximately ~~$414.5 million~~

$313.0 million. The Company evaluated each of the following acquisitions and determined that substantially all of the fair value related to each acquisition was concentrated in a single identifiable asset. In each of these acquisitions, the Company allocated the total consideration for each acquisition to the individual assets and liabilities acquired on a relative fair value basis.

The financial information set forth below summarizes the Company’s ~~preliminary~~ purchase price allocation for the properties acquired during the ~~year ended December 31, 2015 and the final purchase price allocation for the properties acquired during the year ended December 31, 2014 (in thousands).~~

December 31, 2015 December 31, 2014
ASSETS
Land $ 118,898 $ 98,891
Building and improvements 366,977 317,385
Acquired lease intangible asset 13,214 32,200
Deferred charges 4,799 10,336
Assets acquired $ 503,888 $ 458,812
LIABILITIES
Acquired lease intangible liability $ 20,925 $ 44,264
Liabilities assumed $ 20,925 $ 44,264

With respect to these acquisitions, the fair value of in-place leases and other intangibles have been allocated to intangible asset and liability accounts. All allocations are preliminary and may be adjusted as final information becomes available.

~~Pro Forma Financial Information~~

~~The pro forma financial information is based upon the Company’s historical consolidated statements of operations for the~~ years ended December 31, ~~2015~~2018 and 2014, adjusted to give effect to these transactions at the beginning of 2014. The pro forma financial information set forth below is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of each year, nor does it purport to represent the results of future operations2017 (in thousands).

Year Ended December 31,
Statement of operations: 2015 2014
Revenues $ 213,475 $ 204,584
Property operating and other expenses 104,629 94,709
Depreciation and amortization 80,709 80,012
Net income attributable to Retail Opportunity Investments Corp. $ 28,137 $ 29,863



	December 31, 2018		December 31, 2017
Assets
Land	$	7,666	$	123,203
Building and improvements	35,629		251,277
Acquired lease intangible asset	1,763		24,766
Deferred charges	818		9,196
Assets acquired	$	45,876	$	408,442
Liabilities
Mortgage notes assumed	$	—	$	46,801
Acquired lease intangible liability	1,680		48,684
Liabilities assumed	$	1,680	$	95,485

The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the year ended December 31, ~~2015~~2018 for the properties acquired during the year ended December 31, ~~2015~~2018 (in thousands).

Year Ended December 31, 2015
Statement of operations:
Revenues $ 12,706
Property operating and other expenses 3,849
Depreciation and amortization 6,008
Net income attributable to Retail Opportunity Investments Corp. $ 2,849



	Year Ended December 31, 2018
Statement of operations:
Revenues	$	2,343
Net income attributable to Retail Opportunity Investments Corp.	$	753

The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the year ended December 31, ~~2014~~2017 for the properties acquired during the year ended December 31, ~~2014~~2017 (in thousands).

Year Ended December 31, 2014
Statement of operations:
Revenues $ 16,234
Property operating and other expenses 4,643
Depreciation and amortization 7,674
Net income attributable to Retail Opportunity Investments Corp. $ 3,917



	Year Ended December 31, 2017
Statement of operations:
Revenues	$	13,500
Net income attributable to Retail Opportunity Investments Corp.	$	2,948

Property Dispositions

~~On August 25, 2014, the Company sold the Oregon City Point Shopping Center, a non-core shopping center located in Oregon City, Oregon. The sales price of this property of approximately $12.4~~$28.0 million, less costs to sell, resulted in net proceeds of approximately ~~$12.0~~$26.9 million. ~~Accordingly, the~~The Company recorded a gain on sale of real estate of approximately ~~$1.6~~$5.9 million ~~for year ended December 31, 2014 related to this property.~~

~~The Company did not have any properties dispositions~~ during the year ended December 31, ~~2015.~~

~~Unconsolidated Joint Ventures~~

~~At December 31, 2012, investment in and advances~~2018 related to unconsolidated joint venture consisted of a 49% ownership in Terranomics Crossroads Associates, LP of $15.3 million. On September 27, 2013, the Company acquired the remaining interests in Terranomics Crossroads Associates, LP from its joint venture partner. The purchase of its remaining interest was funded through the issuance of 2,639,632 OP Units with a fair value of approximately $36.4 million and the assumption of a $49.6 million mortgage loan on the property. Upon the acquisition of the remaining interest in thethis property the Company reclassified approximately $16.0 million from “Investment in and advances to unconsolidated joint ventures” to “Real estate investments” in the accompanying consolidated balance sheets. The acquisition-date fair value of the previous equity interest was $36.0 million and is included in the measurement of the consideration transferred. The Company recognized a gain of $20.4 million as a result of remeasuring its prior equity interest in the venture held before the acquisition. The gain is included in the line item Gain on consolidation of joint venture in the consolidated statements of operations and comprehensive income.

~~As of December 31, 2015, the Company has no remaining unconsolidated joint ventures.~~

disposition.

3. Acquired Lease Intangibles

Intangible assets and liabilities as of December 31, ~~2015~~2018 and ~~2014~~2017 consisted of the following (in thousands):

December 31, 2015 December 31, 2014
Assets:
In-place leases $ 79,996 $ 78,549
Accumulated amortization (28,535 ) (25,482 )
Above-market leases 25,575 26,197
Accumulated amortization (10,094 ) (7,831 )
Acquired lease intangible assets, net $ 66,942 $ 71,433

Liabilities:
Below-market leases $ 155,169 $ 141,552
Accumulated amortization (30,308 ) (23,193 )
Acquired lease intangible liabilities, net $ 124,861 $ 118,359



	December 31, 2018			December 31, 2017
Assets:
In-place leases	$	92,354		$	99,924
Accumulated amortization	(36,835		)	(36,971		)
Above-market leases	30,093			33,176
Accumulated amortization	(13,503		)	(13,351		)
Acquired lease intangible assets, net	$	72,109		$	82,778
Liabilities:
Below-market leases	$	217,212		$	222,929
Accumulated amortization	(51,066		)	(43,945		)
Acquired lease intangible liabilities, net	$	166,146		$	178,984

For the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013,~~2016, the net amortization of acquired lease intangible assets and acquired lease intangible liabilities for above and below market leases was ~~$9.9~~$14.0 million, ~~$6.9~~$17.1 million and ~~$4.4~~$13.8 million, respectively, which amounts are included in base rents in the accompanying consolidated statements of operations and comprehensive income. For the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013,~~2016, the net amortization of in-place leases was ~~$13.2~~$11.4 million, ~~$12.5~~$14.4 million and ~~$10.3~~$15.6 million, respectively, which amounts are included in depreciation and amortization in the accompanying consolidated statements of operations and comprehensive income.

The scheduled future amortization of acquired lease intangible assets as of December 31, ~~2015~~2018 is as follows (in thousands):

Year ending December 31:
2016 $ 13,116
2017 10,421
2018 7,687
2019 5,146
2020 4,291
Thereafter 26,281
Total future amortization of acquired lease intangible assets $ 66,942



Year Ending December 31:
2019	$	10,573
2020	8,566
2021	6,898
2022	5,705
2023	5,092
Thereafter	35,275
Total future amortization of acquired lease intangible assets	$	72,109

The scheduled future amortization of acquired lease intangible liabilities as of December 31, ~~2015~~2018 is as follows (in thousands):

Year ending December 31:
2016 $ 11,260
2017 10,362
2018 9,508
2019 8,764
2020 7,950
Thereafter 77,017
Total future amortization of acquired lease intangible liabilities $ 124,861

Year Ending December 31:
2019 $ 14,675
2020 13,347
2021 12,075
2022 11,005
2023 9,999
Thereafter 105,045
Total future amortization of acquired lease intangible liabilities $ 166,146

4. Tenant Leases

Space in the Company’s shopping centers is leased to various tenants under operating leases that usually grant tenants renewal options and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volume.

Future minimum rents to be received under non-cancellable leases as of December 31, ~~2015~~2018 are summarized as follows (in thousands):

Year ending December 31:
2016 $ 147,424
2017 133,215
2018 113,062
2019 92,300
2020 74,680
Thereafter 351,703
Total minimum lease payments $ 912,384

Year Ending December 31:
2019 $ 198,998
2020 181,234
2021 160,082
2022 134,368
2023 105,657
Thereafter 429,172
Total minimum lease payments $ 1,209,511

5. ~~Discontinued Operations~~

On June 5, 2013, the Company sold the Nimbus Village Shopping Center, a non-grocery anchored, non-core shopping center located in Rancho Cordova, California. The sales price of this property of approximately $6.3 million, less costs to sell, resulted in proceeds to the Company of approximately $5.6 million. Accordingly, the Company recorded a loss on sale of property of approximately $714,000 for the year ended December 31, 2013, which has been included in discontinued operations. The carrying value of the property as of December 31, 2012 was approximately $6.3 million.

6. Mortgage Notes Payable, Credit ~~Facility~~Facilities and Senior Notes

ROIC does not hold any indebtedness. All debt is held directly or indirectly by the Operating ~~Partnership,~~Partnership; however, ROIC has guaranteed the Operating Partnership’s term loan, unsecured revolving credit facility, carve-out guarantees on property-level debt, the Senior Notes Due 2027, the Senior Notes Due 2026, the Senior Notes Due 2024 and the Senior Notes Due 2023.

Mortgage Notes Payable

On February 1, 2018, the Company repaid in full the Santa Teresa Village mortgage note related to Santa Teresa Village for a total of approximately $10.1 million, without penalty, in accordance with the prepayment provisions of the note. On September 28, 2018, the Company repaid in full the Magnolia Shopping Center mortgage note related to Magnolia Shopping Center for a total of approximately $8.8 million, without penalty, in accordance with the repayment provisions of the note.

The mortgage notes payable collateralized by respective properties and assignment of leases at December 31, ~~2015~~2018 and December 31, ~~2014,~~2017, respectively, were as follows (in thousands, except interest rates):

Property Maturity Date Interest Rate December 31, 2015 December 31, 2014
Renaissance Towne Centre June 2015 5.13 % $ — $ 16,205
Crossroads Shopping Center September 2015 6.50 % — 48,581
Gateway Village III July 2016 6.10 % 7,166 7,270
Bernardo Heights Plaza July 2017 5.70 % 8,404 8,581
Santa Teresa Village February 2018 6.20 % 10,613 10,830
Diamond Hills Plaza October 2025 3.55 % 35,500 —
$ 61,683 $ 91,467
Mortgage Premium 922 2,716
Total mortgage notes payable $ 62,605 $ 94,183



Property	Maturity Date	Interest Rate		December 31, 2018			December 31, 2017
Santa Teresa Village	February 2018	6.200	%	$	—		$	10,138
Magnolia Shopping Center	October 2018	5.500	%	—			8,951
Casitas Plaza Shopping Center	June 2022	5.320	%	7,158			7,307
Riverstone Marketplace	July 2022	4.960	%	18,050			18,424
Fullerton Crossroads	April 2024	4.728	%	26,000			26,000
Diamond Hills Plaza	October 2025	3.550	%	35,500			35,500
				$	86,708		$	106,320
Mortgage premiums				2,074			1,921
Net unamortized deferred financing costs				(271		)	(326		)
Total mortgage notes payable				$	88,511		$	107,915

The combined aggregate principal maturities of mortgage notes payable during the next five years and thereafter are as follows (in thousands):

Principal Repayments Scheduled Amortization Mortgage Premium Total
2016 $ 7,112 $ 474 $ 517 $ 8,103
2017 8,099 361 381 8,841
2018 10,094 43 24 10,161
2019 — — — —
2020 — — — —
Thereafter 32,787 2,713 — 35,500
Total $ 58,092 $ 3,591 $ 922 $ 62,605

During the year ended December 31, 2015, the Company repaid the outstanding principal balance on the Renaissance Towne Center and Crossroads Shopping Center mortgage notes payable of $16.1 million and $48.3 million, respectively, without penalty, in accordance with the prepayment provisions of the notes.

On September 1, 2015, the Company entered into a $35.5 million loan with PNC Bank, National Association. The loan is secured by the Diamond Hills Plaza property and bears interest at 3.55% annually. The loan matures on October 1, 2025, is interest only through September 30, 2021 and amortizes thereafter, on a 30-year amortization.



	Principal Repayments		Scheduled Amortization		Mortgage Premium		Total
2019	$	—	$	551	$	481	$	1,032
2020	—		577		481		1,058
2021	—		717		481		1,198
2022	23,129		1,003		344		24,476
2023	—		686		216		902
Thereafter	58,787		1,258		71		60,116
Total	$	81,916	$	4,792	$	2,074	$	88,782

Term Loan and Credit Facility

The carrying values of the Company’s unsecured term loan (the “term loan”) were as follows (in thousands):



	December 31, 2018			December 31, 2017
Term loan	$	300,000		$	300,000
Net unamortized deferred financing costs	(924		)	(1,184		)
Term loan	$	299,076		$	298,816

On September 29, 2015, the Company entered into aan unsecured term loan agreement ~~(the “Term Loan Agreement”) with KeyBank National Association, as Administrative Agent, and U.S. Bank National Association, as Syndication Agent and the other lenders party thereto,~~ under which the lenders agreed to provide a $300.0 million unsecured term loan facility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term Loan Agreement”) pursuant to which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term Loan Agreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions set forth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. The initial maturity date of the term loan is January 31, 2019, subject to two one-year extension options, which may be exercised upon satisfaction of certain conditions including the payment of extension fees. Borrowings under the Term Loan Agreement accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the relevant period (the “Eurodollar Rate”), or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the Administrative Agent as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%.

The carrying values of the Company’s unsecured revolving credit facility were as follows (in thousands):



	December 31, 2018			December 31, 2017
Credit facility	$	156,000		$	143,500
Net unamortized deferred financing costs	(2,311		)	(3,171		)
Credit facility	$	153,689		$	140,329

The Operating Partnership has an unsecured revolving credit facility with several ~~banks~~banks. Effective September 8, 2017, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which ~~provides for borrowings~~the borrowing capacity under the credit facility was increased from $500.0 million to $600.0 million. The maturity date of upthe credit facility was extended from January 31, 2019 to ~~$500.0 million.~~September 8, 2021, with two six-month extension options, which may be exercised by the Operating Partnership upon satisfaction of certain conditions including the payment of extension fees. Additionally, the credit facility contains an accordion feature, which allows the Operating Partnership to increase the borrowing capacity under the credit facility ~~amount~~ up to an aggregate of ~~$1.0~~$1.2 billion, subject to lender consents and other conditions. The maturity date of the credit facility has been extended to January 31, 2019, subject to a further one-year extension option, which may be exercised by the Operating Partnership upon satisfaction of certain conditions. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank, National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. Additionally, the Operating Partnership is obligated to pay a facility fee at a rate based on the credit rating level of the Company, currently 0.20%, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the credit facility. The Company ~~obtained~~has investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services (BBB-) ~~during the second quarter of 2013.~~

2018.

Senior Notes Due ~~2024~~

2027

The carrying value of the Company’s unsecured Senior Notes Due 2027 is as follows (in thousands):



	December 31, 2018			December 31, 2017
Principal amount	$	250,000		$	250,000
Net unamortized deferred financing costs	(1,123		)	(1,249		)
Senior Notes Due 2027	$	248,877		$	248,751

On November 10, 2017, the Operating Partnership entered into a Note Purchase Agreement which provided for the issuance of $250.0 million principal amount of 4.19% Senior Notes Due 2027 (the “Senior Notes Due 2027”) in a private placement effective December 15, 2017. The Senior Notes Due 2027 pay interest on June 15 and December 15 of each year, commencing on June 15, 2018, and mature on December 15, 2027, unless prepaid earlier by the Operating Partnership. The Operating Partnership’s performance of the obligations under the Note Purchase Agreement, including the payment of any outstanding indebtedness thereunder, are guaranteed, jointly and severally, by ROIC. The net proceeds were used to reduce borrowings under the credit facility.

Senior Notes Due 2026

The carrying value of the Company’s unsecured Senior Notes Due 2026 is as follows (in thousands):



	December 31, 2018			December 31, 2017
Principal amount	$	200,000		$	200,000
Net unamortized deferred financing costs	(219		)	(248		)
Senior Notes Due 2026	$	199,781		$	199,752

On July 26, 2016, the Operating Partnership entered into a Note Purchase Agreement, as amended, which provided for the issuance of $200.0 million principal amount of 3.95% Senior Notes Due 2026 (the “Senior Notes Due 2026”) in a private placement effective September 22, 2016. The Senior Notes Due 2026 pay interest on March 22 and September 22 of each year, commencing on March 22, 2017, and mature on September 22, 2026, unless prepaid earlier by the Operating Partnership. The Operating Partnership’s performance of the obligations under the Note Purchase Agreement, including the payment of any outstanding indebtedness thereunder, are guaranteed, jointly and severally, by ROIC. The net proceeds were used to reduce borrowings under the credit facility.

Senior Notes Due 2024

The carrying value of the Company’s unsecured Senior Notes Due 2024 is as follows (in thousands):

December 31, 2015 December 31, 2014
Principal amount $ 250,000 $ 250,000
Unamortized debt discount (3,191 ) (3,479 )
Senior Notes Due 2024: $ 246,809 $ 246,521



	December 31, 2018			December 31, 2017
Principal amount	$	250,000		$	250,000
Unamortized debt discount	(2,252		)	(2,578		)
Net unamortized deferred financing costs	(1,314		)	(1,535		)
Senior Notes Due 2024	$	246,434		$	245,887

On December 3, 2014, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of 4.000% Senior Notes due 2024 (the “Senior Notes Due 2024”), fully and unconditionally guaranteed by ROIC. The Senior Notes Due 2024 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2015, and mature on December 15, 2024, unless redeemed earlier by the Operating Partnership. The Senior Notes Due 2024 are the Operating Partnership’s senior unsecured obligations that rank equally in right of payment with the Operating Partnership’s other unsecured indebtedness, and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and any preferred equity of the Operating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extent of the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligations under the Senior Notes Due 2024 on a senior unsecured basis, including the due and punctual payment of principal of, and premium, if any, and interest on, the notes, whether at stated maturity, upon acceleration, notice of redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and ranks equally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Senior Notes Due 2024 is effectively subordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including the Operating Partnership and any entity ROIC accounts for under the equity method of accounting). The interest expense recognized on the Senior Notes Due 2024 during the year ended December 31, 2015 includes $10.0 million and approximately $288,000 for the contractual coupon interest and the accretion of the debt discount, respectively. The interest expense recognized on the Senior Notes Due 2024 during the year ended December 31, 2014 includes $750,000 and approximately $21,000 for the contractual coupon interest and the accretion of the debt discount, respectively.

~~In connection with the Senior Notes Due 2024 offering, the Company incurred approximately $2.2 million of deferred financing costs which are being amortized over the term of the Senior Notes Due 2024.~~

Senior Notes Due 2023

The carrying value of the Company’s unsecured Senior Notes Due 2023 is as follows (in thousands):

December 31, 2015 December 31, 2014
Principal amount $ 250,000 $ 250,000
Unamortized debt discount (3,482 ) (3,826 )
Senior Notes Due 2023: $ 246,518 $ 246,174



	December 31, 2018			December 31, 2017
Principal amount	$	250,000		$	250,000
Unamortized debt discount	(2,339		)	(2,737		)
Net unamortized deferred financing costs	(1,304		)	(1,567		)
Senior Notes Due 2023	$	246,357		$	245,696

On December 9, 2013, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of 5.000% Senior Notes due 2023 (the “Senior Notes Due 2023”), fully and unconditionally guaranteed by ROIC.

The Senior Notes Due 2023 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2014, and mature on December 15, 2023, unless redeemed earlier by the Operating Partnership. The Senior Notes Due 2023 are the Operating Partnership’s senior unsecured obligations that rank equally in right of payment with the Operating Partnership’s other unsecured indebtedness, and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and any preferred equity of the Operating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extent of the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligations under the Senior Notes Due 2023 on a senior unsecured basis, including the due and punctual payment of principal of, and premium, if any, and interest on, the notes, whether at stated maturity, upon acceleration, notice of redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and will rank equally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Senior Notes Due 2023 is effectively subordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including the Operating Partnership and any entity ROIC accounts for under the equity method of accounting).

The ~~interest expense recognized on~~combined aggregate principal maturities of the Company’s unsecured senior notes payable during the next five years and thereafter are as follows (in thousands):



	Principal Repayments
2019	$	—
2020	—
2021	—
2022	—
2023	250,000
Thereafter	700,000
Total	$	950,000

Deferred Financing Costs

The unamortized balances of deferred financing costs associated with the Company’s term loan, unsecured revolving credit facility, Senior Notes Due 2027, Senior Notes Due 2026, Senior Notes Due 2024, Senior Notes Due 2023, and mortgage notes payable included as a direct reduction from the carrying amount of the related debt instrument in the Consolidated Balance Sheets as of December 31, 2018 that will be charged to future operations during the ~~year ended December 31, 2015 includes approximately $12.5 million~~next five years and approximately $344,000 for the contractual coupon interest and the accretion of the debt discount, respectively. The interest expense recognized on the Senior Notes Due 2023 during the year ended December 31, 2014 includes approximately $12.4 million and approximately $329,000 for the contractual coupon interest and the accretion of the debt discount, respectively.

thereafter are as follows (in thousands):

~~In connection with the Senior Notes Due 2023 offering, the Company incurred approximately $2.6 million of deferred financing costs which are being amortized over the term of the Senior Notes Due 2023.~~

7.
Financing Costs
2019 $ 1,791
2020 1,791
2021 1,522
2022 848
2023 663
Thereafter 851
$ 7,466

6. Preferred Stock of ROIC

The Company is authorized to issue 50,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the board of directors. As of December 31, ~~2015~~2018 and ~~2014,~~2017, there were no shares of preferred stock outstanding.

7. Common Stock ~~and Warrants~~ of ROIC

Equity Issuance

In connection with the acquisitions of two properties during the year ended December 31, 2017, a portion of the consideration for the properties was funded through the issuance of 2,405,430 OP Units. On ~~August 10, 2015,~~December 12, 2017, the Company issued 2,584,254 shares of common stock, at a price per share of $21.25, in exchange for the 2,405,430 OP Units previously issued and the rights

to approximately $3.8 million of cash to be used to acquire a third property to be identified by the Company. The proceeds of approximately $3.8 million were classified in Restricted Cash in the consolidated balance sheet as of December 31, 2017, as the proceeds were being held with an exchange accommodator under Section 1031 of the Code, and were used to purchase replacement assets during the year ended December 31, 2018. The shares of common stock of the Company were issued in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

On July 12, 2016, ROIC issued ~~5,520,000~~6,555,000 shares of common stock in a registered public offering, including shares issued upon the exercise in full of the underwriters’ option to purchase additional shares, resulting in net proceeds of approximately ~~$87.4~~$133.0 million, after deducting the underwriters’ discounts and commissions and offering expenses. The net proceeds were used to reduce borrowings under the Operating Partnership’s ~~$500.0 million unsecured~~ revolving credit facility.

ATM

~~During the year ended December 31, 2014,~~

~~Warrants~~

Simultaneously with the consummation of the IPO, NRDC Capital Management, LLC purchased 8,000,000 Private Placement Warrants at a purchase price of $1.00 per warrant. The Private Placement Warrants were identical to the Public Warrants except that the Private Placement Warrants were exercisable on a cashless basis as long as they were still held by NRDC Capital Management, LLC or its members, members of its members’ immediate family or their controlled affiliates. The purchase price of the Private Placement Warrants approximated the fair value of such warrants at the purchase date.

~~On February 4, 2013, NRDC exercised the outstanding 8,000,000 Private Placement Warrants on a cashless basis pursuant to which ROIC issued 688,500 shares to NRDC.~~

ROIC had the right to redeem all of the outstanding warrants it issued in the IPO, at a price of $0.01 per warrant upon 30 days’ notice while the warrants were exercisable, only in the event that the last sale price of the common stock is at least a specified price. The terms of the warrants were as follows:

~~The exercise price of the warrants was $12.00.~~

~~The price at which ROIC’s common stock must trade before ROIC was able to redeem the warrants it issued in the IPO was $18.75.~~

To provide that a warrantholder’s ability to exercise warrants was limited to ensure that such holder’s “Beneficial Ownership” or “Constructive Ownership,” each as defined in ROIC’s charter, did not exceed the restrictions contained in the charter limiting the ownership of shares of ROIC’s common stock.

~~ROIC had reserved 53,400,000 shares for the exercise of the Public Warrants and the Private Placement Warrants, and issuance of shares under ROIC’s 2009 Equity Incentive Plan (the “2009 Plan”).~~Agents. During the year ended December 31, ~~2014, the third-party warrant holders exercised~~2018, ROIC sold a total of ~~5,878,216 Public Warrants, resulting~~75,314 shares of common stock under the Prior Sales Agreements, which resulted in gross proceeds of approximately ~~$70.5~~$1.5 million and commissions of ~~proceeds.~~approximately $19,000 paid to the Agents. During the year ended December 31, ~~2013, the third-party warrant holders exercised~~2017, ROIC sold a total of ~~18,877,482 Public Warrants, resulting in approximately $226.5 million of proceeds.~~

In May 2010, ROIC’s board of directors authorized a warrant repurchase program to repurchase up to a maximum of $40.0 million of ROIC’s warrants. During the year ended December 31, 2013, ROIC repurchased 744,850 warrants34,001 shares under the ~~program~~Prior Sales Agreements, which resulted in ~~open market transactions for~~gross proceeds of approximately ~~$1.4 million. During~~$681,000 and commissions of approximately $9,000 paid to the year ended December 31, 2013, ROIC repurchased an additional 15,834,000 warrants in privately negotiated transactions for approximately $31.3 million. No such repurchases occurred during the years ended December 31, 2014 and 2015.

Agents.

~~On October 23, 2014, ROIC's remaining outstanding warrants expired and 64,452 warrants expired unexercised.~~

Stock Repurchase Program

On July 31, 2013, ROIC’s board of directors authorized a stock repurchase program to repurchase up to a maximum of $50.0 million of the Company’s common stock. ~~During~~Through the year ended December 31, ~~2015,~~2018, the Company ~~did~~has not ~~repurchase~~repurchased any shares of common stock under this program.

8. Stock Compensation and Other Benefit Plans for ROIC

~~The Company~~

ROIC follows the FASB guidance related to stock compensation which establishes financial accounting and reporting standards for stock-based employee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer, or the employer incurs liabilities to employees in amounts based on the price of the employer’s stock. The guidance also defines a fair value-based method of accounting for an employee stock option or similar equity instrument.

~~During~~

In 2009, the Company adopted the 2009 Equity Incentive Plan. The 2009 Equity Incentive Plan ~~provides~~provided for grants of restricted common stock and stock option awards up to an aggregate of 7.5% of the issued and outstanding shares of ~~the Company’s~~ROIC’s common stock at the time of the award, subject to a ceiling of 4,000,000 shares.

The Company’s Annual Meeting of Stockholders was held on April 25, 2018 at which time the stockholders of the Company approved the Company’s Amended and Restated 2009 Equity Incentive Plan (the “Equity Incentive Plan”). The types of awards that may be granted under the Equity Incentive Plan include stock options, restricted shares, share appreciation rights, phantom shares, dividend equivalent rights and other equity-based awards. The Equity Incentive Plan has a fungible unit system that counts the number of shares of the Company’s common stock used in the issuance of full-value awards, such as restricted shares, differently than the number of shares of common stock used in the issuance of stock options. A total of 22,500,000 Fungible Units (as defined in the Equity Incentive Plan) are reserved for grant under the Equity Incentive Plan and the Fungible Unit-to-full-value award conversion ratio is 6.25 to 1.0. The Equity Incentive Plan will expire on April 25, 2028. Any available shares that had not been granted under the 2009 Equity Incentive Plan were rolled over and made available for issuance under the Equity Incentive Plan.

Restricted Stock

During the year ended December 31, ~~2015,~~2018, ROIC awarded ~~343,070~~514,972 shares of restricted common stock under the 2009 Equity Incentive Plan, of which ~~117,275~~180,200 shares are performance-based grants and the remainder of the shares are time based grants. The performance-based grants vest ~~in three equal annual tranches,~~ based on pre-defined market-specific performance criteria with a vesting ~~dates~~date on January 1, ~~2016, 2017 and 2018.~~

2021.

A summary of the status of the Company’s non-vested restricted stock awards as of December 31, ~~2015,~~2018, and changes during the year ended December 31, ~~2015~~2018 are presented below:

Shares Weighted Average
Grant Date Fair Value
Non-vested at December 31, 2014 559,358 $ 11.51
Granted 343,070 $ 15.58
Vested (272,125 ) $ 12.10
Forfeited (2,832 ) $ 15.88
Non-vested at December 31, 2015 627,471 $ 14.39



	Shares		Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2017	781,467		$	18.14
Granted	514,972		$	15.85
Vested	(274,608	)	$	18.46
Forfeited	(18,996	)	$	17.75
Non-vested as of December 31, 2018	1,002,835		$	16.88

As of December 31, ~~2015,~~2018, there remained a total of ~~$4.0~~approximately $7.5 million of unrecognized restricted stock compensation related to outstanding non-vested restricted stock grants awarded under the 2009 Equity Incentive Plan. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 1.7 years (irrespective of achievement of the performance conditions). The total fair value of restricted stock that vested during the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013~~2016 was ~~$4.6~~$5.5 million, ~~$2.9~~$6.3 million and ~~$2.4~~$5.6 million, respectively.

Stock Based Compensation Expense

For the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013,~~2016, the amounts charged to expense for all stock based compensation totaled approximately ~~$4.7~~$7.4 million, ~~$3.7~~$6.2 million and ~~$2.9~~$4.9 million, respectively.

Profit Sharing and Savings Plan

During 2011, the Company established a profit sharing and savings plan (the “401K Plan”), which permits eligible employees to defer a portion of their compensation in accordance with the Code. Under the 401K Plan, the Company made matching contributions on behalf of eligible employees. The Company made contributions to the 401K Plan of approximately ~~$31,000, $25,000~~$86,000, $70,000 and ~~$20,000~~$76,000 for the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013,~~2016, respectively.

~~10.~~

9. Capital of the Operating Partnership

As of December 31, ~~2015,~~2018, the Operating Partnership had ~~111,726,637~~125,469,878 OP Units outstanding. ROIC owned an approximate ~~89.0%~~90.8% interest in the Operating Partnership at December 31, ~~2015,~~2018, or ~~99,531,034~~113,992,837 OP Units. The remaining ~~12,195,603~~11,477,041 OP Units are owned by other limited partners. A share of ROIC’s common stock and the OP Units have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership.

~~Subject~~

As of December 31, 2018, subject to certain exceptions, holders ~~of 10,249,120 OP Units may~~are able to redeem their OP Units, at the option of ROIC, for cash or for unregistered shares of ROIC common stock on a one-for-one basis. If cash is paid in the redemption, the redemption price is equal to the average closing price on the NASDAQ Stock Market for shares of ROIC’s common stock over the ten consecutive trading days immediately preceding the date a redemption notice is received by ROIC.

During the year ended December 31, 2015, in connection with the acquisition of the property known as Sternco Shopping Center, the Operating Partnership issued 1,946,483 OP Units whereby the Operating Partnership is required to deliver cash in exchange for the OP Units upon redemption if such OP Units are redeemed on or before January 31, 2016 (“Redeemable OP Units”).

~~During the year ended December 31, 2015,~~2018, ROIC received notices of redemption for a total of ~~174,959~~201,950 OP Units. ROIC elected to redeem the 201,950 OP Units ~~for shares~~in cash, and accordingly, a total of of ROIC common stock on a one-for-one basis, and accordingly, ~~174,959 shares~~a total of ~~ROIC common stock were issued.~~

~~OP Units are classified as either mezzanine equity or permanent equity. If ROIC could be required~~approximately $3.7 million was paid during the year ended December 31, 2018 to ~~deliver cash in exchange for~~ the ~~OP Units upon redemption, such OP Units are differentiated and referred to as Redeemable OP Units. OP Units that could require settlement in cash result in presentation in the mezzanine section~~holders of the ~~balance sheet. ROIC has the ability to deliver unregistered common shares for the remaining portion of the~~respective OP ~~Units that are classified in permanent equity as of December 31, 2015 and 2014.~~

Units.

The redemption value of the OP Units owned by the limited partners as of December 31, 2018, not including ROIC, had such units been redeemed at December 31, ~~2015,~~2018, was approximately ~~$218.1~~$187.9 million, calculated ~~for the OP Units classified as permanent equity~~ based on the average closing price on the NASDAQ Stock Market of ROIC common stock for the ten consecutive trading days immediately preceding December 31, ~~2015,~~2018, which amounted to ~~$17.99~~$16.37 per ~~share, and calculated for mezzanine equity at the cash settlement price of $17.30.~~

share.

Retail Opportunity Investments GP, LLC, ROIC’s wholly-owned subsidiary, is the sole general partner of the Operating Partnership, and as the parent company, ROIC has the full and complete authority over the Operating Partnership’s day-to-day management and control. As the sole general partner of the Operating Partnership, ROIC effectively controls the ability to issue common stock of ROIC upon redemption of any OP ~~Units (excluding Redeemable OP Units).~~Units. The redemption provisions that permit ROIC to settle the redemption of OP Units in either cash or common stock, atin the ~~option~~sole discretion of ROIC, are further evaluated in accordance with applicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Company

evaluated this guidance, including the ~~requirement~~ability, in its sole discretion, to settle in unregistered shares of common stock, and determined that the OP Units meet the requirements to qualify for presentation as permanent equity.

~~11.~~

10. Fair Value of Financial Instruments

The Company follows the FASB guidance that defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The guidance applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies as discussed in Note 1. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts realizable upon disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts.

The carrying values of cash and cash equivalents, restricted cash, tenant and other receivables, deposits, prepaid expenses, other assets, accounts payable and accrued expenses are reasonable estimates of their fair values because of the short-term nature of these instruments. The carrying ~~value~~values of the term loan and revolving credit facility isare deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR contracts. The fair value of the outstanding Senior Notes Due 2027 and Senior Notes Due 2026 at December 31, 2018 was approximately $223.7 million and $178.4 million, respectively, calculated using significant inputs which are not observable in the market, or Level 3. The fair value of the outstanding Senior Notes Due 2024 and Senior Notes Due 2023 at December 31, 2018 was approximately $236.9 million and $249.3 million, respectively, based on inputs not quoted on active markets, but corroborated by market data, or Level ~~2, of the outstanding Senior Notes Due 2024 at December 31, 2015 is approximately $238.5 million.~~The fair value, based on inputs not quoted on active markets, but corroborated by market data, or Level 2, of the outstanding Senior Notes Due 2023 at December 31, 2015 is approximately $257.7 million.2. Assumed mortgage notes payable were recorded at their fair value at the time they were ~~assumed and are~~assumed. The Company’s outstanding mortgage notes payable were estimated to have a fair value of approximately ~~$26.9~~$86.3 million with an interest rate range of ~~3.4%~~4.2% to ~~3.8%~~4.4% and a weighted average interest rate of ~~3.6%~~4.3% as of December 31, ~~2015. Mortgage notes payable originated by the Company are estimated to have a fair value of approximately $32.8 million with an interest rate of 4.5% as of December 31, 2015.~~2018. These fair value measurements fall within ~~level~~Level 3 of the fair value hierarchy.

~~12.~~

11. Derivative and Hedging Activities

~~During the year ended December 31, 2014, the Company cash settled the remaining outstanding interest rate swaps, and accordingly, none are outstanding as of December 31, 2015.~~

The Company’s objectives in using interest rate derivatives ~~historically were~~is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company ~~used~~uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The ~~effective portion~~following is a summary of the terms of the Company’s current interest rate swaps as of December 31, 2018 (in thousands):



Swap Counterparty	Notional Amount		Effective Date	Maturity Date
Interest Rate Swap Agreements:
Bank of Montreal	$	50,000	1/29/2016	1/31/2019
Regions Bank	$	50,000	2/29/2016	1/31/2019
Bank of Montreal	$	100,000	12/29/2017	8/31/2022
U.S. Bank	$	100,000	12/29/2017	8/31/2022
Forward Starting Interest Rate Swap Agreements:
Regions Bank	$	50,000	1/31/2019	8/31/2022
Royal Bank of Canada	$	50,000	1/31/2019	8/31/2022

The changes in the fair value of derivatives that are designated as cash flow hedges are recorded in ~~AOCI~~accumulated other comprehensive income (“AOCI”) and will be subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves, and implied volatilities. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The Company incorporated credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective ~~counterparty’s~~counterparties non-performance risk in the fair value measurements. In adjusting the fair value of its derivative contract for the effect of non-performance risk, the Company considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of December 31, 2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative position and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
December 31, 2018:
Assets
Derivative financial instruments	$	—	$	4,931		$	—	$	4,931
Liabilities
Derivative financial instruments	$	—	$	(580	)	$	—	$	(580	)

December 31, 2017
Assets
Derivative financial instruments	$	—	$	4,321		$	—	$	4,321

Amounts paid, or received, to cash settle interest rate derivatives prior to their maturity date are recorded in AOCI at the cash settlement amount, and will be reclassified to interest expense as interest expense is recognized on the hedged debt. During the next twelve months, the Company estimates that ~~$2.1~~$1.2 million will be reclassified as an increase to interest ~~expense.~~

expense related to the Company’s four outstanding swap arrangements and it’s previously cash-settled swap arrangements.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of December 31, 2018 and 2017, respectively (in thousands):



Derivatives designed as hedging instruments	Balance sheet location	December 31, 2018 Fair Value			December 31, 2017 Fair Value
Interest rate products	Other assets	$	4,931		$	4,321
Interest rate products	Other liabilities	$	(580	)	$	—

Derivatives in Cash Flow Hedging Relationships

The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the years ended December 31, ~~2015, 2014,~~2018, 2017, and ~~2013,~~2016, respectively (in thousands). Amounts reclassified from other comprehensive income (“OCI”) due to ineffectiveness are recognized as interest expense.

Year Ended
December 31, 2015 Year Ended
December 31, 2014 Year Ended
December 31, 2013
Amount of (loss) gain recognized in OCI on derivative $ — $ (3,132 ) $ 4,565
Amount of loss reclassified from accumulated OCI into interest $ 2,139 $ 3,219 $ 4,621
Amount of gain recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) $ — $ — $ 3

~~13.~~
Year Ended December 31,
2018 2017 2016
Amount of gain recognized in OCI on derivatives $ 1,648
$ 3,665
$ 541
Amount of loss reclassified from AOCI into interest $ 57
$ 1,920
$ 2,473

12. Commitments and Contingencies

In the normal course of business, from time to time, the Company is involved in legal actions relating to the ownership and operations of its properties. In management’s opinion, the liabilities, if any, that ultimately may result from such legal actions are not expected to have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company.

The Company has signed several ground leases for certain properties. For financial reporting purposes, rent expense is recognized on a straight-line basis over the term of the lease. Accordingly, rent expense recognized in excess of rent paid is reflected as a

liability in the accompanying consolidated balance sheets. Rent expense, for both ground leases and corporate office storage space, was approximately ~~$1.2~~$2.0 million, ~~$1.2~~$1.5 million, and ~~$1.1 million~~$831,000 for the years ended December 31, ~~2015, 2014~~2018, 2017, and ~~2013,~~2016, respectively.

The following table represents the Company’s future minimum annual lease payments under operating leases as of December 31, ~~2015~~2018 (in thousands):

Operating Leases
2016 $ 981
2017 1,049
2018 1,054
2019 1,059
2020 1,067
Thereafter 36,204
Total minimum lease payments $ 41,414



	Operating Leases
2019	$	1,280
2020	1,287
2021	1,283
2022	1,304
2023	1,330
Thereafter	33,939
Total minimum lease payments	$	40,423

Tax Protection Agreements

In connection with ~~the acquisition of the remaining 51% of the partnership interests in the Terranomics Crossroads Associates, LP and the acquisition of 100% of the equity interest in SARM Five Points Plaza LLC in~~certain acquisitions from September 2013 through March 2017, the Company entered into Tax Protection Agreements with certain limited partners of the Operating Partnership. The Tax Protection Agreements require the Company, subject to certain exceptions, ~~for a period of 12 years,~~ to indemnify the respective sellers receiving OP Units against certain tax liabilities incurred by them, as calculated pursuant to the respective Tax Protection Agreements, for a period of 12 years (with respect to Tax Protection Agreements entered into in September 2013), or 10 years (with respect to Tax Protection Agreements entered into from December 2014 through March 2017) from the date of the Tax Protection Agreements. If the Company were to trigger the tax protection provisions under these agreements, the Company would be required to pay damages in the amount of the taxes owed by these limited partners (plus additional damages in the amount of the taxes incurred as a result of such payment).

In connection with the acquisition of Wilsonville Town Center in December 2014 and Iron Horse Plaza, Sternco Shopping Center and Warner Plaza in December 2015 (all more fully discussed in Footnote 2), the Company entered into Tax Protection Agreements with certain limited partners of the Operating Partnership. The Tax Protection Agreements require the Company, subject to certain exceptions, for a period of 10 years, to indemnify the respective sellers receiving OP Units against certain tax liabilities incurred by them, as calculated pursuant to the respective Tax Protection Agreements. If the Company were to trigger the tax protection provisions under these agreements, the Company would be required to pay damages in the amount of the taxes owed by these limited partners (plus additional damages in the amount of the taxes incurred as a result of such payment).

~~14.~~

13. Related Party Transactions

The Company has entered into several lease agreements with an officer of the Company, whereby pursuant to the lease agreements, the Company is provided the use of storage space. For the years ended December 31, ~~2015, 2014~~2018, 2017, and ~~2013,~~2016, the Company incurred approximately ~~$42,000, $37,000~~$74,000, $52,000 and ~~$25,000,~~$46,000, respectively, of expenses relating to the agreements which were included in general and administrative expenses in the accompanying consolidated statements of operations and other comprehensive income.

~~15.~~

14. Quarterly Results of Operations (Unaudited)

The unaudited quarterly results of operations for the years ended December 31, ~~2015~~2018 and ~~2014~~2017 for ROIC are as follows (in thousands, except share data):

Year Ended December 31, 2015
March 31 June 30 September 30 December 31
Total revenues $ 45,122 $ 46,215 $ 50,077 $ 51,285
Net income $ 4,376 $ 5,411 $ 7,837 $ 7,468
Net income attributable to ROIC $ 4,200 $ 5,201 $ 7,542 $ 6,921
Basic income per share $ 0.04 $ 0.05 $ 0.08 $ 0.07
Diluted income per share $ 0.04 $ 0.05 $ 0.08 $ 0.07

Year Ended December 31, 2014
March 31 June 30 September 30 December 31
Total revenues $ 36,350 $ 36,915 $ 40,856 $ 41,743
Net income $ 3,266 $ 6,051 $ 6,981 $ 4,752
Net income attributable to ROIC $ 3,132 $ 5,834 $ 6,748 $ 4,587
Basic income per share $ 0.04 $ 0.08 $ 0.07 $ 0.05
Diluted income per share $ 0.04 $ 0.07 $ 0.07 $ 0.05



	Year Ended December 31, 2018
	March 31		June 30		September 30		December 31
Total revenues	$	74,395	$	72,341	$	73,904	$	75,158
Net income	$	11,824	$	8,102	$	15,647	$	11,568
Net income attributable to ROIC	$	10,702	$	7,339	$	14,194	$	10,501
Basic and diluted income per share	$	0.09	$	0.06	$	0.12	$	0.09



	Year Ended December 31, 2017
	March 31		June 30		September 30		December 31
Total revenues	$	65,900	$	66,640	$	67,966	$	72,754
Net income	$	11,251	$	9,197	$	10,127	$	12,113
Net income attributable to ROIC	$	10,170	$	8,309	$	9,149	$	10,849
Basic and diluted income per share	$	0.09	$	0.08	$	0.08	$	0.10

The unaudited quarterly results of operations for the years ended December 31, ~~2015~~2018 and ~~2014~~2017 for the Operating Partnership are as follows (in thousands, except unit data):

Year Ended December 31, 2015
March 31 June 30 September 30 December 31
Total revenues $ 45,122 $ 46,215 $ 50,077 $ 51,285
Net income attributable to the Operating Partnership $ 4,376 $ 5,411 $ 7,837 $ 7,468
Basic income per unit $ 0.04 $ 0.05 $ 0.08 $ 0.07
Diluted income per unit $ 0.04 $ 0.05 $ 0.08 $ 0.07

Year Ended December 31, 2014
March 31 June 30 September 30 December 31
Total revenues $ 36,350 $ 36,915 $ 40,856 $ 41,743
Net income attributable to the Operating Partnership $ 3,266 $ 6,051 $ 6,981 $ 4,752
Basic income per unit $ 0.04 $ 0.07 $ 0.07 $ 0.05
Diluted income per unit $ 0.04 $ 0.07 $ 0.07 $ 0.05

~~16.~~



	Year Ended December 31, 2018
	March 31		June 30		September 30		December 31
Total revenues	$	74,395	$	72,341	$	73,904	$	75,158
Net income attributable to the Operating Partnership	$	11,824	$	8,102	$	15,647	$	11,568
Basic and diluted income per unit	$	0.09	$	0.06	$	0.12	$	0.09



	Year Ended December 31, 2017
	March 31		June 30		September 30		December 31
Total revenues	$	65,900	$	66,640	$	67,966	$	72,754
Net income attributable to the Operating Partnership	$	11,251	$	9,197	$	10,127	$	12,113
Basic and diluted income per unit	$	0.09	$	0.08	$	0.08	$	0.10

15. Subsequent Events

~~Prior to January 31, 2016,~~

On February 15, 2019, the Company ~~received notices of redemption~~sold Vancouver Market Center, a non-core shopping center located in Vancouver, Washington for ~~1,828,825 Redeemable OP Units. The Company redeemed the OP Units in cash at~~ a sales price of $17.30, in accordance with the Contribution Agreement for the closing of the property known as Sternco Shopping Center, and accordingly, a total of approximately $31.6 million was paid to the holders of the respective Redeemable OP Units. The remaining 117,658 Redeemable OP Units converted to OP Units on January 31, 2016 and are treated as permanent equity as ROIC now has the sole election to settle the OP Units in cash or unregistered shares of ROIC common stock.

On January 15, 2016, the Company entered into a $50.0 million interest rate swap with Bank of Montreal. The swap has an effective date of January 29, 2016 and a termination date of January 31, 2019. Further, on February 2, 2016, the Company entered into a $50.0 million interest rate swap with Regions Bank. The swap has an effective date of February 29, 2016 and a termination date of January 31, 2019. These swaps are being used to hedge the anticipated variable cash flows associated with the Company’s variable rate debt that is outstanding as of December 31, 2015.

$17.0 million.

On February ~~23, 2016,~~19, 2019, the Company’s board of directors declared a cash dividend on its common stock of ~~$0.18~~$0.1970 per share, payable on March ~~30, 2016~~28, 2019 to holders of record on March ~~16, 2016.~~

14, 2019.

SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, ~~2015~~

2018

(in thousands)

Initial Cost to Company Cost Capitalized Subsequent to Acquisition Amount at Which Carried at Close of Period

Description and Location

Encumbrances

Land
Building &
Improvements

Land
Building &
Improvements

Land
Building &
Improvements

Total
Accumulated
Depreciation⁽¹⁾
Date of
Acquisition^(a)

Paramount Plaza, CA $ — $ 6,347 $ 10,274 $ 214 $ 1,306 $ 6,561 $ 11,580 $ 18,141 $ 2,093 12/22/2009
Santa Ana Downtown Plaza, CA — 7,895 9,890 — 1,018 7,895 10,908 18,803 1,989 1/26/2010
Meridian Valley Plaza, WA — 1,881 4,795 — 555 1,881 5,350 7,231 964 2/1/2010
The Market at Lake Stevens, WA — 3,087 12,397 — 313 3,087 12,710 15,797 2,216 3/16/2010
Norwood Shopping Center, CA — 3,031 11,534 122 1,086 3,153 12,620 15,773 2,101 4/5/2010
Pleasant Hill Marketplace, CA — 6,359 6,927 — 741 6,359 7,668 14,027 1,538 4/8/2010
Vancouver Market Center, WA — 4,080 6,912 — 735 4,080 7,647 11,727 1,183 6/17/2010
Happy Valley Town Center, OR — 11,678 27,011 — 1,742 11,678 28,753 40,431 4,838 7/14/2010
Cascade Summit, OR — 8,853 7,732 — 332 8,853 8,064 16,917 1,638 8/20/2010
Heritage Market Center, WA — 6,595 17,399 — 408 6,595 17,807 24,402 2,928 9/23/2010
Claremont Center, CA⁽²⁾ — 5,975 1,019 183 4,360 6,158 5,379 11,537 1,580 9/23/2010
Shops At Sycamore Creek, CA — 3,747 11,584 — 880 3,747 12,464 16,211 2,520 9/30/2010
Gateway Village, CA 7,166 5,917 27,298 — 510 5,917 27,808 33,725 4,053 12/16/2010
Division Crossing, OR — 3,706 8,327 — 5,713 3,706 14,040 17,746 1,967 12/22/2010
Halsey Crossing, OR⁽²⁾ — — 7,773 — 798 — 8,571 8,571 1,401 12/22/2010
Marketplace Del Rio,CA — 13,420 22,251 — 1,681 13,420 23,932 37,352 3,774 1/3/2011
Pinole Vista, CA — 12,894 30,670 — 2,134 12,894 32,804 45,698 3,645 1/6/2011
Desert Spring Marketplace, CA — 8,517 18,761 (160 ) 1,513 8,357 20,274 28,631 3,327 2/17/2011
Mills Shopping Center, CA — 4,084 16,833 — 6,570 4,084 23,403 27,487 3,675 2/17/2011
Morada Ranch, CA — 2,504 19,547 — 509 2,504 20,056 22,560 3,007 5/20/2011
Renaissance, CA — 8,640 13,848 — 441 8,640 14,289 22,929 1,947 8/3/2011
Country Club Gate, CA — 6,487 17,341 — 1,000 6,487 18,341 24,828 2,672 7/8/2011
Canyon Park, WA — 9,352 15,916 — 3,215 9,352 19,131 28,483 2,281 7/29/2011
Hawks Prairie, WA — 5,334 20,694 — 436 5,334 21,130 26,464 2,797 9/8/2011
Kress Building, WA — 5,693 20,866 — 4,672 5,693 25,538 31,231 3,351 9/30/2011
Round Hill Square, CA — 6,358 17,734 — 950 6,358 18,684 25,042 2,681 8/23/2011
Hillsboro, OR ⁽²⁾ — — 18,055 — 587 — 18,642 18,642 2,486 11/23/2011
Gateway Shopping Center, WA⁽²⁾ — 6,242 23,462 — 30 6,242 23,492 29,734 2,732 2/16/2012
Euclid Plaza, CA — 7,407 7,753 — 2,859 7,407 10,612 18,019 1,527 3/28/2012
Green Valley, CA — 1,685 8,999 — 414 1,685 9,413 11,098 1,282 4/2/2012
Aurora Square, WA — 3,002 1,693 — (28 ) 3,002 1,665 4,667 324 5/3/2012
Marlin Cove, CA — 8,815 6,797 — 1,384 8,815 8,181 16,996 1,160 5/4/2012
Seabridge, CA — 5,098 17,164 — 658 5,098 17,822 22,920 2,257 5/31/2012
Novato, CA — 5,329 4,412 — 937 5,329 5,349 10,678 527 7/24/2012
Glendora, CA — 5,847 8,758 — 164 5,847 8,922 14,769 1,139 8/1/2012
Wilsonville, WA — 4,181 15,394 — 249 4,181 15,643 19,824 1,703 8/1/2012
Bay Plaza, CA — 5,454 14,857 — 1,274 5,454 16,131 21,585 1,748 10/5/2012
Santa Theresa, CA 10,613 14,965 17,162 — 2,954 14,965 20,116 35,081 2,202 11/8/2012
Cypress West, CA — 15,480 11,819 5 1,966 15,485 13,785 29,270 1,480 12/7/2012
Redondo Beach, CA — 16,242 13,625 5 16 16,247 13,641 29,888 1,326 12/28/2012
Harbor Place, CA — 16,506 10,527 — 324 16,506 10,851 27,357 977 12/28/2012
Diamond Bar Town Center, CA — 9,540 16,795 — 3,608 9,540 20,403 29,943 2,019 2/1/2013
Bernardo Heights, CA 8,404 3,192 8,940 — 720 3,192 9,660 12,852 849 2/6/2013
Canyon Crossing, WA — 7,941 24,659 — 2,649 7,941 27,308 35,249 2,529 4/15/2013
Diamond Hills, CA 35,500 15,458 29,353 — 383 15,458 29,736 45,194 2,701 4/22/2013
Granada Shopping Center, CA — 3,673 13,459 — 387 3,673 13,846 17,519 1,161 6/27/2013
Hawthorne Crossings, CA — 10,383 29,277 — 554 10,383 29,831 40,214 2,399 6/27/2013
Robinwood, CA — 3,997 11,317 — 518 3,997 11,835 15,832 938 8/23/2013
Five Points Plaza, CA — 18,420 36,965 — 2,600 18,420 39,565 57,985 2,456 9/27/2013
Crossroads Shopping Center, CA — 68,366 67,756 — 6,524 68,366 74,280 142,646 5,674 9/27/2013
Peninsula Marketplace, CA — 14,730 19,214 — 49 14,730 19,263 33,993 1,341 11/1/2013
Country Club Village, CA — 9,986 26,579 — 1,603 9,986 28,182 38,168 2,067 11/26/2013
Plaza de la Canada, CA — 10,351 24,819 — 331 10,351 25,150 35,501 1,556 12/13/2013
Tigard Marketplace, CA — 13,587 9,603 — 390 13,587 9,993 23,580 797 2/18/2014
Creekside Plaza, CA — 14,807 29,476 — 122 14,807 29,598 44,405 1,945 2/28/2014
North Park Plaza, CA — 13,593 17,733 — 6 13,593 17,739 31,332 884 4/30/2014
Aurora Square II, WA — 6,862 9,798 — 31 6,862 9,829 16,691 609 5/22/2014
Fallbrook Shopping Center⁽²⁾ — 21,232 186,197 83 3,556 21,315 189,753 211,068 9,043 6/13/2014
Moorpark Town Center, CA — 7,063 19,694 — 1,096 7,063 20,790 27,853 798 12/4/2014
Mission Foothill Marketplace, CA — 11,415 17,783 — 207 11,415 17,990 29,405 672 12/4/2014
Wilsonville Town Center, OR — 10,334 27,101 — 81 10,334 27,182 37,516 1,059 12/11/2014
Ontario Plaza — 9,825 26,635 — 35 9,825 26,670 36,495 893 1/6/2015
Winston Manor — 10,018 9,762 — 1,729 10,018 11,491 21,509 336 1/7/2015
Jackson Square — 6,886 24,558 — 234 6,886 24,792 31,678 389 7/1/2015
Tigard Promenade — 9,844 10,843 — 7 9,844 10,850 20,694 163 7/28/2015
Sunnyside Village Square — 4,428 13,324 — — 4,428 13,324 17,752 192 7/28/2015
Gateway Centre — 16,275 28,308 — 40 16,275 28,348 44,623 301 9/1/2015
Johnson Creek — 6,290 25,160 — 374 6,290 25,534 31,824 108 11/9/2015
Iron Horse Plaza — 9,111 36,444 — — 9,111 36,444 45,555 78 12/4/2015
Sternco Shopping Center — 9,889 39,558 — — 9,889 39,558 49,447 86 12/10/2015
Four Corner Square — 8,368 33,470 — — 8,368 33,470 41,838 72 12/21/2015
Warner Plaza Shopping Center — 15,777 63,109 — — 15,777 63,109 78,886 — 12/31/2015

$ 61,683 $ 668,855 $ 1,541,563 $ 452 $ 85,747 $ 669,307 $ 1,627,310 $ 2,296,617 $ 134,311



			Initial Cost to Company				Cost Capitalized Subsequent to Acquisition				Amount at Which Carried at Close of Period
Description and Location	Encumbrances		Land		Building & Improvements		Land		Building & Improvements		Land		Building & Improvements		Total ^(a)		Accumulated Depreciation ^{(b) (1)}		Date of Acquisition
Paramount Plaza, CA	$	—	$	6,347	$	10,274	$	447	$	2,227	$	6,794	$	12,501	$	19,295	$	3,571	12/22/2009
Santa Ana Downtown Plaza, CA	—		7,895		9,890		—		3,856		7,895		13,746		21,641		3,281		1/26/2010
Meridian Valley Plaza, WA	—		1,881		4,795		—		1,724		1,881		6,519		8,400		1,696		2/1/2010
The Market at Lake Stevens, WA	—		3,087		12,397		—		408		3,087		12,805		15,892		3,394		3/16/2010
Norwood Shopping Center, CA	—		3,031		11,534		122		1,253		3,153		12,787		15,940		3,419		4/5/2010
Pleasant Hill Marketplace, CA	—		6,359		6,927		—		1,590		6,359		8,517		14,876		2,396		4/8/2010
Vancouver Market Center, WA	—		4,080		6,912		—		3,981		4,080		10,893		14,973		2,356		6/17/2010
Happy Valley Town Center, OR	—		11,678		27,011		—		2,564		11,678		29,575		41,253		7,539		7/14/2010
Cascade Summit Town Square, OR	—		8,853		7,732		—		421		8,853		8,153		17,006		2,595		8/20/2010
Heritage Market Center, WA	—		6,595		17,399		—		771		6,595		18,170		24,765		4,442		9/23/2010
Claremont Promenade, CA	—		5,975		1,019		183		4,402		6,158		5,421		11,579		2,383		9/23/2010
Sycamore Creek, CA	—		3,747		11,584		—		582		3,747		12,166		15,913		3,572		9/30/2010
Gateway Village, CA	—		5,917		27,298		—		989		5,917		28,287		34,204		6,624		12/16/2010
Division Crossing, OR	—		3,706		8,327		—		5,700		3,706		14,027		17,733		3,980		12/22/2010
Halsey Crossing, OR ⁽²⁾	—		—		7,773		—		7,690		—		15,463		15,463		2,914		12/22/2010
Marketplace Del Rio,CA	—		13,420		22,251		9		2,462		13,429		24,713		38,142		6,357		1/3/2011
Pinole Vista Shopping Center, CA	—		12,894		35,689		—		4,247		12,894		39,936		52,830		6,424		1/6/2011 / 8/27/2018
Desert Springs Marketplace, CA	—		8,517		18,761		443		6,568		8,960		25,329		34,289		5,693		2/17/2011
Mills Shopping Center, CA	—		4,084		16,833		—		11,693		4,084		28,526		32,610		8,137		2/17/2011
Morada Ranch, CA	—		2,504		19,547		—		791		2,504		20,338		22,842		4,717		5/20/2011
Renaissance Towne Centre, CA	—		8,640		13,848		—		1,667		8,640		15,515		24,155		2,987		8/3/2011
Country Club Gate Center, CA	—		6,487		17,341		—		1,208		6,487		18,549		25,036		4,403		7/8/2011
Canyon Park Shopping Center, WA	—		9,352		15,916		—		8,757		9,352		24,673		34,025		5,284		7/29/2011
Hawks Prairie Shopping Center, WA	—		5,334		20,694		—		2,224		5,334		22,918		28,252		4,657		9/8/2011
The Kress Building, WA	—		5,693		20,866		—		4,825		5,693		25,691		31,384		6,179		9/30/2011
Hillsboro Market Center, OR ⁽²⁾	—		—		17,553		—		3,493		—		21,046		21,046		4,295		11/23/2011
Gateway Shopping Center, WA ⁽²⁾	—		6,242		23,462		—		8		6,242		23,470		29,712		4,582		2/16/2012
Euclid Plaza, CA	—		7,407		7,753		—		2,905		7,407		10,658		18,065		2,954		3/28/2012
Green Valley Station, CA	—		1,685		8,999		—		591		1,685		9,590		11,275		2,292		4/2/2012
Aurora Square, WA	—		10,325		13,336		—		1,906		10,325		15,242		25,567		2,220		5/3/2012 / 5/22/2014
Marlin Cove Shopping Center, CA	—		8,815		6,797		—		2,084		8,815		8,881		17,696		2,212		5/4/2012



Seabridge Marketplace, CA	—	5,098	17,164	—	3,482	5,098	20,646	25,744	3,798	5/31/2012
The Village at Novato, CA	—	5,329	4,412	—	1,550	5,329	5,962	11,291	1,044	7/24/2012
Glendora Shopping Center, CA	—	5,847	8,758	—	211	5,847	8,969	14,816	2,062	8/1/2012
Wilsonville Old Town Square, OR	—	4,181	15,394	—	509	4,181	15,903	20,084	3,122	8/1/2012
Bay Plaza, CA	—	5,454	14,857	—	1,096	5,454	15,953	21,407	3,161	10/5/2012
Santa Teresa Village, CA	—	14,965	17,162	—	5,539	14,965	22,701	37,666	4,819	11/8/2012
Cypress Center West, CA	—	15,480	11,819	121	2,065	15,601	13,884	29,485	3,129	12/7/2012
Redondo Beach Plaza, CA	—	16,242	13,625	55	217	16,297	13,842	30,139	2,659	12/28/2012
Harbor Place Center, CA	—	16,506	10,527	—	289	16,506	10,816	27,322	1,932	12/28/2012
Diamond Bar Town Center, CA	—	9,540	16,795	—	3,542	9,540	20,337	29,877	4,662	2/1/2013
Bernardo Heights Plaza, CA	—	3,192	8,940	—	727	3,192	9,667	12,859	1,869	2/6/2013
Canyon Crossing, WA	—	7,941	24,659	—	2,946	7,941	27,605	35,546	5,808	4/15/2013
Diamond Hills Plaza, CA	35,500	15,458	29,353	—	357	15,458	29,710	45,168	5,310	4/22/2013
Granada Shopping Center, CA	—	3,673	13,459	—	491	3,673	13,950	17,623	2,536	6/27/2013
Hawthorne Crossings, CA	—	10,383	29,277	—	127	10,383	29,404	39,787	4,805	6/27/2013
Robinwood Shopping Center, OR	—	3,997	11,317	18	1,064	4,015	12,381	16,396	2,278	8/23/2013
5 Points Plaza, CA	—	17,920	36,965	—	4,082	17,920	41,047	58,967	6,358	9/27/2013
Crossroads Shopping Center, WA	—	68,366	67,756	—	17,984	68,366	85,740	154,106	14,039	9/27/2013
Peninsula Marketplace, CA	—	14,730	19,214	—	1,958	14,730	21,172	35,902	3,572	11/1/2013
Country Club Village, CA	—	9,986	26,579	—	2,017	9,986	28,596	38,582	5,188	11/26/2013
Plaza de la Canada, CA ⁽²⁾	—	10,351	24,819	—	519	10,351	25,338	35,689	3,777	12/13/2013
Tigard Marketplace, OR	—	13,587	9,603	—	565	13,587	10,168	23,755	2,128	2/18/2014
Creekside Plaza, CA	—	14,807	29,476	—	1,351	14,807	30,827	45,634	4,980	2/28/2014
North Park Plaza, CA	—	13,593	17,733	—	832	13,593	18,565	32,158	2,473	4/30/2014
Fallbrook Shopping Center, CA ⁽²⁾	—	21,232	186,197	83	9,286	21,315	195,483	216,798	26,910	6/13/2014
Moorpark Town Center, CA	—	7,063	19,694	—	1,562	7,063	21,256	28,319	3,569	12/4/2014
Mission Foothill Marketplace, CA	—	11,415	17,783	—	107	11,415	17,890	29,305	1,334	12/4/2014
Wilsonville Town Center, OR	—	10,334	27,101	—	622	10,334	27,723	38,057	3,666	12/11/2014
Park Oaks Shopping Center, CA	—	8,527	38,064	—	629	8,527	38,693	47,220	4,803	1/6/2016
Ontario Plaza, CA	—	9,825	26,635	—	1,499	9,825	28,134	37,959	3,707	1/6/2015
Winston Manor, CA	—	10,018	9,762	—	1,854	10,018	11,616	21,634	1,626	1/7/2015
Jackson Square, CA	—	6,886	24,558	—	921	6,886	25,479	32,365	2,796	7/1/2015
Tigard Promenade, OR	—	9,844	10,843	—	101	9,844	10,944	20,788	1,173	7/28/2015
Sunnyside Village Square, OR	—	4,428	13,324	—	3,412	4,428	16,736	21,164	1,996	7/28/2015
Gateway Centre, CA	—	16,275	28,308	—	3,720	16,275	32,028	48,303	3,169	9/1/2015
Johnson Creek Center, OR	—	9,009	22,534	—	1,243	9,009	23,777	32,786	2,510	11/9/2015
Iron Horse Plaza, CA	—	8,187	39,654	—	1,571	8,187	41,225	49,412	3,400	12/4/2015
Bellevue Marketplace, WA	—	10,488	39,119	—	8,385	10,488	47,504	57,992	3,972	12/10/2015
Four Corner Square, WA	—	9,926	31,415	—	350	9,926	31,765	41,691	3,123	12/21/2015
Warner Plaza, CA	—	16,104	60,188	—	8,834	16,104	69,022	85,126	6,067	12/31/2015



Magnolia Shopping Center, CA	—		12,501		27,040		—		1,866			12,501		28,906		41,407		2,545		3/10/2016
Casitas Plaza Shopping Center, CA	7,158		10,734		22,040		—		961			10,734		23,001		33,735		1,825		3/10/2016
Bouquet Center, CA	—		10,040		48,362		—		479			10,040		48,841		58,881		3,891		4/28/2016
North Ranch Shopping Center, CA	—		31,522		95,916		—		1,061			31,522		96,977		128,499		6,884		6/1/2016
Monterey Center, CA ⁽²⁾	—		1,073		10,609		—		(36		)	1,073		10,573		11,646		753		7/14/2016
Rose City Center, OR ⁽²⁾	—		3,637		10,301		—		(78		)	3,637		10,223		13,860		690		9/15/2016
The Knolls, CA	—		9,726		18,299		—		20			9,726		18,319		28,045		1,265		10/3/2016
Bridle Trails Shopping Center, WA	—		11,534		20,700		—		3,633			11,534		24,333		35,867		1,551		10/17/2016
Torrey Hills Corporate Center, CA	—		5,579		3,915		—		2,435			5,579		6,350		11,929		662		12/6/2016
PCC Community Markets Plaza, WA	—		1,856		6,914		—		7			1,856		6,921		8,777		432		1/25/2017
The Terraces, CA	—		18,378		37,103		—		505			18,378		37,608		55,986		2,046		3/17/2017
Santa Rosa Southside Shopping Center, CA	—		5,595		24,453		—		1,477			5,595		25,930		31,525		1,308		3/24/2017
Division Center, OR	—		6,917		26,098		—		1,421			6,917		27,519		34,436		1,433		4/5/2017
Highland Hill Shopping Center, WA	—		10,511		37,825		23		397			10,534		38,222		48,756		2,018		5/9/2017
Monta Loma Plaza, CA	—		18,226		11,113		—		57			18,226		11,170		29,396		426		9/19/2017
Fullerton Crossroads, CA	26,000		28,512		45,419		—		234			28,512		45,653		74,165		1,776		10/11/2017
Riverstone Marketplace, WA	18,050		5,113		27,594		—		117			5,113		27,711		32,824		1,046		10/11/2017
North Lynnwood Shopping Center, WA	—		4,955		10,335		—		117			4,955		10,452		15,407		401		10/19/2017
The Village at Nellie Gail Ranch, CA	—		22,730		22,578		—		953			22,730		23,531		46,261		764		11/30/2017
Stadium Center, WA	—		1,699		17,229		—		79			1,699		17,308		19,007		391		2/23/2018
King City Plaza, OR	—		5,161		10,072		—		49			5,161		10,121		15,282		215		5/18/2018
	$	86,708	$	892,736	$	2,059,275	$	1,504	$	206,957		$	894,240	$	2,266,232	$	3,160,472	$	329,207

~~(a)~~
(a)	RECONCILIATION OF REAL ESTATE – OWNED SUBJECT TO OPERATING LEASES (in thousands)

Year Ended December 31,
2015 2014 2013
Balance at beginning of period: $ 1,785,898 $ 1,372,434 $ 871,694
Property improvements during the year 28,104 27,515 19,514
Properties acquired during the year 485,853 416,298 487,309
Properties sold during the year — (23,676 ) (6,083 )
Assets written off during the year (3,238 ) (6,673 ) —
Balance at end of period: $ 2,296,617 $ 1,785,898 $ 1,372,434



	Year Ended December 31,
	2018			2017			2016
Balance at beginning of period:	$	3,109,397		$	2,687,018		$	2,296,617
Property improvements during the year	40,300			54,481			41,359
Properties acquired during the year	43,387			374,004			354,035
Properties sold during the year	(24,427		)	—			—
Assets written off during the year	(8,185		)	(6,106		)	(4,993		)
Balance at end of period:	$	3,160,472		$	3,109,397		$	2,687,018

~~(b)~~
(b)	RECONCILIATION OF ACCUMULATED DEPRECIATION (in thousands)

Year Ended December 31,
2015 2014 2013
Balance at beginning of period: $ 88,173 $ 57,500 $ 32,365
Depreciation expenses 49,619 38,890 25,653
Properties sold during the year — (2,081 ) (433 )
Property assets fully depreciated and written off (3,481 ) (6,136 ) (85 )
Balance at end of period: $ 134,311 $ 88,173 $ 57,500



	Year Ended December 31,
	2018			2017			2016
Balance at beginning of period:	$	260,115		$	193,021		$	134,311
Depreciation expenses	81,107			72,725			63,872
Properties sold during the year	(3,551		)	—			—
Property assets fully depreciated and written off	(8,464		)	(5,631		)	(5,162		)
Balance at end of period:	$	329,207		$	260,115		$	193,021


(1)	Depreciation and investments in building and improvements reflected in the consolidated statement of operations is calculated over the estimated useful life of the assets as follows:

Building: 39-40 years

Property Improvements: 10-20 years


(2)	Property, or a portion thereof, is subject to a ground lease.


(3)	The aggregate cost for Federal Income Tax Purposes for real estate was approximately ~~$2.1~~$2.9 billion at December 31, ~~2015.~~2018.

~~SCHEDULE IV – MORTGAGE LOANS ON REAL ESTATE~~

~~December 31, 2015~~

~~(in thousands)~~

~~The Company has no remaining mortgage loans on real estate as of December 31, 2015 and 2014, respectively.~~

~~(a)~~

~~RECONCILIATION OF MORTGAGE LOANS ON REAL ESTATE~~

Year Ended December 31,
2015 2014 2013
Balance at beginning of period: $ — $ — $ 10,000
Mortgage loans eliminated upon consolidation of joint venture — — (10,000 )
Balance at end of period: $ — $ — $ —

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures (Retail Opportunity Investments Corp.)

ROIC maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange ~~Commission's~~Commission’s rules and forms, and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, ~~ROIC's~~ROIC’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and its management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~ROIC's~~

ROIC’s Chief Executive Officer and Chief Financial Officer, based on their evaluation of ~~ROIC's~~ROIC’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, have concluded that as of the end of the period covered by this report, ~~ROIC's~~ROIC’s disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to ROIC that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgated thereunder.

During the year ended December 31, ~~2015,~~2018, there was no change in ~~ROIC's~~ROIC’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, ~~ROIC's~~ROIC’s internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures (Retail Opportunity Investments Partnership, LP)

The Operating Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange ~~Commission's~~Commission’s rules and forms, and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Operating ~~Partnership's~~Partnership’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and its management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The ~~Company's~~Company’s Chief Executive Officer and Chief Financial Officer, based on their evaluation of the Operating ~~Partnership's~~Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, have concluded that as of the end of the period covered by this report, the Operating ~~Partnership's~~Partnership’s disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to the Operating Partnership that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgated thereunder.

During the year ended December 31, ~~2015,~~2018, there was no change in the Operating ~~Partnership's~~Partnership’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Operating ~~Partnership's~~Partnership’s internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting (Retail Opportunity Investments Corp.)

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of ROIC’s management, including the Chief Executive Officer and Chief Financial Officer, ROIC conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, ~~2015~~2018 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on that evaluation, Management concluded that its internal control over financial reporting was effective as of December 31, ~~2015.~~

2018.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of internal control over financial reporting as of December 31, ~~2015,~~2018, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report which appears on page 4851 of this Annual Report on Form 10-K.

Management’s Report on Internal Control over Financial Reporting (Retail Opportunity Investments Partnership, LP)

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of ROIC, the Operating Partnership conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, ~~2015~~2018 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on that evaluation, Management concluded that its internal control over financial reporting was effective as of December 31, ~~2015.~~

2018.

Changes in Internal Control over Financial Reporting

There was no change in ROIC’s or the Operating Partnership’s internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during its most recent quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information required by this Item is hereby incorporated by reference to the material appearing in the Proxy Statement for the Company’s ~~2015~~2019 Annual Meeting of Stockholders to be filed within 120 days after December 31, ~~2015.~~

2018.

Item 11. Executive Compensation

2018.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

2018.

Item 13. Certain Relationships and Related Transactions, and Director Independence

2018.

Item 14. Principal Accounting Fees and Services

2018.

PART IV

Item 15. Exhibits and Financial Statement ~~Schedules~~

Schedule

(a)(1) and (2) Financial Statements and ~~Schedules~~

Schedule

Please refer to the Index to Consolidated Financial Statements included under Part II, Item 8. Financial Statements and Supplementary Data.

(a)(3) Exhibits

~~2.1~~

2.1		Articles of Merger, by and between Retail Opportunity Investments Corp., a Delaware corporation, and Retail Opportunity Investments Corp., a Maryland corporation, as survivor, dated as of June 1, 2011⁽³⁾⁽²⁾

~~3.1~~
3.1		Articles of Amendment and Restatement⁽³⁾⁽²⁾

~~3.2~~

~~Bylaws~~ ⁽³⁾

~~3.3~~ 3.2		Bylaws⁽²⁾

3.3		Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, by and among Retail Opportunity Investments GP, LLC as general partner, Retail Opportunity Investments Corp. and the other limited partners thereto, dated as of September 27, 2013⁽⁹⁾⁽⁵⁾

3.4*
3.4		Second Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, dated as of December 4, 2015⁽¹⁰⁾

3.5*
3.5		Third Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, dated as of December 10, 2015⁽¹⁰⁾

3.6*
3.6		Fourth Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, dated as of December 31, 2015⁽¹⁰⁾

~~4.1~~
3.7		Fifth Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, dated as of March 10, 2016⁽¹¹⁾

3.8		Sixth Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, dated as of March 24, 2017⁽¹⁵⁾

3.9		Seventh Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, dated as of October 11, 2017⁽¹⁷⁾

4.1		Specimen Unit Certificate⁽¹⁾

~~4.2~~
4.2		Specimen Common Stock Certificate⁽¹⁾

~~4.3~~
4.3		Indenture, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Wells Fargo Bank, National Association, dated as of December 9, 2013^(10)(6)

~~4.4~~
4.4		First Supplemental Indenture, by and among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp. and Wells Fargo Bank, National Association, dated as of December 9, 2013^(10) (6)

~~4.5~~
4.5		5.000% Senior Notes due 2023 of Retail Opportunity Investments Partnership, LP, guaranteed by Retail Opportunity Investments Corp., dated as of December 9, 2013^(11)(7)

~~4.6~~
4.6		Second Supplemental Indenture, by and among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp. and Wells Fargo Bank, National Association (including Form of 4.000% Senior Notes due 2024 of Retail Opportunity Investments Partnership, LP, guaranteed by Retail Opportunity Investments Corp.), dated as of December 3, 2014^(13) (8)

~~10.1~~

~~Employment Agreement, by and between NRDC Acquisition Corp. and Stuart Tanz, dated as of October 20, 2009~~ ⁽¹⁾

~~10.2~~

10.1

2009 Equity Incentive Plan⁽¹⁾

~~10.3~~
10.2		Amended and Restated 2009 Equity Incentive Plan⁽²⁰⁾

10.3		Form of Restricted Stock Award Agreement under 2009 Equity Incentive Plan and Amended and Restated 2009 Equity Incentive Plan⁽¹⁾

~~10.4~~
10.4		Form of Option Award Agreement under 2009 Equity Incentive Plan and Amended and Restated 2009 Equity Incentive Plan⁽¹⁾

~~10.5~~
		~~Employment Agreement, by and between Retail Opportunity Investments Corp. and Richard K. Schoebel, dated as of December 9, 2009~~ ⁽²⁾

~~10.6~~

10.5

Letter Agreement, by and between Retail Opportunity Investments Corp. and Richard A. Baker, dated as of April 2, 2012⁽⁵⁾⁽³⁾

~~10.7~~

10.6

First Amended and Restated Credit Agreement, by and among Retail Opportunity Investments Partnership, LP, as the Borrower, Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein, as the Subsidiary Guarantors, KeyBank National Association, as Administrative Agent, Swing Line Lender and L/C Issuer, Bank of America, N.A., as the Syndication Agent, PNC Bank, National Association and U.S. Bank National Association, as Co-Documentation Agents, and the other lenders party thereto, dated as of August 29, 2012 ⁽⁶⁾

~~10.8~~

~~Employment Contract, by and between Retail Opportunity Investments Corp. and Michael B. Haines, dated as of November 19, 2012~~ ⁽⁷⁾

~~10.9~~

Letter Agreement, by and between Retail Opportunity Investments Corp. and Laurie Sneve, dated as of October 24, 2012⁽⁸⁾⁽⁴⁾

~~10.10~~

Third Amendment to the Amended and Restated Credit Agreement, by and among Retail Opportunity Investments Partnership, LP, as the Borrower, Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein, as the Subsidiary Guarantors, KeyBank National Association, as Administrative Agent and the other lenders party thereto, dated as of September 26, 2013 ⁽⁹⁾

~~10.11~~

10.7

Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the protected partners identified therein, dated as of September 27, 2013⁽⁹⁾⁽⁵⁾

~~10.12~~
10.8		Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the protected partners identified therein, dated as of September 27, 2013⁽⁹⁾⁽⁵⁾

~~10.13~~
10.9		Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of September 27, 2013⁽⁹⁾⁽⁵⁾

~~10.14~~
10.10		Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of September 27, 2013⁽⁹⁾⁽⁵⁾

~~10.15~~

Sales Agreements, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and each of Jefferies LLC, KeyBanc Capital Markets, Inc., MLV & Co. and Raymond James & Associates, Inc., each dated as of September 19, 2014 ⁽¹²⁾

~~10.16~~

10.11

Fourth Amendment to the First Amended and Restated Credit Agreement, by and among Retail Opportunity Investments Partnership, LP, as the Borrower, Retail Opportunity Investments Corp., as the Parent Guarantor, KeyBank National Association, as Administrative Agent and the other lenders party thereto, dated as of December 12, 2014 ⁽¹⁴⁾

~~10.17~~

~~10.18~~
10.12		Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holder named therein, dated as of December 11, 2014^(15)(9)

~~10.19~~

Term Loan Agreement, dated as of September 29, 2015, by and among Retail Opportunity Investments Partnership, LP, as the Borrower, Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein, as the Subsidiary Guarantors, KeyBank National Association, as Administrative Agent, U.S. Bank National Association, as the Syndication Agent and the other lenders party thereto⁽¹⁶⁾

10.20*

10.13

10.21*
10.14		Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of December 4, 2015⁽¹⁰⁾

10.22*
10.15		Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the protected partners identified therein, dated as of December 10, 2015⁽¹⁰⁾

10.23*
10.16		Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of December 10, 2015⁽¹⁰⁾

10.24*
10.17		Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the protected partner identified therein, dated as of December 31, 2015⁽¹⁰⁾

10.25*
10.18		Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holder named therein, dated as of December 31, 2015⁽¹⁰⁾

81
10.19		Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the protected partner identified therein, dated as of March 10, 2016⁽¹¹⁾

10.20		Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holder named therein, dated as of March 10, 2016⁽¹¹⁾

10.21		Amended and Restated Note Purchase Agreement, dated as of September 22, 2016, by and among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp and the purchasers named therein⁽¹³⁾

10.22		Employment Agreement, dated as of March 21, 2017, by and between the Company and Stuart A. Tanz⁽¹⁴⁾

10.23		Employment Agreement, dated as of March 21, 2017, by and between the Company and Richard K. Schoebel⁽¹⁴⁾

10.24		Employment Agreement, dated as of March 21, 2017, by and between the Company and Michael B. Haines⁽¹⁴⁾

10.25		Second Amended and Restated Credit Agreement, by and among Retail Opportunity Investments Corp., as the guarantor, and Retail Opportunity Investments Partnership, LP, as the borrower, KeyBank National Association, as Administrative Agent, Swing Line Lender and L/C Issuer, PNC Bank National Association and U.S. Bank National Association, as Co-Syndication Agents and the other lenders party thereto, dated as of September 8, 2017⁽¹⁶⁾

10.26		First Amended and Restated Term Loan Agreement, by and among Retail Opportunity Investments Corp., as the Parent Guarantor, Retail Opportunity Investments Partnership, LP, as the Borrower, KeyBank National Association, as Administrative Agent, BMO Capital Markets and Regions Bank, as Co-Syndication Agents, Capital One, National Association, as Documentation Agent, and the other lenders party thereto, dated as of September 8, 2017⁽¹⁶⁾

~~21.1~~

10.27		First Amendment, dated as of September 8, 2017 to the Amended and Restated Note Purchase Agreement, dated as of September 22, 2016, by and among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp and the purchasers named therein⁽¹⁸⁾

10.28		Note Purchase Agreement, dated as of November 10, 2017, by and among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp. and the purchasers named therein⁽¹⁹⁾

10.29		Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Capital One Securities, Inc.⁽²¹⁾

10.30		Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Jefferies LLC⁽²¹⁾

10.31		Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and KeyBanc Capital Markets Inc.⁽²¹⁾

10.32		Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Raymond James & Associates, Inc.⁽²¹⁾

10.33		Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Robert W. Baird & Co. Incorporated⁽²¹⁾

21.1*		List of Subsidiaries of Retail Opportunity Investments Corp.

~~23.1~~
23.1*		Consent of Ernst & Young LLP for Retail Opportunity Investments Corp.

~~23.2~~
23.2*		Consent of Ernst & Young LLP for Retail Opportunity Investments Partnership, LP

~~31.1~~
31.1		Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

~~31.2~~
31.2		Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

~~32.1~~
32.1		Certifications pursuant to Section 1350


101 INS		XBRL Instance Document


101 SCH		XBRL Taxonomy Extension Schema


101 CAL		XBRL Taxonomy Extension Calculation Database


101 DEF		Taxonomy Extension Definition Linkbase


101 LAB		XBRL Taxonomy Extension Label Linkbase


101 PRE		XBRL Taxonomy Extension Presentation Linkbase

________________________


(1)	Incorporated by reference to the Company’s current report on Form 8-K filed on October 26, 2009 ~~(File No. 001-33479)~~


(2)	~~Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 12, 2010 (File No. 001-33749)~~
~~(3)~~	Incorporated by reference to the Company’s current report on Form 8-K filed on June 2,3, 2011

~~(4)~~	~~Incorporated by reference to the Company’s current report on Form 8-K, filed on June 23, 2011~~
~~(5)~~(3)	Incorporated by reference to the Company’s current report on Form 8-K filed on April 5, 2012

~~(6)~~	~~Incorporated by reference to the Company’s current report on Form 8-K filed on September 5, 2012~~
~~(7)~~	~~Incorporated by reference to the Company’s current report on Form 8-K filed on November 30, 2012~~
~~(8)~~(4)	Incorporated by reference to the Company’s current report on Form 8-K filed on January 2,3, 2013

~~(9)~~
(5)	Incorporated by reference to the Company’s current report on Form 8-K filed on October 2, 2013

~~(10)~~
(6)	Incorporated by reference to the Company’s current report on Form 8-K filed on December 9, 2013

~~(11)~~
(7)	Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 25, 2014

~~(12)~~	~~Incorporated by reference to the Company’s current report on Form 8-K filed on September 24, 2014~~
~~(13)~~(8)	Incorporated by reference to the Company’s current report on Form 8-K filed on December 3, 2014

~~(14)~~	~~Incorporated by reference to the Company’s current report on Form 8-K filed on December 17, 2014~~
~~(15)~~(9)	Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2014, filed on February ~~24,~~25, 2015

~~(16)~~
(10)	Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2015, filed on February 24, 2016


(11)	Incorporated by reference to the Company’s current report on Form 8-K filed on March 16, 2016


(12)	Incorporated by reference to the Company’s current report on Form 8-K filed on May 23, 2016


(13)	Incorporated by reference to the Company’s annual report on Form 10-Q for the fiscal quarter ended September 30, ~~2015,~~2016 filed on October ~~29, 2015~~26, 2016


(14)	Incorporated by reference to the Company’s current report on Form 8-K filed on March 24, 2017


(15)	Incorporated by reference to the Company’s annual report on Form 10-Q for the fiscal quarter ended March 31, 2017 filed on April 27, 2017


(16)	Incorporated by reference to the Company’s current report on Form 8-K filed on September 13, 2017


(17)	Incorporated by reference to the Company’s current report on Form 8-K filed on October 17, 2017


(18)	Incorporated by reference to the Company’s annual report on Form 10-Q for the fiscal quarter ended September 30, 2017 filed on October 25, 2017


(19)	Incorporated by reference to the Company’s current report on Form 8-K filed on November 13, 2017


(20)	Incorporated by reference to the Company’s current report on Form 8-K filed on May 1, 2018


(21)	Incorporated by reference to the Company’s current report on Form 8-K filed on May 2, 2018


*	Filed herewith

82
+	Unless otherwise noted, all exhibits have File No. 001-33479

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	RETAIL OPPORTUNITY INVESTMENTS CORP. Registrant
Date: February ~~24, 2016~~20, 2019	By: /s/ Stuart A. Tanz
	Stuart A. Tanz
	President and Chief Executive Officer
	(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stuart A. Tanz and Michael B. Haines, and each of them, with full power to act without the other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all amendments thereto, and to file the same, with exhibits and ~~schedules~~schedule thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



Date: February ~~24, 2016~~20, 2019	/s/ Richard A. Baker
	Richard A. Baker
	Non-Executive Chairman of the Board



Date: February ~~24, 2016~~20, 2019	/s/ Stuart A. Tanz
	Stuart A. Tanz
	President, Chief Executive Officer and Director
	(Principal Executive Officer)



Date: February ~~24, 2016~~20, 2019	/s/ Michael B. Haines
	Michael B. Haines
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)



Date: February ~~24, 2016~~20, 2019	/s/ Laurie A. Sneve
	Laurie A. Sneve
	Chief Accounting Officer



Date: February ~~24, 2016~~20, 2019	/s/ Michael J. Indiveri
	Michael J. Indiveri
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Edward H. Meyer
	Edward H. Meyer
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Lee S. Neibart
	Lee S. Neibart
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Charles J. Persico
	Charles J. Persico
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Laura H. Pomerantz
	Laura H. Pomerantz
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Eric S. Zorn
	Eric S. Zorn
	Director

SIGNATURES



	RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP, by Retail Opportunity Investments GP, LLC, its sole general partner Registrant
Date: February ~~24, 2016~~20, 2019	By: /s/ Stuart A. Tanz
	Stuart A. Tanz
	President and Chief Executive Officer
	(Principal Executive Officer)

POWER OF ATTORNEY



Date: February ~~24, 2016~~20, 2019	/s/ Richard A. Baker
	Richard A. Baker
	Non-Executive Chairman of the Board



Date: February ~~24, 2016~~20, 2019	/s/ Stuart A. Tanz
	Stuart A. Tanz
	President, Chief Executive Officer and Director
	(Principal Executive Officer)



Date: February ~~24, 2016~~20, 2019	/s/ Michael B. Haines
	Michael B. Haines
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)



Date: February ~~24, 2016~~20, 2019	/s/ Laurie A. Sneve
	Laurie A. Sneve
	Chief Accounting Officer



Date: February ~~24, 2016~~20, 2019	/s/ Michael J. Indiveri
	Michael J. Indiveri
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Edward H. Meyer
	Edward H. Meyer
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Lee S. Neibart
	Lee S. Neibart
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Charles J. Persico
	Charles J. Persico
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Laura H. Pomerantz
	Laura H. Pomerantz
	Director



Date: February ~~24, 2016~~20, 2019	/s/ Eric S. Zorn
	Eric S. Zorn
	Director



Maryland (Retail Opportunity Investments Corp.) Delaware (Retail Opportunity Investments Partnership, LP) (State or other jurisdiction of incorporation or ~~organization~~) ~~8905 Towne Centre Drive, Suite 108~~ ~~San Diego, CA~~ ~~(Address of principal executive offices)~~ organization)	26-0500600 (Retail Opportunity Investments Corp.) 94-2969738 (Retail Opportunity Investments Partnership, LP) (I.R.S. Employer Identification No.) ~~92122~~
11250 El Camino Real, Suite 200 San Diego, California (Address of principal executive offices)	92130 (Zip ~~code~~) code)



Title of Each Class		Name of Exchange on Which Registered
Common Stock, $0.0001 par value per share		The NASDAQ Stock Market LLC


Property, State	Year Completed/ Renovated	Year Acquired	Gross Leasable Sq. Feet	Number of Tenants	% Leased	Principal Tenants


*Southern California*
Paramount Plaza, CA	1966/2010	2009	95,062	14	100.0%	Grocery Outlet Supermarket, 99¢ Only Stores, Rite Aid Pharmacy
Santa Ana Downtown Plaza, CA	1987/2010	2010	100,305	28	100.0%	Kroger (Food 4 Less) Supermarket, Marshall’s
Claremont Promenade, CA	1982/2011	2010	91,529	26	100.0%	Super King Supermarket
Sycamore Creek, CA	2008	2010	74,198	17	98.2%	Safeway (Vons) Supermarket, CVS Pharmacy ⁽¹⁾
Gateway Village, CA	2003/2005	2010	96,959	28	96.1%	Sprouts Market
Marketplace Del Rio, CA	1990/ 2004	2011	177,142	41	90.4%	Stater Brothers Supermarket, Walgreens
Desert Springs Marketplace, CA	1993-94 / 2013	2011	105,111	18	100.0%	Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy
Renaissance Towne Centre, CA	1991/2011	2011	53,074	28	98.2%	CVS Pharmacy
Euclid Plaza, CA	1982/2012	2012	77,044	10	100.0%	Vallarta Supermarket, Walgreens
Seabridge Marketplace, CA	2006	2012	93,630	21	100.0%	Safeway (Vons) Supermarket
Glendora Shopping Center, CA	1992/2012	2012	106,535	22	98.4%	Albertson’s Supermarket
Bay Plaza, CA	1986/2013	2012	73,324	30	99.9%	Seafood City Supermarket
Cypress Center West, CA	1970/1978 / 2014	2012	106,451	32	97.3%	Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy
Redondo Beach Plaza, CA	1993/2004	2012	110,509	16	100.0%	Safeway (Von’s) Supermarket, Petco
Harbor Place Center, CA	1994	2012	119,821	10	100.0%	AA Supermarket, Ross Dress For Less
Diamond Bar Town Center, CA	1981	2013	100,342	24	100.0%	Walmart Neighborhood Market, Crunch Fitness
Bernardo Heights Plaza, CA	1983/2006	2013	37,729	5	100.0%	Sprouts Market
Diamond Hills Plaza, CA	1973/2008	2013	139,505	37	98.2%	H-Mart Supermarket, Rite Aid Pharmacy
Hawthorne Crossings, CA	1993/1999	2013	141,288	18	100.0%	Mitsuwa Supermarket, Ross Dress For Less, Staples
Five Points Plaza, CA	1961-62 / 2012 / 2015	2013	160,536	38	99.0%	Trader Joes, Pier 1
Peninsula Marketplace, CA	2000	2013	95,416	15	98.8%	Kroger (Ralph’s) Supermarket, CVS Pharmacy
Plaza de la Canada, CA	1968/2010	2013	100,408	14	100.0%	Gelson’s Supermarket, TJ Maxx, Rite Aid Pharmacy
Creekside Plaza, CA	1993/2005	2014	128,852	27	100.0%	Stater Brothers Supermarket, DigiPlex Theatre
Fallbrook Shopping Center, CA	1966/1986/ 2003/2015	2014	758,074	44	99.8%	Sprouts Market, Trader Joe’s, Kroger (Ralph’s) Supermarket⁽¹⁾, TJ Maxx
Moorpark Town Center, CA	1984/2014	2014	133,538	27	98.4%	Kroger (Ralph’s) Supermarket, CVS Pharmacy
Mission Foothill Marketplace, CA	1996	2014	110,678	20	94.4%	Haggen Supermarket, CVS Pharmacy
Ontario Plaza, CA	1997-1999	2015	149,651	24	99.1%	El Super Supermarket, Rite Aid Pharmacy
Park Oaks Shopping Center, CA	1959/2005	2015	110,092	33	100.0%	Safeway (Vons) Supermarket, Dollar Tree
Warner Plaza, CA	1973-1974	2015	114,242	58	87.9%	Sprouts Market

*Northern California*
Norwood Shopping Center, CA	1993/1999	2010	88,851	13	87.9%	Viva Supermarket, Rite Aid Pharmacy, Citi Trends
Pleasant Hill Marketplace, CA	1980	2010	69,715	3	100.0%	Buy Buy Baby, Office Depot, Basset Furniture
Pinole Vista Shopping Center, CA	1981/2012	2011	223,502	29	95.9%	SaveMart (Lucky) Supermarket, Kmart
Mills Shopping Center, CA	1959/1996	2011	239,081	29	87.0%	Viva Supermarket, dd’s Discounts, Dollar Tree, Planet Fitness
Morada Ranch, CA	2006	2011	101,842	18	99.4%	Raleys Supermarket
Country Club Gate Center, CA	1974/2012	2011	109,331	25	91.8%	SaveMart (Lucky) Supermarket, Rite Aid Pharmacy
Round Hill Square Shopping Center, NV	1998	2011	115,984	26	99.2%	Safeway Supermarket, Dollar Tree, U.S. Postal Service
Marlin Cove Shopping Center, CA	1972/2001	2012	73,186	24	99.2%	99 Ranch Market
Green Valley Station, CA	2006/2007	2012	52,245	14	87.8%	CVS Pharmacy
The Village at Novato, CA	2006	2012	20,081	4	100.0%	Trader Joe’s
Santa Teresa Village, CA	1974-79 / 2013	2012	125,162	34	91.2%	Raleys (Nob Hill) Supermarket, Dollar Tree
Granada Shopping Center, CA	1962/1994	2013	69,325	15	100.0%	SaveMart (Lucky) Supermarket
Country Club Village, CA	1995	2013	111,093	24	100.0%	Walmart Neighborhood Market, CVS Pharmacy

Tenant	Number of Leases		% of Total Annual Base Rent ⁽¹⁾
Albertson’s / Safeway Supermarkets		14		5.0	%
Kroger Supermarkets		7		2.4	%
Rite Aid Pharmacy		12		1.9	%
SaveMart Supermarkets		4		1.7	%
Marshall’s / TJMaxx		6		1.6	%
Sprouts Market		4		1.6	%
JP Morgan Chase		17		1.5	%
Ross Dress For Less / dd’s Discounts		6		1.3	%
Haggen Supermarkets		3		1.2	%
CVS Pharmacy		7		1.1	%
		80		19.3	%

Year of Expiration	Number of Leases Expiring ⁽¹⁾		Leased Square Footage		Annual Base Rent ⁽²⁾		Annual Base Rent%
2016		242		601,789	$	13,655		8.6	%
2017		294		893,045		19,001		12.0	%
2018		258		1,048,239		22,905		14.5	%
2019		202		871,986		17,917		11.4	%
2020		225		1,013,794		18,967		12.0	%
2021		108		665,651		11,175		7.0	%
2022		61		522,309		9,157		5.8	%
2023		43		553,196		9,626		6.1	%
2024		56		406,249		7,190		4.6	%
2025		54		469,536		8,457		5.3	%
Thereafter		77		1,315,727		20,404		12.7	%
Total		1,620		8,361,521	$	158,454		100.0	%

Period	High		Low		Dividends Declared
2015
First Quarter	$	18.73	$	16.60	$	0.17
Second Quarter	$	18.47	$	15.44	$	0.17
Third Quarter	$	17.42	$	15.30	$	0.17
Fourth Quarter	$	18.68	$	16.39	$	0.17
2014
First Quarter	$	15.18	$	13.85	$	0.16
Second Quarter	$	16.30	$	14.82	$	0.16
Third Quarter	$	16.26	$	14.50	$	0.16
Fourth Quarter	$	17.22	$	14.61	$	0.16

Record Date	Payable Date	Total Dividend per Share	Ordinary Income per Share⁽¹⁾	Return of Capital per Share
3/16/2015	3/30/2015	$0.170000	$0.12951	$0.04049
6/16/2015	6/30/2015	$0.170000	$0.12951	$0.04049
9/15/2015	9/29/2015	$0.170000	$0.12951	$0.04049
12/15/2015	12/29/2015	$0.170000	$0.12951	$0.04049

	Period Ending
Index	12/31/10		12/31/11		12/31/12		12/31/13		12/31/14		12/31/15
Retail Opportunity Investments Corp.		100.00		123.74		140.26		167.85		199.47		221.47
S&P500		100.00		102.11		118.45		156.82		178.28		180.75
FTSE NAREIT Equity REITs		100.00		108.29		127.85		131.01		170.49		175.94

		Year Ended December 31, 2015
		Same-center		Non Same-Center		Total

Operating income per GAAP		$	58,758	$	577	$	59,335
Plus:	Depreciation and amortization		48,660		22,297		70,957
	General and administrative expenses ⁽¹⁾		—		12,650		12,650
	Acquisition transaction costs		53		912		965
	Other expenses ⁽¹⁾		—		627		627
Property operating income		$	107,471	$	37,063	$	144,534

		Year Ended December 31, 2014
		Same-Center		Non Same-Center			Total

Operating income per GAAP		$	51,569	$	(7,795	)	$	43,774
Plus:	Depreciation and amortization		49,967		8,468			58,435
	General and administrative expenses ⁽¹⁾		—		11,200			11,200
	Acquisition transaction costs		94		867			961
	Other expenses ⁽¹⁾		—		505			505
Property operating income		$	101,630	$	13,245		$	114,875

		Year Ended December 31, 2013
		Same-Center		Non Same-Center			Total

Operating income per GAAP		$	35,757	$	(7,982	)	$	27,775
Plus:	Depreciation and amortization		31,487		8,911			40,398
	General and administrative expenses ⁽¹⁾		—		10,059			10,059
	Acquisition transaction costs		229		1,459			1,688
	Other expenses ⁽¹⁾		—		315			315
Less:	Mortgage interest income		—		(624	)		(624	)
Property operating income		$	67,473	$	12,138		$	79,611

	December 31, 2015			December 31, 2014
ASSETS
Real Estate Investments:
Land	$	669,307		$	550,078
Building and improvements		1,627,310			1,235,820
		2,296,617			1,785,898
Less: accumulated depreciation		134,311			88,173
Real Estate Investments, net		2,162,306			1,697,725
Cash and cash equivalents		8,844			10,773
Restricted cash		227			514
Tenant and other receivables, net		28,652			23,025
Deposits		500			4,500
Acquired lease intangible assets, net of accumulated amortization		66,942			71,433
Prepaid expenses		1,953			2,454
Deferred charges, net of accumulated amortization		39,316			39,731
Other		1,895			1,541
Total assets	$	2,310,635		$	1,851,696

LIABILITIES AND EQUITY
Liabilities:
Term loan	$	300,000		$	—
Credit facility		135,500			156,500
Senior Notes Due 2024		246,809			246,521
Senior Notes Due 2023		246,518			246,174
Mortgage notes payable		62,605			94,183
Acquired lease intangible liabilities, net of accumulated amortization		124,861			118,359
Accounts payable and accrued expenses		13,205			12,173
Tenants’ security deposits		5,085			3,961
Other liabilities		11,036			11,043
Total liabilities		1,145,619			888,914
Commitments and contingencies		—			—

Non-controlling interests – redeemable OP Units		33,674			—

Equity:
Preferred stock, $.0001 par value 50,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $.0001 par value 500,000,000 shares authorized; and 99,531,034 and 92,991,333 shares issued and outstanding at December 31, 2015 and 2014, respectively		10			9
Additional paid-in-capital		1,166,395			1,013,561
Dividends in excess of earnings		(122,991	)		(80,976	)
Accumulated other comprehensive loss		(6,743	)		(8,882	)
Total Retail Opportunity Investments Corp. stockholders' equity		1,036,671			923,712
Non-controlling interests		94,671			39,070
Total equity		1,131,342			962,782
Total liabilities and equity	$	2,310,635		$	1,851,696

	Limited Partner’s Capital (1)						ROIC Capital (2)
	Units			Amount			Units			Amount			Accumulated other comprehensive loss			Non- controlling interests			Capital
Balance at December 31, 2012		—		$	—			52,596,754		$	484,695		$	(18,155	)	$	2		$	466,542
OP Units issued under the 2009 Plan		—			—			313,364			—			—			—			—
Repurchase of OP Units		—			—			(30,333	)		(407	)		—			—			(407	)
Retirement of options		—			—			—			(275	)		—			—			(275	)
Stock based compensation expense		—			—			—			2,856			—			—			2,856
Issuance of OP Units upon exercise of warrants		—			—			18,877,482			226,530			—			—			226,530
Issuance of OP Units upon exercise of Sponsor warrants		—			—			688,500			—			—			—			—
Repurchase of warrants		—			—			—			(32,786	)		—			—			(32,786	)
Issuance of OP Units in connection with acquisition		3,290,263			45,373			—			—			—			—			45,373
Limited Partner distributions		—			(277	)		—			—			—			—			(277	)
Cash redemption of OP Units		(158,221	)		(2,190	)		—			—			—			—			(2,190	)
Adjustment to non-controlling interests		—			(13,314	)		—			13,314			—			—			—
Purchase of non-controlling interests		—			—			—			—			—			(2	)		(2	)
Registration expenditures		—			—			—			(69	)		—			—			(69	)
Cash distributions ($0.60 per unit)		—			(470	)		—			(42,469	)		—			—			(42,939	)
Dividends payable to officers		—			—			—			(110	)		—			—			(110	)
Net income attributable to Retail Opportunity Investments Partnership, LP		—			165			—			33,813			—			—			33,978
Other comprehensive income		—			—			—			—			9,186			—			9,186
Balance at December 31, 2013		3,132,042			29,287			72,445,767			685,092			(8,969	)		—			705,410
OP Units issued under the 2009 Plan		—			—			340,621			—			—			—			—
Repurchase of OP Units		—			—			(42,438	)		(631	)		—			—			(631	)
Cancellation of OP Units		—			—			(5,833	)		—			—			—			—
Stock based compensation expense		—			—			—			3,662			—			—			3,662
Issuance of OP Units upon exercise of warrants		—			—			5,878,216			70,539			—			—			70,539
Issuance of OP Units in connection with acquisition		989,272			16,343			—			—			—			—			16,343
Cash redemption of OP Units		(200,000	)		(3,280	)		—			—			—			—			(3,280	)
Adjustment to non-controlling interests		—			(2,020	)		—			2,020			—			—			—
Issuance of OP Units in connection with common stock offering		—			—			14,375,000			214,906			—			—			214,906
Registration expenditures		—			—			—			(9,635	)		—			—			(9,635	)
Cash distributions ($0.64 per unit)		—			(2,009	)		—			(53,522	)		—			—			(55,531	)
Dividends payable to officers		—			—			—			(138	)		—			—			(138	)
Net income attributable to Retail Opportunity Investments Partnership, LP		—			749			—			20,301			—			—			21,050
Other comprehensive income		—			—			—			—			87			—			87
Balance at December 31, 2014		3,921,314			39,070			92,991,333			932,594			(8,882	)		—			962,782
OP Units issued under the 2009 Plan		—			—			381,577			—			—			—			—
Repurchase of OP Units		—			—			(78,570	)		(1,317	)		—			—			(1,317	)
Cancellation of OP Units		—			—			(2,832	)		—			—			—			—
Stock based compensation expense		—			—			—			4,684			—			—			4,684
Redemption of OP Units		(174,959	)		(3,184	)		174,959			3,184			—			—			—
Issuance of OP Units in connection with acquisition		8,449,248			116,640			—			—			—			—			116,640
Adjustment to non-controlling interests		—			(49,609	)		—			49,609			—			—			—
Issuance of OP Units in connection with sale of common stock		—			—			6,064,567			101,293			—			—			101,293
Registration expenditures		—			—			—			(4,618	)		—			—			(4,618	)
Cash distributions ($0.68 per unit)		—			(2,764	)		—			(65,718	)		—			—			(68,482	)
Dividends payable to officers		—			—			—			(161	)		—			—			(161	)
Net income attributable to Retail Opportunity Investments Partnership, LP		—			1,228			—			23,864			—			—			25,092
Other comprehensive income		—			—			—			—			2,139			—			2,139
Total		12,195,603		$	101,381			99,531,034		$	1,043,414		$	(6,743	)	$	—		$	1,138,052
Less: Promissory note secured by capital		—			(6,710	)		—			—			—			—			(6,710	)
Balance at December 31, 2015		12,195,603		$	94,671			99,531,034		$	1,043,414		$	(6,743	)	$	—		$	1,131,342

	Lease Origination Costs		Financing Costs		Total
2016	$	6,697	$	2,089	$	8,786
2017		5,384		2,068		7,452
2018		4,138		2,036		6,174
2019		3,168		647		3,815
2020		2,544		521		3,065
Thereafter		8,164		1,860		10,024
	$	30,095	$	9,221	$	39,316

Year ending December 31:
2016	$	13,116
2017		10,421
2018		7,687
2019		5,146
2020		4,291
Thereafter		26,281
Total future amortization of acquired lease intangible assets	$	66,942

Year ending December 31:
2016	$	11,260
2017		10,362
2018		9,508
2019		8,764
2020		7,950
Thereafter		77,017
Total future amortization of acquired lease intangible liabilities	$	124,861



Year Ending December 31:
2019	$	14,675
2020	13,347
2021	12,075
2022	11,005
2023	9,999
Thereafter	105,045
Total future amortization of acquired lease intangible liabilities	$	166,146

Year ending December 31:
2016	$	147,424
2017		133,215
2018		113,062
2019		92,300
2020		74,680
Thereafter		351,703
Total minimum lease payments	$	912,384



Year Ending December 31:
2019	$	198,998
2020	181,234
2021	160,082
2022	134,368
2023	105,657
Thereafter	429,172
Total minimum lease payments	$	1,209,511



	Financing Costs
2019	$	1,791
2020	1,791
2021	1,522
2022	848
2023	663
Thereafter	851
	$	7,466

	Shares			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2014		559,358		$	11.51
Granted		343,070		$	15.58
Vested		(272,125	)	$	12.10
Forfeited		(2,832	)	$	15.88
Non-vested at December 31, 2015		627,471		$	14.39

	Year Ended December 31, 2015		Year Ended December 31, 2014			Year Ended December 31, 2013
Amount of (loss) gain recognized in OCI on derivative	$	—	$	(3,132	)	$	4,565
Amount of loss reclassified from accumulated OCI into interest	$	2,139	$	3,219		$	4,621
Amount of gain recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)	$	—	$	—		$	3