UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



o☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35481

RETAIL PROPERTIES OF AMERICA, INC.

(Exact name of registrant as specified in its charter)



Maryland		42-1579325
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~2021 Spring Road, Suite 200, Oak Brook, Illinois~~	~~60523~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~

2021 Spring Road, Suite 200, Oak Brook, Illinois60523

(~~630)~~ Address of principal executive offices and zip code)

(630) 634-4200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value	RPAI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No o

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



Large accelerated filer	x		Accelerated filero	☐
Non-accelerated filer	☐		Smaller reporting company	☐

~~Non-accelerated filer~~ o		~~Smaller reporting company~~ o

~~(Do not check if a smaller reporting company)~~		Emerging growth companyo	☐

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x

Number of shares outstanding of the registrant’s ~~classes~~class of common stock as of ~~October 27, 2017~~May 1, 2020:

Class A common stock: ~~227,100,049~~214,121,973 shares

~~Table of Contents~~

RETAIL PROPERTIES OF AMERICA, INC.

TABLE OF CONTENTS

~~Table of Contents~~

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)


	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
Assets
Investment properties:
Land	$	1,090,790		$	1,191,403		$	1,075,577		$	1,021,829
Building and other improvements	3,773,266			4,284,664			3,548,769			3,544,582
Developments in progress	31,083			23,439			126,761			113,353
	4,895,139			5,499,506			4,751,107			4,679,764
Less accumulated depreciation	(1,250,619		)	(1,443,333		)
Net investment properties	3,644,520			4,056,173
Less: accumulated depreciation							(1,416,981		)	(1,383,274		)
Net investment properties (includes $30,600 and $12,445 from consolidated variable interest entities, respectively)							3,334,126			3,296,490
Cash and cash equivalents	29,652			53,119			769,241			9,989
Accounts and notes receivable (net of allowances of $6,421 and $6,886, respectively)	72,496			78,941
Accounts and notes receivable, net							72,003			73,832
Acquired lease intangible assets, net	126,487			142,015			78,439			79,832
Assets associated with investment properties held for sale	64,673			30,827
Other assets, net	131,265			91,898
Right-of-use lease assets							44,157			50,241
Other assets, net (includes $344 and $164 from consolidated variable interest entities, respectively)							71,627			75,978
Total assets	$	4,069,093		$	4,452,973		$	4,369,593		$	3,586,362

Liabilities and Equity
Liabilities:
Mortgages payable, net	$	288,100		$	769,184		$	93,562		$	94,155
Unsecured notes payable, net	695,595			695,143			796,420			796,247
Unsecured term loans, net	546,914			447,598			716,792			716,523
Unsecured revolving line of credit	187,000			86,000			849,704			18,000
Accounts payable and accrued expenses	74,105			83,085			50,622			78,902
Distributions payable	40,145			39,222			35,464			35,387
Acquired lease intangible liabilities, net	101,045			105,290			67,573			63,578
Liabilities associated with investment properties held for sale, net	9,056			864
Other liabilities	78,195			74,501
Lease liabilities							85,340			91,129
Other liabilities (includes $3,233 and $1,707 from consolidated variable interest entities, respectively)							76,815			56,368
Total liabilities	2,020,155			2,300,887			2,772,292			1,950,289

Commitments and contingencies (Note 14)
Commitments and contingencies (Note 13)

Equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative redeemable preferred stock, 5,400 shares issued and outstanding as of September 30, 2017 and December 31, 2016; liquidation preference $135,000	5			5
Class A common stock, $0.001 par value, 475,000 shares authorized, 227,496 and 236,770 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	227			237
Preferred stock, $0.001 par value, 10,000 shares authorized, none issued or outstanding							—			—
Class A common stock, $0.001 par value, 475,000 shares authorized, 214,122 and 213,600 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							214			214
Additional paid-in capital	4,804,679			4,927,155			4,512,939			4,510,484
Accumulated distributions in excess of earnings	(2,756,859		)	(2,776,033		)	(2,879,040		)	(2,865,933		)
Accumulated other comprehensive income	886			722
Accumulated other comprehensive loss							(39,870		)	(12,288		)
Total shareholders’ equity							1,594,243			1,632,477
Noncontrolling interests							3,058			3,596
Total equity	2,048,938			2,152,086			1,597,301			1,636,073
Total liabilities and equity	$	4,069,093		$	4,452,973		$	4,369,593		$	3,586,362

See accompanying notes to condensed consolidated financial statements

~~Table of Contents~~

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Operations and Other Comprehensive ~~(Loss) Income~~Loss

(Unaudited)

(in thousands, except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues
Rental income $ 100,977
$ 113,627
$ 316,968
$ 344,081
Tenant recovery income 28,024
29,130
88,334
89,140
Other property income 1,518
1,769
6,249
7,170
Total revenues 130,519
144,526
411,551
440,391

Expenses
Operating expenses 19,572
20,285
62,440
63,438
Real estate taxes 21,863
19,937
65,229
60,966
Depreciation and amortization 51,469
56,763
157,268
163,602
Provision for impairment of investment properties 45,822
4,742
58,856
11,048
General and administrative expenses 7,785
11,110
29,368
33,289
Total expenses 146,511
112,837
373,161
332,343

Operating (loss) income (15,992 ) 31,689
38,390
108,048

Gain on extinguishment of debt —
—
—
13,653
Gain on extinguishment of other liabilities —
—
—
6,978
Interest expense (21,110 ) (25,602 ) (128,077 ) (78,343 )
Other (expense) income, net (76 ) 22
380
449
(Loss) income from continuing operations (37,178 ) 6,109
(89,307 ) 50,785
Gain on sales of investment properties 73,082
66,385
230,874
97,737
Net income 35,904
72,494
141,567
148,522
Preferred stock dividends (2,362 ) (2,362 ) (7,087 ) (7,087 )
Net income attributable to common shareholders $ 33,542
$ 70,132
$ 134,480
$ 141,435

Earnings per common share – basic
Net income per common share attributable to common shareholders $ 0.15
$ 0.30
$ 0.58
$ 0.60
Earnings per common share – diluted
Net income per common share attributable to common shareholders $ 0.15
$ 0.30
$ 0.57
$ 0.60

Net income $ 35,904
$ 72,494
$ 141,567
$ 148,522
Other comprehensive (loss) income:
Net unrealized (loss) gain on derivative instruments (Note 9) (323 ) 666
164
189
Comprehensive income attributable to the Company $ 35,581
$ 73,160
$ 141,731
$ 148,711

Weighted average number of common shares outstanding – basic 229,508
236,783
233,348
236,692

Weighted average number of common shares outstanding – diluted 230,104
237,108
233,949
236,983



	Three Months Ended March 31,
	2020			2019
Revenues:
Lease income	$	118,695		$	122,703

Expenses:
Operating expenses	16,414			17,686
Real estate taxes	18,533			18,403
Depreciation and amortization	40,173			43,267
Provision for impairment of investment properties	346			—
General and administrative expenses	9,165			10,499
Total expenses	84,631			89,855

Other (expense) income:
Interest expense	(17,046		)	(17,430		)
Gain on sales of investment properties	—			8,449
Gain on litigation settlement	6,100			—
Other expense, net	(761		)	(659		)
Net income	22,357			23,208
Net income attributable to noncontrolling interests	—			—
Net income attributable to common shareholders	$	22,357		$	23,208

Earnings per common share – basic and diluted:
Net income per common share attributable to common shareholders	$	0.10		$	0.11

Net income	$	22,357		$	23,208
Other comprehensive loss:
Net unrealized loss on derivative instruments (Note 8)	(27,582		)	(3,514		)
Comprehensive (loss) income attributable to the Company	$	(5,225	)	$	19,694

Weighted average number of common shares outstanding – basic	213,215			212,850

Weighted average number of common shares outstanding – diluted	213,215			213,223

See accompanying notes to condensed consolidated financial statements

~~Table of Contents~~

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands, except per share amounts)

Preferred Stock
Class A
Common Stock

Additional
Paid-in
Capital

Accumulated
Distributions
in Excess of
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Total
Shareholders’
Equity
Shares Amount Shares Amount
Balance as of January 1, 2016 5,400
$ 5
237,267
$ 237
$ 4,931,395
$ (2,776,215 ) $ (85 ) $ 2,155,337
Cumulative effect of accounting change —
—
—
—
17
(17 ) —
—
Net income —
—
—
—
—
148,522
—
148,522
Other comprehensive income —
—
—
—
—
—
189
189
Distributions declared to preferred shareholders
($1.3125 per share)
—
—
—
—
—
(7,087 ) —
(7,087 )
Distributions declared to common shareholders
($0.496875 per share)
—
—
—
—
—
(117,946 ) —
(117,946 )
Issuance of common stock, net of offering costs —
—
—
—
(100 ) —
—
(100 )
Issuance of restricted shares —
—
269
—
—
—
—
—
Exercise of stock options —
—
2
—
23
—
—
23
Stock-based compensation expense, net of forfeitures —
—
(10 ) —
5,296
—
—
5,296
Shares withheld for employee taxes —
—
(152 ) —
(2,250 ) —
—
(2,250 )
Balance as of September 30, 2016 5,400
$ 5
237,376
$ 237
$ 4,934,381
$ (2,752,743 ) $ 104
$ 2,181,984

Balance as of January 1, 2017 5,400
$ 5
236,770
$ 237
$ 4,927,155
$ (2,776,033 ) $ 722
$ 2,152,086
Net income —
—
—
—
—
141,567
—
141,567
Other comprehensive income —
—
—
—
—
—
164
164
Distributions declared to preferred shareholders
($1.3125 per share)
—
—
—
—
—
(7,087 ) —
(7,087 )
Distributions declared to common shareholders
($0.496875 per share)
—
—
—
—
—
(115,306 ) —
(115,306 )
Shares repurchased through share repurchase program —
—
(9,433 ) (10 ) (125,579 ) —
—
(125,589 )
Issuance of restricted shares —
—
285
—
—
—
—
—
Stock-based compensation expense, net of forfeitures —
—
(34 ) —
4,483
—
—
4,483
Shares withheld for employee taxes —
—
(92 ) —
(1,380 ) —
—
(1,380 )
Balance as of September 30, 2017 5,400
$ 5
227,496
$ 227
$ 4,804,679
$ (2,756,859 ) $ 886
$ 2,048,938



	Class A Common Stock				Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity
	Shares		Amount		Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance as of January 1, 2019	213,176		$	213	$	4,504,702		$	(2,756,802	)	$	(1,522	)	$	1,746,591		$	418		$	1,747,009
Net income	—		—		—			23,208			—			23,208			—			23,208
Other comprehensive loss	—		—		—			—			(3,514		)	(3,514		)	—			(3,514		)
Contributions from noncontrolling interests	—		—		—			—			—			—			358			358
Distributions declared to common shareholders ($0.165625 per share)	—		—		—			(35,371		)	—			(35,371		)	—			(35,371		)
Issuance of common stock	111		—		—			—			—			—			—			—
Issuance of restricted shares	392		1		—			—			—			1			—			1
Stock-based compensation expense, net of forfeitures	(9	)	—		1,966			—			—			1,966			—			1,966
Shares withheld for employee taxes	(85	)	—		(1,037		)	—			—			(1,037		)	—			(1,037		)
Balance as of March 31, 2019	213,585		$	214	$	4,505,631		$	(2,768,965	)	$	(5,036	)	$	1,731,844		$	776		$	1,732,620

Balance as of January 1, 2020	213,600		$	214	$	4,510,484		$	(2,865,933	)	$	(12,288	)	$	1,632,477		$	3,596		$	1,636,073
Net income	—		—		—			22,357			—			22,357			—			22,357
Other comprehensive loss	—		—		—			—			(27,582		)	(27,582		)	—			(27,582		)
Contributions from noncontrolling interests	—		—		—			—			—			—			1,123			1,123
Termination of consolidated joint venture	—		—		1,661			—			—			1,661			(1,661		)	—
Distributions declared to common shareholders ($0.165625 per share)	—		—		—			(35,464		)	—			(35,464		)	—			(35,464		)
Issuance of common stock	148		—		—			—			—			—			—			—
Issuance of restricted shares	493		—		—			—			—			—			—			—
Stock-based compensation expense	—		—		2,233			—			—			2,233			—			2,233
Shares withheld for employee taxes	(119	)	—		(1,439		)	—			—			(1,439		)	—			(1,439		)
Balance as of March 31, 2020	214,122		$	214	$	4,512,939		$	(2,879,040	)	$	(39,870	)	$	1,594,243		$	3,058		$	1,597,301

See accompanying notes to condensed consolidated financial statements

~~Table of Contents~~

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Nine Months Ended
September 30,
2017 2016
Cash flows from operating activities:
Net income $ 141,567
$ 148,522
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 157,268
163,602
Provision for impairment of investment properties 58,856
11,048
Gain on sales of investment properties (230,874 ) (97,737 )
Gain on extinguishment of debt —
(13,653 )
Gain on extinguishment of other liabilities —
(6,978 )
Amortization of loan fees and debt premium and discount, net 6,748
4,372
Amortization of stock-based compensation 4,483
5,296
Premium paid in connection with defeasance of mortgages payable 59,968
—
Payment of leasing fees and inducements (13,540 ) (7,730 )
Changes in accounts receivable, net 851
(1,109 )
Changes in accounts payable and accrued expenses, net (5,433 ) 803
Changes in other operating assets and liabilities, net 3,236
(637 )
Other, net (1,452 ) (791 )
Net cash provided by operating activities 181,678
205,008

Cash flows from investing activities:
Changes in restricted escrows, net 20,914
(5,904 )
Purchase of investment properties (146,710 ) (266,377 )
Capital expenditures and tenant improvements (52,565 ) (43,207 )
Proceeds from sales of investment properties 564,069
307,355
Investment in developments in progress (11,160 ) (315 )
Other, net —
194
Net cash provided by (used in) investing activities 374,548
(8,254 )

Cash flows from financing activities:
Principal payments on mortgages payable (98,028 ) (45,244 )
Proceeds from unsecured notes payable —
100,000
Proceeds from unsecured term loans 200,000
—
Repayments of unsecured term loans (100,000 ) —
Proceeds from unsecured revolving line of credit 664,000
390,000
Repayments of unsecured revolving line of credit (563,000 ) (490,000 )
Payment of loan fees and deposits (10 ) (6,386 )
Purchase of U.S. Treasury securities in connection with defeasance of mortgages payable (439,403 ) —
Distributions paid (121,470 ) (125,015 )
Shares repurchased through share repurchase program (120,402 ) —
Other, net (1,380 ) (2,462 )
Net cash used in financing activities (579,693 ) (179,107 )

Net (decrease) increase in cash and cash equivalents (23,467 ) 17,647
Cash and cash equivalents, at beginning of period 53,119
51,424
Cash and cash equivalents, at end of period $ 29,652
$ 69,071
(continued)

~~Table of Contents~~



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	22,357		$	23,208
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	40,173			43,267
Provision for impairment of investment properties	346			—
Gain on sales of investment properties	—			(8,449		)
Amortization of loan fees and debt premium and discount, net	950			798
Amortization of stock-based compensation	2,233			1,966
Payment of leasing fees and inducements	(3,676		)	(2,739		)
Changes in accounts receivable, net	778			6,312
Changes in right-of-use lease assets	467			485
Changes in accounts payable and accrued expenses, net	(26,319		)	(25,058		)
Changes in lease liabilities	(230		)	(150		)
Changes in other operating assets and liabilities, net	(2,652		)	398
Other, net	615			(3,083		)
Net cash provided by operating activities	35,042			36,955

Cash flows from investing activities:
Purchase of investment properties	(54,970		)	(25,204		)
Capital expenditures and tenant improvements	(14,165		)	(18,746		)
Proceeds from sales of investment properties	11,343			21,605
Investment in developments in progress	(12,715		)	(5,841		)
Net cash used in investing activities	(70,507		)	(28,186		)

Cash flows from financing activities:
Principal payments on mortgages payable	(619		)	(764		)
Proceeds from unsecured revolving line of credit	937,704			94,000
Repayments of unsecured revolving line of credit	(106,000		)	(68,000		)
Payment of loan fees and deposits	—			(4		)
Distributions paid	(35,387		)	(35,383		)
Other, net	(316		)	(679		)
Net cash provided by (used in) financing activities	795,382			(10,830		)

Net increase (decrease) in cash, cash equivalents and restricted cash	759,917			(2,061		)
Cash, cash equivalents and restricted cash, at beginning of period	14,447			19,601
Cash, cash equivalents and restricted cash, at end of period	$	774,364		$	17,540
(continued)

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
Supplemental cash flow disclosure, including non-cash activities:
Cash paid for interest, net of interest capitalized	$	61,360		$	73,603		$	14,263		$	16,216
Cash paid for amounts included in the measurement of operating lease liabilities							$	1,446		$	1,679
Distributions payable	$	40,145		$	39,315		$	35,464		$	35,375
Accrued share repurchase through share repurchase program	$	5,187		$	—
Accrued capital expenditures and tenant improvements	$	5,601		$	7,740		$	6,246		$	9,407
Accrued leasing fees and inducements	$	493		$	913		$	683		$	754
Accrued redevelopment costs	$	1,300		$	—		$	2,573		$	395
Amounts reclassified to developments in progress	$	—		$	2,467		$	305		$	—
U.S. Treasury securities transferred in connection with defeasance of mortgages payable	$	439,403		$	—
Defeasance of mortgages payable	$	379,435		$	—
Change in noncontrolling interest due to termination of joint venture							$	1,661		$	—
Lease liabilities arising from obtaining right-of-use lease assets							$	383		$	103,519
Straight-line ground rent liabilities reclassified to right-of-use lease asset							$	—		$	31,030
Straight-line office rent liability reclassified to right-of-use lease asset							$	—		$	507
Acquired ground lease intangible liability reclassified to right-of-use lease asset							$	—		$	11,898

Purchase of investment properties (after credits at closing):
Net investment properties	$	(147,234	)	$	(261,657	)	$	(58,760	)	$	(23,894	)
Right-of-use lease assets							5,999			—
Accounts receivable, acquired lease intangibles and other assets	(11,366		)	(25,049		)	(1,801		)	(1,694		)
Lease liabilities							(5,942		)	—
Accounts payable, acquired lease intangibles and other liabilities	9,366			5,013			5,534			384
Deferred gain	2,524			—
Mortgages payable assumed, net	—			15,316
	$	(146,710	)	$	(266,377	)
Purchase of investment properties (after credits at closing)							$	(54,970	)	$	(25,204	)

Proceeds from sales of investment properties:
Net investment properties	$	395,282		$	282,661		$	11,281		$	17,456
Right-of-use lease assets							—			8,242
Accounts receivable, acquired lease intangibles and other assets	13,801			15,306			167			1,417
Lease liabilities							—			(11,326		)
Accounts payable, acquired lease intangibles and other liabilities	(9,316		)	(9,149		)	(105		)	(2,633		)
Deferred gain	(1,486		)	1,500
Mortgage debt forgiven or assumed	—			(94,353		)
Gain on extinguishment of debt	—			13,653
Gain on sales of investment properties	230,874			97,737			—			8,449
Proceeds temporarily restricted related to potential Internal Revenue Code Section 1031 tax-deferred exchanges	(65,086		)	—
Proceeds from sales of investment properties							$	11,343		$	21,605
	$	564,069		$	307,355
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents, at beginning of period							$	9,989		$	14,722
Restricted cash, at beginning of period (included within “Other assets, net”)							4,458			4,879
Total cash, cash equivalents and restricted cash, at beginning of period							$	14,447		$	19,601

Cash and cash equivalents, at end of period							$	769,241		$	11,855
Restricted cash, at end of period (included within “Other assets, net”)							5,123			5,685
Total cash, cash equivalents and restricted cash, at end of period							$	774,364		$	17,540

See accompanying notes to condensed consolidated financial statements

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited financial statements of Retail Properties of America, Inc. for the year ended December 31, ~~2016,~~2019, which are included in its ~~2016~~2019 Annual Report on Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in the Annual Report have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary, all of which were of normal recurring nature, for a fair presentation have been included in this Quarterly Report.

(1) ORGANIZATION AND BASIS OF PRESENTATION

Retail Properties of America, Inc. (the Company) was formed on March 5, 2003 and its primary purpose is to own and operate high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of March 31, 2020, the Company owned 102 retail operating properties in the United States.

The Company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended (the Code). The Company believes it qualifies for taxation as a REIT and, as such, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax on its taxable income. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and U.S. federal income and excise taxes on its undistributed income. The Company has ~~one~~ ~~wholly-owned~~1 wholly owned subsidiary that has jointly elected to be treated as a taxable REIT subsidiary (TRS) and is subject to U.S. federal, state and local income taxes at regular corporate tax rates. The income tax expense incurred by the TRS did not have a material impact on the Company’s accompanying condensed consolidated financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates and assumptions have been made with respect to ~~useful lives of assets,~~ capitalization of development costs, ~~fair value measurements,~~ provision for impairment, including estimates of holding periods, capitalization rates and discount rates (where applicable), ~~provision for income taxes, recoverable amounts of receivables, deferred taxes~~ and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property ~~acquisitions.~~acquisitions and initial recognition of right-of-use lease assets and lease liabilities. Actual results could differ from these estimates.

All share amounts and dollar amounts in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and notes thereto, are stated in thousands with the exception of per share, ~~amounts~~per square foot and per ~~square foot~~unit amounts.

The accompanying condensed consolidated financial statements include the accounts of the Company, as well as all ~~wholly-owned~~wholly owned subsidiaries and ~~any~~ consolidated variable interest entities (VIEs). All intercompany balances and transactions have been eliminated in consolidation. ~~Wholly-owned~~Wholly owned subsidiaries generally consist of limited liability companies, limited partnerships and statutory trusts.

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a global pandemic. COVID-19 has caused significant disruptions to the U.S. and global economy and has contributed to significant volatility and negative pressure in the financial markets. The global impact of the COVID-19 outbreak has been rapidly evolving and many U.S. states and cities, including where the Company owns properties and/or has development sites, have imposed measures intended to control its spread, such as instituting “shelter-in-place” rules and restrictions on the types of businesses that may continue to operate and/or the types of construction projects that may continue. While the Company did not incur significant disruptions to its lease income and occupancy during the three months ended March 31, 2020 from COVID-19, the Company continues to closely monitor the impact of the pandemic on all aspects of its business. Due to numerous uncertainties, it is not possible to accurately predict the impact the pandemic will have on the Company’s financial condition, results of operations and cash flows. To date, as a result of the pandemic and the measures noted above to mitigate its impact, a number of the Company’s tenants have announced temporary closures of their stores or modifications of their operations and requested lease concessions. Generally, the Company has not yet reached agreement with tenants regarding concession requests, as discussions are ongoing. Certain other tenants are considered essential businesses which remain open and continue to operate during this time. Except for a small, enclosed portion of one property, ~~ownership as~~the Company has not closed any of ~~September 30, 2017 is summarized below:~~its properties and continues to operate them for the benefit of the communities and customers that the Company’s tenants serve.



	~~Wholly-owned~~
~~Retail operating properties (a)~~	~~120~~
~~Office properties~~	1
~~Total operating properties~~	~~121~~

~~Redevelopment properties~~	2


~~(a)~~	~~Excludes six wholly-owned operating properties classified as held for sale as of September 30, 2017.~~

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company’s property ownership as of March 31, 2020 is summarized below:



	Property Count
Retail operating properties	102
Expansion and redevelopment projects:
Circle East	1
One Loudoun Downtown – Pads G & H (a)	—
Carillon	1
The Shoppes at Quarterfield	1
Total number of properties	105


(a)	The operating portion of this property is included within the property count for retail operating properties.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Refer to the Company’s ~~2016~~2019 Annual Report on Form 10-K for a summary of its significant accounting policies. Except as disclosed below, there have been no changes to the Company’s significant accounting policies in the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020.

Recently Adopted Accounting Pronouncements

~~The Company elected to early adopt~~In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2017-09,~~ ~~Compensation – Stock Compensation~~, on a prospective basis as of June 30, 2017. This new pronouncement amends/clarifies guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, an entity should account for the effects of a modification unless all of the following are the same in the modified award as the original award immediately before the original award is modified: 1) the fair value; 2) the vesting conditions; and 3) the classification of the modified award as an equity instrument or a liability instrument. The existing disclosure requirements apply regardless of whether an entity is required to apply modification accounting. The adoption of this pronouncement did not have any effect on the Company’s condensed consolidated financial statements.

~~In March 2017, the Securities and Exchange Commission issued a final rule,~~ ~~Exhibit Hyperlinks and HTML Format~~, which is effective September 1, 2017. The final rule requires registrants that file registration statements and reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings. To enable the inclusion of such hyperlinks, registrants are required to submit all such filings in HyperText Markup Language (HTML) format. The Company has added hyperlinks to its exhibit index starting with this Form 10-Q for the quarter ended September 30, 2017.

~~Recently Issued Accounting Pronouncements~~

~~In May 2014 with subsequent updates issued in August 2015 and March, April, May and December 2016, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~. This new guidance is effective January 1, 2018, with early adoption permitted, and will replace existing revenue recognition standards. The core principle of this standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The sale of investment property and any non-lease components, including common area maintenance reimbursements, contained within lease agreements will be required to follow the new guidance; however, lease components of lease contracts will be subject to the ~~Leases~~ guidance described below. This pronouncement allows either a full or a modified retrospective method of adoption. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this guidance. While the Company anticipates additional disclosure, it does not expect the adoption of this pronouncement on January 1, 2018 will have a material effect on its condensed consolidated financial statements as it believes the majority of its revenue falls outside of the scope of this guidance; however, it will continue to evaluate this assessment until the guidance becomes effective. The Company expects to adopt this guidance on a modified retrospective basis applying the guidance to the sales of investment properties upon adoption and applying it to any non-lease components contained within new and modified lease agreements beginning January 1, 2019 with the adoption of the new ~~Leases~~ ~~guidance.~~

~~In February 2017, the FASB issued ASU 2017-05,~~ ~~Other Income–Gains and Losses from the Derecognition of Nonfinancial Assets. This new guidance is required to be adopted concurrently with the amendments in ASU 2014-09,~~ ~~Revenue from Contracts with Customers. The new pronouncement, which adds guidance for partial sales of nonfinancial assets and clarifies the scope of Subtopic 610-20,~~ ~~Gains and Losses from the Derecognition of Nonfinancial Assets~~, applies to the derecognition of all nonfinancial assets (including real estate) for which the counterparty is not a customer. The pronouncement requires either a retrospective or a modified retrospective method of adoption. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective. The Company expects to adopt this guidance on a modified retrospective basis.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments – Overall~~. This new guidance is effective January 1, 2018 and will require companies to disclose the fair value of financial assets and financial liabilities measured at amortized cost in accordance with the exit price notion and will no longer require disclosure of the methods and significant assumptions used, including any changes, to estimate fair value. In addition, companies will be required to disclose all financial assets and financial liabilities grouped by 1) measurement category and 2) form of financial instrument. The Company does not expect the adoption

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~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective.~~

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows~~. This new guidance is effective January 1, 2018, with early adoption permitted, and adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. Of the eight types of cash flows discussed in the new standard, the classification of debt prepayment costs as a financing outflow will impact the Company’s condensed consolidated statements of cash flows as this item is currently reflected as an operating outflow. The pronouncement requires a retrospective transition method of adoption. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows~~. This new guidance is effective January 1, 2018, with early adoption permitted, and requires amounts that are generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The pronouncement requires a retrospective transition method of adoption. Upon adoption, the Company will include amounts generally described as restricted cash within the beginning-of-period, change and end-of-period total amounts on the statement of cash flows rather than within an activity on the statement of cash flows.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. This new guidance is effective January 1, 2019, with early adoption permitted, and will require lessees to recognize a liability to make lease payments and a right-of-use (ROU) asset, initially measured at the present value of lease payments, for both operating and financing leases. For leases with a term of 12 months or less, lessees will be permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Upon adoption, the Company will recognize a lease liability and an ROU asset for operating leases where it is the lessee, such as ground leases and office leases. The Company is in the process of evaluating the inputs required to calculate the amounts that will be recorded on its balance sheet for each lease. For leases with a term of 12 months or less, the Company expects to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Under this new pronouncement, lessor accounting for lease components will be largely unchanged from existing GAAP; however, upon adoption of the ~~Leases~~ ~~guidance, non-lease components of new or modified leases, including common area maintenance reimbursements, will be accounted for under the~~ ~~Revenue from Contracts with Customers~~ guidance described above. The Company anticipates that it will be required to bifurcate certain lease revenues between lease and non-lease components. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. The pronouncement requires a modified retrospective method of adoption and allows some optional practical expedients. The Company expects to adopt this new guidance on January 1, 2019 and will continue to evaluate the impact of this guidance until it becomes effective.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging~~. This new guidance is effective January 1, 2019, with early adoption permitted, and amends the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in an entity’s financial statements. The new guidance eliminates the requirement to separately measure and report hedge ineffectiveness and entities will be required to present the earnings effect of the hedging instrument in the same income statement line item in which they report the earnings effect of the hedged item. In addition, entities may perform the initial quantitative assessment of hedge effectiveness at any time after hedge designation, but no later than the first quarterly effectiveness testing date, and subsequent assessments of hedge effectiveness may be performed qualitatively unless facts and circumstances change. Disclosure requirements will be modified to include a tabular disclosure related to the effect of hedging instruments on the income statement and eliminate the requirement to disclose the ineffective portion of the change in fair value of such instruments. As of September 30, 2017, the Company had interest rate swaps that were designated as cash flow hedges of interest rate risk that expire prior to the effective date. Based upon its current hedges, the Company does not expect that the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective.

~~In June 2016, the FASB issued ASU~~ 2016-13, Financial Instruments – Credit Losses. This new guidance iswas effective January 1, 2020 ~~with early adoption permitted beginning January 1, 2019,~~ and ~~replaces~~replaced the ~~current~~ incurred loss impairment methodology with a methodology that reflects expected credit losses. Financial assets that are measured at amortized cost ~~will be~~are required to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. In addition, an entity must consider broader information in developing its expected credit loss estimate, including the use of forecasted information. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of this new guidance. Generally, the pronouncement requires a modified retrospective method of adoption. The adoption of this pronouncement on January 1, 2020 did not have any effect on the Company’s consolidated financial statements as it did not have any financial assets within the scope of this guidance.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement. This new guidance was effective January 1, 2020 and provides new and, in some cases, eliminates or modifies the previously existing disclosure requirements on fair value measurements. Public entities are now required to disclose the following: (i) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. In addition, public entities are no longer required to disclose the following: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. The new pronouncement also clarifies and modifies certain existing provisions to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and clarifies that materiality is an appropriate consideration when evaluating disclosure requirements. As permitted by the new pronouncement, the Company removed the discussion of its valuation processes for Level 3 fair value measurements. The Company did not remove any other disclosures as it did not have any transfers between levels of the fair value hierarchy during the current and comparative periods. The adoption of this pronouncement on January 1, 2020 did not have any effect on the Company’s consolidated financial statements. The amended disclosure guidance will be applied prospectively.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. This temporary guidance is effective as of March 12, 2020 through December 31, 2022 to ease potential burdens related to the accounting for, or recognizing the effects of, reference rate reform on financial reporting. The guidance provides optional expedients for applying existing GAAP to contract modifications and hedging relationships affected by the move of global capital markets away from interbank offered rates, most notably the London Interbank Offered Rate (LIBOR). Specifically, the guidance allows for certain changes in critical terms of a designated hedging instrument or hedged item as a result of reference rate reform to not result in the dedesignation of the hedging relationship. In addition, the optional expedients related to probability and effectiveness assessments allow companies to disregard certain economic mismatches in a hedging relationship arising due to reference rate reform until both the derivative and hedged transactions have completed the transition, where current GAAP requires those mismatches to be modeled into the assessment of effectiveness.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~forecasted information. Generally, the pronouncement requires a modified retrospective method of adoption.~~ The Company ~~will continue to evaluate the impact of~~adopted this guidance ~~until~~as of the effective date and elected to apply the optional expedients related to probability and effectiveness prospectively. The Company has not modified any hedging relationship and has disregarded the potential economic mismatches in hedging relationships due to reference rate reform during the three months ended March 31, 2020.

Recently Issued Accounting Pronouncements

In April 2020, the FASB staff issued a question-and-answer (Q&A) document focusing on the application of the lease guidance in ASC 842, Leases, for lease concessions related to the effects of the COVID-19 pandemic. The FASB staff noted that due to the business disruptions and challenges caused by the COVID-19 pandemic, many lessors are, or will be, providing lease concessions such as payment forgiveness and deferral of payments. Changes to lease payments that are not stipulated in the original lease contract are generally accounted for as lease modifications under ASC 842. Within the Q&A, the FASB staff provides relief for lease concessions offered as a result of the effects of the COVID-19 pandemic and does not require these concessions to be accounted for in accordance with the lease modification guidance in ASC 842. Under existing lease guidance, the Company would determine, on a lease by lease basis, if a lease concession was the result of a new arrangement with the tenant or if it ~~becomes effective.~~was under the enforceable rights and obligations within the lease agreement. Under the relief guidance, a company can account for the concessions (i) as if no changes to the existing lease contract were made or (ii) as a variable lease adjustment. The Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. This election is optional and available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than the total payments required by the existing contract. The Company expects to apply the lease modification relief, however, the Q&A has not had a material impact on the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2020 as the Company has not yet reached agreement with tenants regarding any concession requests, as discussions are ongoing. The future impact is dependent upon the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering such concessions.

(3) ACQUISITIONS AND DEVELOPMENTS IN PROGRESS

Acquisitions

The Company closed on the following ~~acquisitions~~acquisition during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

Date Property Name Metropolitan
Statistical Area (MSA) Property Type
Square
Footage

Acquisition
Price

January 13, 2017 Main Street Promenade (a) Chicago Multi-tenant retail 181,600
$ 88,000

January 25, 2017
Boulevard at the Capital Centre –
Fee Interest
Washington, D.C. Fee interest (b) —
2,000

February 24, 2017
One Loudoun Downtown –
Phase II
Washington, D.C. Additional phase of multi-tenant retail (c) 15,900
4,128

April 5, 2017
One Loudoun Downtown –
Phase III
Washington, D.C. Additional phase of multi-tenant retail (c) 9,800
2,193

May 16, 2017
One Loudoun Downtown –
Phase IV
Washington, D.C. Development rights (c) —
3,500

July 6, 2017 New Hyde Park Shopping Center New York Multi-tenant retail 32,300
22,075

August 8, 2017
One Loudoun Downtown –
Phase V
Washington, D.C. Additional phase of multi-tenant retail (c) 17,700
5,167

August 8, 2017
One Loudoun Downtown –
Phase VI
Washington, D.C. Additional phase of multi-tenant retail (c) 74,100
20,523

331,400
$ 147,586
(d)

Date

Property Name

Metropolitan
Statistical Area (MSA)

Property Type

Square

Footage

Acquisition

Price

February 6, 2020

Fullerton Metrocenter

Los Angeles

Fee interest (a)

154,700

55,000

154,700

55,000

(b)


(a)	~~This property was~~The Company acquired ~~through~~the fee interest in an existing multi-tenant retail operating property. In connection with this acquisition, the Company also assumed the lessor position in a ~~consolidated VIE and was used to facilitate an Internal Revenue Code Section 1031 tax-deferred exchange (1031 Exchange).~~ground lease with a shadow anchor.

(b)

The wholly-owned multi-tenant retail operating property located in Largo, Maryland was previously subject to an approximately 70 acre long-term ground lease with a third party. The Company completed a transaction whereby it received the fee interest in approximately 50 acres of the underlying land in exchange for which (i) the Company paid $1,939 and (ii) the term of the ground lease with respect to the remaining approximately 20 acres was shortened to nine months. The Company derecognized building and improvements of $11,347 related to the remaining ground lease, recognized the fair value of land received of $15,200 and recorded a deferred gain of $2,524. The deferred gain will be recognized upon the expiration of the remaining ground lease. The total number of properties in the Company’s portfolio was not affected by this transaction.


~~(c)~~	The Company acquired the remaining five phases under contract, including the development rights for an additional 123 multi-family units for a total of 408 units, at its One Loudoun Downtown multi-tenant retail operating property, which were accounted for as asset acquisitions. The total number of properties in the Company’s portfolio was not affected by these transactions.


~~(d)~~	Acquisition price does not include capitalized closing costs and adjustments totaling ~~$2,190.~~$240.

The Company closed on the following ~~acquisitions~~acquisition during the ~~nine~~three months ended ~~September 30, 2016:~~March 31, 2019:

Date

Property Name

MSA

Property Type

Square

Footage

Acquisition

Price

March 7, 2019

North Benson Center

Seattle

Multi-tenant retail

70,500

25,340

70,500

25,340

(a)

Date Property Name MSA Property Type
Square
Footage

Acquisition
Price
January 15, 2016 Shoppes at Hagerstown (a) Hagerstown Multi-tenant retail 113,000
$ 27,055
January 15, 2016 Merrifield Town Center II (a) Washington, D.C. Multi-tenant retail 76,000
45,676
March 29, 2016 Oak Brook Promenade Chicago Multi-tenant retail 183,200
65,954
April 1, 2016 The Shoppes at Union Hill (b) New York Multi-tenant retail 91,700
63,060
April 29, 2016 Ashland & Roosevelt – Fee Interest Chicago Ground lease interest (c) —
13,850
May 5, 2016 Tacoma South Seattle Multi-tenant retail 230,700
39,400
June 15, 2016 Eastside Dallas Multi-tenant retail 67,100
23,842
August 30, 2016 Woodinville Plaza – Anchor Space Improvements Seattle Anchor space improvements (d) —
4,500
761,700
$ 283,337


(a)	~~These properties were acquired as a two-property portfolio. Merrifield Town Center II also contains 62,000 square feet of storage space for a total of 138,000 square feet.~~Acquisition price does not include capitalized closing costs and adjustments totaling $90.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)


~~(b)~~	~~In conjunction with the acquisition, the Company assumed mortgage debt with a principal balance of~~ ~~$15,971~~ ~~and an interest rate of~~ ~~3.75%~~ ~~that matures in 2031.~~

~~(c)~~

The Company acquired the fee interest in an existing wholly-owned multi-tenant retail operating property located in Chicago, Illinois, which was previously subject to a ground lease with a third party. In conjunction with this transaction, the Company reversed the straight-line ground rent liability of $6,978, which is reflected as “Gain on extinguishment of other liabilities” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income.


~~(d)~~	The Company acquired the anchor space improvements, which were previously subject to a ground lease with the Company, in an existing wholly-owned multi-tenant retail operating property located in Woodinville, Washington.

The following table summarizes the acquisition date values, before prorations, the Company recorded in conjunction with the acquisitions discussed above:



	Three Months Ended March 31,
	2020			2019
Land	$	57,137		$	13,275
Building and other improvements, net	1,623			10,619
Acquired lease intangible assets (a)	2,014			1,770
Acquired lease intangible liabilities (b)	(5,534		)	(234		)
Net assets acquired	$	55,240		$	25,430

Nine Months Ended September 30,
2017 2016
Land $ 38,833
$ 84,720
Building and other improvements, net 108,401
176,937
Acquired lease intangible assets (a) 11,139
25,016
Acquired lease intangible liabilities (b) (7,521 ) (3,991 )
Other liabilities (1,076 ) —
Mortgages payable, net —
(15,316 )
Net assets acquired $ 149,776
$ 267,366


(a)	The weighted average amortization period for acquired lease intangible assets is ~~seven~~17 years and ~~six~~five years for acquisitions completed during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively.


(b)	The weighted average amortization period for acquired lease intangible liabilities is 1317 years and 11five years for acquisitions completed during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively.

~~The above~~These acquisitions were funded using a combination of available cash on hand, proceeds from dispositions and proceeds from the Company’s unsecured revolving line of credit. All of the acquisitions completed during ~~2017~~2020 and 2019 were considered asset acquisitions and, as such, transaction costs were capitalized upon closing. ~~Transaction costs~~

In addition, the Company capitalized $626 and $675 of internal salaries and related benefits of personnel directly involved in capital upgrades and tenant improvements during the three months ended March 31, 2020 and 2019, respectively. The Company also capitalized $60 and $54 of internal leasing incentives, all of which were incremental to signed leases, during the three months ended March 31, 2020 and 2019, respectively.

Developments in Progress

The carrying amount of the Company’s developments in progress are as follows:



Property Name	MSA	March 31, 2020		December 31, 2019
Expansion and redevelopment projects:
Circle East (a)	Baltimore	$	34,665	$	33,628
One Loudoun Downtown	Washington, D.C.	36,346		27,868
Carillon	Washington, D.C.	29,517		26,407
The Shoppes at Quarterfield	Baltimore	524		—
Pad development projects:
Southlake Town Square	Dallas	259		—
		101,311		87,903
Land held for future development:
One Loudoun Uptown	Washington, D.C.	25,450		25,450
Total developments in progress		$	126,761	$	113,353


(a)	During the year ended December 31, 2018, the Company received net proceeds of $11,820 in connection with the sale of air rights to a third party to develop multi-family rental units at Circle East, which is shown net in the “Developments in progress” balance as of March 31, 2020 and December 31, 2019 in the accompanying condensed consolidated balance sheets.

In response to current macroeconomic conditions related to the ~~2016 acquisitions that were accounted~~COVID-19 pandemic, the Company halted plans for ~~as business combinations totaled $913~~vertical construction at its Carillon redevelopment during the three months ended March 31, 2020 and has materially reduced the planned scope and spend for the ~~nine months ended September 30, 2016 and are included in “General and administrative expenses” in~~project. As of March 31, 2020, the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. In addition, total revenues of $36,210 and net income attributable to common shareholders of $7,760 are included in the Company’s condensed consolidated statements of operations and other comprehensive (loss) income for the nine months ended September 30, 2016 from the properties acquired during the nine months ended September 30, 2016 that were accounted for as business combinations.

~~Condensed Pro Forma Financial Information~~

Disclosure of pro forma financial information is required for acquisitions accounted for as business combinations, if such financial information is available. Pro forma financial information is provided for acquisitions accounted for as business combinations completed during the period, or after such period through the financial statement issuance date, as if these acquisitions had been completed as of the beginning of the year prior to the acquisition date. Pro forma financial information is not required for asset acquisitions.

The following unaudited condensed pro forma financial information is presented as if the acquisitions completed during the nine months ended September 30, 2016 were completed as of January 1, 2015. The following 2016 acquisitions have not been adjusted in the pro forma presentation as they were accounted for as asset acquisitions: (i) the acquisition of the anchor space improvements in the Company’s Woodinville Plaza multi-tenant retail operating property located in the Seattle MSA, whichCompany was acquired on August 30, 2016 for $4,500 and (ii) the acquisition of the fee interest in the Company’s Ashland & Roosevelt multi-tenant retail operating property located in the Chicago MSA, which was acquired on April 29, 2016 for $13,850. Pro forma financial information is not presented for acquisitions completed during 2017 as they have been accounted for as asset acquisitions. These pro forma results are for comparative purposes only and are not necessarily indicative of what the Company’s actual results of operations would have been had the acquisitions occurredactively completing site work preparation at the ~~beginning~~property in anticipation of potential future development at the ~~period presented, nor are they necessarily indicative~~site. The Company expects to complete the site work preparation during 2020 for an expected additional capital investment of ~~future operating results.~~approximately $4,500.

109

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The ~~unaudited condensed pro forma financial information is as follows:~~

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2016
Total revenues $ 144,526
$ 444,622
Net income $ 72,494
$ 147,421
Net income attributable to common shareholders $ 70,132
$ 140,334
Earnings per common share – basic and diluted
Net income per common share attributable to common shareholders $ 0.30
$ 0.59
Weighted average number of common shares outstanding – basic 236,783
236,692
Company capitalized $1,316 and $574 of indirect project costs related to redevelopment projects during the three months ended March 31, 2020 and 2019, respectively, including, among other costs, $372 and $365 of internal salaries and related benefits of personnel directly involved in the redevelopment projects and $785 and $144 of interest, respectively.

Variable Interest Entities

~~During~~As of January 1, 2020, the ~~nine~~Company had joint ventures related to the development, ownership and operation of the (i) multi-family rental portion of the expansion project at One Loudoun Downtown – Pads G & H, of which joint venture the Company owned 90%; (ii) multi-family rental portion of the redevelopment project at Carillon, of which joint venture the Company owned 95%, and (iii) medical office building portion of the redevelopment project at Carillon, of which joint venture the Company owned 95%.

The joint ventures are considered VIEs primarily because the Company’s joint venture partners do not have substantive kick-out rights or substantive participating rights. The Company is considered the primary beneficiary as it has a controlling financial interest in each joint venture. As such, the Company has consolidated these joint ventures and presented the joint venture partners’ interests as noncontrolling interests.

As a result of halting the planned vertical construction at Carillon, the Company terminated the joint venture related to the multi-family rental portion of the redevelopment during the three months ended ~~September 30, 2017,~~March 31, 2020. In accordance with the terms of the joint venture agreement, costs incurred prior to the termination were funded evenly by the partners and there was no payment between the partners upon termination. Subsequent to the termination, if the Company ~~entered into an agreement~~commences the redevelopment and uses the materials developed, or approvals obtained, by the joint venture, the Company is required to reimburse the partner’s costs incurred in connection with such materials or approvals. As a ~~qualified intermediary~~result of the termination, the Company reclassified the noncontrolling interest balance of $1,661 related to ~~a potential 1031 Exchange. The~~this multi-family rental joint venture from noncontrolling interests to additional paid-in capital within equity. There was no gain or loss recognized in connection with the termination. Subsequent to March 31, 2020, the Company ~~loaned $87,452~~terminated the joint venture related to the ~~VIEs to acquire Main Street Promenade on January 13, 2017. The 1031 Exchange was completed during the nine months ended September 30, 2017 and, in accordance with applicable provisions~~medical office building portion of the ~~Code, within 180 days~~redevelopment at Carillon.

As of March 31, 2020 and December 31, 2019, the Company had recorded the following related to the consolidated joint ventures:



	March 31, 2020								December 31, 2019
	One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total		One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total
Net investment properties	$	29,715	$	—	$	885	$	30,600	$	8,830	$	2,940	$	675	$	12,445
Other assets, net	$	344	$	—	$	—	$	344	$	164	$	—	$	—	$	164
Other liabilities	$	3,066	$	—	$	167	$	3,233	$	1,546	$	32	$	129	$	1,707
Noncontrolling interests	$	2,699	$	—	$	359	$	3,058	$	1,869	$	1,454	$	273	$	3,596

Development costs are funded by the partners, including the Company, and/or construction loan financing throughout the construction period. Under terms defined in the joint venture agreements, after ~~the acquisition date~~construction completion and stabilization of the ~~property. At~~respective development project, the ~~completion of~~Company has the ~~1031 Exchange,~~ability to call, and the ~~sole membership interests of~~joint venture partner has the ~~VIEs were assigned~~ability to put to the Company, ~~in satisfaction of~~subject to certain conditions, the ~~outstanding loan, resulting~~joint venture partner’s interest in the ~~entities being wholly owned by~~respective joint venture at fair value. The Company has not provided financial support to these VIEs in excess of any amounts that it is contractually required to provide. There was no income from the ~~Company and no longer considered VIEs.~~

~~During~~joint venture projects during the ~~nine~~three months ended ~~September 30, 2016, the Company entered into agreements with a qualified intermediary related to three 1031 Exchanges. The Company loaned $65,419, $39,215~~March 31, 2020 and ~~$23,522 to the VIEs to acquire Oak Brook Promenade, Tacoma South~~2019 and, Eastside, respectively. Each 1031 Exchange was completed during the year ended December 31, 2016 and, in accordance with applicable provisions of the Code, within 180 days after the acquisition date of the property. At the completion of the 1031 Exchanges, the sole membership interests of the VIEs were assigned to the Company and the respective outstanding loans were extinguished, resulting in the entities being wholly owned by the Company andas such, no ~~longer considered VIEs.~~

Prior to the completion of the 1031 Exchanges, the Company was deemed to be the primary beneficiary of each VIE as it had the ability to direct the activities of each VIE that most significantly impact its economic performance and had all of the risks and rewards of ownership. Accordingly, the Company consolidated the VIEs. No value or income was attributed to the noncontrolling ~~interest. The assets of the VIEs consisted of the respective investment property, Main Street Promenade, Oak Brook Promenade, Tacoma South and Eastside, which were operated by the Company.~~interests.

(4) DISPOSITIONS

The Company closed on the following disposition during the three months ended March 31, 2020:



Date	Property Name	Property Type	Square Footage	Consideration		Aggregate Proceeds, Net (a)		Gain
February 13, 2020	King Philip’s Crossing	Multi-tenant retail	105,900	$	13,900	$	11,343	$	—
			105,900	$	13,900	$	11,343	$	—


(a)	Aggregate proceeds are net of transaction costs.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~(4) DISPOSITIONS~~

The Company closed on the following ~~dispositions~~disposition during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2019:

Date Property Name Property Type
Square
Footage
Consideration
Aggregate
Proceeds, Net (a)
Gain
January 27, 2017
Rite Aid Store (Eckerd), Culver Rd. –
Rochester, NY
Single-user retail 10,900
$ 500
$ 332
$ —
February 21, 2017 Shoppes at Park West Multi-tenant retail 63,900
15,383
15,261
7,569
March 7, 2017 CVS Pharmacy – Sylacauga, AL Single-user retail 10,100
3,700
3,348
1,651
March 8, 2017
Rite Aid Store (Eckerd) –
Kill Devil Hills, NC
Single-user retail 13,800
4,297
4,134
1,857
March 15, 2017 Century III Plaza – Home Depot (b) Single-user parcel 131,900
17,519
17,344
4,487
March 16, 2017 Village Shoppes at Gainesville Multi-tenant retail 229,500
41,750
41,380
14,107
March 24, 2017 Northwood Crossing Multi-tenant retail 160,000
22,850
22,723
10,007
April 4, 2017 University Town Center Multi-tenant retail 57,500
14,700
14,590
9,128
April 4, 2017 Edgemont Town Center Multi-tenant retail 77,700
19,025
18,857
8,995
April 4, 2017 Phenix Crossing (c) Multi-tenant retail 56,600
12,400
(28 ) 5,699
April 27, 2017 Brown’s Lane Multi-tenant retail 74,700
10,575
10,318
3,408
May 9, 2017 Rite Aid Store (Eckerd) – Greer, SC Single-user retail 13,800
3,050
2,961
830
May 9, 2017 Evans Towne Centre Multi-tenant retail 75,700
11,825
11,419
5,226
May 25, 2017 Red Bug Village Multi-tenant retail 26,200
8,100
7,767
2,184
May 26, 2017 Wilton Square Multi-tenant retail 438,100
49,300
48,503
19,630
May 30, 2017 Town Square Plaza Multi-tenant retail 215,600
28,600
26,459
3,412
May 31, 2017 Cuyahoga Falls Market Center Multi-tenant retail 76,400
11,500
11,101
1,300
June 5, 2017 Plaza Santa Fe II Multi-tenant retail 224,200
35,220
33,506
16,946
June 6, 2017 Rite Aid Store (Eckerd)–Columbia, SC Single-user retail 13,400
3,250
3,163
1,046
June 16, 2017 Fox Creek Village Multi-tenant retail 107,500
24,825
24,415
12,470
June 29, 2017 Cottage Plaza Multi-tenant retail 85,500
23,050
22,685
8,039
June 29, 2017 Magnolia Square Multi-tenant retail 116,000
16,000
15,692
4,866
June 29, 2017 Cinemark Seven Bridges Single-user retail 70,200
15,271
14,948
3,973
June 29, 2017 Low Country Village I & II Multi-tenant retail 139,900
22,075
21,639
10,286
July 20, 2017 Boulevard Plaza Multi-tenant retail 111,100
14,300
13,913
846
July 26, 2017 Irmo Station (c) Multi-tenant retail 99,400
16,027
(47 ) 7,236
July 27, 2017 Hickory Ridge Multi-tenant retail 380,600
44,020
43,701
18,535
August 4, 2017 Lakepointe Towne Center Multi-tenant retail 196,600
10,500
10,179
—
August 14, 2017 The Columns Multi-tenant retail 173,400
21,750
21,313
5,073
August 25, 2017 Holliday Towne Center Multi-tenant retail 83,100
11,750
11,413
2,633
August 25, 2017 Northwoods Center (c) Multi-tenant retail 96,000
24,250
(9 ) 10,889
September 14, 2017 The Orchard Multi-tenant retail 165,800
20,000
19,663
5,022
September 21, 2017 Lake Mary Pointe Multi-tenant retail 51,100
5,100
4,838
534
September 22, 2017 West Town Market (c) Multi-tenant retail 67,900
14,250
(59 ) 8,074
September 29, 2017 Dorman Centre I & II Multi-tenant retail 388,300
46,000
45,011
13,430
4,302,400
$ 642,712
$ 562,433
$ 229,388


~~(a)~~	Aggregate proceeds are net of transaction costs and proceeds temporarily restricted related to potential 1031 Exchanges and exclude $150 of condemnation proceeds, which did not result in any additional gain recognition.


~~(b)~~	The Company disposed of the Home Depot parcel at Century III Plaza, an existing 284,100 square foot multi-tenant retail operating property. The remaining portion of Century III Plaza is classified as held for sale as of September 30, 2017.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~


~~(c)~~	~~The following disposition proceeds are temporarily restricted related to potential 1031 Exchanges and are included in “Other assets, net” in the accompanying condensed consolidated balance sheets:~~

Property Name
Proceeds
Temporarily
Restricted
Phenix Crossing $ 12,324
Irmo Station 15,643
Northwoods Center 23,255
West Town Market 13,864
$ 65,086

During the nine months ended September 30, 2017, the Company also received proceeds and recognized a gain of $1,486 as a result of the receipt of the escrow related to the disposition of Maple Tree Place on August 12, 2016. The aggregate proceeds, net of closing costs and proceeds temporarily restricted related to potential 1031 Exchanges, from property dispositions and other transactions during the nine months ended September 30, 2017 totaled $564,069, with aggregate gains of $230,874.

~~The Company closed on the following dispositions during the nine months ended September 30, 2016:~~

Date Property Name Property Type
Square
Footage
Consideration
Aggregate
Proceeds, Net (a)
Gain
February 1, 2016 The Gateway (b) Multi-tenant retail 623,200
$ 75,000
$ (795 ) $ 3,868
February 10, 2016 Stateline Station Multi-tenant retail 142,600
17,500
17,210
4,253
March 30, 2016 Six Property Portfolio (c) Single-user retail 230,400
35,413
34,986
13,618
April 20, 2016 CVS Pharmacy – Oklahoma City, OK Single-user retail 10,900
4,676
4,608
1,764
June 2, 2016 Rite Aid Store (Eckerd) – Canandaigua, NY & Tim Horton Donut Shop (d) Single-user retail 16,600
5,400
5,333
1,444
June 15, 2016 Academy Sports – Midland, TX (e) Single-user retail 61,200
5,541
5,399
2,220
June 23, 2016 Four Rite Aid Portfolio (f) Single-user retail 45,400
15,934
14,646
2,287
July 8, 2016 Broadway Shopping Center Multi-tenant retail 190,300
20,500
20,103
7,958
July 21, 2016 Mid-Hudson Center Multi-tenant retail 235,600
27,500
25,615
—
July 27, 2016 Rite Aid Store (Eckerd), Main St. – Buffalo, NY Single-user retail 10,900
3,388
3,296
344
July 29, 2016 Rite Aid Store (Eckerd)–Lancaster, NY Single-user retail 10,900
3,425
3,349
625
August 4, 2016 Alison's Corner Multi-tenant retail 55,100
7,850
7,559
3,334
August 5, 2016 Rite Aid Store (Eckerd), Lake Ave. – Rochester, NY Single-user retail 13,200
5,400
5,334
907
August 12, 2016 Maple Tree Place Multi-tenant retail 489,000
90,000
87,047
15,566
August 12, 2016 CVS Pharmacy – Burleson, TX Single-user retail 10,900
4,190
4,102
1,425
August 18, 2016 Mitchell Ranch Plaza Multi-tenant retail 199,600
55,625
54,305
33,612
August 22, 2016 Rite Aid Store (Eckerd), E. Main St. – Batavia, NY Single-user retail 13,800
5,050
4,924
1,249
September 9, 2016 Rite Aid Store (Eckerd)–Lockport, NY Single-user retail 13,800
4,690
4,415
753
September 9, 2016 Rite Aid Store (Eckerd), Ferry St. – Buffalo, NY Single-user retail 10,900
3,600
3,370
612
2,384,300
$ 390,682
$ 304,806
$ 95,839



Date	Property Name	Property Type	Square Footage	Consideration		Aggregate Proceeds, Net (a)		Gain
March 8, 2019	Edwards Multiplex – Fresno (a)	Single-user retail	94,600	$	25,850	$	21,605	$	8,449
			94,600	$	25,850	$	21,605	$	8,449


(a)	Aggregate proceeds are net of transaction costs.

~~(b)~~

~~The property was disposed of through a lender-directed sale in full satisfaction of the Company’s $94,353 mortgage obligation. Immediately prior~~ Prior to the disposition, the ~~lender reduced~~Company was subject to a ground lease whereby it leased the ~~Company’s loan obligation to $75,000 which~~underlying land from a third party. The ground lease was assumed by the ~~buyer~~purchaser in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653.

~~(c)~~

Portfolio consists of the following properties: (i) Academy Sports – Houma, LA, (ii) Academy Sports – Port Arthur, TX, (iii) Academy Sports – San Antonio, TX, (iv) CVS Pharmacy – Moore, OK, (v) CVS Pharmacy – Saginaw, TX and (vi) Rite Aid Store (Eckerd) – Olean, NY. At the closing of the disposition, proceeds of $34,973 were temporarily restricted related to 1031 Exchanges. During the three months ended September 30, 2016, the related 1031 Exchanges closed and the proceeds were released to the Company.


~~(d)~~	~~The terms of the disposition of Rite Aid Store (Eckerd) – Canandaigua, NY and Tim Horton Donut Shop – Canandaigua, NY were negotiated as a single transaction.~~

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~


~~(e)~~	At the closing of the disposition, proceeds of $5,383 were temporarily restricted related to a 1031 Exchange. During the three months ended September 30, 2016, the related 1031 Exchange closed and the proceeds were released to the Company.


~~(f)~~	Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Cheektowaga, NY, (ii) Rite Aid Store (Eckerd), W. Main St. – Batavia, NY, (iii) Rite Aid Store (Eckerd), Union Rd. – West Seneca, NY and (iv) Rite Aid Store (Eckerd) – Greece, NY.

During the nine months ended September 30, 2016, the Company also disposed of an outparcel for consideration of $2,639 and recorded a gain of $1,898 from the transaction. At the closing of the disposition, proceeds of $2,549 were temporarily restricted related to a 1031 Exchange. During the three months ended September 30, 2016, the related 1031 Exchange closed and the proceeds were released to the Company. The aggregate proceeds, net of closing costs, from the property dispositions and this additional transaction totaled $307,355 with aggregate gains of $97,737.

None of the dispositions completed during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 qualified for discontinued operations ~~treatment.~~treatment and none are considered individually significant.

~~The following~~As of March 31, 2020 and December 31, 2019, no properties qualified for held for sale accounting treatment prior to or during the quarter ended September 30, 2017. Upon meeting all applicable GAAP criteria for held for sale accounting treatment, depreciation and amortization were ceased. In addition, the assets and liabilities associated with these properties are separately classified as held for sale in the condensed consolidated balance sheet as of September 30, 2017.



~~Property Name~~	~~Property Location~~	~~Property Type~~	~~Square Footage~~
~~Century III Plaza, excluding the Home Depot parcel~~	~~West Mifflin, Pennsylvania~~	~~Multi-tenant retail~~	~~152,200~~
~~Forks Town Center~~	~~Easton, Pennsylvania~~	~~Multi-tenant retail~~	~~100,300~~
~~Placentia Town Center~~	~~Placentia, California~~	~~Multi-tenant retail~~	~~111,000~~
~~Quakertown~~	~~Quakertown, Pennsylvania~~	~~Multi-tenant retail~~	~~61,800~~
~~Saucon Valley Square~~	~~Bethlehem, Pennsylvania~~	~~Multi-tenant retail~~	~~80,700~~
~~Five Forks~~	~~Simpsonville, South Carolina~~	~~Multi-tenant retail~~	~~70,200~~
			~~576,200~~

Subsequent to September 30, 2017, the Company sold Forks Town Center, Placentia Town Center, Five Forks and Saucon Valley Square for total consideration of $76,545. Century III Plaza, including the Home Depot parcel, and CVS Pharmacy – Sylacauga were classified as held for sale as of December 31, 2016. The Home Depot parcel at Century III Plaza and CVS Pharmacy – Sylacauga were sold during the nine months ended September 30, 2017.

~~The following table presents the assets and liabilities associated with the investment properties classified as held for sale:~~

September 30, 2017 December 31, 2016
Assets
Land, building and other improvements $ 81,718
$ 45,395
Less accumulated depreciation (21,189 ) (15,769 )
Net investment properties 60,529
29,626
Other assets 4,144
1,201
Assets associated with investment properties held for sale $ 64,673
$ 30,827

Liabilities
Mortgage payable, net $ 7,655
$ —
Other liabilities $ 1,401
$ 864
Liabilities associated with investment properties held for sale, net $ 9,056
$ 864
treatment.

(5) EQUITY COMPENSATION PLANS

The Company’s Amended and Restated 2014 Long-Term Equity Compensation Plan, subject to certain conditions, authorizes the issuance of incentive and non-qualified stock options, restricted stock and restricted stock units, stock appreciation rights and other similar awards ~~as well as cash-based awards~~ to the Company’s employees, non-employee directors, consultants and advisors in connection with compensation and incentive arrangements that may be established by the Company’s board of directors or executive management.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The following table summarizes the Company’s unvested restricted shares as of and for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020:

Unvested
Restricted
Shares

Weighted Average
Grant Date
Fair Value per
Restricted Share
Balance as of January 1, 2017 542

$ 15.28
Shares granted (a) 285

$ 14.60
Shares vested (282 )
$ 15.45
Shares forfeited (34 ) $ 15.12
Balance as of September 30, 2017 (b) 511

$ 14.82



	Unvested Restricted Shares		Weighted Average Grant Date Fair Value per Restricted Share
Balance as of January 1, 2020	535		$	12.46
Shares granted (a)	493		$	12.87
Shares vested	(213	)	$	13.08
Balance as of March 31, 2020 (b)	815		$	12.55


(a)	Shares granted vest over periods ranging from ~~one year~~0.9 years to three years in accordance with the terms of applicable award agreements.


(b)	As of ~~September 30, 2017,~~March 31, 2020, total unrecognized compensation expense related to unvested restricted shares was ~~$3,263,~~$4,937, which is expected to be amortized over a weighted average term of ~~1.3~~1.5 years.

The following table summarizes the Company’s unvested performance restricted stock units (RSUs) as of and for the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

Unvested
RSUs

Weighted Average
Grant Date
Fair Value
per RSU
RSUs eligible for future conversion as of January 1, 2017 391
$ 14.02
RSUs granted (a) 253
$ 15.52
RSUs ineligible for conversion (89 ) $ 14.68
RSUs eligible for future conversion as of September 30, 2017 (b) 555
$ 14.60



	Unvested RSUs		Weighted Average Grant Date Fair Value per RSU
RSUs eligible for future conversion as of January 1, 2020	839		$	13.10
RSUs granted (a)	331		$	13.67
Conversion of RSUs to common stock and restricted shares (b)	(196	)	$	15.52
RSUs eligible for future conversion as of March 31, 2020 (c)	974		$	12.81

(a)

Assumptions and inputs as of the grant date included a risk-free interest rate of ~~1.50%~~1.54%, the Company’s historical common stock performance relative to the peer companies within the National Association of Real Estate Investment Trusts (NAREIT) Shopping Center Index and the Company’s common stock dividend yield of ~~4.32%~~5.07%. ~~In 2020,~~Subject to continued employment, in 2023, following the performance period which concludes on December 31, ~~2019,~~2022, one-third of the RSUs that are earned will convert into shares of common stock and two-thirds will convert into restricted shares with a one year vesting term.

(b)

On February 10, 2020, 196 RSUs converted into 105 shares of common stock and 175 restricted shares that will vest on December 31, 2020, subject to continued employment through such date, after applying a conversion rate of 142.5% based upon the Company’s Total Shareholder Return (TSR) relative to the TSRs of its peer companies for the performance period that concluded on December 31, 2019. An additional 43 shares of common stock were also issued, representing the dividends that would have been paid on the earned awards during the performance period.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


(c)	As of ~~September 30, 2017,~~March 31, 2020, total unrecognized compensation expense related to unvested RSUs was ~~$4,663,~~$7,892, which is expected to be amortized over a weighted average term of ~~2.5~~2.4 years.

During the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company recorded compensation expense of ~~$934~~$2,233 and ~~$1,594,~~$1,966, respectively, related to the amortization of unvested restricted shares and RSUs. During the nine months ended September 30, 2017 and 2016, the Company recorded compensation expense of $4,483 and $5,296, respectively, related to the amortization of unvested restricted shares and RSUs. Included within the amortization of stock-based compensation expense recorded during the three and nine months ended September 30, 2017 is the reversal of $830 of previously recognized compensation expense related to the forfeiture of 34 restricted shares and 89 RSUs resulting from the resignation of the Company’s former Chief Financial Officer and Treasurer. In addition, $30 of dividends previously paid on the forfeited restricted shares were reclassified from distributions paid to compensation expense. The total fair value of restricted shares that vested during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was ~~$4,129.~~$2,513. In addition, the total fair value of RSUs that converted into common stock during the three months ended March 31, 2020 was $1,321.

Prior to 2013, non-employee directors had been granted options to acquire shares under the Company’s Third Amended and Restated Independent Director Stock Option and Incentive Plan. As of ~~September 30, 2017~~March 31, 2020, options to purchase 4116 shares of common stock remained outstanding and ~~exercisable.~~exercisable pursuant to such plan. The Company did not grant any options in ~~2017~~2020 or ~~2016~~2019 and did not record any compensation expense related to stock options during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.

(6) LEASES

Leases as Lessor

Lease income related to the Company’s operating leases is comprised of the following:



	Three Months Ended March 31,
	2020			2019
Lease income related to fixed lease payments	$	91,147		$	90,434
Lease income related to variable lease payments	28,495			30,631
Other (a)	(947		)	1,638
Lease income	$	118,695		$	122,703


(a)	“Other” is comprised of revenue adjustments related to changes in collectibility and amortization of above and below market lease intangibles and lease inducements.

Leases as Lessee

During the three months ended March 31, 2020, the Company extended the term of 1 office lease resulting in an additional lease liability and right-of-use lease asset of $383.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~(7) DEBT

~~Notes to Condensed Consolidated Financial Statements~~The Company has the following types of indebtedness: (i) mortgages payable, (ii) unsecured notes payable, (iii) unsecured term loans and (iv) an unsecured revolving line of credit.

~~(Unaudited)~~

~~(6) MORTGAGES PAYABLE~~Mortgages Payable

The following table summarizes the Company’s mortgages payable:



	March 31, 2020						December 31, 2019
	Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity	Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	94,285		4.37	%	4.8	$	94,904		4.37	%	5.1
Discount, net of accumulated amortization	(483		)				(493		)
Capitalized loan fees, net of accumulated amortization	(240		)				(256		)
Mortgages payable, net	$	93,562					$	94,155

September 30, 2017 December 31, 2016

Aggregate
Principal
Balance

Weighted
Average
Interest Rate

Weighted
Average Years
to Maturity

Aggregate
Principal
Balance

Weighted
Average
Interest Rate

Weighted
Average Years
to Maturity
Fixed rate mortgages payable (a) $ 288,252

4.99 % 5.5 $ 773,395
6.31 % 4.2
Premium, net of accumulated amortization 1,087
1,437

Discount, net of accumulated amortization (590 )
(622 )
Capitalized loan fees, net of accumulated
amortization
(649 ) (5,026 )
Mortgages payable, net $ 288,100

$ 769,184


(a)	The fixed rate mortgages had interest rates ranging from 3.75% to ~~8.00%~~7.48% as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016 and exclude a $7,680 mortgage payable and capitalized loan fees of $(25) associated with one investment property classified as held for sale as of September 30, 2017.~~2019.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company repaid or defeased mortgages payable in the total amount of $473,844, of which $174,702 related to properties that were disposed of during the period, which had a weighted average fixed interest rate of 7.09%, and made scheduled principal payments of ~~$3,619~~$619 related to amortizing loans. Included within the total repayments and defeasances for the nine months ended September 30, 2017 is the defeasance of a portfolio of mortgages payable with a principal balance of $379,435 as of December 31, 2016 that was cross-collateralized by 45 properties and scheduled to mature in 2019 (known as the IW JV portfolio of mortgages payable). The Company incurred a defeasance premium and associated fees totaling $60,198 in connection with this transaction, which are included within “Interest expense” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. As a result, the 45 properties that secured the mortgages payable as of December 31, 2016 are no longer encumbered by mortgages.

~~Debt Maturities~~

~~The following table shows the scheduled maturities and principal amortization of the Company’s indebtedness as of~~ ~~September 30, 2017~~ ~~for the remainder of 2017, each of the next four years and thereafter and the weighted average interest rates by year. The table does not reflect the impact of any debt activity that occurred after~~ ~~September 30, 2017~~.

2017 2018 2019 2020 2021 Thereafter Total
Debt:
Fixed rate debt:
Mortgages payable (a) $ 1,003
$ 4,177
$ 25,257
$ 3,923
$ 22,820
$ 231,072
$ 288,252
Fixed rate term loans (b) —
—
—
—
250,000
200,000
450,000
Unsecured notes payable (c) —
—
—
—
100,000
600,000
700,000
Total fixed rate debt 1,003
4,177
25,257
3,923
372,820
1,031,072
1,438,252

Variable rate debt:
Variable rate term loan and
revolving line of credit
—
100,000
—
187,000
—
—
287,000
Total debt (d) $ 1,003
$ 104,177
$ 25,257
$ 190,923
$ 372,820
$ 1,031,072
$ 1,725,252

Weighted average interest rate on debt:
Fixed rate debt 5.10 % 5.05 % 7.29 % 4.62 % 2.73 % 4.08 % 3.79 %
Variable rate debt (e) —
2.68 % —
2.59 % —
—
2.62 %
Total 5.10 % 2.78 % 7.29 % 2.63 % 2.73 % 4.08 % 3.60 %


~~(a)~~	Excludes mortgage premium of $1,087 and discount of $(590), net of accumulated amortization, as of September 30, 2017 and a $7,680 mortgage payable associated with one investment property classified as held for sale as of September 30, 2017.


~~(b)~~	$250,000 of London Interbank Offered Rate (LIBOR)-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a weighted average fixed rate of 0.67% through December 31,

1612

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

2017. In addition, $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a fixed rate of 1.26% through November 22, 2018.


~~(c)~~	~~Excludes discount of $(882), net of accumulated amortization, as of September 30, 2017.~~


~~(d)~~	The weighted average years to maturity of consolidated indebtedness was 5.4 years as of September 30, 2017. Total debt excludes capitalized loan fees of $(7,283), net of accumulated amortization, as of September 30, 2017, which are included as a reduction to the respective debt balances.


~~(e)~~	~~Represents interest rates as of September 30, 2017.~~

~~The Company plans on addressing its debt maturities through a combination of proceeds from asset dispositions, capital markets transactions and its unsecured revolving line of credit.~~

~~(7) UNSECURED NOTES PAYABLE~~Unsecured Notes Payable

The following table summarizes the Company’s unsecured notes payable:



		March 31, 2020					December 31, 2019
Unsecured Notes Payable	Maturity Date	Balance			Interest Rate/ Weighted Average Interest Rate		Balance			Interest Rate/ Weighted Average Interest Rate
Senior notes – 4.12% due 2021	June 30, 2021	$	100,000		4.12	%	$	100,000		4.12	%
Senior notes – 4.58% due 2024	June 30, 2024	150,000			4.58	%	150,000			4.58	%
Senior notes – 4.00% due 2025	March 15, 2025	250,000			4.00	%	250,000			4.00	%
Senior notes – 4.08% due 2026	September 30, 2026	100,000			4.08	%	100,000			4.08	%
Senior notes – 4.24% due 2028	December 28, 2028	100,000			4.24	%	100,000			4.24	%
Senior notes – 4.82% due 2029	June 28, 2029	100,000			4.82	%	100,000			4.82	%
		800,000			4.27	%	800,000			4.27	%
Discount, net of accumulated amortization		(586		)			(616		)
Capitalized loan fees, net of accumulated amortization		(2,994		)			(3,137		)
	Total	$	796,420				$	796,247

September 30, 2017 December 31, 2016
Unsecured Notes Payable Maturity Date Principal Balance
Interest Rate/
Weighted Average
Interest Rate
Principal Balance
Interest Rate/
Weighted Average
Interest Rate
Senior notes – 4.12% due 2021 June 30, 2021 $ 100,000
4.12 % $ 100,000
4.12 %
Senior notes – 4.58% due 2024 June 30, 2024 150,000
4.58 % 150,000
4.58 %
Senior notes – 4.00% due 2025 March 15, 2025 250,000
4.00 % 250,000
4.00 %
Senior notes – 4.08% due 2026 September 30, 2026 100,000
4.08 % 100,000
4.08 %
Senior notes – 4.24% due 2028 December 28, 2028 100,000
4.24 % 100,000
4.24 %
700,000
4.19 % 700,000
4.19 %
Discount, net of accumulated amortization (882 ) (971 )
Capitalized loan fees, net of accumulated amortization (3,523 ) (3,886 )
Total $ 695,595
$ 695,143

~~Notes Due 2026~~Unsecured Term Loans and ~~2028~~

~~The note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028) contains customary covenants and events~~Revolving Line of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) a minimum interest coverage ratio; (iii) an unencumbered interest coverage ratio (as set forth in the Company’s unsecured credit facility and the note purchase agreement governing the Notes Due 2021 and 2024); and (iv) a fixed charge coverage ratio (as set forth in the Company’s unsecured credit facility).

~~Notes Due 2025~~

The indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025) (the Indenture) contains customary covenants and events of default. Pursuant to the terms of the Indenture, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum secured and total leverage ratios; (ii) a debt service coverage ratio; and (iii) maintenance of an unencumbered assets to unsecured debt ratio.

~~Notes Due 2021 and 2024~~

The note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024) contains customary covenants and events of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial covenants, some of which are based upon the financial covenants in effect in the Company’s unsecured credit facility, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage and unencumbered interest coverage ratios; and (iii) a minimum consolidated net worth.

~~As of September 30, 2017, management believes the Company was in compliance with the financial covenants under the Indenture and the note purchase agreements.~~

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(8) UNSECURED TERM LOANS AND REVOLVING LINE OF CREDIT~~Credit

The following table summarizes the Company’s term loans and revolving line of credit:


		September 30, 2017					December 31, 2016						March 31, 2020					December 31, 2019
	Maturity Date	Balance			Interest Rate		Balance			Interest Rate		Maturity Date	Balance			Interest Rate		Balance			Interest Rate
Unsecured credit facility term loan due 2021 – fixed rate (a)	January 5, 2021	$	250,000		1.97	%	$	250,000		1.97	%	January 5, 2021	$	250,000		3.20	%	$	250,000		3.20	%
Unsecured credit facility term loan due 2018 – variable rate	May 11, 2018	100,000			2.68	%	200,000			2.22	%
Unsecured term loan due 2023 – fixed rate (b)	November 22, 2023	200,000			2.96	%	—			—	%	November 22, 2023	200,000			4.05	%	200,000			4.05	%
Unsecured term loan due 2024 – fixed rate (c)												July 17, 2024	120,000			2.88	%	120,000			2.88	%
Unsecured term loan due 2026 – fixed rate (d)												July 17, 2026	150,000			3.27	%	150,000			3.27	%
Subtotal		550,000					450,000						720,000					720,000
Capitalized loan fees, net of accumulated amortization		(3,086		)			(2,402		)				(3,208		)			(3,477		)
Term loans, net		$	546,914				$	447,598					$	716,792				$	716,523

Revolving line of credit – variable rate (c)	January 5, 2020	$	187,000		2.59	%	$	86,000		2.12	%
Unsecured credit facility revolving line of credit – variable rate (e)												April 22, 2022	$	849,704		2.04	%	$	18,000		2.85	%


(a)	$250,000 of LIBOR-based variable rate debt has been swapped to a weighted average fixed rate of 0.67% plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of September 30, 2017 and December 31, 2016.


~~(b)~~	~~$200,000~~ of ~~LIBOR~~-based variable rate debt has been swapped to a fixed rate of ~~1.26%~~2.00% plus a credit spread based on a leverage grid ranging from ~~1.70%~~1.20% to ~~2.55%~~1.70% through ~~November 22, 2018.~~January 5, 2021. The applicable credit spread was ~~1.70%~~1.20% as of ~~September 30, 2017.~~March 31, 2020 and December 31, 2019.


(b)	$200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging from 1.20% to 1.85% through November 22, 2023. The applicable credit spread was 1.20% as of March 31, 2020 and December 31, 2019.


(c)	$120,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2024. The applicable credit spread was 1.20% as of March 31, 2020 and December 31, 2019.


(d)	$150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid ranging from 1.50% to 2.20% through July 17, 2026. The applicable credit spread was 1.50% as of March 31, 2020 and December 31, 2019.

(e)

Excludes capitalized loan fees, which are included inwithin “Other assets, net” in the accompanying condensed consolidated balance sheets. The revolving line of credit has 2 six-month extension options that the Company can exercise, at its election, subject to (i) customary representations and warranties, including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) payment of an extension fee equal to 0.075% of the revolving line of credit capacity.

Unsecured Credit Facility

~~On January 6, 2016, the~~The Company ~~entered into its fourth amended and restated unsecured credit agreement (Unsecured Credit Agreement) with~~has a ~~syndicate of financial institutions led by KeyBank National Association serving as administrative agent and Wells Fargo Bank, National Association serving as syndication agent to provide for an~~$1,100,000 unsecured credit facility ~~aggregating $1,200,000 (Unsecured Credit Facility). The Unsecured Credit Facility consists~~consisting of ~~a $750,000~~an $850,000 unsecured revolving line of credit and a $250,000 unsecured term loan ~~and a second unsecured term loan which had an outstanding balance of $200,000 at inception, of which the Company repaid $100,000 during the nine months ended September 30, 2017, and~~(Unsecured Credit Facility) that is priced on a leverage grid at a rate of LIBOR plus a credit spread. ~~The Company received investment grade credit ratings from Moody’s and Standard & Poor’s in 2014.~~ In accordance with the unsecured credit agreement, the Company may elect to convert to an investment grade pricing grid. As of ~~September 30, 2017,~~March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, the Company has not made

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

the election to convert to an investment grade pricing grid. During the three months ended March 31, 2020, the Company elected to increase its borrowings under its unsecured revolving line of credit to enhance its liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets. As a result, as of March 31, 2020, the Company’s $850,000 unsecured revolving line of credit was nearly fully drawn.

The following table summarizes the key terms of the Unsecured Credit Facility:

Leverage-Based Pricing

Investment Grade Pricing

Unsecured Credit Facility

Maturity Date

Extension Option

Extension Fee

Credit Spread

Facility Fee

Credit Spread

Facility Fee

$250,000 unsecured term loan due 2021

1/5/2021

N/A

1.20%–1.70%

N/A

0.90%–1.75%

N/A

$850,000 unsecured revolving line of credit

4/22/2022

2-six month

0.075%

1.05%–1.50%

0.15%–0.30%

0.825%–1.55%

0.125%–0.30%

The Unsecured Credit Facility has a $500,000 accordion option that allows the Company, at its election, to increase the total Unsecured Credit Facility up to $1,600,000, subject to (i) customary fees and conditions including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) the Company’s ability to obtain additional lender commitments.

Unsecured Term Loans

As of March 31, 2020, the Company has the following unsecured term loans: (i) a seven-year $200,000 unsecured term loan (Term Loan Due 2023), (ii) a five-year $120,000 unsecured term loan (Term Loan Due 2024) and (iii) a seven-year $150,000 unsecured term loan (Term Loan Due 2026) each of which bears interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit spread based on a leverage grid. In accordance with the respective term loan agreements, the Company may elect to convert to an investment grade pricing grid. As of March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid.

The following table summarizes the key terms of the ~~Unsecured Credit Facility:~~unsecured term loans:



Unsecured Term Loans	Maturity Date	Leverage-Based Pricing Credit Spread				Investment Grade Pricing Credit Spread
$200,000 unsecured term loan due 2023	11/22/2023	1.20	%	–	1.85%	0.85	%	–	1.65%
$120,000 unsecured term loan due 2024	7/17/2024	1.20	%	–	1.70%	0.80	%	–	1.65%
$150,000 unsecured term loan due 2026	7/17/2026	1.50	%	–	2.20%	1.35	%	–	2.25%

~~Leverage-Based Pricing~~

~~Ratings-Based Pricing~~

~~Unsecured Credit Facility~~

~~Maturity Date~~

~~Extension Option~~

~~Extension Fee~~

~~Credit Spread~~

~~Unused Fee~~

~~Credit Spread~~

~~Facility Fee~~

~~$250,000 unsecured term loan~~

~~1/5/2021~~

~~N/A~~

~~1.30% - 2.20%~~

~~N/A~~

~~0.90% - 1.75%~~

~~N/A~~

~~$100,000 unsecured term loan~~

~~5/11/2018~~

~~2 one year~~

~~0.15%~~

~~1.45% - 2.20%~~

~~N/A~~

~~1.05% - 2.05%~~

~~N/A~~

~~$750,000 unsecured revolving line of credit~~

~~1/5/2020~~

~~2 six month~~

~~0.075%~~

~~1.35% - 2.25%~~

~~0.15% - 0.25%~~

~~0.85% - 1.55%~~

~~0.125% - 0.30%~~

The ~~Unsecured Credit Facility~~Term Loan Due 2024 has a ~~$400,000~~$130,000 accordion option and the Term Loan Due 2026 has a $100,000 accordion option that, ~~allows~~collectively, allow the Company, at its election, to increase the total ~~credit facility~~of the Term Loan Due 2024 and Term Loan Due 2026 up to ~~$1,600,000,~~$500,000, subject to (i) customary fees and conditions, including ~~but not limited to,~~ the absence of an event of default as defined in the ~~Unsecured Credit Agreement~~term loan agreement and (ii) the Company’s ability to obtain additional lender commitments.

The Unsecured Credit Agreement contains customary covenants and events of default. Pursuant to the terms of the Unsecured Credit Agreement, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of September 30, 2017, management believes the Company was in compliance with the financial covenants and default provisions under the Unsecured Credit Agreement.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Term Loan Due 2023~~

On January 3, 2017, the Company received funding on a seven-year $200,000 unsecured term loan with a group of financial institutions, which closed during the year ended December 31, 2016. The Term Loan Due 2023 is priced on a leverage grid at a rate of LIBOR plus a credit spread. In accordance with the term loan agreement (Term Loan Agreement), the Company may elect to convert to an investment grade pricing grid. As of September 30, 2017, making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid.

~~The following table summarizes the key terms of the Term Loan Due 2023:~~

The Term Loan Due 2023 has a $100,000 accordion option that allows the Company, at its election, to increase the ~~total unsecured term loan~~Term Loan Due 2023 up to $300,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the amended term loan agreement and (ii) the Company’s ability to obtain additional lender commitments.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Debt Maturities

The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of March 31, 2020 for the remainder of 2020, each of the next four years and thereafter, and the weighted average interest rates by year. The table does not reflect the impact of any debt activity that occurred after March 31, 2020.



	2020			2021			2022			2023			2024			Thereafter			Total
Debt:
Fixed rate debt:
Mortgages payable (a)	$	1,875		$	2,626		$	26,678		$	31,758		$	1,737		$	29,611		$	94,285
Fixed rate term loans (b)	—			250,000			—			200,000			120,000			150,000			720,000
Unsecured notes payable (c)	—			100,000			—			—			150,000			550,000			800,000
Total fixed rate debt	1,875			352,626			26,678			231,758			271,737			729,611			1,614,285

Variable rate debt:
Variable rate revolving line of credit	—			—			849,704			—			—			—			849,704
Total debt (d)	$	1,875		$	352,626		$	876,382		$	231,758		$	271,737		$	729,611		$	2,463,989

Weighted average interest rate on debt:
Fixed rate debt	4.39		%	3.47		%	4.81		%	4.06		%	3.83		%	4.02		%	3.89		%
Variable rate debt (e)	—			—			2.04		%	—			—			—			2.04		%
Total	4.39		%	3.47		%	2.12		%	4.06		%	3.83		%	4.02		%	3.25		%


(a)	Excludes mortgage discount of $(483) and capitalized loan fees of $(240), net of accumulated amortization, as of March 31, 2020.

(b)

Excludes capitalized loan fees of $(3,208), net of accumulated amortization, as of March 31, 2020. The following variable rate term loans have been swapped to fixed rate debt: (i) $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid through January 5, 2021; (ii) $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid through November 22, 2023; (iii) $120,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid through July 17, 2024; and (iv) $150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid through July 17, 2026. As of March 31, 2020, the applicable credit spread for (i), (ii) and (iii) was 1.20% and for (iv) was 1.50%.


(c)	Excludes discount of $(586) and capitalized loan fees of $(2,994), net of accumulated amortization, as of March 31, 2020.


(d)	The weighted average years to maturity of consolidated indebtedness was 3.7 years as of March 31, 2020.


(e)	Represents interest rate as of March 31, 2020.

The Company’s unsecured debt agreements, consisting of the (i) unsecured credit agreement governing the Unsecured Credit Facility, (ii) amended term loan agreement governing the Term Loan ~~Agreement.~~

~~The~~Due 2023, (iii) term loan agreement governing the Term Loan ~~Agreement contains~~Due 2024 and Term Loan Due 2026, (iv) note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024), (v) indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025), (vi) note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), and (vii) note purchase agreement governing the 4.82% senior unsecured notes due 2029 (Notes Due 2029), contain customary representations, warranties and covenants, and events of ~~default, including~~default. These include financial covenants ~~that require the Company to maintain the following:~~such as (i) maximum unencumbered, secured and consolidated leverage ratios; ~~and~~ (ii) minimum interest coverage ratios; (iii) minimum fixed charge ~~and~~coverage ratios; (iv) minimum unencumbered interest coverage ~~ratios.~~ratios; (v) minimum debt service coverage ratio; and (vi) minimum unencumbered assets to unsecured debt ratio. All financial covenants that include operating results, or derivations thereof, in their calculations are based on the most recent four fiscal quarters of activity. As of ~~September 30, 2017,~~March 31, 2020, management believes the Company was in compliance with the financial covenants and default provisions under the ~~Term Loan Agreement.~~unsecured debt agreements.

The Company plans on addressing its debt maturities through a combination of (i) cash flows generated from operations, (ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and (iii) capital markets transactions.

~~(9)~~

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(8) DERIVATIVES

The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company 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 agreement without exchange of the underlying notional amount.

As of ~~September 30, 2017,~~March 31, 2020, the Company ~~utilized~~ ~~four~~has 11 interest rate swaps to hedge the variable cash flows associated with variable rate debt. ~~The effective portion of changes~~Changes in ~~the~~ fair value of the derivatives that are designated and that qualify as cash flow hedges isare recorded in “Accumulated other comprehensive ~~income”~~loss” and isare reclassified tointo interest expense as interest payments are made on the Company’s variable rate debt. Over the next 12 months, the Company estimates that an additional $~~760~~12,010 will be reclassified as ~~a decrease~~an increase to interest expense. ~~The ineffective portion of the change in fair value of derivatives is recognized directly in earnings.~~

The following table summarizes the Company’s interest rate swaps as of ~~September 30, 2017,~~March 31, 2020, which effectively convert one-month floating rate LIBOR to a fixed rate:



Number of Instruments	Effective Date	Aggregate Notional		Fixed Interest Rate		Maturity Date
NaN	December 29, 2017	$	250,000	2.00	%	January 5, 2021
NaN	November 23, 2018	$	200,000	2.85	%	November 22, 2023
NaN	August 15, 2019	$	120,000	1.68	%	July 17, 2024
NaN	August 15, 2019	$	150,000	1.77	%	July 17, 2026

Effective Date Notional
Fixed
Interest Rate
Termination Date
March 1, 2016 $ 100,000
0.66 % December 31, 2017
May 16, 2016 $ 150,000
0.67 % December 31, 2017
January 3, 2017 $ 100,000
1.26 % November 22, 2018
January 3, 2017 $ 100,000
1.26 % November 22, 2018

The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:



	Number of Instruments		Notional
Interest Rate Derivatives	March 31, 2020	December 31, 2019	March 31, 2020		December 31, 2019
Interest rate swaps	11	11	$	720,000	$	720,000

Number of Instruments Notional
Interest Rate Derivatives September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Interest rate swaps 4
2
$ 450,000
$ 250,000

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The table below presents the estimated fair value of the Company’s derivative financial instruments, which are presented within “Other ~~assets, net”~~liabilities” in the accompanying condensed consolidated balance sheets. The valuation techniques ~~utilized~~used are described in Note 1312 to the condensed consolidated financial statements.



	Fair Value
	March 31, 2020		December 31, 2019
Derivatives designated as cash flow hedges:
Interest rate swaps	$	39,870	$	12,288

Fair Value
September 30, 2017 December 31, 2016
Derivatives designated as cash flow hedges:
Interest rate swaps $ 891
$ 743

The following table presents the effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations and other comprehensive ~~(loss) income:~~loss for the three months ended March 31, 2020 and 2019:



Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in Other Comprehensive Income on Derivative				Location of Loss (Gain) Reclassified from Accumulated Other Comprehensive Income (AOCI) into Income	Amount of Loss (Gain) Reclassified from AOCI into Income					Total Interest Expense Presented in the Statements of Operations in which the Effects of Cash Flow Hedges are Recorded
	2020		2019			2020		2019			2020		2019
Interest rate swaps	$	28,653	$	3,386	Interest expense	$	1,071	$	(128	)	$	17,046	$	17,430

Derivatives in
Cash Flow
Hedging
Relationships

Amount of (Gain) Loss
Recognized in Other
Comprehensive Income
on Derivative
(Effective Portion)

Location of
(Gain) Loss
Reclassified from
Accumulated Other
Comprehensive Income (AOCI)
into Income
(Effective Portion)

Amount of (Gain) Loss
Reclassified from
AOCI into Income
(Effective Portion)

Location of
Loss (Gain)
Recognized in
Income on Derivative
(Ineffective Portion
and Amount
Excluded from
Effectiveness Testing)

Amount of Loss (Gain)
Recognized in Income
on Derivative
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)
Three Months
Ended
September 30, Nine Months
Ended
September 30, Three Months
Ended
September 30, Nine Months
Ended
September 30, Three Months
Ended
September 30, Nine Months
Ended
September 30,
2017 $ (9 ) $ (422 ) Interest expense $ (332 ) $ (258 ) Other (expense) income, net $ 5
$ 16
2016 $ (534 ) $ 153
Interest expense $ 132
$ 342
Other (expense) income, net $ (38 ) $ (35 )

~~(10)~~(9) EQUITY

In December 2015, the Company entered into an at-the-market (ATM) equity program under which it may issue and sell shares of its Class A common stock, having an aggregate offering price of up to $250,000, from time to time. Actual sales may depend on a variety of factors, including, among others, market conditions and the trading price of the Company’s Class A common stock. Any net proceeds are expected to be used for general corporate purposes, which may include the funding of acquisitions and redevelopment activities and the repayment of debt, including the Company’s unsecured revolving line of credit. The Company ~~did not sell any shares under its ATM equity program during the nine months ended September 30, 2017 and 2016. As of September 30, 2017, the Company had Class A common shares having~~has an ~~aggregate offering price of up to $250,000 remaining available for sale under its ATM equity program.~~

~~In December 2015, the Company’s board of directors authorized a~~existing common stock repurchase program under which ~~the Company~~it may repurchase, from time to time, up to a maximum of ~~$250,000~~$500,000 of shares of its Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions and are canceled upon repurchase. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of the Company’s assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

may be suspended or terminated at any time without prior notice. The Company did not repurchase any shares during the ~~nine~~three months ended ~~September 30, 2016.~~

~~The following table presents activity under~~March 31, 2020 and 2019. As of March 31, 2020, $189,105 remained available for repurchases of shares of the Company’s common stock ~~repurchase program during the nine months ended September 30, 2017:~~

Number of
Common Shares
Repurchased

Average Price
per Share

Total
Repurchases
First quarter 2017 —
$ —
$ —
Second quarter 2017 6,024
$ 12.55
$ 75,697
Third quarter 2017 (a) 3,805
$ 13.09
$ 49,892
Year to date September 30, 2017 9,829
$ 12.76
$ 125,589


~~(a)~~	Includes 396 shares repurchased in September 2017 at an average price per share of $13.08 for a total of $5,187, which settled on October 2, 2017. This repurchase has been reflected in the Company’s share count as of such date.

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~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~As of September 30, 2017, $115,570 remained available~~ under ~~the~~its common stock repurchase program.

~~(11)~~(10) EARNINGS PER SHARE

The following table summarizes the components used in the calculation of basic and diluted earnings per share (EPS):


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended March 31,
	2017				2016				2017				2016				2020				2019
Numerator:
(Loss) income from continuing operations	$	(37,178	)		$	6,109			$	(89,307	)		$	50,785
Gain on sales of investment properties	73,082				66,385				230,874				97,737
Preferred stock dividends	(2,362		)		(2,362		)		(7,087		)		(7,087		)
Net income attributable to common shareholders	33,542				70,132				134,480				141,435				$	22,357			$	23,208
Distributions paid on unvested restricted shares	(62		)		(108		)		(240		)		(348		)
Earnings allocated to unvested restricted shares																	(109		)		(80		)
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	33,480			$	70,024			$	134,240			$	141,087			$	22,248			$	23,128

Denominator:
Denominator for earnings per common share – basic:
Weighted average number of common shares outstanding	229,508			(a)	236,783			(b)	233,348			(a)	236,692			(b)	213,215			(a)	212,850			(b)
Effect of dilutive securities:
Stock options	1			(c)	2			(c)	1			(c)	2			(c)	—			(c)	—			(c)
RSUs	595			(d)	323			(e)	600			(d)	289			(e)	—			(d)	373			(e)
Denominator for earnings per common share – diluted:
Weighted average number of common and common equivalent shares outstanding	230,104				237,108				233,949				236,983				213,215				213,223

(a)

Excludes ~~511~~815 shares of unvested restricted common stock as of ~~September 30, 2017,~~March 31, 2020, which equate to ~~546 and 549~~677 shares ~~respectively,~~ on a weighted average basis for the three ~~and~~ ~~nine~~months ended ~~September 30, 2017.~~March 31, 2020. These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the shares are released.

(b)

Excludes ~~587~~667 shares of unvested restricted common stock as of ~~September 30, 2016,~~March 31, 2019, which equate to ~~596 and 657~~602 shares ~~respectively,~~ on a weighted average basis for the three ~~and~~ ~~nine~~months ended ~~September 30, 2016.~~March 31, 2019. These shares were excluded from the computation of basic EPS as the contingencies remained and the shares had not been released as of the end of the reporting period.

(c)

There were outstanding options to purchase 4116 and 22 shares of common stock as of ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, at a weighted average exercise price of ~~$19.25~~$15.87 and ~~$19.33,~~$17.34, respectively. Of these totals, outstanding options to purchase 3516 and 18 shares of common stock as of ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, at a weighted average exercise price of ~~$20.55~~$15.87 and ~~$20.63,~~$18.58, respectively, have been excluded from the common shares used in calculating diluted EPS as including them would be anti-dilutive.

(d)

As of ~~September 30, 2017,~~March 31, 2020, there were ~~555~~974 RSUs eligible for future conversion upon completion of the performance periods (see Note 5 to the condensed consolidated financial statements), which equate to ~~633 and 638~~969 RSUs on a weighted average basis for the three ~~and~~ ~~nine~~months ended ~~September 30, 2017, respectively.~~March 31, 2020. These contingently issuable shares ~~are included~~have been excluded from the common shares used in calculating diluted EPS ~~based on the weighted average number of shares that~~as including them would be ~~outstanding during the period, if any, assuming September 30, 2017 was the end of the contingency periods.~~

anti-dilutive.

(e)

As of ~~September 30, 2016,~~March 31, 2019, there were ~~391~~839 RSUs eligible for future conversion upon completion of the performance periods, which equate to ~~391 and 360~~832 RSUs on a weighted average basis for the three ~~and~~ ~~nine~~months ended ~~September 30, 2016, respectively.~~March 31, 2019. These contingently issuable shares are ~~included in~~a component of calculating diluted ~~EPS based on the weighted average number of shares that would have been outstanding during the period, if any, assuming September 30, 2016 was the end of the contingency periods.~~

EPS.

2117

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~(12)~~(11) PROVISION FOR IMPAIRMENT OF INVESTMENT PROPERTIES

As of ~~September 30, 2017~~ ~~and 2016,~~March 31, 2020, the Company identified indicators of impairment at certain of its properties. Such indicators included a low occupancy rate, difficulty in leasing space and related cost of re-leasing, ~~financially troubled tenants~~ or ~~reduced anticipated holding periods.~~significant change in the scope, cost or timing of planned redevelopment. As of March 31, 2019, the Company did not identify indicators of impairment at any of its properties. The following table summarizes the results of these analyses as of ~~September 30, 2017 and 2016:~~March 31, 2020.

September 30, 2017 September 30, 2016
Number of properties for which indicators of impairment were identified 11
(a) 5
(b)
Less: number of properties for which an impairment charge was recorded 2
1

Less: number of properties that were held for sale as of the date the analysis was performed
for which indicators of impairment were identified but no impairment charge was recorded
5
1

Remaining properties for which indicators of impairment were identified but no impairment
charge was considered necessary
4
3

Weighted average percentage by which the projected undiscounted cash flows exceeded
its respective carrying value for each of the remaining properties (c)
32 % 14 %



	March 31, 2020
Number of properties for which indicators of impairment were identified	2
Less: number of properties for which an impairment charge was recorded	—
Less: number of properties that were held for sale as of the date the analysis was performed for which indicators of impairment were identified but no impairment charge was recorded	—
Remaining properties for which indicators of impairment were identified but no impairment charge was considered necessary	2

Weighted average percentage by which the projected undiscounted cash flows exceeded its respective carrying value for each of the remaining properties (a)	58	%


(a)	~~Includes four properties which were sold subsequent to September 30, 2017.~~


~~(b)~~	~~Includes~~ ~~three~~ ~~properties which have subsequently been sold as of~~ ~~September 30, 2017~~.


~~(c)~~	Based upon the estimated holding period for each asset where an undiscounted cash flow analysis was performed.

The Company recorded the following investment property impairment ~~charges~~charge during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

Property Name Property Type Impairment Date
Square
Footage

Provision for
Impairment of
Investment
Properties
Century III Plaza, excluding the Home Depot parcel (a) Multi-tenant retail June 30, 2017 152,200
$ 3,076
Lakepointe Towne Center (b) Multi-tenant retail June 30, 2017 196,600
9,958
Saucon Valley Square (c) Multi-tenant retail September 30, 2017 80,700
184
Schaumburg Towers (d) Office September 30, 2017 895,400
45,638
$ 58,856
Estimated fair value of impaired properties as of impairment date $ 86,800



Property Name	Property Type	Impairment Date	Square Footage	Provision for Impairment of Investment Properties
King Philip’s Crossing (a)	Multi-tenant retail	February 13, 2020	105,900	$	346
				$	346
	Estimated fair value of impaired property as of impairment date			$	11,644


(a)	The Company recorded an impairment charge ~~based upon the terms and conditions of a bona fide purchase offer. This property was classified as held for sale as of September 30, 2017. The Home Depot parcel of Century III Plaza was sold~~ on ~~March 15, 2017.~~


~~(b)~~	~~The Company recorded an impairment charge~~December 31, 2019 based upon the terms and conditions of an executed sales contract. This property was ~~classified as held for sale as of June 30, 2017 and was~~ sold on ~~August 4, 2017.~~


~~(c)~~	The Company recorded an impairment charged based upon the terms and conditions of an executed sales contract. This property was classified as held for sale as of September 30, 2017 and was sold on October 27, 2017.


~~(d)~~	~~The Company recorded an impairment charge based upon the terms and conditions of a bona fide purchase offer.~~

~~The Company recorded the following investment property impairment charges during the nine months ended September 30, 2016:~~

Property Name Property Type Impairment Date
Square
Footage

Provision for
Impairment of
Investment
Properties
South Billings Center (a) Development March 31, 2016 —
$ 2,164
Mid-Hudson Center (b) Multi-tenant retail June 30, 2016 235,600
4,142
Saucon Valley Square (c) Multi-tenant retail September 30, 2016 80,700
4,742
$ 11,048
Estimated fair value of impaired properties as of impairment date $ 37,100

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~


~~(a)~~	~~An impairment charge was recorded on March 31, 2016 based upon the terms and conditions of an executed sales contract,~~February 13, 2020, at which ~~was subsequently terminated. The property, which was not under active development, was sold on December 16, 2016 and~~time additional impairment was recognized pursuant to the terms and conditions of an executed sales contract.


~~(b)~~	The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was classified as held for sale as of June 30, 2016 and was sold on July 21, 2016.


~~(c)~~	~~The Company recorded an impairment charge driven by a change in the estimated holding period for the property.~~

The Company ~~provides~~did not record any investment property impairment charges during the three months ended March 31, 2019.

The extent to which COVID-19 impacts the Company and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence. If the effects of COVID-19 cause economic and market conditions to continue to deteriorate or if the Company’s expected holding period for assets change, subsequent tests for impairment could result in impairment charges in the future. As of March 31, 2020, the Company does not consider the impacts of COVID-19, including tenant requests for lease concessions, to be impairment indicators. However, indications of a tenant’s inability to continue as a going concern, changes in the Company’s view or strategy relative to a tenant’s business or industry as a result of COVID-19, or changes in the Company’s long-term hold strategies could change in future periods. The Company will continue to monitor circumstances and events in future periods and can provide no assurance that material impairment charges with respect to its investment properties will not occur in future periods.

~~(13)~~

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(12) FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments:



	March 31, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities:
Mortgages payable, net	$	93,562	$	95,831	$	94,155	$	98,082
Unsecured notes payable, net	$	796,420	$	788,109	$	796,247	$	822,883
Unsecured term loans, net	$	716,792	$	711,013	$	716,523	$	720,000
Unsecured revolving line of credit	$	849,704	$	841,529	$	18,000	$	18,000
Derivative liability	$	39,870	$	39,870	$	12,288	$	12,288

September 30, 2017 December 31, 2016
Carrying Value Fair Value Carrying Value Fair Value
Financial assets:
Derivative asset $ 891
$ 891
$ 743
$ 743
Financial liabilities:
Mortgages payable, net $ 288,100
$ 302,451
$ 769,184
$ 833,210
Unsecured notes payable, net $ 695,595
$ 699,725
$ 695,143
$ 679,212
Unsecured term loans, net $ 546,914
$ 551,274
$ 447,598
$ 450,421
Unsecured revolving line of credit $ 187,000
$ 187,215
$ 86,000
$ 86,130

The carrying value of the derivative ~~asset~~liability is included inwithin “Other ~~assets, net”~~liabilities” in the accompanying condensed consolidated balance sheets.

Recurring Fair Value Measurements

The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.



	Fair Value
	Level 1		Level 2		Level 3		Total
March 31, 2020
Derivative liability	$	—	$	39,870	$	—	$	39,870

December 31, 2019
Derivative liability	$	—	$	12,288	$	—	$	12,288

Fair Value
Level 1 Level 2 Level 3 Total
September 30, 2017
Derivative asset $ —
$ 891
$ —
$ 891

December 31, 2016
Derivative asset $ —
$ 743
$ —
$ 743

~~Derivative asset:~~Derivatives: The fair value of the derivative ~~asset~~liability is determined using a discounted cash flow analysis on the expected future cash flows of each derivative. This analysis ~~utilizes~~uses observable market data including forward yield curves and implied volatilities to determine the market’s expectation of the future cash flows of the variable component. The fixed and variable components of the derivative are then discounted using calculated discount factors developed based on the LIBOR swap rate and are aggregated to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. 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~~use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~,2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation. As a result, the Company has determined that its derivative valuations in their entirety are classified within Level 2 of the fair value hierarchy.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements. The Company’s derivative instruments are further described in Note 98 to the condensed consolidated financial statements.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Nonrecurring Fair Value Measurements

The Company did not remeasure any assets to fair value on a nonrecurring basis as of March 31, 2020. The following table presents the Company’s assets ~~remeasured~~measured at fair value on a nonrecurring basis as of ~~September 30, 2017 and~~ December 31, ~~2016,~~2019, aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to properties remeasured to fair value as a result of impairment charges recorded during the ~~nine months ended September 30, 2017 and the~~ year ended December 31, ~~2016,~~2019, except for those properties sold prior to ~~September 30, 2017 and~~ December 31, ~~2016, respectively.~~2019. Methods and assumptions used to estimate the fair value of these assets as of December 31, 2019 are described after the table.

Fair Value
Level 1 Level 2 Level 3 Total
Provision for
Impairment (a)
September 30, 2017
Investment property $ —
$ 58,000
(b) $ —
$ 58,000
$ 45,638
Investment properties – held for sale
$ —
$ 18,300
(c) $ —
$ 18,300
$ 3,260

December 31, 2016
Investment properties $ —
$ 500
(d) $ 10,600
(e) $ 11,100
$ 13,227



	Fair Value
	Level 1		Level 2			Level 3			Total		Provision for Impairment
December 31, 2019
Investment properties	$	—	$	11,644	(a)	$	5,300	(b)	$	16,944	$	12,298


(a)	~~Excludes impairment charges recorded on investment properties sold prior to September 30, 2017 and December 31, 2016, respectively.~~

~~(b)~~

Represents the fair value of the Company’s ~~Schaumburg Towers~~King Philip’s Crossing investment property based on an expected sales price of $87,600 from a bona fide purchase offer, determined to be a Level 2 input, which contemplates historically deferred maintenance and capital requirements. The estimated fair value of $58,000 as of ~~September 30, 2017,~~December 31, 2019, the date the asset was measured at fair ~~value, reflects (i) capital expenditures expected to be incurred by the Company prior to sale and (ii) tenant-related costs expected to be credited to the buyer at close.~~

~~(c)~~

~~Represents the fair values of the Company’s Century III Plaza, excluding the Home Depot parcel and Saucon Valley Square investment properties.~~value. The estimated fair value of Century III Plaza, excluding the Home Depot parcel, of $12,000 as of June 30, 2017, the date the asset was measured at fair value, was based upon the expected sales price from a bona fide purchase offer and determined to be a Level 2 input. The estimated fair value of Saucon Valley Square of $6,300 as of September 30, 2017, the date the asset was measured at fair value,King Philip’s Crossing was based upon the expected sales price from an executed sales contract and determined to be a Level 2 input.

~~(d)~~(b)

Represents the fair value of the Company’s ~~Rite Aid Store (Eckerd), Culver Rd.~~Streets of Yorktown investment property as of ~~December 31, 2016,~~September 30, 2019, the date the asset was measured at fair value. The estimated fair value of ~~Rite Aid Store (Eckerd), Culver Rd.~~Streets of Yorktown was ~~based upon the expected sales price from a bona fide purchase offer and determined to be a Level 2 input.~~

~~(e)~~

Represents the fair values of the Company’s Crown Theater and Saucon Valley Square investment properties. The estimated fair values of Crown Theater and Saucon Valley Square of $4,000 and $6,600, respectively, were determined using the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding period to a present value at a risk-adjusted rate. ~~Discount~~The discount rates ~~growth assumptions~~ and ~~terminal capitalization rates utilized~~third-party comparable sales prices used in this approach are derived from property-specific information, market transactions and other ~~financial~~industry data and ~~industry data. The terminal capitalization rate and discount rate~~ are considered significant inputs to this valuation. The ~~following were~~reversion value of the ~~key Level 3~~property was based upon third-party comparable sales prices, which contain unobservable inputs used ~~in estimating~~by these third parties. A weighted average discount rate of 6.89% was used to (i) present value the ~~fair values of Crown Theater as of December 31, 2016 and Saucon Valley Square as of September 30, 2016, the date the assets were measured at fair value:~~

2016
Low High
Rental revenue growth rates Varies (i) Varies (i)
Operating expense growth rates 3.10% 18.02%
Discount rates 9.35% 10.00%
Terminal capitalization rates 8.35% 9.50%


~~(i)~~	~~Since cash flow models are established at the tenant level, projected rental revenue growth rates fluctuate~~estimated income stream over ~~the course of~~ the estimated holding period ~~based upon~~and (ii) present value the ~~timing of lease rollover, amount of available space and other property and space-specific factors.~~reversion value.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Fair Value Disclosures

The following table presents the Company’s financial liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which those measurements fall. ~~Methods and assumptions used~~



	Fair Value
	Level 1		Level 2		Level 3		Total
March 31, 2020
Mortgages payable, net	$	—	$	—	$	95,831	$	95,831
Unsecured notes payable, net	$	242,485	$	—	$	545,624	$	788,109
Unsecured term loans, net	$	—	$	—	$	711,013	$	711,013
Unsecured revolving line of credit	$	—	$	—	$	841,529	$	841,529

December 31, 2019
Mortgages payable, net	$	—	$	—	$	98,082	$	98,082
Unsecured notes payable, net	$	255,965	$	—	$	566,918	$	822,883
Unsecured term loans, net	$	—	$	—	$	720,000	$	720,000
Unsecured revolving line of credit	$	—	$	—	$	18,000	$	18,000

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to ~~estimate~~Condensed Consolidated Financial Statements

(Unaudited)

The Company estimates the fair value of ~~these instruments are described after the table.~~

Fair Value
Level 1 Level 2 Level 3 Total
September 30, 2017
Mortgages payable, net $ —
$ —
$ 302,451
$ 302,451
Unsecured notes payable, net $ 245,250
$ —
$ 454,475
$ 699,725
Unsecured term loans, net $ —
$ —
$ 551,274
$ 551,274
Unsecured revolving line of credit $ —
$ —
$ 187,215
$ 187,215

December 31, 2016
Mortgages payable, net $ —
$ —
$ 833,210
$ 833,210
Unsecured notes payable, net $ 234,700
$ —
$ 444,512
$ 679,212
Unsecured term loans, net $ —
$ —
$ 450,421
$ 450,421
Unsecured revolving line of credit $ —
$ —
$ 86,130
$ 86,130

~~Mortgages payable, net:~~its Level 3 financial liabilities using a discounted cash flow model that incorporates future contractual principal and interest payments. The Company estimates the fair value of its mortgages payable, net and Level 3 unsecured notes payable, net by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rate for each of the Company’s individual mortgages payable based upon the specific terms of the agreement, including the term to maturity, the quality and nature of the underlying property and its leverage ratio. The rates used range from 3.2% to 4.2% and 2.9% to 4.6% as of September 30, 2017 and December 31, 2016, respectively.

~~Unsecured notes payable, net:~~ The quoted market price as of September 30, 2017 was used to value the Notes Due 2025. The Company estimates the fair value of its Notes Due 2021 and 2024 and Notes Due 2026 and 2028 by discounting the future cash flows at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The weighted average rates used were 4.22% and 4.48% as of September 30, 2017 and December 31, 2016, respectively.

~~Unsecured term loans, net:~~ ~~The~~ Company estimates the fair value of its unsecured term loans, net and unsecured revolving line of credit by discounting the anticipated future cash flows ~~related to the~~at a reference rate, currently one-month LIBOR, plus an applicable credit ~~spreads at rates~~spread currently offered to the Company by its lenders for similar instruments of comparable maturities. The following rates were used ~~are not directly observable~~ in the ~~marketplace and judgment is used in determining the appropriate rates. The weighted average rates used~~discounted cash flow model to ~~discount the credit spreads were 1.41% and 1.30% as of September 30, 2017 and December 31, 2016, respectively.~~

~~Unsecured revolving line of credit:~~ ~~The Company estimates~~calculate the fair value of ~~its unsecured revolving line of credit by discounting~~ the anticipated future cash flows related to the credit spreads at rates currently offered to the Company by its lenders for similar facilities of comparable maturity. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The rate used to discount the credit spreads was 1.30% as of September 30, 2017 and December 31, 2016.Company’s Level 3 financial liabilities:



	March 31, 2020	December 31, 2019
Mortgages payable, net – range of discount rates used	3.6% to 4.1%	3.2% to 3.6%
Unsecured notes payable, net – weighted average discount rate used	4.72%	3.79%
Unsecured term loans, net – weighted average credit spread portion of discount rate used	1.75%	1.26%
Unsecured revolving line of credit – credit spread portion of discount rate used	1.63%	1.05%

There were no transfers between the levels of the fair value hierarchy during the ~~nine~~three months ended ~~September 30, 2017~~.March 31, 2020 and the year ended December 31, 2019.

~~(14)~~(13) COMMITMENTS AND CONTINGENCIES

As of ~~September 30, 2017,~~March 31, 2020, the Company had ~~letter(s)~~letters of credit outstanding totaling ~~$9,645 which~~$291 that serve as collateral for certain capital improvements at 1 of its properties and ~~performance obligations on certain redevelopment projects, which will be satisfied upon completion of the projects, and reduced~~reduce the available borrowings on its unsecured revolving line of credit.

The following table summarizes the Company’s active expansion and redevelopment projects as of March 31, 2020:



		Estimated Net Investment				Net Investment as of March 31, 2020
Project Name	MSA	Low		High		Net Investment as of March 31, 2020
Circle East (a)	Baltimore	$	42,000	$	44,000	$	22,804
One Loudoun Downtown – Pads G & H (b)	Washington, D.C.	$	125,000	$	135,000	$	21,542
The Shoppes at Quarterfield	Baltimore	$	9,000	$	10,000	$	524
Southlake Town Square – Pad	Dallas	$	2,000	$	2,500	$	259


(a)	Investment amounts are net of proceeds of $11,820 received from the sale of air rights.


(b)	Investment amounts are net of expected contributions from the Company’s joint venture partners.

In response to current macroeconomic conditions, the Company halted plans for vertical construction at its Carillon redevelopment during the three months ended March 31, 2020 and has materially reduced the planned scope and spend for the project. As of ~~September 30, 2017,~~March 31, 2020, the Company ~~had begun redevelopment activities~~was actively completing site work preparation at ~~Reisterstown Road Plaza located~~the property in ~~Baltimore, Maryland and Towson Circle located in Towson, Maryland.~~anticipation of potential future development at the site. The Company ~~estimates that it will incur net costs~~expects to complete the site work preparation during 2020 for an expected additional capital investment of approximately ~~$9,500 to $10,500~~$4,500. In addition, the Company terminated the joint venture related to the ~~Reisterstown Road Plaza~~multi-family rental portion of the redevelopment and ~~approximately $33,000~~subsequent to ~~$35,000~~March 31, 2020, the Company terminated the joint venture related to the ~~Towson Circle~~medical office building portion of the redevelopment ~~of which $6,539 and $12,102, respectively, has been incurred as of September 30, 2017.~~at Carillon.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(15)~~(14) LITIGATION

The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the Company’s condensed consolidated financial statements. During the three months ended March 31, 2020, the Company entered into a settlement agreement related to litigation with a former tenant and received $6,100 in proceeds.

~~(16)~~

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(15) SUBSEQUENT EVENTS

Subsequent to ~~September 30, 2017,~~March 31, 2020, the Company:

~~closed~~terminated the joint venture related to the medical office building portion of the redevelopment at Carillon; and

executed amendments to its unsecured debt agreements for its Unsecured Credit Facility, Term Loan Due 2023, Term Loan Due 2024 and Term Loan Due 2026 that changed the covenant calculation for the unencumbered interest coverage ratio to include operating results from the most recent four fiscal quarters. Prior to these amendments, the calculation only included operating results from the most recent fiscal quarter. As a result, the updated calculation applies to all unsecured debt instruments to which this covenant relates, including the Company’s unsecured revolving line of credit, all unsecured term loans and all unsecured private placement notes payable.

On May 1, 2020, the Company’s board of directors temporarily suspended future quarterly dividend payments on the disposition of Forks Town Center, a 100,300 square foot multi-tenant retail operating property located in Easton, Pennsylvania, which was classified as held for sale as of September 30, 2017, for a sales price of $23,800 with an anticipated gain on sale. The mortgage payable, with a principal balance of $7,680 as of September 30, 2017 and an interest rate of 7.70%, was repaid in conjunction with the disposition;

~~closed on the disposition of Placentia Town Center, a~~ ~~111,000~~ ~~square foot multi-tenant retail operating property located in Placentia, California, which was classified as held for sale as of September 30, 2017, for a sales price of~~ ~~$35,725~~ ~~with an anticipated gain on sale;~~

closed on the disposition of Five Forks, a 70,200 square foot multi-tenant retail operating property located in Simpsonville, South Carolina, which was classified as held for sale as of September 30, 2017, for a sales price of $10,720 with an anticipated gain on sale;

~~closed on the disposition of Saucon Valley Square, a~~ ~~80,700~~ ~~square foot multi-tenant retail operating property located in Bethlehem, Pennsylvania, which was classified as held for sale as of September 30, 2017, for a sales price of~~ ~~$6,300~~ ~~with no anticipated gain on sale or additional impairment due to previously recognized impairment charges;~~

~~announced that it will redeem all 5,400 outstanding shares of its~~ ~~7.00%~~ ~~Series A cumulative redeemable preferred stock on December 20, 2017 for cash at a redemption price of $25.00 per preferred share, plus~~ ~~$0.3840~~ ~~per preferred share representing all accrued and unpaid dividends up to, but excluding, December 20, 2017; and~~

~~declared the cash dividend for the fourth quarter of 2017 of~~ ~~$0.165625~~ ~~per share on its~~Company’s outstanding Class A common stock ~~which~~in order to preserve and enhance liquidity and capital positioning. The Company’s board of directors will ~~be paid~~evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on ~~January 10, 2018 to Class A common shareholders of record at~~ the ~~close of business on December 27, 2017.~~

Company’s operating cash flow performance as well as other factors.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act). Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described ~~(or~~or that they will happen at ~~all).~~all. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “should,” “intends,” “plans,” ~~“estimates,” “continue”~~“estimates” or “anticipates” and variations of such words or similar expressions or the negative of such words. You can also identify forward-looking statements by discussions of strategies, plans or intentions. Risks, uncertainties and changes in the following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

economic, business and financial conditions, and changes in our industry and changes in the real estate markets in particular;

economic and other developments in ~~our target~~ markets where we have a high concentration of properties;

our business strategy;

our projected operating results;

rental rates and/or vacancy rates;

frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants;

bankruptcy, insolvency or ~~insolvency~~general downturn in the business of a major tenant or a significant number of smaller tenants;

adverse impact of e-commerce developments and shifting consumer retail behavior on our tenants;

interest rates or operating costs;

the discontinuation of London Interbank Offered Rate (LIBOR);

real estate and zoning laws and changes in real property tax rates;

real estate valuations;

our leverage;

our ability to generate sufficient cash flows to service our outstanding indebtedness and make distributions to our shareholders;

changes in the dividend policy for our Class A common stock and our ability to pay dividends at current levels;

our ability to obtain necessary outside financing;

the availability, terms and deployment of capital;

general volatility of the capital and credit markets and the market price of our Class A common stock;

risks generally associated with real estate acquisitions and dispositions, including our ability to identify and pursue acquisition and disposition opportunities;

risks generally associated with redevelopment, including the impact of construction delays and cost overruns, our ability to lease redeveloped space and our ability to identify and pursue redevelopment opportunities;

composition of members of our senior management team;

our ability to attract and retain qualified personnel;

our ability to continue to qualify as a real estate investment trust (REIT);

governmental regulations, tax laws and rates and similar matters;

our compliance with laws, rules and regulations;

environmental uncertainties and exposure to natural disasters;

~~Table of Contents~~

pandemics or other public health crises, such as the novel coronavirus (COVID-19) outbreak, and the related impact on (i) our ability to manage our properties, finance our operations and perform necessary administrative and reporting functions and (ii) our tenants’ ability to operate their businesses, generate sales and meet their financial obligations, including the obligation to pay rent and other charges as specified in their leases;

insurance coverage; and

the likelihood or actual occurrence of terrorist attacks in the U.S.

The extent to which COVID-19 impacts us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. For a further discussion of these and other factors that could impact our future results, performance or transactions, see ~~Item~~Part II, “Item 1A. ~~“Risk~~Risk Factors” in this document and in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019, which you should interpret as being heightened as a result of the numerous and ~~in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017.~~ongoing adverse impacts of COVID-19. Readers should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements). We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q, except as required by applicable law.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes included in this report.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. COVID-19 has caused significant disruptions to the U.S. and global economy and has contributed to significant volatility and negative pressure in the financial markets. The global impact of the COVID-19 outbreak has been rapidly evolving and many U.S. states and cities, including where we own properties and/or have development sites, have imposed measures intended to control its spread, such as instituting “shelter-in-place” rules and restrictions on the types of businesses that may continue to operate and/or the types of construction projects that may continue. While we did not incur significant disruptions to our lease income and occupancy during the three months ended March 31, 2020 from COVID-19, we continue to closely monitor the impact of the pandemic on all aspects of our business. Due to numerous uncertainties, it is not possible to accurately predict the impact the pandemic will have on our financial condition, results of operations and cash flows. To date, as a result of the pandemic and the measures noted above to mitigate its impact, a number of our tenants have announced temporary closures of their stores or modifications of their operations. Certain other tenants are considered essential businesses which remain open and continue to operate during this time. Essential businesses and office represent approximately 37% of our annualized base rent (ABR), including 8% from grocery/warehouse clubs and 6% from office tenants. We have collected more than 52% of April rent charges as of April 30, 2020.

The following table, based on ABR of leases in effect as of March 31, 2020, sets forth information regarding the percent of April rent collected by tenant type as of April 30, 2020. This information is being provided to assist with analysis of the potential impact of COVID-19. April rental receipts may not be indicative of collections in future periods. The classification of tenant type, including the classification between essential and non-essential, is based on management’s understanding of the tenant operations and may not be comparative to similarly titled classifications by other companies.



Resiliency Category/Tenant Type	ABR		% of Total ABR		% of April Rent Collected
Essential
Grocery/Warehouse Clubs	$	30,333	8.3	%	99.9	%
Financial Services/Banks	13,673		3.7	%	99.6	%
Medical	12,211		3.3	%	67.2	%
Electronics	10,241		2.8	%	72.7	%
Hardware	10,136		2.8	%	95.6	%
Auto and Other Essentials	9,936		2.7	%	96.2	%
Pet/Animal Supplies	9,832		2.7	%	71.9	%
Office Supplies	6,396		1.7	%	100.0	%
Wireless Communications	6,308		1.7	%	87.6	%
Drug Stores	3,190		0.9	%	99.0	%
Total Essential	112,256		30.6	%	90.1	%

Non-Essential
Apparel	36,856		10.1	%	9.8	%
Housewares	28,172		7.7	%	31.2	%
Soft Goods/Discount Stores	25,619		7.0	%	57.8	%
Services	22,600		6.2	%	32.3	%
Sporting Goods/Hobby	14,218		3.9	%	41.6	%
Movie Theaters	10,294		2.8	%	0.0	%
Specialty	10,205		2.8	%	39.6	%
Health Clubs	10,035		2.7	%	27.9	%
Other	7,763		2.1	%	13.9	%
Book Stores	4,621		1.2	%	8.1	%
Amusement/Play Centers	2,116		0.6	%	18.8	%
Total Non-Essential	172,499		47.1	%	28.5	%

Restaurants
Restaurants – Full Service	31,908		8.8	%	31.4	%
Restaurants – Quick Service	26,543		7.2	%	50.8	%
Total Restaurants	58,451		16.0	%	40.6	%

Office	23,079		6.3	%	75.7	%

Total Retail Operating Portfolio	$	366,285	100.0	%	52.4	%

While working to preserve our profitability and cash flow, we are also working with our tenants regarding requests for lease concessions and other forms of assistance available to them, including small business loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020 and provides small businesses access to loan programs to cover monthly expenses such as payroll, rent and utilities. Generally, we have not yet reached agreement with tenants regarding concession requests, as discussions are ongoing. While seeking to work toward a mutually agreeable outcome with tenants directly impacted by COVID-19, we believe that certain tenants, which remain open and hold an ability to pay, have elected to withhold April rent unnecessarily. We are not forgoing our contractual rights under our lease agreements and our tenants do not have a clear contractual right to cease paying rent due to government closures. However, COVID-19 and the related governmental orders present fairly novel situations and it is possible government action could impact our rights. Except for a small, enclosed portion of one property, we have not closed any of our properties and continue to operate them for the benefit of the communities and the customers that our tenants serve.

In response to current macroeconomic conditions related to the COVID-19 pandemic, we halted plans for vertical construction at our Carillon redevelopment during the three months ended March 31, 2020 and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately $75,000 to $100,000. As of March 31, 2020, we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to complete the site work preparation during 2020 for an expected additional capital investment of approximately $4,500. In addition, we terminated the joint venture related to the multi-family rental portion of the redevelopment. Subsequent to March 31, 2020, we terminated the joint venture related to the medical office building portion of the redevelopment at Carillon.

During the three months ended March 31, 2020, we elected to increase our borrowings under our unsecured revolving line of credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets. As a result, as of March 31, 2020, our $850,000 unsecured revolving line of credit was nearly fully drawn and the proceeds were deposited into accounts at FDIC-insured institutions. As of March 31, 2020, we have $769,241 of cash on hand and the ability to repay the vast majority of the amount drawn on our unsecured revolving line of credit; however, we may elect to not repay it for some time, which will increase our interest expense.

In order to preserve and enhance liquidity and capital positioning, our board of directors has temporarily suspended future quarterly dividend payments on our outstanding Class A common stock. Our board of directors will evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on our operating cash flow performance as well as other factors.

During this period, our employees, except for a small number that are considered essential to be on-site for the safe operation of our properties, have successfully transitioned to working remotely, and we have not furloughed any employees nor significantly modified our key processes or internal controls over financial reporting. In addition, we expect to reduce our 2020 capital expenditures, including tenant improvements, and certain expenses, including overhead, from the original budget.

Executive Summary

Retail Properties of America, Inc. (we, our, us) is a REIT that owns and operates high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of March 31, 2020, we owned 102 retail operating properties in the United ~~States. As of~~ ~~September 30, 2017, we owned 120 retail operating properties~~States representing ~~21,647,000~~19,961,000 square feet of gross leasable area (GLA). and had four expansion and redevelopment projects. Our retail operating portfolio includes (i) neighborhood and community centers, (ii) power centers, and (iii) lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties.

The following table summarizes our ~~operating~~ portfolio as of ~~September 30, 2017~~March 31, 2020:


Property Type	Number of Properties	GLA (in thousands)	Occupancy		Percent Leased Including Leases Signed (a)		Number of Properties	GLA (in thousands)	Occupancy		Percent Leased Including Leases Signed (a)
Operating portfolio:
Multi-tenant retail
Retail operating portfolio:
Multi-tenant retail:
Neighborhood and community centers	59	7,878	91.8	%	92.6	%	62	10,337	94.7	%	96.0	%
Power centers	40	9,142	93.8	%	95.0	%	22	4,816	95.2	%	96.4	%
Lifestyle centers and mixed-use properties(b)	15	4,172	85.6	%	86.9	%	16	4,547	91.4	%	92.4	%
Total multi-tenant retail	114	21,192	91.5	%	92.5	%	100	19,700	94.0	%	95.3	%
Single-user retail	6	455	100.0	%	100.0	%	2	261	100.0	%	100.0	%
Total retail operating portfolio	120	21,647	91.7	%	92.7	%
Office	1	895	13.8	%	46.1	%
Total operating portfolio (b)	121	22,542	88.6	%	90.8	%
Total retail operating properties							102	19,961	94.1	%	95.3	%
Expansion and redevelopment projects:
Circle East							1
One Loudoun Downtown – Pads G & H (c)							—
Carillon							1
The Shoppes at Quarterfield							1
Total number of properties							105


(a)	Includes leases signed but not commenced.


(b)	Excludes ~~six multi-tenant~~the 18 multi-family rental units at Plaza del Lago. As of March 31, 2020, 16 multi-family rental units were leased at an average monthly rental rate per unit of $1,339.


(c)	The operating portion of this property is included in the property count of lifestyle centers and mixed-use properties within our retail operating ~~properties classified as held for sale as of~~ ~~September 30, 2017~~.portfolio.

In ~~addition to~~2018, we completed our ~~operating~~ portfolio ~~as of September 30, 2017, we owned two properties where we have begun redevelopment activities.~~

~~We have undertaken~~transformation and are now a ~~portfolio repositioning effort, the core objective of which is to become a dominant~~prominent owner of multi-tenant retail properties, many with a mixed-use component, primarily located in ~~10 to 15 target markets, owning 3,000,000 to 5,000,000 square feet in each market. To date, we have identified 10 target~~the following markets: Dallas, Washington, D.C./Baltimore, New York, Chicago, Seattle, Atlanta, Houston, San Antonio, Phoenix and Austin. ~~Depending~~As a result, our portfolio is better focused and since our inaugural investor day in 2013, we have (i) improved our retail ABR by 35% to $19.50 per square foot as of March 31, 2020 from $14.46 per square foot as of March 31, 2013, (ii) increased our concentration in lifestyle and mixed-use properties based on ~~whether favorable market~~multi-tenant retail ABR by 1,900 basis points to 35% as of March 31, 2020 from 16% as of March 31, 2013, (iii) reduced our top 20 retail tenant concentration of total ABR by 1,130 basis points to 26.6% as of March 31, 2020 from 37.9% as of March 31, 2013, and (iv) reduced our indebtedness by 5% to $2,463,989 as of March 31, 2020, which includes our nearly fully drawn $850,000 unsecured revolving line of credit, from $2,601,912 as of March 31, 2013. Additionally, as of March 31, 2020, approximately 88.1% of our multi-tenant retail ABR was generated in the top 25 metropolitan statistical areas (MSAs), as determined by the United States Census Bureau and ranked based on the most recently available population estimates.

In addition to addressing tenant lease concession requests stemming from COVID-19 in the near term, we are focused on optimizing our tenancy, asset level configurations and merchandising through (i) accretive leasing activity and (ii) mixed-use expansion and redevelopment projects. For the three months ended March 31, 2020, we achieved positive comparable cash leasing spreads of 4.8% on signed new leases and 4.9% on signed renewal leases for a blended re-leasing spread of 4.9%. During this period, we achieved average annual contractual rent increases on signed new leases of approximately 170 basis points. As of March 31, 2020, we have $16,272 of ABR related to 647,000 square feet of GLA pertaining to 2020 lease expirations and $4,545 of ABR related to 245,000 square feet of GLA pertaining to leases signed but not commenced. In light of the COVID-19 pandemic, we are unable to project the impact on our leasing volume or other leasing trends. However, while existing tenants are continuing to pursue renewals, we have to a certain extent experienced, and may continue to experience, a slowdown in (i) rent commencing on signed leases, (ii) the volume of renewal leases and (iii) our ability to finalize the execution of new leases given current uncertainty.

Our active and near-term expansion and redevelopment projects consist of approximately $178,000 to $192,000 of expected investment through 2022, equivalent to approximately 6% of the net book value of our investment properties as of March 31, 2020. These predominantly mixed-use-focused projects include the redevelopment at Circle East, the expansion projects of Pads G & H at One Loudoun Downtown and site and building reconfiguration at The Shoppes at Quarterfield as well as the vacant pad development at Southlake Town Square. In response to current macroeconomic conditions ~~exist, among other factors,~~due to the impact of the COVID-19 pandemic, we halted plans for vertical construction at our Carillon redevelopment during the three months ended March 31, 2020 and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately $75,000 to $100,000. As of March 31, 2020, we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to ~~substantially~~ complete ~~our~~the site work preparation during 2020 for an expected additional capital investment of approximately $4,500. In addition, we terminated the joint venture related to the multi-family rental portion of the redevelopment. Subsequent to March 31, 2020, we terminated the joint venture related to the medical office building portion of the redevelopment at Carillon. Our current portfolio ~~disposition efforts by~~of assets contains numerous additional projects in the ~~end of 2018.~~longer-term pipeline, including, among others, redevelopment at Carillon, additional pad developments at One Loudoun Downtown, pad developments and expansions at Main Street Promenade and Downtown Crown, and future projects at Merrifield Town Center, Tysons Corner, Southlake Town Square, Lakewood Towne Center and One Loudoun Uptown.

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Company Highlights — ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020

~~Acquisitions~~Developments in Progress

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we ~~continued to execute~~invested $12,715 in our ~~investment strategy by acquiring two multi-tenant retail operating properties, five~~expansion and redevelopment projects at Circle East, One Loudoun Downtown, Carillon, The Shoppes at Quarterfield and Southlake Town Square. We expect that the majority of our additional ~~phases, including~~2020 project spend will be for the ~~development rights for additional multi-family units, at an existing wholly-owned multi-tenant retail operating property and~~One Loudoun Downtown project.

The following table summarizes the ~~fee interest~~carrying amount of developments in ~~an existing wholly-owned multi-tenant retail operating property for a total purchase price~~progress as of ~~$147,586.~~March 31, 2020:



Property Name	MSA	March 31, 2020
Expansion and redevelopment projects:
Circle East	Baltimore	$	34,665
One Loudoun Downtown	Washington, D.C.	36,346
Carillon	Washington, D.C.	29,517
The Shoppes at Quarterfield	Baltimore	524
Pad development projects:
Southlake Town Square	Dallas	259
		101,311
Land held for future development:
One Loudoun Uptown	Washington, D.C.	25,450
Total developments in progress		$	126,761

Acquisitions

The following table summarizes our ~~acquisitions~~acquisition activity during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

Date Property Name
Metropolitan
Statistical Area (MSA)
Property Type
Square
Footage

Acquisition
Price
January 13, 2017 Main Street Promenade Chicago Multi-tenant retail 181,600
$ 88,000
January 25, 2017
Boulevard at the Capital Centre –
Fee Interest
Washington, D.C. Fee interest (a) —
2,000
February 24, 2017
One Loudoun Downtown –
Phase II
Washington, D.C. Additional phase of multi-tenant retail (b) 15,900
4,128
April 5, 2017
One Loudoun Downtown –
Phase III
Washington, D.C. Additional phase of multi-tenant retail (b) 9,800
2,193
May 16, 2017
One Loudoun Downtown –
Phase IV
Washington, D.C. Development rights (b) —
3,500
July 6, 2017 New Hyde Park Shopping Center New York Multi-tenant retail 32,300
22,075
August 8, 2017
One Loudoun Downtown –
Phase V
Washington, D.C. Additional phase of multi-tenant retail (b) 17,700
5,167
August 8, 2017
One Loudoun Downtown –
Phase VI
Washington, D.C. Additional phase of multi-tenant retail (b) 74,100
20,523
331,400
$ 147,586

Date

Property Name

MSA

Property Type

Square

Footage

Acquisition

Price

February 6, 2020

Fullerton Metrocenter

Los Angeles

Fee interest (a)

154,700

55,000

154,700

55,000

(a)

~~The wholly-owned~~We acquired the fee interest in an existing multi-tenant retail operating ~~property located~~property. In connection with this acquisition, we also assumed the lessor position in ~~Largo, Maryland was previously subject to an approximately 70 acre long-term~~a ground lease with a third party. We completed a transaction whereby we received the fee interest in approximately 50 acres of the underlying land in exchange for which (i) we paid $1,939 and (ii) the term of the ground lease with respect to the remaining approximately 20 acres was shortened to nine months. We derecognized building and improvements of $11,347 related to the remaining ground lease, recognized the fair value of land received of $15,200 and recorded a deferred gain of $2,524. The deferred gain will be recognized upon the expiration of the remaining ground lease.shadow anchor. The total number of properties in our portfolio was not affected by this transaction.


~~(b)~~	We acquired the remaining five phases under contract, including the development rights for an additional 123 multi-family units for a total of 408 units, at our One Loudoun Downtown multi-tenant retail operating property. The total number of properties in our portfolio was not affected by these transactions.

In total for 2017, we expect to invest approximately $375,000 to $475,000 on strategic acquisitions in our target markets and repurchases of our common stock. Some of these acquisitions may be structured as Internal Revenue Code Section 1031 tax-deferred exchanges (1031 Exchanges).

Dispositions

During the nine months ended September 30, 2017, we continued to pursue dispositions of select non-target and single-user properties. Consideration from dispositions totaled $642,712 and included the sales of 28 multi-tenant retail operating properties aggregating 4,038,300 square feet for total consideration of $595,125, a 131,900 square foot single-user parcel located at an existing multi-tenant retail operating property for consideration of $17,519 and six single-user retail properties aggregating 132,200 square feet for total consideration of $30,068.

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The following table summarizes our ~~dispositions~~disposition activity during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

Date Property Name Property Type
Square
Footage
Consideration
January 27, 2017 Rite Aid Store (Eckerd), Culver Rd. – Rochester, NY Single-user retail 10,900
$ 500
February 21, 2017 Shoppes at Park West Multi-tenant retail 63,900
15,383
March 7, 2017 CVS Pharmacy – Sylacauga, AL Single-user retail 10,100
3,700
March 8, 2017 Rite Aid Store (Eckerd) – Kill Devil Hills, NC Single-user retail 13,800
4,297
March 15, 2017 Century III Plaza – Home Depot (a) Single-user parcel 131,900
17,519
March 16, 2017 Village Shoppes at Gainesville Multi-tenant retail 229,500
41,750
March 24, 2017 Northwood Crossing Multi-tenant retail 160,000
22,850
April 4, 2017 University Town Center Multi-tenant retail 57,500
14,700
April 4, 2017 Edgemont Town Center Multi-tenant retail 77,700
19,025
April 4, 2017 Phenix Crossing Multi-tenant retail 56,600
12,400
April 27, 2017 Brown’s Lane Multi-tenant retail 74,700
10,575
May 9, 2017 Rite Aid Store (Eckerd) – Greer, SC Single-user retail 13,800
3,050
May 9, 2017 Evans Town Centre Multi-tenant retail 75,700
11,825
May 25, 2017 Red Bug Village Multi-tenant retail 26,200
8,100
May 26, 2017 Wilton Square Multi-tenant retail 438,100
49,300
May 30, 2017 Town Square Plaza Multi-tenant retail 215,600
28,600
May 31, 2017 Cuyahoga Falls Market Center Multi-tenant retail 76,400
11,500
June 5, 2017 Plaza Santa Fe II Multi-tenant retail 224,200
35,220
June 6, 2017 Rite Aid Store (Eckerd) – Columbia, SC Single-user retail 13,400
3,250
June 16, 2017 Fox Creek Village Multi-tenant retail 107,500
24,825
June 29, 2017 Cottage Plaza Multi-tenant retail 85,500
23,050
June 29, 2017 Magnolia Square Multi-tenant retail 116,000
16,000
June 29, 2017 Cinemark Seven Bridges Single-user retail 70,200
15,271
June 29, 2017 Low Country Village I & II Multi-tenant retail 139,900
22,075
July 20, 2017 Boulevard Plaza Multi-tenant retail 111,100
14,300
July 26, 2017 Irmo Station (b) Multi-tenant retail 99,400
16,027
July 27, 2017 Hickory Ridge Multi-tenant retail 380,600
44,020
August 4, 2017 Lakepointe Towne Center Multi-tenant retail 196,600
10,500
August 14, 2017 The Columns Multi-tenant retail 173,400
21,750
August 25, 2017 Holliday Towne Center Multi-tenant retail 83,100
11,750
August 25, 2017 Northwoods Center (b) Multi-tenant retail 96,000
24,250
September 14, 2017 The Orchard Multi-tenant retail 165,800
20,000
September 21, 2017 Lake Mary Pointe Multi-tenant retail 51,100
5,100
September 22, 2017 West Town Market (b) Multi-tenant retail 67,900
14,250
September 29, 2017 Dorman Centre I & II Multi-tenant retail 388,300
46,000
4,302,400
$ 642,712


~~(a)~~	We disposed of the Home Depot parcel at Century III Plaza, an existing 284,100 square foot multi-tenant retail operating property. The remaining portion of Century III Plaza is classified as held for sale as of September 30, 2017.


~~(b)~~	Disposition proceeds related to this property are temporarily restricted related to a potential 1031 Exchange. As of September 30, 2017, disposition proceeds totaling $65,086 are temporarily restricted and are included in “Other assets, net” in the accompanying condensed consolidated balance sheets.

During the nine months ended September 30, 2017, we also received net proceeds of $1,636 from other transactions, including condemnation awards and receipt of the escrow related to the disposition of Maple Tree Place on August 12, 2016. The aggregate proceeds, net of closing costs and proceeds temporarily restricted related to potential 1031 Exchanges, from property dispositions and other transactions during the nine months ended September 30, 2017 totaled $564,069.

Subsequent to September 30, 2017, we sold four multi-tenant retail operating properties aggregating 362,200 square feet for total consideration of $76,545. In total for 2017, we expect targeted dispositions to total approximately $850,000 to $1,000,000, some of which may be structured as 1031 Exchanges.

~~Table of Contents~~



Date	Property Name	Property Type	Square Footage	Consideration
February 13, 2020	King Philip’s Crossing	Multi-tenant retail	105,900	$	13,900
			105,900	$	13,900

Market Summary

As a result of our capital recycling efforts over the past several years, we increased the amount of annualized base rent (ABR) in our target markets to 76.4% of our total multi-tenant retail ABR, or 76.9% including amounts attributable to our active redevelopments. The following table summarizes our retail operating portfolio by market as of ~~September 30, 2017:~~March 31, 2020:

Property Type/Market
Number of
Properties
ABR (a)
% of Total
Multi-Tenant
Retail ABR (a)

ABR per
Occupied
Sq. Ft.

GLA
(in thousands) (a)

% of Total
Multi-Tenant
Retail GLA (a)
Occupancy
% Leased
Including
Signed
Multi-Tenant Retail:
Target Markets
Dallas, Texas 19
$ 80,592
22.6 % $ 21.98
3,926
18.5 % 93.4 % 94.7 %
Washington, D.C. /
Baltimore, Maryland
13
50,209
14.1 % 22.39
2,735
12.9 % 82.0 % 82.8 %
New York, New York 9
34,661
9.7 % 28.06
1,292
6.1 % 95.6 % 96.7 %
Chicago, Illinois 7
25,688
7.2 % 23.02
1,258
5.9 % 88.7 % 91.7 %
Seattle, Washington 8
20,424
5.7 % 15.18
1,477
7.0 % 91.1 % 91.7 %
Atlanta, Georgia 9
18,401
5.2 % 13.28
1,513
7.1 % 91.6 % 91.7 %
Houston, Texas 9
15,173
4.3 % 14.13
1,141
5.4 % 94.1 % 94.5 %
San Antonio, Texas 3
12,138
3.4 % 17.17
723
3.4 % 97.8 % 98.9 %
Phoenix, Arizona 3
9,886
2.8 % 17.36
632
3.0 % 90.1 % 91.4 %
Austin, Texas 4
5,170
1.4 % 15.99
350
1.7 % 92.4 % 93.7 %
Subtotal 84
272,342
76.4 % 19.93
15,047
71.0 % 90.8 % 91.9 %

Non-Target – Top 50 MSAs 14
37,903
10.6 % 15.50
2,641
12.5 % 92.6 % 94.1 %

Subtotal Target Markets
and Top 50 MSAs
98
310,245
87.0 % 19.25
17,688
83.5 % 91.1 % 92.2 %

Non-Target – Other 16
46,199
13.0 % 14.09
3,504
16.5 % 93.6 % 93.9 %

Total Multi-Tenant Retail 114
356,444
100.0 % 18.38
21,192
100.0 % 91.5 % 92.5 %

Single-User Retail 6
10,669
23.45
455
100.0 % 100.0 %

Total Retail 120
367,113
18.50
21,647
91.7 % 92.7 %

Office 1
1,921
15.55
895
13.8 % 46.1 %

Total Operating Portfolio (b) 121
$ 369,034
$ 18.48
22,542
88.6 % 90.8 %



Property Type/Market	Number of Properties	ABR (a)		% of Total Multi-Tenant Retail ABR (a)		ABR per Occupied Sq. Ft.		GLA (in thousands) (a)	% of Total Multi-Tenant Retail GLA (a)		Occupancy		% Leased Including Signed
Multi-Tenant Retail:
Top 25 MSAs (b)
Dallas	19	$	83,234	23.1	%	$	22.88	3,943	20.0	%	92.2	%	92.9	%
Washington, D.C.	8	39,300		10.9	%	29.32		1,388	7.0	%	96.5	%	96.8	%
New York	9	36,638		10.1	%	29.77		1,292	6.6	%	95.2	%	95.2	%
Chicago	8	29,603		8.2	%	24.08		1,358	6.9	%	90.5	%	90.5	%
Seattle	9	24,450		6.8	%	16.69		1,548	7.9	%	94.6	%	97.6	%
Baltimore	4	21,963		6.1	%	16.02		1,543	7.8	%	88.9	%	93.8	%
Atlanta	9	20,874		5.8	%	14.00		1,513	7.7	%	98.6	%	98.6	%
Houston	9	16,199		4.5	%	14.97		1,141	5.8	%	94.9	%	96.1	%
San Antonio	3	12,729		3.5	%	17.95		721	3.7	%	98.3	%	98.4	%
Phoenix	3	11,019		3.0	%	18.02		632	3.2	%	96.8	%	98.1	%
Los Angeles	1	6,742		1.9	%	18.06		396	2.0	%	94.3	%	96.2	%
Riverside	1	4,584		1.3	%	15.99		292	1.5	%	98.1	%	98.1	%
St. Louis	1	4,275		1.2	%	9.60		453	2.3	%	98.3	%	98.3	%
Charlotte	1	3,691		1.0	%	14.06		320	1.6	%	82.1	%	96.2	%
Tampa	1	2,401		0.7	%	19.69		126	0.6	%	97.0	%	97.0	%
Subtotal	86	317,702		88.1	%	20.29		16,666	84.6	%	93.9	%	95.3	%

Non-Top 25 MSAs (b)	14	42,719		11.9	%	14.90		3,034	15.4	%	94.5	%	95.0	%

Total Multi-Tenant Retail	100	360,421		100.0	%	19.46		19,700	100.0	%	94.0	%	95.3	%

Single-User Retail	2	5,864				22.49		261			100.0	%	100.0	%

Total Retail Operating Portfolio (c)	102	$	366,285			$	19.50	19,961			94.1	%	95.3	%

(a)

Excludes ~~$7,548~~$2,025 of multi-tenant retail ABR and ~~816~~167 square feet of multi-tenant retail GLA attributable to ~~our two active redevelopments, which are~~Circle East and The Shoppes at Quarterfield, located in the Baltimore MSA, and Carillon, located in the Washington, D.C.~~/Baltimore MSA.~~ MSA, all three of which are in redevelopment. Including these amounts, ~~76.9%~~88.2% of our multi-tenant retail ABR and ~~72.1%~~84.7% of our multi-tenant retail GLA is located in ~~our target markets.~~the top 25 MSAs.


(b)	Top 25 MSAs are determined by the United States Census Bureau and ranked based on the most recently available population estimates.


(c)	Excludes ~~six multi-tenant retail operating properties classified as held for sale as~~the 18 multi-family rental units at Plaza del Lago. As of ~~September 30, 2017.~~March 31, 2020, 16 multi-family rental units were leased at an average monthly rental rate per unit of $1,339.

Leasing Activity

The following table summarizes the leasing activity in our retail operating portfolio and our active and near-term expansion and redevelopment projects during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020. Leases with terms of less than 12 months have been excluded from the table.


	Number of Leases Signed	GLA Signed (in thousands)	New Contractual Rent per Square Foot (PSF) (a)		Prior Contractual Rent PSF (a)		% Change over Prior ABR (a)		Weighted Average Lease Term	Tenant Allowances PSF		Number of Leases Signed	GLA Signed (in thousands)	New Contractual Rent per Square Foot (PSF) (a)		Prior Contractual Rent PSF (a)		% Change over Prior ABR (a)		Weighted Average Lease Term	Tenant Allowances PSF (b)
Comparable Renewal Leases	279	1,568	$	19.10	$	17.90	6.7	%	4.9	$	1.56	62	195	$	22.29	$	21.25	4.9	%	4.8	$	8.73
Comparable New Leases	32	177	$	23.16	$	19.37	19.6	%	8.4	$	45.73	5	33	$	23.01	$	21.95	4.8	%	9.4	$	41.30
Non-Comparable New and Renewal Leases ~~(b)~~(c)	73	305	$	18.90	N/A		N/A		6.9	$	27.84	15	57	$	26.62	N/A		N/A		8.7	$	47.57
Total	384	2,050	$	19.51	$	18.05	8.1	%	5.5	$	9.29	82	285	$	22.39	$	21.35	4.9	%	6.2	$	18.51


(a)	Total excludes the impact of Non-Comparable New and Renewal Leases.


(b)	Excludes tenant allowances and related square foot amounts at our active and near-term expansion and redevelopment projects. These tenant allowances, if any, are included in the expected investment for each project.


(c)	Includes (i) leases signed on units that were vacant for over 12 months, (ii) leases signed without fixed rental payments and (iii) leases signed where the previous and ~~the~~ current lease do not have a consistent lease structure.

~~Table~~Our near-term efforts are primarily focused on reaching resolution of ~~Contents~~

~~Our~~tenant lease concession requests. In addition, our leasing efforts ~~continue to be~~are focused on (i) ~~natural lease expirations, (ii) spaces previously occupied by bankrupt tenants, (iii)~~ vacant anchor and small shop space, (ii) upcoming lease expirations and ~~(iv) space~~(iii) spaces within our expansion and redevelopment projects. ~~As we lease vacant space,~~Through these collective efforts, we look to ~~capitalize~~situationally focus on ~~the opportunity to mark rents to market, upgrade our~~stability, tenancy and to optimize the mix of operators and unique retailers at our properties.

~~We continue~~ As of March 31, 2020, we have $16,272 of ABR related to ~~focus on leasing the vacant space at our one remaining office property and have leased 413,000~~647,000 square feet of ~~the available 895,000~~GLA pertaining to 2020 lease expirations and $4,545 of ABR related to 245,000 square feet as of ~~September 30, 2017.~~GLA pertaining to leases signed but not commenced. In light of the COVID-19 pandemic, we are unable to project the impact on our leasing volume or other leasing trends. However, while existing tenants are continuing to pursue renewals, we have to a certain extent experienced, and may continue to experience, a slowdown in (i) rent commencing on signed leases, (ii) the volume of renewal leases and (iii) our ability to finalize the execution of new leases given current uncertainty.

Capital Markets

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we:

defeased the IW JV portfolio of mortgages payable, which had an outstanding principal balance of $379,435 and an interest rate of 7.50%, and incurred a defeasance premium and associated fees totaling $60,198;

~~repaid $100,000 of our unsecured term loan due 2018;~~

~~received funding in the amount of $200,000 on a seven-year unsecured term loan;~~

~~entered into two agreements to swap a total of $200,000 of London Interbank Offered Rate (LIBOR)-based variable rate debt to a fixed interest rate of 1.26% through November 22, 2018;~~

borrowed ~~$101,000,~~$831,704, net of repayments, on our unsecured revolving line of ~~credit;~~credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets; and

~~repaid $94,409 of mortgages payable and~~ made scheduled principal payments of ~~$3,619~~$619 related to amortizing ~~loans; and~~

repurchased 9,829 shares of our common stock at an average price per share of $12.76 for a total of $125,589, which includes 396 shares repurchased in September 2017 at an average price per share of $13.08 for a total of $5,187, which settled on October 2, 2017, resulting in $115,570 remaining available under our $250,000 common stock repurchase program.loans.

Distributions

We declared a quarterly ~~distributions totaling $1.3125 per share~~distribution of ~~preferred stock and quarterly distributions totaling $0.496875~~$0.165625 per share of common stock during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020.

~~Table of Contents~~

Results of Operations

Comparison of Results for the Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019


	Three Months Ended September 30,									Three Months Ended March 31,
	2017			2016			Change			2020			2019			Change
Revenues
Rental income	$	100,977		$	113,627		$	(12,650	)
Tenant recovery income	28,024			29,130			(1,106		)
Other property income	1,518			1,769			(251		)
Total revenues	130,519			144,526			(14,007		)
Revenues:
Lease income										$	118,695		$	122,703		$	(4,008	)

Expenses
Expenses:
Operating expenses	19,572			20,285			(713		)	16,414			17,686			(1,272		)
Real estate taxes	21,863			19,937			1,926			18,533			18,403			130
Depreciation and amortization	51,469			56,763			(5,294		)	40,173			43,267			(3,094		)
Provision for impairment of investment properties	45,822			4,742			41,080			346			—			346
General and administrative expenses	7,785			11,110			(3,325		)	9,165			10,499			(1,334		)
Total expenses	146,511			112,837			33,674			84,631			89,855			(5,224		)

Operating (loss) income	(15,992		)	31,689			(47,681		)

Other (expense) income:
Interest expense	(21,110		)	(25,602		)	4,492			(17,046		)	(17,430		)	384
Other (expense) income, net	(76		)	22			(98		)
(Loss) income from continuing operations	(37,178		)	6,109			(43,287		)
Gain on sales of investment properties	73,082			66,385			6,697			—			8,449			(8,449		)
Gain on litigation settlement										6,100			—			6,100
Other expense, net										(761		)	(659		)	(102		)
Net income	35,904			72,494			(36,590		)	22,357			23,208			(851		)
Preferred stock dividends	(2,362		)	(2,362		)	—
Net income attributable to noncontrolling interests										—			—			—
Net income attributable to common shareholders	$	33,542		$	70,132		$	(36,590	)	$	22,357		$	23,208		$	(851	)

Net income attributable to common shareholders ~~decreased $36,590 from $70,132~~was $22,357 for the three months ended ~~September 30, 2016~~March 31, 2020 compared to ~~$33,542~~$23,208 for the three months ended ~~September 30, 2017~~March 31, 2019. The $851 decrease was primarily ~~as a result of~~due to the following:

a $41,080 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 12 and 13 to the accompanying condensed consolidated financial statements), we recognized impairment charges of $45,822 and $4,742 for the three months ended September 30, 2017 and 2016, respectively; and

~~a $12,650~~an $8,449 decrease in rental income primarily consisting of a $12,601 decrease in base rent, which resulted from the operating properties sold during 2016 and 2017 or classified as held for sale as of September 30, 2017, along with our one remaining office property and our redevelopment properties, partially offset by an increase from the operating properties acquired during 2016 and 2017 and growth from our same store portfolio;

~~partially offset by~~

~~a $6,697 increase~~ in gain on sales of investment properties related to the ~~sales~~sale of 11one investment ~~properties, representing~~property consisting of approximately ~~1,813,300~~105,900 square feet of GLA that was impaired during the three months ended ~~September 30, 2017~~March 31, 2020 compared

to the ~~sales~~sale of 12one investment ~~properties, representing~~property consisting of approximately ~~1,254,000~~94,600 square feet of GLA that was sold for a gain during the three months ended ~~September 30, 2016;~~March 31, 2019; and

a ~~$5,294~~$4,008 decrease in lease income primarily consisting of:

a $1,358 decrease in amortization from acquired below market lease intangibles primarily as a result of the write-off of an acquired lease intangible liability associated with a lease that was not renewed at one of our operating properties during the three months ended March 31, 2019;

a $1,159 decrease in straight-line rent;

a $1,104 increase in bad debt;

a $1,064 decrease in lease termination fee income; and

a $1,007 decrease in tenant recovery income;

partially offset by

an $1,872 increase in base rent primarily due to the growth from our same store portfolio and the operating properties acquired during 2019 and 2020, partially offset by the operating properties sold during 2019 and 2020.

partially offset by

a $6,100 gain on litigation settlement recognized during the three months ended March 31, 2020 related to litigation with a former tenant. No such gain was recognized during the three months ended March 31, 2019;

a $3,094 decrease in depreciation and amortization primarily due to site improvement and in-place lease intangible assets becoming fully depreciated or amortized upon reaching the ~~write-off~~end of ~~assets taken out of service at a redevelopment property~~the asset’s estimated useful life during the three months ended September 30, 2016, along with a decrease from the investment properties sold or classified as held for sale as of September 30, 2017, partially offset by an increase from the acquisition of investment properties during the three months ended September 30, 2017; andMarch 31, 2020;

a ~~$4,492~~$1,334 decrease in ~~interest expense~~general and administrative expenses primarily ~~consisting of:~~

~~an $11,032 decrease in interest on mortgages payable~~ due to a decrease in comparative cash bonus expense resulting from a significant reduction in ~~mortgage debt;~~

~~partially offset by~~

~~Table of Contents~~

~~a $2,998 increase in prepayment penalties;~~

a $2,080 increase in interest from our 4.08% senior unsecured notes due 2026 and our 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), which were issued in September and December 2016, respectively;cash bonus expectations for 2020; and

a ~~$1,514 increase~~$1,272 decrease in ~~interest on our Term Loan Due 2023, which funded~~operating expenses primarily due to lower snow-related expenses in ~~January 2017.~~2020.

Net operating income (NOI)

We define NOI as all revenues other than (i) straight-line rental income (non-cash), (ii) amortization of lease inducements, (iii) amortization of acquired above and below market lease intangibles and (iv) lease termination fee income, less real estate taxes and all operating expenses other than ~~straight-line~~lease termination fee expense and non-cash ground rent expense, ~~(non-cash)~~which is comprised of amortization of right-of-use lease assets and amortization of ~~acquired ground~~ lease ~~intangibles (non-cash).~~liabilities. NOI consists of same store NOI (Same Store NOI) and NOI from other investment properties (NOI from Other Investment Properties). We believe that NOI, Same Store NOI and NOI from Other Investment Properties, which are supplemental non-GAAP financial measures, provide an additional and useful operating perspective not immediately apparent from ~~“Operating~~“Net income” or “Net income attributable to common shareholders” in accordance with accounting principles generally accepted in the United States (GAAP). We use these measures to evaluate our performance on a property-by-property basis because they allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base have on our operating results. NOI, Same Store NOI and NOI from Other Investment Properties do not represent alternatives to “Net income” or “Net income attributable to common shareholders” in accordance with GAAP as indicators of our financial performance. Comparison of our presentation of NOI, Same Store NOI and NOI from Other Investment Properties to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs. For reference and as an aid in understanding our computation of NOI, a reconciliation of net ~~(loss)~~ income attributable to common shareholders as computed in accordance with GAAP to Same Store NOI has been presented for each comparable period presented.

Same store portfolio

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, our same store portfolio consisted of ~~110~~101 retail operating properties acquired or placed in service and stabilized prior to January 1, ~~2016.~~2019. The number of properties in our same store portfolio decreased to ~~110~~101 as of ~~September 30, 2017~~March 31, 2020 from ~~123~~102 as of ~~June 30, 2017~~December 31, 2019 as a result of the following:


•	the removal of King Philip’s Crossing, a same store investment property that was sold during the three months ended March 31, 2020; and

the removal of ~~eight same store investment properties sold~~The Shoppes at Quarterfield, which was reclassified to active redevelopment during the three months ended ~~September 30, 2017; and~~March 31, 2020;

partially offset by

the ~~removal~~addition of ~~five same store investment properties classified as held for sale as of September 30, 2017. Century III~~Reisterstown Road Plaza, ~~which is also classified as held for sale as of September 30, 2017, did not impact the number of same store properties as it~~a redevelopment project that was ~~classified as held for sale as of June 30, 2017.~~

The sales of Boulevard Plaza on July 20, 2017, Irmo Station on July 26, 2017 and Lakepointe Towne Center on August 4, 2017 did not impact the number of same store properties as they were classified as held for sale as of June 30, 2017.reclassified into our retail operating portfolio during 2018.

The properties and financial results reported in “Other investment properties” primarily include the following:

properties acquired ~~after December 31, 2015;~~during 2019 and 2020;

~~our one remaining office property;~~the multi-family rental units at Plaza del Lago, a redevelopment project that was placed in service during 2019;

~~three properties~~Circle East, which is in active redevelopment;


•	One Loudoun Downtown – Pads G & H, which are in active development;

Carillon, a redevelopment project where we ~~have begun redevelopment and/or activities~~halted plans for vertical construction during the three months ended March 31, 2020 in response to current macroeconomic conditions due to the impact of the COVID-19 pandemic; however, we are actively completing site work preparation at the property in anticipation of potential future development at the site;

The Shoppes at Quarterfield, which is in active redevelopment;

investment properties that were sold or classified as held for sale ~~in 2016~~during 2019 and ~~2017;~~2020; and

the net income from our ~~wholly-owned~~wholly owned captive insurance ~~company; and~~

the historical ground rent expense related to an existing same store investment property that was subject to a ground lease with a third party prior to our acquisition of the fee interest on April 29, 2016.

~~Table of Contents~~

company.

The following tables present a reconciliation of net income attributable to common shareholders to Same Store NOI and details of the components of Same Store NOI for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~2019:


	Three Months Ended September 30,									Three Months Ended March 31,
	2017			2016			Change			2020			2019			Change
Net income attributable to common shareholders	$	33,542		$	70,132		$	(36,590	)	$	22,357		$	23,208		$	(851	)
Adjustments to reconcile to Same Store NOI:
Preferred stock dividends	2,362			2,362			—
Gain on sales of investment properties	(73,082		)	(66,385		)	(6,697		)	—			(8,449		)	8,449
Gain on litigation settlement										(6,100		)	—			(6,100		)
Depreciation and amortization	51,469			56,763			(5,294		)	40,173			43,267			(3,094		)
Provision for impairment of investment properties	45,822			4,742			41,080			346			—			346
General and administrative expenses	7,785			11,110			(3,325		)	9,165			10,499			(1,334		)
Interest expense	21,110			25,602			(4,492		)	17,046			17,430			(384		)
Straight-line rental income, net	(1,849		)	(1,226		)	(623		)	(341		)	(1,500		)	1,159
Amortization of acquired above and below market lease intangibles, net	(482		)	(1,441		)	959			(976		)	(2,334		)	1,358
Amortization of lease inducements	242			265			(23		)	419			296			123
Lease termination fees	(188		)	(385		)	197
Straight-line ground rent expense	674			692			(18		)
Amortization of acquired ground lease intangibles	(140		)	(140		)	—
Other expense (income), net	76			(22		)	98
Lease termination fees, net										(124		)	(1,188		)	1,064
Non-cash ground rent expense, net										333			358			(25		)
Other expense, net										761			659			102
NOI	87,341			102,069			(14,728		)	83,059			82,246			813
NOI from Other Investment Properties	(12,054		)	(27,548		)	15,494			(1,318		)	(1,484		)	166
Same Store NOI	$	75,287		$	74,521		$	766		$	81,741		$	80,762		$	979


	Three Months Ended September 30,								Three Months Ended March 31,
	2017		2016			Change			2020			2019			Change
Same Store NOI:
Base rent	$	82,163	$	80,918		$	1,245		$	89,323		$	86,591		$	2,732
Percentage and specialty rent	603		531			72			1,035			1,280			(245		)
Tenant recovery income	24,499		22,838			1,661
Other property operating income	832		881			(49		)
	108,097		105,168			2,929

Tenant recoveries									25,445			26,818			(1,373		)
Other lease-related income									1,466			1,289			177
Bad debt, net									(1,505		)	(428		)	(1,077		)
Property operating expenses	14,814		15,084			(270		)	(15,718		)	(16,365		)	647
Bad debt expense	148		(74		)	222
Real estate taxes	17,848		15,637			2,211			(18,305		)	(18,423		)	118
	32,810		30,647			2,163

Same Store NOI	$	75,287	$	74,521		$	766		$	81,741		$	80,762		$	979

Same Store NOI increased ~~$766,~~$979, or ~~1.0%~~1.2%, primarily due to the following:

a $2,732 increase in base rent ~~increased $1,245~~ primarily ~~due to an increase~~driven by increases of ~~$622~~(i) $1,093 from occupancy growth, (ii) $996 from contractual rent changes ~~$511~~and (iii) $552 from re-leasing ~~spreads and $193 from rent abatements, partially offset by a decrease of $106 from occupancy changes;~~spreads;

partially offset by

a $1,077 increase in bad debt, net; and

a $608 increase in property operating expenses and real estate taxes, net of tenant ~~recovery income, increased $280 primarily~~recoveries, due to a positive impact from the common area maintenance and real estate tax reconciliation process in 2019, increases in certain non-recoverable property operating expenses and higher net real estate ~~tax refunds during the three months ended September 30, 2016; and~~

~~bad debt expense increased $222.~~

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~~Comparison of Results for the Nine Months Ended September 30, 2017 and 2016~~

Nine Months Ended September 30,
2017 2016 Change
Revenues
Rental income $ 316,968
$ 344,081
$ (27,113 )
Tenant recovery income 88,334
89,140
(806 )
Other property income 6,249
7,170
(921 )
Total revenues 411,551
440,391
(28,840 )

Expenses
Operating expenses 62,440
63,438
(998 )
Real estate taxes 65,229
60,966
4,263
Depreciation and amortization 157,268
163,602
(6,334 )
Provision for impairment of investment properties 58,856
11,048
47,808
General and administrative expenses 29,368
33,289
(3,921 )
Total expenses 373,161
332,343
40,818

Operating income 38,390
108,048
(69,658 )

Gain on extinguishment of debt —
13,653
(13,653 )
Gain on extinguishment of other liabilities —
6,978
(6,978 )
Interest expense (128,077 ) (78,343 ) (49,734 )
Other income, net 380
449
(69 )
(Loss) income from continuing operations (89,307 ) 50,785
(140,092 )
Gain on sales of investment properties 230,874
97,737
133,137
Net income 141,567
148,522
(6,955 )
Preferred stock dividends (7,087 ) (7,087 ) —
Net income attributable to common shareholders $ 134,480
$ 141,435
$ (6,955 )

Net income attributable to common shareholders decreased $6,955 from $141,435 for the nine months ended September 30, 2016 to $134,480 for the nine months ended September 30, 2017 primarily as a result of the following:

~~a $49,734 increase in interest expense primarily consisting of:~~

a $67,513 increase in prepayment penalties and defeasance premiums and a $3,395 increase in capitalized loan fee write-offs primarily related to the defeasance of the IW JV portfolio of mortgages payable during the ~~nine~~ ~~months ended September 30, 2017, which resulted in a defeasance premium and associated fees totaling $60,198 and the write-off of $4,003 of capitalized loan fees;~~

a $6,240 increase in interest from our 4.08% senior unsecured notes due 2026 and our 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), which were issued in September and December 2016, respectively; and

~~a $4,460 increase in interest on our Term Loan Due 2023, which funded in January 2017;~~

~~partially offset by~~

~~a $33,065 decrease in interest on mortgages payable due to a reduction in mortgage debt;~~

a $47,808 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 12 and 13 to the accompanying condensed consolidated financial statements), we recognized impairment charges of $58,856 and $11,048 for the ~~nine~~ ~~months ended September 30, 2017 and 2016, respectively;~~

a $27,113 decrease in rental income primarily consisting of a $26,936 decrease in base rent, which resulted from the operating properties sold during 2016 and 2017 or classified as held for sale as of September 30, 2017, along with our one remaining office property and our redevelopment properties,taxes, partially offset by ~~an increase from the~~decreases in net recoverable property operating ~~properties acquired during 2016 and 2017 and growth from our same store portfolio;~~

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~~a $13,653 gain on extinguishment of debt recognized during the~~ ~~nine~~ ~~months ended September 30, 2016 associated with the disposition of The Gateway through a lender-directed sale in full satisfaction of our mortgage obligation. No such gain was recorded during the~~ ~~nine~~ ~~months ended September 30, 2017; and~~

~~a $6,978 gain on extinguishment of other liabilities recognized during the~~ ~~nine~~ months ended September 30, 2016 related to the acquisition of the fee interest in Ashland & Roosevelt, one of our existing investment properties that was previously subject to a ground lease with a third party. The amount recognized represents the reversal of the straight-line ground rent liability associated with the ground lease. No such gain was recorded during the ~~nine~~ ~~months ended September 30, 2017;~~

~~partially offset~~expenses primarily driven by

a $133,137 increase in gain on sales of investment properties related to the sales of 34 investment properties and a single-user parcel located at an existing multi-tenant retail operating property, representing approximately 4,302,400 square feet of GLA, during the ~~nine~~ ~~months ended September 30, 2017 compared to the sales of 28 investment properties and one outparcel, representing approximately 2,387,700 square feet of GLA, during the~~ ~~nine~~ ~~months ended September 30, 2016; and~~

a $6,334 decrease in depreciation and amortization primarily due to the write-off of assets taken out of service at a redevelopment property during the nine months ended September 30, 2016, along with a decrease from the investment properties sold or classified as held for sale as of September 30, 2017, partially offset by an increase from the acquisition of investment properties during the nine months ended September 30, 2017.

The following tables present a reconciliation of net income attributable to common shareholders to Same Store NOI and details of the components of Same Store NOI for the nine months ended September 30, 2017 and 2016:

Nine Months Ended September 30,
2017 2016 Change
Net income attributable to common shareholders $ 134,480
$ 141,435
$ (6,955 )
Adjustments to reconcile to Same Store NOI:
Preferred stock dividends 7,087
7,087
—
Gain on sales of investment properties (230,874 ) (97,737 ) (133,137 )
Depreciation and amortization 157,268
163,602
(6,334 )
Provision for impairment of investment properties 58,856
11,048
47,808
General and administrative expenses 29,368
33,289
(3,921 )
Gain on extinguishment of debt —
(13,653 ) 13,653
Gain on extinguishment of other liabilities —
(6,978 ) 6,978
Interest expense 128,077
78,343
49,734
Straight-line rental income, net (3,109 ) (3,054 ) (55 )
Amortization of acquired above and below market lease intangibles, net (1,762 ) (2,412 ) 650
Amortization of lease inducements 824
817
7
Lease termination fees (2,310 ) (3,070 ) 760
Straight-line ground rent expense 2,037
2,372
(335 )
Amortization of acquired ground lease intangibles (420 ) (420 ) —
Other income, net (380 ) (449 ) 69
NOI 279,142
310,220
(31,078 )
NOI from Other Investment Properties (52,111 ) (87,028 ) 34,917
Same Store NOI $ 227,031
$ 223,192
$ 3,839

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Nine Months Ended September 30,
2017 2016 Change
Same Store NOI:
Base rent $ 246,496
$ 242,589
$ 3,907
Percentage and specialty rent 2,433
2,621
(188 )
Tenant recovery income 71,777
68,961
2,816
Other property operating income 2,474
2,386
88
323,180
316,557
6,623

Property operating expenses 44,224
45,435
(1,211 )
Bad debt expense 668
355
313
Real estate taxes 51,257
47,575
3,682
96,149
93,365
2,784

Same Store NOI $ 227,031
$ 223,192
$ 3,839

Same Store NOI increased $3,839, or 1.7%, primarily due to an increase of $3,907 in base rent primarily as a result of increases in the following: $1,905 from contractual rent changes, $1,647 from re-leasing spreads and $300 from rent abatements. lower snow-related expenses.

Funds From Operations Attributable to Common Shareholders

The National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a financial measure known as funds from operations (FFO). As defined by NAREIT, FFO means net income ~~(loss)~~ computed in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains ~~(or losses)~~ from sales of ~~depreciable~~ real estate ~~plus depreciation~~assets, (iii) gains and ~~amortization~~losses from change in control and (iv) impairment ~~charges on depreciable~~write-downs of real ~~estate.~~estate assets and investments in entities directly attributable to decreases in the value of real estate held by the entity. We have adopted the NAREIT definition in our computation of FFO attributable to common shareholders. Management believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing our performance and operations to those of other REITs.

We define Operating FFO attributable to common shareholders as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the impact on earnings from gains or losses associated with the early extinguishment of debt or other liabilities, ~~impairment charges to write down the carrying value of assets other than depreciable real estate,~~ litigation involving the Company, including ~~actual or anticipated~~gains recognized as a result of settlement and ~~associated legal~~ costs ~~and~~to engage outside counsel related to litigation with former tenants, the impact on earnings from executive separation and the excess of redemption value over carrying value of preferred stock redemption, which are not otherwise adjusted in our calculation of FFO attributable to common shareholders.

We believe that FFO attributable to common shareholders and Operating FFO attributable to common shareholders, which are supplemental non-GAAP financial measures, provide an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders and Operating FFO attributable to common shareholders do not represent alternatives to (i) “Net Income” or “Net income attributable to common shareholders” as indicators of our financial performance, or (ii) “Cash flows from operating activities” in accordance with GAAP as measures of our capacity to fund cash needs, including the payment of dividends. Comparison of our presentation of Operating FFO attributable to common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

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The following table presents a reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders and Operating FFO attributable to common shareholders:

Three Months Ended
September 30,

Nine Months Ended
September 30,
2017 2016 2017 2016
Net income attributable to common shareholders $ 33,542
$ 70,132
$ 134,480
$ 141,435
Depreciation and amortization of depreciable real estate 50,867
56,384
155,857
162,577
Provision for impairment of investment properties 45,822
4,742
58,856
8,884
Gain on sales of depreciable investment properties (73,082 ) (66,385 ) (230,874 ) (97,737 )
FFO attributable to common shareholders $ 57,149
$ 64,873
$ 118,319
$ 215,159

FFO attributable to common shareholders per common share outstanding $ 0.25
$ 0.27
$ 0.51
$ 0.91

FFO attributable to common shareholders $ 57,149
$ 64,873
$ 118,319
$ 215,159
Impact on earnings from the early extinguishment of debt, net 3,006
—
71,675
(12,842 )
Provision for hedge ineffectiveness 5
(38 ) 16
(35 )
Provision for impairment of non-depreciable investment property —
—
—
2,164
Gain on extinguishment of other liabilities —
—
—
(6,978 )
Impact on earnings from executive separation, net (a) (1,086 ) —
(1,086 ) —
Other (b) 207
(5 ) 188
(189 )
Operating FFO attributable to common shareholders $ 59,281
$ 64,830
$ 189,112
$ 197,279

Operating FFO attributable to common shareholders
per common share outstanding
$ 0.26
$ 0.27
$ 0.81
$ 0.83



	Three Months Ended March 31,
	2020			2019
Net income attributable to common shareholders	$	22,357		$	23,208
Depreciation and amortization of real estate	39,838			42,913
Provision for impairment of investment properties	346			—
Gain on sales of investment properties	—			(8,449		)
FFO attributable to common shareholders	$	62,541		$	57,672

FFO attributable to common shareholders per common share outstanding – diluted	$	0.29		$	0.27

FFO attributable to common shareholders	$	62,541		$	57,672
Gain on litigation settlement	(6,100		)	—
Other (a)	1,011			711
Operating FFO attributable to common shareholders	$	57,452		$	58,383

Operating FFO attributable to common shareholders per common share outstanding – diluted	$	0.27		$	0.27


(a)	~~Reflected as a reduction to “General and administrative expenses” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income.~~

~~(b)~~

Primarily consists of the impact on earnings from litigation involving the Company, including ~~actual or anticipated settlement and associated legal~~ costs to engage outside counsel related to litigation with former tenants, which are included inwithin “Other ~~(expense) income,~~expense, net” in the accompanying condensed consolidated statements of operations and other comprehensive ~~(loss) income.~~loss.

Liquidity and Capital Resources

We anticipate that cash flows from the below-listed sources will provide adequate capital for the next 12 months and beyond for all scheduled principal and interest payments on our outstanding indebtedness, including maturing debt, current and anticipated tenant allowances or other capital obligations, the shareholder distributions required to maintain our REIT status and compliance with the financial covenants of our unsecured debt agreements.

Our primary expected sources and uses of liquidity are as follows:



	SOURCES		USES
▪	Operating cash flow	▪	Tenant allowances and leasing costs
▪	Cash and cash equivalents	▪	Improvements made to individual properties, certain of which are not
▪	~~Available borrowings under our unsecured revolving~~Proceeds from capital markets transactions		recoverable through common area maintenance charges to tenants
▪	~~line of credit~~Proceeds from asset dispositions	▪	~~Acquisitions~~Debt repayments
▪	Proceeds from ~~capital markets transactions~~	▪	~~Debt repayments and defeasances~~
▪	~~Proceeds from asset dispositions~~the sales of air rights	▪	Distribution payments
		▪	Redevelopment, ~~renovation or~~ expansion and pad development activities
		▪	Acquisitions
		▪	New development
		▪	Repurchases of our common stock
		▪	~~Redemption of our preferred stock~~

WeDuring the three months ended March 31, 2020, we elected to nearly fully draw on our $850,000 unsecured revolving line of credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets. As of March 31, 2020, we have $769,241 of cash on hand and the ability to repay the vast majority of the amount drawn on our unsecured revolving line of credit; however, we may elect to not repay it for some time, which will increase our interest expense. Over the last several years, we have made substantial progress ~~over the last several years~~ in strengthening our balance sheet, as demonstrated by our reduced leverage, ~~increased liquidity~~improved financial flexibility and higher unencumbered asset ratio. We believe this progress places us in a position to be able to better withstand the current unprecedented macroeconomic environment. However, there can be no assurances in this regard or that additional financing or capital will be available to us going forward, on favorable terms or at all. Additionally, through April 30, 2020, we have collected more than 52% of billed rent from our tenants. If such a trend continues, or possibly deteriorates, and if we agree with certain tenants that rent may be deferred until a later date, our operating cash flows and liquidity will be negatively impacted. As we worked to fortify our balance sheet, we funded debt maturities primarily through asset dispositions and capital markets transactions, including the public offering of our common stock and private and public offerings of senior unsecured notes. As of ~~September 30, 2017,~~March 31, 2020, we ~~had $1,003~~ have no scheduled debt maturities and $1,875

of principal amortization due through the end of ~~2017,~~2020, which we plan

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on satisfying through a combination of ~~proceeds~~cash flows from ~~asset dispositions,~~operations and working capital, ~~markets transactions and our unsecured revolving line~~including cash on hand of ~~credit.~~$769,241 as of March 31, 2020.

The table below summarizes our consolidated indebtedness as of ~~September 30, 2017~~March 31, 2020:


Debt	Aggregate Principal Amount		Weighted Average Interest Rate		Maturity Date	Weighted Average Years to Maturity	Aggregate Principal Amount		Weighted Average Interest Rate		Maturity Date	Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	288,252	4.99	%	Various	5.5 years	$	94,285	4.37	%	Various	4.8 years

Unsecured notes payable:
Senior notes – 4.12% due 2021	100,000		4.12	%	June 30, 2021	3.8 years	100,000		4.12	%	June 30, 2021	1.2 years
Senior notes – 4.58% due 2024	150,000		4.58	%	June 30, 2024	6.8 years	150,000		4.58	%	June 30, 2024	4.3 years
Senior notes – 4.00% due 2025	250,000		4.00	%	March 15, 2025	7.5 years	250,000		4.00	%	March 15, 2025	5.0 years
Senior notes – 4.08% due 2026	100,000		4.08	%	September 30, 2026	9.0 years	100,000		4.08	%	September 30, 2026	6.5 years
Senior notes – 4.24% due 2028	100,000		4.24	%	December 28, 2028	11.3 years	100,000		4.24	%	December 28, 2028	8.8 years
Senior notes – 4.82% due 2029							100,000		4.82	%	June 28, 2029	9.2 years
Total unsecured notes payable (a)	700,000		4.19	%		7.5 years	800,000		4.27	%		5.6 years

Unsecured credit facility:
Term loan due 2021 – fixed rate (b)	250,000		1.97	%	January 5, 2021	3.3 years	250,000		3.20	%	January 5, 2021	0.8 years
Term loan due 2018 – variable rate (c)	100,000		2.68	%	May 11, 2018 (c)	0.6 years
Revolving line of credit – variable rate ~~(c)~~	187,000		2.59	%	January 5, 2020 (c)	2.3 years	849,704		2.04	%	April 22, 2022 (c)	2.1 years
Total unsecured credit facility (a)	537,000		2.32	%		2.4 years	1,099,704		2.30	%		1.8 years

Term Loan Due 2023 – fixed rate (a) (d)	200,000		2.96	%	November 22, 2023	6.1 years
Unsecured term loans:
Term Loan Due 2023 – fixed rate (d)							200,000		4.05	%	November 22, 2023	3.6 years
Term Loan Due 2024 – fixed rate (e)							120,000		2.88	%	July 17, 2024	4.3 years
Term Loan Due 2026 – fixed rate (f)							150,000		3.27	%	July 17, 2026	6.3 years
Total unsecured term loans (a)							470,000		3.50	%		4.7 years

Total consolidated indebtedness	$	1,725,252	3.60	%		5.4 years	$	2,463,989	3.25	%		3.7 years

(a)

Fixed rate mortgages payable excludes mortgage ~~premium of $1,087,~~ discount of ~~$(590)~~$(483) and capitalized loan fees of ~~$(649)~~$(240), net of accumulated amortization, as of September 30, 2017 and a $7,680 mortgage payable and capitalized loan fees of $(25), net of accumulated amortization, associated with one investment property classified as held for sale as of September 30, 2017.March 31, 2020. Unsecured notes payable excludes discount of ~~$(882)~~$(586) and capitalized loan fees of ~~$(3,523)~~$(2,994), net of accumulated amortization, as of ~~September 30, 2017. Term~~March 31, 2020. Unsecured term loans exclude capitalized loan fees of ~~$(3,086)~~$(3,208), net of accumulated amortization, as of ~~September 30, 2017.~~March 31, 2020. Capitalized loan fees related to the revolving line of credit are included inwithin “Other assets, net” in the accompanying condensed consolidated balance sheets.


(b)	Reflects $250,000 of LIBOR-based variable rate debt that has been swapped to a ~~weighted average~~ fixed rate of ~~0.67%~~2.00% plus a credit spread based on a leverage grid ranging from ~~1.30%~~1.20% to ~~2.20%~~1.70% through ~~December 31, 2017.~~January 5, 2021. The applicable credit spread was ~~1.30%~~1.20% as of ~~September 30, 2017.~~March 31, 2020.

(c)

We have ~~two one year extension options on the term loan due 2018 and~~ two six-month extension options on the revolving line of credit, which we may exercise as long as we are in compliance with the terms of the unsecured credit agreement and we pay an extension fee equal to ~~0.15% for the term loan and~~ 0.075% of the commitment amount being ~~extended for the revolving line of credit.~~extended.


(d)	Reflects $200,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of ~~1.26%~~2.85% plus a credit spread based on a leverage grid ranging from ~~1.70%~~1.20% to ~~2.55%~~1.85% through November 22, ~~2018.~~2023. The applicable credit spread was ~~1.70%~~1.20% as of ~~September 30, 2017.~~March 31, 2020.


(e)	Reflects $120,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2024. The applicable credit spread was 1.20% as of March 31, 2020.


(f)	Reflects $150,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid ranging from 1.50% to 2.20% through July 17, 2026. The applicable credit spread was 1.50% as of March 31, 2020.

Mortgages Payable

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we ~~repaid or defeased mortgages payable in the total amount of $473,844, which had a weighted average fixed interest rate of 7.09%, and~~ made scheduled principal payments of ~~$3,619~~$619 related to amortizing loans. Included within the total repayments and defeasances for the nine months ended September 30, 2017 is the defeasance of a portfolio of mortgages payable with a principal balance of $379,435 as of December 31, 2016 and an interest rate of 7.50% that was cross-collateralized by 45 properties and scheduled to mature in 2019 (known as the IW JV portfolio of mortgages payable). We incurred a defeasance premium and associated fees totaling $60,198 in connection with this transaction, which are included within “Interest expense” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. As a result, the 45 properties that secured the mortgages payable as of December 31, 2016 are no longer encumbered by mortgages.

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~~Unsecured Notes Payable~~

~~Notes Due 2026 and 2028~~

On September 30, 2016, we issued $100,000 of 4.08% senior unsecured notes due 2026 in a private placement transaction pursuant to a note purchase agreement we entered into with certain institutional investors on September 30, 2016. Pursuant to the same note purchase agreement, on December 28, 2016, we also issued $100,000 of 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028). The proceeds were used to pay down our unsecured revolving line of credit, early repay certain longer-dated mortgages payable and for general corporate purposes.

The note purchase agreement governing the Notes Due 2026 and 2028 contains customary covenants and events of default. Pursuant to the terms of the note purchase agreement, we are subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) a minimum interest coverage ratio; (iii) an unencumbered interest coverage ratio (as set forth in our unsecured credit facility and the note purchase agreement governing the Notes Due 2021 and 2024); and (iv) a fixed charge coverage ratio (as set forth in our unsecured credit facility).

~~Notes Due 2025~~

On March 12, 2015, we completed a public offering of $250,000 in aggregate principal amount of 4.00% senior unsecured notes due 2025 (Notes Due 2025). The Notes Due 2025 were priced at 99.526% of the principal amount to yield 4.058% to maturity. The proceeds were used to repay a portion of our unsecured revolving line of credit.

The indenture, as supplemented, governing the Notes Due 2025 (the Indenture) contains customary covenants and events of default. Pursuant to the terms of the Indenture, we are subject to various financial covenants, including the requirement to maintain the following: (i) maximum secured and total leverage ratios; (ii) a debt service coverage ratio; and (iii) maintenance of an unencumbered assets to unsecured debt ratio.

~~Notes Due 2021 and 2024~~

On June 30, 2014, we completed a private placement of $250,000 of unsecured notes, consisting of $100,000 of 4.12% senior unsecured notes due 2021 and $150,000 of 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024). The proceeds were used to repay a portion of our unsecured revolving line of credit.

The note purchase agreement governing the Notes Due 2021 and 2024 contains customary covenants and events of default. Pursuant to the terms of the note purchase agreement, we are subject to various financial covenants, some of which are based upon the financial covenants in effect in our unsecured credit facility, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage and unencumbered interest coverage ratios; and (iii) a minimum consolidated net worth.

~~As of September 30, 2017, management believes we were in compliance with the financial covenants under the Indenture and the note purchase agreements.~~

Unsecured Term Loans and Revolving Line of Credit

Unsecured Credit Facility

~~On January 6, 2016, we entered into our fourth amended and restated unsecured credit agreement (Unsecured Credit Agreement) with~~We have a ~~syndicate of financial institutions led by KeyBank National Association serving as administrative agent and Wells Fargo Bank, National Association serving as syndication agent to provide for an~~$1,100,000 unsecured credit facility ~~aggregating $1,200,000 (Unsecured Credit Facility). The Unsecured Credit Facility consists~~consisting of ~~a $750,000~~an $850,000 unsecured revolving line of credit and a $250,000 unsecured term loan ~~and a second unsecured term loan which had an outstanding balance of $200,000 at inception, of which we repaid $100,000 during the nine months ended September 30, 2017, and~~(Unsecured Credit Facility) that is priced on a leverage grid at a rate of LIBOR plus a credit spread. ~~We received investment grade credit ratings from Moody’s and Standard & Poor’s in 2014.~~ In accordance with the unsecured credit agreement, we may elect to convert to an investment grade pricing grid. As of ~~September 30, 2017,~~March 31,

2020, making such an election would have resulted in a higher interest rate and, as such, we have not made the election to convert to an investment grade pricing grid.

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The following table summarizes the key terms of the Unsecured Credit Facility:

Leverage-Based Pricing

~~Ratings-Based~~Investment Grade Pricing

Unsecured Credit Facility

Maturity Date

Extension Option

Extension Fee

Credit Spread

~~Unused~~Facility Fee

Credit Spread

Facility Fee

$250,000 unsecured term loan due 2021

1/5/2021

N/A

~~1.30% - 2.20%~~1.20%–1.70%

N/A

0.90% - –1.75%

N/A

$~~100,000 unsecured term loan~~

~~5/11/2018~~

~~2 one year~~

~~0.15%~~

~~1.45% - 2.20%~~

~~N/A~~

~~1.05% - 2.05%~~

~~N/A~~

~~$750,000~~850,000 unsecured revolving line of credit

~~1/5/2020~~4/22/2022

~~2 six~~2-six month

0.075%

~~1.35% - 2.25%~~1.05%–1.50%

0.15% ~~- 0.25%~~–0.30%

~~0.85% -~~ 0.825%–1.55%

0.125% - –0.30%

The Unsecured Credit Facility has a ~~$400,000~~$500,000 accordion option that allows us, at our election, to increase the total ~~credit facility~~Unsecured Credit Facility up to $1,600,000, subject to (i) customary fees and conditions including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) our ability to obtain additional lender commitments.

The Unsecured Credit Agreement contains customary covenants and events of default. Pursuant to the terms of the Unsecured Credit Agreement, we are subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of ~~September 30, 2017, management believes we were in compliance with the financial covenants and default provisions under the Unsecured Credit Agreement.~~

~~As of September 30, 2017,~~March 31, 2020, we had ~~letter(s)~~letters of credit outstanding totaling ~~$9,645 which~~$291 that serve as collateral for certain capital improvements at one of our properties and ~~performance obligations on certain redevelopment projects, which will be satisfied upon completion of the projects, and reduced~~reduce the available borrowings on our unsecured revolving line of credit.

Unsecured Term ~~Loan Due 2023~~Loans

~~On January 3, 2017,~~As of March 31, 2020, we ~~received funding on~~have the following unsecured term loans: (i) a seven-year $200,000 unsecured term loan ~~with a group of financial institutions, which closed during the year ended December 31, 2016. The Term~~(Term Loan Due ~~2023 is priced on~~2023), (ii) a ~~leverage grid~~five-year $120,000 unsecured term loan (Term Loan Due 2024), and (iii) a seven-year $150,000 unsecured term loan (Term Loan Due 2026) each of which bears interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit ~~spread.~~spread based on a leverage grid. In accordance with the respective term loan ~~agreement (Term Loan Agreement),~~agreements, we may elect to convert to an investment grade pricing grid. As of ~~September 30, 2017,~~March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, we have not made the election to convert to an investment grade pricing grid.

The following table summarizes the key terms of the ~~Term Loan Due 2023:~~unsecured term loans:



Unsecured Term ~~Loan Due 2023~~Loans	Maturity Date	Leverage-Based Pricing Credit Spread	~~Ratings-Based~~Investment Grade Pricing Credit Spread
$200,000 unsecured term loan due 2023	11/22/2023	~~1.70%~~1.20% – ~~2.55%~~1.85%	0.85% – 1.65%
$120,000 unsecured term loan due 2024	7/17/2024	1.20% – 1.70%	0.80% – 1.65%
$150,000 unsecured term loan due 2026	7/17/2026	1.50% – ~~2.45%~~2.20%	1.35% – 2.25%

The Term Loan Due 2024 has a $130,000 accordion option and the Term Loan Due 2026 has a $100,000 accordion option that, collectively, allow us, at our election, to increase the total of the Term Loan Due 2024 and Term Loan Due 2026 up to $500,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the term loan agreement and (ii) our ability to obtain additional lender commitments.

The Term Loan Due 2023 has a $100,000 accordion option that allows us, at our election, to increase the ~~total unsecured term loan~~Term Loan Due 2023 up to $300,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the ~~Term Loan Agreement.~~

The Term Loan Agreement contains customary covenants and events of default, including financial covenants that require us to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios;amended term loan agreement and (ii) our ability to obtain additional lender commitments.

Our unsecured revolving line of credit and unsecured term loans each bear interest at a rate of LIBOR plus a credit spread, which is based on leverage grids. To the extent that our leverage ratio increases, the applicable credit spread will increase according to the tiers of each respective leverage grid. Based on our unsecured revolving line of credit and unsecured term loans balance of $1,569,704 as of March 31, 2020, the resulting increase in our leverage ratio and related movement to a higher tier on each respective leverage grid is expected to increase the weighted average credit spread portion of the interest rate by 0.11% applicable to the $1,569,704 balance for, at a minimum, ~~fixed charge~~the next quarterly compliance period under our debt agreements. Additionally, the facility fee on our unsecured revolving line of credit is expected to increase by 0.05% due to the increase in our leverage ratio and ~~unencumbered interest coverage ratios. As of September 30, 2017, management believes we were in compliance with~~related movement to a higher tier on the ~~financial covenants and default provisions under the Term Loan Agreement.~~

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leverage grid.

Debt Maturities

The following table ~~shows~~summarizes the scheduled maturities and principal amortization of our indebtedness as of ~~September 30, 2017~~March 31, 2020 for the remainder of ~~2017,~~2020, each of the next four years and thereafter, and the weighted average interest rates by year, as well as the fair value of our indebtedness as of ~~September 30, 2017.~~March 31, 2020. The table does not reflect the impact of any debt activity that occurred after ~~September 30, 2017~~March 31, 2020.


	2017			2018			2019			2020			2021			Thereafter			Total			Fair Value		2020			2021			2022			2023			2024			Thereafter			Total			Fair Value
Debt:
Fixed rate debt:
Mortgages payable (a)	$	1,003		$	4,177		$	25,257		$	3,923		$	22,820		$	231,072		$	288,252		$	302,451	$	1,875		$	2,626		$	26,678		$	31,758		$	1,737		$	29,611		$	94,285		$	95,831
Fixed rate term loans (b)	—			—			—			—			250,000			200,000			450,000			451,174		—			250,000			—			200,000			120,000			150,000			720,000			711,013
Unsecured notes payable (c)	—			—			—			—			100,000			600,000			700,000			699,725		—			100,000			—			—			150,000			550,000			800,000			788,109
Total fixed rate debt	1,003			4,177			25,257			3,923			372,820			1,031,072			1,438,252			1,453,350		1,875			352,626			26,678			231,758			271,737			729,611			1,614,285			1,594,953

Variable rate debt:
Variable rate term loan and revolving line of credit	—			100,000			—			187,000			—			—			287,000			287,315
Variable rate revolving line of credit																								—			—			849,704			—			—			—			849,704			841,529
Total debt (d)	$	1,003		$	104,177		$	25,257		$	190,923		$	372,820		$	1,031,072		$	1,725,252		$	1,740,665	$	1,875		$	352,626		$	876,382		$	231,758		$	271,737		$	729,611		$	2,463,989		$	2,436,482

Weighted average interest rate on debt:
Fixed rate debt	5.10		%	5.05		%	7.29		%	4.62		%	2.73		%	4.08		%	3.79		%			4.39		%	3.47		%	4.81		%	4.06		%	3.83		%	4.02		%	3.89		%
Variable rate debt (e)	—			2.68		%	—			2.59		%	—			—			2.62		%			—			—			2.04		%	—			—			—			2.04		%
Total	5.10		%	2.78		%	7.29		%	2.63		%	2.73		%	4.08		%	3.60		%			4.39		%	3.47		%	2.12		%	4.06		%	3.83		%	4.02		%	3.25		%


(a)	Excludes mortgage ~~premium of $1,087 and~~ discount of ~~$(590)~~$(483) and capitalized loan fees of $(240), net of accumulated amortization, as of ~~September 30, 2017 and a $7,680 mortgage payable associated with one investment property classified as held for sale as of September 30, 2017.~~March 31, 2020.

(b)

~~$250,000~~Excludes capitalized loan fees of $(3,208), net of accumulated amortization, as of March 31, 2020. The following variable rate term loans have been swapped to fixed rate debt: (i) $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid through ~~two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a weighted average fixed rate of 0.67% through December 31, 2017. In addition,~~January 5, 2021; (ii) $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid through ~~two interest~~November 22, 2023; (iii) $120,000 of LIBOR-based variable rate ~~swaps. The swaps effectively convert one-month floating rate LIBOR~~debt has been swapped to a fixed rate of ~~1.26%~~1.68% plus a credit spread based on a leverage grid through ~~November 22, 2018.~~July 17, 2024; and (iv) $150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid through July 17, 2026. As of March 31, 2020, the applicable credit spread for (i), (ii) and (iii) was 1.20% and for (iv) was 1.50%.


(c)	Excludes discount of ~~$(882)~~$(586) and capitalized loan fees of $(2,994), net of accumulated amortization, as of ~~September 30, 2017.~~March 31, 2020.


(d)	The weighted average years to maturity of consolidated indebtedness was ~~5.4~~3.7 years as of September 30, 2017. Total debt excludes capitalized loan fees of $(7,283), net of accumulated amortization, as of September 30, 2017, which are included as a reduction to the respective debt balances.March 31, 2020.


(e)	Represents interest ~~rates~~rate as of ~~September 30, 2017.~~March 31, 2020.

Our unsecured debt agreements, consisting of the (i) unsecured credit agreement governing the Unsecured Credit Facility, (ii) amended term loan agreement governing the Term Loan Due 2023, (iii) term loan agreement governing the Term Loan Due 2024 and Term Loan Due 2026, (iv) note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024), (v) indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025), (vi) note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), and (vii) note purchase agreement governing the 4.82% senior unsecured notes due 2029 (Notes Due 2029), contain customary representations, warranties and covenants, and events of default. These include financial covenants such as (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage ratios; (iii) minimum fixed charge coverage ratios; (iv) minimum unencumbered interest coverage ratios; (v) minimum debt service coverage ratio; and (vi) minimum unencumbered assets to unsecured debt ratio. All financial covenants that include operating results, or derivations thereof, in the covenant calculations are based on the most recent four fiscal quarters of activity. As such, the impact of short-term relative adverse operating results, if any, on our financial covenants is partially mitigated by previous and/or subsequent operating results. As of March 31, 2020, management believes we were in compliance with the financial covenants and default provisions under the unsecured debt agreements.

We plan on addressing our debt maturities through a combination of ~~proceeds~~(i) cash flows from ~~asset dispositions,~~operations, (ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and (iii) capital markets ~~transactions and our unsecured revolving line of credit.~~transactions.

Distributions and Equity Transactions

Our distributions of current and accumulated earnings and profits for U.S. federal income tax purposes are taxable to shareholders, generally, as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction

of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. We intend to continue to qualify as a REIT for U.S. federal income tax purposes. The Internal Revenue Code of 1986, as amended (the Code) generally requires that a REIT annually distributes to its shareholders at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains. The Code imposes tax on any undistributed REIT taxable income.

To satisfy the requirements for qualification as a REIT and generally not be subject to U.S. federal income and excise tax, we intend to make ~~regular quarterly~~ distributions of all, or substantially all, of our taxable income to shareholders. Our future distributions will be at the discretion of our board of ~~directors.~~directors and are required to be declared 10 days prior to the record date. When determining the amount of future distributions, we expect to consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future cash flow, (iii) our determination of near-term cash needs for debt repayments and potential future share repurchases, (iv) the market of available acquisitions of new properties and redevelopment, ~~expansions~~expansion and pad development opportunities, (v) the timing of significant re-leasing activities and the establishment of additional cash reserves for anticipated tenant allowances and general property capital improvements, (vi) our ability to continue to access additional sources of capital, and (vii) the amount required to be

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distributed to maintain our status as a REIT, which is a requirement of our ~~Unsecured Credit Agreement,~~unsecured credit agreement, and to avoid or minimize any income and excise taxes that we otherwise would be required to ~~pay, and (viii) the amount required to declare and pay in cash, or set aside for the payment of, the dividends on our Series A preferred stock for all past dividend periods.~~pay. Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements.

In ~~December 2015, we entered into an at-the-market (ATM) equity program under which we may issue~~order to preserve and ~~sell shares~~enhance liquidity and capital positioning, our board of directors has temporarily suspended future quarterly dividend payments on our Class A common stock, having an aggregate offering price of up to $250,000, from time to time. Actual sales may depend on a variety of factors, including, among others, market conditions and the trading price of ouroutstanding Class A common stock. Any net proceeds are expected to be used for general corporate purposes, which may include the funding of acquisitions and redevelopment activities and the repayment of debt, including our unsecured revolving line of credit. We did not sell any shares under our ATM equity program during the nine months ended September 30, 2017. As of ~~September 30, 2017, we had Class A common shares having an aggregate offering price of up to $250,000 remaining available for sale under our ATM equity program.~~

~~In December 2015, our~~Our board of directors ~~authorized a~~will evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on our operating cash flow performance as well as other factors.

We have an existing common stock repurchase program under which we may repurchase, from time to time, up to a maximum of ~~$250,000~~$500,000 of shares of our Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions and are canceled upon repurchase. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of our assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program may be suspended or terminated at any time without prior notice.

~~The following table presents activity under~~ We did not repurchase any shares during the three months ended March 31, 2020. As of March 31, 2020, $189,105 remained available for repurchases of shares of our common stock ~~repurchase program during the nine months ended September 30, 2017:~~


~~(a)~~	~~Includes 396 shares repurchased in September 2017 at an average price per share of $13.08 for a total of $5,187, which settled on October 2, 2017.~~

~~As of September 30, 2017, $115,570 remained available~~ under our common stock repurchase program.

Capital Expenditures and Redevelopment Activity

We anticipate that obligations related to capital improvements and redevelopments, including expansions and pad developments, ~~at our operating properties and our one remaining office property in 2017~~ can be met with (i) cash flows from operations, ~~asset dispositions~~(ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and ~~working capital.~~(iii) capital markets transactions.

~~We began~~As of March 31, 2020, we have active expansion and redevelopment ~~activities~~projects at ~~Reisterstown Road Plaza~~Circle East, One Loudoun Downtown, The Shoppes at Quarterfield and ~~Towson Circle in 2016. We~~a vacant pad development at Southlake Town Square. To date, we have invested a total of approximately ~~$18,600~~$45,000 in these projects, which is net of proceeds of $11,820 from the sale of air rights at Circle East and net of contributions from our joint venture partner at One Loudoun Downtown. These projects are at various stages of completion, and based on our current plans and estimates, we anticipate that it will require approximately $133,000 to $147,000 of additional investment from us to complete these projects. During the three months ended March 31, 2020, we halted plans for vertical construction at our Carillon redevelopment in response to current macroeconomic conditions due to the impact of the COVID-19 pandemic and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately $75,000 to $100,000. As of March 31, 2020, we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to complete the site work preparation during 2020 for an expected additional capital investment of approximately $4,500.

We capitalized $626 and $675 of internal salaries and related benefits of personnel directly involved in capital upgrades and tenant improvements during the three months ended March 31, 2020 and 2019, respectively. We also capitalized $60 and $54 of internal leasing incentives, all of which were incremental to signed leases, during the three months ended March 31, 2020 and 2019, respectively.

In addition, we capitalized $1,316 and $574 of indirect project costs, which includes, among other costs, $372 and $365 of internal salaries and related benefits of personnel directly involved in the redevelopment projects ~~it will require an additional $23,900~~and $785 and $144 of interest, related to ~~$26,900, net of proceeds from land sales, reimbursement from third parties~~expansion and ~~contributions from a project partner, as applicable. We anticipate funding~~redevelopment projects during the ~~redevelopments with cash flows from operations, asset dispositions, working capital~~three months ended March 31, 2020 and ~~proceeds from our unsecured revolving line of credit.~~2019, respectively.

Dispositions

~~We continue to execute our portfolio repositioning strategy of disposing of select non-target and single-user properties.~~ The following table highlights our property dispositions during ~~2016~~2019 and the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020:

Number of
Properties Sold (a)

Square
Footage
Consideration
Aggregate
Proceeds, Net (b)

Debt
Extinguished

2017 Dispositions (through September 30, 2017) 35
4,302,400
$ 642,712
$ 562,433
$ 19,691
(c)
2016 Dispositions 46
3,013,900
$ 540,362
$ 448,216
$ 94,353
(c) (d)

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	Number of Properties Sold	Square Footage	Consideration		Aggregate Proceeds, Net (a)		Debt Extinguished
2020 Disposition (through March 31, 2020)	1	105,900	$	13,900	$	11,343	$	—
2019 Dispositions	2	236,100	$	44,750	$	39,594	$	—


(a)	2017 dispositions include the disposition of CVS Pharmacy – Sylacauga and the Home Depot parcel at Century III Plaza, both of which were classified as held for sale as of December 31, 2016. 2016 dispositions include the disposition of one development property, which was not under active development.


~~(b)~~	Represents total consideration net of transaction costs, as well as capital and ~~proceeds temporarily restricted related to potential 1031 Exchanges. 2017 dispositions exclude proceeds of $65,086 which are temporarily restricted related to potential 1031 Exchanges.~~


~~(c)~~	~~Excludes $155,011 and $10,695 of mortgages payable repayments or defeasances completed prior to disposition of the respective property for the~~ ~~nine~~ ~~months ended September 30, 2017 and year ended December 31, 2016, respectively.~~

~~(d)~~

~~Represents The Gateway’s outstanding mortgage payable prior~~tenant-related costs credited to the ~~lender-directed sale of the property. Immediately prior to the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the~~ buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653.at close, as applicable.

In addition to the transactions presented in the preceding table, during the ~~nine months ended September 30, 2017, we received escrow funds related to a 2016 property disposition and a condemnation award, which resulted in net proceeds totaling $1,636. During the~~ year ended December 31, ~~2016,~~2019, we ~~also~~ received net proceeds of ~~$2,549 from~~$5,062 in connection with the second and third phases of the sale of a ~~single-user outparcel.~~land parcel, which included rights to develop 22 residential units, at One Loudoun Downtown.

Acquisitions

~~We continue to execute our investment strategy of acquiring high quality, multi-tenant retail assets within our target markets.~~ The following table highlights our asset acquisitions during ~~2016~~2019 and the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

Number of
Assets Acquired

Square
Footage

Acquisition
Price

Mortgage
Debt
2017 Acquisitions (through September 30, 2017) (a) 8
331,400
$ 147,586
$ —
2016 Acquisitions (b) 9
1,102,300
$ 408,308
$ 15,971



	Number of Assets Acquired	Square Footage	Acquisition Price		Mortgage Debt
2020 Acquisition (through March 31, 2020) (a)	1	154,700	$	55,000	$	—
2019 Acquisitions (b)	3	73,600	$	29,976	$	—

(a)

~~2017 acquisitions include the purchase of the following: 1)~~2020 acquisition is the fee interest in our ~~Boulevard at the Capital Centre~~Fullerton Metrocenter multi-tenant retail operating ~~property that was previously subject to~~property. In connection with this acquisition, we also assumed the lessor position in a ground lease with a third party and 2) the remaining five phases under contract, including the development rights for additional multi-family units, at our One Loudoun Downtown multi-tenant retail operating property that was acquired in phases as the seller completed construction on stand-alone buildings at the property.shadow anchor. The total number of properties in our portfolio was not affected by ~~these transactions.~~this transaction.

(b)

~~2016~~In addition to the acquisition of one multi-tenant retail operating property, 2019 acquisitions include the purchase of the ~~following: 1) the fee interest in~~following that did not affect our ~~Ashland & Roosevelt~~property count: (i) a parcel adjacent to our Paradise Valley Marketplace multi-tenant retail operating property ~~that was previously subject to~~and (ii) a ~~ground lease with a third party and 2) the anchor space improvements~~single-user parcel at our ~~Woodinville Plaza~~Southlake Town Square multi-tenant retail operating ~~property that was previously subject to a ground lease with us. The total number of properties in our portfolio was not affected by these transactions.~~property.

Summary of Cash Flows

Nine Months Ended September 30,
2017 2016 Change
Net cash provided by operating activities $ 181,678
$ 205,008
$ (23,330 )
Net cash provided by (used in) investing activities 374,548
(8,254 ) 382,802
Net cash used in financing activities (579,693 ) (179,107 ) (400,586 )
(Decrease) increase in cash and cash equivalents (23,467 ) 17,647
(41,114 )
Cash and cash equivalents, at beginning of period 53,119
51,424

Cash and cash equivalents, at end of period $ 29,652
$ 69,071



	Three Months Ended March 31,
	2020			2019			Change
Net cash provided by operating activities	$	35,042		$	36,955		$	(1,913	)
Net cash used in investing activities	(70,507		)	(28,186		)	(42,321		)
Net cash provided by (used in) financing activities	795,382			(10,830		)	806,212
Increase (decrease) in cash, cash equivalents and restricted cash	759,917			(2,061		)	761,978
Cash, cash equivalents and restricted cash, at beginning of period	14,447			19,601
Cash, cash equivalents and restricted cash, at end of period	$	774,364		$	17,540

Cash Flows from Operating Activities

Cash flows from operating activities consist primarily of net income from property operations, adjusted for the following, among others: (i) depreciation and amortization, (ii) provision for impairment of investment properties and (iii) gain on sales of investment ~~properties, and (iv) gains on extinguishment of debt and other liabilities.~~properties. Net cash provided by operating activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 decreased ~~$23,330~~$1,913 primarily due to the following:

a ~~$31,078~~$937 increase in cash paid for leasing fees and inducements;

a $337 increase in cash bonuses paid related to the results of 2019; and

ordinary course fluctuations in working capital accounts;

partially offset by

a $1,953 decrease in cash paid for interest; and

an $813 increase in NOI, consisting of an increase in Same Store NOI of $979, partially offset by a decrease in NOI from properties that were sold or held for sale in ~~2016~~2019 and ~~2017~~2020 and other properties not included in our same store portfolio of ~~$34,917, partially offset~~$166.

During the three months ended March 31, 2020, we distributed $35,387 to common shareholders, which is $345 in excess of net cash provided by ~~an increase in Same Store NOI~~operating activities during the period. This is primarily driven by the timing of ~~$3,839; and~~

~~a $5,810 increase in cash paid for leasing fees and inducements;~~

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~~partially offset by~~

~~a $12,243 decrease in cash paid for interest;~~

~~a $758 decrease in cash bonuses paid; and~~

ordinary course ~~fluctuations~~annual real estate tax payments. We used existing cash and cash equivalents in addition to net cash flows provided by operating activities to fund such distributions.

As a result of COVID-19, a number of our tenants have announced temporary closures of their stores or modifications of their operations. While working ~~capital accounts.~~to preserve our cash flow, we are also working with our tenants regarding requests for lease concessions. While we have not yet reached agreement with tenants regarding concession requests, certain tenants have not paid or only partially paid their April rent and other charges. As of April 30, 2020, we have collected more than 52% of April rent charges. We will continue to work with tenants regarding lease concession requests, which may or may not include some element of rent deferral and, in some cases, partial rent abatement. While seeking to work toward a mutually agreeable outcome with tenants directly impacted by COVID-19, we believe that certain tenants, which remain open and hold an ability to pay, have elected to withhold April rent unnecessarily. We are not forgoing our contractual rights under our lease agreements and our tenants do not have a clear contractual right to cease paying rent due to government closures. However, COVID-19 and the related governmental orders present fairly novel situations and it is possible government action could impact our rights.

Management believes that cash flows from operations and existing cash and cash equivalents will provide sufficient liquidity to sustain future operations; however, we cannot provide any such assurances.

Cash Flows from Investing Activities

Cash flows from investing activities consist primarily ~~of proceeds from the sales of investment properties, net~~ of cash paid to purchase investment properties and fund capital expenditures, tenant improvements and developments in progress, ~~in addition to changes in restricted escrows.~~net of proceeds from the sales of investment properties. Net cash flows from investing activities during the ~~nine~~three months ended ~~September 30, 2017 increased $382,802 primarily~~March 31, 2020 decreased $42,321 due to the following:

a ~~$256,714~~$29,766 increase in cash paid to purchase investment properties;

a $10,262 decrease in proceeds from the sales of investment properties;

~~a $119,667 decrease in cash paid to purchase investment properties;~~ and

a ~~$26,818 net change in restricted escrow activity;~~

~~partially offset by~~

~~a $10,845~~$6,874 increase in investment in developments in progress; ~~and~~

partially offset by

a ~~$9,358 increase~~$4,581 decrease in capital expenditures and tenant improvements.

~~We will continue~~For 2020, we expect to execute our investment strategy by pursuing targeted dispositions. The majority of the proceeds from disposition activity for the remainder of 2017 is expected to be used to acquire high quality, multi-tenant retail assets within our target markets, fund redevelopment, expansion and pad development activities, ~~repay debt, repurchase our common stock~~capital expenditures and ~~redeem our preferred stock. In addition,~~ tenant ~~improvement costs associated with re-leasing vacant space may continue to be significant.~~improvements through (i) cash flows generated from operations, (ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and (iii) capital markets transactions.

Cash Flows from Financing Activities

Cash flows from financing activities primarily consist of proceeds from our unsecured revolving line of credit, ~~and the issuance of debt instruments,~~ partially offset by ~~distribution payments,~~(i) repayments of our unsecured revolving line of credit, ~~and other debt instruments,~~(ii) distribution payments, (iii) principal payments on mortgages payable ~~the purchase~~and (iv) payment of ~~U.S. Treasury securities in connection with defeasance of mortgages payable~~loan fees and ~~repurchases of our common stock.~~deposits. Net cash flows from financing activities during the ~~nine~~three months ended ~~September 30, 2017 decreased $400,586~~March 31, 2020 increased $806,212 primarily due to the following:

an $805,704 change in the ~~$439,403 purchase of U.S. Treasury securities in connection with defeasance of the IW JV portfolio of mortgages payable during the~~ ~~nine~~ ~~months ended September 30, 2017;~~

~~$120,402 paid in 2017 to repurchase common shares through our share repurchase program;~~

~~the repayment of $100,000~~activity on our unsecured ~~term loan due 2018~~revolving line of credit from net proceeds of $26,000 during the ~~nine~~three months ended ~~September 30, 2017;~~

~~a $100,000 decrease in~~March 31, 2019 compared to net proceeds ~~from the issuance~~ of ~~unsecured notes related to a $100,000 private placement transaction~~$831,704 during the ~~nine~~three months ended ~~September 30, 2016;~~March 31, 2020; and

a ~~$52,784 increase~~$145 decrease in principal payments on mortgages ~~payable;~~

~~partially offset by~~

~~a $201,000 increase in net proceeds from our unsecured revolving line of credit;~~

~~$200,000 of proceeds from the Term Loan Due 2023, which funded in January 2017;~~

~~a $6,376 decrease in the payment of loan fees and deposits; and~~

~~Table of Contents~~

a $3,545 decrease in distributions paid as a result of the timing of the third quarter preferred distribution payment and a decrease in common shares outstanding due to the repurchase of common shares through our share repurchase program.payable.

We plan to continue to address our debt maturities through a combination of ~~proceeds~~(i) cash flows from ~~asset dispositions,~~operations, (ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and (iii) capital markets ~~transactions and our unsecured revolving line of credit.~~transactions.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, except as otherwise disclosed herein, there were no material changes outside the normal course of business to the contractual obligations identified in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

Critical Accounting Policies and Estimates

Our ~~2016~~2019 Annual Report on Form 10-K contains a description of our critical accounting policies, including those relating to the acquisition of investment properties, impairment of long-lived assets and unconsolidated joint ventures, cost capitalization, depreciation and amortization, development and redevelopment, investment properties held for sale, partially-owned entities, revenue recognition, accounts and notes receivable and allowance for doubtful accounts and income taxes.lease income. For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020, there were no significant changes to these policies.

Impact of Recently Issued Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies ~~to our~~in the accompanying condensed consolidated financial statements ~~contained herein~~ regarding recently issued accounting pronouncements.

Subsequent Events

Subsequent to ~~September 30, 2017,~~March 31, 2020, we:

~~closed on~~terminated the ~~disposition~~joint venture related to the medical office building portion of ~~Forks Town Center, a 100,300 square foot multi-tenant retail operating property located in Easton, Pennsylvania, which was classified as held~~the redevelopment at Carillon; and

executed amendments to our unsecured debt agreements for ~~sale as of September 30, 2017, for a sales price of $23,800 with an anticipated gain on sale. The mortgage payable, with a principal balance of $7,680 as of September 30, 2017~~our Unsecured Credit Facility, Term Loan Due 2023, Term Loan Due 2024 and ~~an interest rate of 7.70%, was repaid in conjunction with~~Term Loan Due 2026 that changed the ~~disposition;~~

closed on the disposition of Placentia Town Center, a 111,000 square foot multi-tenant retail operating property located in Placentia, California, which was classified as held for sale as of September 30, 2017, for a sales price of $35,725 with an anticipated gain on sale;

closed on the disposition of Saucon Valley Square, a 80,700 square foot multi-tenant retail operating property located in Bethlehem, Pennsylvania, which was classified as held for sale as of September 30, 2017, for a sales price of $6,300 with no anticipated gain on sale or additional impairment due to previously recognized impairment charges;

announced that we will redeem all 5,400 outstanding shares of our 7.00% Series A cumulative redeemable preferred stock on December 20, 2017 for cash at a redemption price of $25.00 per preferred share, plus $0.3840 per preferred share representing all accrued and unpaid dividends up to, but excluding, December 20, 2017; and

~~declared the cash dividend~~covenant calculation for the ~~fourth quarter~~unencumbered interest coverage ratio to include operating results from the most recent four fiscal quarters. Prior to these amendments, the calculation only included operating results from the most recent fiscal quarter. As a result, the updated calculation applies to all unsecured debt instruments to which this covenant relates, including our unsecured revolving line of ~~2017~~credit, all unsecured term loans and all unsecured private placement notes payable.

On May 1, 2020, our board of ~~$0.165625 per share~~directors temporarily suspended future quarterly dividend payments on our outstanding Class A common stock ~~which~~in order to preserve and enhance liquidity and capital positioning. Our board of directors will ~~be paid~~evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on ~~January 10, 2018 to Class A common shareholders of record at the close of business on December 27, 2017.~~our operating cash flow performance as well as other factors.

~~Table of Contents~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We may be exposed to interest rate changes primarily as a result of our long-term debt that is used to maintain liquidity and fund our operations. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we borrow primarily at fixed rates, and in some cases variable rates with the ability to convert to fixed rates.

With regard to variable rate financing, we assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We maintain risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates on our future cash flows.

As of ~~September 30, 2017~~March 31, 2020, we had ~~$450,000~~$720,000 of variable rate debt based on LIBOR that has been swapped to fixed rate debt through interest rate swaps. Our interest rate swaps as of ~~September 30, 2017~~March 31, 2020 are summarized in the following table:


	Notional Amount		Termination Date	Fair Value of Derivative Asset		Notional Amount		Maturity Date	Fair Value of Derivative Liability
Fixed rate portion of Unsecured Credit Facility	$	250,000	December 31, 2017	$	367
Unsecured credit facility term loan due 2021						$	250,000	January 5, 2021	$	3,158
Term Loan Due 2023	200,000		November 22, 2018	524		200,000		November 22, 2023	18,124
Term Loan Due 2024						120,000		July 17, 2024	6,672
Term Loan Due 2026						150,000		July 17, 2026	11,916
	$	450,000		$	891	$	720,000		$	39,870

For a discussion concerning the scheduled debt maturities and principal amortization of our indebtedness as of ~~September 30, 2017~~March 31, 2020 for the remainder of ~~2017,~~2020, each of the next four years and thereafter and the weighted average interest rates by year to evaluate the expected cash flows and sensitivity to interest rate changes, refer to Note ~~6 to~~7 – Debt in the accompanying condensed consolidated financial statements and Part I, “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt ~~Maturities.”~~Maturities” contained herein.

A decrease of 1% in market interest rates would result in a hypothetical ~~decrease~~increase in our derivative ~~asset~~liability of approximately ~~$2,559.~~$25,013.

The combined carrying amount of our ~~mortgages payable, unsecured notes payable, Term Loan Due 2023 and Unsecured Credit Facility~~debt is approximately ~~$23,056 lower~~$19,996 higher than the fair value as of ~~September 30, 2017~~March 31, 2020.

We had ~~$287,000~~$849,704 of variable rate debt, excluding ~~$450,000~~$720,000 of variable rate debt that has been swapped to fixed rate debt, with an interest ~~rates varying~~rate of 2.04% based upon LIBOR ~~with a weighted average interest rate of 2.62%~~ as of ~~September 30, 2017.~~March 31, 2020. An increase in the variable interest rate on this debt constitutes a market risk. If interest rates increase by 1% based on debt outstanding as of ~~September 30, 2017,~~March 31, 2020, interest expense would increase by approximately ~~$2,870~~$8,497 on an annualized basis.

We may use additional derivative financial instruments to hedge exposures to changes in interest rates. To the extent we do, we are exposed to market and credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, we generally are not exposed to the credit risk of the counterparty. We minimize credit risk in derivative instruments by entering into transactions with highly rated counterparties or with the same party providing the financing, with the right of offset.

~~Table~~When LIBOR is discontinued, the interest rate for certain of ~~Contents~~

our debt instruments, including our unsecured credit facility term loan due 2021, unsecured credit facility revolving line of credit, Term Loan Due 2023, Term Loan Due 2024 and Term Loan Due 2026, and interest rate swap agreements that are indexed to LIBOR will be based on a replacement rate or an alternate base rate as specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings or swaps, but the replacement rate or alternate base rate could be higher or more volatile than LIBOR prior to its discontinuance. We understand that LIBOR is expected to remain available through the end of 2021.

ITEM 4. CONTROLS AND PROCEDURES

We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to the members of senior management and the board of directors.

Based on management’s evaluation as of ~~September 30, 2017~~March 31, 2020, our ~~President,~~ Chief Executive Officer and ~~Treasurer and Interim Principal~~our Executive Vice President, Chief Financial Officer ~~has~~and Treasurer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of ~~1934)~~1934, as amended) are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our ~~President,~~ Chief Executive Officer and ~~Treasurer~~our Executive Vice President, Chief Financial Officer and ~~Interim Principal Financial Officer,~~Treasurer, to allow timely decisions regarding required disclosure.

There were no changes to our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended ~~September 30, 2017~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

~~Table of Contents~~

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, we believe, based on currently available information, that the final outcome of such matters will not have a material effect on our condensed consolidated financial statements.

ITEM 1A. RISK FACTORS

Except to the extent updated below or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such factors (including, without limitation, the matters discussed in Part I,I. “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there have been no material changes to our risk factors during the three months ended ~~September 30, 2017~~March 31, 2020 compared to those risk factors presented in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2019:

The current novel coronavirus (COVID-19) pandemic and measures intended to prevent its spread has caused, and could continue to cause, severe disruptions in the U.S., regional and global economies, and could materially and adversely impact our cash flow, financial condition and results of operations.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. COVID-19 has caused, and could continue to cause, significant disruptions to the U.S. and global economy and has contributed to significant volatility and negative pressure in the financial markets. The global impact of the COVID-19 outbreak has been rapidly evolving and many U.S. states and cities, including where we own properties and/or have development sites, have imposed measures intended to control its spread, such as instituting “shelter-in-place” rules and restrictions on the types of businesses that may continue to operate and/or the types of construction projects that may continue. As a result of these measures, a number of our tenants have announced temporary closures of their stores or modifications of their operations and requested lease concessions. In addition, in response to macroeconomic conditions, we halted plans for vertical construction at our Carillon redevelopment and temporarily suspended future quarterly dividend payments. Furthermore, we withdrew guidance for 2020 and nearly fully drew on our $850,000 unsecured revolving line of credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets.

The extent to which COVID-19 impacts our business, operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of such pandemic, actions taken to contain the pandemic or mitigate its impact, all of which could vary by geographic region in which our properties are located. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of COVID-19. Nevertheless, COVID-19 may materially adversely affect our cash flow, financial condition and results of operations, and it may also have the effect of heightening many of the risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019, including:

a complete or partial closure of, or a decrease in customer traffic at, one or more of our properties, which has and could continue to adversely affect our operations and those of our tenants;

reduced economic activity impacting the businesses, financial condition and liquidity of our tenants, which has caused and could continue to cause one or more of our tenants, including certain significant tenants, to be unable to meet their rent payment or other obligations to us in full, or at all, or to otherwise seek modifications of such obligations or declare bankruptcy;

decreases in consumer discretionary spending and consumer confidence during the pandemic, as well as a decrease in individuals’ willingness to frequent our properties once reopened as a result of the public health risks and social impacts of such outbreak, which could affect the ability of our properties to generate sufficient revenues to meet operating and other expenses in the short and long term;

inability to renew leases, lease vacant space or re-let space as leases expire on favorable terms, or at all, which could cause interruptions or delays in the receipt of rental payments or the non-receipt of rental payments;

state, local or industry-initiated efforts, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions, which may affect our ability to collect rent or enforce remedies for the failure to pay rent;

severe disruption and instability in the U.S. and global financial markets or deteriorations in credit and financing conditions, which may affect our ability to access capital on attractive terms or at all;

a reduction in cash flows, which could impact our ability to pay dividends to our stockholders;

our ability to remain in compliance with the financial covenants set forth in our unsecured credit agreement and other debt agreements, which non-compliance could result in a default and, potentially, an acceleration of such indebtedness;

a general decline in business activity and demand for real estate transactions, which could adversely affect the value of our portfolio and our ability or desire to make strategic acquisitions or dispositions;

disruptions in the supply of materials or products or the inability of contractors to perform on a timely basis or at all, including as a result of restrictions on construction activity due to containment measures, which could cause delays in completing ongoing or future construction, expansion or redevelopment projects;

the potential negative impact on the health of our employees or the employees of our tenants, particularly if a significant number of our or their executive management team or key employees are impacted, which could result in a deterioration in our and our tenants’ ability to ensure business continuity during a disruption;

any inability to effectively manage our portfolio and operations while working remotely during the COVID-19 pandemic and for a time after such pandemic, which could adversely impact our business; and

the limited access to our facilities, management, tenants, support staff and professional advisors, which could decrease the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, increase our susceptibility to security breaches, or hamper our ability to comply with regulatory obligations leading to reputational harm and regulatory issues or fines.

There have been no other material changes to our risk factors during the three months ended March 31, 2020 compared to those risk factors presented in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


(a)	Not applicable.


(b)	Not applicable.


(c)	Issuer Purchases of Equity Securities

The following table summarizes ~~our common stock repurchases during~~ the ~~quarter ended September 30, 2017, including, where applicable,~~number of shares of Class A common stock surrendered to the Company by employees to satisfy their tax withholding obligations in connection with the vesting of common stock and restricted shares for the specified periods and amounts outstanding under our common stock repurchase ~~program.~~program:

Period
Total number
of shares of
Class A common
stock purchased

Average price
paid per share
of Class A
common stock

Total number of
shares purchased
as part of publicly
announced plans
or programs

Maximum number
(or approximate dollar
value) of shares that
may yet be purchased
under the plans
or programs (a)
July 1, 2017 to July 31, 2017 —
$ —
—
$ 165,462
August 1, 2017 to August 31, 2017 1,466
$ 13.15
1,462
$ 146,207
September 1, 2017 to September 30, 2017 (b) 2,343
$ 13.06
2,343
$ 115,570
Total 3,809
$ 13.09
3,805
$ 115,570



Period	Total number of shares of Class A common stock purchased	Average price paid per share of Class A common stock		Total number of shares purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (a)
January 1, 2020 to January 31, 2020	34	$	13.07	N/A	$	189,105
February 1, 2020 to February 29, 2020	55	$	12.53	N/A	$	189,105
March 1, 2020 to March 31, 2020	30	$	10.47	N/A	$	189,105
Total	119	$	12.16	N/A	$	189,105


(a)	As disclosed on the Current Reports on Form 8-K dated December 15, 2015 and December 14, 2017, this value represents the amount outstanding under our ~~$250,000~~$500,000 common stock repurchase program, which has no scheduled expiration date.


~~(b)~~	~~Includes 396 shares repurchased in September 2017 at an average price per share of $13.08 for a total of $5,187, which settled on October 2, 2017.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~None.~~On May 4, 2020, following a review of the covenants included in our unsecured debt agreements, we entered into (i) the First Amendment to our unsecured credit agreement, with KeyBank National Association, a national banking association, as administrative agent and certain lenders from time to time party thereto, as lenders, (ii) the Third Amendment to our term loan agreement governing the Term Loan Due 2023, with Capital One, National Association, a national banking association, as administrative agent and certain lenders from time to time party thereto, as lenders, and (iii) the First Amendment to our term loan agreement governing the Term Loan Due 2024 and Term Loan Due 2026, with KeyBank National Association, a national banking association, as administrative agent and certain lenders from time to time party thereto, as lenders.

Each of the amendments changed the covenant calculation for the unencumbered interest coverage ratio to include operating results from the most recent four fiscal quarters. Prior to these amendments, the calculation only included operating results from the most recent fiscal quarter.

50The foregoing summary is qualified in its entirety by reference to the copies of the amendments, which are filed with this report as Exhibits 10.1, 10.2 and 10.3 and are incorporated herein by reference.

~~Table of Contents~~

ITEM 6. EXHIBITS



Exhibit No.		Description

10.1		First Amendment to Fifth Amended and Restated Agreement, dated as of May 4, 2020, by and among the Registrant as Borrower and KeyBank National Association as Administrative Agent and certain lenders from time to time parties hereto, as Lenders (filed herewith).
10.2		Third Amendment to Term Loan Agreement, dated as of May 4, 2020, by and among the Registrant as Borrower and Capital One, National Association as Administrative Agent and certain lenders from time to time parties hereto, as Lenders (filed herewith).
10.3		First Amendment to Term Loan Agreement, dated as of May 4, 2020, by and among the Registrant as Borrower and KeyBank National Association as Administrative Agent and certain lenders from time to time parties hereto, as Lenders (filed herewith).
31.1		Certification of ~~President,~~ Chief Executive ~~Officer and Treasurer and Interim Principal Financial~~ Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
31.2		Certification of Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
32.1		Certification of ~~President,~~ Chief Executive Officer and ~~Treasurer~~Executive Vice President, Chief Financial Officer and ~~Interim Principal Financial Officer~~Treasurer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 (furnished herewith).
~~101~~101.SCH		~~Attached~~Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104		Cover Page Interactive Data File (formatted as ~~Exhibit 101 to this report are the following formatted~~inline XBRL with applicable taxonomy extension information contained in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) Income for the Three-Month Periods and Nine-Month Periods Ended September 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Equity for the Nine-Month Periods Ended September 30, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2017 and 2016, and (v) Notes to Condensed Consolidated Financial Statements.Exhibits 101.^*) (filed herewith).

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RETAIL PROPERTIES OF AMERICA, INC.



By:	/s/ STEVEN P. GRIMES

	Steven P. Grimes
	~~President,~~ Chief Executive Officer ~~and Treasurer~~
	(Principal Executive ~~Officer and Interim Principal Financial~~ Officer)
Date:	~~November 1, 2017~~	May 6, 2020

By:	/s/ JULIE M. SWINEHART

	Julie M. Swinehart
	Executive Vice President,
	~~Senior Vice President~~Chief Financial Officer and ~~Chief Accounting Officer~~Treasurer
	(Principal Financial Officer and
	Principal Accounting Officer)
Date:	~~November 1, 2017~~	May 6, 2020

5247



PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2723

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4842

Item 4.	Controls and Procedures	4943

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	5044

Item 1A.	Risk Factors	5044

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5045

Item 3.	Defaults Upon Senior Securities	5045

Item 4.	Mine Safety Disclosures	5045

Item 5.	Other Information	5046

Item 6.	Exhibits	5146

SIGNATURES		5247



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues
Rental income	$	100,977		$	113,627		$	316,968		$	344,081
Tenant recovery income	28,024			29,130			88,334			89,140
Other property income	1,518			1,769			6,249			7,170
Total revenues	130,519			144,526			411,551			440,391

Expenses
Operating expenses	19,572			20,285			62,440			63,438
Real estate taxes	21,863			19,937			65,229			60,966
Depreciation and amortization	51,469			56,763			157,268			163,602
Provision for impairment of investment properties	45,822			4,742			58,856			11,048
General and administrative expenses	7,785			11,110			29,368			33,289
Total expenses	146,511			112,837			373,161			332,343

Operating (loss) income	(15,992		)	31,689			38,390			108,048

Gain on extinguishment of debt	—			—			—			13,653
Gain on extinguishment of other liabilities	—			—			—			6,978
Interest expense	(21,110		)	(25,602		)	(128,077		)	(78,343		)
Other (expense) income, net	(76		)	22			380			449
(Loss) income from continuing operations	(37,178		)	6,109			(89,307		)	50,785
Gain on sales of investment properties	73,082			66,385			230,874			97,737
Net income	35,904			72,494			141,567			148,522
Preferred stock dividends	(2,362		)	(2,362		)	(7,087		)	(7,087		)
Net income attributable to common shareholders	$	33,542		$	70,132		$	134,480		$	141,435

Earnings per common share – basic
Net income per common share attributable to common shareholders	$	0.15		$	0.30		$	0.58		$	0.60
Earnings per common share – diluted
Net income per common share attributable to common shareholders	$	0.15		$	0.30		$	0.57		$	0.60

Net income	$	35,904		$	72,494		$	141,567		$	148,522
Other comprehensive (loss) income:
Net unrealized (loss) gain on derivative instruments (Note 9)	(323		)	666			164			189
Comprehensive income attributable to the Company	$	35,581		$	73,160		$	141,731		$	148,711

Weighted average number of common shares outstanding – basic	229,508			236,783			233,348			236,692

Weighted average number of common shares outstanding – diluted	230,104			237,108			233,949			236,983



	Preferred Stock			Class A Common Stock					Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity
	Shares	Amount		Shares		Amount			Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity
Balance as of January 1, 2016	5,400	$	5	237,267		$	237		$	4,931,395		$	(2,776,215	)	$	(85	)	$	2,155,337
Cumulative effect of accounting change	—	—		—		—			17			(17		)	—			—
Net income	—	—		—		—			—			148,522			—			148,522
Other comprehensive income	—	—		—		—			—			—			189			189
Distributions declared to preferred shareholders ($1.3125 per share)	—	—		—		—			—			(7,087		)	—			(7,087		)
Distributions declared to common shareholders ($0.496875 per share)	—	—		—		—			—			(117,946		)	—			(117,946		)
Issuance of common stock, net of offering costs	—	—		—		—			(100		)	—			—			(100		)
Issuance of restricted shares	—	—		269		—			—			—			—			—
Exercise of stock options	—	—		2		—			23			—			—			23
Stock-based compensation expense, net of forfeitures	—	—		(10	)	—			5,296			—			—			5,296
Shares withheld for employee taxes	—	—		(152	)	—			(2,250		)	—			—			(2,250		)
Balance as of September 30, 2016	5,400	$	5	237,376		$	237		$	4,934,381		$	(2,752,743	)	$	104		$	2,181,984

Balance as of January 1, 2017	5,400	$	5	236,770		$	237		$	4,927,155		$	(2,776,033	)	$	722		$	2,152,086
Net income	—	—		—		—			—			141,567			—			141,567
Other comprehensive income	—	—		—		—			—			—			164			164
Distributions declared to preferred shareholders ($1.3125 per share)	—	—		—		—			—			(7,087		)	—			(7,087		)
Distributions declared to common shareholders ($0.496875 per share)	—	—		—		—			—			(115,306		)	—			(115,306		)
Shares repurchased through share repurchase program	—	—		(9,433	)	(10		)	(125,579		)	—			—			(125,589		)
Issuance of restricted shares	—	—		285		—			—			—			—			—
Stock-based compensation expense, net of forfeitures	—	—		(34	)	—			4,483			—			—			4,483
Shares withheld for employee taxes	—	—		(92	)	—			(1,380		)	—			—			(1,380		)
Balance as of September 30, 2017	5,400	$	5	227,496		$	227		$	4,804,679		$	(2,756,859	)	$	886		$	2,048,938



	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
Total revenues	$	144,526	$	444,622
Net income	$	72,494	$	147,421
Net income attributable to common shareholders	$	70,132	$	140,334
Earnings per common share – basic and diluted
Net income per common share attributable to common shareholders	$	0.30	$	0.59
Weighted average number of common shares outstanding – basic	236,783		236,692



Property Name	Proceeds Temporarily Restricted
Phenix Crossing	$	12,324
Irmo Station	15,643
Northwoods Center	23,255
West Town Market	13,864
	$	65,086



	Unvested Restricted Shares		Weighted Average Grant Date Fair Value per Restricted Share
Balance as of January 1, 2017	542		$	15.28
Shares granted (a)	285		$	14.60
Shares vested	(282	)	$	15.45
Shares forfeited	(34	)	$	15.12
Balance as of September 30, 2017 (b)	511		$	14.82



	Unvested RSUs		Weighted Average Grant Date Fair Value per RSU
RSUs eligible for future conversion as of January 1, 2017	391		$	14.02
RSUs granted (a)	253		$	15.52
RSUs ineligible for conversion	(89	)	$	14.68
RSUs eligible for future conversion as of September 30, 2017 (b)	555		$	14.60



	September 30, 2017						December 31, 2016
	Aggregate Principal Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity	Aggregate Principal Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	288,252		4.99	%	5.5	$	773,395		6.31	%	4.2
Premium, net of accumulated amortization	1,087						1,437
Discount, net of accumulated amortization	(590		)				(622		)
Capitalized loan fees, net of accumulated amortization	(649		)				(5,026		)
Mortgages payable, net	$	288,100					$	769,184



Derivatives in Cash Flow Hedging Relationships	Amount of (Gain) Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)						Location of (Gain) Loss Reclassified from Accumulated Other Comprehensive Income (AOCI) into Income (Effective Portion)	Amount of (Gain) Loss Reclassified from AOCI into Income (Effective Portion)						Location of Loss (Gain) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Loss (Gain) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended September 30,			Nine Months Ended September 30,
2017	$	(9	)	$	(422	)	Interest expense	$	(332	)	$	(258	)	Other (expense) income, net	$	5		$	16
2016	$	(534	)	$	153		Interest expense	$	132		$	342		Other (expense) income, net	$	(38	)	$	(35	)



	Number of Common Shares Repurchased	Average Price per Share		Total Repurchases
First quarter 2017	—	$	—	$	—
Second quarter 2017	6,024	$	12.55	$	75,697
Third quarter 2017 (a)	3,805	$	13.09	$	49,892
Year to date September 30, 2017	9,829	$	12.76	$	125,589



	September 30, 2017			September 30, 2016
Number of properties for which indicators of impairment were identified	11		(a)	5		(b)
Less: number of properties for which an impairment charge was recorded	2			1
Less: number of properties that were held for sale as of the date the analysis was performed for which indicators of impairment were identified but no impairment charge was recorded	5			1
Remaining properties for which indicators of impairment were identified but no impairment charge was considered necessary	4			3

Weighted average percentage by which the projected undiscounted cash flows exceeded its respective carrying value for each of the remaining properties (c)	32	%		14	%



	2016
	Low	High
Rental revenue growth rates	Varies (i)	Varies (i)
Operating expense growth rates	3.10%	18.02%
Discount rates	9.35%	10.00%
Terminal capitalization rates	8.35%	9.50%



	Number of Properties Sold (a)	Square Footage	Consideration		Aggregate Proceeds, Net (b)		Debt Extinguished
2017 Dispositions (through September 30, 2017)	35	4,302,400	$	642,712	$	562,433	$	19,691	(c)
2016 Dispositions	46	3,013,900	$	540,362	$	448,216	$	94,353	(c) (d)



	Number of Assets Acquired	Square Footage	Acquisition Price		Mortgage Debt
2017 Acquisitions (through September 30, 2017) (a)	8	331,400	$	147,586	$	—
2016 Acquisitions (b)	9	1,102,300	$	408,308	$	15,971

~~Term Loan Due 2023~~

~~Maturity Date~~

~~Leverage-Based Pricing~~
~~Credit Spread~~

~~Ratings-Based Pricing~~
~~Credit Spread~~

~~$200,000 unsecured term loan~~

~~11/22/2023~~

~~1.70% – 2.55%~~

~~1.50% – 2.45%~~