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 March 31, ~~2016~~2017

~~WP Glimcher~~Washington Prime Group Inc.

Washington Prime Group, L.P.

(Exact name of Registrant as specified in its charter)

Indiana (Both Registrants)

(State of incorporation or organization)

~~001-36252 (WP Glimcher Inc.)~~

~~333-205859~~



001-36252 (Washington Prime Group ~~L.P.)~~ ~~(Commission File No.)~~ ~~46-4323686 (WP Glimcher~~ Inc.) ~~46-4674640 (Washington Prime Group, L.P.)~~ ~~(I.R.S. Employer Identification No.)~~ ~~180 East Broad Street~~ ~~Columbus, Ohio 43215~~ ~~(Address of principal executive offices)~~ 333-205859 (Washington Prime Group, L.P.) (Commission File No.)	180 East Broad Street Columbus, Ohio 43215 (Address of principal executive offices)
46-4323686 (Washington Prime Group Inc.) 46-4674640 (Washington Prime Group, L.P.) (I.R.S. Employer Identification No.)	(614) 621-9000 (Registrant's telephone number, including area code)

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.



~~WP Glimcher~~Washington Prime Group Inc. Yes x No ¨		Washington Prime Group, L.P. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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).



~~WP Glimcher~~Washington Prime Group Inc. Yes x No ¨		Washington Prime Group, L.P. Yes x No ¨

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



~~WP Glimcher~~Washington Prime Group Inc. (Check One):		Large accelerated filer x Accelerated filer ¨
		Non-accelerated filer ¨ Smaller reporting company ¨
		Emerging growth company ¨ (Do not check if a smaller reporting company)

Washington Prime Group, L.P. (Check One):		Large accelerated filer ¨ Accelerated filer ¨
		Non-accelerated filer x Smaller reporting company ¨
		Emerging growth company ¨ (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



~~WP Glimcher~~Washington Prime Group Inc. Yes¨ No x		Washington Prime Group, L.P. Yes¨ No x

As of ~~May 5, 2016, WP Glimcher~~April 26, 2017, Washington Prime Group Inc. had ~~185,310,857~~185,428,977 shares of common stock outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, ~~2016~~2017 of ~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P. Unless stated otherwise or the context requires otherwise, references to "WPG Inc." mean ~~WP Glimcher~~Washington Prime Group Inc., an Indiana corporation, and references to "WPG L.P." mean Washington Prime Group, L.P., an Indiana limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between WPG Inc. and WPG L.P. We use the terms ~~“we” or~~"WPG," the "Company,” “we,” "us," and “our” ~~or "WPG" or the "Company”~~ to refer to WPG Inc., WPG L.P., and entities in which WPG Inc. or WPG L.P. (or anany affiliate) has a material interest on a consolidated basis, unless the context indicates otherwise.

WPG Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). WPG Inc. owns properties and conducts operations through WPG L.P., of which WPG Inc. is the sole general partner and of which it ~~holds~~held approximately ~~84.1%~~84.2% of the partnership interests (“OP units”) at March 31, ~~2016.~~2017. The remaining OP units are owned by various limited partners. As the sole general partner of WPG L.P., WPG Inc. has the exclusive and complete responsibility for WPG L.P.’s day-to-day management and control. Management operates WPG Inc. and WPG L.P. as one enterprise. The management of WPG Inc. consists of the same persons who direct the management of WPG L.P. As general partner with control of WPG L.P., WPG Inc. consolidates WPG L.P. for financial reporting purposes, and WPG Inc. does not have significant assets other than its investment in WPG L.P. Therefore, the assets and liabilities of WPG Inc. and WPG L.P. are substantially the same on their respective consolidated financial statements and the disclosures of WPG Inc. and WPG L.P. also are substantially similar.

The Company believes, therefore, that the combination into a single report of the quarterly reports on Form 10-Q of WPG Inc. and WPG L.P. provides the following benefits:

enhances investors' understanding of the operations of WPG Inc. and WPG L.P. by enabling investors to view the business as a whole in the same manner as management views and operates the business;

eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both WPG Inc. and WPG L.P.; and

creates time and cost efficiencies through the preparation of one set of disclosures instead of two separate sets of disclosures.

The substantive difference between WPG Inc.’s and WPG L.P.’s filings is the fact that WPG Inc. is a REIT with shares traded on a public stock exchange, while WPG L.P. is a limited partnership with no publicly traded equity. Moreover, the interests in WPG L.P. held by third parties are classified differently by the two entities (i.e., noncontrolling interests for WPG Inc. and partners' equity for WPG L.P.). In the consolidated financial statements, these differences are primarily reflected in the equity section of the consolidated balance sheets and in the consolidated statements of equity. Apart from the different equity presentation, the consolidated financial statements of WPG Inc. and WPG L.P. are nearly identical.

This combined Form 10-Q for WPG Inc. and WPG L.P. includes, for each entity, separate interim financial statements (but combined footnotes), separate reports on disclosure controls and procedures and internal control over financial reporting, and separate CEO/CFO certifications. In addition, if there were any material differences between WPG Inc. and WPG L.P. with respect to any other financial and non-financial disclosure items required by Form 10-Q, they would be discussed separately herein.

WPG L.P. is a voluntary filer. We are evaluating whether or not WPG L.P. will continue to voluntarily file reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

~~WP GLIMCHER~~WASHINGTON PRIME GROUP INC. AND WASHINGTON PRIME GROUP, L.P.

FORM 10-Q

INDEX



PART I:	FINANCIAL INFORMATION	PAGE

Item 1.	Consolidated Financial Statements (unaudited)

	Financial Statements for ~~WP Glimcher~~Washington Prime Group Inc.:

	Consolidated Balance Sheets as of March 31, ~~2016~~2017 and December 31, ~~2015~~2016	4

	Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~ for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016	5

	Consolidated Statements of Cash Flows for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016	6

	Consolidated Statement of Equity for the three months ended March 31, ~~2016~~2017	7

	Financial Statements for Washington Prime Group, L.P.:

	Consolidated Balance Sheets as of March 31, ~~2016~~2017 and December 31, ~~2015~~2016	8

	Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~ for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016	9

	Consolidated Statements of Cash Flows for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016	10

	Consolidated Statement of Equity for the three months ended March 31, ~~2016~~2017	11

	Condensed Notes to Consolidated Financial Statements	12

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3527

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5341

Item 4.	Controls and Procedures	5341

PART II:	OTHER INFORMATION

Item 1.	Legal Proceedings	5442

Item 1A.	Risk Factors	5442

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5442

Item 3.	Defaults Upon Senior Securities	5442

Item 4.	Mine Safety Disclosures	5442

Item 5.	Other Information	5442

Item 6.	Exhibits	5543

SIGNATURES		5644

PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements

~~WP Glimcher~~Washington Prime Group Inc.

Unaudited Consolidated Balance Sheets

(dollars in thousands, except share and par value amounts)


	March 31, 2016			December 31, 2015			March 31, 2017			December 31, 2016
ASSETS:
Investment properties at cost	$	6,659,405		$	6,656,200		$	6,304,916		$	6,294,628
Less: accumulated depreciation	2,259,242			2,225,750			2,172,732			2,122,572
	4,400,163			4,430,450			4,132,184			4,172,056
Cash and cash equivalents	91,259			116,253			94,531			59,353
Tenant receivables and accrued revenue, net	87,689			91,603			96,560			99,967
Real estate assets held-for-sale	—			30,000			—			50,642
Investment in and advances to unconsolidated entities, at equity	474,259			488,071			442,257			458,892
Deferred costs and other assets	311,424			303,232			251,507			266,556
Total assets	$	5,364,794		$	5,459,609		$	5,017,039		$	5,107,466
LIABILITIES:
Mortgage notes payable	$	1,788,620		$	1,793,439		$	1,610,802		$	1,618,080
Notes payable	247,093			246,728			247,817			247,637
Unsecured term loans	1,333,417			1,332,812			1,334,525			1,334,522
Revolving credit facility	260,943			275,622			291,489			306,165
Accounts payable, accrued expenses, intangibles, and deferred revenues	360,959			379,112			287,969			309,178
Distributions payable	2,992			2,992			2,992			2,992
Cash distributions and losses in partnerships and joint ventures, at equity	15,398			15,399
Cash distributions and losses in unconsolidated entities, at equity							15,421			15,421
Total liabilities	4,009,422			4,046,104			3,791,015			3,833,995
Redeemable noncontrolling interests	5,773			6,132			3,265			10,660
EQUITY:
Stockholders' Equity:
Series H Cumulative Redeemable Preferred Stock, $0.0001 par value, 4,000,000 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	104,251			104,251
Series I Cumulative Redeemable Preferred Stock, $0.0001 par value, 3,800,000 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	98,325			98,325
Common stock, $0.0001 par value, 300,000,000 shares authorized, 185,309,682 and 185,304,555 issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	19			19
Series H Cumulative Redeemable Preferred Stock, $0.0001 par value, 4,000,000 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively							104,251			104,251
Series I Cumulative Redeemable Preferred Stock, $0.0001 par value, 3,800,000 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively							98,325			98,325
Common stock, $0.0001 par value, 300,000,000 shares authorized, 185,428,977 and 185,427,411 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively							19			19
Capital in excess of par value	1,224,968			1,225,926			1,234,860			1,232,638
Accumulated deficit	(252,063		)	(214,243		)	(384,070		)	(346,706		)
Accumulated other comprehensive (loss) income	(9,604		)	1,716
Accumulated other comprehensive income							6,888			4,916
Total stockholders' equity	1,165,896			1,215,994			1,060,273			1,093,443
Noncontrolling interests	183,703			191,379			162,486			169,368
Total equity	1,349,599			1,407,373			1,222,759			1,262,811
Total liabilities, redeemable noncontrolling interests and equity	$	5,364,794		$	5,459,609		$	5,017,039		$	5,107,466

The accompanying notes are an integral part of these statements.

~~WP Glimcher~~Washington Prime Group Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~

(dollars in thousands, except per share amounts)


	For the Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
REVENUE:
Minimum rent	$	143,105		$	160,906		$	137,116		$	143,105
Overage rent	3,457			3,264			2,832			3,457
Tenant reimbursements	57,956			69,245			56,790			57,956
Other income	5,513			4,303			5,656			5,513
Total revenues	210,031			237,718			202,394			210,031
EXPENSES:
Property operating	43,934			51,109			37,244			43,934
Depreciation and amortization	71,403			92,184			67,511			71,403
Real estate taxes	24,491			30,525			26,007			24,491
Advertising and promotion	2,232			2,675			2,152			2,232
Provision for credit losses	732			698			1,581			732
General and administrative	10,804			9,589			8,828			10,804
Merger and transaction costs	—			20,810
Ground rent	1,057			2,373			1,031			1,057
Impairment loss							8,509			—
Total operating expenses	154,653			209,963			152,863			154,653
OPERATING INCOME	55,378			27,755			49,531			55,378
Interest expense, net	(37,348		)	(37,114		)	(32,488		)	(37,348		)
Income and other taxes	(979		)	(445		)	(2,026		)	(979		)
(Loss) income from unconsolidated entities	(1,161		)	216
INCOME (LOSS) BEFORE LOSS ON DISPOSITION OF PROPERTIES	15,890			(9,588		)
Loss on disposition of properties	(2,209		)	—
NET INCOME (LOSS)	13,681			(9,588		)
Net income (loss) attributable to noncontrolling interests	1,659			(2,296		)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	12,022			(7,292		)
Loss from unconsolidated entities, net							(444		)	(1,161		)
INCOME BEFORE GAIN (LOSS) ON DISPOSITION OF INTERESTS IN PROPERTIES, NET							14,573			15,890
Gain (loss) on disposition of interests in properties, net							51			(2,209		)
NET INCOME							14,624			13,681
Net income attributable to noncontrolling interests							1,814			1,659
NET INCOME ATTRIBUTABLE TO THE COMPANY							12,810			12,022
Less: Preferred share dividends	(3,508		)	(4,978		)	(3,508		)	(3,508		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	8,514		$	(12,270	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS							$	9,302		$	8,514

EARNINGS (LOSS) PER COMMON SHARE, BASIC AND DILUTED	$	0.05		$	(0.07	)
EARNINGS PER COMMON SHARE, BASIC AND DILUTED							$	0.05		$	0.05

COMPREHENSIVE INCOME (LOSS):
Net income (loss)	$	13,681		$	(9,588	)
Unrealized loss on interest rate derivative instruments	(13,466		)	(404		)
Comprehensive income (loss)	215			(9,992		)
Comprehensive loss attributable to noncontrolling interests	(487		)	(2,360		)
Comprehensive income (loss) attributable to common shareholders	$	702		$	(7,632	)
COMPREHENSIVE INCOME:
Net income							$	14,624		$	13,681
Unrealized income (loss) on interest rate derivative instruments							2,349			(13,466		)
Comprehensive income							16,973			215
Comprehensive income (loss) attributable to noncontrolling interests							2,191			(487		)
Comprehensive income attributable to common shareholders							$	14,782		$	702

The accompanying notes are an integral part of these statements.

~~WP Glimcher~~Washington Prime Group Inc.

Unaudited Consolidated Statements of Cash Flows

(dollars in thousands)


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2016			2015			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	13,681		$	(9,588	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and stock compensation	70,377			90,574
Loss on disposition of properties	2,209			—
Net income							$	14,624		$	13,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation							66,994			70,377
(Gain) loss on disposition of interests in properties and outparcels, net							(324		)	2,209
Impairment loss							8,509			—
Provision for credit losses	732			698			1,581			732
Loss (income) from unconsolidated entities	1,161			(216		)
Loss from unconsolidated entities, net							444			1,161
Distributions of income from unconsolidated entities	53			99			80			53
Changes in assets and liabilities:
Tenant receivables and accrued revenue, net	2,900			10,924			2,399			2,900
Deferred costs and other assets	(2,259		)	(5,628		)	(9,947		)	(2,259		)
Accounts payable, accrued expenses, deferred revenues and other liabilities	(29,723		)	(35,089		)	(12,912		)	(29,723		)
Net cash provided by operating activities	59,131			51,774			71,448			59,131
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired	—			(956,602		)
Capital expenditures, net	(25,502		)	(34,882		)	(25,039		)	(25,502		)
Restricted cash reserves for future capital expenditures, net	(3,554		)	1,492			(558		)	(3,554		)
Net proceeds from disposition of properties	9,020			—			62,887			9,020
Investments in unconsolidated entities	(3,260		)	—			(36,368		)	(3,260		)
Distributions of capital from unconsolidated entities	15,712			46			52,479			15,712
Net cash used in investing activities	(7,584		)	(989,946		)
Net cash provided by (used in) investing activities							53,401			(7,584		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to noncontrolling interest holders in properties	—			(8		)	(23		)	—
Redemption of preferred shares	(5		)	—
Redemption of limited partner units/preferred shares							—			(5		)
Change in lender-required restricted cash reserves on mortgage loans	839			—			—			839
Net proceeds from issuance of common shares, including common stock plans	—			796			7			—
Purchase of redeemable noncontrolling interest							(6,830		)	—
Distributions on common and preferred shares/units	(58,717		)	(52,807		)	(59,016		)	(58,717		)
Proceeds from issuance of debt, net of transaction costs	—			1,423,280			80,814			—
Repayments of debt	(18,658		)	(286,241		)	(104,623		)	(18,658		)
Net cash (used in) provided by financing activities	(76,541		)	1,085,020
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(24,994		)	146,848
Net cash used in financing activities							(89,671		)	(76,541		)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS							35,178			(24,994		)
CASH AND CASH EQUIVALENTS, beginning of period	116,253			108,768			59,353			116,253
CASH AND CASH EQUIVALENTS, end of period	$	91,259		$	255,616		$	94,531		$	91,259

The accompanying notes are an integral part of these statements.

~~WP Glimcher~~Washington Prime Group Inc.

Unaudited Consolidated Statement of Equity

(dollars in thousands, except per share/unit amounts)


	Preferred Series H		Preferred Series I		Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests			Preferred Series H		Preferred Series I		Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income		Total Stockholders' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
Balance, December 31, 2015	$	104,251	$	98,325	$	19	$	1,225,926		$	(214,243	)	$	1,716		$	1,215,994		$	191,379		$	1,407,373		$	6,132
Redemption of limited partner units	—		—		—		—			—			—			—			(5		)	(5		)	—
Balance, December 31, 2016																												$	104,251	$	98,325	$	19	$	1,232,638		$	(346,706	)	$	4,916	$	1,093,443		$	169,368		$	1,262,811		$	10,660
Exercise of stock options																												—		—		—		7			—			—		7			—			7			—
Other	—		—		—		52			—			—			52			—			52			(353		)	—		—		—		(36		)	—			—		(36		)	—			(36		)	—
Equity-based compensation	—		—		—		675			—			—			675			—			675			—			—		—		—		1,132			—			—		1,132			346			1,478			—
Adjustments to noncontrolling interests	—		—		—		(1,685		)	—			—			(1,685		)	1,685			—			—			—		—		—		554			—			—		554			(554		)	—			—
Purchase of redeemable noncontrolling interest																												—		—		—		565			—			—		565			—			565			(7,395		)
Distributions on common shares/units ($0.25 per common share/unit)	—		—		—		—			(46,334		)	—			(46,334		)	(8,815		)	(55,149		)	—			—		—		—		—			(46,666		)	—		(46,666		)	(8,805		)	(55,471		)	—
Distributions declared on preferred shares	—		—		—		—			(3,508		)	—			(3,508		)	—			(3,508		)	—			—		—		—		—			(3,508		)	—		(3,508		)	—			(3,508		)	—
Other comprehensive loss	—		—		—		—			—			(11,320		)	(11,320		)	(2,146		)	(13,466		)	—
Net income (loss), excluding $60 of distributions to preferred unitholders	—		—		—		—			12,022			—			12,022			1,605			13,627			(6		)
Balance, March 31, 2016	$	104,251	$	98,325	$	19	$	1,224,968		$	(252,063	)	$	(9,604	)	$	1,165,896		$	183,703		$	1,349,599		$	5,773
Other comprehensive income																												—		—		—		—			—			1,972		1,972			377			2,349			—
Net income, excluding $60 of distributions to preferred unitholders																												—		—		—		—			12,810			—		12,810			1,754			14,564			—
Balance, March 31, 2017																												$	104,251	$	98,325	$	19	$	1,234,860		$	(384,070	)	$	6,888	$	1,060,273		$	162,486		$	1,222,759		$	3,265

The accompanying notes are an integral part of this statement.

Washington Prime Group, L.P.

Unaudited Consolidated Balance Sheets

(dollars in thousands, except unit amounts)


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
ASSETS:
Investment properties at cost	$	6,659,405	$	6,656,200	$	6,304,916	$	6,294,628
Less: accumulated depreciation	2,259,242		2,225,750		2,172,732		2,122,572
	4,400,163		4,430,450		4,132,184		4,172,056
Cash and cash equivalents	91,259		116,253		94,531		59,353
Tenant receivables and accrued revenue, net	87,689		91,603		96,560		99,967
Real estate assets held-for-sale	—		30,000		—		50,642
Investment in and advances to unconsolidated entities, at equity	474,259		488,071		442,257		458,892
Deferred costs and other assets	311,424		303,232		251,507		266,556
Total assets	$	5,364,794	$	5,459,609	$	5,017,039	$	5,107,466
LIABILITIES:
Mortgage notes payable	$	1,788,620	$	1,793,439	$	1,610,802	$	1,618,080
Notes payable	247,093		246,728		247,817		247,637
Unsecured term loans	1,333,417		1,332,812		1,334,525		1,334,522
Revolving credit facility	260,943		275,622		291,489		306,165
Accounts payable, accrued expenses, intangibles, and deferred revenues	360,959		379,112		287,969		309,178
Distributions payable	2,992		2,992		2,992		2,992
Cash distributions and losses in partnerships and joint ventures, at equity	15,398		15,399
Cash distributions and losses in unconsolidated entities, at equity					15,421		15,421
Total liabilities	4,009,422		4,046,104		3,791,015		3,833,995
Redeemable noncontrolling interests	5,773		6,132		3,265		10,660
EQUITY:
Partners' Equity:
General partner
Preferred equity, 7,800,000 units issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	202,576		202,576
Common equity, 185,309,682 and 185,304,555 units issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	963,320		1,013,418
Preferred equity, 7,800,000 units issued and outstanding as of March 31, 2017 and December 31, 2016, respectively					202,576		202,576
Common equity, 185,428,977 and 185,427,411 units issued and outstanding as of March 31, 2017 and December 31, 2016, respectively					857,697		890,867
Total general partners' equity	1,165,896		1,215,994		1,060,273		1,093,443
Limited partners, 35,129,921 and 34,807,051 units issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	182,621		190,297
Limited partners, 35,127,735 units issued and outstanding as of March 31, 2017 and December 31, 2016, respectively					161,405		168,264
Total partners' equity	1,348,517		1,406,291		1,221,678		1,261,707
Noncontrolling interests	1,082		1,082		1,081		1,104
Total equity	1,349,599		1,407,373		1,222,759		1,262,811
Total liabilities, redeemable noncontrolling interests and equity	$	5,364,794	$	5,459,609	$	5,017,039	$	5,107,466

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~

(dollars in thousands, except per unit amounts)


	For the Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
REVENUE:
Minimum rent	$	143,105		$	160,906		$	137,116		$	143,105
Overage rent	3,457			3,264			2,832			3,457
Tenant reimbursements	57,956			69,245			56,790			57,956
Other income	5,513			4,303			5,656			5,513
Total revenues	210,031			237,718			202,394			210,031
EXPENSES:
Property operating	43,934			51,109			37,244			43,934
Depreciation and amortization	71,403			92,184			67,511			71,403
Real estate taxes	24,491			30,525			26,007			24,491
Advertising and promotion	2,232			2,675			2,152			2,232
Provision for credit losses	732			698			1,581			732
General and administrative	10,804			9,589			8,828			10,804
Merger and transaction costs	—			20,810
Ground rent	1,057			2,373			1,031			1,057
Impairment loss							8,509			—
Total operating expenses	154,653			209,963			152,863			154,653
OPERATING INCOME	55,378			27,755			49,531			55,378
Interest expense, net	(37,348		)	(37,114		)	(32,488		)	(37,348		)
Income and other taxes	(979		)	(445		)	(2,026		)	(979		)
(Loss) income from unconsolidated entities	(1,161		)	216
INCOME (LOSS) BEFORE LOSS ON DISPOSITION OF PROPERTIES	15,890			(9,588		)
Loss on disposition of properties	(2,209		)	—
NET INCOME (LOSS)	13,681			(9,588		)
Loss from unconsolidated entities, net							(444		)	(1,161		)
INCOME BEFORE GAIN (LOSS) ON DISPOSITION OF INTERESTS IN PROPERTIES, NET							14,573			15,890
Gain (loss) on disposition of interests in properties, net							51			(2,209		)
NET INCOME							14,624			13,681
Net loss attributable to noncontrolling interests	(6		)	(3		)	—			(6		)
NET INCOME (LOSS) ATTRIBUTABLE TO UNITHOLDERS	13,687			(9,585		)
NET INCOME ATTRIBUTABLE TO UNITHOLDERS							14,624			13,687
Less: Preferred unit distributions	(3,568		)	(5,028		)	(3,568		)	(3,568		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNITHOLDERS	$	10,119		$	(14,613	)
NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS							$	11,056		$	10,119

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNITHOLDERS:
NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS:
General partner	$	8,514		$	(12,270	)	$	9,302		$	8,514
Limited partners	1,605			(2,343		)	1,754			1,605
Net income (loss) attributable to common unitholders	$	10,119		$	(14,613	)
Net income attributable to common unitholders							$	11,056		$	10,119

EARNINGS (LOSS) PER COMMON UNIT, BASIC AND DILUTED	$	0.05		$	(0.07	)
EARNINGS PER COMMON UNIT, BASIC AND DILUTED							$	0.05		$	0.05

COMPREHENSIVE INCOME (LOSS):
Net income (loss)	$	13,681		$	(9,588	)
Unrealized loss on interest rate derivative instruments	(13,466		)	(404		)
Comprehensive income (loss)	215			(9,992		)
COMPREHENSIVE INCOME:
Net income							$	14,624		$	13,681
Unrealized income (loss) on interest rate derivative instruments							2,349			(13,466		)
Comprehensive income							16,973			215
Comprehensive loss attributable to noncontrolling interests	(6		)	(3		)	—			(6		)
Comprehensive income (loss) attributable to unitholders	$	221		$	(9,989	)
Comprehensive income attributable to unitholders							$	16,973		$	221

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Cash Flows

(dollars in thousands)


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2016			2015			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	13,681		$	(9,588	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income							$	14,624		$	13,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation	70,377			90,574			66,994			70,377
Loss on disposition of properties	2,209			—
(Gain) loss on disposition of interests in properties and outparcels, net							(324		)	2,209
Impairment loss							8,509			—
Provision for credit losses	732			698			1,581			732
Loss (income) from unconsolidated entities	1,161			(216		)
Loss from unconsolidated entities, net							444			1,161
Distributions of income from unconsolidated entities	53			99			80			53
Changes in assets and liabilities:
Tenant receivables and accrued revenue, net	2,900			10,924			2,399			2,900
Deferred costs and other assets	(2,259		)	(5,628		)	(9,947		)	(2,259		)
Accounts payable, accrued expenses, deferred revenues and other liabilities	(29,723		)	(35,089		)	(12,912		)	(29,723		)
Net cash provided by operating activities	59,131			51,774			71,448			59,131
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired	—			(956,602		)
Capital expenditures, net	(25,502		)	(34,882		)	(25,039		)	(25,502		)
Restricted cash reserves for future capital expenditures, net	(3,554		)	1,492			(558		)	(3,554		)
Net proceeds from disposition of properties	9,020			—			62,887			9,020
Investments in unconsolidated entities	(3,260		)	—			(36,368		)	(3,260		)
Distributions of capital from unconsolidated entities	15,712			46			52,479			15,712
Net cash used in investing activities	(7,584		)	(989,946		)
Net cash provided by (used in) investing activities							53,401			(7,584		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to unitholders, net	(58,717		)	(52,807		)
Distributions to noncontrolling interest holders in properties	—			(8		)	(23		)	—
Redemption of preferred units	(5		)	—
Redemption of limited partner/preferred units							—			(5		)
Change in lender-required restricted cash reserves on mortgage loans	839			—			—			839
Net proceeds from issuance of common units, including equity-based compensation plans	—			796			7			—
Purchase of redeemable noncontrolling interest							(6,830		)	—
Distributions to unitholders, net							(59,016		)	(58,717		)
Proceeds from issuance of debt, net of transaction costs	—			1,423,280			80,814			—
Repayments of debt	(18,658		)	(286,241		)	(104,623		)	(18,658		)
Net cash (used in) provided by financing activities	(76,541		)	1,085,020
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(24,994		)	146,848
Net cash used in financing activities							(89,671		)	(76,541		)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS							35,178			(24,994		)
CASH AND CASH EQUIVALENTS, beginning of period	116,253			108,768			59,353			116,253
CASH AND CASH EQUIVALENTS, end of period	$	91,259		$	255,616		$	94,531		$	91,259

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statement of Equity

(dollars in thousands, except per unit amounts)


	General Partner																							General Partner
	Preferred Equity			Common Equity			Total Equity			Limited Partners			Total Partners' Equity			Non- Controlling Interests		Total Equity			Redeemable Non-Controlling Interests			Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
Balance, December 31, 2015	$	202,576		$	1,013,418		$	1,215,994		$	190,297		$	1,406,291		$	1,082	$	1,407,373		$	6,132
Redemption of limited partner units	—			—			—			(5		)	(5		)	—		(5		)	—
Balance, December 31, 2016																								$	202,576		$	890,867		$	1,093,443		$	168,264		$	1,261,707		$	1,104		$	1,262,811		$	10,660
Exercise of stock options																								—			7			7			—			7			—			7			—
Other	—			52			52			—			52			—		52			(353		)	—			(36		)	(36		)	—			(36		)	—			(36		)	—
Equity-based compensation	—			675			675			—			675			—		675			—			—			1,132			1,132			346			1,478			—			1,478			—
Adjustments to limited partners' interests	—			(1,685		)	(1,685		)	1,685			—			—		—			—			—			554			554			(554		)	—			—			—			—
Purchase of redeemable noncontrolling interest																								—			565			565			—			565			—			565			(7,395		)
Distributions on common units ($0.25 per common unit)	—			(46,334		)	(46,334		)	(8,815		)	(55,149		)	—		(55,149		)	—			—			(46,666		)	(46,666		)	(8,782		)	(55,448		)	(23		)	(55,471		)	—
Distributions declared on preferred units	(3,508		)	—			(3,508		)	—			(3,508		)	—		(3,508		)	(60		)	(3,508		)	—			(3,508		)	—			(3,508		)	—			(3,508		)	(60		)
Other comprehensive loss	—			(11,320		)	(11,320		)	(2,146		)	(13,466		)	—		(13,466		)	—
Other comprehensive income																								—			1,972			1,972			377			2,349			—			2,349			—
Net income	3,508			8,514			12,022			1,605			13,627			—		13,627			54			3,508			9,302			12,810			1,754			14,564			—			14,564			60
Balance, March 31, 2016	$	202,576		$	963,320		$	1,165,896		$	182,621		$	1,348,517		$	1,082	$	1,349,599		$	5,773
Balance, March 31, 2017																								$	202,576		$	857,697		$	1,060,273		$	161,405		$	1,221,678		$	1,081		$	1,222,759		$	3,265

The accompanying notes are an integral part of this statement.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


1.	Organization

~~WP Glimcher Inc. (formerly named~~ Washington Prime Group Inc.) (“WPG Inc.”) is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as ~~amended.~~amended (the "Code"). REITs will generally not be liable for federal corporate income taxes as long as they continue to distribute not less than 100% of their taxable income and satisfy certain other requirements. Washington Prime Group, L.P. (“WPG L.P.”) is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of March 31, ~~2016,~~2017, our assets consisted of material interests in ~~119~~111 shopping centers in the United States, consisting of community centers and ~~malls.~~

~~WPG (defined below) was created to hold the community center business and smaller~~ enclosed ~~malls~~retail properties, comprised of ~~Simon Property Group, Inc. (“SPG”) and its subsidiaries. On May 28, 2014 (the "Separation Date"), WPG separated from SPG through the distribution~~approximately 60 million square feet of 100% of the outstanding units of WPG L.P. to the owners of Simon Property Group, L.P. (“SPG L.P.”), SPG's operating partnership, and 100% of the outstanding shares of WPG Inc. to the SPG shareholders in a tax‑free distribution. Prior to the separation, WPG Inc. and WPG L.P. were wholly owned subsidiaries of SPG and its subsidiaries. As described in Note 2 - "Basis of Presentation and Principles of Consolidation and Combination," WPG’s results prior to the separation are presented herein on a carve-out basis. Prior to or concurrent with the separation, SPG engaged in certain formation transactions that were designed to consolidate the ownership of its interests in 98 properties (the “SPG Businesses”) and distribute such interests to us. Pursuant to the separation agreement, on May 28, 2014, SPG distributed 100% of the common shares of WPG Inc. on a pro rata basis to SPG’s shareholders as of the May 16, 2014 record date.gross leasable area.

Unless the context otherwise requires, references to ~~"WPG",~~"WPG," the ~~"Company", “we”,~~"Company," “we,” “us” ~~and~~or “our” refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or anany affiliate) has a material ownership or financial interest, on a consolidated basis, after giving effect to the transfer of assets and liabilities from SPG as well as to the SPG Businesses prior to the date of the completion of the separation. Before the completion of the separation, the SPG Businesses were operated as subsidiaries of SPG, which operates as a REIT.

At the time of the separation and distribution, WPG Inc. owned a percentage of the outstanding units of partnership interest, or units, of WPG L.P. that was approximately equal to the percentage of outstanding units of partnership interest that SPG owned of SPG L.P., with the remaining units of WPG L.P. being owned by the limited partners who were also limited partners of SPG L.P. as of the May 16, 2014 record date. The units in WPG L.P. held by limited partners are exchangeable, at their election, for WPG Inc. common shares on a one‑for‑one basis or cash, as determined by WPG Inc.

Prior to the separation, WPG entered into agreements with SPG under which SPG provided various services to us relating primarily to the legacy SPG Businesses, including accounting, asset management, development, human resources, information technology, leasing, legal, marketing, public reporting and tax. The charges for the services were based on an hourly or per transaction fee arrangement and pass‑through of out‑of‑pocket costs (see Note 10 - "Related Party Transactions").basis.

We derive our revenues primarily from retail tenant leases, including fixed minimum rent leases, overage and percentage rent leases based on tenants’ sales volumes, offering property operating services to our tenants and others, including energy, waste handling and facility services, and reimbursements from tenants for certain recoverable expenditures such as property operating, real estate taxes, repair and maintenance, and advertising and promotional expenditures.

We seek to enhance the performance of our properties and increase our revenues by, among other things, securing leases of anchor and inline tenant spaces, re‑developing or renovating existing properties to increase the leasable square footage, and increasing the productivity of occupied locations through aesthetic upgrades, re‑merchandising and/or changes to the retail use of the space.

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

~~The Merger~~

In the Merger, Glimcher common shareholders received, for each Glimcher common share, $14.02 consisting of $10.40 in cash and 0.1989 of a share of WPG Inc.’s common stock valued at $3.62 per Glimcher common share, based on the closing price of WPG Inc.’s common stock on the Merger closing date. Approximately 29.9 million shares of WPG Inc.'s common stock were issued to Glimcher shareholders in the Merger, and WPG L.P. issued to WPG Inc. a like number of common units as consideration for the common shares issued. Additionally, included in consideration were operating partnership units held by limited partners and preferred stock as noted below. In connection with the closing of the Merger, an indirect subsidiary of WPG L.P. was merged into Glimcher’s operating partnership. In the Merger, we acquired material interests in 23 shopping centers comprised of approximately 15.8 million square feet of gross leasable area and assumed additional mortgages on 14 properties with a fair value of approximately $1.4 billion. The combined company, which was renamed WP Glimcher Inc. in May 2015 upon receiving shareholder approval, is comprised of more than 67 million square feet of gross leasable area (compared to approximately 53 million square feet for the Company prior to the Merger) and has a combined portfolio of material interests in 119 properties as of March 31, 2016.

In the Merger, the preferred stock of Glimcher was converted into preferred stock of WPG Inc., and WPG L.P. issued to WPG Inc. preferred units as consideration for the preferred shares issued. Additionally, each outstanding common unit of Glimcher’s operating partnership held by limited partners was converted into 0.7431 of a unit of WPG LP. Further, each outstanding stock option in respect of Glimcher common stock was converted into a WPG Inc. option, and certain other Glimcher equity awards were assumed by WPG Inc. and converted into equity awards in respect of WPG Inc.'s common shares.

Concurrent with the closing of the Merger, Glimcher completed a transaction with SPG under which affiliates of SPG acquired Jersey Gardens in Elizabeth, New Jersey, and University Park Village in Fort Worth, Texas, properties previously owned by affiliates of Glimcher, for an aggregate purchase price of $1.09 billion, including SPG’s assumption of approximately $405.0 million of associated mortgage indebtedness (the “Property Sale”).

The cash portion of the Merger consideration was funded by the Property Sale and draws under the Bridge Loan (see Note 6 - "Indebtedness"). During the three months ended March 31, 2015, the Company incurred $20.8 million of costs related to the Merger, which are included in merger and transaction costs in the accompanying consolidated statements of operations and comprehensive income (loss).

On June 1, 2015, the Company announced a management transition plan through which Mark S. Ordan, the then Executive Chairman of the Board, transitioned to serve as an active non-executive Chairman of the Board and provide consulting services to the Company under a transition and consulting agreement, effective as of January 1, 2016. Michael P. Glimcher continues to serve as the Company’s Vice Chairman and Chief Executive Officer. Additionally, the Company has reduced staff formerly located in its Bethesda, Maryland-based transition operations group led by C. Marc Richards, the Company’s then Executive Vice President and Chief Administrative Officer, who departed the Company on January 15, 2016. Other senior executives from the Bethesda office who departed the Company at the end of 2015 were Michael J. Gaffney, then Executive Vice President, Head of Capital Markets (who served as a consultant to the Company through March 31, 2016), and Farinaz S. Tehrani, then Executive Vice President, Legal and Compliance.

On June 1, 2015, the Company completed a joint venture transaction with a third party with respect to the ownership and operation of five of the malls and certain related out-parcels acquired in the Merger (see Note 5 - "Investment in Unconsolidated Entities, at Equity").

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

~~2. Basis of Presentation and Principles of Consolidation~~


2.	Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of March 31, ~~2016~~2017 and December 31, ~~2015~~2016 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The accompanying consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. Due to the seasonal nature of certain operational activities, the results for the interim period ended March 31, ~~2016~~2017 are not necessarily indicative of the results to be expected for the full year.

These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by GAAP for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading. These consolidated unaudited financial statements should be read in conjunction with the audited consolidated and combined financial statements and related notes included in the combined ~~2015~~2016 Annual Report on Form 10-K for WPG Inc. and WPG L.P.~~, as amended~~ (the ~~"2015~~"2016 Form 10-K").

~~Combined Presentation~~

~~The financial statements of both WPG Inc. and WPG L.P. are included in this report.~~

As the sole general partner of WPG L.P., WPG Inc. has the exclusive and complete responsibility for WPG L.P.’s day-to-day management and control. Management operates WPG Inc. and WPG L.P. as one enterprise. The management of WPG Inc. consists of the same persons who direct the management of WPG L.P. As general partner with control of WPG L.P., WPG Inc. consolidates WPG L.P. for financial reporting purposes, and WPG Inc. does not have significant assets other than its investment in WPG L.P. Therefore, the assets and liabilities of WPG Inc. and WPG L.P. are substantially the same on their respective consolidated financial statements and the disclosures of WPG Inc. and WPG L.P. also are substantially similar.

~~The Company believes, therefore, that providing one set of notes for the financial statements of WPG Inc. and WPG L.P. provides the following benefits:~~

~~enhances investors' understanding of the operations of WPG Inc. and WPG L.P. by enabling investors to view the business as a whole in the same manner as management views and operates the business;~~

~~eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both WPG Inc. and WPG L.P.; and~~

~~creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes.~~

In addition, in light of the combined notes, the Company believes it is important for investors to understand the few differences between WPG Inc. and WPG L.P. The substantive difference between WPG Inc. and WPG L.P. is the fact that WPG Inc. is a REIT with stock traded on a public exchange, while WPG L.P. is a limited partnership with no publicly traded equity. Moreover, the interests in WPG L.P. held by third parties are classified differently by the two entities (i.e. noncontrolling interests for WPG Inc. and partners' equity for WPG L.P.). In the consolidated financial statements, these differences are primarily reflected in the equity section of the consolidated balance sheets and in the consolidated statements of equity. Apart from the different equity presentation, the consolidated financial statements of WPG Inc. and WPG L.P. are nearly identical.

General

These consolidated financial statements reflect the consolidation of properties that are wholly owned or properties in which we own less than a 100% interest but that we control. Control of a property is demonstrated by, among other factors, our ability to refinance debt and sell the property without the consent of any other unaffiliated partner or owner, and the inability of any other unaffiliated partner or owner to replace us.

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

We consolidate a ~~VIE~~variable interest entity ("VIE") when we are determined to be the primary beneficiary. Determination of the primary beneficiary of a VIE is based on whether an entity has (1) the power to direct activities that most significantly impact the economic performance of the VIE and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our determination of the primary beneficiary of a VIE considers all relationships between us and the VIE, including management agreements and other contractual arrangements.

Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

Effective January 1, 2016, we adopted Accounting Standards Update ("ASU") No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis," which changed the way reporting enterprises must evaluate the consolidation of limited partnerships, variable interests and similar entities. Among other things, the changes eliminate the presumption in the voting model that a general partner controls a limited partnership. However, a general partner may consolidate a limited partnership under the variable interest model, depending on the facts and circumstances. WPG Inc. reevaluated whether to consolidate WPG L.P., now considered a variable interest entity, or VIE, under the new guidance. Based on the facts and circumstances, WPG Inc. concluded that it may continue to consolidate WPG L.P. under the variable interest model as the primary beneficiary of the limited partnership. Ultimately, the new guidance did not impact any of our previous conclusions regarding consolidation.

~~Except as discussed above related to the classification of WPG L.P. as a VIE, there~~There have been no changes during the three months ended March 31, ~~2016~~2017 to any of our previous conclusions about whether an entity qualifies as a VIE or whether we are the primary beneficiary of any previously identified VIE. In connection with the Merger, the Company acquired an interest in a VIE in which we are deemed to be the primary beneficiary. Accordingly, we have consolidated the VIE, which consists solely of undeveloped land. During the three months ended March 31, ~~2016,~~2017, we did not provide financial or other support to a previously identified VIE that we were not previously contractually obligated to provide.

Investments in partnerships and joint ventures represent our noncontrolling ownership interests in properties. We account for these investments using the equity method of accounting. We initially record these investments at cost and we subsequently adjust for net equity in income or loss, which we allocate in accordance with the provisions of the applicable partnership or joint venture agreement and cash contributions and distributions, if applicable. The allocation provisions in the partnership or joint venture agreements are not always consistent with the legal ownership interests held by each general or limited partner or joint venture investee primarily due to partner preferences. We separately report investments in joint ventures for which accumulated distributions have exceeded investments in and our share of net income from the joint ventures within cash distributions and losses in partnerships and joint ventures, at equity in the consolidated balance sheets. The net equity of certain joint ventures is less than zero because of financing or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization, and WPG has committed to or intends to fund the venture.

As of March 31, ~~2016,~~2017, our assets consisted of material interests in ~~119~~111 shopping centers. The consolidated financial statements as of that date reflect the consolidation of ~~106~~101 wholly owned properties and ~~seven~~four additional properties that are less than wholly owned, but which we control or for which we are the primary beneficiary. We account for our interests in the remaining six properties, or the joint venture properties, using the equity method of accounting, as we have determined that we have significant influence over their operations. We manage the day-to-day operations of the joint venture properties, but do not control the operations as we have determined that our partner or partners have substantive participating rights with respect to the assets and operations of these joint venture properties.

We allocate net operating results of WPG L.P. to third parties and to WPG Inc. based on the partners' respective weighted average ownership interests in WPG L.P. Net operating results of WPG L.P. attributable to third parties are reflected in net income attributable to noncontrolling interests. WPG Inc.'s weighted average ownership interest in WPG L.P. was 84.1% ~~and 84.0%~~ for both the three months ended March 31, ~~2016~~2017 and ~~2015, respectively.~~2016. As of March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, WPG Inc.'s ownership interest in WPG L.P. was ~~84.1%~~84.2% and ~~84.2%~~84.1%, respectively. We adjust the noncontrolling limited partners' interests at the end of each period to reflect their interest in WPG L.P.

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

~~3. Summary of Significant Accounting Policies~~

~~Cash and Cash Equivalents~~

We consider all highly liquid investments purchased with an original maturity of 90 days or less to be cash and cash equivalents. Cash equivalents are carried at cost, which approximates fair value. Cash equivalents generally consist of commercial paper, bankers' acceptances, repurchase agreements, and money market deposits or securities. Financial instruments that potentially subject us to concentrations of credit risk include our cash and cash equivalents and our tenant receivables. We place our cash and cash equivalents in institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of FDIC and SIPC insurance limits.

~~Investment Properties~~

We record investment properties at fair value when acquired. Investment properties include costs of acquisitions; development, predevelopment, and construction (including allocable salaries and related benefits); tenant allowances and improvements; and interest and real estate taxes incurred during construction. We capitalize improvements and replacements from repair and maintenance when the repair and maintenance extends the useful life, increases capacity, or improves the efficiency of the asset. All other repair and maintenance items are expensed as incurred. We capitalize interest on projects during periods of construction until the projects are ready for their intended purpose based on interest rates in place during the construction period. We record depreciation on buildings and improvements utilizing the straight-line method over an estimated original useful life, which is generally five to 40 years. We review depreciable lives of investment properties periodically and we make adjustments when necessary to reflect a shorter economic life. We amortize tenant allowances and tenant improvements utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter. We record depreciation on equipment and fixtures utilizing the straight-line method over three to ten years.

We review investment properties for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable. These circumstances include, but are not limited to, declines in a property's cash flows, ending occupancy, estimated market values or our decision to dispose of a property before the end of its estimated useful life. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. We measure any impairment of investment property when the estimated undiscounted operating income before depreciation and amortization plus its residual value is less than the carrying value of the property. To the extent impairment has occurred, we charge to expense the excess of the carrying value of the property over its estimated fair value. We estimate fair value using unobservable data such as operating income, estimated capitalization rates, leasing prospects and local market information. We may decide to dispose of properties that are held for use and the consideration received from these property dispositions may differ from their carrying values. We also review our investments, including investments in unconsolidated entities, if events or circumstances change indicating that the carrying amount of our investments may not be recoverable. We will record an impairment charge if we determine that a decline in the fair value of the investments in unconsolidated entities is other-than-temporary. Changes in economic and operating conditions that occur subsequent to our review of recoverability of investment property and other investments in unconsolidated entities could impact the assumptions used in that assessment and could result in future charges to earnings if assumptions regarding those investments differ from actual results.

~~Investments in Unconsolidated Entities~~

Joint ventures are common in the real estate industry. We use joint ventures to finance properties, develop new properties, and diversify our risk in a particular property or portfolio of properties. On June 1, 2015, we completed a joint venture transaction with respect to the ownership and operation of five of our properties (see Note 5 - "Investment in Unconsolidated Entities, at Equity"). We held material unconsolidated joint venture ownership interests in six properties as of March 31, 2016 and December 31, 2015.

Certain of our joint venture properties are subject to various rights of first refusal, buy-sell provisions, put and call rights, or other sale or marketing rights for partners which are customary in real estate joint venture agreements and the industry. We and our partners in these joint ventures may initiate these provisions (subject to any applicable lock up or similar restrictions), which may result in either the sale of our interest or the use of available cash or borrowings to acquire the joint venture interest from our partner.

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~


3.	Summary of Significant Accounting Policies

Fair Value Measurements

The Company measures and discloses its fair value measurements in accordance with Accounting Standards Codification ("ASC") Topic 820 - “Fair Value Measurement” (“Topic 820”). Topic 820 guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, Topic 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The fair value hierarchy, as defined by Topic 820, contains three levels of inputs that may be used to measure fair value as follows:

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as interest rates, foreign exchange rates, and yield curves, that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity's own assumptions, as there is little, if any, related market activity.

~~In instances where the determination of~~The asset or liability's fair value within the fair value ~~measurement is based on inputs from different levels of the fair value~~ hierarchy ~~the level in the fair value hierarchy within which the entire fair value measurement falls~~ is based on the lowest level of any input that is significant to the fair value ~~measurement in its entirety. The Company's assessment of the significance of a particular input to the~~measurement. Under Topic 820, fair value ~~measurement~~measurements are determined based on the assumptions that market participants would use in ~~its entirety requires judgment and considers factors specific to~~pricing the asset or ~~liability.~~

~~Note 6 - "Indebtedness" includes a discussion of~~liability in an orderly transaction at the ~~fair value of debt measured using Level 2 inputs. Note 4 - "Investment in Real Estate" includes a discussion of the fair values recorded in purchase accounting, using Level 2~~measurement date and Level 3 inputs. Level 3 inputs to our purchase accounting analyses include our estimations of net operating results of the property, capitalization rates and discount rates. Similar Level 3 inputs are used in our impairment analyses noted above.

~~The Company has derivatives that must be measured~~ under the fair value standard (see Note 7 - "Derivative Financial Instruments"). The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.

~~Purchase Accounting~~

We record the purchase price of acquisitions and any excess investment in unconsolidated entities to the various components of the acquisition based upon the fair value of each component which may be derived from various observable or unobservable inputs and assumptions. Also, we may utilize third party valuation specialists. These components typically include buildings, land and intangibles related to in-place leases, and we estimate:

~~the fair value of land and related improvements and buildings on an as-if-vacant basis;~~

~~the market value of in-place leases based upon our best estimate of~~ current market ~~rents and amortize the resulting market rent adjustment into revenues;~~

~~the value of costs to obtain tenants, including tenant allowances and improvements and leasing commissions; and~~

~~the value of revenue and recovery of costs foregone during a reasonable lease-up period, as if the space was vacant.~~

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

The fair value of building is depreciated over the estimated remaining life of the acquired building or related improvements. We amortize tenant improvements, in-place lease assets and other lease-related intangibles over the remaining life of the underlying leases. We also estimate the value of other acquired intangible assets, if any, which are amortized over the remaining life of the underlying related intangibles.

conditions.

Use of Estimates

We prepared the accompanying consolidated financial statements in accordance with GAAP. This requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Our actual results could differ from these estimates.

Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

Segment Disclosure

Our primary business is the ownership, development and management of retail real estate. We have aggregated our operations, including ~~malls~~enclosed retail properties and community centers, into one reportable segment because they have similar economic characteristics and we provide similar products and services to similar types of, and in many cases, the same tenants.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU No. 2014-09 revises GAAP by offering a single comprehensive revenue recognition standard instead of numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. An entity has the option to apply the provisions of ASU No. 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this standard recognized at the date of initial application. On July 9, 2015, the FASB announced it would defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also decided to permit early adoption of the standard, but not before the original effective date of December 15, 2016. This new standard will be effective for the Company on January 1, 2018 and, upon effectiveness, certain of our revenue streams will be impacted. The impacted revenue streams primarily consist of fees earned from management, development and leasing services provided to joint ventures in which we own an interest, sales of real estate and other ancillary income earned from our properties. During the three months ended March 31, 2017, these revenues were less than 2% of consolidated revenue. We ~~are currently evaluating~~expect that fee income earned from our ~~method~~joint ventures for the above-mentioned services will generally be recognized in a manner consistent with our current measurement and patterns of ~~adopting and the impact, if any,~~recognition. As a result, we do not expect the adoption of this standard ~~will~~to have ~~on our consolidated financial statements.~~

In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard amended existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of as a deferred charge. It was effective for annual reporting periods beginning after December 15, 2015, but early adoption was permitted. This new guidance reduced total assets and total long-term debt on our consolidated balance sheets by amounts ($18.1 million and $19.9 million as of March 31, 2016 and December 31, 2015, respectively) previously classified as deferred debt issuance costs (see Note 6 - "Indebtedness" for amounts), but this standard did not have any other effect on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments," which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Under this ASU, acquirers must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This guidance is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company elected to early adopt this ASU in the third quarter of 2015, resulting in no materialsignificant impact on our consolidated ~~financial statements.~~

results of operations upon adoption in 2018. We expect to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of adoption.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." ASU No. 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. It is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. From a lessee perspective, the Company currently has seven ground leases that, under the new guidance, will result in the recognition of a lease liability and corresponding right-of-use asset. From a lessor perspective, the new guidance remains mostly similar to current rules, though contract consideration will now be allocated between lease and non-lease components. Non-lease component allocations will be recognized under ASU 2014-09, and we expect that this will result in a different pattern of recognition for certain non-lease components, including for fixed common-area ("CAM") revenues. In addition, ASU 2016-02 limits the capitalization of leasing costs to initial direct costs, which will likely result in a reduction to our capitalized leasing costs and an increase to general and administrative expenses, though the amount of such changes is highly dependent upon the leasing compensation structures in place at the time of adoption. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements.

~~Reclassifications~~

~~Reclassifications~~In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230)." ASU No. 2016-15 is intended to reduce diversity in practice with respect to how certain ~~amounts~~transactions are classified in the ~~2015~~statement of cash flows. It is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted. In addition, in November 2016, the Emerging Issues Task Force ("EITF") of the FASB issued EITF Issue 16-A "Restricted Cash," requiring that a statement of cash flows explain the change during the period in total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash would 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. This guidance is also effective for fiscal years beginning after December 15, 2017, including interim periods. These new standards require a retrospective transition approach. The Company has $30.8 million and $29.2 million of restricted cash on its consolidated ~~financial statements have been made~~balance sheets as of March 31, 2017 and December 31, 2016, respectively, whose cash flow statement classification will change to align with the new guidance upon adoption of the EITF. We are currently evaluating our plans regarding the adoption of these new standards.

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business," that provides guidance to assist entities with evaluating when a set of transferred assets and activities (set) is a business. The new guidance requires an acquirer to determine if substantially all of the fair value of the gross assets acquired is concentrated in ~~order to conform~~a single identifiable asset or group of assets; if so, the set of transferred assets and activities is not a business. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with ~~2016 presentation.~~early adoption permitted. The new guidance will be applied on a prospective basis for transactions that occur within the period of adoption. Upon

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

adoption of this standard, the Company anticipates that more property acquisitions will be accounted for under asset acquisition accounting rather than business combination accounting, which will result in the capitalization of transactions costs rather than expensing of said costs under the current guidance. We early adopted this standard prospectively as of January 1, 2017, as permitted under the standard.

Deferred Costs and Other Assets

~~4. Investment in Real Estate~~

~~The Merger~~

On January ~~15, 2015, we acquired 23 properties in~~4, 2017, the ~~Merger (see Note 1 - "Organization"). We reflected the assets and liabilities of the properties acquired in the Merger at the estimated fair value~~remaining $15.6 million outstanding on the January 15, 2015 acquisition date. The following table summarizes the purchase accounting for the acquisition, which was finalized during the quarter ended March 31, 2016 and did not result in any material changes from the estimated fair values disclosed in the 2015 Form 10-K:

Investment properties $ 3,091,410
Cash and cash equivalents (1) 547,294
Tenant accounts receivable 14,311
Investment in and advances to unconsolidated real estate entities 21,994
Deferred costs and other assets (including intangibles) 370,079
Accounts payable, accrued expenses, intangibles, and deferred revenue (289,551 )
Distributions payable (2,658 )
Redeemable noncontrolling interests, including preferred units (5,795 )
Total assets acquired and liabilities assumed 3,747,084
Fair value of mortgage notes payable assumed (1,356,389 )
Net assets acquired 2,390,695
Less: Common shares issued (535,490 )
Less: Preferred shares issued (319,960 )
Less: Common operating partnership units issued to limited partners (29,482 )
Less: Cash and cash equivalents acquired (547,294 )
Net cash paid for acquisition $ 958,469

~~(1) Includes the proceeds from the Property Sale, net of the repayment of the $155.0 million balance on the Glimcher credit facility.~~

The consolidated balance sheet at March 31, 2016 contains certain intangible assets associated with the Merger. Intangibles of $96.9 million, which relate primarily to above-market leases and lease in place values (excluding the amountspromissory note receivable related to the O'Connor Properties, which were transferred to unconsolidated entities upon deconsolidation on June 1, 2015, per Note 5 - "Investment in Unconsolidated Entities, at Equity"), are included in “Deferred costs and other assets” at March 31, 2016. Intangibles of $95.1 million, which are primarily related to below-market leases, are included in “Accounts payable, accrued expense, intangibles, and deferred revenue” at March 31, 2016.

Total revenues and net loss (excluding transaction costs and costs of corporate borrowing) from the properties we acquired in the Merger (including the amounts from the O'Connor Properties for periods prior to the date of the O'Connor Joint Venture transaction) were $68.8 million and $10.3 million, respectively, for the three months ended March 31, 2015, which are included in the accompanying consolidated statements of operations and comprehensive income (loss).

~~2016 Dispositions~~

On January 29, 2016 ~~the Company completed the~~ sale of Forest Mall, located in Fond Du Lac, Wisconsin, and Northlake Mall, located in Atlanta, Georgia, was received by the Company in full. The proceeds were used to reduce the balance of corporate debt.

On February 28, 2017, the buyer of Knoxville Center, located in Knoxville, Tennessee, extended the maturity of the $6.2 million promissory note receivable, issued during the August 19, 2016 sale of the property, to April 28, 2017 and paid the Company $0.4 million of the outstanding principal balance. As of March 31, 2017, the buyer was current on their interest payments.

Redeemable Noncontrolling Interests for WPG Inc.

Redeemable noncontrolling interests represent the underlying equity held by unaffiliated third parties in the consolidated joint venture entity that owns Arbor Hills, located in Ann Arbor, Michigan (the "Arbor Hills Venture") and the consolidated joint venture that owns Classen Curve and The Triangle at Classen Curve, each located in Oklahoma City, Oklahoma and Nichols Hills Plaza, located in Nichols Hills, Oklahoma (the "Oklahoma City Properties Venture," collectively) as well as the outstanding WPG L.P. 7.3% Series I-1 Preferred Units (the "Series I-1 Preferred Units"). The unaffiliated third parties have, at their option, the right to have their equity purchased by the Company subject to the satisfaction of certain conditions. During the three months ended March 31, 2017, the Company purchased all of the equity owned by such unaffiliated third parties related to the Arbor Hills Venture and the Oklahoma City Properties Venture, respectively. As of March 31, 2017, the aforementioned properties were wholly owned by the Company, and the only remaining redeemable noncontrolling interests relate to Series I-1 Preferred Units.


4.	Investment in Real Estate

2017 Dispositions

On February 21, 2017, we completed the sale of Gulf View Square and River Oaks Center to private real estate investors ~~(the "Buyers")~~ for an aggregate purchase price of ~~$30.0~~$42 million, which was classified as real estate held for sale on the accompanying consolidated balance sheet as of December 31, 2015. The sales price consisted of $10.0 million paid to the Company at closing and the issuance of a promissory note for $20.0 million from the Company to the Buyers with an interest rate of 6% per annum. The note is due on June 30, 2016 with one six-month extension option available to the Buyers. As of March 31, 2016, the Buyers are current on their interest payments. In connection with the sale the Company recorded a $2.2 million loss on the sale.2016. The net proceeds from the ~~transactions~~transaction were used to reduce corporate debt.

On January 10, 2017, we completed the sale of Virginia Center Commons to a private real estate investor for a purchase price of $9 million, which was classified as real estate held for sale on the accompanying consolidated balance sheet as of December 31, 2016. The net proceeds from the transaction were used to reduce corporate debt.

In connection with the sales noted above, the Company recorded a $0.1 million gain, which is included in gain (loss) on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income for the three months ended March 31, 2017.

2016 Dispositions

On January 29, 2016, the Company completed the sale of Forest Mall and Northlake Mall to private real estate investors for an aggregate purchase price of $30.0 million. The net proceeds from the transaction were used to reduce the balance outstanding under the Revolver, as defined ~~below.~~below (see Note 6 - "Indebtedness").

In connection with the sale noted above, the Company recorded a $2.2 million loss, which is included in gain (loss) on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income for the three months ended March 31, 2016.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

~~2015 Acquisition~~Impairment

~~On January 13, 2015,~~During the three months ended March 31, 2017, the Company entered into a purchase and sale agreement to dispose of a community center asset. The agreement is subject to customary closing and diligence requirements. Given uncertainties that the disposition is probable within one year due to the aforementioned closing and diligence requirements, this property remains classified as held for use as of March 31, 2017. In connection with the preparation of our financial statements included in this Form 10-Q, we ~~acquired Canyon View Marketplace, a shopping center located~~shortened the hold period used in ~~Grand Junction, Colorado,~~assessing impairment for ~~$10.0 million including~~ the ~~assumption~~asset, which resulted in the carrying value not being recoverable from the expected cash flows. The purchase offer represents the best available evidence of fair value for this property. We compared the fair value to the carrying value, which resulted in the recording of an ~~existing mortgage with a principal balance~~impairment charge of ~~$5.5 million. The source~~approximately $8.5 million in the accompanying consolidated statements of ~~funding~~operations and comprehensive income for the ~~acquisition was cash on hand.~~

three months ended March 31, 2017.

Intangible Assets and Liabilities Associated with Acquisitions

Intangible assets and liabilities as of March 31, 2016, which were recorded at the respective acquisition dates, are associated with the Company's acquisitions of properties at fair value, including the properties acquired in the Merger.

The gross intangibles recorded as of their respective acquisition dates are comprised of an asset for acquired above-market leases of $62,900 in which the Company is the lessor, a liability for acquired below-market leases of $159,399 in which the Company is the lessor, a liability of $2,536 for an acquired above-market lease in which the Company is the lessee, and an asset for in-place leases of $156,842.

The intangibles related to above and below-market leases in which the Company is the lessor are amortized to minimum rents on a straight-line basis over the estimated life of the lease, with amortization as a net increase to minimum rents in the amounts of $1.9 million and $4.6 million for the three months ended March 31, 2016 and 2015, respectively. The above-market leases in which the Company is the lessee are amortized to other operating expenses over the life of the non-cancelable lease terms, with amortization as a net decrease to other operating expenses in the amounts of $20 and $26 for the three months ended March 31, 2016 and 2015, respectively. In-place leases are amortized to depreciation and amortization expense over the life of the leases to which they pertain, with such amortization in the amounts of $6.6 million and $14.9 million for the three months ended March 31, 2016 and 2015, respectively. The 2016 activity reflects the deconsolidation of the activity related to the properties transferred to the O'Connor Joint Venture (see Note 5 - "Investment in Unconsolidated Entities, at Equity").

The table below identifies the types of intangible assets and liabilities, their location on the consolidated balance sheets, their weighted average amortization period, and their book value, which is net of accumulated amortization, as of March 31, ~~2016~~2017 and December 31, ~~2015:~~

2016:

Balance as of
Intangible
Asset/Liability

Location on the
Consolidated Balance Sheets
Weighted Average Remaining Amortization (in years) March 31, 2016
December 31,
2015
Above-market leases - Company is lessor Deferred costs and other assets 7.4 $ 44,164
$ 47,285
Below-market leases - Company is lessor Accounts payable, accrued expenses, intangibles and deferred revenues 13.3 $ 124,073
$ 131,854
Above-market lease - Company is lessee Accounts payable, accrued expenses, intangibles and deferred revenues 31.2 $ 2,441
$ 2,461
In-place leases Deferred costs and other assets 9.6 $ 93,556
$ 99,836

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

~~Condensed Pro Forma Financial Information (Unaudited)~~

The results of operations of acquired properties are included in the consolidated statements of operations beginning on their respective acquisition dates. The following unaudited condensed pro forma financial information is presented as if the Merger and the Property Sale described in Note 1 - "Organization," which were completed on January 15, 2015, had been consummated on January 1, 2015. The unaudited condensed pro forma financial information assumes the O'Connor Joint Venture transaction completed on June 1, 2015 (see Note 5 - "Investment in Unconsolidated Entities, at Equity") also occurred as of January 1, 2015. Additionally, adjustments have been made to reflect the following transactions as if they occurred on January 1, 2015: the issuance of the Notes Payable on March 24, 2015 (see Note 6 - "Indebtedness"), the redemption of all of the outstanding Series G Preferred Shares on April 15, 2015 (see Note 8 - "Equity"), the refinancings of property mortgages on May 21, 2015 (see Note 6 - "Indebtedness"), the receipt of funds from the June 2015 Term Loan on June 4, 2015 (see Note 6 - "Indebtedness") and the receipt of funds from the December 2015 Term Loan on December 10, 2015 (see Note 6 - "Indebtedness"). Finally, no pro forma adjustments have been made for the January 13, 2015 acquisition of Canyon View Marketplace or the January 29, 2016 sale of Forest Mall and Northlake Mall since they would not have a significant impact. The unaudited condensed pro forma financial information is for comparative purposes only and not necessarily indicative of what actual results of operations of the Company would have been had the Merger and other transactions noted above been consummated on January 1, 2015, nor does it purport to represent the results of operations for future periods.

~~WPG Inc. Condensed Pro Forma Financial Information (Unaudited)~~

~~The table below contains information related to the unaudited condensed pro forma financial information of WPG Inc. for the three months ended March 31, 2015 is as follows:~~

Three Months Ended March 31,
2015
Total revenues $ 213,333
Net income attributable to the Company $ 13,934
Net income attributable to common shareholders $ 10,797
Earnings per common share-basic and diluted $ 0.06
Weighted average shares outstanding-basic (in thousands) 185,099
Weighted average shares outstanding-diluted (in thousands) 219,942

~~WPG L.P. Condensed Pro Forma Financial Information (Unaudited)~~

~~The table below contains information related to the unaudited condensed pro forma financial information of WPG L.P. for the three months ended March 31, 2015 is as follows:~~

Three Months Ended March 31,
2015
Total revenues $ 213,333
Net income attributable to unitholders $ 15,940
Net income attributable to common unitholders $ 12,803
Earnings per common unit-basic and diluted $ 0.06
Weighted average units outstanding-basic (in thousands) 219,468
Weighted average units outstanding-diluted (in thousands) 219,942

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~



			Balance as of
Intangible Asset/Liability	Location on the Consolidated Balance Sheets	Weighted Average Remaining Amortization (in years)	March 31, 2017		December 31, 2016
Above-market leases - Company is lessor	Deferred costs and other assets	7.3	$	32,119	$	34,337
Below-market leases - Company is lessor	Accounts payable, accrued expenses, intangibles and deferred revenues	13.5	$	100,112	$	104,540
Above-market lease - Company is lessee	Accounts payable, accrued expenses, intangibles and deferred revenues	30.2	$	2,363	$	2,383
In-place leases	Deferred costs and other assets	10.0	$	65,972	$	70,907


5.	Investment in Unconsolidated Entities, at Equity

The Company's investment activity in unconsolidated real estate entities ~~for~~during the three months ended March 31, 2017 and March 31, 2016 consisted of investments in the following material joint ventures:

The O'Connor Joint Venture

~~On June 1, 2015, we completed~~This investment consists of a ~~joint venture transaction with O'Connor Mall Partners, L.P. ("O'Connor"), an unaffiliated third party, with respect to~~51% interest held by the ~~ownership and operation~~Company in a portfolio of five ~~of the Company’s malls~~enclosed retail properties and ~~certain~~ related ~~out-parcels (the "O'Connor Joint Venture") acquired in the Merger, which were valued at approximately $1.625 billion,~~outparcels, consisting of the following: The Mall at Johnson City located in Johnson City, Tennessee; Pearlridge Center located in Aiea, Hawaii; Polaris Fashion Place® located in Columbus, Ohio; Scottsdale Quarter® located in Scottsdale, ~~Arizona~~Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas (collectively the "O'Connor Properties"). ~~Under~~We retained management, leasing, and development responsibilities for the ~~terms of the joint venture agreement, we retained a 51% interest in~~O'Connor Joint Venture.

On March 2, 2017, the O'Connor Joint Venture ~~and sold~~closed on the ~~remaining 49% interest to O'Connor. In addition, the Company received reimbursement for 49%~~purchase of ~~costs incurred as~~Pearlridge Uptown II, a 180,000 square foot wing of ~~June 1, 2015 related to development activity at Scottsdale Quarter. The transaction generated net proceeds, after taking into consideration the assumption of debt (including the new loans on~~ Pearlridge Center, ~~and Scottsdale Quarter) and costs associated with the transaction,~~for a gross purchase price of approximately $432 million (including $28.7 million for the partial reimbursement of the Scottsdale Quarter development costs), which was used to repay a portion of the Bridge Loan (see Note 6 - "Indebtedness"). Since we no longer control the operations of the O'Connor Properties, we deconsolidated the properties and recorded a gain in connection with this sale of $4.2 million on June 1, 2015. We retained management and leasing responsibilities for the O'Connor Properties, though our partner's substantive participating rights over the decisions most important to the operations of$70.0 million.

On March 30, 2017, the O'Connor Joint Venture ~~preclude our control~~closed on a $43.2 million non-recourse mortgage note payable with an eight year term and ~~consolidation~~a fixed interest rate of ~~this venture.~~4.071% secured by Pearlridge Uptown II. The mortgage note payable requires monthly interest only payments until April 1, 2019, at which time monthly interest and principal payments are due until maturity.

~~This investment consists of a 51% interest held by the Company in~~On March 29, 2017, the O'Connor Joint Venture ~~that owns~~closed on a $55.0 million non-recourse mortgage note payable with a ten year term and ~~operates the O'Connor Properties. One~~a fixed interest rate of ~~the properties in this venture, Pearlridge Center, is subject to a ground lease.~~

4.36% secured by sections of Scottsdale Quarter® known as Block K and Block M. The ~~Seminole Joint Venture~~

~~This investment consists of a 45%~~mortgage note payable requires monthly interest ~~held by the Company in Seminole Towne Center, an approximate 1.1 million square foot enclosed regional mall located in the Orlando, Florida area. The Company's effective financial~~only payments until May 1, 2022, at which time monthly interest ~~in this property (after preferences) is estimated to be approximately 22% for 2016.~~

~~Other Joint Venture~~

~~The Company also holds an indirect 12.5% ownership interest in certain real estate through a joint venture with an unaffiliated third party.~~

~~Individual agreements specify which services the Company is to provide to each joint venture. The Company, through its affiliates, may provide management, development, construction, leasing~~ and ~~legal services for a fee to each of the joint ventures described above.~~

~~The results for the O'Connor Joint Venture~~principal payments are ~~included below for the three months ended March 31, 2016.~~

The results for Seminole Towne Center are included below for all periods presented. The results for the indirect 12.5% ownership interest in certain real estate are included for the three months ended March 31, 2016 and for the period from January 15, 2015 through March 31, 2015.due until maturity.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

The Seminole Joint Venture

This investment consists of a 45% legal interest held by the Company in Seminole Towne Center, an approximate 1.1 million square foot enclosed regional retail property located in the Orlando, Florida area. The Company's effective financial interest in this property (after preferences) is estimated to be approximately 22% for 2017. We retain management and leasing responsibilities for the Seminole Joint Venture.

Individual agreements specify which services the Company is to provide to each joint venture. The Company, through its affiliates, provide management, development, construction, marketing, leasing and legal services for a fee to each of the joint ventures described above. Related to performing these services, we recorded management fees of $1.6 million and $1.5 million for the three months ended March 31, 2017 and 2016, respectively, which are included in other income in the accompanying consolidated statements of operations and comprehensive income. Advances to the O'Connor Joint Venture totaled $2.6 million and $2.5 million as of March 31, 2017 and December 31, 2016, respectively, which are included in investment in and advances to unconsolidated entities, at equity in the accompanying consolidated balance sheets. Management deems this balance to be collectible and anticipates repayment within one year.

The following table presents the combined statements of operations for the ~~unconsolidated joint venture properties~~O'Connor Joint Venture, the Seminole Joint Venture, and an indirect 12.5% ownership interest in certain real estate for ~~the~~all periods ~~indicated above~~presented during which the Company accounted for these investments as unconsolidated entities for the three months ended March 31, ~~2016~~2017 and ~~2015:~~2016:


	For the Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Total revenues	$	46,312		$	8,464		$	48,434		$	46,312
Operating expenses	19,306			3,969			20,591			19,306
Depreciation and amortization	20,044			1,301			19,034			20,044
Operating income	6,962			3,194			8,809			6,962
Interest expense, net	(7,889		)	(1,096		)
Net (loss) income from the Company's unconsolidated real estate entities	(927		)	2,098
Our share of (loss) income from the Company's unconsolidated real estate entities	$	(1,161	)	$	216
Interest expense, taxes, and other, net							(8,460		)	(7,889		)
Net income (loss) from the Company's unconsolidated real estate entities							349			(927		)
Our share of loss from the Company's unconsolidated real estate entities							$	(444	)	$	(1,161	)


6.	Indebtedness

Mortgage Debt

Total mortgage indebtedness at March 31, ~~2016~~2017 and December 31, ~~2015~~2016 was as follows:


	March 31, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Face amount of mortgage loans	$	1,778,445		$	1,782,103		$	1,603,806		$	1,610,429
Fair value adjustments, net	16,032			17,683			11,691			12,661
Debt issuance cost, net	(5,857		)	(6,347		)	(4,695		)	(5,010		)
Carrying value of mortgage loans	$	1,788,620		$	1,793,439		$	1,610,802		$	1,618,080

A roll forward of mortgage indebtedness from December 31, ~~2015~~2016 to March 31, ~~2016~~2017 is summarized as follows:


Balance, December 31, 2015	$	1,793,439
Balance at December 31, 2016				$	1,618,080
Debt amortization payments	(3,658		)	(6,623		)
Amortization of fair value and other adjustments	(1,651		)	(970		)
Amortization of debt issuance costs	490			315
Balance, March 31, 2016	$	1,788,620
Balance at March 31, 2017				$	1,610,802

Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

Unsecured Debt

The Facility

On May 15, 2014, we closed on a senior unsecured revolving credit facility, or "Revolver," and a senior unsecured term loan, or "Term Loan" (collectively referred to as the "Facility"). The Revolver provides borrowings on a revolving basis up to $900.0 million, bears interest at one-month LIBOR plus 1.25%, and will initially mature on May 30, 2018, subject to two six-month extensions available at our option subject to compliance with the terms of the Facility and payment of a customary extension fee. The Term Loan provides borrowings in an aggregate principal amount up to $500.0 million, bears interest at one-month LIBOR plus 1.45%~~, and will mature on~~. During the three months ended March 31, 2017, we extended the maturity of the Term Loan from May 30, 2017 ~~subject~~ to ~~two,~~May 30, 2018. We have one, 12-month ~~extensions~~extension available at our option subject to compliance with the terms of the Facility and payment of a customary extension fee. On July 6, 2016, the Company executed interest rate swap agreements totaling $200.0 million, which effectively fixed the interest rate on a portion of the Term Loan at 2.04% through August 1, 2018. The interest rate on the Facility may vary in the future based on the Company's credit rating.

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

At March 31, ~~2016,~~2017, borrowings under the Facility consisted of ~~$263.8~~$293.0 million outstanding under the Revolver (before debt issuance costs, net of ~~$2.8~~$1.5 million) and ~~$500.0~~$499.7 million, net of $0.3 million of debt issuance costs, outstanding under the Term ~~Loan (before debt issuance costs, net of $0.2 million).~~Loan. On March 31, ~~2016,~~2017, we had an aggregate available borrowing capacity of ~~$635.9~~$606.7 million under the Revolver, net of $0.3 million reserved for outstanding letters of credit. At March 31, ~~2016,~~2017, the applicable interest rate on the Revolver was one-month LIBOR plus 1.25%, or ~~1.69%~~2.23%, and the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 1.45%, or ~~1.89%~~2.43%.

Term Loans

On December 10, 2015, the Company borrowed $340.0 million under a term loan (the "December 2015 Term Loan"), pursuant to a commitment received from bank lenders. The December 2015 Term Loan bears interest at one-month LIBOR plus 1.80% and will mature in January 2023. ~~The interest rate on the December 2015 Term Loan may vary in the future based on the Company's credit rating.~~ On December 11, 2015, the Company executed interest rate swap agreements totaling $340.0 million, which effectively fixed the interest rate on the December 2015 Term Loan at 3.51% through January 2023. The ~~Company used the proceeds from~~interest rate on the December 2015 Term Loan ~~to repay outstanding amounts~~may vary in the future based on the ~~Revolver and for other general corporate purposes.~~Company's credit rating. As of March 31, ~~2016,~~2017, the balance ~~is $336.6~~was $337.1 million, net of ~~$3.4~~$2.9 million of debt issuance ~~costs, net.~~costs.

On June 4, 2015, the Company borrowed $500.0 million under a term loan (the "June 2015 Term Loan"), pursuant to a commitment received from bank lenders. The June 2015 Term Loan bears interest at one-month LIBOR plus 1.45% and will mature in March 2020. ~~The interest rate on the June 2015 Term Loan may vary in the future based on the Company's credit rating.~~ On June 19, 2015, the Company executed interest rate swap agreements totaling $500.0 million, with an effective date of July 6, 2015, which effectively fixed the interest rate on the June 2015 Term Loan at 2.56% through June 2018. The ~~Company used the proceeds from~~interest rate on the June 2015 Term Loan ~~to repay~~may vary in the ~~remaining outstanding balance~~future based on the ~~Bridge Loan (defined below).~~Company's credit rating. As of March 31, ~~2016,~~2017, the balance ~~is $497.1~~was $497.8 million, net of ~~$2.9~~$2.2 million of debt issuance ~~costs, net.~~

~~Bridge Loan~~

On September 16, 2014, in connection with the execution of the Merger Agreement, WPG entered into a debt commitment letter, which was amended and restated on September 23, 2014 pursuant to which parties agreed to provide up to $1.25 billion in a senior unsecured bridge loan facility (the “Bridge Loan”). The Bridge Loan had a maturity date of January 14, 2016, the date that is 364 days following the closing date of the Merger.

~~On January 15, 2015, the Company borrowed $1.19 billion under the Bridge Loan in connection with the closing of the Merger, which balance was repaid in full during 2015.~~

The Company incurred $10.4 million of Bridge Loan commitment, structuring and funding fees. Upon the repayment of the Bridge Loan, the Company accelerated amortization of the deferred loan costs, resulting in total amortization of $4.1 million included in interest expense in the accompanying consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2015.

costs.

Notes Payable

On March 24, 2015, WPG L.P. closed on a private placement of $250.0 million of 3.850% senior unsecured notes (the "Notes Payable") at a 0.028% discount due April 1, 2020. WPG L.P. received net proceeds from the offering of $248.4 million, which it used to repay a portion of outstanding borrowings under the ~~Bridge Loan.~~bridge loan dated as of September 16, 2014 (the "Bridge Loan"). The Notes Payable contain certain customary covenants and events of default which, if any such event of default occurs, would permit or require the principal, premium, if any, and accrued and unpaid interest on all of the then-outstanding Notes Payable to be declared immediately due and payable (subject in certain cases to customary grace and cure periods).

On October 21, 2015, WPG L.P. completed an offer to exchange (the "Exchange Offer") up to $250.0 million aggregate principal amount of the Notes Payable for a like principal amount of its 3.850% senior unsecured notes that have been registered under the Securities Act of 1933 (the "Exchange Notes"). On October 21, 2015, $250.0 million of Exchange Notes were issued in exchange for $250.0 million aggregate principal amount of the Notes Payable that were tendered in the Exchange Offer.

As of March 31, ~~2016,~~2017, the balance outstanding under the Exchange Notes ~~is $247.1~~was $247.8 million, net of ~~$2.9~~$2.2 million of debt discount and issuance ~~costs, net.~~

costs.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

Covenants

Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of March 31, ~~2016,~~2017, management believes the Company is in compliance with all covenants of its unsecured debt.

The total balance of mortgages was approximately ~~$1.8~~$1.6 billion as of March 31, ~~2016.~~2017. At March 31, ~~2016,~~2017, certain of our consolidated subsidiaries were the borrowers under 3430 non-recourse loans, one full-recourse loan and one partial-recourse loan secured by mortgages encumbering 3936 properties, including two separate pools of cross-defaulted and cross-collateralized mortgages encumbering a total of six properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the debt and enforce its right against its collateral. If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral.

On ~~January 11, 2016,~~March 30, 2017, the ~~$44.9~~Company transferred the $40.0 million mortgage loan secured by ~~River Valley~~Valle Vista Mall, located in ~~Lancaster, Ohio, matured.~~Harlingen, Texas, to the special servicer at the request of the borrower, a consolidated subsidiary of the Company. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. The Company will continue to manage and lease the property.

On June 30, 2016, we received a notice, dated that same date, that the $87.3 million mortgage loan secured by Mesa Mall, located in Grand Junction, Colorado had been transferred to the special servicer due to the payment default that occurred when the borrower, a consolidated subsidiary of the Company, did not repay the loan in full ~~on the~~by its June 1, 2016 maturity date. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options including restructuring, extending and other options, including transitioning the property to the ~~lender.~~lender (see Note 12 - "Subsequent Events").

On ~~October 30, 2015,~~June 6, 2016, we received a notice of default letter, dated that same date, from the special servicer to the borrower concerning the $62.4 million mortgage loan that matures on February 1, 2017 and is secured by Chesapeake Square, located in Chesapeake, Virginia. The default resulted from an operating cash flow shortfall at the property in October 2015 that the borrower, a consolidated subsidiary of the Company, did not cure. The borrower transitioned the property to the lender on April 28,June 3, 2016, ~~(see Note 12 - "Subsequent Events").~~

~~On October 8, 2015, we received a notice of default letter, dated October 5, 2015,~~ from the special servicer to the borrower of the ~~$52.9~~$99.5 million mortgage loan secured by ~~Merritt Square~~Southern Hills Mall, located in ~~Merritt Island, Florida.~~Sioux City, Iowa. The letter was sent because the borrower, a consolidated subsidiary of the Company, did not repay the loan in full by its ~~September~~June 1, ~~2015~~2016 maturity date. ~~The borrower has initiated discussions with~~On October 27, 2016, we received notification that a receiver had been appointed to manage and lease the ~~special servicer regarding this non-recourse loan and expects to transition~~property. An affiliate of the ~~property~~Company still holds title to the ~~lender in the second quarter of 2016.~~

property.

At March 31, ~~2016,~~2017, management believes the applicable borrowers under our other non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows. ~~In addition, we~~The Company has assessed each of these properties for impairment indicators and have ~~identified~~concluded no impairment charges were warranted as of March 31, 2017.

Fair Value of Debt

The carrying values of our variable-rate loans approximate their fair values. We estimate the ~~following properties as over-levered: Southern Hills Mall, located in Sioux City, Iowa, where we have commenced discussions with the special servicer on the loan encumbering this property,~~fair values of fixed-rate mortgages and ~~Valle Vista Mall, located in Harlingen, Texas, where we expect~~fixed-rate unsecured debt (including variable-rate unsecured debt swapped to ~~commence discussions with the special servicer on the loan encumbering this property.~~

fixed-rate) using cash flows discounted at current borrowing rates.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

~~Fair Value of Debt~~

~~The carrying values of our variable-rate loans approximate their fair values. We estimate the fair values of fixed-rate mortgages using cash flows discounted at current borrowing rates.~~ The book value ~~of our fixed-rate mortgages was $1.6 billion as of March 31, 2016~~ and ~~December 31, 2015. The~~ fair ~~values~~value of these financial instruments and the related discount rate assumptions as of March 31, ~~2016~~2017 and December 31, ~~2015~~2016 are summarized as follows:


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Book value of fixed-rate mortgages⁽¹⁾					$1,352,706		$1,359,329
Fair value of fixed-rate mortgages	$1,686,130		$1,675,035		$1,395,559		$1,403,103
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages	3.15	%	3.42	%	3.80	%	3.79	%

Book value of fixed-rate unsecured debt⁽¹⁾					$1,290,000		$1,290,000
Fair value of fixed-rate unsecured debt					$1,265,188		$1,261,858
Weighted average discount rates assumed in calculation of fair value for fixed-rate unsecured debt					2.86	%	2.86	%

(1) Excludes debt issuance costs and applicable debt discounts.


7.	Derivative Financial Instruments

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash payments related to the Company's borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives the Company primarily uses interest rate swaps or caps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in other comprehensive income ("OCI") or other comprehensive loss (“OCL”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed-rate financings or refinancings continue to be included in accumulated other comprehensive ~~loss~~income ("~~AOCL"~~AOCI") during the term of the hedged debt transaction. Any ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The Company recognized $0.1 million of hedge ineffectiveness as an increase to earnings during the three months ended March 31, 2017. The Company recognized $2.3 million of hedge ineffectiveness as a decrease to earnings during the three months ended March 31, 2016, primarily resulting from a mismatch in the terms of the December 2015 Term Loan and the corresponding derivative. The December 2015 Term ~~loan~~Loan includes a 0% LIBOR floor while the corresponding derivative does not. ~~There was no hedge ineffectiveness in earnings during the three months ended March 31, 2015.~~

Amounts reported in ~~AOCL~~AOCI relate to derivatives that will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Realized gains or losses on settled derivative instruments included in ~~AOCL~~AOCI are recognized as an adjustment to income over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional ~~$6.5~~$0.4 million will be reclassified as ~~an increase~~a decrease to interest expense.

As of March 31, ~~2016,~~2017, the Company had ~~twelve~~15 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a notional value of ~~$939,600.~~

$1,139,600.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, ~~2016~~2017 and December 31, ~~2015:~~

2016:


Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:	Balance Sheet Location	As of March 31, 2016		As of December 31, 2015		Derivatives designated as hedging instruments:	Balance Sheet Location	March 31, 2017		December 31, 2016
Interest rate products	Asset derivatives	Deferred costs and other assets	$	—	$	1,658	Asset derivatives	Deferred costs and other assets	$	8,223	$	5,754
Interest rate products	Liability derivatives	Accounts payable, accrued expenses, intangibles and deferred revenues	$	14,273	$	152	Liability derivatives	Accounts payable, accrued expenses, intangibles and deferred revenues	$	—	$	2

The asset derivative instruments were reported at their fair value of ~~zero~~$8,223 and ~~$1,658~~$5,754 in deferred costs and other assets at March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, with a corresponding adjustment to OCI for the unrealized gains and losses (net of noncontrolling interest allocation). The liability derivative instruments were reported at their fair value of ~~$14,273~~$0 and ~~$152~~$2 in accounts payable, accrued expenses, intangibles, and deferred revenues at March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, with a corresponding adjustment to OCL for the unrealized gains and losses (net of noncontrolling interest allocation). Over time, the unrealized gains and losses held in ~~AOCL~~AOCI will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.

~~During the three months ended March 31, 2016, the Company recognized OCL of $37 related to the two ten-year forward starting swaps that were terminated on September 9, 2015.~~ The Company recognized OCL of $5,212, of which $860 has been amortized into interest expense, related to the five three-year swaps associated with the June 2015 Term Loan. The Company recognized OCL of $10,148, net of $1,101 which has been amortized into interest expense, related to the six seven-year swaps associated with the December 2015 Term Loan.

During the three months ended March 31, 2015, the Company recognized OCI of $593 related to the five-year swaps associated with the Notes Payable, which will be amortized into expense over the term of the Notes Payable, and OCL of $1.0 million related to the two ten-year forward starting swaps that were terminated on September 9, 2015.

~~The tables~~table below ~~present~~presents the effect of the Company's derivative financial instruments on the consolidated statements of operations and comprehensive income ~~(loss)~~ for the three months ended March 31, ~~2016~~2017 and ~~2015:~~

2016:

Derivatives in Cash Flow Hedging Relationships Amount of Gain or (Loss) Recognized in OCL on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion) Amount of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31,
2016 2015 2016 2015 2016 2015
Interest rate products $ (15,397 ) $ (407 ) Interest expense $ 1,931
$ 3
Interest expense $ (2,342 ) $ —

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

~~Non-Designated Hedges~~

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks, but do not meet the strict hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As of March 31, 2016, the Company has no derivatives that are not designated as cash flow hedges.



Derivatives in Cash Flow Hedging Relationships		Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)					Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
		Three Months Ended						Three Months Ended					Three Months Ended
	��	March 31,						March 31,					March 31,
		2017		2016				2017		2016			2017		2016
Interest rate products		$	1,263	$	(15,397	)	Interest expense	$	1,086	$	1,931	Interest expense	$	92	$	(2,342	)

Credit Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision that if the Company either defaults or is capable of being declared in default on any of its consolidated indebtedness, then the Company could also be declared in default on its derivative obligations.

The Company has agreements with its derivative counterparties that incorporate the loan covenant provisions of the Company's indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.

As of March 31, ~~2016,~~2017, the fair value of derivatives in a net liability position, plus accrued interest but excluding any adjustment for nonperformance risk, related to these agreements was ~~$15,993.~~$0. As of March 31, ~~2016,~~2017, the Company has not posted any collateral related to these agreements. The Company is not in default with any of these provisions. If the Company had breached any of these provisions at March 31, ~~2016,~~2017, it would have been required to settle its obligations under the agreements at their termination value of ~~$15,993.~~

$0.

Fair Value Considerations

Currently, the Company uses interest rate swaps and caps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. Based on these inputs the Company has determined that its interest rate swap and cap valuations are classified within Level 2 of the fair value hierarchy.

Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

To comply with the provisions of Topic 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, 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 of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

~~The Company values its net derivative instruments on a recurring basis using significant other observable inputs (Level 2).~~

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

The tables below presents the Company’s net assets and liabilities measured at fair value as of March 31, ~~2016~~2017 and December 31, ~~2015~~2016 aggregated by the level in the fair value hierarchy within which those measurements fall:



	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2017
Derivative instruments, net	$	—	$	8,223	$	—	$	8,223

Quoted Prices in Active Markets for Identical Liabilities
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Balance at March 31,
2016
Derivative instruments, net $ —
$ (14,273 ) $ —
$ (14,273 )

Quoted Prices in Active Markets for Identical Liabilities
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
Balance at December 31, 2015
Derivative instruments, net $ —
$ 1,506
$ —
$ 1,506



	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2016
Derivative instruments, net	$	—	$	5,752	$	—	$	5,752


8.	Equity

~~The Merger~~

Related to the Merger completed on January 15, 2015, WPG Inc. issued 29,942,877 common shares, 4,700,000 shares of 8.125% Series G Cumulative Redeemable Preferred Stock (the "Series G Preferred Shares"), 4,000,000 shares of 7.5% Series H Cumulative Redeemable Preferred Stock (the "Series H Preferred Shares") and 3,800,000 shares of 6.875% Series I Cumulative Redeemable Preferred Stock (the "Series I Preferred Shares"), and WPG L.P. issued to WPG Inc. a like number of common and preferred units as consideration for the common and preferred shares issued. Additionally, WPG L.P. issued to limited partners 1,621,695 common units and 130,592 WPG L.P. 7.3% Series I‑1 Preferred Units. The preferred shares and units were issued as consideration for similarly-named preferred interests of Glimcher that were outstanding at the Merger date.

On April 15, 2015, WPG Inc. redeemed all of the 4,700,000 issued and outstanding Series G Preferred Shares, resulting in WPG L.P. redeeming a like number of preferred units under terms identical to those of the Series G Preferred Shares described below. The Series G Preferred Shares were redeemed at a redemption price of $25.00 per share, plus accumulated and unpaid distributions up to, but excluding, the redemption date, in an amount equal to $0.5868 per share, for a total payment of $25.5868 per share. This redemption amount includes the first quarter dividend of $0.5078 per share that was declared on February 24, 2015 to holders of record of such Series G Preferred Shares on March 31, 2015. Because the redemption of the Series G Preferred Shares was a redemption in full, trading of the Series G Preferred Shares on the NYSE ceased after the redemption date. The aggregate amount paid to effect the redemptions of the Series G Preferred Shares was approximately $120.3 million, which was funded with cash on hand.

Exchange Rights

Subject to the terms of the limited partnership agreement of WPG L.P., limited partners in WPG L.P. have, at their option, the right to exchange all or any portion of their units for shares of WPG Inc. common stock on a one‑for‑one basis or cash, as determined by WPG Inc. Therefore, the common units held by limited partners are considered by WPG Inc. to be share equivalents and classified as noncontrolling interests within permanent equity, and classified by WPG L.P. as permanent equity. The amount of cash to be paid if the exchange right is exercised and the cash option is selected will be based on the ~~trading price~~market value of WPG Inc.'s common stock ~~at that time.~~as determined pursuant to the terms of the WPG L.P. Partnership Agreement. At March 31, ~~2016,~~2017, WPG Inc. had reserved ~~35,129,921~~35,127,735 shares of common stock for possible issuance upon the exchange of units held by limited partners.

The holders of the Series I-1 Preferred Units have, at their option, the right to have their units purchased by WPG L.P. subject to the satisfaction of certain conditions. Therefore, the Series I-1 Preferred Units are classified as redeemable noncontrolling interests outside of permanent equity.

~~WP Glimcher Inc. and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

Stock Based Compensation

On May 28, 2014, ~~WPG Inc.'s~~the Board ~~of Directors~~ adopted the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the "Plan"), which permits the Company to grant awards to current and prospective directors, officers, employees and consultants of the Company or any affiliate. An aggregate of 10,000,000 shares of common stock has been reserved for issuance under the Plan. In addition, the maximum number of awards to be granted to a participant in any calendar year is 500,000 ~~shares.~~shares/units. Awards may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs") or other stock-based awards in WPG Inc., or long term incentive ~~plan~~units ("~~LTIP"~~LTIP units" or "LTIPs") ~~units~~ or performance units ("Performance LTIP Units") in WPG L.P. The Plan terminates on May 28, 2024.

The following is a summary by type of the awards that the Company issued during the three months ended March 31, 2017 and March 31, 2016 under the Plan.

Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

~~Long Term~~Annual Long-Term Incentive Awards

~~The~~On February 21, 2017 (the "Adoption Date"), the Company ~~has issued various types of LTIP awards. Listed below is~~approved the ~~summary~~terms and conditions of the ~~types of awards that have been issued.~~

~~Time Vested LTIP Awards~~

~~The Company has issued time-vested LTIP units~~2017 annual award ("~~Inducement LTIP Units"~~2017 Annual Long-Term Incentive Awards") tofor certain executive officers and employees ~~under the Plan, pursuant to LTIP Unit Award Agreements between the Company and each~~ of the ~~grant recipients. These awards will vest~~Company. Under the terms of the 2017 Annual Long-Term Incentive Awards program, each participant is provided the opportunity to receive (i) time-based RSUs and ~~the related fair value will be expensed over~~(ii) performance-based stock units ("PSUs"). RSUs represent a ~~four-year vesting period.~~contingent right to receive one WPG Inc. common share for each vested RSU. During the three months ended March 31, ~~2016~~2017, the Company ~~did not~~issued 358,198 time-based RSUs, with a grant ~~any Inducement LTIP Units.~~

~~Performance Based Awards~~

~~The Company has allocated LTIP unit awards~~date fair value of $3.4 million, which will vest in one-third installments on each of February 21, 2018, 2019, and 2020, subject to ~~certain market conditions under ASC 718 ("Performance LTIP Units") to certain executive officers and employees to be earned~~the participant's continued employment with the Company through each vesting date and the ~~related fair value expensed~~participant's continued compliance with certain applicable covenants. During the service period, dividend equivalents will be paid with respect to the RSUs corresponding to the amount of any dividends paid by the Company to the Company's common shareholders for the applicable dividend payment dates. Compensation expense is recognized on a straight-line basis over the ~~applicable performance periods.~~three year vesting term. During the three months ended March 31, 2017, the Company issued 358,198 PSUs, at target, with a grant date fair value of $2.8 million. Actual PSUs earned may range from 0%-150% of the target PSUs, based on the Company's total shareholder return ("TSR") compared to a peer group based on companies with similar assets and revenue over a three-year performance period that commenced on the Adoption Date. During the performance period, dividend equivalents corresponding to the amount of any regular cash dividends paid by the Company to the Company’s common shareholders for the applicable dividend payment dates will accrue and be deemed reinvested in additional PSUs, which will be settled in common shares at the same time and only to the extent that the underlying PSU is earned and settled in common shares. Payout of the PSUs is also subject to the participant’s continued employment with the Company through the end of the performance period. The awards were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the three year performance period.

During 2016, the Company ~~did not~~approved the performance criteria and maximum dollar amount of the 2016 annual awards (the "2016 Annual Long-Term Incentive Awards"), that generally range from 30%-100% of annual base salary, for certain executive officers and employees of the Company. The number of awards was determined by converting the cash value of the award to a number of RSUs (the "Allocated RSUs") based on the closing price of WPG Inc.'s common shares for the final 15 trading days of 2016. Recipients were eligible to receive a percentage of the Allocated RSUs based on the Company's performance on its strategic goals detailed in the Company's 2016 cash bonus plan and the Company's relative TSR compared to a peer group based on companies with similar assets and revenue. Payout for 50% of the Allocated RSUs was based on the Company's performance on the strategic goals and the payout on the remaining 50% was based on the Company's TSR performance. Both the strategic goal component as well the TSR performance were achieved at target, resulting in a 100% payout. During the three months ended March 31, 2017, the Company awarded 324,237 of Allocated RSUs, with a grant ~~any Performance LTIP Units.~~

date fair value of $2.2 million, related to the 2016 Annual Long-Term Incentive Awards, which will vest in one-third installments on each of February 21, 2018, 2019 and 2020.

During 2015, the Company approved the performance criteria and maximum dollar amount of the 2015 annual LTIP unit awards (the "2015 Annual Long-Term Incentive Awards"), that generally range from 30%-300% of annual base salary, for certain executive officers and employees of the Company. The number of awards iswas determined by converting the cash value of the award to a number of LTIP ~~Units~~units (the "Allocated Units") based on the closing price of WPG Inc.'s common shares for the final 15 trading days of 2015. ~~Recipients are~~Eventual recipients were eligible to receive a percentage of the Allocated Units based on the Company's performance on its strategic goals detailed in the Company's 2015 cash bonus plan and the Company's relative TSR compared to the MSCI REIT Index. Payout for 40% of the Allocated Units iswas based on the Company's performance on the strategic goals and the payout on the remaining 60% iswas based on the Company's TSR performance. The strategic goal component was achieved in 2015; however, the TSR was below ~~the~~ threshold performance, resulting in only a 40% ~~award~~payout for this annual LTIP award. During the three months ended March 31, 2016, the Company awarded 323,417 LTIP units related to the 2015 Annual Long-Term Incentive ~~Awards.~~

~~WPG Restricted Share~~ Awards,

~~As part~~ of which 108,118 vest in one-third installments on each of January 1, 2017, 2018 and 2019. The 94,106 LTIP units awarded to our former Executive Chairman fully vested on the ~~Merger, unvested restricted shares held by~~grant date and the 121,193 LTIP units awarded to certain ~~Glimcher~~former executive employees, which had an original vesting period of five years, were converted into 1,039,785 WPG restricted shares (the “WPG Restricted Shares”). The WPG Restricted Shares will be amortized over the remaining life ofofficers fully vested on the applicable ~~vesting period, except for~~severance date during 2016 pursuant to the ~~portion~~underlying severance arrangements.

Stock Options

During the three months ended March 31, 2017, no stock options were granted from the Plan to employees, 1,566 stock options were exercised by employees and 34,452 stock options were canceled, forfeited or expired. As of ~~the awards applicable to pre-Merger service, which was included as equity consideration issued in the Merger.~~March 31, 2017, there were 941,558 stock options outstanding.

~~LTIP/WPG Restricted Share Award Related Compensation Expense~~

The Company recorded compensation expense related to all LTIP and WPG Restricted Shares of approximately $1.9 million (excluding the $1.2 million reversal of previously recorded stock compensation expense associated with the forfeiture of grants to former executives) and $2.3 million forDuring the three months ended March 31, 2016, no stock options were granted from the Plan to employees, no stock options were exercised by employees and 2015, respectively, which expense is included in general and administrative expense and merger and transaction costs in the accompanying consolidated statements of operations and comprehensive income (loss).1,000 stock options were canceled, forfeited or expired.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

~~Stock Options~~Share Award Related Compensation Expense

~~As part of the Merger, outstanding stock options held by certain former Glimcher employees were converted into 1,125,014 WPG stock options.~~ During the three months ended March 31, 2017 and 2016, nothe Company recorded share award related compensation expense pertaining to the award and option plans noted above of $1.5 million and $1.9 million (excluding the $1.2 million reversal of previously recorded stock ~~options were granted from~~compensation expense associated with the ~~Plan~~forfeiture of grants to ~~employees, no stock options were exercised by employees and 1,000 stock options were canceled, forfeited or expired. As of~~former executives during the three months ended March 31, ~~2016, there were 1,144,181~~2016), respectively, in general and administrative expense within the consolidated statements of operations and comprehensive income. In certain instances, employment agreements and stock ~~options outstanding.~~

compensation programs provide for accelerated vesting when executives are terminated without cause.

Distributions

~~On February 25,~~During the three months ended March 31, 2017 and 2016, ~~WPG Inc.'s~~the Board declared common share/unit dividends of ~~Directors declared the following cash distributions~~$0.25 per common share/~~unit:~~unit.



~~Security Type~~	~~Distribution per Share/Unit~~	~~For the~~ ~~Quarter Ended~~	~~Record Date~~	~~Date Paid~~
~~Common Shares/Units~~	~~$0.2500~~	~~March 31, 2016~~	~~March 7, 2016~~	~~March 15, 2016~~
~~Series H Preferred Shares/Units (1)~~	~~$0.4688~~	~~March 31, 2016~~	~~March 31, 2016~~	~~April 15, 2016~~
~~Series I Preferred Shares/Units (1)~~	~~$0.4297~~	~~March 31, 2016~~	~~March 31, 2016~~	~~April 15, 2016~~
~~Series I‑1 Preferred Units (1)~~	~~$0.4563~~	~~March 31, 2016~~	~~March 31, 2016~~	~~April 15, 2016~~


~~(1)~~9.	~~Amounts total $3.0 million~~Commitments and ~~are recorded as distributions payable in the accompanying consolidated balance sheet as of March 31, 2016.~~Contingencies

~~9. Commitments and Contingencies~~

Litigation

We are involved from time-to-time in various legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such litigation, claims and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.

~~Loss Contingency~~

The purchase and sale agreement related to the O’Connor Joint Venture contains certain lease-up provisions. The majority of the deals are fully executed; however, a small number of leases are not yet executed pursuant to these provisions. The Company is currently negotiating with tenants for these spaces and believes that it is likely that the space will be leased. However, if the Company is not able to execute leases with these tenants (or replacement tenants) within a specified timeframe, O’Connor could seek an adjustment payment effectively reducing the amount paid for their acquisition of joint venture interest. The Company estimates the range of the potential losses associated with these deals to be between $0 and $3 million. The Company believes that the loss is not probable at this time and has not accrued for this loss contingency in the accompanying financial statements.

Concentration of Credit Risk

Our properties rely heavily upon anchor or major tenants to attract customers; however, these retailers do not constitute a material portion of our financial results. Additionally, many anchor retailers in the ~~mall~~enclosed retail properties own their spaces further reducing their contribution to our operating results. All operations are within the United States and no customer or tenant accounts for 5% or more of our consolidated revenues.

~~10. Related Party Transactions~~


10.	Related Party Transactions

Transactions with ~~SPG~~Simon Property Group Inc.

~~As described~~The Company was formed in ~~Note 1 - "Organization" and Note 2 - "Basis~~2014 through a spin-off of ~~Presentation and Principles of Consolidation," the accompanying consolidated financial statements include the operations of the~~certain properties ~~under the Company's ownership subsequent to the separation. Transactions between the properties have been eliminated in the consolidated presentation.~~

~~WP Glimcher~~from Simon Property Group, Inc. ~~and Washington Prime Group, L.P.~~

~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)~~

~~In connection with the separation,~~("SPG"). SPG managed the day-to-day operations of our legacy SPG ~~mall~~enclosed retail properties through February 29, 2016 in accordance with property management agreements that ~~expire~~expired as of May 31, 2016. Additionally, WPG and SPG entered into a transition services agreement pursuant to which SPG provided to WPG, on an interim, transitional basis after May 28, 2014 through May 31, 2016, the ~~Separation Date,~~date on which it was terminated, various services including administrative support for the community centers through December 31, 2015, information technology, property management, accounts payable and other financial functions, as well as engineering support, quality assurance support and other administrative ~~services.~~services for the enclosed retail properties until March 1, 2016. Under the transition services agreement that terminated on May 31, 2016, SPG charged WPG, based upon SPG's allocation of certain shared costs such as insurance premiums, advertising and promotional programs, leasing and development fees. Amounts charged to expense for property management and common costs, services, and other as well as insurance premiums are included in property operating ~~costs~~expenses in the consolidated statements of operations and comprehensive ~~income (loss).~~income. Additionally, leasing and development fees charged by SPG are capitalized by the property.

~~Charges for properties which are consolidated for each of the periods presented are as follows:~~

For the Three Months Ended March 31,
2016 2015
Property management and common costs, services and other $ 4,215
$ 6,929
Insurance premiums $ —
$ 2,269
Advertising and promotional programs $ 102
$ 219
Capitalized leasing and development fees $ 1,168
$ 1,631

~~Charges for unconsolidated properties for each of the periods presented are as follows:~~

For the Three Months Ended March 31,
2016 2015
Property management costs, services and other $ 124
$ 222
Insurance premiums $ —
$ 3
Advertising and promotional programs $ 6
$ 10
Capitalized leasing and development fees $ 8
$ 2

At March 31, 2016 and December 31, 2015, $3,847 and $3,455, respectively, were payable to SPG and its affiliates and are included in accounts payable, accrued expenses, intangibles, and deferred revenues in the accompanying consolidated balance sheets.

~~In connection with and as part of WPG's post-Merger integration efforts,~~ WPG ~~issued a notice to SPG on November 30, 2015 to communicate its plan to terminate~~terminated the transition services agreement, all applicable property management agreements with SPG, and the property development agreement ~~except for certain limited ongoing development projects,~~ effective May 31, 2016.

~~Transactions with~~We did not incur any charges pertaining to the ~~O'Connor Joint Venture~~

~~As described in the O'Connor Joint Venture section within Note 4 - "Investment in Real Estate," we retained management, leasing and development responsibilities~~transition services agreements for the ~~O'Connor Properties. Related to performing these services, we recorded management fee revenue of $1.4 million~~three months ended March 31, 2017. Charges for the consolidated and unconsolidated properties for the three months ended March 31, 2016 ~~which~~ are ~~included in other income~~ ~~in the accompanying consolidated statements of operations and comprehensive income (loss). Advances to the O'Connor Joint Venture totaled $1.1 million and $1.2 million~~ as of March 31, 2016 and December 31, 2015, respectively, which are included in investment in and advances to unconsolidated entities, at equity in the accompanying consolidated balance sheets. Management deems this balance to be collectible and anticipates repayment within one year.follows:



	For the Three Months Ended March 31,
	2016
	Consolidated		Unconsolidated
Property management and common costs, services and other	$	5,238	$	124
Insurance premiums	$	—	$	—
Advertising and promotional programs	$	102	$	6
Capitalized leasing and development fees	$	1,168	$	8

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

~~11. Earnings (Loss) Per Common Share/Unit~~


11.	Earnings Per Common Share/Unit

WPG Inc. Earnings ~~(Loss)~~ Per Common Share

We determine WPG Inc.'s basic earnings ~~(loss)~~ per common share based on the weighted average number of shares of common stock outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG Inc.'s diluted earnings ~~(loss)~~ per share based on the weighted average number of shares of common stock outstanding combined with the incremental weighted average shares that would have been outstanding assuming all potentially dilutive securities were converted into common shares at the earliest date possible.

The following table sets forth the computation of WPG Inc.'s basic and diluted earnings ~~(loss)~~ per common share:

For the Three Months Ended March 31,
2016 2015
Earnings (Loss) Per Common Share, Basic:
Net income (loss) attributable to common shareholders - basic $ 8,514
$ (12,270 )
Weighted average shares outstanding - basic 185,307,541
180,453,143
Earnings (loss) per common share, basic $ 0.05
$ (0.07 )

Earnings (Loss) Per Common Share, Diluted:
Net income (loss) attributable to common shareholders - basic $ 8,514
$ (12,270 )
Net income (loss) attributable to common unitholders 1,605
(2,343 )
Net income (loss) attributable to common shareholders - diluted $ 10,119
$ (14,613 )
Weighted average common shares outstanding - basic 185,307,541
180,453,143
Weighted average operating partnership units outstanding 34,304,835
34,116,765
Weighted average additional dilutive securities outstanding 657,575
—
Weighted average common shares outstanding - diluted 220,269,951
214,569,908
Earnings (loss) per common share, diluted $ 0.05
$ (0.07 )



	For the Three Months Ended March 31,
	2017		2016
Earnings Per Common Share, Basic:
Net income attributable to common shareholders - basic	$	9,302	$	8,514
Weighted average shares outstanding - basic	186,278,173		185,436,932
Earnings per common share, basic	$	0.05	$	0.05

Earnings Per Common Share, Diluted:
Net income attributable to common shareholders - basic	$	9,302	$	8,514
Net income attributable to common unitholders	1,754		1,605
Net income attributable to common shareholders - diluted	$	11,056	$	10,119
Weighted average common shares outstanding - basic	186,278,173		185,436,932
Weighted average operating partnership units outstanding	34,986,704		34,304,835
Weighted average additional dilutive securities outstanding	525,629		657,575
Weighted average common shares outstanding - diluted	221,790,506		220,399,342
Earnings per common share, diluted	$	0.05	$	0.05

For the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, additional potentially dilutive securities include contingently-issuable outstanding stock options and performance based ~~and~~components of annual ~~LTIP unit~~ awards. ~~For the three months ended March 31, 2015, diluted shares exclude the impact of any such securities because their effect would be anti-dilutive.~~ We accrue distributions when they are declared.

WPG L.P. Earnings ~~(Loss)~~ Per Common Unit

We determine WPG L.P.'s basic earnings ~~(loss)~~ per common unit based on the weighted average number of common units outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG L.P.'s diluted earnings ~~(loss)~~ per unit based on the weighted average number of common units outstanding combined with the incremental weighted average units that would have been outstanding assuming all potentially dilutive securities were converted into common units at the earliest date possible.

~~WP Glimcher~~Washington Prime Group Inc. and Washington Prime Group, L.P.

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)

The following table sets forth the computation of WPG L.P.'s basic and diluted earnings ~~(loss)~~ per common unit:

For the Three Months Ended March 31,
2016 2015
Earnings (Loss) Per Common Unit, Basic and Diluted:
Net income (loss) attributable to common unitholders - basic and diluted $ 10,119
$ (14,613 )
Weighted average common units outstanding - basic 219,612,376
214,569,908
Weighted average additional dilutive securities outstanding 657,575
—
Weighted average shares outstanding - diluted 220,269,951
214,569,908
Earnings (loss) per common unit, basic and diluted $ 0.05
$ (0.07 )



	For the Three Months Ended March 31,
	2017		2016
Earnings Per Common Unit, Basic and Diluted:
Net income attributable to common unitholders - basic and diluted	$	11,056	$	10,119
Weighted average common units outstanding - basic	221,264,877		219,741,767
Weighted average additional dilutive securities outstanding	525,629		657,575
Weighted average units outstanding - diluted	221,790,506		220,399,342
Earnings per common unit, basic and diluted	$	0.05	$	0.05

For the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, additional potentially dilutive securities include contingently-issuable units related to WPG Inc.'s outstanding stock options, WPG Inc.'s performance based components of annual awards, and WPG L.P.'s ~~performance based and~~ annual LTIP unit awards. ~~For the three months ended March 31, 2015, diluted shares exclude the impact of any such securities because their effect would be anti-dilutive.~~ We accrue distributions when they are declared.


12.	Subsequent Events

~~12. Subsequent Events~~

On April ~~21, 2016,~~25, 2017, the ~~trustee on behalf~~Company completed a discounted payoff of the $87.3 million mortgage ~~lender conducted a non-judicial foreclosure sale~~loan secured by Mesa Mall for $63.0 million and will retain ownership and management of ~~Chesapeake Square, located in Chesapeake, Virginia, in which~~ the ~~Company’s affiliate previously held a majority ownership interest.~~property. The ~~mortgage lender was the successful bidder at the sale. Upon the ownership transfer on April 28, 2016, the~~ Company ~~recognized~~will record a gain related to this repayment of approximately ~~$36~~$21.0 million ~~based on~~for the ~~cancellation of outstanding mortgage debt of $62.4 million during the~~ three and six months ended June 30, ~~2016.~~

2017.

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


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

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this report.

Overview - Basis of Presentation

~~WP Glimcher Inc. (formerly named~~ Washington Prime ~~Group~~Group™ Inc.) (“WPG Inc.”) is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as ~~amended.~~amended (the "Code"). REITs will generally not be liable for federal corporate income taxes as long as they continue to distribute not less than 100% of their taxable income and satisfy certain other requirements. Washington Prime Group, L.P. (“WPG L.P.”) is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of March 31, ~~2016,~~2017, our assets consisted of material interests in ~~119~~111 shopping centers in the United States, consisting of community centers and ~~malls.~~

~~WPG (defined below) was created to hold the community center business and smaller~~ enclosed ~~malls~~retail properties, comprised of ~~Simon Property Group, Inc. (“SPG”) and its subsidiaries. On May 28, 2014 (the "Separation Date"), WPG separated from SPG through the distribution~~approximately 60 million square feet of 100% of the outstanding units of WPG L.P. to the owners of Simon Property Group, L.P. (“SPG L.P.”), SPG's operating partnership, and 100% of the outstanding shares of WPG Inc. to the SPG shareholders in a tax‑free distribution. Prior to the separation, WPG Inc. and WPG L.P. were wholly owned subsidiaries of SPG and its subsidiaries. Prior to or concurrent with the separation, SPG engaged in certain formation transactions that were designed to consolidate the ownership of its interests in 98 properties (the “SPG Businesses”) and distribute such interests to us. Pursuant to the separation agreement, SPG distributed 100% of the common shares of WPG Inc. on a pro rata basis to SPG’s shareholders as of the May 16, 2014 record date.gross leasable area.

Unless the context otherwise requires, references to ~~"WPG",~~"WPG," the ~~"Company", “we”,~~"Company," “we,” “us” and “our” refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or anany affiliate) has a material ownership or financial interest, on a consolidated basis, after giving effect to the transfer of assets and liabilities from SPG as well as to the SPG Businesses prior to the date of the completion of the separation. Before the completion of the separation, the SPG Businesses were operated as subsidiaries of SPG, which operates as a REIT.

At the time of the separation and distribution, WPG Inc. owned a percentage of the outstanding units of partnership interest, or units, of WPG L.P. that is approximately equal to the percentage of outstanding units of partnership interest that SPG owned of SPG L.P., with the remaining units of WPG L.P. being owned by the limited partners who were also limited partners of SPG L.P. as of the May 16, 2014 record date. The units in WPG L.P. held by limited partners are exchangeable, at their election, for WPG Inc. common shares on a one‑for‑one basis or cash, as determined by WPG Inc.basis.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of March 31, ~~2016~~2017 and December 31, ~~2015~~2016 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading.

~~Prior to~~ The Company has filed a trademark application with the separation, WPG entered into agreements with SPG under which SPG provides various services to us relating primarily to the legacy SPG Businesses, including accounting, asset management, development, human resources, information technology, leasing, legal, marketing, public reportingUnited States Trademark and ~~tax. The charges~~Patent Office for the ~~services were based on an hourly or per transaction fee arrangement~~name "Washington Prime Group" and ~~pass-through of out-of-pocket costs.~~it remains pending.

~~The Merger~~

On January 15, 2015, the Company acquired Glimcher Realty Trust (“Glimcher”), pursuant to a definitive agreement and plan of merger with Glimcher and certain affiliated parties of each dated September 16, 2014 (the “Merger Agreement”), in a stock and cash transaction valued at approximately $4.2 billion, including the assumption of debt (the “Merger”). In the Merger, Glimcher common shareholders received, for each Glimcher common share, $14.02 consisting of $10.40 in cash and 0.1989 of a share of WPG Inc.’s common stock valued at $3.62 per Glimcher common share, based on the closing price of WPG Inc.’s common stock on the Merger closing date. Approximately 29.9 million shares of WPG Inc.'s common stock were issued to Glimcher shareholders in the Merger, and WPG L.P. issued to WPG Inc. a like number of common units as consideration for the common shares issued. Additionally, included in consideration were operating partnership units held by limited partners and preferred stock as noted below. In connection with the closing of the Merger, an indirect subsidiary of WPG L.P. was merged into Glimcher’s operating partnership. In the Merger, we acquired material interests in 23 shopping centers comprised of approximately 15.8 million square feet of gross leasable area and assumed additional mortgages on 14 properties with a fair value of approximately $1.4 billion. The combined company, which was renamed WP Glimcher Inc. post-Merger upon receiving shareholder approval, is comprised of more than 67 million square feet of gross leasable area (compared to approximately 53 million square feet for the Company prior to the Merger) and has a combined portfolio of material interests in 119 properties as of March 31, 2016.

In the Merger, the preferred stock of Glimcher was converted into preferred stock of WPG Inc., and WPG Inc. issued to WPG Inc. preferred units as consideration for the preferred shares issued. Additionally, each outstanding unit of Glimcher’s operating partnership held by limited partners was converted into 0.7431 of a unit of WPG LP. Further, each outstanding stock option in respect of Glimcher common stock was converted into a WPG Inc. option, and certain other Glimcher equity awards were assumed by WPG Inc. and converted into equity awards in respect of WPG Inc.'s common shares.

The cash portion of the Merger consideration was funded by the Property Sale and draws under the Bridge Loan (see "Financing and Debt" below). During the three months ended March 31, 2015, the Company incurred $20.8 million of costs related to the Merger, which are included in merger and transaction costs in the consolidated statement of operations and comprehensive income (loss).

The O'Connor Joint Venture

On ~~June 1, 2015, we completed~~November 2, 2016, the Company entered into a definitive agreement providing for a joint venture ~~transaction~~ with O'Connor Mall Partners L.P. ("O'Connor")~~, an unaffiliated third party,~~ with respect to the ownership and operation of seven of the Company's retail properties, which are valued at approximately $608 million. The Company has an existing joint venture with O'Connor for five of the ~~Company’s malls~~Company's enclosed retail properties and certain related ~~out-parcels (the "O'Connor Joint Venture") acquired in~~outparcels. Under the ~~Merger, which were valued at approximately $1.625 billion, consisting~~terms of the ~~following:~~agreement, the Company will retain a 51% interest and sell 49% to O'Connor for net proceeds of approximately $350 million, including the Company's pro rata share of new mortgage debt of over $100 million, which will be used to reduce the Company's debt and for general corporate purposes. The ~~Mall~~Company will retain management and leasing responsibilities of the properties. On November 18, 2016, O'Connor completed its due diligence and the escrow deposit of $18.7 million became non-refundable. Subject to the completion of certain debt financings and customary closing requirements, the Company expects to close on the joint venture during the second quarter of 2017.

On March 2, 2017, the O'Connor Joint Venture acquired an additional section at ~~Johnson City located in Johnson City, Tennessee;~~ Pearlridge Center, located in Aiea, ~~Hawaii; Polaris Fashion Place® located in Columbus, Ohio; Scottsdale Quarter® located in Scottsdale, Arizona~~Hawaii, for a gross purchase price of $70.0 million. Pearlridge Center is currently comprised of two distinct enclosed venues commonly referred to as Uptown and ~~Town Center Plaza (which consists~~Downtown. The newly acquired 180,000-square-foot section, which is part of ~~Town Center Plaza~~Uptown (and referenced herein as Pearlridge Uptown II), is anchored by Ross Dress for Less and TJ Maxx and was 92% occupied at March 31, 2017. Subsequent to the ~~adjacent Town Center Crossing) located in Leawood, Kansas (collectively the "O'Connor Properties"). Under the terms of~~purchase, the joint venture ~~agreement, we retained~~placed secured debt on the property (see below for details). Our share of the purchase price was funded by a ~~51% interest in~~combination of our share of the secured debt and availability on our credit facility.

On March 30, 2017, the O'Connor Joint Venture closed on a $43.2 million non-recourse mortgage note payable with an eight year term and ~~sold the remaining 49%~~a fixed interest ~~to O'Connor. In addition, the Company received reimbursement for 49%~~rate of ~~costs incurred as of June~~4.071% secured by Pearlridge Uptown II. The mortgage note payable requires monthly interest only payments until April 1, ~~2015 related to development activity~~2019, at ~~Scottsdale Quarter. The transaction generated net proceeds, after taking into consideration the assumption of debt (including the new loans on Pearlridge Center~~which time monthly interest and ~~Scottsdale Quarter) and costs associated with the transaction, of approximately $432 million (including $28.7 million for the partial reimbursement~~principal payments are due until maturity. Our pro-rata share of the Scottsdale Quarter development costs), which was used to repay a portion of the Bridge Loan (defined below). Since we no longer control the operations of the O'Connor Properties, we deconsolidated the properties and recorded a gain related to this sale of $4.2 million on June 1, 2015. We retained management and leasing responsibilities for the O'Connor Properties, though our partner's substantive participating rights over the decisions most important to the operations ofmortgage note payable issuance is $22.0 million.

On March 29, 2017, the O'Connor Joint Venture ~~preclude our control~~closed on a $55.0 million non-recourse mortgage note payable with a ten year term and ~~consolidation~~a fixed interest rate of 4.36% secured by sections of Scottsdale Quarter® known as Block K and Block M. The mortgage note payable requires monthly interest only payments until May 1, 2022, at which time monthly interest and principal payments are due until maturity. Our pro-rata share of the mortgage note payable issuance is $28.1 million.

Impairment

During the three months ended March 31, 2017, the Company entered into a purchase and sale agreement to dispose of a community center asset. The agreement is subject to customary closing and diligence requirements. Given uncertainties that the disposition is probable within one year due to the aforementioned closing and diligence requirements, this ~~venture.~~property remains classified as held for use as of March 31, 2017. We shortened the hold period used in assessing impairment for the asset, which resulted in the carrying value not being recoverable from the expected cash flows. The purchase offer represents the best available evidence of fair value for this property. We compared the fair value to the carrying value, which resulted in the recording of an impairment charge of approximately $8.5 million in the consolidated statements of operations and comprehensive income for the three months ended March 31, 2017. The potential sales proceeds from this transaction will be used to reduce the Company's debt.

Business Opportunities

We derive our revenues primarily from retail tenant leases, including fixed minimum rent leases, percentage rent leases based on tenants' sales volumes and reimbursements from tenants for certain expenses. We seek to re-lease our spaces at higher rents and increase our occupancy rates, and to enhance the performance of our properties and increase our revenues by, among other things, adding anchors or big-boxes, re-developing or renovating existing properties to increase the leasable square footage, and increasing the productivity of occupied locations through aesthetic upgrades, re-merchandising and/or changes to the retail use of the space. We seek growth in earnings, ~~FFO~~funds from operations ("FFO") and cash flows by enhancing the profitability and operation of our properties and investments.

Additionally, we feel there are opportunities to enhance our portfolio and balance sheet through active portfolio management. We believe that there are opportunities for us to acquire additional shopping centers that match our investment and strategic criteria. We invest in real estate properties to maximize total financial return which includes both operating cash flows and capital appreciation. We also seek to ~~enhance the quality~~dispose of or contribute to a joint venture assets that no longer meet our ~~portfolio by disposing of under-performing assets.~~strategic criteria. These dispositions will be a combination of asset sales and transitions of over-levered properties to lenders.

We consider FFO, net operating income, or NOI, and comparable NOI (NOI for properties owned and operating in both periods under comparison) to be key measures of operating performance that are not specifically defined by GAAP. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Reconciliations of these measures to the most comparable GAAP measure are included elsewhere in this report.

Portfolio Data

The portfolio data discussed in this overview includes key operating statistics for the Company ~~(including the properties acquired in the Merger for both periods)~~ including ending occupancy, average base minimum rent per square foot and comparable ~~NOI. These reporting~~NOI for the properties owned and managed at March 31, 2017. Southern Hills Mall is excluded from the metrics ~~exclude~~as the ~~impact~~management and leasing of ~~five non-core properties~~the property was transferred to the receiver during the fourth quarter of 2016 (see the "Financing and ~~are thus deemed to be from our "core portfolio" or "core properties."~~

Debt" section for further details).

Core business fundamentals in the overall portfolio ~~during~~for the first ~~three months~~quarter of ~~2016~~2017 were generally ~~improved~~stable compared to ~~the first three months of 2015.~~2016. Ending occupancy for the ~~core properties~~portfolio was ~~92.4%~~92.7% as of March 31, ~~2016, as compared to 91.9% as of~~2017, which is unchanged from March 31, ~~2015.~~2016. Average base minimum rent per square foot for the ~~core~~ portfolio increased by ~~1.3%~~0.4% when comparing March 31, ~~2016~~2017 to March 31, ~~2015.~~2016. Comparable NOI ~~increased 4.3% for the core portfolio and 4.0%~~decreased 0.7% for the portfolio ~~including~~in the ~~non-core~~first quarter of 2017 compared to the first quarter of 2016. The enclosed retail properties ~~when comparing~~had a decrease in comparable NOI of 1.8%, which was driven primarily by a large real estate tax refund at our Westminster Mall in Westminster, California which we received in the first quarter of 2016, as well as the impact of tenant bankruptcies. The community center properties had comparable NOI growth of 2.9% in the first quarter of 2017 compared to the first quarter of 2015. NOI growth resulted from $3.2 million in increased minimum rent from the lease-up of vacant spaces and from some redevelopment projects coming on-line, as well as a pick-up of $3.0 million from lower operating costs, net of the related reimbursement income, primarily from successful real estate tax appeals. The growth in our NOI was 4.8% for our community centers and 4.1% for our core mall properties.

2016.

The following table sets forth key operating statistics for ~~our~~the combined portfolio of ~~core~~ properties or interests in properties:


	March 31, 2016	March 31, 2015	% Change	March 31, 2017	March 31, 2016	% Change
Ending occupancy (1)	92.4%	91.9%	0.5%	92.7%	92.7%	—%
Average base minimum rent per square foot (2)	$21.39	$21.11	1.3%	$21.47	$21.39	0.4%

(1)

Ending occupancy is the percentage of gross leasable area, or GLA, which is leased as of the last day of the reporting period. We include all Company-owned space except for ~~mall~~ anchors, ~~mall~~ majors, ~~mall~~ freestanding office and ~~mall~~ outlots at our enclosed retail properties in the calculation of ending occupancy. Community center GLA included in the calculation relates to all Company-owned space other than office space. ~~When including the non-core properties, occupancy was 91.8% and 91.2% at March 31, 2016 and 2015, respectively.~~


(2)	Average base minimum rent per square foot is the average base minimum rent charge in effect for the reporting period for all tenants that would qualify to be included in ending occupancy.

Current Leasing Activities

During the ~~three months~~quarter ended March 31, 2017, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the portfolio, comprising approximately 945,200 square feet. The average annual initial base minimum rent for new leases was $27.55 per square foot ("psf") and for renewed leases was $23.56 psf. For these leases, the average for tenant allowances was $35.23 psf for new leases and $2.17 psf for renewals. During the quarter ended March 31, 2016, we signed new leases and renewal leases with terms in excess of a year (excluding ~~mall~~enclosed retail property anchors, majors, offices, and ~~offices)~~in-line spaces in excess of 10,000 square feet) across the ~~core~~ portfolio, comprising approximately 762,900 square feet. The average annual initial base minimum rent for new leases was $22.15 ~~per square foot ("psf")~~psf and for renewed leases was $29.88 psf. For these leases, the average for tenant allowances was $34.09 psf for new leases and $7.88 psf for renewals.

Results of Operations

Activities Affecting Results

The following acquisitions and dispositions affected our results in the comparative periods:

•On February 21, 2017, we completed the sale of Gulf View Square, located in Port Richey, Florida, and River Oaks Center, located in Chicago, Illinois.

•On January 10, 2017, we completed the sale of Virginia Center Commons, located in Glen Allen, Virginia.

•On December 29, 2016, we transitioned River Valley Mall, located in Lancaster, Ohio, to the lender.

•On November 10, 2016, we completed the sale of Richmond Town Square, located in Cleveland, Ohio.

•On August 19, 2016, we completed the sale of Knoxville Center, located in Knoxville, Tennessee.

•On June 9, 2016, we transitioned Merritt Square Mall, located in Merritt Island, Florida, to the lender.

•On April 28, 2016, we transitioned Chesapeake Square, located in Chesapeake, Virginia, to the lender.

•On January 29, 2016, we completed the sale of Forest Mall, located in Fond Du Lac, Wisconsin, and Northlake Mall, located in Atlanta, ~~Georgia, to private real estate investors.~~

On June 1, 2015, we completed the transaction forming the O'Connor Joint Venture with regard to the ownership and operation of the O'Connor Properties, resulting in the deconsolidation of five of our malls and certain related out-parcels acquired in the Merger. Under the terms of the joint venture agreement, we retained a 51% interest and sold a 49% interest to O'Connor, the third party partner.

On January 15, 2015, we acquired 23 properties in the Merger. Total revenues and net loss (excluding transaction costs and costs of corporate borrowing) from these properties (including the amounts from the O'Connor Properties for periods prior to the date of the O'Connor Joint Venture transaction) from the date of the Merger of $68.8 million and $10.3 million, respectively, for the three months ended March 31, 2015 are included in the consolidated statements of operations and comprehensive income (loss). The primary driver of the net loss is depreciation and amortization on the newly acquired assets recorded at fair value. Thus, the operating results of the properties are contributing positive FFO for the Company.

~~On January 13, 2015, we acquired Canyon View Marketplace, a 43,000 square foot shopping center located in Grand Junction, Colorado.~~

Georgia.

For the purposes of the following comparisons, the properties acquired in the Merger transaction, net of those deconsolidated in the O'Connor Joint Venture transaction (causing decreases period over period), are referred to as the "Merger Properties," and the other transactions listed above are referred to as the "Property ~~Transactions.~~Transactions," ~~In the following discussions of our results of operations, "comparable"~~and "comparable properties" refers to the remaining properties we owned and operated throughout both of the periods under comparison.

Three Months Ended March 31, ~~2016~~2017 vs. Three Months Ended March 31, ~~2015~~

2016

Minimum rents decreased ~~$17.8 million, of which the Merger Properties accounted for $16.6~~$6.0 million primarily due to ~~the impact of O'Connor Joint Venture, and the remaining $1.2~~a $9.0 million decrease ~~is primarily due to~~from the Property ~~Transactions. Overage rents increased $0.2~~Transactions offset by a $3.0 million ~~primarily~~net increase attributable to the comparable ~~properties, net of decreases from the Merger Properties and Property Transactions.~~properties. Tenant reimbursements decreased ~~$11.3~~$1.2 million due to ~~$7.6~~a $3.4 million ~~attributable to the Merger Properties and $3.7 million~~decrease attributable to the Property Transactions and comparable properties, including amounts related to real estate refunds. Other income increased $1.2 million primarily due to $1.4 million of management, leasing and development fee income from the O'Connor Joint Venture, partially offset by a ~~net $0.2~~$2.2 million ~~decrease~~increase attributable to the ~~Merger Properties, Property Transactions and~~ comparable properties.

~~Total~~Property operating expenses decreased ~~$55.3~~$6.7 million, of which $23.3 million was attributable to the Merger Properties, $20.8 million related to transaction costs associated with the Merger incurred in the 2015 period with no such costs incurred in the 2016 period, and $12.4$3.9 million was attributable to the Property Transactions and $2.8 million was attributable to the comparable properties, primarily related to ~~decreased depreciation on fully depreciated assets and real estate refunds. These decreases were partially offset by~~ a ~~$1.2 million increase~~reduction in ~~general and administrative expenses.~~

~~Interest~~management fee expense ~~increased a net $0.2 million, of which $6.8 million was attributable to net borrowings to finance the Merger transaction (net of bridge loan fees written off in 2015) and $1.2 million~~ related to ~~default interest on properties~~the termination of certain transition service agreements with Simon Property Group, Inc. related to ~~be transitioned~~the 2014 spin-off. Depreciation and amortization decreased $3.9 million, primarily due to ~~lenders. These increases were partially offset by~~ a $5.4 million decrease attributable to the ~~Merger Properties and~~Property Transactions offset by a ~~$2.4~~$1.5 million increase attributable to the comparable properties, which was primarily due to development assets placed into service. Real estate taxes increased $1.5 million, primarily due to a $1.6 million decrease attributable to the ~~repayment~~Property Transactions, offset by a $3.1 million increase attributable to the comparable properties, which was primarily due to a real estate tax refund received at Westminster Mall during 2016 that did not occur in 2017. General and administrative expenses decreased $2.0 million, primarily due to a reduction in legal and consulting fees. The $8.5 million impairment loss recorded in 2017 related to the write down of ~~certain mortgages~~a community center asset, as described in ~~2015.~~further detail under "Impairment."

Interest expense, net, decreased $4.9 million, of which $2.7 million was attributable to the Property Transactions and $2.5 million was attributable to swap ineffectiveness in the first quarter of 2016. Offsetting these decreases were increases of $0.3 million, primarily attributable to increased borrowings on the Revolver (as defined in "Liquidity and Capital Resources") over the comparable period.

Income and other taxes increased $1.0 million, which was attributable to a nonrecurring state use tax that was incurred in 2017.

~~Loss~~

Gain (loss) on disposition of interests in properties, ~~recognized in~~net for 2017 was attributable to the sales of Gulf View Square, River Oaks Center, and Virginia Center Commons. The 2016 ~~period consisted of $2.2 million from~~net loss was attributable to the ~~sale~~sales of Forest Mall and Northlake Mall. ~~There was no such loss recognized in the 2015 period.~~

For WPG Inc., net income ~~(loss)~~ attributable to noncontrolling interests primarily relates to the allocation of income ~~(loss)~~ to third parties based on their respective weighted average ownership interest in WPG L.P., which percentage ~~increased slightly due to~~remained consistent over the ~~capital transactions related to the Merger.~~

Preferred share dividends relate to the 8.125% Series G Cumulative Redeemable Preferred Stock (the "Series G Preferred Shares"), the 7.5% Series H Cumulative Redeemable Preferred Stock (the "Series H Preferred Shares") and the 6.875% Series I Cumulative Redeemable Preferred Stock (the "Series I Preferred Shares") issued in connection with the Merger. Preferred dividends decreased $1.5 million primarily related to the Series G Preferred Shares, which were redeemed in full on April 15, 2015.

periods.

Liquidity and Capital Resources

Our primary uses of cash include payment of operating expenses, working capital, debt repayment, including principal and interest, reinvestment in properties, development and redevelopment of properties, tenant allowance and dividends. Our primary sources of cash are operating cash flow and borrowings under our debt arrangements, including our senior unsecured revolving credit facility, or "Revolver," and three senior unsecured term loans as further discussed below.

Because we own primarily long-lived income-producing assets, our financing strategy relies on long-term fixed rate mortgage debt as well as floating rate debt (including unsecured financing such as the Revolver, as defined below, and our term loans). At March 31, ~~2016,~~2017, floating rate debt (excluding loans hedged to fixed ~~interest)~~interest rates) comprised ~~25.9%~~24.0% of our total consolidated debt. We will continue to monitor our borrowing mix to limit market risk. We derive most of our liquidity from leases that generate positive net cash flow from operations, the total of which was ~~$59.1~~$71.4 million during the three months ended March 31, ~~2016.~~

2017.

Our balance of cash and cash equivalents ~~decreased $25.0~~increased $35.2 million during ~~2016~~2017 to ~~$91.3~~$94.5 million as of March 31, ~~2016.~~2017. The ~~decrease~~increase was primarily due to ~~the repayment of debt and capital expenditures, partially offset by~~ operating cash flow from properties, net distributions from our joint ventures, and the ~~properties and~~net proceeds from the disposition of ~~properties.~~properties, partially offset by net repayment of debt, dividend distributions, and capital expenditures. See "Cash Flows" below for more information.

On March 31, ~~2016,~~2017, we had an aggregate available borrowing capacity of ~~$635.9~~$606.7 million under the Revolver, net of outstanding borrowings of ~~$263.8~~$293.0 million and $0.3 million reserved for outstanding letters of credit. The weighted average interest rate on the Revolver was ~~1.6%~~2.1% during the three months ended March 31, ~~2016.~~

2017.

The consolidated indebtedness of our business was approximately ~~$3.6~~$3.5 billion as of March 31, ~~2016,~~2017, or a decrease of approximately ~~$18.5~~$21.8 million from December 31, ~~2015.~~2016. The change in consolidated indebtedness from December 31, ~~2015~~2016 is described in greater detail under "Financing and Debt".

Outlook

~~Outlook~~. Our business model and WPG Inc.'s status as a REIT require us to regularly access the debt markets to raise funds for acquisition, development and redevelopment activity, and to refinance maturing debt. We may also, from time to time, access the equity capital markets to accomplish our business objectives. We believe we have sufficient cash on hand, availability under the Revolver and cash flow from operations to address our debt maturities, distributions and capital needs through ~~2016.~~2017.

The successful execution of our business strategy will require the availability of substantial amounts of operating and development capital both currently and over time. Sources of such capital could include additional bank borrowings, public and private offerings of debt or equity, including rights offerings, sale of certain assets and joint ventures. The major credit rating agencies have assigned us investment grade credit ratings, but there can be no assurance that the Company will achieve a particular rating or maintain a particular rating in the future.

Cash Flows

Our net cash flow from operating activities totaled ~~$59.1~~$71.4 million during the three months ended March 31, ~~2016.~~2017. During this period we also:

funded capital expenditures of ~~$25.5~~$25.0 million;

funded net amounts of restricted cash reserves held for future capital expenditures of ~~$3.6~~$0.6 million;

received net proceeds from the disposition of properties of ~~$9.0~~$62.9 million;

funded investments in unconsolidated entities of ~~$3.3~~$36.4 million;

received distributions of capital from unconsolidated entities of ~~$15.7~~$52.5 million;

~~received net proceeds from lender-required restricted cash reserves on mortgage loans of $0.8 million;~~

funded the net repayment of debt of ~~$18.7~~$23.8 million; and

funded distributions to common and preferred shareholders and unitholders of ~~$58.7~~$59.0 million.

In general, we anticipate that cash generated from operations will be sufficient to meet operating expenses, monthly debt service, recurring capital expenditures, and distributions to shareholders necessary to maintain WPG Inc.'s status as a REIT on a long-term basis. In addition, we expect to be able to generate or obtain capital for nonrecurring capital expenditures, such as acquisitions, major building renovations and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from:

excess cash generated from operating performance and working capital ~~reserves,~~

reserves;

borrowings on our debt ~~arrangements,~~

arrangements;

opportunistic asset ~~sales,~~

sales;

additional secured or unsecured debt ~~financing,~~financing; or

additional equity raised in the public or private markets.

We expect to generate positive cash flow from operations in ~~2016,~~2017, and we consider these projected cash flows in our sources and uses of cash. These cash flows are principally derived from rents paid by our retail tenants. A significant deterioration in projected cash flows from operations could cause us to increase our reliance on available funds from our debt arrangements, curtail planned capital expenditures, or seek other additional sources of financing as discussed above.

Financing and Debt

Mortgage Debt

Total mortgage indebtedness at March 31, ~~2016~~2017 and December 31, ~~2015~~2016 was as follows (in thousands):


	March 31, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Face amount of mortgage loans	$	1,778,445		$	1,782,103		$	1,603,806		$	1,610,429
Fair value adjustments, net	16,032			17,683			11,691			12,661
Debt issuance costs, net	(5,857		)	(6,347		)
Debt issuance cost, net							(4,695		)	(5,010		)
Carrying value of mortgage loans	$	1,788,620		$	1,793,439		$	1,610,802		$	1,618,080

A roll forward of mortgage indebtedness from December 31, ~~2015~~2016 to March 31, ~~2016~~2017 is summarized as follows (in thousands):


Balance, December 31, 2015	$	1,793,439
Balance at December 31, 2016				$	1,618,080
Debt amortization payments	(3,658		)	(6,623		)
Amortization of fair value and other adjustments	(1,651		)	(970		)
Amortization of debt issuance costs	490			315
Balance, March 31, 2016	$	1,788,620
Balance at March 31, 2017				$	1,610,802

Highly-levered Assets

We have identified ~~five~~three mortgage loans that have leverage levels in excess of our targeted leverage and have worked with, or have plans to work with, the special servicers on these non-recourse mortgages. We ~~have commenced discussions~~received notices of default on ~~the loans encumbering Merritt Square~~Mesa Mall in ~~Merritt Island, Florida, River Valley Mall in Lancaster, Ohio,~~Grand Junction, Colorado and Southern Hills Mall in Sioux City, Iowa. ~~We received notices of default on Chesapeake Square in Chesapeake, Virginia, and Merritt Square~~Further, we have commenced discussions with special servicer regarding the loan secured by Valley Vista Mall, in ~~2015, and we are in default on River Valley Mall, but have not yet received notice of such default.~~Harlingen, Texas. See "Covenants" below for further discussion on these notices of default. Chesapeake Square was transitioned to the lender on April 28, 2016 (see details in the discussion that follows) and we expect that Merritt Square Mall will be transitioned to the lender in the second quarter of 2016. We have also identified Valle Vista Mall in Harlingen, Texas as over-levered and expect to commence discussions with the special servicer on this loan as well.highly-levered assets. As of March 31, ~~2016,~~2017, the mortgages on ~~these five~~the highly-levered properties ~~total $301.7~~totaled $226.8 million and we ~~will~~expect to improve our leverage once all, or a portion of them, are transitioned to the ~~lenders.~~

On April 21, 2016, the trustee on behalf of the mortgage lender conducted a non-judicial foreclosure sale of Chesapeake Square, in which the Company’s affiliate previously held a majority ownership interest. The mortgage lender was the successful bidder at the sale. Upon the ownership transfer on April 28, 2016, the Company recognized approximately $36 million of gain based on the cancellation of outstanding mortgage debt of $62.4 million during the three months ended June 30, 2016.

lenders, with minimal impact to net cash flows.

Unsecured Debt

The Facility

LIBOR plus 1.45%~~, and will mature on~~. During the three months ended March 31, 2017, we extended the maturity of the Term Loan from May 30, 2017 ~~subject~~ to ~~two,~~May 30, 2018. We have one, 12-month ~~extensions~~extension available at our option subject to compliance with the terms of the Facility and payment of a customary extension fee. On July 6, 2016, the Company executed interest rate swap agreements totaling $200.0 million, which effectively fixed the interest rate on a portion of the Term Loan at 2.04% through August 1, 2018. The interest rate on the Facility may vary in the future based on the Company's credit rating.

Term Loans

~~Bridge Loan~~

~~On January 15, 2015, the Company borrowed $1.19 billion under the Bridge Loan in connection with the closing of the Merger, which balance was repaid in full during 2015.~~

The Company incurred $10.4 million of Bridge Loan commitment, structuring and funding fees. Upon the repayment of the Bridge Loan, the Company accelerated amortization of the deferred loan costs, resulting in total amortization of $4.1 million included in interest expense in the consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2015.

costs.

Notes Payable

As of March 31, ~~2016,~~2017, the balance outstanding under the Exchange Notes ~~is $247.1~~was $247.8 million, net of ~~$2.9~~$2.2 million of debt discount and issuance ~~costs, net.~~

costs.

Covenants

entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the debt and enforce its right against its collateral. If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral.

On ~~January 11, 2016,~~March 30, 2017, the ~~$44.9~~Company transferred the $40.0 million mortgage loan secured by ~~River Valley~~Valle Vista Mall ~~matured.~~to the special servicer at the request of the borrower, a consolidated subsidiary of the Company. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. The Company will continue to manage and lease the property.

On June 30, 2016, we received a notice, dated that same date, that the $87.3 million mortgage loan secured by Mesa Mall had been transferred to the special servicer due to the payment default that occurred when the borrower, a consolidated subsidiary of the Company, did not repay the loan in full ~~on the~~by its June 1, 2016 maturity date. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options including restructuring, extending and other options, including transitioning the property to the lender. On April 25, 2017, the Company completed a discounted payoff of the mortgage loan for $63.0 million and will retain ownership and management of the property. The Company will record a gain related to this repayment of approximately $21.0 million for the three and six months ended June 30, 2017.

On ~~October 30, 2015,~~June 6, 2016, we received a notice of default letter, dated that same date, from the special servicer to the borrower concerning the $62.4 million mortgage loan that matures on February 1, 2017 and is secured by Chesapeake Square. The default resulted from an operating cash flow shortfall at the property in October 2015 that the borrower, a consolidated subsidiary of the Company, did not cure. The borrower transitioned the property to the lender on April 28,June 3, 2016, ~~(see details at "Highly-levered Assets" above).~~

~~On October 8, 2015, we received a notice of default letter, dated October 5, 2015,~~ from the special servicer to the borrower of the ~~$52.9~~$99.5 million mortgage loan secured by ~~Merritt Square~~Southern Hills Mall. The letter was sent because the borrower, a consolidated subsidiary of the Company, did not repay the loan in full by its ~~September~~June 1, ~~2015~~2016 maturity date. ~~The borrower has initiated discussions with~~On October 27, 2016, we received notification that a receiver had been appointed to manage and lease the ~~special servicer regarding this non-recourse loan and expects to transition~~property. An affiliate of the ~~property~~Company still holds title to the ~~lender in the second quarter of 2016.~~

property.

The Company has assessed each of these properties for impairment indicators and have concluded no impairment charges were warranted as of March 31, 2017.

Summary of Financing

Our consolidated debt and the effective weighted average interest rates as of March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, consisted of the following (dollars in thousands):


	March 31, 2016			Weighted Average Interest Rate		December 31, 2015			Weighted Average Interest Rate		March 31, 2017			Weighted Average Interest Rate		December 31, 2016			Weighted Average Interest Rate
Fixed-rate debt, face amount	$	2,682,345		4.52	%	$	2,686,003		4.48	%	$	2,642,706		4.23	%	$	2,649,329		4.23	%
Variable-rate debt, face amount	949,850			1.93	%	964,850			1.91	%	844,100			2.44	%	859,100			2.25	%
Total face amount of debt	3,632,195			3.84	%	3,650,853			3.80	%	3,486,806			3.79	%	3,508,429			3.75	%
Note discount	(57		)			(60		)			(45		)			(47		)
Fair value adjustments, net	16,032					17,683					11,691					12,661
Debt issuance costs, net	(18,097		)			(19,875		)			(13,819		)			(14,639		)
Total carrying value of debt	$	3,630,073				$	3,648,601				$	3,484,633				$	3,506,404

Contractual Obligations

The following table summarizes the material aspects of the Company's future obligations for consolidated entities as of March 31, ~~2016,~~2017, for the remainder of ~~2016~~2017 and for subsequent years thereafter assuming the obligations remain outstanding through maturities noted below (in thousands):


	2016		2017 - 2018		2019 - 2020		Thereafter		Total		2017		2018 - 2019		2020 - 2021		Thereafter		Total
Long term debt (1)	$	422,322	$	198,409	$	1,909,738	$	1,101,726	$	3,632,195	$	339,625	$	992,352	$	1,120,033	$	1,034,796	$	3,486,806
Interest payments (2)	82,174		173,985		136,546		97,281		489,986		88,858		205,277		105,289		58,513		457,937
Distributions (3)	10,702		15,964		—		—		26,666		9,369		3,028		—		—		12,397
Ground rent (4)	2,641		7,020		7,046		118,155		134,862		2,637		7,084		7,080		119,556		136,357
Purchase/tenant obligations (5)	82,032		—		—		—		82,032		81,312		—		—		—		81,312
Total	$	599,871	$	395,378	$	2,053,330	$	1,317,162	$	4,365,741	$	521,801	$	1,207,741	$	1,232,402	$	1,212,865	$	4,174,809


(1)	Represents principal maturities only and therefore excludes net fair value adjustments of ~~$16,032,~~$11,691, debt issuance costs of ~~$(18,097)~~$(13,819) and bond discount of ~~$(57)~~$(45) as of March 31, ~~2016.~~2017. In addition, the principal maturities reflect any available extension options within the control of the Company.


(2)	Variable rate interest payments are estimated based on the LIBOR rate at March 31, ~~2016.~~2017.


(3)	Since there is no required redemption, distributions on the Series H Preferred Shares/Units, Series I Preferred Shares/Units and Series I-1 Preferred Units may be paid in perpetuity; for purposes of this table, such distributions were included through the optional redemption dates of August 10, 2017, March 27, 2018 and March 27, 2018, respectively.


(4)	Represents minimum future lease payments due through the end of the initial lease term.


(5)	Includes amounts due under executed leases and commitments to vendors for development and other matters.

The following table summarizes the material aspects of the Company's proportionate share of future obligations for unconsolidated entities as of March 31, ~~2016,~~2017, for the remainder of ~~2016~~2017 and for subsequent years thereafter assuming the obligations remain outstanding through maturities noted below (in thousands):


	2016		2017 - 2018		2019 - 2020		Thereafter		Total		2017		2018 - 2019		2020 - 2021		Thereafter		Total
Long term debt (1)	$	1,254	$	3,629	$	37,373	$	380,726	$	422,982	$	1,324	$	4,085	$	43,609	$	416,800	$	465,818
Interest payments	12,818		33,910		32,528		64,905		144,161		14,601		37,753		34,518		59,682		146,554
Ground rent (2)	1,446		3,858		4,320		123,633		133,257		1,446		4,089		4,320		121,473		131,328
Purchase/tenant obligations (3)	13,005		—		—		—		13,005		8,018		—		—		—		8,018
Total	$	28,523	$	41,397	$	74,221	$	569,264	$	713,405	$	25,389	$	45,927	$	82,447	$	597,955	$	751,718


(1)	Represents principal maturities only and therefore excludes net fair value adjustments of ~~$8,729~~$7,381 and debt issuance costs of ~~$(1,259)~~$(2,136) as of March 31, ~~2016.~~2017. In addition, the principal maturities reflect any available extension options.


(2)	Represents minimum future lease payments due through the end of the initial lease term.


(3)	Includes amounts due under executed leases and commitments to vendors for development and other matters.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements consist primarily of investments in joint ventures which are common in the real estate industry. Joint ventures typically fund their cash needs through secured debt financings obtained by and in the name of the joint venture entity. The joint venture debt is secured by a first mortgage, is without recourse to the joint venture partners, and does not represent a liability of the partners, except to the extent the partners or their affiliates expressly guarantee the joint venture debt. As of March 31, ~~2016,~~2017, there were no guarantees of joint venture related mortgage indebtedness. In addition to obligations under mortgage indebtedness, our joint ventures have obligations under ground leases and purchase/tenant obligations. Our share of obligations under joint venture debt, ground leases and purchase/tenant obligations is quantified in the unconsolidated entities table within "Contractual Obligations" above. WPG may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not required contractually or otherwise.

~~Equity Activity~~

~~The Merger~~

Related to the Merger completed on January 15, 2015, WPG Inc. issued 29,942,877 common shares, 4,700,000 Series G Preferred Shares, 4,000,000 Series H Preferred Shares and 3,800,000 Series I Preferred Shares, and WPG L.P. issued to WPG Inc. a like number of common and preferred units as consideration for the common and preferred shares issued. Additionally, WPG L.P. issued to limited partners 1,621,695 common units and 130,592 WPG L.P. 7.3% Series I‑1 Preferred Units. The preferred shares and units were issued as consideration for similarly-named preferred interests of Glimcher that were outstanding at the Merger date.

Equity Activity

Exchange Rights

Stock Based Compensation

On May 28, 2014, ~~WPG Inc.'s~~the Board ~~of Directors~~ adopted the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the "Plan"), which permits the Company to grant awards to current and prospective directors, officers, employees and consultants of the Company or any affiliate. An aggregate of 10,000,000 shares of common stock has been reserved for issuance under the Plan. In addition, the maximum number of awards to be granted to a participant in any calendar year is 500,000 ~~shares.~~shares/units. Awards may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units or other stock-based awards in WPG Inc., or long term incentive ~~plan~~units ("~~LTIP"~~LTIP units" or "LTIPs") ~~units~~ or performance units ("Performance LTIP Units") in WPG L.P. The Plan terminates on May 28, 2024.

The following is a summary by type of the awards that the Company issued during the three months ended March 31, 2017 under the Plan.

~~Long Term~~Annual Long-Term Incentive Awards

~~Time Vested LTIP Awards~~

~~Performance Based Awards~~

date fair value of $2.2 million, related to the 2016 Annual Long-Term Incentive Awards, which will vest in one-third installments on each of February 21, 2018, 2019 and 2020.

~~WPG Restricted Share~~ Awards,

Stock Options

~~LTIP/WPG Restricted Share Award Related Compensation Expense~~

The Company recorded compensation expense related to all LTIP and WPG Restricted Shares of approximately $1.9 million (excluding the $1.2 million reversal of previously recorded stock compensation expense associated with the forfeiture of grants to former executives) and $2.3 million forDuring the three months ended March 31, 2016 and 2015, respectively, which expense is included in general and administrative expense and merger and transaction costs in the accompanying consolidated statements of operations and comprehensive income (loss).

~~Stock Options~~

~~As part of the Merger, outstanding~~2017, no stock options ~~held~~were granted from the Plan to employees, 1,566 stock options were exercised by ~~certain former Glimcher~~ employees and 34,452 stock options were ~~converted into 1,125,014 WPG~~canceled, forfeited or expired. As of March 31, 2017, there were 941,558 stock ~~options.~~ options outstanding.

During the three months ended March 31, 2016, no stock options were granted from the Plan to employees, no stock options were exercised by employees and 1,000 stock options were canceled, forfeited or expired. ~~As of~~

Share Award Related Compensation Expense

During the three months ended March 31, 2017 and 2016, ~~there were 1,144,181~~the Company recorded share award related compensation expense pertaining to the award and option plans noted above of $1.5 million and $1.9 million (excluding the $1.2 million reversal of previously recorded stock ~~options outstanding.~~

compensation expense associated with the forfeiture of grants to former executives during the three months ended March 31, 2016), respectively, in general and administrative expense within the consolidated statements of operations and comprehensive income. In certain instances, employment agreements and stock compensation programs provide for accelerated vesting when executives are terminated without cause.

Distributions



~~Security Type~~	~~Distribution per Share/Unit~~	~~For the~~ ~~Quarter Ended~~	~~Record Date~~	~~Date Paid~~
~~Common Shares/Units~~	~~$0.2500~~	~~March 31, 2016~~	~~March 7, 2016~~	~~March 15, 2016~~
~~Series H Preferred Shares/Units (1)~~	~~$0.4688~~	~~March 31, 2016~~	~~March 31, 2016~~	~~April 15, 2016~~
~~Series I Preferred Shares/Units (1)~~	~~$0.4297~~	~~March 31, 2016~~	~~March 31, 2016~~	~~April 15, 2016~~
~~Series I‑1 Preferred Units (1)~~	~~$0.4563~~	~~March 31, 2016~~	~~March 31, 2016~~	~~April 15, 2016~~


~~(1)~~	~~Amounts total $3.0 million and are recorded as distributions payable in the consolidated balance sheet as of March 31, 2016.~~

unit.

Acquisitions and Dispositions

Buy-sell, marketing rights, and other exit mechanisms are common in real estate partnership agreements. Most of our partners are institutional investors who have a history of direct investment in retail real estate. We and our partners in our joint venture properties may initiate these provisions (subject to any applicable lock up or similar restrictions). If we determine it is in our shareholders' best interests for us to purchase the joint venture interest and we believe we have adequate liquidity to execute the purchase without hindering our cash flows, then we may initiate these provisions or elect to buy. If we decide to sell any of our joint venture interests, we expect to use the net proceeds to reduce outstanding indebtedness or to reinvest in development, redevelopment, or expansion opportunities.

Acquisitions. We pursue the acquisition of properties that meet our strategic criteria.

On March 2, 2017, our O'Connor Joint Venture completed the acquisition of Pearlridge Uptown II (see "The O'Connor Joint Venture" section for further details).

Dispositions. We pursue the disposition of properties that no longer meet our strategic criteria or interests in properties to generate proceeds for alternate business uses.

On ~~April~~February 21, 2016, the trustee on behalf of the mortgage lender conducted a non-judicial foreclosure sale of Chesapeake Square, located in Chesapeake, Virginia, in which the Company’s affiliate previously held a majority ownership interest. The mortgage lender was the successful bidder at the sale. Upon the ownership transfer on April 28, 2016, the Company recognized approximately $36 million of gain based on the cancellation of outstanding mortgage debt of $62.4 million during the three months ended June 30, 2016.

~~On January 29, 2016, the Company~~2017, we completed the sale of ~~Forest Mall, located in Fond Du Lac, Wisconsin,~~Gulf View Square and ~~Northlake Mall, located in Atlanta, Georgia,~~River Oaks Center to private real estate investors ~~(the "Buyers")~~ for an aggregate purchase price of ~~$30.0 million.~~$42 million, which was classified as real estate held for sale on the accompanying consolidated balance sheet as of December 31, 2016. The ~~sales price consisted of $10.0 million paid to the Company at closing and the issuance of a promissory note for $20.0 million~~net proceeds from the ~~Company~~transaction were used to reduce corporate debt.

On January 10, 2017, we completed the ~~Buyers with an interest rate~~sale of ~~6% per annum.~~Virginia Center Commons to a private real estate investor for a purchase price of $9 million, which was classified as real estate held for sale on the accompanying consolidated balance sheet as of December 31, 2016. The ~~note is due on June 30, 2016 with one six-month extension option available~~net proceeds from the transaction were used to ~~the Buyers. As of March 31, 2016, the Buyers are current on their interest payments.~~ reduce corporate debt.

In connection with the ~~sale~~sales noted above, the Company recorded a ~~$2.2 million loss~~$51,000 gain, which is included in gain (loss) on disposition of interests in properties, net in the ~~sale. The proceeds from~~accompanying consolidated statements of operations and comprehensive income for the ~~transactions were used to reduce the balance outstanding under the Revolver.~~

three months ended March 31, 2017.

Development Activity

New Development, Expansions and Redevelopments. We routinely incur costs related to construction for significant redevelopment and expansion projects at our properties. We expect our share of development costs for calendar year ~~2016~~2017 related to these activities to be approximately ~~$150~~$125 to ~~$200~~$150 million. Our estimated stabilized return on invested capital typically ranges between 8% and 11%.

~~In addition,~~During the fourth quarter of 2016 we ~~own land for the development~~held our grand opening of aour new approximately 400,000 square foot shopping center in the Houston metropolitan area, ~~which has been named~~ Fairfield Town Center. The ~~carrying value of~~investment to date on this project is ~~$15.8 million at March 31, 2016, which primarily relates to~~$43.6 million. The total project budget for the cost of the underlying land and site improvements for infrastructure as well as the project costs incurred to date noted below. We commenced construction to add approximately 30,000 square feet of small shop space adjacent to the H-E-B store in the fourth quarter of 2015 for an opening in 2016. Subsequent phases ~~will~~that have ~~additions of big box retailers that will offer fashion, sporting goods, home goods and restaurants. The project~~been constructed thus far is ~~being built in phases and we are currently committed to phases with a projected cost of approximately $50.0~~$50 million before any available incentives with an expected yield of ~~which we had incurred approximately $7.5 million~~7 - 9%. The project features retailers such as H-E-B, Academy Sports, Marshall's, Party City, Old Navy, and Ulta Cosmetics. In addition, a number of ~~March 31, 2016. The development is expected to be fully completed in~~dining options are at the ~~first half of 2017.~~center such as Chipotle, PeiWei, Whataburger, and Zoe's Kitchen. The project's leasing momentum is strong with over ~~90%~~95% of the space ~~committed including over 70%~~leased and approximately 85% open as of March 31, 2017 with the remainder of the space expected to open by the middle of 2017.

At Northwoods Mall in Peoria, Illinois, we plan to redevelop the space from ~~signed leases.~~

~~During~~a former Macy’s store that closed in March 2016. We purchased the ~~second quarter of 2014, we commenced~~store from Macy’s in January 2017. We will redevelop the former department store to add entertainment, food and some additional in-line retailers. The redevelopment ~~activities at Jefferson Valley Mall,~~will be anchored by a ~~556,000~~56,000 square foot ~~shopping~~Round 1 Entertainment, the first to the market. Round 1 will provide bowling entertainment as well as food and adult beverages. In addition to Round 1 we anticipate adding dining options and new retail stores. The expected investment in this redevelopment is approximately $16 million with an anticipated yield of 8% - 9%. We anticipate completion of this project in 2018.

At Classen Curve in Oklahoma City, Oklahoma, we plan to add new 28,000 - 32,000 square feet multi-tenant buildings to the open-air center ~~located in~~to add new retailers to the ~~New York City area. A new Dick’s Sporting Goods store~~fully leased center. The investment is expected to open at the mall during the fourth quarter of 2016 and the existing H&M store has been relocated to a newly remodeled store representing their latest prototype during the first quarter of 2016. In addition to the new retailers scheduled to open at the mall, the entrances and interior will be ~~updated.~~between $10 - $13 million with openings in late 2017. The ~~total cost of~~yield on this project is expected to be 10% to 12%.

At The Outlet Collection | Seattle, in Auburn, Washington, we plan to replace a Marshall’s store that vacated in the first quarter of 2017 with a new Dave & Buster’s which is expected to open in 2018. The investment in the anchor box replacement will be approximately ~~$34.0~~$4.5 to $5.5 million ~~of which we had incurred approximately $8.1 million as of March 31, 2016. The redevelopment~~and the yield is expected to be ~~partially~~approximately 9% - 11%.

At Pearlridge Center in Aiea, Hawaii (“Pearlridge”), we have commenced a $33 million, 18-month renovation project. The project entails a refresh of the “Downtown” section of the center, including new tenants, an expanded and remodeled food court, new finishes and entrances. We also plan to add a new stand-alone 10,000 square foot Down To Earth natural foods-and-products store, a new Bank of Hawaii branch, and restaurant offerings including Pieology and Five Guys Burger and Fries. In addition, a new 9,100 square foot men’s apparel store is expected to open in the newly renovated Downtown. Architecturally, the contemporary design will reflect the history of the area and take advantage of the natural lighting. In 2016, Hawaii Pacific Health commenced construction of a state of the art cancer treatment center that will be completed in 2017. The funding for the development will be shared pro-rata with our joint venture partner, resulting in our share of the investment of approximately $17 million and the expected yield on the project is 6% - 8%. The redevelopment will come on line at various times beginning in late ~~2016~~2017 and ~~fully~~throughout 2018.

At Scottsdale Quarter in Scottsdale, Arizona, our most recent redevelopment effort involves the final phase of the significant expansion of our initial development of the project. The first part of the expansion has been completed, ~~in mid 2017.~~

~~The~~comprising of the buildings on the north and south parcels ~~of the third phase of Scottsdale Quarter ("Phase III") are constructed. The north parcel consists of luxury apartment units~~ with ground floor retail. The apartments are partially occupied and leasing momentum is strong for the ground floor retail with openings expected in late 2016 and early 2017. The O’Connor Joint Venture, of which we own a 51% interest, has retained a 25% interest in the apartment development and our joint venture partner in the apartment development has built and is managing the apartment complex. The south parcel includes a 140,000 square foot building comprised of retail and office.tenancy including American Girl ~~is the retail anchor for the building~~ and Design Within Reach, ~~occupies the majority of the remaining retail space in the building. Office tenants began moving into the south parcel building in 2015~~as well as luxury apartment homes and office ~~leasing on the building is nearly complete.~~space. The ~~middle parcel will be the~~ final component of ~~Phase III and~~the expansion will be comprised of ~~residential,~~approximately 300 new luxury apartment homes and 35,000 square feet of new street-level retail. In addition to the luxury apartment homes and street-level retail, the project will include a 10,000-square-foot indoor amenity complex and ~~likely a boutique hotel, which is planned for completion in late 2018. Phase III will add density at~~an outdoor, urban courtyard with pool and spa, roof-top terraces overlooking Scottsdale Quarter ~~with a mix of office, residential~~ and ~~lodging, but~~ the ~~cornerstone of the development will remain retail. The total investment in Phase III (including our joint venture partner's share)~~McDowell Mountains, and new onsite parking areas. Construction is expected to ~~be approximately $115.0 million to $125.0 million, of which we had incurred approximately $81.4 million as of March 31, 2016.~~

~~The redevelopment at Town Center Plaza~~start in Leawood, Kansas will result in the addition of a new Arhaus store as well as a 40,000 square foot, two-story Restoration Hardware store. The new Arhaus store opened during the second quarter of 2015 and the sales were above forecasted projections through March 31, 2016. Restoration Hardware is expected2017 with tenants beginning to open in ~~the fall of 2016. The investment in this redevelopment is expected to be approximately $20.0 million, of which we had incurred approximately $11.6 million as of March 31, 2016.~~

A redevelopment at Longview Mall in Longview, Texas is underway with an expected completion during the fourth quarter of 2016. In late 2015, we upgraded an underperforming retailer outparcel store with a new BJ’s Restaurant & Brewhouse and will soon be adding a new Dick’s Sporting Goods anchor store to the mall as well as some additional national in-line tenants. A renovation of the mall is planned in connection with this redevelopment, which has resulted in commitments by many of our retailers to remodel their stores and sign long-term renewals at higher rents. The investment in this redevelopment is expected to be approximately $15.0 million, of which we had incurred approximately $0.4 million as of March 31, 2016.2018.

Beyond Fairfield Town Center, we do not expect to hold material land for development. Land currently held for future development is substantially limited to the land parcels at our current centers which we may utilize for expansion of the existing centers or sales of outlots.

Capital ~~Expenditures.~~

Expenditures

The following table summarizes total consolidated capital expenditures on a cash basis for the three months ended March 31, ~~2016~~2017 (in thousands):


New developments	$	1,980	$	2,100
Redevelopments and expansions	5,836		10,815
Tenant allowances	5,735		4,670
Operational capital expenditures	1,612		4,320
Total (1)	$	15,163	$	21,905

(1) Excludes capitalized interest, wages and real estate taxes, as well as expenditures for certain equipment and fixtures, commissions and project costs, which are included in capital expenditures, net on the consolidated statement of cash flows.

Forward-Looking Statements

Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and it is possible that our actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such factors include, but are not limited to: ~~our~~changes in asset quality and credit risk; ability to ~~meet debt service requirements,~~sustain revenue and earnings growth; changes in political, economic or market conditions generally and the real estate and capital markets specifically; the impact of increased competition; the availability of ~~financing, adverse effects~~capital and financing; tenant or joint venture partner(s) bankruptcies; the failure to increase enclosed retail store occupancy and same-store operating income; risks associated with acquisitions, dispositions, development, expansion, leasing and management of ~~our significant level of indebtedness, including decreasing our business flexibility and increasing our interest expense, the impact of restrictive covenants~~properties; changes in market rental rates; trends in the ~~agreements that govern our indebtedness,~~retail industry; relationships with anchor tenants; risks relating to joint venture properties; costs of common area maintenance; competitive market forces; the ~~Merger, including the ability to effectively integrate the business with that of Glimcher, changes in our credit rating, changes in market rates~~level and volatility of interest rates; the ~~ability~~rate of revenue increases as compared to ~~hedge interest rate risk, risks associated~~expense increases; the financial stability of tenants within the retail industry; the restrictions in current financing arrangements or the failure to comply with the acquisition, development and expansion of properties, general risks related to retail real estate, including the ability to renew leases or lease new properties on favorable terms, dependency on anchor stores or major tenants and on the level of revenues realized by tenants,such arrangements; the liquidity of real estate ~~investments, environmental liabilities, international, national, regional~~investments; the impact of changes to tax legislation and ~~local economic climates, changes in market rental rates, trends in the retail industry, the inability~~our tax positions; failure to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, intensely competitive market environment in the retail industry, costs of common area maintenance, insurance costs and coverage, dependency on key management personnel, terrorist activities, changes in economic and market conditions and maintenance of our statusqualify as a real estate investment ~~trust.~~trust; the failure to refinance debt at favorable terms and conditions; loss of key personnel; material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities; possible restrictions on the ability to operate or dispose of any partially-owned properties; the failure to achieve earnings/funds from operations targets or estimates; the failure to achieve projected returns or yields on development and investment properties (including joint ventures); expected gains on debt extinguishment; changes in generally accepted accounting principles or interpretations thereof; terrorist activities and international hostilities; the unfavorable resolution of legal or regulatory proceedings; the impact of future acquisitions and divestitures; assets that may be subject to impairment charges; and significant costs related to environmental issues. We discussed these and other risks and uncertainties under Part I, "Item 1A. Risk Factors" in the combined Annual Report on Form 10-K for WPG Inc. and WPG L.P. for the year ended December 31, ~~2015, as amended.~~2016. We undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Non-GAAP Financial Measures

Industry practice is to evaluate real estate properties in part based on FFO, NOI and comparable NOI. We believe that these non-GAAP measures are helpful to investors because they are widely recognized measures of the performance of REITs and provide a relevant basis for our comparison among REITs. We also use these measures internally to measure the operating performance of our portfolio.

We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts, or NAREIT, as net income computed in accordance with GAAP:

excluding real estate related depreciation and amortization;

excluding gains and losses from extraordinary items and cumulative effects of accounting changes;

excluding gains and losses from the sales or disposals of previously depreciated retail operating properties;

excluding gains and losses upon acquisition of controlling interests in properties;

excluding impairment charges of depreciable real estate;

plus the allocable portion of FFO of unconsolidated entities accounted for under the equity method of accounting based upon economic ownership interest.

We include in FFO gains and losses realized from the sale of land, marketable and non-marketable securities, and investment holdings of non-retail real estate.

You should understand that our computation of these non-GAAP measures might not be comparable to similar measures reported by other REITs and that these non-GAAP measures:

do not represent cash flow from operations as defined by GAAP;

should not be considered as alternatives to net income determined in accordance with GAAP as a measure of operating performance; and

are not alternatives to cash flows as a measure of liquidity.

The following schedule reconciles total FFO to net income ~~(loss)~~ for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016 (in thousands, except share/unit amounts):


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2016			2015			2017			2016
Net income (loss)	$	13,681		$	(9,588	)
Net income							$	14,624		$	13,681
Less: Preferred dividends and distributions on preferred operating partnership units	(3,568		)	(5,028		)	(3,568		)	(3,568		)
Adjustments to Arrive at FFO:
Real estate depreciation and amortization, including joint venture impact	79,412			91,682			74,521			79,412
Loss on sale of interests in properties	2,209			—
Impairment loss, including (gain) loss on the sale of interests in properties and other							8,458			2,209
Net loss attributable to noncontrolling interest holders in properties	6			3			—			6
Noncontrolling interests portion of depreciation and amortization	(39		)	(33		)	—			(39		)
FFO of the Operating Partnership (1)	91,701			77,036			94,035			91,701
FFO allocable to limited partners	14,282			12,323			14,834			14,282
FFO allocable to common shareholders/unitholders	$	77,419		$	64,713		$	79,201		$	77,419

Diluted earnings (loss) per share/unit	$	0.05		$	(0.07	)
Diluted earnings per share/unit							$	0.05		$	0.05
Adjustments to arrive at FFO per share/unit:
Depreciation and amortization from consolidated properties and our share of real estate depreciation and amortization from unconsolidated properties	0.36			0.43			0.33			0.36
Loss on sale of interests in properties	0.01			—
Impairment loss, including (gain) loss on the sale of interests in properties and other							0.04			0.01
Diluted FFO per share/unit	$	0.42		$	0.36		$	0.42		$	0.42

Weighted average shares outstanding - basic	185,307,541			180,453,143			186,278,173			185,436,932
Weighted average limited partnership units outstanding	34,304,835			34,116,765			34,986,704			34,304,835
Weighted average additional dilutive securities outstanding ~~(2)~~	657,575			473,989			525,629			657,575
Weighted average shares/units outstanding - diluted	220,269,951			215,043,897			221,790,506			220,399,342

(1)

FFO of the operating partnership increased by ~~$14.7~~$2.3 million for the three months ended March 31, ~~2016~~2017 compared to the three months ended March 31, ~~2015. Contributing~~2016. This increase can primarily be attributable to ~~this increase was the $20.8~~a $2.0 million decrease in general and administrative expenses, primarily due to a reduction in costs associated with the Merger. Additionally, during the three months ended March 31, 2015, we accelerated certain loan costs associated with the Bridge Loan. Offsetting these increases, we received less FFO related to the Merger Properties primarily attributed to the partial sale of properties into the O'Connor Joint Venture.legal and consulting fees.


~~(2)~~	The weighted average additional dilutive securities for the three months ended March 31, 2015 are excluded for purposes of calculating diluted earnings (loss) per share/unit because their effect would have been anti-dilutive.

We deem NOI and comparable NOI to be important measures for investors and management to use in assessing our operating performance, as these measures enable us to present the core operating results from our portfolio, excluding certain non-cash, corporate-level and nonrecurring items. Following the completion of the Merger on January 15, 2015, we reassessed our calculation methodology for NOI and comparable NOI and decided that a change in presentation was necessary to provide more meaningful metrics for users, considering the post-Merger business. Specifically, we ~~now~~ exclude from operating income the following items in our calculations of comparable NOI:

straight-line rents and fair value rent ~~amortization, which became more material post-Merger;~~

amortization;

management fee allocation to promote comparability across periods; and

termination income, ~~and~~ out-parcel sales and insurance proceeds, which are deemed to be outside of normal operating ~~results (previously included in NOI, but added back for comparable NOI purposes).~~

~~Further, we now adjust for the following items in our calculation of comparable NOI:~~

~~adding NOI from Glimcher properties prior to the Merger to provide comparability across periods presented; and~~

~~removing NOI from non-core properties to present only the more meaningful results of core properties.~~results.

The following schedule reconciles comparable NOI to operating income and presents comparable NOI percent change for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016 (in thousands):


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2016			2015			2017			2016
Operating income	$	55,378		$	27,755		$	49,531		$	55,378

Depreciation and amortization	71,403			92,184			67,511			71,403
General and administrative	10,804			9,589			8,828			10,804
Merger and transaction costs	—			20,810
Impairment loss							8,509			—
Fee income	(1,448		)	(96		)	(1,582		)	(1,448		)
Management fee allocation	3,610			3,908			476			3,610
Adjustment to include Glimcher NOI from prior to merger (2)	—			4,186
Pro-rata share of unconsolidated joint ventures in comp NOI	11,166			(5,500		)	11,893			11,164
NOI from non-comparable properties and other (1)	3,007			(128		)
Property allocated corporate expense							3,337			3,365
Non-comparable properties and other (1)							(3,577		)	(2,364		)
NOI from sold properties	(295		)	(1,308		)	(1,530		)	(8,710		)
Termination income and outparcel sales	(980		)	(633		)	(1,109		)	(980		)
Straight-line rents	246			(1,595		)	(454		)	246
Ground lease adjustments for straight-line and fair market value	(5		)	671			5			(5		)
Fair market value adjustment to base rents	(1,883		)	(4,638		)
Less: NOI from non-core properties (3)	(4,808		)	(4,985		)
Fair market value and inducement adjustments to base rents							(2,200		)	(1,857		)

Comparable NOI - core portfolio	$	146,195		$	140,220
Comparable NOI percentage change - core portfolio	4.3%

Comparable NOI - total portfolio (including non-core)	$	151,003		$	145,205
Comparable NOI percentage change - total portfolio	4.0%
Comparable NOI							$	139,638		$	140,606
Comparable NOI percentage change							(0.7)%

(1)

Represents an adjustment to remove the NOI ~~excluded~~amounts from ~~comparable NOI relates to~~ properties not owned and operated in all periods presented, certain non-recurring expenses, as well as insurance proceeds received in the periods presented. ~~The assets acquired~~Furthermore, Southern Hills Mall is removed as ~~part~~the management and leasing of the ~~Merger are included in comparable NOI, as described in note 2 below.~~


~~(2)~~	~~Represents an adjustment to add the historical NOI amounts from the 23 properties acquired in the Merger for periods prior~~property was transferred to the ~~January 15, 2015 Merger date. This adjustment~~receiver during the fourth quarter of 2016, although legal title to the property is ~~included to provide comparability across~~still held by an affiliate of the ~~periods presented.~~Company.


~~(3)~~	~~NOI from five non-core mall properties that were held in each period presented.~~

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates, primarily LIBOR. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower the overall borrowing costs by closely monitoring our variable rate debt and converting such debt to fixed rates when we deem such conversion advantageous. From time to time, we may enter into interest rate swap agreements or other interest rate hedging contracts. While these agreements are intended to lessen the impact of rising interest rates, they also expose us to the risks that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly effective cash flow hedges under GAAP guidance. As of March 31, ~~2016, $940.5~~2017, $837.1 million (net of $7.0 million in debt issuance costs) of our aggregate indebtedness ~~(25.9%~~(24.0% of total indebtedness) was subject to variable interest rates, excluding amounts outstanding under variable rate loans that have been hedged to fixed interest rates.

If LIBOR rates of interest on our variable rate debt fluctuated, our future earnings and cash flows would be impacted, depending upon the current LIBOR rates and the existence of any derivative contracts current in effect. Based upon our variable rate debt balance as of March 31, ~~2016,~~2017, a 50 basis point increase in LIBOR rates would result in a decrease in earnings and cash flow of $4.7 million annually and a 50 basis point decrease in LIBOR rates ~~(or to 0% for LIBOR rates that are below 0.50%)~~ would result in an increase in earnings and cash flow of ~~$3.7~~$4.2 million annually. This assumes that the amount outstanding under our variable rate debt remains at ~~$940.5~~$837.1 million, the balance as of March 31, ~~2016.~~

2017.


Item 4.	Controls and Procedures

Controls and Procedures of ~~WP Glimcher~~Washington Prime Group Inc.

Evaluation of Disclosure Controls and Procedures. WPG Inc. maintains disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) that are designed to provide reasonable assurance that information required to be disclosed in the reports that WPG Inc. files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Management of WPG Inc., with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of WPG Inc.'s disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the disclosure controls and procedures of WPG Inc. were effective.

Changes in Internal Control Over Financial Reporting. On January 15, 2015, the Company acquired the business and related assets and liabilities of Glimcher Realty Trust, which operated under its own set of systems and internal controls. These systems and internal controls were utilized by the Company throughout the first quarter of 2016. The Company's two systems of internal control were integrated into a single control environment as of March 31, 2016. There have not been any ~~other~~ changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the quarter ended March 31, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Controls and Procedures of Washington Prime Group, L.P.

Evaluation of Disclosure Controls and Procedures. WPG L.P. maintains disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports that WPG L.P. files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer of WPG Inc., WPG L.P.'s general partner, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Management of WPG L.P., with the participation of the Chief Executive Officer and Chief Financial Officer of WPG Inc., WPG L.P.'s general partner, evaluated the effectiveness of the design and operation of WPG L.P.'s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of WPG Inc., WPG L.P.'s general partner, concluded that, as of the end of the period covered by this report, WPG L.P.'s disclosure controls and procedures were effective.

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings

We are involved from time-to-time in various legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such litigation, claims, and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable, and the amount can be reasonably estimated.


Item 1A.	Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the combined Annual Report on Form 10-K for WPG Inc. and WPG L.P. for the year ended December 31, ~~2015, as amended~~2016 (the ~~“2015~~“2016 Form 10-K”). There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A, of the ~~2015~~2016 Form 10-K.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.


Item 4.	Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

~~Rule 14a-8 Stockholder Proposal Deadline~~

The 2016 Annual Meeting of Stockholders (the “Annual Meeting”) for WPG Inc. will be held on Tuesday, August 16, 2016, which is more than 30 days after the first anniversary of the 2015 annual meeting of stockholders which was held on May 21, 2015. The deadline for submitting a stockholder proposal(s) to be considered for inclusion in our proxy statement for the Annual Meeting will be a reasonable time before we begin to print and send or make available such proxy statement. We currently anticipate mailing the proxy statement and associated materials for the Annual Meeting on or about June 30, 2016. Any such proposal(s), should contain the name and record address of the stockholder(s), the class and number of shares of our common stock beneficially owned, a description of, and reasons for, the proposal(s) and all information that would be required to be included in a proxy statement filed with the United States Securities and Exchange Commission if such stockholder(s) was a participant in a solicitation subject to Section 14 of the Exchange Act. The proposal(s) as well as any questions related thereto, should be directed to WPG Inc.’s Secretary at 180 East Broad Street, Columbus, Ohio 43215.

~~Director Nominations, Proposals for Action and Other Business Brought Before the Annual Meeting~~

Our bylaws have requirements related to proposals of stockholders made outside of the processes of Rule 14a-8 under the Exchange Act and how such proposals must be submitted. In the event the date of the Annual Meeting is changed by more than 30 days from May 21, 2016, the date of the first anniversary of the 2015 annual meeting of stockholders, the proposal(s) must be received by us not later than the close of business on the later of 120 calendar days in advance of the Annual Meeting or ten (10) calendar days following the date upon which public announcement of the date of the Annual Meeting is first made. We publicly announced the date of the Annual Meeting in a Form 10-K/A filed with the SEC on April 29, 2016 and the date that is 120 calendar days from the announced date of the Annual Meeting was April 18, 2016; therefore, any shareholder proposal(s) made outside of the processes of Rule 14a-8 under the Exchange Act need to be received by WPG Inc.'s Secretary at 180 East Broad Street, Columbus, Ohio 43215 no later than the close of business on May 9, 2016.

Item 6. Exhibits

~~The exhibits required by this Item are set forth on the Exhibit Index attached hereto.~~

~~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.~~



	~~WP Glimcher Inc.~~
	~~Washington Prime Group, L.P.~~
		~~by: WP Glimcher Inc., its sole general partner~~

	~~By:~~	~~/s/ Mark E. Yale~~
		~~Mark E. Yale~~ ~~Executive Vice President and Chief Financial Officer~~ ~~(Principal Financial Officer)~~



	~~By:~~	~~/s/ Melissa A. Indest~~
		~~Melissa A. Indest~~ ~~Chief Accounting Officer and Senior Vice President, Finance~~ ~~(Principal Accounting Officer)~~

~~Dated: May 6, 2016~~

~~EXHIBIT INDEX~~



Exhibit Number	Exhibit Descriptions
~~10.55*+~~	Series 2015B LTIP Unit Award Agreement by and among WP Glimcher Inc., Washington Prime Group L.P., and Michael P. Glimcher, dated as of February 25, 2016 (relates to LTIP Unit award for 2015 annual awards)
~~10.56*+~~	~~Series 2015B LTIP Unit Award Agreement by and among WP Glimcher Inc., Washington Prime Group L.P., and Mark E. Yale, dated as of February 25, 2016 (relates to LTIP Unit award for 2015 annual awards)~~
~~10.57*+~~	~~Series 2015B LTIP Unit Award Agreement by and among WP Glimcher Inc., Washington Prime Group L.P., and Mark S. Ordan dated as of February 25, 2016 (relates to LTIP Unit award for 2015 annual awards)~~
~~10.58*+~~	Series 2015B LTIP Unit Award Agreement by and among WP Glimcher Inc., Washington Prime Group L.P., and Melissa A. Indest, dated as of February 25, 2016 (relates to LTIP Unit award for 2015 annual awards)
~~10.59*+~~	Series 2015B LTIP Unit Award Agreement by and among WP Glimcher Inc., Washington Prime Group L.P., and Keric M. “Butch” Knerr, dated as of February 25, 2016 (relates to LTIP Unit award for 2015 annual awards)
~~10.60*+~~	Series 2015B LTIP Unit Award Agreement by and among WP Glimcher Inc., Washington Prime Group L.P., and Thomas J. Drought, Jr., dated as of February 25, 2016 (relates to LTIP Unit award for 2015 annual awards)
10.6110.50+	First Amendment to the Amended and Restated Employment Agreement ~~by and~~ between ~~WP Glimcher Inc. and Mark E. Yale, dated as of March 21, 2016, effective as of March 18, 2016~~
~~10.62*+~~	~~Second Amendment to Employment Agreement, by and between WP Glimcher Inc. and Michael P. Glimcher, dated as of March 24, 2016, effective as of March 18, 2016~~
~~10.63*+~~	~~Transition and Consulting Agreement by and between WP Glimcher Inc. and Michael J. Gaffney, dated as of December 28, 2015~~
~~10.64*+~~	~~Form of Certificate of Designation of Series 2015B LTIP Units of~~ Washington Prime Group ~~L.P.~~Inc. and Robert P. Demchak, dated February 21, 2017.
10.51*+	Form Employee Restricted Stock Unit Award Agreement.
10.52*+	Form Employee Restricted Stock Unit Award Agreement (Employee with Severance Agreement).
10.53*+	Form Employee Restricted Stock Unit Award Agreement (Employee with Employment Agreement).
10.54*+	Form Employee Performance Share Unit Award Agreement (Employee with Employment Agreement).
10.55*+	Form Employee Performance Share Unit Award Agreement (Employee without Employment Agreement).
31.1*	Certification by the Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for ~~WP Glimcher~~Washington Prime Group Inc.
31.2*	Certification by the Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for ~~WP Glimcher~~Washington Prime Group Inc.
31.3*	Certification by the Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
31.4*	Certification by the Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
32.1*	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for ~~WP Glimcher~~Washington Prime Group Inc.
32.2*	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

* Filed electronically herewith.

+ Represents management contract or compensatory plan or arrangement.

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.



		Washington Prime Group Inc.
		Washington Prime Group, L.P.
			by: Washington Prime Group Inc., its sole general partner

Date:	April 27, 2017	By:	/s/ Mark E. Yale
			Mark E. Yale Executive Vice President and Chief Financial Officer (Principal Financial Officer)



Date:	April 27, 2017	By:	/s/ Melissa A. Indest
			Melissa A. Indest Chief Accounting Officer and Senior Vice President, Finance (Principal Accounting Officer)



Investment properties	$	3,091,410
Cash and cash equivalents (1)	547,294
Tenant accounts receivable	14,311
Investment in and advances to unconsolidated real estate entities	21,994
Deferred costs and other assets (including intangibles)	370,079
Accounts payable, accrued expenses, intangibles, and deferred revenue	(289,551		)
Distributions payable	(2,658		)
Redeemable noncontrolling interests, including preferred units	(5,795		)
Total assets acquired and liabilities assumed	3,747,084
Fair value of mortgage notes payable assumed	(1,356,389		)
Net assets acquired	2,390,695
Less: Common shares issued	(535,490		)
Less: Preferred shares issued	(319,960		)
Less: Common operating partnership units issued to limited partners	(29,482		)
Less: Cash and cash equivalents acquired	(547,294		)
Net cash paid for acquisition	$	958,469