UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A10-K
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20152018
WP Glimcher
Washington Prime Group Inc.
Washington Prime Group, L.P.
(Exact name of Registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act:
WP GlimcherWashington Prime Group Inc.:
Title of each class Name of each exchange on which registered
Common Stock, $0.0001 par value (185,309,744 shares outstanding as of February 25, 2016)per share New York Stock Exchange
7.5% Series H Cumulative Redeemable Preferred Stock, par value $0.0001 per share New York Stock Exchange
6.875% Series I Cumulative Redeemable Preferred Stock, par value $0.0001 per share New York Stock Exchange

Washington Prime Group, L.P.: None

Securities registered pursuant to Section 12(g) of the Act:
WP GlimcherWashington Prime Group Inc.: None
Washington Prime Group, L.P.: NoneUnits of limited partnership interest (34,755,660 units outstanding as of February 20, 2019)

Indicate by check mark if the Registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).
WP GlimcherWashington Prime Group Inc. Yes x No ¨        Washington Prime Group, L.P. Yes  ¨ No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
WP GlimcherWashington Prime Group Inc. Yes  ¨No x        Washington Prime Group, L.P. Yes  x¨ No ¨x

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 GlimcherWashington Prime Group Inc. Yes x No ¨        Washington Prime Group, L.P. Yes x No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 GlimcherWashington Prime Group Inc. Yes x No ¨        Washington Prime Group, L.P. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
WP GlimcherWashington Prime Group Inc.    ¨             Washington Prime Group, L.P. ¨

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 the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
WP GlimcherWashington Prime Group Inc. (Check One):    Large accelerated filer x    Accelerated filer¨Emerging growth company ¨
Non-accelerated filer ¨    Smaller reporting company ¨
(Do not check if a smaller reporting company)
Washington Prime Group, L.P. (Check One):    Large accelerated filer ¨Accelerated filer¨Emerging growth company ¨
Non-accelerated filer x    Smaller reporting company ¨
(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Washington Prime Group Inc. ¨Washington Prime Group, L.P. ¨

Indicate by check mark whether Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).
WP GlimcherWashington Prime Group Inc. Yes  ¨No x        Washington Prime Group, L.P. Yes  ¨No x

The aggregate market value of shares of common stock held by non-affiliates of WP GlimcherWashington Prime Group Inc. was approximately $2,484 million$1.5 billion based on the closing sale price on the New York Stock Exchange for such stock on June 30, 2015.29, 2018.

As of February 20, 2019, Washington Prime Group Inc. had 186,074,461 shares of common stock outstanding. Washington Prime Group, L.P. has no publicly traded equity and no common stock outstanding.

Documents Incorporated By Reference: NoneReference

Portions of Washington Prime Group Inc.'s Proxy Statement in connection with its 2019 Annual Meeting of Stockholders are incorporated by reference in Part III.


EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (this “Amendment”) amendsreport combines the WP Glimcher Inc. (“WPG”) and Washington Prime Group, L.P. (“WPG L.P.”) Annual Reportannual reports on Form 10-K for the fiscal year ended December 31, 2015, originally filed on February 29, 2016 (the “Original Filing”). We are filing this Amendment to include the information required by Part III2018 of Washington Prime Group® Inc. and not included in the Original Filing. Pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”)Washington Prime Group®, this information may be incorporated by reference into the Original Filing from WPG’s definitive proxy statement for its annual meeting of shareholders (“Proxy Statement”); provided, that such Proxy Statement is filed with the SEC no later than 120 days from the end of WPG’s fiscal year ended December 31, 2015. WPG’s Proxy Statement will not be filed with the SEC within this time period. This Amendment also corrects three line item disclosures that are a part of the cover page on Form 10-K. The disclosure in the Original Filing concerning securities registered under Section 12(g) and requirements to file reports pursuant to Section 13L.P. Unless stated otherwise or Section 15(d) of the Securities Exchange Act of 1934, as amended (The "Exchange Act"), incorrectly referenced the operating partnership units of WPG L.P. and incorrectly reflected that WPG L.P. was required to file reports under Section 13 or 15(d) of the Exchange Act, and the line item check-the-box disclosure pertaining to disclosure required by Item 405 of Regulation S-K concerning delinquent Form 3, 4 and 5 filers has been added to the cover page of this Amendment as it was inadvertently omitted from the cover page of the Original Filing. Lastly, in connection with the filing of this Amendment and pursuant to the rules of the SEC, we are including with this Amendment new certifications of our principal executive officer and principal financial officer pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended. Accordingly, Item 15 of Part IV has also been amended to reflect the filing of these new certifications. Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. WPG’s 2016 Annual Meeting of Shareholders will be held on August 16, 2016.

As used in this Amendment, unless the context requires otherwise, all references to “we,” “our,” “us,” “our company,” or the “Company” are intended as"WPG Inc." mean 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 "WPG," the "Company," “we,” "us," and “our,” to refer to WPG Inc., WPG L.P., and entities in which WPG Inc. or WPG L.P. (or any affiliate) havehas 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 held approximately 84.4% of the partnership interests (“OP units”) at December 31, 2018. 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 annual reports on Form 10-K 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 basis.Annual Report on Form 10-K for WPG Inc. and WPG L.P. includes, for each entity, separate 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-K, they would be discussed separately herein.


WASHINGTON PRIME GROUP INC. AND WASHINGTON PRIME GROUP, L.P.

Annual Report on Form 10-K
2December 31, 2018



TABLE OF CONTENTS

Item No. Page No.
Part I 
1.Business
4
1A.Risk Factors
9
1B.Unresolved Staff Comments
24
2.Properties
25
3.Legal Proceedings
37
4.Mine Safety Disclosures
37
Part II 
5.Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
37
6.Selected Financial Data
39
7.Management's Discussion and Analysis of Financial Condition and Results of Operations
42
7A.Quantitative and Qualitative Disclosure About Market Risk
70
8.Financial Statements and Supplementary Data
70
9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
70
9A.Controls and Procedures
70
9B.Other Information
71
Part III 
10.Directors, Executive Officers and Corporate Governance
72
11.Executive Compensation
72
12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
72
13.Certain Relationships and Related Transactions and Director Independence
72
14.Principal Accounting Fees and Services
72
Part IV 
15.Exhibits and Financial Statement Schedules
73
16.Form 10-K Summary
77
Signatures
78


Part I
Item 1.    Business
Unless the context otherwise requires, references to "WPG," "the Company," "we," "us" or "our" refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated basis.
General
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 (the "Code"). WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. 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. On May 28, 2014, WPG separated from Simon Property Group Inc. ("SPG") through the distribution of 100% of the outstanding units of WPG L.P. to the owners of Simon Property Group L.P. and 100% of the outstanding shares of WPG to the SPG common 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 ("SPG Businesses"). At the time of the separation, our assets consisted of interests in 98 shopping centers (the "WPG Legacy Properties"). On January 15, 2015, the Company acquired Glimcher Realty Trust ("GRT"), in a stock and cash transaction valued at approximately $4.2 billion, including the assumption of debt (the "Merger"). In the Merger, we acquired material interests in 23 shopping centers and assumed mortgages on 14 properties with a fair value of approximately $1.4 billion. Prior to our separation from SPG, WPG Inc. entered into agreements with SPG under which SPG provided various services to WPG Inc. relating primarily to the legacy SPG Businesses and WPG Legacy Properties, 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. Except for certain indemnification obligations and other terms and conditions, these underlying agreements expired effective May 31, 2016.
We own, develop and manage enclosed retail properties and open air properties. As of December 31, 2018, our assets consisted of material interests in 108 shopping centers in the United States, comprised of approximately 58 million square feet of managed gross leasable area ("GLA").
Transactions
For a description of our operational strategies and developments in our business during 2018 see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Form 10-K.
Segments
Our primary business is the ownership, development and management of retail real estate within the United States. We have aggregated our operations, including enclosed retail properties and open air properties, into one reportable segment because they have similar economic characteristics and we provide similar products and services to similar types of tenants and, in many cases, the same tenants. For the year ended December 31, 2018, Signet Jewelers, Ltd. (based on common parent ownership of tenants including, but not limited to, Body by Pagoda, Jared's, Kay Jewelers, Piercing Pagoda, Rogers Jewelers, and Zales Jewelers) accounted for approximately 2.9% of base minimum rents. Further, Signet Jewelers, Ltd., L Brands, Inc. (based on common parent ownership of tenants including Bath & Body Works, La Senza, Pink, Victoria's Secret, and White Barn Candle), Dick's Sporting Goods (based on common parent ownership including Dick's Sporting Goods, Field & Stream, and Golf Galaxy) and Footlocker, Inc. (based on common parent ownership including Champs Sports, Foot Action USA, Footlocker, Kids Footlocker, Lady Footlocker, and World Footlocker), in aggregate, comprised approximately 9.4% of base minimum rents. See Item 2. "Properties" for further information on tenant mix.
Other Policies
The following is a discussion of our investment policies, financing policies, conflicts of interest policies and policies with respect to certain other activities. One or more of these policies may be amended or rescinded from time to time without a stockholder vote.

Investment Policies
We are in the business of owning, managing and operating enclosed retail properties and open air properties across the United States and while we emphasize these real estate investments, we may also invest in equity or debt securities of other entities engaged in real estate activities or securities of other issuers. However, any of these investments would be subject to the percentage ownership limitations and gross income tests necessary for REIT qualification of WPG Inc. under federal tax laws as well as our own internal policies concerning conflicts of interest and related party transactions. These REIT limitations mean that we cannot make an investment that would cause our real estate assets to be less than 75% of our total assets. We must also derive at least 75% of our gross income directly or indirectly from investments relating to real property or mortgages on real property, including "rents from real property," dividends from other REITs and, in certain circumstances, interest from certain types of temporary investments. In addition, we must also derive at least 95% of our gross income from such real property investments, and from dividends, interest and gains from the sale or dispositions of stock or securities or from other combinations of the foregoing.
Subject to REIT limitations, we may invest in the securities of other issuers in connection with acquisitions of indirect interests in real estate. Such an investment would normally be in the form of general or limited partnership or membership interests in special purpose partnerships and limited liability companies that own one or more properties. We may, in the future, acquire all or substantially all of the securities or assets of other REITs, management companies or similar entities where such investments would be consistent with our investment policies.
Financing Policies
Because WPG Inc.'s REIT qualification requires it to distribute at least 90% of its taxable income, exclusive of net capital gains, we regularly access the capital markets to raise the funds necessary to finance operations, acquisitions, strategic investments, development and redevelopment opportunities, and to refinance maturing debt. We must comply with customary covenants contained in our financing agreements that limit our ratio of debt to total assets or market value, as defined in such agreements. For example, WPG L.P.'s current line of credit and term loans contain covenants that restrict the total amount of debt of WPG L.P. to 60% of total assets, as defined under the related agreements, and secured debt to 40% of total assets, with slight easing of restrictions during the four trailing quarters following a portfolio acquisition. In addition, these agreements contain other covenants requiring compliance with financial ratios. Furthermore, the amount of debt that we may incur is limited as a practical matter by our desire to maintain acceptable ratings for our equity securities and debt securities of WPG L.P. We strive to maintain investment grade ratings at all times, but we cannot assure you that we will be able to do so in the future (see "Liquidity and Capital Resources" within Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for a discussion of events that occurred subsequent to December 31, 2018).
If WPG Inc.'s Board of Directors determines to seek additional capital, we may raise such capital by offering equity or debt securities, creating joint ventures with existing ownership interests in properties, entering into joint venture arrangements for new development projects, or a combination of these methods. If the Board of Directors determines to raise equity capital, it may, without shareholder approval, issue additional shares of common stock or other capital stock. The Board of Directors may issue a number of shares up to the amount of our authorized capital in any manner and on such terms and for such consideration as it deems appropriate. Such securities may be senior to the outstanding classes of common stock. Such securities also may include additional classes of preferred stock, which may be convertible into common stock. Existing shareholders have no preemptive right to purchase shares in any subsequent offering of WPG Inc.'s securities. Any such offering could dilute a shareholder's investment in WPG Inc.
We expect most future borrowings would be made through WPG L.P. or its subsidiaries. Borrowings may be in the form of bank borrowings, publicly and privately placed debt instruments, or purchase money obligations to the sellers of properties. Any such indebtedness may be secured or unsecured. Any such indebtedness may also have full or limited recourse to the borrower or be cross-collateralized with other debt, or may be fully or partially guaranteed by WPG L.P. Although we may borrow to fund the payment of dividends, we currently have no expectation that we will regularly do so. See "Financing and Debt" within Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Form 10-K for a discussion of our debt arrangements as of December 31, 2018.
We could potentially issue additional debt securities through WPG L.P., and we may issue such debt securities which may be convertible into capital stock or be accompanied by warrants to purchase capital stock. We also may sell or securitize our lease receivables.
We may also finance acquisitions through the issuance of common shares or preferred shares, the issuance of additional units of partnership interest in WPG L.P., the issuance of preferred units of WPG L.P., the issuance of other securities including unsecured notes and mortgage debt, draws on our credit facilities or sale or exchange of ownership interests in properties, including through the formation of joint venture agreements or other arrangements.

WPG L.P. may also issue units to transferors of properties or other partnership interests which may permit the transferor to defer gain recognition for tax purposes.
We do not have a policy limiting the number or amount of mortgages that may be placed on any particular property. Mortgage financing instruments, however, usually limit additional indebtedness on such properties. Additionally, unsecured credit facilities, unsecured note indentures and other contracts may limit our ability to borrow and contain limits on the amount of secured indebtedness we may incur.
Typically, we will invest in or form special purpose entities to assist us in obtaining secured permanent financing at attractive terms. Permanent financing may be structured as a mortgage loan on a single property, or on a group of properties, and will generally require us to provide a mortgage lien on the property or properties in favor of an institutional third party, as a joint venture with a third party, or as a securitized financing. For securitized financings, we may create special purpose entities to own the properties. These special purpose entities, which are common in the real estate industry, are structured with the intention of not being consolidated in a bankruptcy proceeding involving a parent company. We will decide upon the structure of the financing based upon the best terms then available to us and whether the proposed financing is consistent with our other business objectives. For accounting purposes, we will include the outstanding securitized debt of special purpose entities owning consolidated properties as part of our consolidated indebtedness.
Conflicts of Interest Policies
We maintain policies and have entered into agreements designed to reduce or eliminate potential conflicts of interest. We have adopted governance principles governing our affairs and those of the Board of Directors.
Under WPG Inc.’s Governance Principles, directors must disclose to the rest of the Board of Directors any potential conflict of interest they may have with respect to any matter under discussion and, if appropriate, recuse themselves from Board of Director discussions of, and/or refrain from voting on, such matter. Directors shall not have a duty to communicate or present any corporate opportunity to WPG Inc. and WPG Inc. renounces any interest or expectancy in such opportunity and waives any claim against a director arising from the fact that he or she does not present the opportunity to WPG Inc. or pursues or facilitates the pursuit of the opportunity by others; provided, however, that the foregoing shall not apply in a case in which a director is presented with a corporate opportunity in writing expressly in his or her capacity as a director or officer of WPG Inc.
In addition, we have a Code of Business Conduct and Ethics, which applies to all of our officers, directors, and employees. At least a majority of the members of WPG Inc.'s Board of Directors, Governance and Nominating Committee, Audit Committee and Compensation Committee must qualify as independent under the listing standards for New York Stock Exchange listed companies. Any transaction between us and any officer, WPG Inc. director or any family member of any of the foregoing persons, or 5% shareholder of WPG Inc. must be approved pursuant to our related party transaction policy.
Policies With Respect To Certain Other Activities
We intend to make investments which are consistent with WPG Inc.'s qualification as a REIT, unless the Board of Directors determines that it is no longer in WPG Inc.'s best interests to so qualify as a REIT. The Board of Directors may make such a determination because of changing circumstances or changes in the REIT requirements. We have authority to offer shares of our capital stock or other securities in exchange for property. We also have authority to repurchase or otherwise reacquire our shares or any other securities. We may issue shares of our common stock, or cash at our option, to holders of units in future periods upon exercise of such holders' rights under the Operating Partnership agreement. Our policy prohibits us from making any loans to our directors or executive officers for any purpose. We may make loans to the joint ventures in which we participate. Additionally, we may make or buy interests in loans for real estate properties owned by others.
Competition
Our direct competitors include other publicly-traded retail development and operating companies, retail real estate companies, commercial property developers and other owners of retail real estate that engage in similar businesses. Within our property portfolio, we compete for retail tenants and the nature and extent of the competition we face varies from property to property. With respect to specific alternative retail property types, we have faced increased competition over the last several years from both lifestyle centers and power centers, in addition to other open air properties and enclosed retail properties.

We believe the principal factors that retailers consider in making their leasing decisions include, but are not limited to, the following:
Consumer demographics;
Quality, design and location of properties;
Total number and geographic distribution of properties;
Diversity of retailers and anchor tenants;
Management and operational expertise; and
Rental rates.
In addition, because our revenue potential is linked to the success of our retailers, we indirectly share exposure to the same competitive factors and market forces that our retail tenants experience in their respective markets when trying to attract individual shoppers. These dynamics include general competition from other retail properties, including outlet properties and other discount shopping properties, as well as competition with discount shopping clubs, catalog companies, direct mail, home shopping networks, and telemarketing. The changes in consumer shopping behavior to increase purchases on-line from their computers and mobile devices provide retailers with distribution options other than brick and mortar retail stores and has resulted in competitive alternatives that could have a material adverse effect on our ability to lease, develop and redevelop traditional commercial retail space and on the level of rents we can obtain.
Seasonality
The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during our fiscal fourth quarter due to the holiday season, which generally results in higher percentage rent income in the fourth quarter. Additionally, enclosed shopping centers achieve a substantial portion of their specialty (temporary retailer) rents during the holiday season. Thus, occupancy levels and revenue production are generally the highest in the fourth quarter of each year. Results of operations realized in any one quarter may not be indicative of the results likely to be experienced over the course of our fiscal year.
Environmental Matters
See Item 1A. "Risk Factors" for information concerning the potential effects of environmental regulations on our operations.
Intellectual Property
WPG L.P., by and through its affiliates, holds service marks registered with the United States Patent and Trademark Office, including the terms Washington Prime Group® (expiration date January 2028), The Outlet Collection®(expiration date October 2023), Shelby’s Sugar Shop® (expiration date September 2028), and TANGIBLE®(expiration date September 2028) as well as the names of certain of our properties such as Scottsdale Quarter® (expiration date November 2019) and Polaris Fashion Place® (expiration date July 2022), and other marketing terms, phrases, and materials it uses to promote its business, services, and properties.
Sustainability
ESG (Environmental, Social and Governance)
We know that ESG issues, otherwise known as corporate sustainability, are important to our stakeholders, and they are important to the Company. We believe in a strong commitment to the community and embrace opportunities to improve the lives of our guests, employees and the environment.
The Board of Directors’ Sustainability Committee, as well as our internal, interdisciplinary ESG Steering Committee, work together with senior leadership to further establish sustainability as a key business driver as it relates to how we redevelop and operate our retail properties, conduct business with our guests, engage with our communities and create a productive and positive work environment for our employees. The Company will continue to work diligently to find ways to manage our properties' carbon footprint and identify environmentally-friendly alternatives that reduce waste, maximize energy efficiency and improve recycling efforts.
Some examples of the Company’s focus on environmental sustainability investments in its properties include energy efficient Light Emitting Diode ("LED") lighting projects, charging stations for electric cars, solar energy panels, and many more innovations. As it relates to new projects, we are focused on the area of energy reduction and leveraging sustainability to achieve cost efficiencies in our operations. We are working with local and state municipalities to expand the Property Assessed Clean Energy (PACE) model promulgated by the U.S. Department of Energy to help finance energy efficiency projects at its retail properties. The Company continues to install efficient LED lighting, including installations at nearly 40 of our retail properties in the past two years, which has led to a 9 percent reduction in the Company's annual electric consumption.

In addition, the Company is working with a third party to implement operational and technology improvements at the property level. This initiative includes technical communications, WiFi design and implementation, as well as analytics and reporting in order to make informed future energy management decisions. We continue to explore ways to innovate even more so in the future.
We believe a commitment to incorporating sustainable practices into many of the areas of our business will add long term value to our portfolio of retail town centers.
Employees
At December 31, 2018, we had 834 employees, of which 107 were part-time.
Headquarters
Our corporate headquarters are located at 180 East Broad Street, Columbus, Ohio 43215, and our telephone number is (614) 621-9000. We have an additional corporate office located at 111 Monument Circle, Indianapolis, Indiana 46204.
Available Information
WPG Inc. and WPG L.P. file this Annual Report on Form 10-K and other periodic reports and statements electronically with the Securities Exchange Commission ("SEC"). The SEC maintains an Internet site that contains reports, statements and proxy and information statements, and other information provided by issuers at www.sec.gov. WPG Inc.'s and WPG L.P.'s reports and statements, including amendments, are also available free of charge on its website, www.washingtonprime.com, as soon as reasonably practicable after such documents are filed with the SEC. The information contained on our website is not incorporated by reference into this report and such information should not be considered a part of this report.

Item 1A.    Risk Factors
The following risk factors, among others, could materially affect our business, financial condition, operating results, cash flows, fiscal outlook and business reputation. These risk factors may describe situations beyond our control and you should carefully consider them. Additional risks and uncertainties not presently known to us or that are currently not believed to be material could also affect our actual results. We may update these risk factors in our future periodic reports, other filings, and public announcements.
Risks Related to Our Business and Operations
We might not be able to renew leases or relet space at existing properties, or lease newly developed properties.
When leases for our existing properties expire, the premises might not be relet or the terms of reletting, including the cost of tenant allowances and concessions and the size of the space, might be less favorable than the current lease terms, due to strong competition or otherwise. Also, we might not be able to lease new properties to an appropriate mix of tenants or for rents that are consistent with our projections. To the extent that our leasing plans are not achieved, our business, results of operations and financial condition could be materially adversely affected and our operational and strategic objectives may not be achieved readily or at all.
Our lease agreements with our tenants typically provide a fixed rate for certain cost reimbursement charges; if our operating expenses increase or we are otherwise unable to collect sufficient cost reimbursement payments from our tenants, our business, results of operations and financial condition might be materially adversely affected.
Energy costs, repairs, maintenance and capital improvements to common areas of our properties, janitorial services, administrative, property and liability insurance costs and security costs are typically allocable to our properties' tenants. Our lease agreements typically provide that the tenant is liable for a portion of such common area maintenance charges (which we refer to as "CAM") and other operating expenses. The majority of our current leases require the tenant to pay a fixed periodic amount to reimburse a portion of our CAM and other operating expenses. In these cases, a tenant will pay either (a) a specified rent amount that includes the fixed CAM and operating expense reimbursement amount, or (b) a fixed expense reimbursement amount separate from the rent payment. Generally, both types of CAM and operating expense reimbursement payments are subject to annual increases regardless of the actual amount of CAM and other operating expenses. As a result, any adjustments in tenant payments do not depend on whether operating expenses increase or decrease, causing us to be responsible for any excess amounts. In the event that our operating expenses increase, CAM and tenant reimbursements that we receive might not allow us to recover a substantial portion of these operating costs.
Additionally, the computation of cost reimbursements from tenants for CAM, insurance and real estate taxes is complex and involves numerous judgments, including interpretation of lease terms and other tenant lease provisions, including those in leases that we assume in connection with property acquisitions. Unforeseen or underestimated expenses might cause us to collect less than our actual expenses. The amounts we calculate and bill could also be disputed by tenants or become the subject of a tenant audit or even litigation. There can be no assurance that we will collect all or substantially all of this amount.
Some of our properties depend on anchor stores or major tenants to attract shoppers and could be materially adversely affected by the loss of, or a store closure by, one or more of these anchor stores or major tenants.
Our open air properties and enclosed retail properties are typically anchored by department stores and other large nationally or regionally recognized tenants. The value of some of our properties could be materially adversely affected if these department stores or major tenants fail to comply with their contractual obligations, seek concessions in order to continue operations, or cease their operations.
For example, among department stores and other large stores, corporate merger or consolidation activity typically results in the closure of duplicate or geographically overlapping store locations. Resulting adverse pressure on the businesses of our department stores and major tenants could have an adverse impact upon our own results. Certain department stores, including The Bon-Ton Stores, Inc. which liquidated in 2018, and Sears Holdings Corporation, and other national retailers have experienced, and might continue to experience, depending on consumer confidence levels or overall economic conditions, considerable decreases in customer traffic in their retail stores, increased competition from alternative retail options, such as those accessible via the Internet and other mediums, and other forms of pressure on their business models. Pressure on these department stores and national retailers could impact their ability to maintain their stores, meet their obligations both to us and to their external lenders and suppliers, withstand takeover attempts by investors or rivals or avoid bankruptcy and/or liquidation, all of which could result in impairment or closures of their stores. Other of our tenants might be entitled to modify the economic or other terms of their existing leases in the event of such closures (through co-tenancy clauses), which could decrease rents and/or operating expense reimbursements or entitle such retailers to close their stores. The leases of some anchors might permit the anchor to transfer its lease, including any attendant approval rights, to another retailer.

The transfer to a new anchor could cause customer traffic in the property to decrease or to be composed of different types of customers, which could reduce the income generated by that property and adversely impact development or re-development prospects for such property. A transfer of a lease to a new anchor also could allow other tenants to make reduced rental payments or to terminate their leases at the property, which could adversely affect our results of operations.
Additionally, department store or major tenant closures might result in decreased customer traffic, which could lead to decreased sales at our properties and adversely impact our ability to successfully execute our leasing strategy and objectives. If the sales of stores operating in our properties decline significantly due to the closing of anchor stores or other national retailers, adverse economic conditions, or other reasons, tenants might be unable to pay their minimum rents or expense recovery charges, which would likely negatively impact our financial results. In the event of any default by a tenant, whether a department store, national or regional retailer or otherwise, we might not be able to fully recover and/or experience delays and costs in enforcing our rights as landlord to recover amounts due to us under the terms of our agreements with such parties.
We face risks associated with the acquisition, development, re-development and expansion of properties, including risks of higher than projected costs, inability to obtain financing, inability to obtain required consents or approvals and inability to attract tenants at anticipated rates.
In the event we seek to acquire and develop new properties and expand and redevelop existing properties, we might not be successful in identifying or pursuing acquisition, development or re-development/expansion opportunities. Additionally, newly acquired properties, developed, re-developed or expanded properties might not perform as well as expected. Other related risks we face include, without limitation, the following:
Construction and other development costs of a project could be higher than projected, potentially making the project unfeasible or unprofitable;
We might not be able to obtain financing or to refinance loans on favorable terms, if at all;
We might be unable to obtain zoning, occupancy or other governmental approvals, or the approvals obtained may not be adequate;
Occupancy rates and rents might not meet our projections and as a result the project could be unprofitable; and
In some cases, we might need the consent of third parties, such as anchor tenants, mortgage lenders and joint venture partners to conduct acquisition, development, re-development or expansion activities, and those consents may be withheld, take an unexpected amount of time to be obtained, or be subject to the satisfaction of certain conditions.
If a project is unsuccessful, either because it is not meeting our expectations when operational or was not completed according to the project planning, we could lose our investment in the project or have to incur an impairment charge relating to the asset or development which could then adversely impact our financial results. Furthermore, if we guarantee the property's financing, our loss could exceed our investment in the project.
Our assets may be subject to impairment charges that may materially affect our financial results.
We evaluate our real estate assets and other assets for impairment indicators whenever events or changes in circumstances indicate that recoverability of our investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. Our determination of whether a particular held-for-use asset is impaired is based upon the undiscounted projected cash flows used for the impairment analysis and our determination of the asset's estimated fair value, that in turn are based upon our plans for the respective asset and our views of market and economic conditions. With respect to assets held-for-sale, our determination of whether such an asset is impaired is based upon market and economic conditions. If we determine that an impairment has occurred, then we would be required under Generally Accepted Accounting Principles in the United States ("GAAP") to make an adjustment to the net carrying value of the asset, which could have a material adverse effect on our results of operations in the accounting period in which the adjustment is made. Furthermore, changes in estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions could result in the recognition of additional impairment losses for already impaired assets, which, under the applicable accounting guidance, could be substantial. See the "Impairment" section within Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of recent impairments.
Our ability to change the composition of our real estate portfolio is limited because real estate investments are relatively illiquid.
Our properties represent a substantial portion of our total consolidated assets, and these investments are relatively illiquid. As a result, our ability to sell one or more of our properties or investments in real estate in response to any changes in economic or other conditions is limited. If we want to sell a property, we cannot be certain that we will be able to dispose of it in the desired time period or that the sale price of a property will exceed the cost of our investment in that property, which may then have an adverse impact on our financial results.

Clauses in leases with certain tenants of our development or redevelopment properties may include inducements, such as reduced rent and tenant allowance payments, which can reduce our rents and Funds From Operations ("FFO"). As a result, these development or redevelopment properties are more likely to achieve lower returns during their stabilization periods than our previous development or redevelopment properties.
The leases for a number of the tenants that have opened stores at properties we have developed or redeveloped have reduced rent from co-tenancy clauses that allow those tenants to pay reduced rent until occupancy at the respective property reaches certain thresholds and/or certain named co-tenants open stores at the respective property. Additionally, some tenants may have rent abatement clauses that delay rent commencement for a prolonged period of time after initial occupancy. The effect of these clauses reduces our rents and FFO while they are applicable. We expect to continue to offer co-tenancy and rent abatement clauses in the future to attract tenants to our development and redevelopment properties. As a result, our current and future development and redevelopment properties are more likely to achieve lower returns during their stabilization periods than other projects of this nature historically have, which may adversely impact our investment in such developments, as well as our financial condition and results of operations. Additionally, the prevalence and volume of such properties is likely to increase in our development and redevelopment pipeline at an unpredictable rate in light of the recent proliferation of bankruptcy filings and closures by retailers occupying "big box", anchor or other traditionally large spaces which can have an adverse impact on our financial condition and results of operations.
We face a wide range of competition that could affect our ability to operate profitably.
Our properties compete with other retail properties and other forms of retail, such as catalogs and e-commerce websites. Competition could also come from open air properties, outlet centers, lifestyle centers, and enclosed retail properties, and both existing and future development projects. The presence of competitive alternatives might adversely impact the success of our existing properties, our ability to lease space and the rental rates we can obtain. We also compete with other retail property developers to acquire prime development sites. Additionally, we compete with other retail property companies for tenants and qualified management. If we are unable to successfully compete, our business, results of operations and financial condition could be materially adversely affected.
The increase in and prevalence of digital and mobile technology usage has increased the speed of the transition of a percentage of market share from shopping at physical locations to web-based purchases. If we are unsuccessful in adapting our business to changing consumer spending habits, our results of operations and financial condition could be materially adversely affected. Additionally, our investments in ventures aimed at finding innovative and unique uses within shopping centers and retail generally may be unsuccessful and incur expenses, losses, and use resources to a degree that adversely impacts our financial results without a corresponding positive financial return or operational benefit.
If we lose our key management personnel, we might not be able to successfully manage our business and achieve our objectives.
Our management team has substantial experience in owning, operating, acquiring, and developing enclosed shopping centers and other open air properties. A large part of our success depends on the leadership and performance of our executive management team and we cannot guarantee that they will remain with us. If we unexpectedly lose the services of these individuals, we might not be able to successfully manage our business or achieve our business objectives. Additionally, we continue to actively recruit management and other professional talent within the real estate and retail industries necessary to manage our properties to optimal performance. If we are not able to successfully recruit such personnel or cannot do so readily, this may adversely impact our ability to manage our business, achieve our financial goals, or meet our strategic and operational objectives.
We have limited control with respect to some properties that are partially owned or managed by third parties, which could adversely affect our ability to sell or refinance or otherwise take actions concerning these properties that would be in the best interests of WPG Inc.'s shareholders.
We may continue to co-invest with third parties through partnerships, joint ventures, or other entities, including without limitation by acquiring controlling or non-controlling interests in, or sharing responsibility for, managing the affairs of a property, partnership, joint venture or other entity. At December 31, 2018, we do not have sole decision-making authority regarding 13 unconsolidated properties that we currently hold through joint ventures with third parties.
Additionally, we might not be in a position to exercise sole decision-making authority regarding any future properties that we hold in a partnership or joint venture. Investments in partnerships, joint ventures or other entities could, under certain circumstances, involve risks that would not be present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt, suffer a deterioration in their financial condition, or fail to fund their share of required capital contributions. Partners or co-venturers could have economic or other business interests or goals that are inconsistent with our own business interests or goals, and could be in a position to take actions contrary to our policies or objectives.

Such investments also have the potential risk of creating impasses on decisions, such as a sale or financing, because neither we nor our partner or co-venturer would have full control over the partnership or joint venture. Disputes between us and partners or co-venturers might result in litigation or arbitration that could increase our expenses and prevent our officers and/or directors from focusing their time and efforts on our business. Consequently, actions by, or disputes with, partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. Additionally, we risk the possibility of being liable for the actions of our third-party partners or co-venturers.
Our revenues are dependent on the level of revenues realized by our tenants, and a decline in their revenues could materially adversely affect our business, results of operations and financial condition.
We are subject to various risks that affect the retail environment generally, including levels of consumer spending, seasonality, changes in economic conditions, unemployment rates, an increase in the use of the Internet by retailers and consumers, and natural disasters. Additionally, levels of consumer spending could be adversely affected by, for example, increases in consumer savings rates, increases in tax rates, reduced levels of income growth, interest rate increases, and other declines in consumer net worth and a strengthening of the U.S. dollar as compared to non-U.S. currencies.
As a result of these and other economic and market-based factors, our tenants might be unable to pay their existing minimum rents or expense recovery charges due. Because substantially all of our income is derived from rentals of commercial real property, our income and cash flow would be adversely affected if a significant number of tenants are unable to meet their obligations or their revenues decline, especially if they were tenants with a significant number of locations within our portfolio. Additionally, a decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates.
Store closures and/or bankruptcy filings by tenants could occur during the course of our operations. We continually seek to re-lease vacant spaces resulting from tenant terminations. Large scale store closings or the bankruptcy of a tenant, particularly an anchor tenant, might make it more difficult to lease the remainder of a particular property or properties. Furthermore, certain of our tenants, including anchor tenants, hold the right under their lease(s) to terminate their lease(s) or reduce their rental rate if certain occupancy conditions are not met, if certain anchor tenants close, if certain sales levels (sales kick-out provisions) or profit margins are not achieved, or if an exclusive use provision is violated, which all could be triggered in the event of one or more tenant bankruptcies. Future tenant bankruptcies, especially by anchor tenants, could adversely affect our properties or impact our ability to successfully execute our re-leasing strategy as well as adversely impact our ability to achieve our operational and strategic objectives.
Economic and market conditions could negatively impact our business, results of operations and financial condition.
The market in which we operate is affected by a number of factors that are largely beyond our control but could nevertheless have a significant negative impact on us. These factors include, but are not limited to:
Fluctuations or frequent variances in interest rates and credit spreads;
The availability of credit, including the price, terms and conditions under which it can be obtained;
A decrease in consumer spending or sentiment, including as a result of increases in savings rates and tax increases, and any effect that this might have on retail activity;
The actual and perceived state of the real estate market, market for dividend-paying stocks and public capital markets in general; and
Unemployment rates, both nationwide and within the primary markets in which we operate.
In addition, increased inflation might have a pronounced negative impact on the interest expense we pay in connection with our outstanding indebtedness and our general and administrative expenses, as these costs could increase at a rate higher than our rents. Inflation might adversely affect tenant leases with stated rent increases, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending which could impact our tenants' sales and, in turn, our own results of operations.
Conversely, deflation might result in a decline in general price levels, often caused by a decrease in the supply of money or credit. The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand. Restricted lending practices might impact our ability to obtain financing for our properties and might also negatively impact our tenants' ability to obtain credit. Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.
A slow-growing economy hinders consumer spending, which could decrease the level of discretionary income available for shopping at our properties. Weak income growth could weigh down consumer spending, which could be further affected if the overall economy suffers a setback.

An increase in market interest rates could increase our interest costs on existing and future debt and could adversely affect WPG Inc.'s common share price.
An environment of rising interest rates could lead holders of our common shares to seek higher yields through other investments, which could adversely affect the market price of our common shares. One of the factors that may influence the price of our common shares in public markets is the annual distribution rate we pay as compared with the yields on alternative investments. Additionally, increases in market interest rates could result in increased borrowing costs for us, which may adversely affect our cash flow and the amounts available for distributions to our shareholders.
We have significant indebtedness, which could adversely affect our business, including decreasing our business flexibility and increasing our interest expense.
The consolidated indebtedness of our business as of December 31, 2018 was approximately $2.9 billion. We have and will continue to incur various costs and expenses associated with our transactions and executing our operational and fiscal strategy. Any future increased levels of indebtedness could also reduce access to capital and increase borrowing costs generally, thereby reducing funds available for working capital, capital expenditures, tenant improvements, acquisitions and other general corporate purposes and may create competitive disadvantages for us relative to other companies with lower debt levels. If we do not achieve our operational and growth goals or if the financial performance of the Company does not meet current expectations, then our ability to service our indebtedness may be adversely impacted. Lastly, if interest rates increase, the cost of capital and expenses of debt service requirements relating to our variable rate debt, which constitutes 15.2% of our consolidated indebtedness as of December 31, 2018, would increase which could adversely affect our cash flows.
We may not be able to generate sufficient cash to service and repay all of our debt and may be forced to take other actions to satisfy our obligations under our debt, which may not be successful.
Our ability to make scheduled payments on, or to refinance, our debt will depend on our financial condition, liquidity and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us both to fund our business purposes and to pay the principal of, or premium, if any, and interest on our debt.
If our cash flows and capital resources are insufficient to service and repay our debt and fund other cash requirements, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to sell assets or operations, seek additional capital or restructure or refinance our debt. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet all of our debt obligations. Our unsecured revolving credit facility (the "Revolver") and senior unsecured term loan (the "Term Loan" and collectively with the Revolver, the "Facility") were amended and restated on January 22, 2018 and restrict (i) our ability to dispose of assets and (ii) our ability to incur debt. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt obligations then due.
In addition, we conduct our operations through our subsidiaries. Our subsidiaries may not be able to, or may not be permitted to, make cash available to us to enable us to make payments in respect of our debt. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual prohibitions or other restrictions may limit our ability to obtain cash from our subsidiaries. In the event that our subsidiaries do not make sufficient cash available to us, we may be unable to make required principal, premium, if any, and interest payments on our debt.
Our inability to obtain sufficient cash flows from our subsidiaries, whether as a result of their performance or otherwise, to satisfy our debt, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position, condition, liquidity and results of operations.
If we fail to make required payments in respect of our debt, (i) we will be in default thereunder and, as a result, the related debt holders and lenders, and potentially other debt holders and lenders, could declare all outstanding principal and interest to be due and payable, (ii) the lenders under the Revolver could terminate their commitments to loan money to us, (iii) our secured lenders could foreclose against the assets securing the related debt, (iv) could result in cross defaults on other financing obligations or defaults in other transactional arrangements we have; and (v) we could be forced into bankruptcy or liquidation.
Despite current and anticipated debt levels, we may still be able to incur substantially more debt.
We may be able to incur substantial additional debt in the future. Although the Facility and the WPG L.P. notes restrict the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions and the additional debt incurred in compliance with these restrictions could be substantial. If new debt is added to our current debt levels, the related risks that we now face would increase.

We depend on external financings for our growth and ongoing debt service requirements.
We depend on external financings, principally debt financings, to fund our acquisitions, development and other capital expenditures and to ensure that we can meet our debt service requirements. Our long-term ability to grow through acquisitions or development, which is an important component of our strategy, will be limited if we cannot obtain additional debt financing. Our access to financings depends on our credit ratings, the willingness of banks to lend to us and conditions in the capital markets. Market conditions might make it difficult to obtain debt financing, and we cannot be certain that we will be able to obtain additional debt financing or that we will be able to obtain such financing on acceptable terms.
The agreements that govern our indebtedness contain various covenants that impose restrictions on us and certain of our subsidiaries that might affect our or their ability to operate.
We have a variety of debt, including the unsecured Facility, the unsecured WPG L.P. notes, and secured property-level debt. The agreements that govern such indebtedness contain various affirmative and negative covenants that could, subject to certain significant exceptions, restrict our ability and certain of our subsidiaries to, among other things, have liens on property, incur additional indebtedness, make loans, advances or other investments, make non-ordinary course asset sales, and/or merge or consolidate with any other entity or sell or convey certain assets to any one person or entity. Additionally, some of the agreements that govern the debt financing contain financial covenants that require us to maintain certain financial ratios. Our ability and the ability of our subsidiaries to comply with these provisions might be affected by events beyond our control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations.
If we cannot obtain additional capital, our growth might be limited.
In order to qualify and maintain our qualification as a REIT each year, we are required to distribute at least 90% of our REIT taxable income, excluding net capital gains, to our shareholders. As a result, our retained earnings available to fund acquisitions, development, innovation or other capital expenditures are nominal, and we rely upon the availability of additional debt or equity capital to fund these activities. Our long-term ability to grow through acquisitions, development, innovation or strategic partnerships which is an important component of our strategy, will be limited if we cannot obtain additional debt financing or equity capital. Market conditions might make it difficult to obtain debt financing or raise equity capital, and we cannot be certain that we will be able to obtain additional debt or equity financing or that we will be able to obtain such capital on favorable terms.
Adverse changes in any credit rating might affect our borrowing capacity and borrowing terms.
Our outstanding debt is periodically rated by nationally recognized credit rating agencies. Our credit ratings impact the cost and availability of future borrowings and, accordingly, our cost of capital. Our ratings reflect each rating organization's opinion of our financial strength, operating performance and ability to meet debt obligations. At the end of 2018, we had investment grade credit ratings from three rating agencies. Subsequent to year end, two rating agencies lowered our rating below investment grade. There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future. Furthermore, the interest rate under the Facility is variable and could increase in the event our credit rating is downgraded, resulting in higher borrowing costs. An increase in our cost of capital could adversely impact our ability to fund key activities related to achieving our business objectives.
We may enter into hedging interest rate protection arrangements that might not effectively limit our interest rate risk.
We may seek to selectively manage any exposure that we might have to interest rate risk through interest rate protection agreements geared toward effectively fixing or capping a portion of our variable-rate debt. Additionally, we may refinance fixed-rate debt at times when we believe rates and terms are appropriate. Any such efforts to manage these exposures might not be successful.
Our potential use of interest rate hedging arrangements to manage risk associated with interest rate volatility might expose us to additional risks, including the risk that a counterparty to a hedging arrangement fails to honor its obligations. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that hedging activities will have the desired beneficial impact on our results of operations or financial condition. Termination of these hedging agreements typically involves costs, such as transaction fees or breakage costs.

As owners of real estate, we might face liabilities or other significant costs related to environmental issues.
Federal, state and local laws and regulations relating to the protection of the environment might require us, as a current or previous owner or operator of real property, to investigate and clean up hazardous or toxic substances or petroleum product releases at a property or at impacted neighboring properties. These laws and regulations might require us to abate or remove asbestos containing materials in the event of damage, demolition or renovation, reconstruction or expansion of a property and also govern emissions of and exposure to asbestos fibers in the air. These laws and regulations also govern the installation, maintenance and removal of underground storage tanks used to store waste oils or other petroleum products. Many of our properties contain, or at one time contained, asbestos containing materials or underground storage tanks (primarily related to auto service center establishments or emergency electrical generation equipment). The costs of investigation, removal or remediation of hazardous or toxic substances could be substantial and could adversely affect our results of operations or financial condition. The presence of contamination, or the failure to remediate contamination, might also adversely affect our ability to sell, lease or redevelop a property or to borrow using a property as collateral.
In addition, under various federal, state or local laws, ordinances and regulations, a current or previous owner or operator of real estate might be held liable to third parties for bodily injury or property damage incurred by the parties in connection with the contamination. These laws often impose liability without regard to whether the owner or operator knew of, or otherwise caused, the release of the hazardous or toxic substances. The presence of contamination at any of our properties, or the failure to remediate contamination discovered at such properties, could result in significant costs to us and/or materially adversely affect our ability to sell or lease such properties or to borrow using such properties as collateral.
For example, federal, state and local laws require abatement or removal of asbestos-containing materials in the event of demolition or certain renovations or remodeling, the cost of which might be substantial for certain re-developments. These regulations also govern emissions of, and exposure to, asbestos fibers in the air, which might necessitate implementation of site-specific maintenance practices. Certain laws also impose liability for the release of asbestos-containing materials into the air, and third parties might seek recovery from owners or operators of real property for personal injury or property damage associated with asbestos-containing materials. Asbestos-containing building materials are present at some of our properties and might be present at others. To minimize the risk of on-site asbestos being improperly disturbed, we have developed and implemented asbestos operations and maintenance programs to manage asbestos-containing materials and suspected asbestos-containing materials in accordance with applicable legal requirements, however we cannot be certain that our programs eliminate all risk of asbestos being improperly disturbed. Any liability, and the associated costs thereof, we might face for environmental matters could adversely impact our ability to operate our business and our financial condition.
Lastly, in connection with certain mortgages on our properties, our affiliate, Washington Prime Property, L.P., singly, or together with WPG L.P. and certain other affiliates, have executed environmental indemnification agreements to indemnify the respective lenders for those loans against losses or costs to remediate damage to the mortgaged property caused by the presence or release of hazardous materials.
We are subject to various regulatory requirements, and any changes in such requirements could have a material adverse effect on our business, results of operations and financial condition.
The laws, regulations and policies governing our business, or the regulatory or enforcement environment at the national level or in any of the states in which we operate, might change at any time and could have a material adverse effect on our business. We are unable to predict how any future legislative or regulatory proposals or programs will be administered or implemented, or whether any additional or similar changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Additionally, changes in tax laws might have a significant impact on our operating results. For more information regarding the impact of changing tax laws on our operating results, please refer to the risk factors section titled "Risks Related to WPG Inc.'s Status as a REIT."
Also, we may be required to expend significant sums of money to comply with the Americans with Disabilities Act of 1990, as amended (“ADA”), and other federal, state, and local laws in order for our properties and facilities to meet requirements related to access and use by physically challenged persons. Additionally, unanticipated costs and expenses may be incurred in connection with defending lawsuits relating to ADA compliance not covered by our liability insurance.
Our inability to remain in compliance with regulatory requirements could have a material adverse effect on our operations and on our reputation generally. We are unable to give any assurances that applicable laws or regulations will not be amended or construed differently, or that new laws and regulations will not be adopted, either of which could have a material adverse effect on our business, financial condition or results of operations.

Some of our potential losses might not be covered by insurance.
We maintain insurance coverage with financially-sound insurers for property, third-party liability, terrorism, workers compensation, and rental loss insurance on all of our properties. However, certain catastrophic perils are subject to large deductibles that may cause an adverse impact on our operating results. Additionally, there are some types of losses, including lease and other contract claims, that are not insured. If an uninsured loss or a loss in excess of insured limits occurs, or a loss for which there is a large deductible occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue it could generate.
We currently maintain insurance coverage for acts of terrorism by foreign or domestic agents. The United States government provides reinsurance coverage to insurance companies following a declared terrorism event under the Terrorism Risk Insurance Program Reauthorization Act, which extended the effectiveness of the Terrorism Risk Insurance Extension Act (which we refer to as the "TRIA") of 2005. The TRIA is designed to reinsure the insurance industry from declared terrorism events that cause or create in excess of $100 million in damages or losses. The U.S. government could terminate its reinsurance of terrorism, thus increasing the risk of uninsured losses for such acts. Our tenants, vendors and joint venture partners in retail are subject to similar risks.
We face possible risks associated with climate change.
We cannot determine with certainty whether global warming or cooling is occurring and, if so, at what rate. To the extent climate change causes changes in weather patterns, our properties in certain markets and regions could experience increases in storm intensity and rising sea-levels. Over time, these conditions could result in volatile or decreased demand for retail space at certain of our properties or, in extreme cases, our inability to operate the properties at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) insurance on favorable terms and increasing the cost of energy and snow removal at our properties. Moreover, compliance with new laws or regulations related to climate change, including compliance with "green" building codes, may require us to make improvements to our existing properties or increase taxes and fees assessed on us or our properties. At this time, there can be no assurance that climate change will not have a material adverse effect on us.
Some of our properties are subject to potential natural or other disasters.
A number of our properties are located in Florida, California, Texas, and Hawaii or in other areas with a higher risk of natural disasters such as earthquakes, fires, floods, tornadoes, hurricanes, or tsunamis. The occurrence of natural disasters can adversely impact operations, redevelopment, or development at our centers and projects, increase investment costs to repair or replace damaged properties, increase future property insurance costs, and negatively impact the tenant demand for lease space. Additionally, some of our properties are located in coastal regions, and would therefore be affected by any future increases in sea levels. If insurance is unavailable to us or is unavailable on acceptable terms, or our insurance is not adequate to cover losses from these events, our financial condition and results of operations could be adversely affected.
Our due diligence review of acquisition opportunities or other transactions might not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations.
Although we intend to conduct due diligence with respect to each acquisition opportunity or other transaction that we pursue, it is possible that our due diligence processes will not or did not uncover all relevant facts, particularly with respect to any assets we acquire from unaffiliated third parties. In some cases, we might be given limited access to information about the investment and will rely on information provided by the target of the investment. Additionally, if opportunities are scarce, the process for selecting bidders is competitive, or the time frame in which we are required to complete diligence is short, our ability to conduct a due diligence investigation might be limited, and we would be required to make investment decisions based upon a less thorough diligence process than would otherwise be the case. Accordingly, investments and other transactions that initially appear to be viable may prove to not be so over time, due to the limitations of the due diligence process or other factors.
Management and administrative services provided by unaffiliated persons or entities to one or more of the WPG Legacy Properties between May 28, 2014 and March 31, 2016 (the “Service Period”) may have been provided in such a manner that requires personnel of WPG (or any affiliate) to address issues, problems, or disputes that arose during the Service Period and were not addressed resulting in our expenditure of time, capital and resources to address such matters to a degree that could materially affect our business, financial condition, liquidity or results of operations.
We depended on unaffiliated persons or entities to provide certain services in connection with their operation and management of the WPG Legacy Properties during the Service Period. These services included, but were not limited to, promoting the respective property through advertisements, leasing the WPG Legacy Properties, billing tenants for rent and all other charges, paying the salaries of persons responsible for management of the WPG Legacy Properties, making such infrastructure repairs as approved in the fiscal budget for the WPG Legacy Properties, maintenance and payment of any taxes or fees.

In the event there were isolated or perhaps even systemic instances of the aforementioned services being provided in a manner inconsistent with WPG’s current business practices, philosophy or standards due to the inattention, underperformance, mismanagement, or deficit service, WPG personnel would, upon assuming management and operational control of the WPG Legacy Properties, which we did by March 31, 2016, have to address one or more issues, problems, or disputes that arose during the Service Period and were not addressed resulting in our expenditure of time, capital and resources to resolve such matters to a degree that could materially affect our business, financial condition, liquidity and results of operations as well as the optimal operation of one or more of the WPG Legacy Properties.
We cannot assure you that we will be able to continue paying distributions at the current rate.
We have maintained a policy to pay a quarterly cash distribution at an annualized rate of $1.00 per common share/unit and intend to pay the same distribution going forward. However, holders of our common shares/units may not receive the same quarterly distributions for various reasons, including the following:
We may not have enough cash to pay such distributions due to changes in our cash requirements, indebtedness, capital spending plans, cash flows or financial position;
Decisions on whether, when and in what amounts to make any future distributions will remain at all times entirely at the discretion of WPG Inc.'s Board of Directors, which reserves the right to change dividend practices at any time and for any reason;
We may desire to retain cash to maintain or improve our credit ratings or to address costs related to implementing our growth strategy or executing on our operational strategy; and
The ability of our subsidiaries to make distributions to us may be subject to restrictions imposed by law, regulation or the terms of any current or future indebtedness that these subsidiaries may incur.
Our shareholders/unitholders have no contractual or other legal right to distributions that have not been declared.
Risks associated with the implementation of new information systems or upgrades to existing systems may interfere with our operations or ability to maintain adequate records.
We are continuing to implement new information systems and upgrades to existing systems as part of our growing business and problems with the design as well as the security or implementation of these new or upgraded systems could interfere with our operations or ability to maintain adequate and secure records.
The occurrence of cyber incidents, a deficiency in our cyber security, or a data breach could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber-incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupting data, or stealing confidential information. We rely upon information technology networks and systems, some of which are managed by third-parties, to process, transmit, and store electronic information, some of which may be confidential and/or proprietary, and to manage or support a variety of business processes and activities. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Primary risks that could directly result from the occurrence of a cyber-incident include, but are not limited to, operational interruption, damage to our relationship with our tenants and other business partners, and private data exposure (including personally identifiable information, or proprietary and confidential information, of ours and our employees, as well as third parties). Any such incidents could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, and reduce the benefits of our advanced technologies. We carry cyber liability insurance; however a loss could exceed the limits of the policy. We have implemented processes, procedures and controls to help mitigate these risks, such as providing security awareness training with simulated spam, phishing and social engineering attacks for associates. We perform mock incident and mock disasters to test the adequacy of our internal incident response plan and that our associates are properly prepared.  We leverage a third party security firm to perform risk assessments. However, these measures, our increased awareness of a risk of a cyber-incident, and our insurance coverage, do not guarantee that our financial results will not be negatively impacted by such an incident.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and WPG Inc.'s share price.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and are required to prepare our financial statements according to the rules and regulations required by the Securities and Exchange Commission (the "SEC"). Additionally, the Exchange Act requires that we file annual, quarterly and current reports. Our failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing.
In addition, the Sarbanes-Oxley Act requires that we, among other things, establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting in future reports, when such certifications will be required.
Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis, or may cause our company to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in our company and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm report a material weakness in our internal control over financial reporting or if the firm resigns in light of such a weakness. This could materially adversely affect our company by, for example, leading to a decline in WPG Inc.'s share price and impairing our ability to raise additional capital.
Risks Related to the Separation from SPG
Potential indemnification liabilities to SPG pursuant to the Separation Agreement could materially adversely affect our operations.
The Separation Agreement with SPG provides for, among other things, the principal corporate transactions required to effect the separation, certain conditions to the separation and distribution and provisions governing our relationship with SPG with respect to and following the separation and distribution. Among other things, the Separation Agreement provides for indemnification obligations designed to make us financially responsible for substantially all liabilities that may exist relating to our business activities, whether incurred prior to or after the separation and distribution, as well as those obligations of SPG that we will assume pursuant to the Separation Agreement. If we are required to indemnify SPG under the circumstances set forth in this agreement, we may be subject to substantial liabilities.
In connection with our separation from SPG, SPG will indemnify us for certain pre-distribution liabilities and liabilities related to SPG assets. However, there can be no assurance that these indemnities will be sufficient to insure us against the full amount of such liabilities, or that SPG's ability to satisfy its indemnification obligation will not be impaired in the future.
Pursuant to the Separation Agreement, SPG has agreed to indemnify us for certain liabilities. However, third parties could seek to hold us responsible for any of the liabilities that SPG agrees to retain, and there can be no assurance that SPG will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from SPG any amounts for which we are held liable, such indemnification may be insufficient to fully offset the financial impact of such liabilities and/or we may be temporarily required to bear these losses while seeking recovery from SPG.
We have a limited history operating as an independent company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.
The historical information about us in this Form 10-K prior to May 28, 2014 is derived from the historical accounting records of SPG and refers to our business as operated by and integrated with SPG. Some of our historical financial information included in this annual report is derived from the consolidated financial statements and accounting records of SPG. Accordingly, the historical and financial information does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly traded company during the periods presented or those that we will achieve in the future. Factors which could cause our results to differ from those reflected in such historical financial information and which may adversely impact our ability to receive similar results in the future include, but are not limited to, the following:

Prior to the separation, a portion of our current business had been operated by SPG as part of its broader corporate organization, rather than as an independent, stand-alone company. SPG or one of its affiliates performed various corporate functions for us, such as accounting, property management, information technology, legal, and finance. Following the separation, SPG provided some of these functions to us. Our historical financial results for periods prior to the separation from SPG reflect allocations of corporate expenses from SPG for such functions and are likely to be less than the expenses we would have incurred had we operated as a separate, publicly traded company. We have and will continue to make significant investments to replicate or outsource from other providers certain facilities, systems, infrastructure, and personnel to which we no longer have access after our separation from SPG. Developing our ability to operate without access to SPG's current operational and administrative infrastructure has been challenging;
During the time our business was integrated with the other businesses of SPG, we were able to use SPG's size and purchasing power in procuring various goods and services and shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. For example, we were historically able to take advantage of SPG's purchasing power in technology and services, including information technology, marketing, insurance, treasury services, property support and the procurement of goods. We entered into certain transition and other separation-related agreements with SPG, however these agreements have either expired or been terminated and we may not continue to fully capture the benefits we enjoyed as a result of being integrated with SPG and might result in us paying higher charges than in the past for these services. As a separate, independent company, we may be unable to on a consistent, sustainable and long-term basis obtain goods and services at the prices and terms obtained prior to the separation, which could decrease our overall profitability. As a separate, independent company, we may also not be as successful on a consistent, sustainable and long-term basis in negotiating favorable tax treatments and credits with governmental entities. Likewise, it may be more difficult for us to attract and retain desired tenants on a consistent, sustainable and long-term basis. This could have an adverse effect on our business, results of operations and financial condition following the completion of the separation;
Before the separation, generally our working capital requirements and capital for our general corporate purposes, including acquisitions, research and development, and capital expenditures, were historically satisfied as part of SPG's cash management policies. Since the separation, we have been and may continue to be required to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements, which might not be on terms as favorable to those obtained by SPG, and the cost of capital for our business may be higher than SPG's cost of capital prior to the separation; and
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and are required to prepare our financial statements according to the rules and regulations promulgated by the SEC. Complying with these requirements could result in significant costs to us and require us to divert substantial resources, including management time, from other activities.
Other significant changes have occurred and may continue to occur in our cost structure, management, strategic transactions, financing and business operations as a result of operating as an independent company. For additional information about the past financial performance of our business and the basis of presentation of the historical combined financial statements of our business, please refer to "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and accompanying notes included elsewhere in this Form 10-K.
Risks Related to WPG Inc.'s Status as a REIT
If WPG Inc. fails to remain qualified as a REIT, it will be subject to U.S. federal income tax as a regular corporation and could face substantial tax liability, which would substantially reduce funds available for distribution to its shareholders and result in other negative consequences.
If WPG Inc. were to fail to qualify as a REIT in any taxable year, it would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on its taxable income at regular corporate rates, and distributions to its shareholders would not be deductible by WPG Inc. in computing its taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to WPG Inc.'s shareholders, which in turn could have an adverse effect on the value of, and trading prices for, WPG Inc.'s common shares. Unless WPG Inc. is deemed to be entitled to relief under certain provisions of the Code, it would also be disqualified from taxation as a REIT for the four taxable years following the year during which it initially ceased to qualify as a REIT.
Furthermore, the New York Stock Exchange ("NYSE") requires, as a condition to the listing of WPG Inc.'s common shares, that WPG Inc. maintain its REIT status. Consequently, if WPG Inc. fails to maintain its REIT status, its common shares could promptly be delisted from the NYSE, which would decrease the trading activity of such common shares, making the sale of such common shares difficult.

Dividends paid by REITs do not qualify for the reduced tax rates available for some dividends.
Dividends paid by certain non-REIT corporations to their shareholders that are individuals, trusts and estates are generally taxed at reduced tax rates. Dividends payable by REITs, however, generally are not eligible for the reduced rates. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the shares of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including WPG Inc.'s common shares.
Qualifying as a REIT involves highly technical and complex provisions of the Code.
Qualifying as a REIT involves the application of highly technical and complex provisions of the Code for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize WPG Inc.'s REIT qualification. WPG Inc.'s qualification as a REIT will depend on WPG Inc.'s satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. Compliance with these requirements must be carefully monitored on a continuing basis, and there can be no assurance that WPG Inc.'s personnel responsible for doing so will be able to successfully monitor WPG Inc.'s compliance, despite clauses in the property management agreements requiring such monitoring. Additionally, WPG Inc.'s ability to satisfy the requirements to qualify to be taxed as a REIT might depend, in part, on the actions of third parties over which we have either no control or only limited influence.
Monitoring REIT qualification for both WPG Inc. as well as the separate individual REITs within joint venture arrangements adds compliance complexity.
REIT compliance is required to be tested for WPG Inc. as well as any subsidiary REIT within our structure. Each REIT’s compliance is tested and determined separately. Therefore the subsidiary REITs have a lower materiality threshold. If one of the subsidiary REITs failed to be REIT compliant it may impact the REIT status of WPG Inc.
Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a negative effect on WPG Inc.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process, and by the IRS and the U.S. Department of the Treasury (the "Treasury"). Although we are not aware of any provision of the Tax Cuts and Jobs Act, the tax reform legislation enacted in 2017, or any pending tax legislation that would adversely affect our ability to operate as a REIT, changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect WPG Inc.'s investors or WPG Inc. WPG Inc. cannot predict how changes in the tax laws might affect its investors or WPG Inc. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect WPG Inc.'s ability to qualify to be taxed as a REIT and/or the U.S. federal income tax consequences to WPG Inc.'s investors and WPG Inc. of such qualification.
Legislative or regulatory action could adversely affect stockholders.
Future changes to tax laws may adversely affect the taxation of the REIT, its subsidiaries or its stockholders. These changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets. These potential changes could generally result in REITs having fewer tax advantages, and may lead REITs to determine that it would be more advantageous to elect to be taxed, for federal income tax purposes, as a corporation.
Not all states automatically conform to changes in the Internal Revenue Code. Some states use the legislative process to decide whether it is in their best interests to conform or not to various provisions of the Code. This could increase the complexity of our compliance efforts, increase compliance costs, and may subject us to additional taxes and audit risk.
WPG Inc.'s REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.
In order for WPG Inc. to qualify to be taxed as a REIT, and assuming that certain other requirements are also satisfied, it generally must distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to its shareholders each year, so that U.S. federal corporate income tax does not apply to earnings that it distributes. To the extent that WPG Inc. satisfies this distribution requirement and qualifies for taxation as a REIT, but distributes less than 100% of its REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, it will be subject to U.S. federal corporate income tax on its undistributed net taxable income. Additionally, WPG Inc. will be subject to a 4% nondeductible excise tax if the actual amount that it distributes to its shareholders in a calendar year is less than a minimum amount specified under U.S. federal income tax laws. WPG Inc. intends to make distributions to its shareholders to comply with the REIT requirements of the Code.

From time to time, WPG Inc. might generate taxable income greater than its cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves, or required debt or amortization payments. If we do not have other funds available in these situations, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of WPG Inc.'s capital stock or debt securities to make distributions sufficient to enable WPG Inc. to pay out enough of its taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Further, amounts distributed will not be available to fund the growth of our business. Thus, compliance with WPG Inc.'s REIT requirements may hinder our ability to grow, which could adversely affect our liquidity and our ability to execute our business plan.
Even if WPG Inc. remains qualified as a REIT, it could face other tax liabilities that reduce its cash flows.
Even if WPG Inc. remains qualified for taxation as a REIT, it could be subject to certain U.S. federal, state and local taxes on its income and assets, including taxes on any undistributed income and state or local income, property and transfer taxes. For example, in order to meet the REIT qualification requirements, WPG Inc. may hold some of its assets or conduct certain of its activities through one or more taxable REIT subsidiaries ("TRSs") or other subsidiary corporations that will be subject to federal, state and local corporate-level income taxes as regular C corporations. Additionally, WPG Inc. might incur a 100% excise tax on transactions with a TRS if they are not conducted on an arm's-length basis. Any of these taxes would decrease cash available for distribution to WPG Inc.'s shareholders.
Complying with WPG Inc.'s REIT requirements might cause us to forego otherwise attractive acquisition opportunities or liquidate otherwise attractive investments.
To qualify to be taxed as a REIT for U.S. federal income tax purposes, WPG Inc. must ensure that, at the end of each calendar quarter, at least 75% of the value of its assets consist of cash, cash items, government securities and "real estate assets" (as defined in the Code), including certain mortgage loans and securities. The remainder of WPG Inc.'s investments (other than government securities, qualified real estate assets and securities issued by a TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
Additionally, in general, no more than 5% of the value of WPG Inc.'s total assets (other than government securities, qualified real estate assets and securities issued by a TRS) can consist of the securities of any one issuer, and no more than 20% of the value of our total assets can be represented by securities of one or more TRSs. If WPG Inc. fails to comply with these requirements at the end of any calendar quarter, it must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing its REIT qualification and suffering adverse tax consequences. As a result, we might be required to liquidate or forego otherwise attractive investments. These actions could have the effect of reducing WPG Inc.'s income and amounts available for distribution to its shareholders.
In addition to the asset tests set forth above, to qualify to be taxed as a REIT, WPG Inc. must continually satisfy tests concerning, among other things, the sources of its income, the amounts it distributes to its shareholders and the ownership of its shares. We might be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements of WPG Inc. for qualifying as a REIT. Thus, compliance with WPG Inc.'s REIT requirements may hinder our ability to make certain attractive investments.
Complying with WPG Inc.'s REIT requirements might limit our ability to hedge effectively and may cause WPG Inc. to incur tax liabilities.
The REIT provisions of the Code to which WPG Inc. must adhere substantially limit our ability to hedge our assets and liabilities. Income from certain potential hedging transactions that we may enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets or from transactions to manage risk of currency fluctuations with respect to any item of income or gain that satisfy WPG Inc.'s REIT gross income tests (including gain from the termination of such a transaction) does not constitute "gross income" for purposes of the 75% or 95% gross income tests that apply to REITs, provided that certain identification requirements are met. To the extent that we enter into other types of hedging transactions or fail to properly identify such transaction as a hedge, the income is likely to be treated as non-qualifying income for purposes of both of WPG Inc.'s gross income tests.
As a result of these rules, we might be required to limit our use of advantageous hedging techniques or implement those hedges through a total return swap. This could increase the cost of our hedging activities because the total return swap may be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear.
Additionally, losses in the total return swap will generally not provide any tax benefit, except that such losses could theoretically be carried back or forward against WPG Inc.'s past or future taxable income in the total return swap.

The share ownership limit imposed by the Code for REITs, and WPG Inc.'s amended and restated articles of incorporation, may inhibit market activity in WPG Inc.'s shares and restrict our business combination opportunities.
In order for WPG Inc. to maintain its qualification as a REIT under the Code, not more than 50% in value of its outstanding shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year after its first taxable year. WPG Inc.'s amended and restated articles of incorporation, with certain exceptions, authorize its Board of Directors to take the actions that are necessary and desirable to preserve its qualification as a REIT. Unless exempted by WPG Inc.'s Board of Directors, no person may own more than 8%, or 18% in the case of certain family members and other related persons of Mr. David Simon, the current Chairman and CEO of SPG and former member of our Board of Directors, of any class of WPG Inc.'s capital stock or any combination thereof, determined by the number of shares outstanding, voting power or value (as determined by WPG Inc.'s Board of Directors), whichever produces the smallest holding of capital stock under the three methods, computed with regard to all outstanding shares of capital stock and, to the extent provided by the Code, all shares of WPG Inc.'s capital stock issuable under outstanding options and exchange rights that have not been exercised. WPG Inc.'s Board of Directors may grant an exemption in its sole discretion, subject to such conditions, representations and undertakings as it may determine in its sole discretion. These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for WPG Inc.'s common shares or otherwise be in the best interest of WPG Inc.'s shareholders.
Risks Related to Our Common and Preferred Shares/Units
We cannot guarantee the timing, amount, or payment of distributions on our shares/units.
Although we expect to pay regular cash distributions, the timing, declaration, amount and payment of future distributions to shareholders will fall within the discretion of our Board of Directors. Our Board of Directors' decisions regarding the payment of distributions will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other factors that it deems relevant. Our ability to pay distributions will depend on our ongoing ability to generate cash from operations and access capital markets. We cannot guarantee that we will pay a distribution in the future or continue to pay any distribution at a particular rate.
The market value or trading price of our preferred and Common Shares could decrease based upon uncertainty in the marketplace and market perception.
The market price of our common and preferred shares may fluctuate widely as a result of a number of factors, many of which are outside our control or influence. Additionally, the stock market is subject to fluctuations in share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have adversely affected and may continue to adversely affect the market price of our common and preferred shares. Among the factors that could adversely affect the market price of our common and preferred shares are:
actual or anticipated quarterly fluctuations in our operating results and financial condition;
changes in our FFO, revenue, or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
negative speculation or information in the media or investment community;
any changes in our distribution or dividend policy;
any sale or disposal of properties within our portfolio;
any future issuances of equity securities;
increases in leverage, mortgage debt financing, or outstanding borrowings;
strategic actions by our Company or our competitors, such as acquisitions, joint ventures, or restructurings;
general market conditions and, in particular, developments related to market conditions for the real estate industry or retail sector;
proposed or adopted regulatory or legislative changes or developments; or
anticipated or pending investigations, proceedings, or litigation that involves or affect us.

WPG Inc.'s cash available for distribution to shareholders might be insufficient to pay distributions at any particular levels or in amounts sufficient in order for WPG Inc. to maintain its REIT qualification, which could require us to borrow funds in order to make such distributions.
As a REIT, WPG Inc. is required to distribute at least 90% of its REIT taxable income each year, excluding net capital gains, to its shareholders. WPG Inc. intends to make regular quarterly distributions whereby it expects to distribute at least 100% of its REIT taxable income to its shareholders out of assets legally available thereof. Based on the amount of its REIT taxable income for the year ended December 31, 2018, WPG Inc.'s annual dividend of $1.00 per share satisfied this requirement. However, WPG Inc.'s ability to make distributions could be adversely affected by various factors, many of which are not within its control. For example, in the event of downturns in its financial condition or operating results, economic conditions or otherwise, WPG Inc. might be unable to declare or pay distributions to its shareholders to the extent required to maintain its REIT qualification. WPG Inc. might be required either to fund distributions from borrowings under the Revolver or to reduce its distributions. If we borrow to fund WPG Inc.'s distributions, our interest costs could increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
In addition, some of WPG Inc.'s distributions may include a return of capital. To the extent that WPG Inc. makes distributions in excess of its current and accumulated earnings and profits (as determined for U.S. federal income tax purposes), such distributions would generally be considered a return of capital for U.S. federal income tax purposes to the extent of the holder's adjusted tax basis in its shares. A return of capital is not taxable, but it has the effect of reducing the holder's adjusted tax basis in its investment. To the extent that distributions exceed the adjusted tax basis of a holder's shares, the distributions will be treated as gain from the sale or exchange of such shares.
Your percentage of ownership in WPG Inc. may be diluted in the future.
In the future, your percentage ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise. WPG Inc. also regularly grants compensatory equity awards to directors, executive officers and certain employees who are eligible to receive such awards. Such awards, which are derivatives of our common shares, will ultimately, if they vest, have a dilutive effect on WPG Inc.'s earnings per share, which could adversely affect the market price of WPG Inc.'s common shares.
In addition, WPG Inc.'s amended and restated articles of incorporation authorize WPG Inc. to issue, without the approval of its shareholders, one or more additional classes or series of preferred shares having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common shares respecting dividends and distributions, as WPG Inc.'s Board of Directors generally may determine.
The terms of one or more such classes or series of preferred shares could dilute the voting power or reduce the value of WPG Inc.'s common shares. For example, WPG Inc. could grant the holders of preferred shares the right to elect some number of WPG Inc. directors in all events or on the occurrence of specified events, or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred shares could affect the residual value of the common shares.
Certain provisions in WPG Inc.'s amended and restated articles of incorporation and bylaws, and provisions of Indiana law, might prevent or delay an acquisition of our company, which could decrease the trading price of WPG Inc.'s common shares.
WPG Inc.'s amended and restated articles of incorporation and bylaws contain, and Indiana law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with WPG Inc.'s Board of Directors rather than to attempt a hostile takeover. These provisions include, among others:
The inability of WPG Inc.'s shareholders to call a special meeting;
Restrictions on the ability of WPG Inc.'s shareholders to act by written consent without a meeting;
Advance notice requirements and other limitations on the ability of shareholders to present proposals or nominate directors for election at shareholder meetings;
The right of WPG Inc.'s Board of Directors to issue preferred shares without shareholder approval;
Limitations on the ability of WPG Inc.'s shareholders to remove directors;
The ability of WPG Inc.'s directors, and not shareholders, to fill vacancies on WPG Inc.'s Board of Directors;
Restrictions on the number of shares of capital stock that individual shareholders may own;
Limitations on the exercise of voting rights in respect of any "control shares" acquired in a control share acquisition, which WPG Inc. has currently opted out of in WPG Inc.'s amended and restated bylaws but which could apply to WPG Inc. in the future; and

Restrictions on an "interested shareholder" to engage in certain business combinations with WPG Inc. for a five-year period following the date the interested shareholder became such.
We believe these provisions will protect WPG Inc.'s shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with WPG Inc.'s Board of Directors and by providing WPG Inc.'s Board of Directors with more time to assess any acquisition proposal. These provisions are not intended to make the company immune from takeovers. However, these provisions will apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that WPG Inc.'s Board of Directors determines is not in the best interests of WPG Inc. and its shareholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.
Several of the agreements that we entered into with SPG in connection with the separation require SPG's consent to any assignment by us of our rights and obligations under the agreements, but these agreements generally expired within two years of May 28, 2014, except for certain agreements that continue for longer terms. These agreements include the Separation Agreement and the Tax Matters Agreement. The consent and termination rights set forth in these agreements might discourage, delay or prevent a strategic transaction that you may consider favorable.
In addition, an acquisition or further issuance of WPG Inc.'s common shares could trigger the application of Section 355(e) of the Code. Under the tax related agreement(s) we had with SPG following the separation, we would be required to indemnify SPG for any resulting taxes and related amounts, and this indemnity obligation might discourage, delay or prevent a strategic transaction that you may consider favorable.
Certain provisions in WPG L.P.'s amended and restated limited partnership agreement may limit our ability to execute transactions that our shareholders may consider favorable.
WPG L.P.'s amended and restated limited partnership agreement, as amended (the "Partnership Agreement") provides that we must obtain the approval of a majority of the units of limited partnership interest held by limited partners in order to merge or consolidate WPG L.P. or voluntarily sell or otherwise transfer all or substantially all of the assets of WPG L.P. In addition, during all periods in which Melvin Simon, Herbert Simon and David Simon and members of their immediate families (and including their lineal descendants, trusts established for their benefit and entities controlled by them), collectively, hold at least 10% of the partnership units in WPG L.P., the Partnership Agreement requires that WPG L.P. obtain the consent of the Simons holding more than 50% of the partnership units then held by the Simons prior to, among other things, selling, exchanging, transferring or otherwise disposing of all or substantially all of the assets of WPG L.P. David Simon (or such other person as may be designated by the holders of more than 50% of the partnership units held by the Simons) has been granted authority by those limited partners who are Simons to grant and withhold consent on behalf of the Simons whenever such consent of the Simons is required. Because WPG L.P.'s assets comprise substantially all of our assets, these restrictions could limit our ability to sell or transfer all or substantially all of our assets, or impact the manner in which we do so, even if some of our shareholders believe that doing so would be in our and their best interests.
WPG Inc.'s substantial shareholders may exert influence over our company that may be adverse to our best interests and those of WPG Inc.'s other shareholders.
A substantial portion of WPG Inc.'s outstanding common shares are held by a relatively small group of shareholders. This concentration of ownership may make some transactions more difficult or impossible without the support of some or all of these shareholders. For example, the concentration of ownership held by the substantial shareholders, even if they are not acting in a coordinated manner, could allow them to influence our policies and strategy and could delay, defer or prevent a change of control or impede a merger, takeover or other business combination that may otherwise be favorable to us and our other shareholders. Additionally, the interests of any of WPG Inc.'s substantial shareholders, or any of their respective affiliates, could conflict with or differ from the interests of WPG Inc.'s other shareholders or the other substantial shareholders. A substantial shareholder or affiliate thereof may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.
Item 1B.    Unresolved Staff Comments
None.

Item 2.    Properties
As of December 31, 2018, our portfolio of properties consisted of material interests in 108 properties totaling approximately 58 million square feet of managed GLA. We also own parcels of land which can be used for either new development or the expansion of existing properties. While most of these properties are wholly owned by us, several are less than wholly owned through joint ventures and other arrangements with third parties, which is common in the real estate industry. As of December 31, 2018, our properties had an ending occupancy rate of 93.7% (based on the measures described in note (2) to the table that follows).
Our properties are leased to a variety of tenants across the retail spectrum including anchor stores, big-box tenants, national inline tenants, sit-down restaurants, movie theaters, and regional and local retailers. As of December 31, 2018, selected anchors and tenants include Macy's, Inc., Dillard's, Inc., J.C. Penney Co., Inc., Sears Holdings Corporation, Target Corporation, Kohl's Corporation, Dick's Sporting Goods, Best Buy Co., Inc., Bed Bath & Beyond Inc. and TJX Companies, Inc. With respect to all tenants in our portfolio, no single tenant was responsible for more than 3.0% of our total base minimum rental revenues for the year ended December 31, 2018. Further, no single property accounted for more than 5.1%, of our total base minimum rental revenues for the year ended December 31, 2018. Finally, as of December 31, 2018, no more than 14.5% of our total gross annual base minimum rental revenues was derived from leases that expire in any single calendar year. Capitalized terms not defined in this Item 2 shall have the definition ascribed to these terms in Item 1 of this Form 10-K.
The following table summarizes certain data for our portfolio of properties as of December 31, 2018:
Property Information
As of December 31, 2018
Property Name State City (Major Metropolitan Area) Ownership
Interest
(Expiration
if Lease)		 Financial
Interest (1)		 Year
Acquired
or Built		 Occupancy (%)(2)  Total
Center
SF		 Anchors
Enclosed Retail Properties              
Anderson Mall SC Anderson Fee 100.0% Built 1972 85.2% 670,772
 Belk(10), Books-A-Million, Dillard's(10), JCPenney
Arbor Hills MI Ann Arbor Fee 51.0% Acquired 2015 100.0% 87,487
 N/A
Arboretum, The TX Austin Fee 51.0% Acquired 1998 92.5% 195,331
 Barnes & Noble, Cheesecake Factory, Pottery Barn
Ashland Town Center KY Ashland Fee 100.0% Acquired 2015 97.9% 437,284
 Belk, Belk Home Store, JCPenney(10), T.J. Maxx
Bowie Town Center MD Bowie (Wash, D.C.) Fee 100.0% Built 2001 92.5% 571,483
 Barnes & Noble, Best Buy(10), L.A. Fitness, Macy's(10), Off Broadway Shoes, Sears(5)(8)
Boynton Beach Mall FL Boynton Beach (Miami) Fee 100.0% Acquired 1996 81.2% 1,101,881
 Cinemark Theatres, Dillard's(10), JCPenney, Macy's(10), Sears(5), You Fit Health Clubs
Brunswick Square NJ East Brunswick (New York) Fee 100.0% Acquired 1996 97.5% 760,998
 Barnes & Noble, JCPenney(10), Macy's(10), Starplex Luxury Cinema
Charlottesville Fashion Square VA Charlottesville Ground Lease (2076) 100.0% Acquired 1997 87.5% 578,063
 Belk(4), JCPenney(10) Sears(5)
Chautauqua Mall NY Lakewood Fee 100.0% Acquired 1996 87.3% 432,931
 JCPenney, Office Max, Sears(5)
Chesapeake Square Theater VA Chesapeake (VA Beach) Fee 100.0% Acquired 1996 100.0% 42,248
 Cinemark Theatres
Clay Terrace IN Carmel (Indianapolis) Fee 100.0% Acquired 2014 92.6% 577,601
 Dick's Sporting Goods, DSW, Pier 1, St. Vincent's Sports Performance, Whole Foods
Cottonwood Mall NM Albuquerque Fee 100.0% Built 1996 89.6% 1,051,847
 Conn's Electronic & Appliance(10), Dillard's(10), HiLife Furniture, Hobby Lobby, JCPenney(10), Regal Cinema

Property Name State City (Major Metropolitan Area) Ownership
Interest
(Expiration
if Lease)		 Financial
Interest (1)		 Year
Acquired
or Built		 Occupancy (%)(2)  Total
Center
SF		 Anchors
Dayton Mall OH Dayton Fee 100.0% Acquired 2015 96.4% 1,443,039
 Dick's Sporting Goods, DSW, JCPenney, Macy's(10)
Edison Mall FL Fort Myers Fee 100.0% Acquired 1997 95.2% 1,039,126
 Books-A-Million, Dillard's(10), JCPenney, Macy's(4), Sears(8)
Grand Central Mall WV Parkersburg Fee 100.0% Acquired 2015 91.6% 758,513
 Belk, Dunham's Sports, JCPenney, Regal Cinemas
Great Lakes Mall OH Mentor (Cleveland) Fee 100.0% Acquired 1996 90.7% 1,232,642
 Atlas Cinema Stadium 16, Barnes & Noble, Dick's Sporting Goods, Dillard's(10), JCPenney, Macy's(10), Round One
Indian Mound Mall OH Newark Fee 100.0% Acquired 2015 89.5% 556,746
 AMC Theaters, Big Sandy Superstore(10), Dick's Sporting Goods, JCPenney, Sears(10)
Irving Mall TX Irving (Dallas) Fee 100.0% Built 1971 99.2% 1,052,013
 AMC Theatres, Burlington Coat Factory, Dillard's(10), Fitness Connection, La Vida Fashion and Home Décor(10), Macy's(10), Shoppers World, Sky Zone
Jefferson Valley Mall NY Yorktown Heights (New York) Fee 100.0% Built 1983 93.5% 580,871
 Dick's Sporting Goods, Macy's, Sears(5)(8)
Lima Mall OH Lima Fee 100.0% Acquired 1996 98.1% 743,872
 JCPenney, Macy's(10)
Lincolnwood Town Center IL Lincolnwood (Chicago) Fee 100.0% Built 1990 84.0% 422,847
 Kohl's
Lindale Mall IA Cedar Rapids Fee 100.0% Acquired 1998 93.1% 723,666
 Hy-Vee, Von Maur
Longview Mall TX Longview Fee 100.0% Built 1978 94.9% 653,171
 Dick's Sporting Goods, Dillard's(10), JCPenney(10), L'Patricia(10), Sears(5), Stage(10)
Malibu Lumber Yard CA Malibu Ground Lease (2047) 51.0% Acquired 2015 46.4% 31,514
 N/A
Mall at Fairfield Commons, The OH Beavercreek Fee 100.0% Acquired 2015 98.8% 1,045,249
 Dick's Sporting Goods, JCPenney, Macy's(10)
Mall at Johnson City, The TN Johnson City Fee 51.0% Acquired 2015 98.5% 567,892
 Belk for Her, Belk Home Store, Dick's Sporting Goods, JCPenney, Sears(10)
Maplewood Mall MN St. Paul (Minneapolis) Fee 100.0% Acquired 2002 81.6% 905,960
 Barnes & Noble, JCPenney(10), Kohl's(10), Macy's(10)
Markland Mall IN Kokomo Fee 100.0% Built 1968 97.9% 381,625
 Aldi, PetSmart, Ross Dress for Less, Target
Melbourne Square FL Melbourne Fee 100.0% Acquired 1996 91.2% 723,654
 Dick's Sporting Goods, Dillard's(11), JCPenney, L.A. Fitness, Macy's(10)
Mesa Mall CO Grand Junction Fee 100.0% Acquired 1998 97.7% 873,311
 Cabela's(10), JCPenney(10), Jo-Ann Fabrics, Target(10)
Morgantown Mall WV Morgantown Fee 100.0% Acquired 2015 87.7% 555,350
 AMC Theaters, JCPenney, Sears(5)
Muncie Mall IN Muncie Fee 100.0% Built 1970 87.0% 641,821
 JCPenney, Macy's(10)
New Towne Mall OH New Philadelphia Fee 100.0% Acquired 2015 86.6% 505,223
 Dick's Sporting Goods, Jo-Ann Fabrics, Kohl's, Marshalls, Route 250 Health and Performance

Property Name State City (Major Metropolitan Area) Ownership
Interest
(Expiration
if Lease)		 Financial
Interest (1)		 Year
Acquired
or Built		 Occupancy (%)(2)  Total
Center
SF		 Anchors
Northtown Mall MN Blaine Fee 100.0% Acquired 2015 98.3% 644,735
 Becker Furniture, Best Buy, Burlington Coat Factory, Hobby Lobby(10), Home Depot, L.A. Fitness, Sky Zone
Northwoods Mall IL Peoria Fee 100.0% Built 1983 94.6% 649,408
 JCPenney(10), Round One, Sears(10), The RoomPlace
Oak Court Mall TN Memphis Fee 100.0% Acquired 1997 96.5% 847,127
 Dillard's(4), Macy's(10)
Oklahoma City Properties OK Oklahoma City Fee 51.0%(7)Acquired 2015 97.0% 312,692
 Trader Joe's, Whole Foods
Orange Park Mall FL Orange Park (Jacksonville) Fee 100.0% Acquired 1994 97.8% 959,146
 AMC Theatres, Belk(10), Dick's Sporting Goods, Dillard's(10), JCPenney, Sears(10)
Outlet Collection® | Seattle, The
 WA Auburn (Seattle) Fee 100.0% Acquired 2015 92.9% 923,331
 Bed Bath & Beyond, Burlington Coat Factory, Dave & Busters, Nordstrom Rack
Paddock Mall FL Ocala Fee 100.0% Acquired 1996 96.4% 548,147
 Belk, JCPenney, Macy's(10), Sears(5)(8)
Pearlridge Center HI Aiea Fee and Ground Lease (2043, 2058) 51.0% Acquired 2015 96.2% 1,297,814
 Bed, Bath, and Beyond, Longs Drug Store, Macy's, Pearlridge Mall Theaters, Ross Dress for Less, Sears, T.J. Maxx
Polaris Fashion Place®
 OH Columbus Fee 51.0% Acquired 2015 99.1% 1,571,346
 Barnes & Noble, Dick's Sporting Goods, JCPenney(10), Macy's(10), Saks Fifth Avenue(10), Sears(5), Von Maur(10)
Port Charlotte Town Center FL Port Charlotte Fee 100.0%(6)Acquired 1996 90.2% 777,246
 Bealls(10), Dillard's(10), DSW, JCPenney, Macy's(10), Recreational Warehouse, Regal Cinema, Sears(5)
Rolling Oaks Mall TX San Antonio Fee 100.0% Built 1988 95.7% 883,336
 Dillard's(10), JCPenney(10), Macy's(10), Sears(5)(10)
Scottsdale Quarter®
 AZ Scottsdale Fee 51.0% Acquired 2015 95.9% 724,804
 Apogee Physicians, H&M, iPic Theaters, JDA Software, Restoration Hardware, Starwood Hotels
Seminole Towne Center FL Sanford (Orlando) Fee 6.8%(6)Built 1995 93.2% 1,109,945
 Athletic Apex, Burlington Coat Factory, Dick's Sporting Goods, Dillard's(10), JCPenney(10), Macy's, United Artists Theatre
Southern Hills Mall IA Sioux City Fee 100.0% Acquired 1998 90.1% 794,010
 AMC Theaters, Barnes & Noble, Hy-Vee, JCPenney(10), Scheel's All Sports, Sears(5)
Southern Park Mall OH Youngstown Fee 100.0% Acquired 1996 81.5% 1,202,768
 Cinemark Theatres,
Dillard's(10), JCPenney, Macy's
Southgate Mall MT Missoula Fee 100.0% Acquired 2018 89.4% 630,811
 AMC Theater, Dillard's(10), JCPenney(10), Lucky's Market
Sunland Park Mall TX El Paso Fee 100.0% Built 1988 77.9% 927,305
 Cinemark, Dillard's(11), Sears(5)(10), Starr Western Wear
Town Center at Aurora CO Aurora (Denver) Fee 100.0% Acquired 1998 94.1% 1,080,995
 Century Theatres, Dillard's(10), JCPenney(10), Macy's(10), Sears

Property Name State City (Major Metropolitan Area) Ownership
Interest
(Expiration
if Lease)		 Financial
Interest (1)		 Year
Acquired
or Built		 Occupancy (%)(2)  Total
Center
SF		 Anchors
Town Center Crossing & Plaza KS Leawood Fee 51.0% Acquired 2015 98.6% 670,455
 Arhaus, Barnes & Noble, Crate & Barrel, Macy's(10), Restoration Hardware
Towne West Square KS Wichita Fee 100.0%(12)Built 1980 —% —
 N/A
Waterford Lakes Town Center FL Orlando Fee 100.0% Built 1999 100.0% 965,765
 Ashley Furniture Home Store (10), Barnes & Noble, Bed Bath & Beyond, Best Buy, Jo-Ann Fabrics, L.A. Fitness(10), Office Max, Regal Cinemas, Ross Dress for Less, Target(10), T.J. Maxx
Weberstown Mall CA Stockton Fee 100.0% Acquired 2015 98.1% 859,071
 Barnes & Noble, Dillard's(10), JCPenney(10), Sears(10)
West Ridge Mall KS Topeka Fee 100.0%(9)Built 1988 75.7% 1,013,982
 Dillard's(10), Furniture Mall of Kansas(10), JCPenney(10), Sky Zone
Westminster Mall CA Westminster (Los Angeles) Fee 100.0% Acquired 1998 86.7% 1,216,695
 Chuze Fitness, DSW,
JCPenney(10), John's Incredible Pizza, Macy's(10), Sky Zone, Target(10)
WestShore Plaza FL Tampa Fee 100.0% Acquired 2015 92.8% 1,075,486
 AMC Theatres, Dick's Sporting Goods, JCPenney, Macy's(10), Sears(5)
Total Enclosed Retail Properties Portfolio Square Footage (3)   43,632,451
  
                 
Open Air Properties            
Bloomingdale Court IL Bloomingdale (Chicago) Fee 100.0% Built 1987 98.9% 697,088
 Best Buy, Dick's Sporting Goods, Jo-Ann Fabrics, Office Max, Picture Show, Ross Dress for Less, T.J. Maxx N More, Walmart Supercenter(10)
Bowie Town Center Strip MD Bowie (Wash, D.C.) Fee 100.0% Built 2001 92.2% 106,636
 Safeway(10)
Canyon View Marketplace CO Grand Junction Fee 100.0% Acquired 2015 100.0% 199,815
 City Market(10), Kohl's(10)
Charles Towne Square SC Charleston Fee 100.0% Built 1976 100.0% 71,794
 Regal Cinema
Chesapeake Center VA Chesapeake (Virginia Beach) Fee 100.0% Acquired 1996 94.3% 279,581
 Dollar Tree(10), PetSmart, Value City Furniture
Concord Mills Marketplace NC Concord (Charlotte) Fee 100.0% Acquired 2007 100.0% 250,704
 At Home, BJ's Wholesale Club
Countryside Plaza IL Countryside (Chicago) Fee 100.0% Built 1977 100.0% 403,455
 Best Buy, Dollar Tree, Floor & Decor, Home Depot(10), Jo-Ann Fabrics, PetSmart, The Tile Shop
Dare Centre NC Kill Devil Hills Ground Lease (2058) 100.0% Acquired 2004 95.8% 168,613
 Belk(10), Food Lion
DeKalb Plaza PA King of Prussia (Philadelphia) Fee 100.0% Acquired 2003 100.0% 101,915
 ACME Grocery(10), Bob's Discount Furniture
Empire East SD Sioux Falls Fee 100.0% Acquired 1998 100.0% 301,438
 Bed Bath & Beyond, Kohl's, Target(10)
Fairfax Court VA Fairfax (Wash, D.C.) Fee 100.0% Acquired 2014 98.5% 249,488
 Burlington Coat Factory, Pier 1, XSport Fitness
Fairfield Town Center TX Houston Fee 100.0% Built 2014 98.8% 364,469
 Academy Sports, HEB(10), Marshalls, Party City

Property Name State City (Major Metropolitan Area) Ownership
Interest
(Expiration
if Lease)		 Financial
Interest (1)		 Year
Acquired
or Built		 Occupancy (%)(2)  Total
Center
SF		 Anchors
Forest Plaza IL Rockford Fee 100.0% Built 1985 100.0% 433,816
 Bed Bath & Beyond, Kohl's, Marshalls, Michaels, Office Max, Petco
Gaitway Plaza FL Ocala Fee 96.0%(6)Acquired 2014 98.4% 196,812
 Bed Bath & Beyond, Michael's, Office Depot, Ross Dress for Less, T.J. Maxx
Gateway Centers TX Austin Fee 51.0% Acquired 2004 98.1% 513,987
 
Best Buy, Crate & Barrel, Nordstrom Rack, Off 5th Saks 5th Ave, Regal Cinema, REI(10), Whole Foods, The Container Store, The Tile Shop
Greenwood Plus IN Greenwood (Indianapolis) Fee 100.0% Built 1979 100.0% 155,319
 Best Buy, Kohl's
Henderson Square PA King of Prussia (Philadelphia) Fee 100.0% Acquired 2003 100.0% 107,371
 Avalon Carpet & Tile Shop, Giant
Keystone Shoppes IN Indianapolis Fee 100.0% Acquired 1997 97.5% 36,457
 N/A
Lake Plaza IL Waukegan (Chicago) Fee 100.0% Built 1986 97.6% 215,590
 Home Owners Bargain Outlet
Lake View Plaza IL Orland Park (Chicago) Fee 100.0% Built 1986 97.7% 367,369
 Arhaus, Best Buy, Bob's Discount Furniture, Golf Galaxy, Jo-Ann Fabrics, Petco, Tuesday Morning, Value City Furniture(10)
Lakeline Plaza TX Cedar Park (Austin) Fee 100.0% Built 1998 100.0% 386,229
 Bed, Bath, & Beyond, Best Buy, Jumpstreet, Office Max, PetSmart, Ross Dress for Less, T.J. Maxx, Total Wine & More(10)
Lima Center OH Lima Fee 100.0% Acquired 1996 100.0% 233,878
 Hobby Lobby(10), Jo-Ann Fabrics, Kohl's, T.J. Maxx
Lincoln Crossing IL O'Fallon (St. Louis) Fee 100.0% Built 1990 100.0% 303,526
 Academy Sports, PetSmart, Walmart(10)
MacGregor Village NC Cary Fee 100.0% Acquired 2004 83.6% 139,520
 Sports HQ
Mall of Georgia Crossing GA Buford (Atlanta) Fee 100.0% Built 1999 100.0% 440,774
 Best Buy, Hobby Lobby, Nordstrom Rack, Staples, Target(10), T.J. Maxx 'n More
Markland Plaza IN Kokomo Fee 100.0% Built 1974 100.0% 90,527
 Bed Bath & Beyond, Best Buy
Martinsville Plaza VA Martinsville Ground Lease (2026) 100.0% Built 1967 99.3% 102,105
 Ollie's Bargain Outlet, Rose's
Matteson Plaza IL Matteson (Chicago) Fee 100.0% Built 1988 56.2% 273,836
 Beauty Trends, Shoppers World
Muncie Towne Plaza IN Muncie Fee 100.0% Built 1998 86.1% 171,621
 AMC Theatres(10), Kohl's, T.J. Maxx
North Ridge Shopping Center NC Raleigh Fee 100.0% Acquired 2004 97.8% 171,489
 Ace Hardware, Harris-Teeter Grocery, O2 Fitness Club
Northwood Plaza IN Fort Wayne Fee 100.0% Built 1974 91.8% 204,956
 Target(10)
Palms Crossing TX McAllen Fee 51.0% Built 2007 78.6% 389,618
 Barnes & Noble, Bealls, Best Buy, DSW, Hobby Lobby
Plaza at Buckland Hills, The CT Manchester Fee 100.0% Acquired 2014 100.0% 321,328
 Big Lots, Jo-Ann Fabrics, Michael's(10), PetSmart(10), Total Wine & More, Trader Joe's
Richardson Square TX Richardson (Dallas) Fee 100.0% Acquired 1996 100.0% 516,100
 Lowe's Home Improvement(10), Ross Dress for Less, Sears(5)(10), Super Target(10)

Property Name State City (Major Metropolitan Area) Ownership
Interest
(Expiration
if Lease)		 Financial
Interest (1)		 Year
Acquired
or Built		 Occupancy (%)(2)  Total
Center
SF		 Anchors
Rockaway Commons NJ Rockaway (New York) Fee 100.0% Acquired 1998 98.7% 238,970
 Best Buy, Buy Buy Baby, Christmas Tree Shops, DSW, Michael's, Nordstrom Rack
Rockaway Town Plaza NJ Rockaway (New York) Fee 100.0% Built 2004 100.0% 306,436
  Dick's Sporting Goods(10), PetSmart, Target(10)
Royal Eagle Plaza FL Coral Springs (Miami) Fee 100.0% Acquired 2014 83.6% 186,283
 Hobby Lobby, Lucky's Market
Shops at Arbor Walk, The TX Austin Ground Lease (2056) 51.0% Built 2006 99.1% 309,064
 DSW, Home Depot, Jo-Ann Fabrics, Marshalls, Sam Moon Trading Co., Spec's Wine, Spirits and Fine Foods
Shops at North East Mall, The TX Hurst (Dallas) Fee 100.0% Built 1999 100.0% 365,039
 Barnes & Noble, Bed Bath & Beyond, Best Buy, DSW, Michaels, PetSmart, T.J. Maxx
St. Charles Towne Plaza MD Waldorf (Wash, D.C.) Fee 100.0% Built 1987 90.6% 391,325
 Ashley Furniture, Big Lots, Citi Trends, Dollar Tree, K & G Menswear, Shoppers Food Warehouse, Value City Furniture(10)
Tippecanoe Plaza IN Lafayette Fee 100.0% Built 1974 100.0% 90,522
 Barnes & Noble, Best Buy
University Center IN Mishawaka Fee 100.0% Acquired 1996 96.8% 150,441
 Best Buy(10), Michael's, Ross Dress for Less
University Town Plaza FL Pensacola Fee 100.0% Redeveloped 2013 78.3% 565,538
 Academy Sports, Burlington Coat Factory, JCPenney(10)
Village Park Plaza IN Carmel (Indianapolis) Fee 100.0% Acquired 2014 100.0% 517,948
 Bed Bath & Beyond, Hobby Lobby, Kohl's, Marsh Supermarket(10), Regal Cinemas, Walmart Supercenter(10)
Washington Plaza IN Indianapolis Fee 100.0% Acquired 1996 90.0% 50,107
 Jo-Ann Fabrics
West Ridge Plaza KS Topeka Fee 100.0%(9)Built 1988 100.0% 253,086
 Ashley HomeStore (10), Target(10), T.J. Maxx
West Town Corners FL Altamonte Springs (Orlando) Fee 100.0%(6)Acquired 2014 91.7% 383,220
 American Signature Furniture(10), PetSmart, T.J. Maxx, Walmart(10), Winn-Dixie Marketplace
Westland Park Plaza FL Orange Park (Jacksonville) Fee 100.0%(6)Acquired 2014 86.7% 163,259
 Beall's, Burlington Coat Factory, Guitar Center, L.A. Fitness
White Oaks Plaza IL Springfield Fee 100.0% Built 1986 98.8% 398,077
 Big Lots, County Market(10), HomeGoods, Kohl's, T.J. Maxx
Whitehall Mall PA Whitehall Fee 100.0% Acquired 2014 99.5% 603,475
 Bed Bath & Beyond, Buy Buy Baby, Gold's Gym, Kohl's, Michael's, Raymour & Flanigan Furniture, Sears
Wolf Ranch TX Georgetown (Austin) Fee 100.0% Built 2005 97.1% 632,246
 Best Buy, DSW, Gold's Gym, Kohl's(10), Michael's, Office Depot, PetSmart, Ross Dress for Less, Target(10), T.J. Maxx
Total Open Air Portfolio Square Footage(3)   14,572,260
  
Total Portfolio Square Footage(3)   58,204,711
  


(1)Direct and indirect interests in some joint venture properties are subject to preferences on distributions and/or capital allocation in favor of other partners.
(2)Enclosed Retail Properties—Executed leases for all Company-owned GLA in enclosed retail property stores, excluding majors and anchors. Open Air Properties—Executed leases for all Company-owned retail GLA (or total center GLA).
(3)Includes office space in the properties, including the following properties with more than 20,000 square feet of office space:
Clay Terrace—80,033 sq. ft.; Oak Court Mall—123,891 sq. ft.; Oklahoma City Properties—20,469 sq. ft.
Royal Eagle Plaza—25,207 sq. ft.; Pearlridge Center—182,796 sq. ft.; Scottsdale Quarter—297,473 sq. ft.
(4)Indicates tenant has multiple locations at this property and one of these spaces is owned by others.
(5)Indicates anchor has announced its intent to close this location in 2019.
(6)Our interest does not reflect our legal ownership percentage due to capital preferences.
(7)Includes the following properties: Classen Curve, Nichols Hills Plaza and The Triangle @ Classen Curve.
(8)Sears store owned by Seritage Growth Properties.
(9)Borrower is in default and thus in discussions with the loan servicer regarding the nonrecourse mortgage loan on this property.
(10)Indicates anchor space is owned by others.
(11)Indicates tenant has multiple locations at this property and both of these spaces are owned by others.
(12)Borrower is in default. On August 24, 2018, we received notification that a receiver had been appointed to manage and lease the property. As we no longer manage or lease the property and we receive no economics from the property after the date the property was placed into receivership, it is excluded from our GLA and occupancy numbers presented.

Lease Expirations(1)
The following table summarizes lease expiration data for our properties as of December 31, 2018:
Year 
Number of
Leases
Expiring
 Square Feet 
Average Base
Minimum Rent
Per Square Foot
 
Percentage of
Gross Annual
Rental
Revenues(2)
Inline Stores and Freestanding  
  
  
  
Month To Month Leases 180
 348,564
 $38.91
 2.2%
2019 719
 2,004,342
 $28.68
 9.1%
2020 796
 2,621,941
 $26.05
 11.1%
2021 706
 2,394,365
 $25.65
 10.2%
2022 569
 2,011,600
 $26.44
 8.8%
2023 510
 1,875,301
 $27.40
 8.5%
2024 294
 1,193,210
 $26.86
 5.3%
2025 230
 987,930
 $27.89
 4.6%
2026 226
 1,199,799
 $28.57
 5.6%
2027 224
 1,044,060
 $28.04
 4.7%
2028 149
 645,998
 $25.88
 2.7%
2029 and Thereafter 58
 476,411
 $24.98
 2.0%
Specialty Leasing Agreements w/ terms in excess of 11 months 703
 1,665,257
 $13.06
 3.7%
Anchors        
2019 18
 1,484,687
 $2.95
 0.8%
2020 52
 2,992,747
 $6.67
 3.4%
2021 46
 2,523,234
 $7.65
 3.2%
2022 37
 1,871,211
 $7.93
 2.4%
2023 48
 2,278,701
 $9.80
 3.7%
2024 27
 1,278,653
 $8.72
 1.9%
2025 20
 960,667
 $11.08
 1.8%
2026 13
 458,843
 $11.47
 0.8%
2027 15
 783,498
 $8.45
 1.0%
2028 13
 481,281
 $13.42
 1.1%
2029 and Thereafter 15
 1,007,897
 $9.10
 1.4%


(1)Does not consider the impact of renewal options that may be contained in leases and only considers Company-owned GLA managed at December 31, 2018. Accordingly, leases at Towne West Square are excluded as the property was placed into receivership during 2018.
(2)Gross annual rental revenues represents 2018 consolidated and joint venture combined base rental revenue for the portfolio.

Mortgage Financing on Properties
The following table sets forth certain information regarding the mortgages and unsecured indebtedness encumbering our properties and the properties held in our joint venture arrangements, and our unsecured corporate debt as of December 31, 2018:
Summary of Mortgage and Other Indebtedness
As of December 31, 2018
(in thousands)
Property Name Maturity Date (1) Interest Rate Principal Balance Our Share of Principal Balance   F = Fixed
V = Variable
Floating
Consolidated Indebtedness:    
  
  
    
Secured Indebtedness    
  
  
    
Anderson Mall 12/1/2022 4.61% $17,891
 $17,891
   F
Ashland Town Center 7/6/2021 4.90% 36,824
 36,824
   F
Brunswick Square 3/1/2024 4.80% 71,154
 71,154
   F
Canyon View Marketplace 11/6/2023 5.47% 5,215
 5,215
   F
Charlottesville Fashion Square 4/1/2024 4.54% 46,099
 46,099
   F
Concord Mills Marketplace 11/1/2023 4.82% 16,000
 16,000
   F
Cottonwood Mall 4/6/2024 4.82% 97,203
 97,203
   F
Dayton Mall 9/1/2022 4.57% 80,421
 80,421
   F
Forest Plaza 10/10/2019 7.50% 15,588
 15,588
   F
Grand Central Mall 7/6/2020 6.05% 39,598
 39,598
   F
Lakeline Plaza 10/10/2019 7.50% 14,604
 14,604
   F
Lincolnwood Town Center 4/1/2021 4.26% 48,662
 48,662
   F
Mall of Georgia Crossing 10/6/2022 4.28% 22,208
 22,208
   F
Muncie Mall 4/1/2021 4.19% 33,876
 33,876
   F
Muncie Towne Plaza 10/10/2019 7.50% 6,071
 6,071
   F
North Ridge Shopping Center 12/1/2022 3.41% 11,764
 11,764
   F
Oak Court Mall 4/1/2021 4.76% 36,998
 36,998
   F
Port Charlotte Town Center 11/1/2020 5.30% 42,196
 42,196
 (2) F
Southgate Mall 9/27/2023 4.48% 35,000
 35,000
   F
Town Center at Aurora 4/1/2021 4.19% 52,250
 52,250
   F
Towne West Square 6/1/2021 5.61% 45,205
 45,205
 (3) F
Weberstown Mall 6/8/2021 4.25% 65,000
 65,000
   V
West Ridge Mall 3/6/2024 7.84% 39,945
 39,945
 (3) F
West Ridge Plaza 3/6/2024 7.84% 9,986
 9,986
 (3) F
Westminster Mall 4/1/2024 4.65% 78,375
 78,375
   F
White Oaks Plaza 10/10/2019 7.50% 12,143
 12,143
   F
Unsecured Indebtedness    
  
  
    
Credit Facility 12/30/2022 3.75% 290,000
 290,000
   V
5.950% Notes due 2024 8/15/2024 5.95% 750,000
 750,000
   F
3.850% Notes due 2020 ("Exchange Notes") 4/1/2020 3.85% 250,000
 250,000
   F
Term Loan (unhedged portion) 12/30/2022 3.95% 100,000
 100,000
   V
Term Loan (hedged portion) 12/30/2022 4.21% 250,000
 250,000
 (4) F
December 2015 Term Loan 1/10/2023 3.51% 340,000
 340,000
 (4) F
Total Indebtedness at Face Value 4.0 yrs. 4.75% 2,960,276
 2,960,276
    

Property Name Maturity Date (1) Interest Rate Principal Balance Our Share of Principal Balance   F = Fixed
V = Variable
Floating
             
Premium on Fixed-Rate Indebtedness    
 5,764
 5,764
    
Bond Discounts    
 (9,680) (9,680)    
Debt Issuance Costs, net     (18,883) (18,883)    
Total Consolidated Indebtedness 4.1 yrs. 4.79% 2,937,477
 2,937,477
    
Unconsolidated Secured Indebtedness:    
  
  
    
Arbor Hills 1/1/2026 4.27% 24,660
 12,577
   F
Arboretum, The 6/1/2027 4.13% 59,400
 30,294
   F
Gateway Centers 6/1/2027 4.03% 112,500
 57,375
   F
Mall at Johnson City, The 5/6/2020 6.76% 49,050
 25,016
   F
Oklahoma City Properties            
Loan One 6/1/2027 3.90% 52,779
 26,917
   F
Loan Two 1/1/2023 5.00% 12,981
 6,620
   V
Palms Crossing 8/1/2021 5.49% 34,110
 17,396
   F
Pearlridge Center            
Loan One 6/1/2025 3.53% 225,000
 114,750
   F
Loan Two 5/1/2025 4.07% 43,200
 22,032
   F
Polaris Fashion Place®
            
Loan One 3/1/2025 3.90% 225,000
 114,750
   F
Loan Two 3/1/2025 4.46% 15,500
 7,905
   F
Scottsdale Quarter®
            
Loan One 6/1/2025 3.53% 165,000
 84,150
   F
Loan Two 4/1/2027 4.36% 55,000
 28,050
   F
Seminole Towne Center 5/6/2021 5.97% 53,603
 3,624
 (2) F
Shops at Arbor Walk, The 8/1/2021 5.49% 38,552
 19,662
   F
Town Center Crossing & Plaza            
Loan One 2/1/2027 4.25% 33,647
 17,160
   F
Loan Two 2/1/2027 5.00% 67,978
 34,669
   F
Other joint venture mortgage debt 7/1/2032 4.70% 19,269
 2,017
   F
Total Indebtedness at Face Value 6.5 yrs. 4.15% 1,287,229
 624,964
    
Premium on Fixed-Rate Indebtedness    
 10,534
 5,372
    
Debt Issuance Costs, net     (4,962) (2,451)    
Total Unconsolidated Indebtedness 6.5 yrs. 4.13% 1,292,801
 627,885
    
Total Mortgage and Other Indebtedness 4.5 yrs. 4.67% $4,230,278
 $3,565,362
    


(1)Maturity date assumes full exercise of extension options.
(2)Our share does not reflect our legal ownership percentage due to capital preferences.
(3)Borrower is in default and thus in discussions with loan servicer regarding this nonrecourse mortgage loan.
(4)Interest rate fixed via swap agreements as of December 31, 2018.
Note: Substantially all of the above mortgage and property related debt is nonrecourse to us.

The following table lists the 70 unencumbered properties in our portfolio as of December 31, 2018:
Unencumbered Properties
As of December 31, 2018
Financial Interest
Enclosed Retail Properties:
Bowie Town Center100.0%
Boynton Beach Mall100.0%
Chautauqua Mall100.0%
Clay Terrace100.0%
Edison Mall100.0%
Great Lakes Mall100.0%
Indian Mound Mall100.0%
Irving Mall100.0%
Jefferson Valley Mall100.0%
Lima Mall100.0%
Lindale Mall100.0%
Longview Mall100.0%
Malibu Lumber Yard(1)51.0%
Mall at Fairfield Commons, The100.0%
Maplewood Mall100.0%
Markland Mall100.0%
Melbourne Square100.0%
Mesa Mall100.0%
Morgantown Mall100.0%
New Towne Mall100.0%
Northtown Mall100.0%
Northwoods Mall100.0%
Orange Park Mall100.0%
Outlet Collection® | Seattle, The100.0%
Paddock Mall100.0%
Rolling Oaks Mall100.0%
Southern Hills Mall100.0%
Southern Park Mall100.0%
Sunland Park Mall100.0%
Waterford Lakes Town Center100.0%
WestShore Plaza100.0%
Open Air Properties:
Bloomingdale Court100.0%
Bowie Town Center Strip100.0%
Charles Towne Square100.0%
Chesapeake Center100.0%
Countryside Plaza100.0%
Dare Centre100.0%
DeKalb Plaza100.0%
Empire East100.0%
Fairfax Court100.0%
Fairfield Town Center100.0%

Index PageFinancial Interest
PART IIIGaitway Plaza(2) 96.0%
Item 10Directors, Executive Officers and Corporate Governance4
Item 11Executive Compensation9
Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters51
Item 13Certain Relationships and Related Transactions, and Director Independence54
Item 14Principal Accounting Fees and Services58
PART IVGreenwood Plus 100.0%
Item 15
Henderson Square		Exhibits, Financial Statement Schedules59100.0%
Exhibit IndexKeystone Shoppes59100.0%
SignaturesLake Plaza60100.0%
Lake View Plaza100.0%
Lima Center100.0%
Lincoln Crossing100.0%
MacGregor Village100.0%
Markland Plaza100.0%
Martinsville Plaza100.0%
Matteson Plaza100.0%
Northwood Plaza100.0%
Plaza at Buckland Hills, The100.0%
Richardson Square100.0%
Rockaway Commons100.0%
Rockaway Town Plaza100.0%
Royal Eagle Plaza100.0%
Shops at North East Mall, The100.0%
St. Charles Towne Plaza100.0%
Tippecanoe Plaza100.0%
University Center100.0%
University Town Plaza100.0%
Village Park Plaza100.0%
Washington Plaza100.0%
West Town Corners(2)100.0%
Westland Park Plaza(2)100.0%
Whitehall Mall100.0%
Wolf Ranch100.0%


(1)This property is part of the O'Connor Joint Venture II, as discussed in Part II, Item 7 and Note 5 of the Notes to the Consolidated Financial Statements presented in Part IV, Item 15.
(2)We receive substantially all the economic benefit of the property due to a capital preference.


Item 3.    Legal Proceedings

3



PART III.

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 of our exposure can be reasonably estimated.
Item 10.    Directors, Executive Officers4.    Mine Safety Disclosures
Not applicable.
Part II
Item 5.    Market for the Registrant's Common Equity, Related Stockholder Matters, and Corporate GovernanceIssuer Purchases of Equity Securities
WPG Inc.
Market Information
WPG Inc.'s common shares are traded on the NYSE under the symbol "WPG." The following table presents certain informationsets forth, for the periods indicated, the dividends declared per common share:
  Distribution Declared Per Common Share
  2018 2017
1st Quarter $0.25
 $0.25
2nd Quarter $0.25
 $0.25
3rd Quarter $0.25
 $0.25
4th Quarter $0.25
 $0.25
Stockholder Information
As of February 20, 2019, there were 1,339 holders of record of WPG Inc.'s common shares.
Distribution Information
WPG Inc. must pay a minimum amount of dividends to maintain its status as a REIT. WPG Inc.'s future dividends and future distributions of WPG L.P. will be determined by WPG Inc.'s Board of Directors based on actual results of operations, cash available for dividends and limited partner distributions, cash reserves as deemed necessary for capital and operating expenditures, and the amount required to maintain WPG Inc.'s status as a REIT. We announced a policy to pay a quarterly cash distribution at an annualized rate of $1.00 per common share/unit, which continues in effect as of the date of this Amendment concerningAnnual Report on Form 10-K.
Common share/unit distributions paid during each of our executive officers (the “Senior Executives”2018 and 2017 aggregated $1.00 per share/unit.
WPG Inc. 7.5% Series H Cumulative Redeemable Preferred Stock ("Series H Preferred Shares") and directors.6.875% Series I Cumulative Redeemable Preferred Stock ("Series I Preferred Shares") that were issued on January 15, 2015 in connection with the Merger each pay cumulative dividends, and therefore WPG Inc. is obligated to pay the dividends for these shares in each fiscal period in which the shares remain outstanding. Further, WPG L.P. issued 7.3% Series I-1 Preferred Units (the "Series I-1 Preferred Units") which pay cumulative distributions, and therefore we are obligated to pay the distributions for these units in each fiscal period in which the units remain outstanding. The aggregate preferred obligation is approximately $14.3 million per year.

WPG L.P.
Market Information
There is no established public trading market for WPG L.P.'s units, including the preferred units, the transfers of which are restricted by the terms of WPG L.P.'s limited partnership agreement. The following table sets forth, for the periods indicated, WPG L.P.'s distributions declared per common unit:
  Distribution Declared Per Common Unit
  2018 2017
1st Quarter $0.25
 $0.25
2nd Quarter $0.25
 $0.25
3rd Quarter $0.25
 $0.25
4th Quarter $0.25
 $0.25
Unitholder Information
As of February 20, 2019, there were 237 holders of record of WPG L.P.'s common units.
Distribution Information
Included in WPG Inc.'s "Distribution Information" discussion above.
Operating Partnership Units and Recent Sales of Unregistered Securities
On January 15, 2015, in connection with the Merger, WPG L.P. issued 1,621,695 common units of limited partnership interest and 130,592 WPG L.P. Series I-1 Preferred Units to third parties.
Additionally, long-term incentive units ("LTIP") of limited partnership interest have been previously issued to executives of the Company from our equity incentive compensation plan in connection with our equity compensation awards. See Note 9 - "Equity" in the Notes to Consolidated Financial Statements. Holders of common units of limited partnership interest receive distributions per unit in the same manner as distributions on a per common share basis to WPG Inc.'s common shareholders of beneficial interest.
Common shares to be issued upon redemption of common units of limited partnership interest would be issued in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act").
Issuances Under Equity Compensation Plans (WPG Inc. and WPG L.P.)
For information regarding the securities authorized for issuance under our equity compensation plans, see Item 12 of this report.

Item 6.    Selected Financial Data
The following tables set forth selected financial data for WPG Inc. and WPG L.P. The consolidated and combined statements of operations include the consolidated accounts of the Company and the combined accounts of SPG Businesses. Accordingly, the results presented for the year ended December 31, 2014 reflect the aggregate operations and changes in cash flows and equity on a carve-out basis of the SPG Businesses for the period from January 1, 2014 through May 27, 2014 and on a consolidated basis of the Company subsequent to May 27, 2014 following our separation from SPG.
The combined historical financial statements prior to the separation do not necessarily include all of the expenses that would have been incurred had we been operating as a separate, stand-alone entity and may not necessarily reflect our results of operations, financial position and cash flows had we been a stand-alone company during the periods presented prior to the separation. Our combined historical financial statements include charges related to certain SPG corporate functions, including senior management, property management, legal, leasing, development, marketing, human resources, finance, public reporting, tax and information technology. These expenses have been charged based on direct usage or benefit where identifiable, with the remainder charged on a pro rata basis of revenues, headcount, square footage, number of transactions or other measures. We consider the expense allocation methodology and results to be reasonable for all periods presented. However, the charges may not be indicative of the actual expenses that would have been incurred had WPG operated as an independent, publicly-traded company for the periods presented prior to the separation. Post-separation, WPG now incurs additional costs associated with being an independent, publicly traded company, primarily from newly established or expanded corporate functions.
The selected financial data should be read in conjunction with the financial statements and notes thereto and with "Management's Discussion and Analysis of Financial Condition and Results of Operations". Other financial data we believe is important in understanding trends in our business is also included in the tables. The amounts in the below tables are in thousands, except per share amounts.


  For the Year Ended December 31,
  2018 2017 2016 2015 2014
Operating Data:  
  
  
    
Total revenue $723,305
 $758,122
 $843,475
 $921,356
 $660,978
Depreciation and amortization (257,796) (258,740) (281,150) (332,469) (197,890)
Spin-off, merger and transaction costs —
 —
 (29,607) (31,653) (47,746)
Other operating expenses (289,873) (287,651) (325,846) (375,520) (238,205)
Impairment loss —
 (66,925) (21,879) (147,979) —
Interest expense, net (141,987) (126,541) (136,225) (139,923) (82,428)
Income and other taxes (1,532) (3,417) (2,232) (849) (1,215)
Income (loss) from unconsolidated entities 541
 1,395
 (1,745) (1,247) 973
Gain on extinguishment of debt, net 51,395
 90,579
 34,612
 —
 —
Gain (loss) upon acquisition of controlling interests and on sale of interests in properties, net 24,602
 124,771
 (1,987) 4,162
 110,988
Net income (loss) $108,655
 $231,593
 $77,416
 $(104,122) $205,455
WPG Inc.:          
Net income (loss) $108,655
 $231,593
 $77,416
 $(104,122) $205,455
Net (income) loss attributable to noncontrolling interests (15,051) (34,530) (10,285) 18,825
 (35,426)
Preferred share dividends (14,032) (14,032) (14,032) (15,989) —
Net income (loss) attributable to common shareholders $79,572
 $183,031
 $53,099
 $(101,286) $170,029
Earnings (loss) per common share, basic and diluted $0.42
 $0.98
 $0.29
 $(0.55) $1.10
WPG L.P.:          
Net income (loss) $108,655
 $231,593
 $77,416
 $(104,122) $205,455
Net income attributable to noncontrolling interests (76) (68) (11) (286) —
Preferred unit distributions (14,272) (14,272) (14,272) (16,218) —
Net income (loss) attributable to common unitholders $94,307
 $217,253
 $63,133
 $(120,626) $205,455
Earnings (loss) per common unit, basic and diluted $0.42
 $0.98
 $0.29
 $(0.55) $1.10
Cash Flow Data: (1)    
  
    
Operating activities $287,245
 $324,631
 $288,987
 $310,882
 $279,417
Investing activities $(179,828) $93,850
 $(124,485) $(689,932) $(225,271)
Financing activities $(116,534) $(436,793) $(231,148) $403,102
 $39,703
Other Financial Data:      
  
  
FFO(2) $386,819
 $452,128
 $398,091
 $375,271
 $295,051
Distributions per common share/unit(3) $1.00
 $1.00
 $1.00
 $1.00
 $0.50
  As of December 31,
  2018 2017 2016 2015 (4) 2014
Balance Sheet Data:    
  
  
  
Cash and cash equivalents $42,542
 $52,019
 $59,353
 $116,253
 $108,768
Total assets $4,361,288
 $4,451,407
 $5,107,466
 $5,459,609
 $3,528,003
Mortgages and other debt $2,937,477
 $2,897,609
 $3,506,404
 $3,648,601
 $2,348,864
Redeemable noncontrolling interests $3,265
 $3,265
 $10,660
 $6,132
 $—
Cumulative redeemable preferred stock $202,576
 $202,576
 $202,576
 $202,576
 $—
Total equity $1,148,271
 $1,267,122
 $1,262,811
 $1,407,373
 $958,041

(1)In 2018, we adopted accounting guidance which requires that the statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. This resulted in the reclassification of restricted cash within the statement of cash flows for all periods presented.
(2)FFO does not represent cash flow from operations as defined by GAAP and may not be reflective of WPG's operating performance due to changes in WPG's capital structure in connection with the separation and distribution. We use FFO as a supplemental measure of our operating performance. For a definition of FFO as well as a discussion of its uses and inherent limitations, please refer to "Non-GAAP Financial Measures" below.
(3)Distributions per common share/unit are only applicable for periods after our separation from SPG on May 28, 2014 when we first issued common shares and units as a separate stand-alone entity.
(4)As a result of the Merger which closed on January 15, 2015 (net of the impact of the O'Connor Joint Venture I transaction which closed on June 1, 2015), our assets, liabilities and equity as of December 31, 2015 increased significantly over our assets, liabilities and equity as of December 31, 2014.

Item 7.    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 that are included in this Annual Report on Form 10-K. Capitalized terms not defined in this Item 7 shall have the definitions ascribed to those terms in Items 1-6 of this Annual Report on Form 10-K.
Overview—Basis of Presentation
WPG Inc. is an Indiana corporation that operates as a self‑administered and self‑managed REIT, under the Code. WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. 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. On May 28, 2014, WPG separated from SPG through the distribution of 100% of the outstanding units of WPG L.P. to the owners of SPG L.P. and 100% of the outstanding shares of WPG Inc. to the SPG common shareholders in a tax-free distribution. Prior to the separation, WPG Inc. and WPG L.P. were wholly owned subsidiaries of the SPG Businesses. On January 15, 2015, the Company acquired Glimcher Realty Trust in a stock and cash transaction valued at approximately $4.2 billion, including the assumption of debt. As of December 31, 2018, our assets consisted of material interests in 108 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 58 million square feet of managed GLA.
The consolidated financial statements are prepared in accordance with U.S. GAAP. The consolidated balance sheets as of December 31, 2018 and December 31, 2017 include the accounts of WPG Inc. and WPG L.P., as well as their wholly-owned subsidiaries. The consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation.
Leadership Changes and Severance Impacting Financial Results
2019 Activity
On February 5, 2019, the Company’s Executive Vice President, Head of Open Air Centers, was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated, without cause, additional non-executive personnel in the Property Management department as part of an effort to reduce overhead costs. The Company expects to record aggregate severance charges of approximately $1.9 million, including $0.1 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards.
2018 Activity
On May 7, 2018, the Company's Executive Vice President, Property Management was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated without cause additional non-executive personnel in the Property Management department. In connection with and as part of the aforementioned management and personnel changes, the Company recorded aggregate severance charges of $2.0 million, including $0.5 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards, which costs are included in general and administrative expense in the consolidated statements of operations and comprehensive income for the year ended December 31, 2018.
2016 Activity
On June 20, 2016, the Company announced the following leadership changes: (1) the resignation of Mr. Michael P. Glimcher as the Company’s Chief Executive Officer and Vice Chairman of the Board; (2) the appointment of Mr. Louis G. Conforti, a current Board member, as Interim Chief Executive Officer; (3) the resignation of Mr. Mark S. Ordan as non-executive Chairman of the Board; and (4) the resignation of Mr. Niles C. Overly from the Board. In July of 2016, the Company terminated some additional executive and non-executive personnel as part of an effort to reduce overhead costs. On October 6, 2016, the Company announced that Mr. Conforti would serve as the Company's Chief Executive Officer for a term ending December 31, 2019, subject to early termination clauses and automatic renewals pursuant to his employment agreement.
In connection with and as part of the aforementioned management changes, the Company recorded aggregate charges of $29.6 million during the year ended December 31, 2016, of which $25.5 million related to severance and restructuring-related costs, including $9.5 million of non-cash stock compensation for accelerated vesting of equity incentive awards, and $4.1 million related to fees and expenses incurred in connection with the Company's investigation of various strategic alternatives, which costs are included in merger, restructuring and transaction costs in the consolidated statements of operations and comprehensive income.

The Facility
On January 22, 2018, WPG L.P. amended and restated $1.0 billion of the existing unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" (collectively known as the "Facility"). The recasted Facility can be increased to $1.5 billion through currently uncommitted Facility commitments. Excluding the accordion feature, the recasted Facility includes a $650.0 million Revolver and $350.0 million Term Loan. The interest rates for the Revolver and Term Loan remained substantially consistent with the previous terms. When considering extension options, the recasted Facility will mature on December 30, 2022. The $350.0 million Term Loan was fully funded at closing, and the Company used the proceeds to repay the $270.0 million outstanding on the June 2015 Term Loan and to pay down the Revolver.
Southgate Mall
On April 24, 2018, the Company closed on the acquisition of Southgate Mall, located in Missoula, Montana, for $58.0 million. The enclosed retail property contains approximately 631,000 square feet of GLA and is anchored by a recently constructed AMC Theater, a new Lucky’s Market grocer that replaced a portion of a former Sears, J.C. Penney (non-owned) and Dillard’s (non-owned) and is the dominant retail center in this secondary market, with no competitive destination retail property located within 130 miles.
On September 27, 2018, an affiliate of WPG Inc. closed on a $35.0 million full-recourse mortgage note payable with a three-year term and a fixed rate of 4.48% secured by Southgate Mall. The mortgage note payable requires interest only payments and will initially mature on September 27, 2021, subject to two one-year extensions available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees. The proceeds were used to reduce corporate debt and for ongoing redevelopment efforts.
Sears Parcel Acquisitions
On April 11, 2018, we acquired, through a sale-leaseback transaction, four Sears department stores and adjacent Sears Auto Centers at Longview Mall, located in Longview, Texas; Polaris Fashion Place®, located in Columbus, Ohio; Southern Hills Mall, located in Sioux City, Iowa; and Town Center at Aurora, located in Aurora, Colorado. The purchase price was approximately $28.5 million and was funded by a combination of $13.4 million from our Facility, $9.7 million from the first tranche of the Four Corners transaction, as discussed in "Overview - Basis of Presentation - Outparcel Sale," and $5.4 million from our joint venture partner related to their pro-rata share of the joint venture that owns Polaris Fashion Place®. We have control of these stores for future redevelopment and Sears, depending on the outcome of their bankruptcy proceedings, will continue to operate under new leases, providing aggregate minimum rent under these leases of approximately $1.25 million per annum. In addition, under the terms of these leases, Sears is responsible for paying common area maintenance charges, taxes, insurance and utilities while they operate the stores. Other than the store at Town Center at Aurora, Sears has announced plans to close the remaining three stores in the first quarter of 2019.
Sears Bankruptcy
On October 15, 2018, Sears Holdings filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code and announced additional store closings. As of December 31, 2018, we had 35 Sears stores totaling approximately 4.9 million square feet of GLA within the portfolio of properties we manage, which were responsible for approximately 0.8% of our total annualized base minimum rents. We own 17 of the stores, Sears owns eight stores and third parties (including Seritage Growth Properties) own 10 stores. Sears has announced plans to close a number of stores during the first quarter of 2019. Additionally, Sears has entered into an asset purchase agreement which was approved by the Bankruptcy Court for the Southern District of New York (the “Court”) on February 8, 2019. Certain of our leases may be assumed and assigned as part of the asset purchase transaction, while other stores may be closed as part of Sears’ ongoing store closings.  After the announced closures, we expect to have 10 Sears stores operating in our portfolio, subject to the outcome of the ongoing proceedings. In addition to the risk of lost base minimum rent from Sears, co-tenancy clauses in leases for in-line retailers may trigger as a result of Sears store closures, and losses could be significant. We considered the impact of the bankruptcy announcement in our evaluation of impairment, including announced closures, noting no impairment charges were warranted as of December 31, 2018. We are in various stages of redevelopment for many of these stores (see details under "Development Activity").
Outparcel Sale
During the year ended December 31, 2018, we completed the sale of various tranches of restaurant outparcels to FCPT Acquisitions, LLC ("Four Corners") pursuant to the purchase and sale agreement executed on September 20, 2017 between the Company and Four Corners.

The following table summarizes the key terms of each tranche (dollars in thousands):
Tranche Sales Date Parcels Sold Purchase Price Sales Proceeds
Tranche 1 January 12, 2018 10
 $13,692
 $13,506
Tranche 2 June 29, 2018 5
 9,503
 9,423
Tranche 3 July 27, 2018 2
 4,607
 4,530
Tranche 4 October 31, 2018 2
 1,718
 1,714
Tranche 5 November 16, 2018 1
 3,195
 3,166
    20
 $32,715
 $32,339
The Company used the proceeds to fund a portion of the acquisition of the Sears parcels on April 11, 2018 as discussed above, to reduce corporate debt, and to fund ongoing redevelopment efforts. On January 18, 2019, we completed the sixth tranche of restaurant outparcels. This tranche consisted of eight restaurant outparcels. Additionally on February 11, 2019, we closed on the sale of one additional restaurant outparcel. The allocated purchase price was approximately $12.2 million, and the net proceeds of approximately $12.1 million were used to fund ongoing redevelopment efforts and for general corporate purposes. The Company expects to close on the remaining 15 outparcels for approximately $25.3 million during the first half of 2019, subject to due diligence and closing conditions.
The O'Connor Joint Ventures
The Company has two joint ventures with O'Connor Mall Partners, L.P. ("O'Connor").
•The O'Connor Joint Venture I
This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of five enclosed retail properties and related outparcels, consisting of the following: The Mall at Johnson City located in Johnson City, Tennessee; Pearlridge Center located in Aiea, Hawaii; Polaris Fashion Place®; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retain management, leasing, and development responsibilities for the O'Connor Joint Venture I.

On April 11, 2018, the O'Connor Joint Venture I closed on the acquisition of the Sears department store located at Polaris Fashion Place® in connection with our acquisition of additional Sears department stores (see details under "Overview - Basis of Presentation - Sears Parcel Acquisitions").
On March 2, 2017, the O'Connor Joint Venture I acquired an additional section at Pearlridge Center 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 Downtown. The acquired section consists of approximately 153,000 square feet, which is part of Uptown (and referenced herein as Pearlridge Uptown II), and is anchored by Ross Dress for Less and TJ Maxx. Subsequent to the purchase, the joint venture placed secured debt on the property (see below for details). Our share of the purchase price was funded by a combination of our share of the secured debt and availability on our credit facility.
On March 30, 2017, the O'Connor Joint Venture I closed on a $43.2 million non-recourse mortgage note payable with an eight year term and a fixed interest rate of 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. Our pro-rata share of the mortgage note payable issuance is $22.0 million.
On March 29, 2017, the O'Connor Joint Venture I closed on a $55.0 million non-recourse mortgage note payable with a ten year term and 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.
•The O'Connor Joint Venture II
During the year ended December 31, 2017, we completed an additional joint venture transaction with O'Connor with respect to the ownership and operation of seven of the Company's retail properties and certain related outparcels, consisting of the following: The Arboretum, located in Austin, Texas; Arbor Hills, located in Ann Arbor, Michigan; 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," collectively); Gateway Centers, located in Austin, Texas; Malibu Lumber Yard, located in Malibu, California; Palms Crossing I and II, located in McAllen, Texas and The Shops at Arbor Walk, located in Austin, Texas (the "O'Connor Joint Venture II"). The transaction valued the properties at $598.6 million before closing adjustments and debt assumptions.

Under the terms of the joint venture agreement, we retained a non-controlling 51% interest in the O'Connor Joint Venture II and sold the remaining 49% to O'Connor. The transaction generated net proceeds to the Company of approximately $138.9 million, after taking into consideration costs associated with the transaction and the assumption of debt (including the new mortgage loans on The Arboretum, Gateway Centers, and Oklahoma City Properties which closed prior to the joint venture transaction; see "Financing & Debt" below for net proceeds to the Company from the new mortgage loans), which we used to reduce the Company's debt as well as for general corporate purposes. At the time of closing, we deconsolidated the properties included in the O'Connor Joint Venture II and recorded a gain in connection with this partial sale of $126.1 million, which is included in gain (loss) on disposition of interests in properties, net in the consolidated statements of operations and comprehensive income. The gain was recorded pursuant to ASC 360-20 and calculated based upon proceeds received, less 49% of the book value of the deconsolidated net assets. Our retained 51% non-controlling equity method interest was valued at historical cost based upon the pro rata book value of the retained interest in the net assets. We retain management and leasing responsibilities for the properties included in the O'Connor Joint Venture II. In connection with the formation of this joint venture, we recorded transaction costs of approximately $6.4 million as part of our basis in this investment.
Impairment
During the fourth quarter of 2017, a major anchor tenant of Rushmore Mall, located in Rapid City, South Dakota, informed us of their intention to close their store at the property. The impending closure was deemed a triggering event and, therefore, we evaluated this property in conjunction with our quarterly impairment review and preparation of our financial statements for the year ended December 31, 2017. We compared the estimated fair value of $37.5 million to the related carrying value of $75.0 million, which resulted in the recording of an impairment charge of approximately $37.5 million in the consolidated statements of operations and comprehensive income for the year ended December 31, 2017.
On October 4, 2017, the Company entered into a purchase and sale agreement to sell Colonial Park Mall, located in Harrisburg, Pennsylvania, to an unaffiliated private real estate investor, which was sold on November 3, 2017. During the third quarter of 2017, we shortened the hold period used in assessing impairment for this asset, which resulted in the carrying value not being recoverable from the expected cash flows. We compared the fair value measurement of the property to its relative carrying value, which resulted in the recording of an impairment charge of approximately $20.9 million in the consolidated statements of operations and comprehensive income for the year ended December 31, 2017.
During the first quarter of 2017, the Company entered into a purchase and sale agreement to dispose of Morgantown Commons, located in Morgantown, West Virginia, which was sold in the second quarter of 2017. We shortened the hold period used in assessing impairment for the asset during the quarter ended March 31, 2017, which resulted in the carrying value not being recoverable from the expected cash flows. The purchase offer represented 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 year ended December 31, 2017.
During the year ended December 31, 2016, we recorded an impairment charge of $21.9 million primarily related to noncore properties consisting of Gulf View Square, located in Port Richey, Florida; Richmond Town Square, located in Cleveland, Ohio; River Oaks Center, located in Chicago, Illinois; and Virginia Center Commons, located in Glen Allen, Virginia. The impairment charge was attributed to the continued declines in the fair value of the properties and executed agreements entered into in 2016 to sell these properties at prices below the carrying value. Each of the Senior Executivesaforementioned noncore properties has been sold in accordance with the Company's strategic objectives.
Hurricane Harvey and Hurricane Irma
During the third quarter of 2017, Hurricane Harvey and Hurricane Irma made landfall in Houston, Texas and Southern Florida, respectively. The Company had 15 assets experience damage attributed to the hurricanes, but no asset sustained catastrophic damage nor was there any loss of life. Further, no asset experienced a significant loss of business or functionality. The Company recognized approximately $900,000 of expense attributed to the damage, repairs and asset write-offs, which was below insurance deductible thresholds.
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 or replacing anchors or big-box tenants, 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 and cash flows by enhancing the profitability and operation of our properties and investments.

Additionally, we feel there are personsopportunities 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 dispose of or contribute to a joint venture assets that no longer meet our strategic criteria. These dispositions will be a combination of asset sales and transitions of over-levered properties to lenders or special servicers.
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 ending occupancy, average base minimum rent per square foot and comparable NOI for the core properties owned at December 31, 2018. Towne West Square, located in Wichita, Kansas, and West Ridge Mall, located in Topeka, Kansas were identified as noncore properties.
Core business fundamentals in the overall portfolio during 2018 were generally stable compared to 2017. Ending occupancy for the core portfolio was 93.9% as of December 31, 2018, as compared to 93.5% as of December 31, 2017. Average base minimum rent per square foot for the core portfolio decreased by 0.5% when comparing December 31, 2018 to December 31, 2017. Comparable NOI decreased 3.0% for the core portfolio when comparing calendar year 2018 to 2017. Our core enclosed retail properties had a decrease in comparable NOI of 3.5%, which was driven primarily by the WPG Boardimpact of Directors (the “Board”) as “executive officers”2018 department store bankruptcies filed and related co-tenancy impact. The core open air properties had a comparable NOI decrease of WPG as that term is used under Item 401(b)1.7% in 2018 when compared to 2017, primarily related to the Toys R Us bankruptcy and lower CAM capital spending in 2018.
The following table sets forth key operating statistics for the combined portfolio of Regulation S-K (17 C.F.R. §229.401(b)core properties or interests in properties:
  December 31, 2018 
%
Change
 December 31, 2017 
%
Change
 December 31, 2016
Ending occupancy (1) 93.9% 0.4 % 93.5% (1.0)% 94.5%
Average base minimum rent per square foot (2) $21.86
 (0.5)% $21.96
 0.5 % $21.86

(1)Ending occupancy is the percentage of GLA which is leased as of the last day of the reporting period. We include all Company-owned space except for anchors, majors, office and outlots at our enclosed retail properties in the calculation of ending occupancy. Open air property GLA included in the calculation relates to all Company-owned space other than office space.
(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 year ended December 31, 2018, 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 core portfolio, comprising approximately 2,188,100 square feet. The average annual initial base minimum rent for new leases was $23.82 per square foot ("psf") and defined under SEC Rule 3b-7 (17 C.F.R. §240.3b-7).for renewed leases was $26.87 psf. For these leases, the average for tenant allowances was $31.54 psf for new leases and $5.23 psf for renewals. During the year ended December 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 comparable core portfolio, comprising approximately 2,497,800 square feet. The average annual initial base minimum rent for new leases was $24.78 psf and for renewed leases was $25.26 psf. For these leases, the average for tenant allowances was $36.05 psf for new leases and $3.40 psf for renewals.
Portfolio Summary
We have provided some of our key operating metrics for our core enclosed retail property portfolio in different tiers. The purpose of the disclosure is to provide some distinction between the characteristics of the core enclosed retail properties. Tier 1 enclosed retail properties generally have higher occupancy, sales productivity and growth profiles, while Tier 2 enclosed retail properties are viable enclosed retail properties with lower productivity and modest growth profiles.

The table below provides some of our key metrics for the core enclosed retail property tiers as well as some key metrics for our open air property portfolio:
 Property Count 
Leased Occupancy %1
 
Store Sales Per Square Foot for 12 Months Ended1
 
Store Occupancy Cost %1
 
% of Total Comp NOI for 12 Months Ended1
     
  12/31/18 12/31/17 12/31/18 12/31/17 12/31/18 12/31/17 12/31/18
Open Air Properties51
 95.6% 95.8%         25.4%
                
Tier 1 Enclosed retail properties41
 94.2% 93.3% $399
 $393
 11.7% 12.3% 64.2%
Tier 2- Enclosed retail properties14
 87.7% 87.7% $286
 $284
 13.6% 14.0% 10.4%
Core Enclosed Retail Properties Subtotal55
 92.8% 92.0% $377
 $371
 12.0% 12.6% 74.6%
                
Total Core Portfolio106
 93.9% 93.5%         100.0%
1Metrics only include properties owned as of December 31, 2018.
Enclosed Retail Property Tiers
The following table categorizes the enclosed retail properties into the respective tiers as of December 31, 2018:
NameTier 1 AgeTier 2 Position(s) HeldNonCore
Mark S. OrdanArbor Hills57Morgantown Mall Chairman of the Board
Michael P. Glimcher48Anderson Mall Vice Chairman and Chief Executive OfficerTowne West Square
Louis G. ConfortiArboretum, The51Northtown Mall Director and Audit Committee Chairperson
Robert J. Laikin52Boynton Beach Mall Lead Independent DirectorWest Ridge Mall
Niles C. OverlyAshland Town Center65Northwoods Mall Director and Compensation Committee Chairperson
Jacquelyn R. Soffer50
Charlottesville Fashion Square(2)
 Director and Governance and Nominating Committee Chairperson
Marvin L. WhiteBowie Town Center54Oklahoma City Properties Director and an Audit Committee Financial Expert
Gregory A. Gorospe50Chautauqua Mall Executive Vice President, General Counsel and Secretary
Melissa A. IndestBrunswick Square52Orange Park Mall Senior Vice President, Finance and Chief Accounting Officer
Keric M. “Butch” Knerr51Indian Mound Mall Executive Vice President and Chief Operating Officer
Mark E. YaleClay Terrace50Paddock Mall Executive Vice President and Chief Financial OfficerLima Mall
Cottonwood MallPearlridge Center
Lincolnwood Town Center(1)
Dayton MallPolaris Fashion PlaceMaplewood Mall
Edison MallPort Charlotte Town Center
Muncie Mall(2)
Grand Central MallScottsdale QuarterNew Towne Mall
Great Lakes MallSouthern Hills MallOak Court Mall
Irving MallSouthern Park MallRolling Oaks Mall
Jefferson Valley MallSouthgate Mall
Seminole Towne Center(2)
Lindale MallThe Outlet Collection | SeattleSunland Park Mall
Longview MallTown Center at Aurora
Malibu Lumber YardTown Center Crossing & Plaza
Mall at Fairfield Commons, TheWaterford Lakes Town Center
Mall at Johnson City, TheWeberstown Mall
Markland MallWestminster Mall
Melbourne SquareWestShore Plaza
Mesa Mall

1Property has been identified to change tiers in 2019.
Set forth below is biographical information concerning2Reclassified as noncore properties in 2019.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to use judgment in the membersapplication of accounting policies, including making estimates and assumptions. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the Boardfinancial statements and Senior Executivesthe reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied resulting in a different presentation of our financial statements.

From time to time, we reevaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information. Below is a discussion of accounting policies that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. For a summary of our significant accounting policies, please refer to Note 3 of the notes to the consolidated financial statements.
We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and account for our leases as operating leases. We generally accrue minimum rents on a straight-line basis over the terms of their respective leases. Many of our retail tenants are also required to pay overage rents based on sales over a stated amount during the lease year. We recognize overage rents only when each tenant's sales exceed its sales threshold as defined in their lease. We amortize any tenant inducements as a reduction of revenue utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.
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, a decline 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 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 sell properties that are held for use and the sale prices of these properties 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 below carrying value is other-than-temporary. Changes in economic and operating conditions that occur subsequent to our review of recoverability of investment property and other investments 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.
To maintain its status as a REIT, WPG Inc. must distribute at least 90% of its REIT taxable income, exclusive of net capital gains in any given year and meet certain asset and income tests. We monitor our business and transactions that may potentially impact WPG Inc.'s REIT status. In the unlikely event that WPG Inc. fails to maintain REIT status, and available relief provisions do not apply, then it would be required to pay federal income taxes at regular corporate income tax rates during the period it did not qualify as a REIT. If WPG Inc. lost its REIT status, it could not elect to be taxed as a REIT for four years unless its failure was due to reasonable cause and certain other conditions were met. As a result, failing to maintain REIT status would result in a significant increase in the income tax expense recorded and paid during those periods.
We make estimates as part of our recording of property acquisitions to the various components of the acquisition based upon the fair value of each component. The most significant components of our allocations are typically the recording of the fair value of buildings as-if-vacant, land and market value of in-place leases. In the case of the fair value of buildings and the recording of the fair value of land and other intangibles, our estimates of the values of these components will affect the amount of depreciation we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the market value of in-place leases, we make our best estimates of the tenants' ability to pay rents based upon the tenants' operating performance at the property, including the competitive position of the property in its market as well as tenant sales, rents per square foot, and overall occupancy cost for the tenants in place at the acquisition date. Our assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases.
A variety of costs are incurred in the development and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of professional judgment. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed when it is held available for occupancy, and accordingly, cease capitalization of costs upon opening.

New Accounting Pronouncements
Adoption of New Standards
On January 1, 2018, we adopted Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" using the modified retrospective approach. ASU 2014-09 revised 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. 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 and other ancillary income earned from our properties. Upon adoption, we recorded a cumulative-effect adjustment to increase equity of approximately $2.5 million related to changes in the revenue recognition pattern of lease commissions earned by the Company from our joint ventures. We do not expect the adoption of ASU 2014-09 to have a material impact to our net income on an ongoing basis.
Additionally, we adopted the clarified scope guidance of ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets" in conjunction with ASU 2014-09, using the modified retrospective approach. ASC 610-20 applies to the sale, transfer and derecognition of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales, and eliminates the guidance specific to real estate in ASC 360-20. With respect to full disposals, the recognition will generally be consistent with our current measurement and pattern of recognition. With respect to partial sales of real estate to joint ventures, the new guidance requires us to recognize a full gain where an equity investment is retained. These transactions could result in a basis difference as we will be required to measure our retained equity interest at fair value, whereas the joint venture may continue to measure the assets received at carryover basis. No adjustments were required upon adoption of this standard.
On January 1, 2018, we adopted ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." ASU 2017-12 aims to reduce complexity in cash value hedges of interest rate risk and eliminates the requirement to separately measure and report hedge ineffectiveness, generally requiring the entire change in the fair value of the hedging instrument to be presented in the same income statement line as the hedged item. Upon adoption, we recorded a cumulative-effect adjustment of $0.6 million between accumulated other comprehensive income and retained earnings.
On January 1, 2018, we adopted ASU 2016-15, "Statement of Cash Flows (Topic 230)" and ASU 2016-18 "Restricted Cash" using a retrospective transition approach, which changed our statements of cash flows and related disclosures for all periods presented. ASU 2016-15 is intended to reduce diversity in practice with respect to how certain transactions are classified in the statement of cash flows and its adoption had no impact on our financial statements. ASU 2016-18 requires 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. For the year ended December 31, 2017, restricted cash related to cash flows provided by operating activities of $2.9 million, restricted cash related to cash flows used in investing activities of $6.4 million, and restricted cash related to cash flows used in financing activities of $1.7 million were reclassified. For the year ended December 31, 2016, restricted cash related to cash flows provided by operating activities of $0.8 million, restricted cash related to cash flows used in investing activities of $1.5 million, and restricted cash related to cash flows used in financing activities of $10.4 million were reclassified. Restricted cash primarily relates to cash held in escrow for payment of real estate taxes and property reserves for maintenance, expansion or leasehold improvements as required by our mortgage loans. Restricted cash is included in "Deferred costs and other assets" in the consolidated balance sheets as of December 31, 2018 and December 31, 2017.
New Standards Issued But Not Yet Adopted
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 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.
In July 2018, the FASB approved an amendment that provides an entity the optional transition method to initially account for the impact of the adoption ASU 2016-02 with a cumulative adjustment to retained earnings on January 1, 2019 (the effective date of the ASU), rather than January 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. We will utilize this Amendment.optional transition method. From a lessee perspective, the Company currently has four material ground leases, two material office leases, and one material garage lease that, under the new guidance, will result in the recognition of a lease liability and corresponding right-of-use asset. As of December 31, 2018, undiscounted future minimum lease payments due under these leases total approximately $31.1 million with termination dates which range from 2023 to 2076 and we expect the recognized lease liability and corresponding right-of-use asset to not exceed $20.0 millionupon adoption.
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.

However, the FASB's amendment to ASU 2016-02 referred to above allows lessors to elect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. This practical expedient allows lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) the combined single component would be classified as an operating lease. We believe we meet the criteria to use this practical expedient and we plan to elect this practical expedient upon the effective date. 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. For the years ended December 31, 2018 and 2017, the Company deferred $17.7 million and $16.9 million of internal leasing costs, respectively. From a lessor perspective, other than the reduction to capitalized leasing costs and increase to general and administrative expenses related to internal leasing costs based on the Company’s current leasing compensation structure, which is not expected to change significantly upon adoption of ASU 2016-02, we do not expect the adoption of ASU 2016-02 to have a material impact to the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurements (ASC 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurements." ASU 2018-13 eliminates certain disclosures, modifies certain disclosures, and adds additional disclosures. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact this ASU will have on our financial statements and related disclosures.
Results of Operations
The following acquisitions and dispositions affected our results in the comparative periods:
•On November 16, 2018, we completed the sale of the fifth tranche of restaurant outparcels with Four Corners.
•On October 31, 2018, we completed the sale of the fourth tranche of restaurant outparcels with Four Corners.
•On October 23, 2018, we transitioned Rushmore Mall to the lender.
•On July 27, 2018, we completed the sale of the third tranche of restaurant outparcels with Four Corners.
•On June 29, 2018, we completed the sale of the second tranche of restaurant outparcels with Four Corners.
•On April 24, 2018, we closed on the acquisition of Southgate Mall.
•On April 11, 2018, we closed on the acquisition of four Sears department stores located at Longview Mall, Polaris Fashion Place® (unconsolidated), Southern Hills Mall, and Town Center at Aurora.
•On January 12, 2018, we completed the sale of the first tranche of restaurant outparcels with Four Corners.
•On November 3, 2017, we completed the sale of Colonial Park Mall.
•On October 17, 2017, we completed a discounted payoff of the mortgage loan secured by Southern Hills Mall, located in Sioux City, Iowa.
•On October 3, 2017, we transitioned Valle Vista Mall, located in Harlingen, Texas, to the lender.
•On June 13, 2017, we sold 49% of our interest in Malibu Lumber Yard as part of the O'Connor Joint Venture II transaction.
•On June 7, 2017, we completed the sale of Morgantown Commons.
•On May 16, 2017, we completed the sale of an 80,000 square foot vacant anchor parcel at Indian Mound Mall, located in Heath, Ohio.
•On May 12, 2017, we completed the transaction forming the O'Connor Joint Venture II with regard to the ownership and operation of six of the Company's retail properties and certain related outparcels. Under the terms of the joint venture agreement, we retained a 51% non-controlling interest and sold a 49% interest to O'Connor, the third party partner.
•On April, 25, 2017, we completed a discounted payoff of the mortgage loan secured by Mesa Mall, located in Grand Junction, Colorado.
•On February 21, 2017, we completed the sale of Gulf View Square and River Oaks Center.
•On January 10, 2017, we completed the sale of Virginia Center Commons.
•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.
•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.
Year Ended December 31, 2018 vs. Year Ended December 31, 2017
For purposes of the following comparisons, the transactions listed above that occurred in the periods under comparison (excluding the properties included in the O'Connor Joint Venture II and the discounted payoffs of Mesa Mall and Southern Hills Mall, which are referred to as their respective capitalized terms) are referred to as the "Property Transactions," and "comparable properties" refers to the remaining properties we owned and operated throughout both years in the year-to-year comparisons.
Minimum rents decreased $24.2 million primarily due to a $13.8 million decrease related to the O'Connor Joint Venture II properties, a $6.3 million decrease related to the Property Transactions and a $4.1 million decrease attributable to the comparable properties, primarily attributable to a reduction in base minimum rents as a result of anchor tenant bankruptcies and related co-tenancy claims. Tenant reimbursements decreased $17.0 million primarily due to a $9.2 million decrease attributable to the comparable properties, primarily due to lower real estate tax revenue and a reduction in common-area maintenance and capital expense reimbursements as a result of tenants converting to gross deals, as well as amendments that modified certain charges in leases of national retailers that filed bankruptcy in the first half of 2018 and throughout 2017, a $5.2 million decrease related to the O'Connor Joint Venture II properties, and a $2.6 million decrease attributable to the Property Transactions. Other income increased $6.2 million, primarily attributable to receipt of $4.7 million of franchise tax proceeds received, a $1.6 million increase in management, leasing and development fee income from the unconsolidated joint ventures to which we provide such services, a $1.1 million increase from lease settlements that occurred in 2018 at the comparable properties, and a $0.4 million increase in ancillary income from the comparable properties, offset by a $1.3 million decrease attributable to the O'Connor Joint Venture II properties, and a $0.3 million decrease attributable to the Property Transactions.
Property operating expenses increased $1.9 million, primarily due to an increase of $8.1 million attributable to the comparable properties, primarily driven by snow removal costs, property and liability insurance costs, on-site security costs, trash removal costs, utility costs, operational repairs and maintenance, and employee benefits, offset by a $3.3 million decrease attributable to the Property Transactions and a $2.9 million decrease attributable to the O'Connor Joint Venture II properties. Depreciation and amortization decreased $0.9 million, primarily due to a $6.9 million decrease attributable to the O'Connor Joint Venture II properties and a $4.0 million decrease attributable to the Property Transactions, offset by a $10.0 million increase attributable to the comparable properties, which was primarily attributable to accelerated depreciation of certain tenant related improvements and intangibles in addition to development assets placed into service. Real estate taxes decreased $3.0 million, primarily due to a $3.4 million decrease attributable to the O'Connor Joint Venture II properties, offset by a $0.2 million increase attributable to the Property Transactions and a $0.2 million increase attributable to the comparable properties. Provision for credit losses increased $0.8 million, primarily attributable to tenant bankruptcies during 2018. General and administrative expenses increased $4.2 million, primarily attributable to $2.0 million of severance costs, as discussed in "Overview - Basis of Presentation' and $2.2 million primarily attributable to professional fees, office rent, amortization of stock-based compensation and travel costs. Ground rent decreased $1.6 million primarily attributable to the O'Connor Joint Venture II properties. The $66.9 million impairment loss recorded in 2017 related to the write down of Rushmore Mall, Colonial Park Mall and Morgantown Commons, as described in further detail under "Impairment." No impairment charges were recorded in 2018.
Interest expense, net, increased $15.4 million, of which $26.8 million was attributable to corporate debt activity primarily related to the August 2017 bond offering and amortization of deferred financing fees related to the January 2018 Facility recast and $0.1 million related to default interest on properties transitioned, or to be transitioned, to lenders. Offsetting these increases were decreases of $8.3 million attributable to the payoffs of the mortgage loans secured by Mesa Mall, WestShore Plaza, Southern Hills Mall, Henderson Square, The Outlet Collection® | Seattle, located in Auburn, Washington, and Whitehall Mall, located in Whitehall, Pennsylvania, $1.8 million attributable to the O'Connor Joint Venture II Properties, $1.0 million related to the Property Transactions, and $0.4 million attributable to the comparable properties.
Gain (loss) on disposition of interests in properties, net for 2018 is primarily attributable to the outparcel sales to Four Corners. The 2017 net gain was attributed to sales of Morgantown Commons, a vacant anchor parcel at Indian Mound Mall, the O'Connor Joint Venture II transactions, Gulf View Square, River Oaks Center, and Virginia Center Commons.
Gain on extinguishment of debt, net recognized in the 2018 period consisted of the $51.4 million gain related to the transition of the $94.0 million mortgage loan secured by Rushmore Mall. The gain on extinguishment of debt, net recognized in the 2017 period consisted of the $90.6 million gain related to the discounted payoff of the $99.7 million mortgage loan secured by Southern Hills Mall, transitioning of the $40.0 million mortgage loan secured by Valle Vista Mall to the lender, and the discounted payoff of the $87.3 million mortgage loan secured by Mesa Mall.

Income and other taxes decreased $1.9 million, which was primarily attributable to a nonrecurring state use tax that was incurred in 2017.
For WPG Inc., net income attributable to noncontrolling interests primarily relates to the allocation of income to third parties based on their respective weighted average ownership interest in WPG L.P., which percentage remained consistent over the periods.
Year Ended December 31, 2017 vs. Year Ended December 31, 2016
For purposes of the following comparisons, the transactions listed above that occurred in the periods under comparison (excluding the properties included in the O'Connor Joint Venture II and the discounted payoffs of Mesa Mall and Southern Hills Mall, which are referred to as their respective capitalized terms) are referred to as the "Property Transactions," and "comparable properties" refers to the remaining properties we owned and operated throughout both years in the year-to-year comparisons.
Minimum rents decreased $56.4 million, primarily due to a $33.3 million decrease related to the Property Transactions and $23.6 million decrease related to the O'Connor Joint Venture II properties offset by a $0.5 million increase attributable to the comparable properties. Overage rents decreased $3.8 million primarily due to a $1.0 million decrease related to the Property Transactions, $1.3 million decrease related to the O'Connor Joint Venture II properties, and a $1.5 million decrease attributable to the comparable properties. Tenant reimbursements decreased $28.2 million due to a $12.1 million decrease attributable to the Property Transactions, $8.0 million decrease related to the O'Connor Joint Venture II properties, and an $8.1 million decrease attributable to the comparable properties, primarily due to rent restructuring in leases for national retailers that filed bankruptcy in 2017 and 2016. Other income increased $3.0 million, primarily due to a $2.2 million increase from lease settlements that occurred in 2017 and a $1.2 million increase in management, leasing and development fee income from the unconsolidated joint ventures to which we provide such services, offset by a net $0.4 million decrease attributable to ancillary property income.
Property operating expenses decreased $20.2 million, of which $14.1 million was attributable to the Property Transactions, $3.9 million was attributable to the O'Connor Joint Venture II properties, and $2.2 million was attributable to the comparable properties, primarily involving a reduction in management fee expense related to the termination of certain transition service agreements with SPG in connection with the 2014 spin-off. Depreciation and amortization decreased $22.4 million, primarily due to a $17.1 million decrease attributable to the Property Transactions and an $11.5 million decrease attributable to the O'Connor Joint Venture II properties, offset by a $6.2 million increase attributable to the comparable properties, which was primarily due to development assets placed into service. Real estate taxes decreased $13.0 million, primarily due to an $8.7 million decrease attributable to the Property Transactions and a $5.0 million decrease attributable to the O'Connor Joint Venture II properties, offset by a $0.7 million increase attributable to the comparable properties. Provision for credit losses increased $0.6 million, primarily attributable to tenant bankruptcies during 2017. General and administrative expenses decreased $2.4 million, primarily due to reductions in external legal, consulting, and audit fees and reductions in salaries and wages expenses. The decrease in merger, restructuring and transaction costs of $29.6 million was attributable to the management transition as well as strategic alternatives explored during 2016 and no comparable costs occurring in 2017. The increase of $45.0 million in impairment losses recorded in 2017 relate to the write down of Rushmore Mall, Colonial Park Mall and Morgantown Commons, as described in further detail under "Impairment," when compared to the impairments taken during the comparable period in 2016.
Interest expense, net, decreased $9.7 million, of which $7.5 million was attributable to the Property Transactions, $11.0 million was attributable to the discounted payoffs of the mortgage loans secured by Mesa Mall and Southern Hills Mall, respectively, and $3.3 million was attributable to the O'Connor Joint Venture II properties. Offsetting these decreases were increases of $11.4 million related to corporate debt activity, primarily related to the August 2017 bond offering offset by reduced Revolver activity, reductions in term loan interest expense, and swap ineffectiveness, and $0.7 million related to other financing activities.
Gain (loss) on disposition of interests in properties, net in the 2017 period consisted of a net gain of $124.8 million from the sales of Colonial Park Mall, Morgantown Commons, a vacant anchor parcel at Indian Mound Mall, the O'Connor Joint Venture II transaction, Gulf View Square, River Oaks Center, and Virginia Center Commons. The $2.0 million loss in the 2016 period occurred from the sales of Richmond Town Square, Knoxville Center, Forest Mall, and Northlake Mall.
Gain on extinguishment of debt recognized in the 2017 period consisted of $90.6 million gain related to the discounted payoff of the $99.7 million mortgage loan secured by Southern Hills Mall, transitioning of $40.0 million mortgage loan secured by Valle Vista Mall to the lender, and the discounted payoff of the $87.3 million mortgage loan secured by Mesa Mall. The gain on extinguishment of debt, net recognized in the 2016 period consisted of the $34.6 million net gain from the transitioning of River Valley Mall, Merritt Square Mall, and Chesapeake Square to the lenders.
Income and other taxes increased $1.2 million, which was attributable primarily to a nonrecurring state use tax that was incurred in 2017.
For WPG Inc., net income attributable to noncontrolling interests primarily relates to the allocation of income to third parties based on their respective weighted average ownership interest in WPG L.P., which percentage remained consistent over the 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", unsecured notes payable and senior unsecured term loans as further discussed below.
We derive most of our liquidity from leases that generate positive net cash flow from operations, the total of which was $287.2 million during the year ended December 31, 2018.
Our balance of cash and cash equivalents decreased $9.5 million during 2018 to $42.5 million as of December 31, 2018. The decrease was primarily due to net repayment of debt, dividend distributions, and capital expenditures, partially offset by operating cash flow from properties, net distributions from our joint ventures, and the net proceeds from the disposition of properties. See "Cash Flows" below for more information.
Because we own primarily long-lived income-producing assets, our financing strategy relies on a combination of long-term mortgage debt as well as unsecured debt supported by a quality unencumbered asset pool, providing us with ample flexibility from a liquidity perspective. Our strategy is to have the majority of our debt fixed either through fixed rate mortgages or interest rate swaps that effectively fix the interest rate. At December 31, 2018, floating rate debt (excluding loans hedged to fixed interest) comprised 15.2% of our total consolidated debt. We will continue to monitor our borrowing mix to limit market risk.
During the third quarter of 2017, we successfully completed the issuance of $750.0 million of unsecured notes. The notes are due on August 15, 2024 and the proceeds were used to repay the $500.0 million Term Loan (as defined in "Financing and Debt"), with a maturity date of May 30, 2018 and $230.0 million of the June 2015 Term Loan (as defined in "Financing and Debt") with a maturity date of March 2, 2020, respectively.
Additionally, on January 22, 2018, we amended and restated our Facility (as defined under "The Facility."). Under the amended and restated terms, the Facility will mature in December 2022 assuming all extension options are exercised. Prior to the amendment and restatement, the Revolver matured on May 30, 2019, assuming all extension options were exercised. These transactions are reflective of our strategy to access the unsecured debt markets to extend our weighted average debt maturity.
On December 31, 2018, we had an aggregate available borrowing capacity of $359.8 million under the Revolver, net of outstanding borrowings of $290.0 million and $0.2 million reserved for outstanding letters of credit. The weighted average interest rate on the Revolver was 3.3% for the year ended December 31, 2018.
Subsequent to December 31, 2018, Fitch Ratings & Moody's Investor Service lowered their credit rating on WPG L.P.'s unsecured long-term indebtedness, which will increase interest rates on our Facility (as defined in "Overview - Basis of Presentation - The Facility."), December 2015 Term Loan, and 5.950% Notes due 2024 as of February 2, 2019. Due to the downgrade, our Revolver will bear interest at LIBOR plus 165 basis points (an increase of 40 basis points), our Term Loan will bear interest at LIBOR plus 190 basis points (an increase of 45 basis points), and our December 2015 Term Loan will bear interest at LIBOR plus 235 basis points (an increase of 55 basis points). Our 5.950% Notes due 2024 will bear interest at 6.450% (an increase of 50 basis points). Assuming the new pricing grid was effective January 1, 2018, the impact would have resulted in an increase in borrowing costs of approximately $8.5 million during 2018. Such a downgrade may also impact terms and conditions of future borrowings in addition to adversely affecting our ability to access the public markets.
The consolidated indebtedness of our business was approximately $2.9 billion as of December 31, 2018, or an increase of approximately $39.9 million from December 31, 2017. The change in consolidated indebtedness from December 31, 2017 is described in greater detail under "Financing and Debt."
Outlook
Our business model and WPG Inc.'s status as a REIT requires 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 2019.
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 as of December 31, 2018, but there can be no assurance that the Company will achieve a particular rating or maintain a particular rating in the future (see discussion above for further details).

Cash Flows
Our net cash flow from operating activities totaled $287.2 million during 2018. During 2018, we also:
funded capital expenditures of $153.9 million,
received net proceeds from the disposition of interests in properties and outparcels of $39.2 million,
funded investments in unconsolidated entities of $20.2 million,
received distributions of capital from unconsolidated entities of $35.1 million,
received net proceeds from our debt financing, refinancing, and repayment activities of $120.4 million; and
funded distributions to common and preferred shareholders and unitholders of $236.8 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,
borrowings on our debt arrangements,
opportunistic asset sales,
additional secured or unsecured debt financing, or
additional equity raised in the public or private markets.
We expect to generate positive cash flow from operations in 2019, 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 December 31, 2018 and 2017 was as follows (in thousands):
  December 31,
2018		 December 31,
2017
Face amount of mortgage loans $980,276
 $1,152,436
Fair value adjustments, net 5,764
 8,338
Debt issuance cost, net (2,771) (3,692)
Carrying value of mortgage loans $983,269
 $1,157,082
A roll forward of mortgage indebtedness from December 31, 2017 to December 31, 2018 is summarized as follows (in thousands):
Balance at December 31, 2017 $1,157,082
Debt amortization payments (18,322)
Repayment of debt (94,838)
Debt borrowings, net of issuance costs 34,782
Debt canceled upon lender foreclosures, net of debt issuance costs (93,988)
Amortization of fair value and other adjustments (2,574)
Amortization of debt issuance costs 1,127
Balance at December 31, 2018 $983,269
On October 23, 2018, the $94.0 million mortgage on Rushmore Mall was canceled upon a deed-in-lieu of foreclosure agreement (see "Covenants" section below for additional details).

On October 2, 2018, an affiliate of WPG Inc. repaid the $8.3 million mortgage loan on Whitehall Mall, located in Whitehall, Pennsylvania. This repayment was funded by cash on hand.
On September 27, 2018, an affiliate of WPG Inc. closed on a $35.0 million full-recourse note payable secured by Southgate Mall (see details under "Overview - Basis of Presentation - Southgate").
On June 8, 2018, the Company exercised the first of three options to extend the maturity date of the $65.0 million term loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2019, subject to two one year extensions available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees.
On January 19, 2018, an affiliate of WPG Inc. repaid the $86.5 million mortgage loan on The Outlet Collection® | Seattle. This repayment was funded by borrowings on the Revolver (as defined below).
On December 29, 2017, an affiliate of WPG Inc. repaid the $11.7 million mortgage loan secured by Henderson Square, located in King of Prussia, Pennsylvania. This repayment was funded by cash on hand.
On October 17, 2017, an affiliate of WPG Inc. completed a discounted payoff of the $99.7 million mortgage loan secured by Southern Hills Mall for $55.0 million (see "Covenants" section below for additional details).
On October 3, 2017, the $40.0 million mortgage on Valle Vista Mall was canceled upon a deed-in-lieu of foreclosure agreement (see "Covenants" section below for additional details).
On October 2, 2017, an affiliate of WPG Inc. repaid the $99.6 million mortgage loan on WestShore Plaza, located in Tampa, Florida. This repayment was funded by borrowings on the Revolver.
On May 10, 2017 and prior to the deconsolidation of these properties due to the sale of 49% of our interests (see section "The O'Connor Joint Ventures" for additional details), the Company closed on non-recourse mortgage loans encumbering The Arboretum, Gateway Centers, and Oklahoma City Properties. The following table summarizes the key terms of each mortgage loan:
Property Principal Debt issuance costs Net debt issuance Interest Rate Maturity Date
The Arboretum $59,400
 $(452) $58,948
 4.13% June 1, 2027
Gateway Centers 112,500
 (709) 111,791
 4.03% June 1, 2027
Oklahoma City Properties 43,279
 (427) 42,852
 3.90% June 1, 2027
Total $215,179
 $(1,588) $213,591
    
The Arboretum and Gateway Centers loans require monthly interest only payments until July 1, 2021, at which time monthly interest and principal payments are due until maturity. The Oklahoma City Properties loan requires monthly interest only payments until July 1, 2022, at which time monthly interest and principal payments are due until maturity. We used the net proceeds to repay a portion of the outstanding balance on the Revolver, as defined below. These three loans were deconsolidated during the year ended December 31, 2017, in connection with the completion of the O'Connor Joint Venture II transaction.
On April 25, 2017, the Company completed a discounted payoff of the $87.3 million mortgage loan secured by Mesa Mall for $63.0 million (see "Covenants" section below for additional details).
Highly-levered Assets
As of December 31, 2018, we have identified two mortgage loans that have leverage levels in excess of our targeted leverage and have plans to work with the special servicers on these non-recourse mortgages. These mortgage loans total $95.1 million and encumber Towne West Square and West Ridge Mall and West Ridge Plaza, all of which have been identified as noncore properties. We expect to improve our leverage once all, or a portion of them, are transitioned to the lenders, with minimal impact to net cash flows. See "Covenants" below for further discussion on these highly-levered assets.

Unsecured Debt
The following table identifies our total unsecured debt outstanding at December 31, 2018 and December 31, 2017:
  December 31,
2018		 December 31,
2017
Notes payable:    
Face amount - the Exchange Notes(1)
 $250,000
 $250,000
Face amount - 5.950% Notes due 2024(2)
 750,000
 750,000
Debt discount, net (9,680) (11,086)
Debt issuance costs, net (7,623) (9,542)
Total carrying value of notes payable $982,697
 $979,372
     
Unsecured term loans:(8)
    
Face amount - Term Loan(3)(4)
 $350,000
 $—
Face amount - December 2015 Term Loan(5)
 340,000
 340,000
Face amount - June 2015 Term Loan(6)
 —
 270,000
Debt issuance costs, net (4,491) (3,305)
Total carrying value of unsecured term loans $685,509
 $606,695
     
Revolving credit facility:(3)(7)
    
Face amount $290,000
 $155,000
Debt issuance costs, net (3,998) (540)
Total carrying value of revolving credit facility $286,002
 $154,460
(1)The Exchange Notes were issued at a 0.028% discount, bear interest at 3.850% per annum and mature on April 1, 2020.
(2) The 5.950% Notes due 2024 were issued at a 1.533% discount, bear interest at 5.950% per annum, and mature on August 15, 2024. The interest rate could vary in the future based upon changes to the Company's credit ratings. In February 2019, the Company's credit rating was downgraded which will result in an interest rate increase of 50 basis points to 6.450%.
(3)The Revolver and Term Loan are collectively known as the Facility, as defined in "Overview - Basis of Presentation - The Facility."
(4)The Term Loan bears interest at one-month LIBOR plus 1.45% per annum and will mature on December 30, 2022. We had interest rate swap agreements totaling $270.0 million, which effectively fixed the interest rate on a portion of the Term Loan at 2.56% per annum through June 30, 2018. On May 9, 2018, we executed swap agreements totaling $250.0 million to replace matured swap agreements, which effectively fix the interest rate on a portion of the Term Loan at 4.21% through June 30, 2021. At December 31, 2018, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 1.45% or 3.95%. In February 2019, the Company's credit rating was downgraded which will result in an interest rate increase of45 basis points to LIBOR plus 1.90%.
(5)The December 2015 Term Loan bears interest at one-month LIBOR plus 1.80% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million, which effectively fix the interest rate at 3.51% per annum through maturity. In February 2019, the Company's credit rating was downgraded which will result in an interest rate increase of55 basis points to LIBOR plus 2.35%.
(6)The June 2015 Term Loan bore interest at one-month LIBOR plus 1.45% per annum. During the year ended December 31, 2017, the Company repaid $230.0 million of the June 2015 Term Loan and wrote off $0.9 million of debt issuance costs. On January 22, 2018, the Company repaid the remaining $270.0 million outstanding with proceeds from the amended and restated Facility (as discussed above) and wrote off $0.5 million of debt issuance costs.
(7)As of December 31, 2017, the Revolver provided borrowings on a revolving basis up to $900.0 million, bore interest at one-month LIBOR plus 1.25%, and was initially scheduled to mature on May 30, 2018. On January 22, 2018, we amended the terms of the Revolver to provide borrowings on a revolving basis up to $650.0 million at one-month LIBOR plus 1.25%. Under the amended terms, the Revolver will mature on December 30, 2021, subject to two six months month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. Upon the amended terms, the Company wrote off $0.3 million of debt issuance costs. At December 31, 2018, we had an aggregate available borrowing capacity of $359.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At December 31, 2018, the applicable interest rate on the Revolver was one-month LIBOR plus 1.25%, or 3.75%. In February 2019, the Company's credit rating was downgraded which will result in an interest rate increase of40 basis points to LIBOR plus 1.65%.
(8)While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings.

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 one or more of the respective lenders including adjustments to the applicable interest rate. As of December 31, 2018, management believes the Company is in compliance with all covenants of its unsecured debt.
The total balance of mortgages was approximately $980.3 million as of December 31, 2018. At December 31, 2018, certain of our consolidated subsidiaries were the borrowers under 21 non-recourse loans and two full-recourse loans secured by mortgages encumbering 26 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four 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 lenders could accelerate the debt and enforce its right against their collateral.
On November 19, 2018, we received a notice of default letter, dated November 15, 2018, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $49.9 million mortgage loan secured by West Ridge Mall and West Ridge Plaza, located in Topeka, Kansas (collectively known as "West Ridge"). The notice was issued by the special servicer because the borrower did not make certain reserve payments or deposits as required by the loan agreement for the aforementioned loan. 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 May 29, 2018, we received a notice of default letter, dated May 25, 2018, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $94.0 million mortgage loan secured by Rushmore Mall ("Rushmore"). The notice was issued by the special servicer because the borrower notified the lender that there were insufficient funds to ensure future compliance with the mortgage loan due to the loss of certain tenants at Rushmore. On October 23, 2018, an affiliate of the Company transitioned the property to the lender.
On April 11, 2018, we received a notice of default letter, dated April 6, 2018, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $45.2 million mortgage loan secured by Towne West Square, located in Wichita, Kansas. The notice was issued by the special servicer because the borrower did not make certain reserve payments or deposits as required by the loan agreement for the aforementioned loan. On August 24, 2018, we received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company still holds title to the property.
On March 30, 2017, the Company transferred the then $40.0 million mortgage loan secured by Valle Vista Mall to the special servicer at the request of the borrower, a consolidated subsidiary of the Company. On May 18, 2017, we received a notice of default letter, dated that same date, from the special servicer because the borrower did not repay the loan in full by its May 10, 2017 maturity date. On October 3, 2017, an affiliate of WPG Inc. transitioned the property to the lender.
On June 6, 2016, we received a notice of default letter, dated June 3, 2016, from the special servicer to the borrower of the then $99.7 million mortgage loan secured by 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 June 1, 2016 maturity date.  On October 27, 2016, we received notification that a receiver had been appointed to manage and lease the property. On October 17, 2017, an affiliate of WPG Inc. completed a discounted payoff of the mortgage loan for $55.0 million and we retained ownership and management of the property.
On June 30, 2016, we received a notice, dated that same date, that the then $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 by its June 1, 2016 maturity date. On April 25, 2017, the Company completed a discounted payoff of the mortgage loan for $63.0 million and retained ownership and management of the property.

During the year ended December 31, 2018 the Company recognized a net gain of $51.4 million related to the $94.0 million mortgage debt cancellation and ownership transfer of Rushmore Mall, which is included in gain on extinguishment of debt, net in the consolidated statements of operations and comprehensive income for the year then ended. During the year ended December 31, 2017, the Company recognized a net gain of $90.6 million based on the cancellation of mortgage debt of $108.9 million related to discounted payoff of the mortgage note payable secured by Southern Hills Mall, ownership transfer of Valle Vista Mall, and discounted payoff of the mortgage note payable secured by Mesa Mall, which is included in gain on extinguishment of debt, net in the consolidated statements of operations and comprehensive income for the year then ended.
At December 31, 2018, 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. The Company has assessed each of the defaulted properties for impairment indicators and have concluded no impairment charges were warranted as of December 31, 2018.
Summary of Financing
Our consolidated debt and the effective weighted average interest rates as of December 31, 2018 and 2017 consisted of the following (dollars in thousands):
  December 31, 2018 
Weighted
Average
Interest Rate
 December 31, 2017 
Weighted
Average
Interest Rate
Fixed-rate debt, face amount $2,505,276
 4.91% $2,610,936
 4.72%
Variable-rate debt, face amount 455,000
 3.87% 306,500
 2.99%
Total face amount of debt 2,960,276
 4.75% 2,917,436
 4.54%
Note discount (9,680)   (11,086)  
Fair value adjustments, net 5,764
   8,338
  
Debt issuance costs, net (18,883)   (17,079)  
Total carrying value of debt $2,937,477
   $2,897,609
  

Contractual Obligations
The following table summarizes the material aspects of the Company's future obligations for consolidated entities as of December 31, 2018, assuming the obligations remain outstanding through maturities noted below (in thousands):
  2019 2020 - 2021 2022 - 2023 Thereafter Total
Long-term debt(1)
 $64,281
 $665,097
 $1,175,977
 $1,054,921
 $2,960,276
Interest payments(2)
 138,422
 236,967
 166,351
 31,455
 573,195
Distributions(3)
 3,568
 —
 —
 —
 3,568
Ground rent/operating leases(4)
 2,267
 4,499
 3,596
 21,376
 31,738
Purchase/tenant obligations(5)
 101,987
 —
 —
 —
 101,987
Total $310,525
 $906,563
 $1,345,924
 $1,107,752
 $3,670,764

(1)Represents principal maturities only and therefore excludes net fair value adjustments of $5,764, debt issuance costs of $(18,883) and bond discount of $(9,680) as of December 31, 2018. 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 and our credit ratings in place at December 31, 2018. Due to the credit rating downgrade that occurred subsequent to December 31, 2018, we expect an increase of approximately $39.7 million in interest payments over the periods presented as a result of the new pricing grid based on the LIBOR rate in place at December 31, 2018.
(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 are included upon declaration by the Board as the optional redemption dates have lapsed.
(4)Represents minimum future lease payments due through the end of the initial lease term under executed leases.
(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 December 31, 2018, assuming the obligations remain outstanding through initial maturities (in thousands):
  2019 2020 - 2021 2022 - 2023 Thereafter Total
Long-term debt(1)
 $3,346
 $73,488
 $20,062
 $528,068
 $624,964
Interest payments(2)
 25,926
 50,690
 42,446
 44,589
 163,651
Ground rent/operating leases(3)
 3,939
 7,942
 8,053
 189,002
 208,936
Purchase/tenant obligations(4)
 14,921
 —
 —
 —
 14,921
Total $48,132
 $132,120
 $70,561
 $761,659
 $1,012,472

(1)Represents principal maturities only and therefore excludes net fair value adjustments of $5,372 and debt issuance costs of $(2,451) as of December 31, 2018. In addition, the principal maturities reflect any available extension options.
(2)Variable rate interest payments are estimated based on the LIBOR rate at December 31, 2018.
(3)Represents minimum future lease payments due through the end of the initial lease term under executed leases.
(4)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 December 31, 2018, 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 biographical information presented, also includedunconsolidated 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
Preferred Stock
Series H Cumulative Redeemable Preferred Stock
On January 15, 2015, WPG Inc. issued 4,000,000 shares of 7.5% Series H Preferred Shares to convert the preferred stock of GRT outstanding at the time of merger. Dividends accrue quarterly at an annual rate of 7.5% per share. WPG Inc. can redeem this series, in whole or in part, at a redemption price of $25.00 per share, plus accumulated and unpaid dividends. WPG L.P. issued to WPG Inc. a like number of preferred units as consideration for each Board member isthe Series H Preferred Shares and can redeem this series, in whole or in part, when WPG Inc. can redeem the Series H Preferred Shares at like terms. All shares remain issued and outstanding as of December 31, 2018 and 2017.
Series I Cumulative Redeemable Preferred Stock
On January 15, 2015, WPG Inc. issued 3,800,000 shares of 6.875% Series I Preferred Shares to convert the preferred stock of GRT outstanding at the time of merger. Dividends accrue quarterly at an annual rate of 6.875% per share. WPG Inc. can redeem this series, in whole or in part, at a listingredemption price of $25.00 per share, plus accumulated and unpaid dividends. WPG L.P. issued to WPG Inc. a like number of preferred units as consideration for the Series I Preferred Shares and can redeem this series, in whole or in part, when WPG Inc. can redeem the Series I Preferred Shares at like terms. All shares remain issued and outstanding as of December 31, 2018 and 2017.

Exchange Rights
Subject to the terms of the particular skills, qualifications, experience,limited partnership agreement of WPG L.P., limited partners in WPG L.P. have, at their option, the right to exchange all or attributes that ledany 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 market value of WPG Inc.'s common stock as determined pursuant to the terms of the WPG L.P. Partnership Agreement. During the year ended December 31, 2017, WPG Inc. issued 314,577 shares of common stock to a limited partner of WPG L.P. in exchange for an equal number of units pursuant to the WPG L.P. Partnership Agreement. This transaction increased WPG Inc.’s ownership interest in WPG L.P. There were no similar transactions during the years ended December 31, 2018 and 2016. At December 31, 2018, WPG Inc. had reserved 34,755,660 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, these preferred units are classified as redeemable noncontrolling interests outside of permanent equity.
Share Based Compensation
On May 28, 2014, the Board adopted the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the "Plan"), which permits the Company to conclude that the respective director should serve as a member of the Board.


4


Mark S. Ordan served as Executive Chairmangrant 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/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., long term incentive units ("LTIP units" or "LTIPs") or performance units ("Performance LTIP Units") in WPG L.P. The Plan terminates on May 28, 2024.
Long Term Incentive Awards
Time Vested LTIP Awards
The Company has issued time-vested LTIP units ("Inducement LTIP Units") to 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 and the related fair value will be expensed over a four-year vesting period. During the years ended December 31, 2018, 2017 and 2016, the Company did not grant any Inducement LTIP Units. As of December 31, 2018, the estimated future compensation expense for Inducement LTIP Units was $37,500. The weighted average period over which the compensation expense will be recorded for the Inducement LTIP Units is approximately 0.2 years.
Performance Based Awards
2015 Awards
During 2015, the Company authorized the award of LTIP units subject to certain market conditions under ASC 718 ("Performance LTIP Units") to certain executive officers and employees of the Company in the maximum total amount of 304,818 units, to be earned and related fair value expensed over the applicable performance periods, except in certain instances that could result in accelerated vesting due to severance arrangements.
The Performance LTIP Units that were allocated during the year ended December 31, 2015 are market based awards with a service condition. Recipients could have earned between 0% -100% of the award based on the Company's achievement of absolute and relative (versus the MSCI REIT Index) total shareholder return ("TSR") goals, with 40% of the Performance LTIP Units available to be earned with respect to each performance period based on achievement of absolute TSR goals, and 60% of the Performance LTIP Units available to be earned with respect to each performance period based on achievement of relative TSR goals. The Performance LTIP Units issued during 2015 relate to the following performance periods: from Januarythe beginning of the service period to (i) December 31, 2016 ("2015-First Special PP"), (ii) December 31, 2017 ("2015-Second Special PP"), and (iii) December 31, 2018 ("2015-Third Special PP"). There was no award for the 2015-First Special PP, 2015-Second Special PP, or 2015-Third Special PP since our TSR was below the threshold level during 2016, 2017, and 2018, respectively.

Annual Long-Term Incentive Awards
During the years ended December 31, 2018 and 2017, the Company approved the terms and conditions of the 2018 and 2017 annual awards (the "2018 Annual Long-Term Incentive Awards" and "2017 Long-Term Incentive Awards," respectively) for certain executive officers and employees of the Company. Under the terms of the awards program, each participant is provided the opportunity to receive (i) time-based RSUs and (ii) performance-based stock units ("PSUs"). RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. RSUs will vest in one-third installments on each annual anniversary of the respective Grant Date (as referenced below), subject to the participant's continued employment with the Company through each vesting date and the 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 three year vesting term, except in instances that result in accelerated vesting due to severance arrangements. Actual PSUs earned may range from 0%-150% of the PSUs allocated to the award recipient, based on the Company's TSR compared to a peer group based on companies with similar assets and revenue over a three-year performance period that commenced on the respective Grant Date (as referenced below). 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 PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the three-year performance period, except in instances that result in accelerated amortization due to severance arrangements.
The following table summarizes the issuance of the 2018 Annual Long-Term Incentive Awards and 2017 Annual Long-Term Incentive Awards, respectively:
 2018 Annual Long-Term Incentive Awards 2017 Annual Long-Term Incentive Awards
Grant DateFebruary 20, 2018 February 21, 2017
RSUs issued587,000 358,198
Grant date fair value per unit$6.10 $9.58
PSUs issued587,000 358,198
Grant date fair value per unit$4.88 $7.72
During 2016, the Company 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 actual 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. Eventual 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 as the TSR performance were achieved at target, resulting in a 100% payout. During the year ended December 31, 2017, the Company awarded 324,237 Allocated RSUs, with a grant 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, subject to the participant's continued employment with the Company through each vesting date and the participant's continued compliance with certain applicable covenants.

During 2015, untilthe 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 actual base salary earnings, 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 LTIP units (the "Allocated Units") based on the closing price of WPG Inc.'s common shares for the final 15 trading days of 2015. 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 was based on the Company's performance on the strategic goals and the payout on the remaining 60% was based on the Company's TSR performance. The strategic goal component was achieved in 2015; however, the TSR was below threshold performance, resulting in only a 40% payout for this annual LTIP award. During the year ended December 31, 2016, the Company awarded 323,417 LTIP units related to the 2015 Annual Long-Term Incentive Awards, of which 108,118 vest in one-third installments on each of January 1, 2017, 2018 and 2019, subject to the participant's continued employment with the Company through each vesting date and the participant's continued compliance with certain applicable covenants. The 94,106 LTIP units awarded to our former Executive Chairman fully vested on the grant date and the 121,193 LTIP units awarded to certain former executive officers fully vested on the applicable severance dates during 2016 when he becamepursuant to the non-executive Chairmanunderlying severance arrangements. The fair value of the Board pursuant to a Transition and Consulting Agreement, dated May 31, 2015, by and between Mr. Ordan and WPG (the “Consulting Agreement”). Mr. Ordan served as our Chief Executive Officer from May 2014 to January 15, 2015. Mr. Ordan has served on the Board since May 2014. From January 2013 to November 2013, Mr. Ordan served as a director and as the Chief Executive Officer of Sunrise Senior Living, LLC, the successor to the management business of Sunrise Senior Living, Inc. ("Sunrise"), which had been a publicly traded operator of approximately 300 senior living communities located in the United States, Canada and the United Kingdom prior to its sale in January 2013 to Health Care REIT, Inc. Mr. Ordan served as Sunrise's Chief Executive Officer from November 2008 to January 2013, and as a director from July 2008 to January 2013. While at Sunrise, Mr. Ordan led its restructuring and oversaw its eventual sale. He served as the Chief Executive Officer and President of The Mills Corporation ("Mills"), a publicly traded developer, owner and manager of a diversified portfolio of regional shopping malls and retail entertainment centers, from October 2006 to May 2007, as its Chief Operating Officer from February 2006 to October 2006 and as a director from December 2006 until May 2007. While at Mills, Mr. Ordan oversaw its operations and its eventual sale to Simon Property Group, Inc. (“Simon”) and Farallon Capital Management, LLC in May 2007. Prior to that, he served as President and Chief Executive Officer of Balducci's LLC, a gourmet food store chain. He also founded and served as Chairman, President and Chief Executive Officer of Fresh Fields Markets, Inc., an organic foods supermarket chain, eventually leading the mergerportion of the company with Whole Foods Markets, Inc. Mr. Ordan also was employed inawards based upon the equities divisionCompany's performance of the investment banking firmstrategic goals was recognized to expense when granted.
WPG Restricted Share Awards
The WPG Restricted Shares relate to unvested restricted shares held by certain GRT executive employees at the time of Goldman Sachs & Co. Mr. Ordan served asthe Merger. The amount of compensation expense related to unvested restricted shares that we expect to recognize in future periods is $33,000 over a directorweighted average period of Harris Teeter Supermarkets, Inc., a publicly traded supermarket chain, from February 2013 until January 2014, when it0.3 years. During the year ended December 31, 2018, the aggregate intrinsic value of shares that vested was acquired by $43,900. As of December 31, 2018, 9,033 WPG Restricted Shares were outstanding.
WPG Restricted Stock Unit Awards
The Kroger Co. He was a Trustee of Vassar College for fifteen years. He also previously served for ten years, including five years as Non-Executive Chairman, on the Board of Trustees of Federal Realty Investment Trust. Since June 2015, Mr. Ordan has been a memberCompany issues RSUs to certain executive officers, employees, and non-employee directors of the Board of Directors (see "Board of VEREIT, Inc. (f/k/Directors Compensation" for discussion regarding RSUs issued to non-employee directors). The RSUs are service-based awards and the related fair value is expensed over the applicable service periods, except in instances that result in accelerated vesting due to severance arrangements. During the year ended December 31, 2018, the Company issued 673,792 RSUs under the Plan with a American Realty Capital Properties, Inc.),fair value of $4.2 million, of which 587,000 RSUs with a New York fair value of $3.6 million relates to the annual long-term incentive award issuances that occurred in February 2018 (see "Annual Long-Term Incentive Awards" section above). As of December 31, 2018, 1,430,665 unvested RSUs were outstanding. The amount of compensation related to the unvested RSUs that we expect to recognize in future periods is $6.2 million over a weighted average period of 1.6 years.
Board of Directors Compensation
On May 18, 2018, the Board approved annual compensation for the period of May 29, 2018 through May 28, 2019 for the non-employee members of the Board. Each non-employee director's annual compensation (other than the Board Chairman who receives annual compensation of $450,000) totaled $230,000 based on a combination of cash and RSUs granted under the Plan. During 2018, the six non-employee directors were granted RSUs for 138,648 shares with an aggregate grant date fair value of $940,000, which is being recognized as expense over the vesting period ending on May 28, 2019.
Stock Exchange ("NYSE") listed full-serviceOptions
Options granted under the Company's Plan generally vest over a three year period, with options exercisable at a rate of 33.3% per annum beginning with the first anniversary on the date of the grant. These options were valued using the Black-Scholes pricing model and the expenses associated with these options are amortized over the requisite vesting period.
During the year ended December 31, 2018, no stock options were granted from the Plan to employees, no stock options were exercised by employees and 114,273 stock options were canceled, forfeited or expired. As of December 31, 2018, there were 679,741 stock options outstanding.

Share Award Related Compensation Expense
During the years ended December 31, 2018, 2017 and 2016, the Company recorded share award related compensation expense pertaining to the award and option plans noted above within the consolidated statements of operations and comprehensive income as indicated below (dollars in millions):
  For the Year Ended December 31,
  2018 2017 2016
Merger, restructuring and transaction costs $—
 $—
 $9.5
General and administrative and property operating 8.3
 6.4
 4.6
Total expense $8.3
 $6.4
 $14.1
Distributions
During each of the years ended December 31, 2018 and 2017, the Board declared common share/unit dividends of $1.00 per common share/unit.
On February 12, 2019, the Board declared common share/unit dividends of $0.25 per common share/unit. The dividend is payable on March 15, 2019 to shareholders/unitholders of record on March 4, 2019.
Acquisitions and Dispositions
Buy-sell, marketing rights, and other exit mechanisms are common in real estate operating company withpartnership agreements. Most of our partners are institutional investors who have a history of direct investment management capability that owns and actively manages a diversified portfolio of retail, restaurant, office and industrial real estate assets. Additionally, Mr. Ordan currently serves on the boards of the following nonprofit organizations: the U.S. Chamber of Commerce, the National Endowment for Democracy, the Seed School Foundation, and the Economic Club of Washington, D.C.
Skills and Qualifications: Mr. Ordan has substantial executive experience, leadership ability and a proven record of accomplishment in retail real estateestate. We and healthcare, with proven skillsour partners in corporate finance, capital markets, mergersour 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 acquisitions,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 ventures, corporate restructurings,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 planningcriteria.
On April 24, 2018, the Company closed on the acquisition of Southgate Mall for $58.0 million (see details under "Overview - Basis of Presentation - Southgate Mall").
On April 11, 2018, the Company closed on the acquisition of four Sears anchor parcels and other public company matters.related outparcels for $28.5 million (see details under "Overview - Basis of Presentation - Sears Parcel Acquisitions").
On March 2, 2017, the O'Connor Joint Venture I completed the acquisition of Pearlridge Uptown II (see details under "Overview - Basis of Presentation - The O'Connor Joint Ventures").
Dispositions.    We pursue the disposition of properties that no longer meet our strategic criteria or interests in properties to generate proceeds for alternative business uses.
Michael P. Glimcherbecame our Vice Chairman and Chief Executive Officer on January 15, 2015. Mr. Glimcher previously served as ChairmanOn February 11, 2019, we completed the sale of the Glimcher Realty Trust (“Glimcher” or “GRT”) Boardseventh tranche of Trustees from September 2007 to January 15, 2015 when Glimcher was acquired by WPG (the “Merger”), as Glimcher’s Chief Executive Officer from January 2005 to January 15, 2015,restaurant outparcels which consisted of one outparcel and as a Trusteean allocated purchase price of Glimcher from June 1997 until January 15, 2015. As Glimcher's Chairmanapproximately $2.8 million of the Boardtotal purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). The Company received net proceeds of approximately $2.7 million, which were used to reduce corporate debt and Chief Executive Officer, hefor ongoing redevelopment efforts.
On January 18, 2019, we completed the sale of the sixth tranche of restaurant outparcels which consisted of eight outparcels and an allocated purchase price of approximately $9.4 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). The Company received net proceeds of approximately $9.4 million, which were used to reduce corporate debt and for ongoing redevelopment efforts.
On November 16, 2018, we completed the sale of the fifth tranche of restaurant outparcels which consisted of one outparcel and an allocated purchase price of approximately $3.2 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). The Company received net proceeds of approximately $3.2 million, which were used to reduce corporate debt and for ongoing redevelopment efforts.
On October 31, 2018, we completed the sale of the fourth tranche of restaurant outparcels which consisted of two outparcels and an allocated purchase price of approximately $1.7 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). The Company received net proceeds of approximately $1.7 million, which were used to reduce corporate debt and for ongoing redevelopment efforts.

On July 27, 2018, we completed the sale of the third tranche of restaurant outparcels which consisted of two outparcels and an allocated purchase price of approximately $4.6 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). The Company received net proceeds of approximately $4.5 million, which were used to reduce corporate debt and for ongoing redevelopment efforts.
On June 29, 2018, we completed the sale of the second tranche of restaurant outparcels which consisted of 5 outparcels and an allocated purchase price of approximately $9.5 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). The Company received net proceeds of approximately $9.4 million, which were used to reduce corporate debt and for ongoing redevelopment efforts.
On January 12, 2018, we completed the sale of the first tranche of restaurant outparcels which consisted of 10 outparcels and an allocated purchase price of approximately $13.7 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). The net proceeds were used to fund a portion of the acquisition of the Sears parcels on April 11, 2018 and for general corporate purposes.
In connection with the 2018 sales noted above, the Company recorded a net gain of $25.0 million for the year ended December 31, 2018, which is included in gain (loss) on disposition of interests in properties, net in the consolidated statements of operations and comprehensive income for the year ended December 31, 2018.
On November 3, 2017, we completed the sale of Colonial Park Mall to an unaffiliated private real estate investor for a purchase price of $15.0 million. The net proceeds were used for general corporate purposes.
On June 13, 2017, we sold 49% of our interest in Malibu Lumber Yard as part of the O'Connor Joint Venture II transaction (see details under "Overview - Basis of Presentation - The O'Connor Joint Ventures").
On June 7, 2017, we completed the sale of Morgantown Commons, to a private real estate investor for a purchase price of approximately $6.7 million. The net proceeds were used for general corporate purposes.
On May 16, 2017, we completed the sale of an 80,000 square foot vacant anchor parcel at Indian Mound Mall to a private real estate investor for a purchase price of approximately $0.8 million. The net proceeds were used for general corporate purposes.
On May 12, 2017, we completed the transaction forming the O'Connor Joint Venture II with regard to the ownership and operation of six of the Company's retail properties and certain related outparcels. Under the terms of the joint venture agreement, we retained a 51% non-controlling interest and sold a 49% interest to O'Connor, the third party partner (see details under "Overview - Basis of Presentation - The O'Connor Joint Ventures").
On February 21, 2017, we completed the sale of Gulf View Square and River Oaks Center to private real estate investors for an aggregate purchase price of $42.0 million. The net proceeds from the 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 $9.0 million. The net proceeds from the transaction were used to reduce corporate debt.
In connection with the 2017 sales noted above, the Company recorded a net gain of $124.8 million, which is included in gain (loss) on disposition of interest in properties, net in the consolidated statements of operations and comprehensive income for the year ended December 31, 2017.
On October 23, 2018, Rushmore Mall was responsibletransitioned to the lender (see "Financing and Debt" above for implementingfurther discussion). Upon the policiesownership transfer, we reduced our debt by $94.0 million.
On October 3, 2017, Valle Vista Mall was transitioned to the lender (see "Financing and Debt" above for further discussion). Upon the ownership transfer, we reduced our debt by $40.0 million.
Development Activity
New Development, Expansions and Redevelopments.  We routinely incur costs related to construction for significant redevelopment and expansion projects at our properties. Our share of Glimcher,development costs for calendar year 2018 related to these activities was approximately $117 million. Our estimated stabilized return or yield, on invested capital typically ranges between 8% and 11%.
We have identified 28 department stores (currently vacant or anticipated vacancies) in our portfolio that we plan to redevelop and we are actively working on repositioning 24 of the locations. These department stores represent an opportunity to enhance the experience at the property by bringing in offerings such as determined by the Glimcher Board of Trustees,dining, grocery, entertainment, home furnishings, mixed-use components as well as managing Glimcher's overall businessdynamic retail offerings. These stores are in our Tier 1 and affairs. He also servedopen air properties and exclude department stores that are owned by third parties, such as Glimcher's Executive Vice President from March 1999Seritage. We project that we will invest between $300 million to $350 million over the next three to five years to complete the redevelopment of these department stores.

During the fourth quarter of 2016, we held our grand opening of our new approximately 400,000 square foot shopping center in the Houston metropolitan area, Fairfield Town Center. 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 dining options are at the center such as Chipotle, PeiWei, Whataburger, and Zoe's Kitchen. The project is 100% leased as of December 199931, 2018. During the third quarter of 2017, we approved the final phase of this new development for an additional investment of approximately $28 million, which will add an additional 130,000 square feet of new GLA to accommodate the strong demand at the project. Leasing for this new phase is over 50% committed for small shops and its President from December 1999 until September 2007,we have executed deals with a national theater and a national value fashion apparel retailer, and are finalizing a deal with an additional big box user.
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 and consists of buildings on the north and south parcels with tenancy including American Girl and Design Within Reach, as well as luxury apartment homes and office space. The final component of the expansion will be comprised of approximately 300 new luxury apartment homes and 30,000 to 35,000 square feet of new street-level retail. The street-level retail and luxury apartment homes will have substantial amenities, such as new on-site parking and roof-top terraces overlooking Scottsdale Quarter and the McDowell Mountains. On February 7, 2018, the rights to construct the luxury apartment homes on the land of this final component were sold to an unrelated third party for $12.5 million and construction has since commenced. The interest in various seniorthe retail unit of the planned development was retained. Tenants are expected to begin opening in this final component in 2019.
At Great Lakes Mall in Mentor, Ohio, we commenced redevelopment of a former Dillard’s Men’s Store. Dillard’s made the decision earlier in 2017 to consolidate its department stores at Great Lakes Mall into a single renovated anchor space. Round 1 Entertainment anchors the redevelopment and opened on March 30, 2018. Additional dining options, including Outback Steakhouse, which opened in December 2018, and new retailers are expected to open in early 2019. In addition, an outparcel building will be redeveloped to add a new Hobby Lobby store. We will invest approximately $15 million in this redevelopment with an expected yield of 7% - 9%.
At Cottonwood Mall in Albuquerque, New Mexico, we acquired the former Macy’s store for a planned redevelopment at the property. We plan to replace the former department store with two home furnishings stores, Mor Furniture for Less and Homelife Furniture, which opened in December 2018, as well as a new Hobby Lobby store, which opened in November 2018. We will invest between $20 million and $22 million in this redevelopment with an expected yield of 6% - 7%.
At Grand Central Mall in Parkersburg, West Virginia, we replaced an Elder-Beerman with a new 20,000 square foot H&M store, their first store in West Virginia, which opened in October 2018. Additionally, we added a new Five Below and Ulta Beauty, which opened in September 2018, in the former hhgregg store, and we are adding a Big Lots in the former Toys R Us location. Lastly, we have finalized our redevelopment plans for the former Sears space which will add an exciting exterior facing element to the center featuring dynamic first-to-market retailers. This new lifestyle component will complete the transformation of Grand Central Mall from a traditional enclosed regional center into a hybrid town center. We will invest between $31 million and $33 million in this redevelopment with an expected yield of 6% - 8%.
At Dayton Mall in Dayton, Ohio, we have signed leases with Ross Dress for Less and The RoomPlace to enhance the retail offering at the property. Ross Dress for Less will replace a former hhgregg store and The RoomPlace will be located in a newly combined larger store from previous small shop space. The estimated investment in adding these two retailers to the property will be between $8 million and $10 million with an anticipated yield of 10% - 12%.
At Lincolnwood Town Center in Lincolnwood, Illinois, we have a signed lease with The RoomPlace to take approximately two thirds of the recently vacated Carson Pirie Scott department store. The estimated investment in the redevelopment will be between $16 million and $18 million and the yield is anticipated to be 7% - 8%.
On April 11, 2018 we acquired, through a sale-leaseback transaction, four Sears department stores and adjacent Sears Auto Centers located at Longview Mall; Polaris Fashion Place®; Southern Hills Mall; and Town Center at Aurora. The purchase price was approximately $28.5 million and was funded by a combination of the Section 1031 tax proceeds from the Four Corners transaction, contributions from our joint venture partner related to their pro-rata share of the joint venture that owns Polaris Fashion Place® and availability on our Facility. We have control of these stores for future redevelopment and Sears, subject to their bankruptcy proceedings, will continue to operate under new leases.

In addition to the purchase of four Sears stores discussed above, we also proactively negotiated early termination of Sears leases to gain control of the real estate and commence redevelopment efforts at four of our Tier One assets. The first lease relates to the Sears store at Grand Central Mall, which closed in December 2018, and the redevelopment of the property is discussed above. The second lease relates to the Sears store at Southern Park Mall in Youngstown, Ohio which closed during the third quarter of 2018. We are in discussions with new tenants for the high visibility anchor space. The third lease relates to the Sears store at The Mall at Fairfield Commons in Beavercreek, Ohio, which closed in December 2018. We will be adding The RoomPlace and Round 1 Entertainment, both first to market. The RoomPlace will replace the upper level of Sears and complement the hybrid town center format with dynamic retail, dining and entertainment options. Round 1 Entertainment will replace the lower level of Sears. Both The RoomPlace and Round 1 Entertainment are expected to open in late 2019. The fourth lease relates to the Sears store at WestShore Plaza in Tampa, Florida which will terminate at the end of the first quarter of 2019, and we are currently in the entitlement process. We are actively working on redevelopment plans, and additional details will be announced in the future.
At The Outlet Collection® | Seattle, we have plans to add a FieldhouseUSA to the property in a former Sam’s Club store. FieldhouseUSA specializes in sporting leagues, events and tournaments by offering year-round league and tournament play in team sports such as basketball, soccer, volleyball and flag football in addition to programs such as birthday parties, corporate events, performance training and skills training. This use will greatly complement the recently added Dave & Buster’s at the property and we anticipate announcing further details about this exciting redevelopment in the near future. The estimated investment in the redevelopment will be between $11 million and $13 million and the yield is anticipated to be 9% - 10%.
Capital Expenditures
The following table summarizes total consolidated capital expenditures on a cash basis for the year ended December 31, 2018 (in thousands):
  2018
New developments $1,435
Redevelopments and expansions 95,440
Tenant allowances 23,464
Operational capital expenditures 37,052
Total (1) $157,391
(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: changes in asset quality and credit risk; ability to 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 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 development positions since joining Glimchermanagement of properties; changes in 1991. Mr. Glimcher has beenmarket rental rates; trends in the retail industry; relationships with anchor tenants; risks relating to joint venture properties; costs of common area maintenance; competitive market forces; the level and volatility of interest rates; the rate of revenue increases as compared to expense increases; the financial stability of tenants within the retail industry; the restrictions in current financing arrangements or the failure to comply with such arrangements; the liquidity of real estate investments; the impact of changes to tax legislation and our tax positions; failure to qualify as a directorreal estate investment trust; the failure to refinance debt at favorable terms and conditions; loss of M/I Homes, Inc., a publicly traded builder of single family homes, since January 2013. He serveskey 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 Executive Boardability 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 Governance Committeeinvestment 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 this Annual Report on Form 10-K and other reports and statements filed by WPG Inc. and WPG L.P. with the SEC. 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, (“NAREIT”), the trade association for real estate investment trusts, and the Board of Trustees for the Arizona State University Foundation, an organization responsible for all aspects of fundraising at Arizona State University, and the Wexner Center for the Arts, a multidisciplinary and international organization affiliated with The Ohio State University and formed for the exploration and advancement of contemporary art. He is an ex officio member of the Board of Trustees of the International Council of Shopping Centers ("ICSC"), the leading industry organization for retail real estate companies, and the Columbus Partnership, a non-profit membership-based organization of chief executive officers from leading businesses and institutions located in Columbus, Ohio. Mr. Glimcher also serves on the Governing Committee of The Columbus Foundation, a philanthropic organization based in Columbus, Ohio, and is a member of the International Council of The Real Estate Roundtable, a non-profit public policy organization that represents the interests of constituents in the real estate industry. He is active in several other charitable and community organizations.
Skills and Qualifications: Mr. Glimcher has substantial executive experience and leadership ability in the retail real estate industry, with strong skills in corporate finance, capital markets, mergers and acquisitions, strategic planning and other public company matters.


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Louis G. Conforti became a director on May 27, 2014. Since December 2013, Mr. Conforti has been Senior Managing Director of Balyasny Asset Management LP, an alternative investment manager firm, and since April 2014, a Principal of Colony Capital LLC, a global real estate investment firm. Mr. Conforti was Global Head of Real Estate for UBS O’Connor, the alternative investment management division of UBS AG, a financial services firm, from October 2008 to November 2013. During that time, he also served as Senior Portfolio Manager of O’Connor Colony Property Strategies, a partnership with Colony Capital LLC. Previously, he was Managing Director and Head of Real Estate Investments at the hedge fund firm of Stark Investments, from January 2005 to October 2008. His predecessor real estate hedge fund, The Greenwood Group, was acquired by Stark Investments in January 2005. Mr. Conforti served as Co‑President and Chief Financial Officer of Prime Group Realty Trust, a publicly traded office and industrial property real estate investment trust, from June 2000 to October 2003, as its Executive Vice‑President‑Capital Markets, from June 1988 to November 1999, and as its Senior Vice President‑Capital Markets, from June 1998 to November 1999. Prior to that, Mr. Conforti worked at the investment banking firms of CIBC World Markets and Alex. Brown & Sons within their real estate investment banking and capital markets divisions.
Skills and Qualifications: Mr. Conforti has substantial real estate industry experience, with strong skills in real estate investments, executive management, corporate finance, capital markets, financial statement and accounting matters and other public company matters.
Robert J. Laikin became a director and was appointed as our Lead Independent Director on May 27, 2014. Mr. Laikin founded BrightPoint, Inc., a wireless device distribution and logistics company (then known as Wholesale Cellular USA, Inc.), in 1989. He served as the Chairman of the Board and Chief Executive Officer of BrightPoint, Inc., a NASDAQ listed company, from April 1994 until its sale in October 2012 to Ingram Micro Inc., a publicly traded wholesale technology distributor and supply-chain management and mobile device lifecycle services company. Mr. Laikin is currently an Executive Advisor to the CEO and Government Relations Executive of Ingram Micro Inc., a position he has held since November 2012. From July 1986 to December 1987, Mr. Laikin was Vice President, and from January 1988 to February 1993, President, of Century Cellular Network, Inc., a company engaged in the retail sale of cellular telephones and accessories.
Skills and Qualifications: Mr. Laikin has an established track record of launching and building successful enterprises, with significant experience in the areas of executive leadership, business strategy and finance, management, global business operations, accounting, corporate governance, public company compliance, political/governmental matters, charitable/philanthropic matters, marketing, risk management, investor, media, and public relations, negotiation and deal structure.
Niles C. Overly became a director on January 15, 2015. Mr. Overly previously served as a Trustee of Glimcher from May 2004 until January 15, 2015. Currently, Mr. Overly serves as Chairman and Chief Executive Officer of Metro Data Center, LLC, a high tier data center located in Dublin, Ohio, and has served in that capacity since 2012. Mr. Overly also serves as Chairman and Chief Executive Officer of BrightCastle Ventures LLC, a private equity and consulting company, and has served in that role since 2007. He also served as Chairman of The Frank Gates Companies/Avizent ("Frank Gates"), which specialize in employee benefit and risk management services, from 2003 to August 2008. Mr. Overly served as Chief Executive Officer of Frank Gates from 1983 to March 2007 and as General Counsel for Frank Gates from 1979 until 1983. Prior to joining Frank Gates, Mr. Overly served as an international tax consultant with Arthur Andersen & Company, and he was also a partner in the law firm of Overly, Spiker, Chappano & Wood, L.P.A. for five years. He currently serves as a member of the Ohio Chamber of Commerce and was formerly Chairman of the organization. He has also been active in the Young Presidents Organization ("YPO"), having served as the Chairman and Education Chair of YPO's Columbus, Ohio Chapter.
Skills and Qualifications: Mr. Overly has general business, risk management, finance and accounting, compliance, legal, audit, compensation, corporate governance and public company experience as well as corporate management experience and skills.
Jacquelyn R. Soffer became a director on May 27, 2014. Ms. Soffer is a Principal for Turnberry Associates, a real estate development and property management company, which she joined in 1989, where she oversees the company's retail, hospitality and office divisions including its landmark Aventura Mall, a super-regional shopping center located in South Florida. Turnberry Associates holds a two-thirds interest in Aventura Mall, with the remaining one-third interest being held by an affiliate of Simon. Ms. Soffer's experience includes her instrumental roles in developing Destin Commons, an open-air lifestyle center in Northwest Florida, which recently opened a 100,000 square foot expansion. Additionally, Ms. Soffer leads the continued enhancement and operations of both the Fontainebleau Miami Beach as well as Turnberry Isle Miami Resort. She is a board member of Fontainebleau Miami Beach and a Founding Member and member of the Board of Trustees of the Institute of Contemporary Art in Miami, Florida.
Skills and Qualifications: Ms. Soffer has extensive executive management experience in the retail, hospitality and office real estate sectors and real estate generally, with strong overall entrepreneurial skills and extensive experience and skills in the areas of real estate development and property management.


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Marvin L. White became a director on May 27, 2014. Since November 2014, Mr. White has served as the President and Chief Executive Officer of The MLW Advisory Group, LLC, a management advisory company targeting the needs of health care and related companies. From September 2008 to March 2014, Mr. White served as System Vice President and Chief Financial Officer of St. Vincent Health, and was responsible for finance, materials management, accounting, patient financial services and managed care for all 19 hospitals and 36 joint ventures. Prior to joining St. Vincent Health, Mr. White served as Executive Director and Chief Financial Officer at Eli Lilly & Company's (“Lilly”) Lilly USA, from 2000 to 2006 where he was a member of the Operations Committee. Mr. White also held leadership positions at Lilly in corporate finance and investment banking in the Corporate Strategy Group, and was the pharmaceutical company's Executive Director and Assistant Treasurer, from 2006 to 2008. Prior to his career in health care, Mr. White was with General Motors in Illinois, from 1981 to 1987, and the Hewlett-Packard Company (n/k/a HP Inc.), an information technology company, in Atlanta, from 1989 to 1993, undertaking various supervisory and financial assignments. In 1993, he joined Motorola, Inc.'s (n/k/a Motorola Solutions, Inc.) Cordless Operation as Operations Controller, and in 1995 he was named Senior Operations Controller for the Japan Cellular Division of this telecommunications company. Mr. White also served as the South Asia Divisional Controller for Motorola's Cellular Sector, and later became the Latin America Divisional Controller for that sector. Mr. White served as the chair of St. Vincent Indianapolis Hospital Board of Directors from 2006 to 2008 and as a member of the Board of Trustees of HealthLease Properties Real Estate Investment Trust, a Canadian-based, senior housing and post-acute health care property real estate investment trust, from November 2013 to November 2014, when it was acquired by HealthCare REIT, Inc. He currently serves on the boards of Emergent BioSolutions Inc., a specialty pharmaceutical company publicly traded on the NYSE (since June 2010), CoLucid Pharmaceuticals, Inc., a NASDAQ listed Phase 3 clinical-stage biopharmaceutical company (since July 2015), and One American Financial Partners, Inc., a financial services company (since August 2014). Additionally, he is a past member of the Arts Council of Indianapolis and the Investment Committee of Lynxx Capital Corporation, an investment management firm
Skills and Qualifications: Mr. White has extensive chief financial officer experience in the health care industry, with strong skills in hospital accounting, general finance/accounting, financial statement matters, risk management, corporate governance, general management, audit/compliance, charitable/philanthropic matters, general business, and public company matters. He also previously served as the Chair of the Audit Committee of another public company.
Gregory A. Gorospe serves as Executive Vice President, General Counsel, and Secretary and has held this position since joining the Company in October 2015. Mr. Gorospe oversees all legal, compliance, and governance matters for the Company. Prior to joining the Company, Mr. Gorospe was with the law firm of Jones Day from 1995 to 2015 and as a partner at Jones Day from 2003 until his departure. He practiced in the areas of real estate, finance, capital markets, and commercial real estate development. He is a member of ICSC, the Ohio State Bar Association, and the Columbus (Ohio) Bar Association, and sits on the boards of the Asian-Pacific American Bar Association-Columbus and Buckeye Leadership Fellows, a student leadership development program fostered by alumni of The Ohio State University to empower students to acquire real world life and leadership skills.
Melissa A. Indest became our Senior Vice President, Finance and Chief Accounting Officer on January 15, 2015. She had served as Glimcher’s Chief Accounting Officer and Senior Vice President, Finance since January 2014. In this capacity, she oversaw all operations of Glimcher’s accounting and finance departments as well as investor relations and corporate communications. Previously, Ms. Indest served as a Senior Vice President, Finance and Accounting at Glimcher from June 2010 to January 2014, where she was responsible for the day‑to‑day operations of the accounting department, including external financial reporting, tax reporting, lease accounting, credit and investor relations. Ms. Indest also held the role of Vice President, Finance and Accounting from 2007 to June 2010. She originally joined Glimcher in 2003 as Vice President and Controller. Prior to joining Glimcher, Ms. Indest served in various accounting and operational roles with Corporate Express of Cincinnati, Ohio, an office supply company, where she most recently held the title of President, Central Midwest Division. In addition to her prior experience as Glimcher’s Controller, Ms. Indest has extensive background in finance, audit, budget and operational processes and procedures. Ms. Indest began her career with PricewaterhouseCoopers LLP and serves as Vice Chairperson and Treasurer on the Board of Directors for Lifeline of Ohio Organ Procurement, Inc., a nonprofit organization.
Keric M. “Butch” Knerr became our Executive Vice President and Chief Operating Officer in September 2014. Mr. Knerr joined our company from Simon where he served as Executive Vice President of Leasing from March 2009 to September 2014, as well as several other roles of increasing responsibility at Simon and its predecessor from July 1988 through March 2009. As Simon’s Executive Vice President of Leasing, Mr. Knerr was responsible for overseeing Simon’s leasing activities for approximately 55 properties, as well as for overseeing leasing activities on new center developments, mall expansions and redevelopments. Mr. Knerr is a member of ICSC.


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Mark E. Yale became our Executive Vice President and Chief Financial Officer on January 15, 2015. He had been Executive Vice President of Glimcher since May 2006, its Chief Financial Officer since August 2004 and its Treasurer since May 2005. In these roles, he was responsible for Glimcher’s financial reporting, accounting, treasury, budgeting, information technology, and investor relations functions. Mr. Yale served as Senior Vice President of Glimcher from August 2004 to May 2006. He served as Manager of Finance and Chief Financial Officer at Storage USA, Inc. (“Storage”), a division of GE Real Estate, from 2002 through 2004. Prior to that, Mr. Yale served as Senior Vice President for Financial Reporting at Storage, a then publicly traded storage real estate investment trust, from July 1999 to June 2002 and as Vice President for Financial Reporting from August 1998 to June 1999. Prior to the acquisition of Storage by GE Real Estate in 2002, Mr. Yale successfully managed Storage’s financial and accounting functions. He also served as Senior Audit Manager of PricewaterhouseCoopers LLP from January 1994 to July 1998.
Family Relationships
As of the date of this Amendment, there are no familial relationships between any of our directors and Senior Executives.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our Senior Executives and directors, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC reports of ownership of our securities and changes in reported ownership. Officers, directors and greater than 10% shareholders are required by SEC rules to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of the reports furnished to us, or written representations from reporting persons that all reportable transactions were reported, we believe that except for one Form 4 filing reporting an equity award from WPG to Mr. Niles C. Overly, a WPG external director, all Section 16 filing requirements for WPG’s remaining directors and Senior Executives (including any former Senior Executives and directors who served during 2015) were complied with on a timely basis during our fiscal year ended December 31, 2015.
Governance Principles
The Board has adopted a set of Governance Principles to assist it in guiding our corporate governance practices. The Governance Principles are from time-to-time re‑evaluated by the Governance and Nominating Committee in light of changing circumstances in order to continue serving our best interests and the best interests of our shareholders. Our Governance Principles are available on the Corporate Governance page of the Investors section of our website at www.wpglimcher.com.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics, which we refer to as the code of conduct that requires all business activities to be conducted in compliance with laws, regulations and ethical principles and values. All of our directors, officers and employees are required to read, understand and abide by the requirements of the code of conduct.
The code of conduct is accessible on the Corporate Governance page of the Investors section of our website at www.wpglimcher.com. Any amendment to, or waiver from, a provision of the code of conduct may be granted only by an employee’s immediate supervisor and only after advance notice to, and consultation with, the General Counsel, or in those instances required by the code of conduct, the Chief Executive Officer. Waivers involving any of our executive officers or directors may be made only by the Audit Committee, and all waivers granted to executive officers and directors will be disclosed to our shareholders as required under applicable law and regulations. Our General Counsel, who is responsible for overseeing, administering, and monitoring the code of conduct, reports to the Chief Executive Officer with respect to all matters relating to the code of conduct.
Procedures by Which Shareholders May Recommend Nominees For Director
WPG last disclosed the procedures and process by which shareholders may recommend nominees for director in its proxy statement for its 2014 annual meeting of shareholders and since that filing there have been no material changes to these procedures or processes.
Audit Committee
The Board has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee assists the Board in monitoring the integrity of our financial statements, the qualifications, independence and performance of our independent registered public accounting firm, the performance of our internal audit function and our compliance with legal and regulatory requirements. The charter of the Audit Committee is available on the Corporate


8


Governance page of the Investors section of our website at www.wpglimcher.com, or by requesting a copy, in print, without charge by contacting our Secretary at 180 East Broad Street, Columbus, Ohio 43215. As of the date of this Amendment, the Audit Committee is comprised of Messrs. Conforti (Chairman), Overly, and White. The Board has determined that each of Messrs. Conforti, Overly and White is financially literate under NYSE rules and that Mr. White qualifies as an “audit committee financial expert” as defined by SEC rules.

Item 11.    Executive Compensation
Compensation Discussion and Analysis
Overview
The year 2015 was a transformative year for our company which was reflected in nearly every aspect of our business and operations. We completed the Merger on January 15, 2015 (the “Merger Closing Date”) which increased the size of our company with respect to properties owned and operated, personnel, and our national footprint. Our management team also evolved in connection with the Merger as well as throughout 2015. From an executive compensation perspective the components of our program generally remained the same from 2014, except that we adopted a formal plan for our bonus compensation and incorporated corporate performance objectives into both our equity incentive compensation and bonus compensation that compliment the individual performance objectives used to determine equity and bonus compensation. In connection with the Merger, inducement equity awards and special performance equity awards were used to incentivize the management team from Glimcher to join the new combined company. The inducement awards vest on the passage of time. The special performance equity awards are market-based, with shares earned based on total shareholder return (“TSR”), subject to additional time-based vesting. We also continued our practice of having annual equity-based awards and maintained the use of long-term incentive plan units (“LTIP Units”) as our currency.
As referenced above, our management team evolved throughout 2015. In connection with the consummation of the Merger, our pre-merger Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) assumed new roles within our company and the Glimcher CEO and CFO assumed those roles in the new post-merger combined company. Our pre-merger CEO became our Executive Chairman at the Merger Closing Date and eventually by the end of 2015 transitioned to the role of non-executive Chairman of the Board. Compensation disclosure is also provided in this section for our current Chief Operating Officer and also our Chief Accounting Officer. We will also discuss in this Compensation Discussion and Analysis (“CD&A”), the compensation of two other executive officers who were with our company pre-merger or joined shortly thereafter, but separated at the end of 2015 as well as another Glimcher executive officer who joined us as a result of the Merger as our Executive Vice President, Director of Leasing. Unless otherwise indicated, we will refer to the persons listed in the compensation tables that follow this CD&A as the “Named Executives” on a collective basis or individually as a “Named Executive.”
This CD&A describes our executive compensation philosophy, objectives and policies for 2015 on a general basis and as applied to the Named Executives. We first highlight some of our business and operational accomplishments in 2015 for which we will discuss in this CD&A the awards and compensation for such accomplishments. We then describe the objectives of our compensation program for the Named Executives as well as executive compensation generally, and provide an overview of what our executive compensation program is designed to reward and recognize. Following this discussion, we will review the elements of our executive compensation program and the relationship of each element to our compensation objectives. As we discuss each element of compensation and our reasons for choosing to pay the particular element, we will also discuss:

(i)how we generally determined the payment amount for the particular element of compensation;

(ii)how our decision regarding that element fits into one or more of our overall objectives for our executive compensation program; and

(iii)how decisions about the particular element of compensation affects, if at all, our decisions regarding other compensation elements.
We conclude our discussion with a brief overview of our stock ownership guidelines and restrictions, tax and accounting implications of our executive compensation program, and a discussion of the impact or influence on our compensation philosophy and programs of previous shareholder voting results on executive compensation. Unless otherwise stated, references in this section to data in the Summary Compensation Table are only with respect to the year 2015.


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2015 Business Highlights
In addition to completing the Merger, we realized a number of other financial and non‑financial achievements in 2015, including:
†Completion in June 2015 of a joint venture with O’Connor Capital Partners (“O’Connor”) which involved five of the Company’s properties and resulted in $430 million of net proceeds and approximately $800 million in consolidated debt reduction.
†Repayment in June 2015 of the $1.2 billion bridge loan (the “Bridge Loan”) that was part of the Merger financing package.
†Completion of over $800 million in multi-year unsecured financings.
†Completion of an inaugural $250 million bond offering.
†Solidified plan in November 2015 to transition the properties managed by Simon at the Merger Closing Date onto the Company’s operational platform by May 2016.
†Achieved at 2015 year-end net debt to EBITDA ratio of approximately 7.0x.
†Consolidated by the end of 2015 the Company’s leadership teams in Columbus, Ohio and Indianapolis, Indiana and hired all key senior leadership positions.
†Redeemed in April 2015 all of the outstanding 8.125% Series G Cumulative Redeemable Preferred Shares of Beneficial Interest.
Objectives of Our Executive Compensation Program
The goal of our executive compensation program is to provide compensation that is equitable to both the executive officer and our company and is competitive with compensation provided to similarly-situated executives at peer real estate investment trusts (“REITs”). Throughout 2015, although no formal market benchmarking was done with respect to our 2015 executive compensation, the Compensation Committee’s decision-making and planning with respect to the Company’s executive compensation was guided by the following objectives:
†to pay for performance based upon financial results of our company, the performance of our shares over time, and the executive’s leadership and contributions to our company;
†to provide incentives to focus performance on both near‑term and long‑term goals of our company;
†to attract and retain senior executive officers who are important to the success of our company by awarding compensation that is tied to continued long‑term employment; and
†to encourage executive ownership of our Common Shares over the course of their employment, aligning executive interests with those of our shareholders.
Although the Compensation Committee’s decisions were guided by the aforementioned objectives in making its decisions during 2015 regarding our executive compensation, the Compensation Committee neither weighted nor ranked these objectives with any particular importance when making these decisions.
What Our Executive Compensation Program is Designed to Reward
Our executive compensation program is designed to reward the operating performance of our company and the individual performance of our executive management team members.
(i)    Company Operating Performance
Our company is a REIT that primarily owns, leases, acquires, develops, and operates shopping malls and community shopping centers. In order to maintain WPG’s REIT status, we must distribute at least 90% of our ordinary taxable income to WPG’s shareholders. We use Funds From Operations, or FFO, as a supplemental metric to net income to measure our operating performance. FFO is the commonly accepted and recognized measure of operating performance for REITs by the real estate industry. FFO is defined by NAREIT, as net income (or loss) computed in accordance with generally accepted accountingGAAP:

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principles, or GAAP, excluding real estate related depreciation and amortization, amortization;
excluding gains and losses from extraordinary items and cumulative effects of accounting changes, changes;
excluding gains and losses from the salesales or disposaldisposals of previously depreciated retail operating properties, properties;
excluding gains and losses upon acquisition of controlling interests in properties;
excluding impairment charges of depreciable real estate, estate;
plus the allocable portion of FFO of unconsolidated entities accounted for under the equity method of accounting based upon economic ownership interest.
We believe that per share growthinclude in FFO is an important factor in enhancing shareholder value. Therefore, a componentgains and losses realized from the sale of our executive compensation program is designed to reward achievementland, marketable and non-marketable securities, and investment holdings of our company’s year-end FFO goals. Although FFO is partly influenced by market forces that are beyond our control, we feelnon-retail real estate.
You should understand that our Senior Executives, including the Named Executives, have the greatest opportunitycomputation of these non-GAAP measures might not be comparable to influence performance in this area. Therefore, we base a large portion of their total cash compensation on an evaluation of WPG’s annual FFO results. FFO doessimilar measures reported by other REITs and that these non-GAAP measures:
do not represent cash flow from our operating activities in accordance with GAAP and our FFO may not be directly comparable to similarly titled measures reportedoperations as defined by other REITs. Moreover, FFO GAAP;
should not be considered as an alternativealternatives to net income (determineddetermined in accordance with GAAP), as an indication of our financial performance,GAAP as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. Our executive bonus plan uses FFO performance targets to determine a portion of each Named Executive’s annual bonus. As we will discuss in greater detail in the section below captioned 2015 Annual Incentive Cash Bonus Plan, fifty percent (50%) of a Named Executive’s total target bonus opportunity under the Executive Bonus Plan is used to determine the portion of the bonus based upon an evaluation of WPG’s annual FFO results on a per diluted common share (the “Common Shares” or “Common Stock”) as adjusted basis. We calculate WPG’s reported FFO (with adjustment for non-recurring items such as Merger-related expenses) per Common Share for reporting purposes by dividing WPG’s FFO by the weighted average number of diluted Common Shares outstanding for the fiscal year which WPG’s per Common Share FFO is being determined. We also use TSR as an additional metric to measure corporate performance in connection with determining executive compensation as explained in greater detail below under the section captioned Equity Compensation.
Some other factors that we use to measure our operating performance include occupancy levels at our core properties, comparable net operating income growth at our core properties, property salesperformance; and acquisitions, initiation or completion of development or redevelopment projects, managing our leverage or indebtedness, and completed joint venture or partnering initiatives. These factors are generally used for individual goals or objectives because the completion of goals or objectives of this nature are generally heavily influenced by the actions of a particular Senior Executive, department, or functional area within our company.
(ii)Company Strategic Performance
Our Company’s strategic performance is rewarded through our annual cash bonus and our annual equity awards based upon the Compensation Committee’s assessment of the Company’s performance compared to our corporate strategic objectives (the “Strategic Objectives”). The strategic objectives are reviewed and approved annually by the Compensation Committee at the time the annual cash bonus plan and annual equity awards are approved, typically in the first fiscal quarter of the performance period. For 2015, our Strategic Objectives were the following:
A.
Progress towards moving off theSimon platform no later than May 2016;
B.Consummation of the Company’s joint venture transaction with O’Connor;
C.Successful refinancing of the Bridge Loan;
D.Achieving a specified net debt-to-equity ratio;
E.Building a solid organizational structure; and
F.Analysis, evaluation and initiation of growth opportunities.
The Company believes achievement of strategic objectives are critical to long-term value creation and as such, are critical to aligning the interests of executives with our shareholders, and with the long-term success of the organization.
(iii)    Individual Performance
Our executive compensation program also rewards individual performance. Individual performance is rewarded through base salary and performance-based or variable compensation. Through base salary, the specific skill set and managerial abilities of an executive are rewarded. With respect to performance-based or variable compensation, individual performance is evaluated and rewarded based primarily upon an assessment of the executive’s achievement of predetermined individual objectives that

11



are linkednot alternatives to our overall corporate goals. Generally, individual objectives of the executives differ for each officer and are established prior to or near the beginning of the evaluation year in connection with the adoption of the executive bonus plan for that year. For the 2015 performance year, except for Messrs Ordan and Glimcher, each of the Named Executives had five (5) individual objectives. Messrs. Ordan and Glimcher each had eight (8) individual objectives. Bonus awards for individual performance were granted under the Company’s 2015 executive bonus plan.
(iv)    Company Market Performance
Through our equity compensation awards, our executive compensation program rewards TSR. TSR is used to ensure alignment of executive interests with those of our shareholders. Pursuant to our special performance equity awards made both after the Merger, and for some Named Executives, prior to the Merger in 2014, relative (compared to an index of REITs) and absolute TSR is measured in determining the number of LTIP Units earned over the respective performance period. The Company believes that over time, TSR provides the most appropriatecash flows as a measure of shareholder success and as such, is a critical tool in our pay-for-performance program.
Executive Employment Arrangements & the Elements of Compensation Within Our Executive Compensation Program
In addition to our formal compensation and benefit plans which are an important component of our executive compensation program, the primary elements of our program – salary, equity compensation, bonus/incentive compensation, and severance/change in control arrangements – are governed by the employment agreements or other arrangements we currently have with Named Executives still employed with us or had with certain Named Executives whose employment was terminated at the end of 2015 or shortly thereafter.
This CD&A and the tables that follow will describe compensation arrangements under employment agreements we have with Messrs. Michael P. Glimcher, our Vice Chairman and Chief Executive Officer, Mark E. Yale, the Executive Vice President and Chief Financial Officer of the Company, and Keric M. “Butch” Knerr, the Company’s Executive Vice President and Chief Operating Officer, and conditional offer letters of employment executed by Mr. Thomas J. Drought, Jr., our Executive Vice President, Director of Leasing, and Ms. Melissa A. Indest, the Company’s Senior Vice President, Finance and Chief Accounting Officer. Also, the now terminated employment agreements with former executives Mr. C. Marc Richards, the Company’s former Chief Financial Officer and former Executive Vice President and Chief Administrative Officer, and Ms. Farinaz S. Tehrani, the former Executive Vice President, Legal and Compliance, governed the compensation each received during 2015. Mr. Mark S. Ordan, our current Chairman of the Board and the former Chief Executive Officer and Executive Chairman, had an employment agreement with us until his employment termination date of December 31, 2015 after which the Consulting Agreement became effective on January 1, 2016. Lastly, Mr. Michael Gaffney, our former Executive Vice President, Head of Capital Markets, also had an employment agreement with us that terminated in connection with his termination on December 31, 2015 and he also entered into a Transition and Consulting Agreement with the Company which became effective January 1, 2016.

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liquidity.

The employment agreements for Messrs. Glimcher and Yale were separately entered into priorfollowing schedule reconciles total FFO to the Merger Closing Date in the fall of 2014 to recruit and retain the services of Messrs. Glimcher and Yale following the Merger Closing Date. Each agreement was ratified by the compensation committee of the Company’s predecessor board of directors and became effective on the Merger Closing Date. Mr. Glimcher’s agreement is for an initial term of five years and Mr. Yale’s agreement has an initial term of three years. Each agreement has automatic one year renewals at the end of the initial term and each year thereafter unless at least 120 days, in the case of Mr. Glimcher, or 30 days, in the case of Mr. Yale, prior to the renewal date either party to the respective agreement gives written notice to the other of non-renewal. Each agreement, as will be further explained later in this CD&A, sets forth their title, duties, reporting structure and provides for an annual salary, bonus compensation opportunity, long-term equity compensation opportunity, severance/termination compensation, and eligibility for benefits. Mr. Glimcher’s employment agreement was amended in 2015 in connection with Mr. Ordan’s transition from Executive Chairman to non-executive Chairman, to change the reporting structure, but no changes to compensation were made at that time. With respect to Mr. Knerr, his employment agreement was executed in September 2014 in connection with his election as Executive Vice President and Chief Operating Officer. Mr. Knerr’s agreement has a three year term with automatic one year renewals at the end of the initial term and each year thereafter unless at least 30 days prior to the renewal date either party to the agreement gives written notice to the other of non-renewal. Similar to Messrs. Glimcher and Yale’s agreements, Mr. Knerr’s agreement sets forth his title, duties, reporting structure and provides for an annual base salary rate, target bonus opportunity, makes Mr. Knerr eligible to participate in the Company’s long-term equity compensation program, and establishes payments payable upon separation or a change in control.
With respect to Mr. Drought and Ms. Indest, each has a conditional offer letter of employment from WPG, each dated as of January 9, 2015 (each an “Offer Letter” or the “Offer Letters”), and which became effective on the Merger Closing Date. The letters establish at-will employment between WPG and Ms. Indest and Mr. Drought. Similar to the employment agreements discussed above, the letters for both Ms. Indest and Mr. Drought, establish their respective titles and duties, reporting structure, set an annual base salary rate, bonus compensation, long-term equity compensation, benefits, inducement equity awards granted upon closing of the Merger, and severance compensation.
Similar to Mr. Knerr, Mr. Richards and Ms. Tehrani each had employment agreements with three year terms that operated in much the same way as the employment agreement discussed above for Mr. Knerr. Each agreement terminated in connection with their respective terminations at the end of 2015, although each agreement afforded the respective employee a separation payment in the event of a not for cause termination of employment, as defined in the agreements. In Ms. Tehrani’s case, her separation payment was equal to her annual salary in effect immediately prior to the termination date and, for Mr. Richards, his separation payment was equal to two times the sum of his annual salary in effect immediately prior to the termination date plus his target bonus opportunitynet income for the year in which the termination occurred or if no bonus plan has been adopted for the year in which the termination occurs then such target bonus opportunity in effect for WPG’s most recently completed fiscal year.
Like the other Named Executives, the employment agreements for Messrs. Ordanyears ended December 31, 2018, 2017 and Gaffney set their base salary rate2016 (in thousands, except share/unit and bonus opportunity for 2015. Both Messrs. Ordan and Gaffney entered into post-employment consulting arrangements with the Company after their respective employment terminated at the end of 2015. Generally, the compensation for fiscal year 2015 discussed in this section and reported in the tables that follow was provided pursuant to the terms of Messrs. Ordan and Gaffney’s employment agreements. However, for Mr. Ordan, the Consulting Agreement governed (i) the conditions under which he would remain eligible to receive a bonus award for 2015 performance, (ii) the vesting of his inducement equity awards received in 2014 pursuant to his employment agreement, and (iii) his equity award payout for our 2015 long-term compensation awards. Mr. Gaffney’s employment agreement and equity award agreement provided for his severance benefits upon his termination, namely a separation payment equal to his annual salary in effect on the date immediately preceding his termination date and the acceleration of vesting for his unvested equity incentive compensation awards.
As stated above, the employment agreements and other arrangements we had with the Named Executives during 2015 set the key elements of our executive compensation program that will be discussed in this section. Although not explicitly stated in each agreement or arrangement, generally, these elements are designed to achieve our three most important compensation objectives:
†rewarding executives based on financial performance;
†aligning the interests of executives and shareholders; and
†attracting and retaining qualified, experienced executives.

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The table below indicates how each element of our 2015 compensation for the Named Executives is intended to achieve each of the aforementioned objectives.per share/unit amounts):
Element of 2015
Compensation		Rewarding
Performance		Aligning
Interests		Attracting
and
Retaining		Comments/Summary
Base Salary
XSet by terms of employment agreement or Offer Letter and may be adjusted by Compensation Committee in its management of executive salary levels. Salaries of Named Executive remained unchanged in 2015 after the Merger Closing Date.
Annual Cash Bonus
XXCash bonus award for 2015 made pursuant to plan in which corporate and individual performance determine payout relative to target award/payment. Generally, eligibility and target award size determined by employment agreement or Offer Letter. Terms of plan permit Compensation Committee to exercise some element of discretion in determining bonus payout.
Inducement Equity AwardsXX
Inducement equity awards made in 2015 are one‑time awards that represent a portion of the financial commitment used to recruit and retain certain Named Executives following the Merger, as set forth in their employment agreements. The awards feature time‑based vesting over four years, thereby aligning the interests of the particular Named Executives with Company shareholders and creating an immediate retention incentive.

Special Performance-Based Equity AwardsXXX
Special performance‑based equity awards represent a portion of the financial commitment we made to certain Named Executives during 2015 following the Merger. Terms of recipients’ employment agreements determined award size. These awards have a performance‑based absolute and relative TSR vesting conditions over three overlapping performance periods which immediately created a long-term financial interest in the Company which is only realized through TSR performance.

Annual Long-Term Incentive Equity AwardsXXX
Our annual long-term incentive equity awards are a key part of our competitive annual compensation package for executives. The annual awards provide an opportunity for executives to earn equity based on WPG’s relative TSR performance and through achievement of key strategic objectives that ultimately support long-term value creation. The intent is for the awards to align the interests of recipients with value creation and share ownership.

Termination Payments and Change in Control BenefitsXXProvide protection against a termination of employment outside of the executive’s control and to serve as a financial bridge between employment. Change in control benefits mitigate Company risk in the event of a potential transaction that may directly impact an executive’s employment. These financial protections allow executives to focus on the transaction and further align executives’ interests with those of shareholders. Legacy arrangements from Glimcher were amended for certain Named Executives to provide benefits not included in the employment agreements or Offer Letters.
Perquisites and Other Benefits
XExecutive officers are entitled to participate in our 401(k) retirement plan, medical insurance plan, disability plans and other benefits on the same basis as other salaried employees. As with other salaried employees, these benefits are provided as part of pay package, to improve employee health and well‑being and to comply with government regulations. Oversight of the Compensation Committee is also provided, as applicable.


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2015 Salary Compensation
The 2015 base salaries for our Named Executives in all cases were set either pursuant to the Named Executive’s employment agreement with the Company or Offer Letter. Amendments executed in fiscal year 2014 to the employment agreements for Messrs. Ordan and Richards became effective on the Merger Closing Date and, among other things, changed their salaries to reflect the new positions each assumed in our Company on the Merger Closing Date. The base salaries for the Named Executives as of the end of 2015 are listed below along with the portion of the base salary each Named Executive received during 2015 (all amounts are rounded to the nearest dollar).

Named Executives
2015
Annual
Base
Salary
 
2015
Base
Salary
Earned
Mr. Michael P. Glimcher$825,000 $828,690
Mr. Mark E. Yale$500,000 $500,000
Mr. Keric M. “Butch” Knerr$495,000 $494,998
Mr. Thomas J. Drought, Jr.$425,000 $424,050
Ms. Melissa A. Indest$285,000 $282,442
Transitioning & Former Executives  
Mr. Mark S. Ordan$825,000 $825,000
Mr. C. Marc Richards$450,000 $450,000
Ms. Farinaz S. Tehrani$375,000 $343,269
Mr. Michael Gaffney$350,000 $342,308

The salaries earned for 2015 by some of the Named Executives reflect a pro‑rated portion of their annual base salaries based upon the person’s period of employment with us following the Merger Closing Date. Salary amounts also include salary compensation received during the fourteen days of 2015 preceding the Merger Closing Date.
The Compensation Committee may review annual base salaries each year and modify them from time to time to address market comparability, change in responsibilities, or intracompany pay equity concerns. During fiscal year 2015, our current Chief Executive Officer and former Executive Chairman each had, respectively, the highest salary compensation amongst the Named Executives because of their management and oversight responsibilities. These differences in compensation are also reflected in our bonus, equity incentive opportunities, and change in control arrangements for the same reasons.The amount of a Named Executive’s 2015 annual base salary was not affected or influenced by the amount of any other compensation element within our executive compensation program. However, annual paid or earned salary is a variable used in the formula to determine Named Executives’ annual performance bonus target and the initial cash value of Named Executives’ annual awards of LTIP Units. Annual base salary is a variable in the formula to determine parts of certain Named Executive’s particular severance or change in control payout under our executive severance arrangements. Salaries earned by the Named Executives for fiscal year 2015 are reflected in column (c) of the Summary Compensation Table and account forapproximately12% to 26% of a Named Executive’s total annual compensation reported in the Summary Compensation Table.
2015 Annual Incentive Cash Bonus Plan
The annual cash bonuses for our Senior Executives, including the Named Executives, are designed to further our executive compensation objectives of providing performance-based compensation by motivating the Senior Executives to achieve our company’s corporate goals and objectives and rewarding such achievement. Like our annual bonus awards for fiscal year 2014, the annual cash bonuses for fiscal year 2015 performance are cash payments awarded during our first fiscal quarter following the end of the respective performance year. The amount of the 2015 bonus payment for our Senior Executives, including the Named Executives, is for performance during 2015, determined based upon the terms and conditions of the 2015 WPG Executive Bonus Plan (the “2015 Plan”). The 2015 Plan is the only compensation plan from which the Named Executives can receive cash incentive compensation for performance during 2015. The Compensation Committee approved the participants for the 2015 Plan as well as the terms and conditions of the 2015 Plan. Actual award payouts under the 2015 Plan vary amongst the plan participants, including the Named Executives, and are ultimately approved by the Compensation Committee.

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  For the Year Ended December 31,
  2018 2017 2016
Net income $108,655
 $231,593
 $77,416
Less: Preferred dividends and distributions on preferred operating partnership units (14,272) (14,272) (14,272)
Adjustments to Arrive at FFO:      
Real estate depreciation and amortization, including joint venture impact 295,900
 292,748
 311,038
(Gain) loss on disposition of interests in properties, net including impairment loss (3,353) (57,846) 24,066
Net income attributable to noncontrolling interest holders in properties (76) (68) (10)
Noncontrolling interests portion of depreciation and amortization (35) (27) (147)
FFO of the Operating Partnership (1) 386,819
 452,128
 398,091
FFO allocable to limited partners 60,062
 70,837
 61,865
FFO allocable to common shareholders/unitholders $326,757
 $381,291
 $336,226
       
Diluted earnings per share/unit $0.42
 $0.98
 $0.29
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 1.33
 1.32
 1.41
(Gain) loss on disposition of interests in properties, net including impairment loss (0.02) (0.26) 0.10
Diluted FFO per share/unit $1.73
 $2.04
 $1.80
       
Weighted average shares outstanding - basic 187,696,339
 186,829,385
 185,633,582
Weighted average limited partnership units outstanding 34,703,770
 34,808,890
 34,304,109
Weighted average additional dilutive securities outstanding 603,674
 337,508
 803,805
Weighted average shares/units outstanding - diluted 223,003,783
 221,975,783
 220,741,496

(i)(1)The StructureFFO of the 2015 Plan
The 2015 Plan is funded if a specified threshold level of FFO per diluted Common Share, as adjusted and more fully described below, is achieved by WPGoperating partnership decreased $65.3 million for fiscal year 2015. The payment of actual bonus awards under the 2015 Plan is based on an assessment of the achievement of the performance goals as described in this section. If actual FFO per diluted Common Share, as adjusted, is below the threshold level, the 2015 Plan is not funded and no bonuses are paid to any 2015 Plan participants including the Named Executives.
The respective employment agreements and Offer Letters for each Named Executive require each to be eligible for an annual bonus with a target bonus award opportunity at a certain percentage or within a range of percentages (“Target Bonus Multiplier”) of either the respective Named Executive’s annualized base salary or base salary which under the 2015 Plan is construed to mean actual paid base salary. The Target Bonus Multiplier for the Named Executives ranges from 75% to 200% of actual paid base salary. Additionally, for our Chief Executive Officer, the actual bonus awarded to him under the 2015 Plan cannot exceed 300% of his actual base salary earnings for fiscal year 2015. Under the 2015 Plan, the target bonus award opportunity for each participant is the sum of bonus targets for: (A) our year-end FFO per diluted Common Share performance, (B) the Company’s performance on the Strategic Objectives, and (C) achievement on individual goals (the “Individual Objectives”). The 2015 Plan is structured in this manner so that we may reward both individual achievement and corporate achievement in furtherance of our compensation objective to provide performance-based compensation and reward the type of achievement that our executive compensation program is designed to reward. An individual’s actual bonus payment is the sum of three components: (1) the portion of the payment based on the review and evaluation of our Company’s year-end FFO performance (the “FFO Component”), (2) the portion of the payment based on the 2015 Plan participant’s overall achievement of the person’s Individual’s Objectives (the “Individual Objectives Component”), and (3) the portion of the payment based on the Company’s achievement on Strategic Objectives (the “Strategic Objectives Component”).
Under the terms of the 2015 Plan, the fiscal impact, whether positive or negative, of certain unanticipated or unplanned factors or events not contemplated in the Company’s fiscal year 2015 consolidated corporate budget shall be excluded from the calculation of WPG’s year-end FFO per diluted Common Share metric used to determine payout amounts for FFO performance under the 2015 Plan. Specifically, for purposes of the 2015 Plan, FFO per diluted Common Share was adjusted to exclude Merger and/or transaction related costs. Other categories of factors enumerated under the 2015 Plan the impact of which may be excluded or disregarded in determining the Company’s 2015 fiscal year end FFO per diluted Common Share include: (A) non-cash asset write downs or impairments and (B) the financial impact of charges and expenditures associated with the early extinguishment of debt and the discontinuation of certain transactions or pre-development and development projects. The terms of the 2015 Plan authorize the Compensation Committee to use its discretion to reject any of the aforementioned adjustments described above in approving the final payout amount for the FFO Component of the bonus payment. The terms of the 2015 Plan also empower the Compensation Committee to use its discretion to make any other adjustments they believe are appropriate in approving the final bonus payout amount for the Company’s 2015 FFO performance.
In determining the FFO Component, Individual Objectives Component, and Strategic Objectives Component that comprise a 2015 Plan participant’s bonus payment, the following bonus targets must initially be determined: (A) Target Bonus Payout Amount, (B) FFO Target Amount, (C) Individual Objectives Target Amount, and (D) Strategic Objectives Target Amount. A Named Executive’s Target Bonus Payout Amount is a stated percentage of their actual base salary earnings paid during fiscal year 2015. The Named Executive’s FFO Target Amount is 50% of the person’s respective Target Bonus Payout Amount, the Individual Objectives Target Amount is 25% of the Target Bonus Payout Amount, and the Strategic Objectives Target Amount is 25% of the Target Bonus Payout Amount. The Compensation Committee structured the 2015 Plan in this manner in order to make the majority of a Named Executive’s bonus award opportunity impacted by WPG’s overall FFO performance and corporate achievement of strategic goals. Additionally, the structure of the 2015 Plan is similar to the bonus plan for Glimcher and is a by-product of our Merger integration efforts. The Target Bonus Payout Amount, FFO Target Amount, Individual Objectives Target Amount, and Strategic Objectives Target Amount do not represent bonus payment amounts under the 2015 Plan, but instead represent targets used in calculating the actual bonus payment amount for 2015 Plan participants, including each Named Executive, depending upon the level of individual and corporate achievement. As part of the various assessments and evaluations performed in connection with determining an annual bonus payment for a 2015 Plan participant, the Compensation Committee may determine that no payment is earned for the Individual Component, FFO Component, or Strategic Objectives Component of the actual bonus award.

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The Target Bonus Payout Amount, FFO Target Amount, Individual Objectives Target Amount, and Strategic Objectives Target Amount for each of the Named Executives under the 2015 Plan are listed in the table below (amounts are rounded to the nearest dollar):
Named
Executive
Target Bonus Payout Amount
(Target Bonus Multiplier of actual salary earnings)
FFO
Target Amount
(50% of Target Bonus Payout Amount)
Individual Objectives
Target Amount
(25% of Target Bonus Payout Amount)
Strategic Objectives
Target Amount
(25% of Target Bonus Payout Amount)
Mr. Glimcher$1,657,380 (200% of actual base salary earnings)$828,690$414,345$414,345
Mr. Yale$625,000 (125% of actual base salary earnings)$312,500$156,250$156,250
Mr. Knerr$866,247 (175% of actual base salary earnings)$433,123$216,562$216,562
Mr. Drought$424,050 (100% of actual base salary earnings)$212,025$106,012$106,013
Ms. Indest$211,832 (75% of actual base salary earnings)$105,916$52,958$ 52,958
Mr. Ordan$1,650,000 (200% of actual base salary earnings)$825,000$412,500$412,500
Mr. Richards$675,000 (150% of actual base salary earnings)$337,500$168,750$168,750
Ms. Tehrani$386,178 (112.5% of actual base salary earnings)$193,089$96,544$ 96,544
Mr. Gaffney$342,308 (100% of actual base salary earnings)$171,154$85,577$ 85,577
The 2015 Plan requires that in order for participants to receive a bonus payment, the participant must be actively employed with the Company (or any affiliate) on the date the bonus payment is approved by the Compensation Committee. The 2015 Plan by its terms authorizes the Compensation Committee to exercise its discretion with respect to bonus payments to 2015 Plan participants in the event of such person’s death, disability, or other intervening circumstance that arises prior to the aforementioned approval date. The Compensation Committee exercised such discretion in approving bonus payments under the 2015 Plan at the Target Bonus Payout Amount shown above for Ms. Tehrani and Messrs. Gaffney and Richards each of whom were terminated prior to the Compensation Committee approving bonuses under the 2015 Plan. The Compensation Committee reasoned that each was a participant in the 2015 Plan since its adoption, employed with the Company at or until the end of the performance year and contributed, through their respective individual efforts, to the Company achieving its year-end goals and objectives. In the remaining discussion on the annual bonus in this section, unless otherwise indicated, all references to the “Named Executives” will exclude Ms. Tehrani and Messrs. Gaffney and Richards.
(ii)Determining the Amountyear ended December 31, 2018 when compared to the year ended December 31, 2017. During the year ended December 31, 2018, we received $8.0 million less in FFO related to properties that were disposed of during the period January 1, 2017 through December 31, 2018. We also received $6.9 million less in FFO from properties that are now held as joint ventures. The majority of this variance can be attributed to properties that were transferred to the O'Connor Joint Venture II during the second quarter of 2017. Interest expense increased by $15.4 million of which the majority of this increase can be attributed to additional interest expense incurred on our corporate bonds. Additionally, we received $18.6 million less in comparable NOI from comparable properties. Of this decrease, $8.0 million is related to co-tenancy and lost rents associated with anchor bankruptcies, an additional $1.3 million relates to tenant reimbursement revenue decreases related to capital projects, and $5.9 million in additional property operating expenses which were primarily driven by an increase in insurance costs. Lastly, we experienced a decrease of FFO related to the gain on extinguishment of debt, net of $39.2 million. During 2017 we recognized $90.6 million in gain, related to three following transactions: $21.2 million gain related to the discounted payoff of the FFO Component$87.3 million mortgage loan secured by Mesa Mall, a $41.6 million gain related to the discounted payoff of the $99.7 million mortgage loan secured by Southern Hills Mall; and a $27.8 million gain related to the transition of Valle Vista Mall to the mortgage lender pursuant to the terms of a Named Executive’s Annual Bonus
Following the Compensation Committee’s review and evaluation of our year-end FFO performance, the amount of the FFO Component of a Named Executive’s annual bonus under the 2015 Plan is determined using the following scale:
Evaluation Levels for Per Common Sharedeed-in-lieu of foreclosure agreement entered into by an affiliate of WPG Inc. and the mortgage lender concerning the $40.0 million mortgage loan. During 2018 we recorded a $51.4 million gain related to the transition of Rushmore Mall to the mortgage lender pursuant to the term of a deed-in-lieu of foreclose agreement entered into by an affiliate of WPG Inc. and the mortgage lender concerning the $94.0 million mortgage loan. Offsetting these decreases was $21.6 million in additional FFO Performance
Bonus Payment Component
Threshold
(Yr. End FFOreceived from the sale of $1.72outparcels primarily related to the sale to Four Corners (see details under "Overview - $1.76 Per Share)
Target
(Yr. End FFOBasis of $1.77 Per Share)
Maximum
(Yr. End FFO of 1.78- $1.85 Per Share and Above)
FFO Component35%Presentation - 87% of FFO Target Amount100% of FFO Target Amount106.3% - 150% of FFO Target Amount
The FFO targets stated in the chart above were formulated to include the range of our anticipated or forecasted 2015 per diluted Common Share FFO results that were initially announced by our company at the beginning of 2015. Under each level of FFO performance in the 2015 Plan, each year-end FFO per share amount is assigned a percentage used to determine the portion of the FFO Target Amount a participant is eligible to receive based upon the Company’s year-end FFO performance. For example, if we attain a year-end FFO of $1.72 per diluted Common Share then 2015 Plan participants would be eligible to receive 35% of their FFO Target Amount, but if we achieve a year-end FFO of $1.85 per diluted Common Share or above the 2015 Plan participants would be eligible to receive 150% of their FFO Target Amount. The aforementioned examples do not take into consideration any adjustments to our year-end FFO per Common Share amount that would be permitted under the 2015 Plan. As discussed earlier, we believe that measurement of per Common Share FFO is a primary metric in evaluating growth in shareholder value as well as evaluating the management and operation of our underlying business. Per Common Share FFO performance results under the 2015 Plan that occur between threshold, target, and maximum levels will result in a mathematically interpolated payout of the FFO Component.

17



The 2015 Plan is funded for bonus compensation to be paid because WPG’s adjusted FFO per diluted Common Share results for fiscal year 2015 is $1.91 per Common Share which exceeds the minimum performance level of $1.72 per diluted Common Share under the threshold level. WPG’s adjusted 2015 FFO per diluted Common Share of $1.91 reflects an adjustment for transaction costs relating to the Merger and the amortization of fees on the Bridge Loan of $42.1 million, or $0.20 per diluted Common Share. WPG’s unadjusted reported per Common Share FFO results for 2015 were $1.71. Under the 2015 Plan, per Common Share FFO performance of $1.91 exceeded the maximum performance goal of $1.85 per share, resulting in a payout for the FFO Component under the 2015 Plan at the maximum level. The Compensation Committee approved a bonus payout for the FFO Component of 150% of the FFO Target Amount for 2015 Plan participants, including each Named Executive still employed or affiliated with the Company on the date of the Compensation Committee’s approval, as shown in the table below (amounts are rounded to the nearest dollar):
Named
Executive
FFO Target Amount
(50% of Target Bonus Payout Amount)
FFO Component of Annual Bonus
(150% of FFO Target Amount)
Mr. Glimcher$828,690$1,243,035
Mr. Yale$312,500$ 468,750
Mr. Knerr$433,123$ 649,685
Mr. Drought$212,025$ 318,037
Ms. Indest$105,916$ 158,874
Mr. Ordan$825,000$1,237,500
(iii)Determining the Strategic Objectives and Individual Objectives Component of a Named Executive’s Annual Bonus
In determining the Strategic Objectives Component of the annual bonus, the Compensation Committee conducted a qualitative assessment of the Company’s performance in achieving its Strategic Objectives established in connection with the adoption of the 2015 Plan. Under the 2015 Plan, the achievement percentages range from 25% to 150%Outparcel Sale"). Based upon the Compensation Committee’s qualitative assessment of the Company’s aggregate performance on its Strategic Objectives, the achievement percentage attained is applied to a Named Executive’s Strategic Objectives Target Amount to determine the Strategic Objectives Component of the annual bonus award.In establishing the Strategic Objectives, there was no specific weighting or priority placed by the Compensation Committee on or amongst any of the objectives.
In determining the Individual Objectives Component of the annual performance bonus, the Compensation Committee considers the overall performance of the Named Executive on his or her Individual Objectives. Upon the completion of the Named Executive’s performance evaluation, the Named Executive receives an overall achievement percentage that ranges from 25% to 150% and reflects the person’s respective performance on his or her Individual Objectives. This overall achievement percentage is then applied to the Named Executive’s Individual Objectives Target Amount to determine the Individual Objectives Component of the Named Executive’s annual bonus award.
The table below aggregates the Individual Objectives Target Amount and the Strategic Objectives Target Amount for each of the Named Executives and the range of values, or resulting payouts, between the Threshold and Maximum levels of performance for which each Named Executive could qualify to receive (amounts are rounded to the nearest dollar):


Overall Performance Evaluation Levels for Strategic Objectives and Individual Objectives
Named
Executive
Threshold
(25-99% Achievement Percentage)
Target
(100%
Achievement Percentage)(1)
Maximum
(101-150%
Achievement Percentage)
Mr. Glimcher$207,172 – $820,403$828,690$836,977 – $1,243,035
Mr. Yale$ 78,125 – $309,375$312,500$315,625 – $ 468,750
Mr. Knerr$108,281 – $428,793$433,124$437,455 – $ 649,686
Mr. Drought$ 53,006 – $209,905$212,025$214,145 – $ 318,037
Ms. Indest$ 26,479 – $104,857$105,916$106,975 – $ 158,874
Mr. Ordan$206,250 – $816,750$825,000$833,250 – $1,237,500
1
Listed amounts represent the sum of the Named Executive’s respective Individual Objectives Target Amount and Strategic Objectives Target Amount.

18



The Compensation Committee assessedWe 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 Company’s performance on its Strategic Objectives at the target level of performance based on some of the Company’s corporate achievements described in the section above entitled 2015 Business Highlights. Additionally, with respect to the Company’s Strategic Objective to analyze, evaluatecore operating results from our portfolio, excluding certain non-cash, corporate-level and initiate growth opportunities for the Company, the Compensation Committee assessed that the Company achieved this objective by making measurable progress toward aligning the Company’s operations and assets to achieve growth in netnonrecurring items. Specifically, we exclude from operating income (“NOI”)the following items in line with expectations for fiscal year 2016 justifying an evaluationour calculations of this objective at the target level of achievement. Based on aforementioned analysiscomparable NOI:
straight-line rents and assessment, the Compensation Committee approved a bonus payout for the Strategic Objectives Component of 100% of the Strategic Objectives Target Amount for 2015 Plan participants including each Named Executive.fair value rent amortization;
Assessment of the individual performance of 2015 Plan participants is done entirely through evaluating their respective achievement on the individual objectives that each 2015 Plan participant, including the Named Executives, established during the first half of 2015. For the 2015 performance year, except for Messrs Ordanmanagement fee allocation to promote comparability across periods; and Glimcher, each of the Named Executives had five (5) individual objectives. Messrs. Ordan
termination income, out-parcel sales and Glimcher each had eight (8) individual objectives. For the 2015 performance year, objectives had a strong nexus to the Company’s Strategic Objectives and generally can be grouped into four categories: (A) Financial Objectives, which generally concern completing or formulating capital or budget plans for the Company, achieving financial or budgetary forecasts, operating the Company within budgeted parameters, managing our debt and liquidity levels sufficiently, and finding new sources or vehicles for capital; (B) Operational Objectives, which generally concern our leasing operations, development/redevelopment activity, and staffing/recruitment of personnel; (C) Merger Integration Objectives, which concern the Company’s post-Merger plans, projects, initiatives, strategies, and goals geared toward integrating the operations of Glimcher into the Company to create an efficient and effective organization; and (D) Functional Objectives,material insurance proceeds, which are such additional objectives relating to a Named Executive’s particular areas(s) of expertise or focus or relating to the department or functional area such person manages within our company. Evaluation of the performance of the Named Executives on their respective Individual Objectives was done by the Compensation Committee with respect to the Company’s former Executive Chairman and current CEO; however, for the other Named Executives, the respective manager or supervisor for such person performed the evaluation. The Chief Executive Officer evaluated the performance of the CFO and Chief Operating Officer. The CFO evaluated the fiscal year 2015 performance of the Chief Accounting Officer and the Chief Operating Officer evaluated the performance of the Executive Vice President, Director of Leasing. The Compensation Committee relied partly upon written evaluations in determining the level of achievement an evaluated Named Executive attained on his or her respective Individual Objectives.
Generally, the Named Executives received between target and maximum achievement on their specific individual objectives; except in a few isolated instances where lower achievement levels were recorded. Also, aggregate individual achievement percentages attained by the Named Executives ranged between approximately 82% and 140%. The individual achievement percentages reflects the aggregate evaluation a Named Executive received on his or her Individual Objectives performance assessment and is applied to the Individual Objectives Target Amount to get the Individual Objectives Component of the annual bonus award. An overview of the assessment for each of the Named Executives follows.
Messrs. Glimcher and Ordan had identical Individual Objectives. Mr. Glimcher, due to his significant day-to-day involvement and managerial responsibilities, achieved a maximum rating with respect to three of his four Financial Objectives as exemplified by delivering a three year strategic plan for the Company eventually approved by the Board; coordinating the payoff of the Bridge Loan and other associating financing that raised the Company’s available liquidity to approximately $700 million; and managing the planning and strategy behind decreasing by the end of 2015 the Company’s net debt to EBITDA ratio to approximately 7.0x. Mr. Glimcher also achieved a maximum evaluation on his Operational Objective and two Merger Integration Objectives as demonstrated by the Company establishing formal internal policies around capital allocation and upgrading the Company’s systems and protocols to sufficiently operate the combined company; completing hiring of senior management personnel; successfully implementing the transition of the WPG legacy properties onto the Company’s operating platform; and implementing a plan ahead of schedule to transition off of the services agreement with Simon. With respect to Mr. Ordan, in light of his transition, Mr. Ordan achieved a target evaluation for all of his objectives except one of his Merger Integration Objectives for which a Maximum assessment was achieved and two other objectives for which no payout was approved because the target achievement relating to the objectives for investor relations (“IR”) outreach and NOI growth were not achieved. Mr. Glimcher’s evaluation and payout for his objectives relating to IR outreach and NOI performance were identical to those for Mr. Ordan.

19



With respect to the evaluation of Mr. Yale’s five Individual Objectives, four of his five objectives were evaluated at the maximum achievement level. Mr. Yale’s objectives consisted of two Financial Objectives, one Merger Integration Objective and Operational Objective apiece, and one Functional Objective. The Compensation Committee observed that the maximum evaluation for Mr. Yale’s Financial Objectives, Merger Integration Objective, and Operational Objective was supported by: (A) the completion of the three year strategic plan for the Company and its approval by the Board; (B) repayment of the Bridge Loan by the end of the 2015 second fiscal quarter; (C) successful preparation of the Company’s finance and accounting functions to support the combined company after the termination of the Simon services agreement and to also facilitate realization of Merger synergies; and (D) establishment of processes to support service and reporting requirements of the O’Connor joint venture. Mr. Yale received a target evaluation on his Functional Objective relating to IR outreach because the number of new analysts launching coverage on the Company during 2015 was slightly less than the targeted amount despite a challenging environment for the Company to attract new investors.
The assessment of Ms. Indest’s performance on her Individual Objectives was similar to that for Mr. Yale in that she received a maximum rating on four of her five objectives and a target rating on her Functional Objective relating to IR outreach for the same reasons as Mr. Yale’s evaluation and payout for that objective. Three of Ms. Indest’s objectives were Merger Integration Objectives relating to: (A) preparing the Company’s finance and accounting functions to support the combined company after termination of the Simon services agreement and to also facilitate realization of Merger synergies; (B) managing an effective transition with the Company’s external independent auditors and addressing in a timely manner Merger accounting issues and public financial reporting procedures; and (C) establishing by year-end a marketing and communication plan to rollout the Company’s new post-Merger brand. Finally, Ms. Indest’s other Functional Objective related to the successful organization and completion of the Company’s inaugural Investor and Analyst Day.
Messrs. Knerr and Drought also achieved maximum ratings for four out of five of their respective Individual Objectives. Messrs. Knerr and Drought’s objectives may be categorized as Financial Objectives, Operational Objectives, Merger Integration Objectives and, for Mr. Drought, one Functional Objective relating to Mr. Drought’s responsibility to manage the Company’s leasing function. The Compensation Committee found support for Mr. Knerr’s maximum rating given for one of his Operational Objectives, two Merger Integration Objectives, and one Financial Objective in the following achievements: (A) creation of a three year portfolio-wide strategic plan for leasing and development; (B) integration and enhancement of the Company’s development and leasing departments; (C) development and implementation of a portfolio-wide organizational structure for the Company’s property management department; and (D) increase, in spite of significant tenant bankruptcies, portfolio-wide total occupancy by the end of 2015 as compared to the end of the 2015 first fiscal quarter. Mr. Knerr achieved target achievement for his second Operational Objective relating to replacing income lost due to tenant bankruptcies as shown by the replacement of over 75% of such income. With respect to Mr. Drought, the Compensation Committee found support for the maximum ratings given for one of his Operational Objectives, Merger Integration Objective, Financial Objective, and Functional Objective in the following achievements: (A) leadership of integrated leasing team to achieve NOI, FFO and leasing results for 2015 consistent with expectations; (B) post-Merger organization of the leasing department for the combined company and recruitment of additional leasing talent; (C) effective management of leasing department which included recruitment of four leasing and specialty leasing managers, continued internal cross-functional strategy meetings, and over 100 portfolio meetings with tenants; and (D) visiting a majority of properties in the Company’s portfolio to promote a thorough understanding of the portfolio and integrating leasing functions in both of the Company’s corporate offices. Mr. Drought achieved target achievement for his second Operational Objective relating to re-leasing the Company’s expansion or redevelopment properties as shown by the leasing progress made at Phase III of Scottsdale Quarter®, which includes the addition of American Girl and Design Within Reach, and three restaurants recently opened at The Mall at Fairfield Commons.

20



(iv)    Total Payouts to Named Executives Under 2015 Plan
The chart below summarizes the payout amounts for the Individual Objectives Component for each of the Named Executives based upon each person’s overall achievement percentage that resulted from his or her performance evaluation. The Individual Objectives Component for each Named Executive was added to the person’s FFO Component and Strategic Objectives Component to obtain the total bonus payout under the 2015 Plan (amounts are rounded to the nearest dollar):
Named Executive (Indiv. Achieve. Percent.)
Individual Objectives Target
Amount
Strategic
Objectives
Component of
Annual Bonus
Individual Objectives Component of Annual Bonus1
FFO Component of Annual Bonus
Total Bonus
Award
Mr. Glimcher (112.50%)$414,345$414,345$466,138$1,243,035$2,123,518
Mr. Yale (140%)$156,250$156,250$218,750$ 468,750$ 843,750
Mr. Knerr (139.9999%)$216,562$216,562$303,186$ 649,685$1,169,433
Mr. Drought (140.001%)$106,012$106,013$148,418$ 318,037$ 572,468
Ms. Indest (140%)$ 52,958$ 52,958$ 74,141$ 158,874$ 285,973
Mr. Ordan (81.25%)$412,500$412,500$335,156$1,237,500$1,985,156
1Amount determined by multiplying achievement percentage by Individual Objectives Target Amount.
The bonus payout award under the 2015 Plan, for each of the Named Executives, is reflected in column (f) of the Summary Compensation Table. The bonus payment amount under the 2015 Plan, generally, accounts for approximately 18% to 58% of a Named Executive’s total annual compensation that is reported in the Summary Compensation Table. As stated earlier, the 2015 annual bonuses are plan-based compensation intended to serve as incentive for performance over a period of time that is evaluated using various performance targets established and communicated to the plan participants prior to the evaluation. For this reason, the bonus compensation is reported in the Summary Compensation Table in column (f). Bonuses for fiscal year 2014 are reported in column (d) because when awarded, no performance metrics or targets had been pre-established and the bonuses were not paid pursuant to the terms of a plan; instead the Compensation Committee based its bonus determinations for fiscal year 2014 performance on its review of Company performance for 2014, including financial results compared to previously established goals, the Company’s strategic achievements, and the Compensation Committee’s assessment of individual management’s contributions and performance.
Equity Compensation
The components of the Company’s equity compensation to executives for fiscal year 2015 satisfy three important compensation objectives: (i) to reward executives based on financial and market performance, (ii) align the interests of executives and our shareholders, and (iii) attract and retain qualified and experienced executives. Although we anticipate that the size and nature of our future equity compensation awards will be influenced by our compensation objectives, historical practices, market or peer group comparisons, and performance; as we discuss below, the awards during fiscal year 2015 were influenced primarily by the terms of the Merger and the provisions of the employment agreements or other arrangements between the Company and the respective Named Executive.
Additionally, as reflected in the compensation tables that follow, Named Executives formally employed with Glimcher prior to the Merger (a “Glimcher Named Executive” and collectively, the “Glimcher Named Executives”) who held Glimcher stock options and restricted common stock received from the Company, as part of the Merger consideration, converted stock options for Common Shares (“WP Glimcher Converted Options”) and converted restricted Common Shares (“WP Glimcher Converted Restricted Share Awards”). The WP Glimcher Converted Options and WP Glimcher Converted Restricted Share Awards were issued from the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the “WPGLP Plan”), but the terms and conditions of each security, including the applicable vesting schedule, are governed by the respective Glimcher equity compensation plan that the Company assumed in connection with the consummation of the Merger. The conversion mechanics operated as follows; in addition to any other Merger consideration due under the Merger agreement, each Glimcher restricted common share was exchanged for 0.7840 (the “Equity Award Exchange Ratio”) of a WPG Common Share.

21



The Equity Award Exchange Ratio was also applied to Glimcher stock options to convert them into WP Glimcher Converted Options. Lastly, the Equity Award Exchange Ratio was used to convert the exercise price of the Glimcher stock option (“Glimcher Option Exercise Price”) to the exercise price for the WP Glimcher Converted Option by dividing the Glimcher Option Exercise Price by the Equity Award Exchange Ratio. The table below provides the resulting WP Glimcher Converted Restricted Share Awards as well as unexpired and unexercised WP Glimcher Converted Options holdings for the Glimcher Named Executives following application of the equity award conversion prescribed under the Merger agreement (amounts are rounded as detailed below)1:
Glimcher Named Executive
Pre-Merger
Stock
Options2
Glimcher Option
Exercise Price
Post Merger
WP Glimcher Converted Options 2
Post Merger WP Glimcher Converted Option Exercise Price
Pre-Merger Restricted
Stock
Post Merger WP Glimcher Converted Restricted Share Awards3
Mr. Glimcher75,000$25.2258,798$32.17895,721702,233
Mr. Yale25,000$25.2219,599$32.17217,419170,454
Mr. Drought
10,000
  4,000
$25.22
$ 4.51
  7,839
  3,135
$32.17
$ 5.76
139,150109,092
Ms. Indest
  5,000
  5,000
  5,000
  3,333
$25.22
$27.28
$10.94
$ 4.51
  3,919
  3,919
  3,919
  2,613
$32.17
$34.80
$13.96
$ 5.76
  26,013  20,394
1
Totals for WP Glimcher Converted Restricted Share Awards and WP Glimcher Converted Options are rounded to nearest Common Share and whole option respectively. The exercise prices for the WP Glimcher Converted Options are rounded up to the nearest cent. Other amounts and variables are rounded here to the nearest tenth, but unrounded in the conversion and any underlying calculations.
2
Excludes options that expired in March 2015.
3
Totals are as of the Merger Closing Date and do not reflect vesting that occurred in 2015 after the Merger Closing Date.

Grant date fair value information for the above-listed WP Glimcher Converted Restricted Share Awards and WP Glimcher Converted Options are excluded from the Summary Compensation Table and Grants of Plan-Based Awards Table because they do not reflect any additional compensation or 2015 executive compensation decisions made by the Company or Compensation Committee. The remaining unexpired WP Glimcher Converted Options and WP Glimcher Converted Restricted Share Awards are however reported in the Outstanding Equity Awards at Fiscal Year-End table, Options Exercised and Stock Vested table, and the beneficial ownership table as applicable.
Equity awards made by the Company during 2015 were in the form of LTIP Units. LTIP Units are authorized by the WPGLP Plan and represent a separate class of equity interests in WPG L.P. LTIP Unit awards may be subject to performance‑based conditions, continuing service requirements, and/or other conditions. They may be granted to employees and other persons who directly or indirectly provide services to our operating partnership subsidiary or any of its affiliates as a form of equity‑based incentive compensation. LTIP Units are similar to the common limited partnership operating units of WPG L.P. (“O.P. Units”), and are generally entitled to distributions in the same manner as the O.P. Units and Common Shares, except that they have a number of special terms intended to enable LTIP Units to constitute “profits interests” for U.S. federal income tax purposes. Generally, once an LTIP Unit has vested pursuant to the terms set forth in the award agreement, LTIP Units will be economically identical to and freely convertible into O.P. Units, which themselves may be exchanged, at the option of the holder, for Common Shares on a one‑for‑one basis or cash, as determined by us in our sole discretion. Vested LTIP Units also are entitleddeemed to be voted on an equal basis with O.P. Units.

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(i)Post Merger Inducement and Performance-Based LTIP Unit Awards
During 2015, LTIP Units were used by the Company for the post Merger inducement awards (the “Inducement Awards”) to certain former Glimcher executives, and each of the Glimcher Named Executives, per the terms of their respective employment agreement or Offer Letters.Additionally, the Company made post Merger special performance-based LTIP Unit allocations (the “Performance-Based LTIP Allocations”) to the former Glimcher executives, and each of the Glimcher Named Executives, as well as other Company executives. The Glimcher Named Executives and Ms. Tehrani received both Inducement Awards and Performance-Based LTIP Allocations. None of the other Named Executives received during 2015 any Inducement Awards or Performance-Based LTIP Allocations in connection with the consummation of the Merger.
The Inducement Awards constituted actual grants of LTIP Units. Grant sizes for Glimcher Named Executives were determined by dividing cash values set forth in their respective employment agreements or Offer Letters by the average closing price for the Common Shares for the twenty consecutive trading days following the Merger Closing Date (the “Closing Price”). With respect to Ms. Tehrani’s Inducement Award, the number of LTIP Units granted was the result of negotiations concerning her overall compensation package and designed to be comparable to similar awards made before the Merger to similarly-situated executives of the Company during fiscal year 2014. The Inducement Awards were structured to vest over a period of four years in 25% increments of the total number of LTIP Units awardedsubject to continued employment through the applicable vesting date which for the Glimcher Named Executives was the annual anniversary of the Merger Closing Date and for Ms. Tehrani was her hire date of January 21, 2015 (the “Tehrani Hire Date”).
Unlike the Inducement Awards, the Performance-Based LTIP Allocations are not actual unit-denominated awards or grants, but rather award allocations for which recipients receive a percentage, ranging from 0% to 100%, if certain performance targets are achieved over distinct performance periods spread over a three year horizon. The allocated LTIP Units that comprise a recipient’s Performance-Based LTIP Allocations were apportioned evenly over the applicable performance periods. Pursuant to the respective employment agreements and Offer Letters of the recipients, performance would be measured by absolute TSR of the Common Shares, applicable to 40% of the allocated amount per performance period, and relative TSR performance of the Common Shares versus the MSCI US REIT Index (NYSE: RMZ) (the “Index”), applicable to 60% of the allocated amount per performance period. For the Glimcher Named Executives, the relative performance periods run from the Merger Closing Date to December 31, 2016; December 31, 2017; and December 31, 2018, respectively (each a “Special Performance Period” and all, collectively, the “Special Performance Periods”). For Ms. Tehrani, the performance period end dates were the same, but the start date was the Tehrani Hire Date. Similar to the Inducement Awards, for the Glimcher Named Executives, the size of the Performance-Based LTIP Allocations were determined by dividing cash values set in their respective employment agreements or Offer Letters by the Closing Price. The size of Ms. Tehrani’s Performance-Based LTIP Allocation was formulated like her Inducement Award in that it mirrored comparable awards made before the Merger to similarly-situated executives of the Company during fiscal year 2014. Except as the Compensation Committee may otherwise provide in an applicable award agreement or as otherwise provided in a written employment or severance agreement between the Company and an applicable recipient, LTIP Units granted from Performance-Based LTIP Allocations with respect to the performance periods that end on December 31, 2016 and December 31, 2017 are to vest on the third (3rd) anniversary of the Merger Closing Date for the Glimcher Named Executives and the third (3rd) anniversary of the Tehrani Hire Date for Ms. Tehrani’s award. LTIP Units granted from Performance-Based LTIP Allocations with respect to the last performance period ending on December 31, 2018 shall vest immediately upon grant subject to continued employment through the grant date. The tables below show (A) the number of Inducement Awards and Performance-Based LTIP Allocations that certain Named Executives received and (B) the possible payout of allocated LTIP Units based on absolute TSR performance and relative TSR performance versus the Index.
 Inducement AwardsPerformance-Based LTIP Allocations
Named Executive

(a)
Value

(b)
Awarded Units1

(c)
Value

(d)
Allocated Units2

(e)
Allocated Units Per Special
Performance Period
(f)
Mr. Glimcher$1,400,00079,849$2,100,000119,77239,924
Mr. Yale$ 600,00034,221$ 900,000  51,33017,110
Mr. Drought$ 400,00022,814$ 600,000  34,22111,407
Ms. Indest$ 300,00017,110$ 450,000  25,665  8,555
Ms. Tehrani
$ 262,9953
15,000
$ 394,4923
  22,500  7,500
1
Amount determined by dividing respective value in column (b) by the Closing Price of $17.533. Amounts rounded to nearest whole unit.
2
Amount determined by dividing respective value in column (d) by the Closing Price of $17.533. Amounts rounded to nearest whole unit.
3
Amount provided for comparability purposes against the values provided for other Named Executives listed. Amounts rounded to nearest dollar.

23



 Absolute TSR Performance (40% of Performance-Based LTIP Allocations)
 Special Performance Period Ending
Percentage of Perf.-Based LTIP Allocations Resulting in LTIP
Units Granted
12/31/1612/31/1712/31/18
WPG Absolute TSRWPG Absolute TSRWPG Absolute TSR
  100%>=16%>=24%>=32%
83.3%   14%   21%   28%
66.7%   12%   18%   24%
   50%   10%   15%   20%
33.3%     8%   12%   16%
     0%  <8%<12%<16%
    
 Relative TSR Performance (60% of Performance-Based LTIP Allocations)
 Special Performance Period Ending
Percentage of Perf.-Based LTIP Allocations Resulting in LTIP
Units Granted
12/31/1612/31/1712/31/18
WPG TSR to IndexWPG TSR to IndexWPG TSR to Index
100%Index + 1%Index + 1%Index + 1%
  75%IndexIndexIndex
  50%Index – 2%Index – 2%Index – 2%
    0%Index – 4%Index – 4%Index – 4%
For Company’s fiscal year ending December 31, 2015, no LTIP Units were awarded from Performance-Based LTIP Allocations because none of the Special Performance Periods had concluded; however, 25% of the Glimcher Named Executives’ LTIP Units constituting Inducement Awards vested on January 15, 2016. As discussed later in more detail, Ms. Tehrani forfeited her outstanding Performance-Based LTIP Allocations in connection with the termination of her employment, but the vesting for the Inducement Awards accelerated in connection with such termination per the terms of the award agreement.Performance-Based LTIP Allocations account for 60% of a recipient's post Merger LTIP Unit awards with the remaining 40% being time-or service based awards which we feel furthers our compensation objective of making the majority of our executive compensation based on market, corporate, and individual performance.
(ii)    2015 Annual LTIP Unit Awards
In March 2015, the Compensation Committee approved performance criteria for our 2015 annual LTIP Unit awards (the “2015 Annual Awards”) to be granted to executive personnel, including all of the Named Executives, in 2016 no later than upon the completion of the audit of WPG's 2015 financial statements. The 2015 Annual Awards were established as a cash value representing the maximum award value and equal to a multiple of the respective recipient’s 2015 annual paid salary. For Named Executives now eligible to receive a payout from the 2015 Annual Awards, the multiple ranged from 75% – 300% as determined by the terms of the Named Executive’s employment agreement or Offer Letter. At the end of 2015, the cash value is converted to an allocated number of LTIP Units (“2015 LTIP Unit Allocation”) from which actual awards are made. Actual awards of LTIP Units for the 2015 Annual Awards are determined by the following performance criteria:
†TSR of WPG for 2015 compared to the Index, calculated on a net basis and represented by the Index (“TSR Objective”); and
†The Company’s performance on the Strategic Objectives (the “Strategic Goal Component”).
Sixty percent of the 2015 LTIP Unit Allocation represents the LTIP Units available to be awarded for WPG’s achievement on the TSR Objective (the “2015 TSR LTIP Unit Allocation”) and the remaining 40% of the 2015 LTIP Unit Allocation represents the LTIP Units available to be awarded for the Company’s achievement on the Strategic Objectives (the “2015 Strategic Goals LTIP Unit Allocation”). The award was structured in this manner to again further our compensation objective of providing performance-based compensation that aligns the interest of our executives with those of our shareholders. Furthermore, the Strategic Goal Component was introduced to provide the Compensation Committee the ability to recognize and award strategy execution not immediately reflected in WPG’s relative Common Share price.

24



The payout for the Strategic Goal Component will range from 0% to 100% of the 2015 Strategic Goals LTIP Unit Allocation, based on the Compensation Committee's qualitative assessment of WPG's performance relative to the Strategic Objectives. With respect to the TSR component, the payout for the TSR Objective ranges from 100% to 76% of the 2015 TSR LTIP Unit Allocation for achievement 1 percentage point or more above the Index; 75% to 51% of the 2015 TSR LTIP Unit Allocation for achievement at the Index; 50% to 1% of the 2015 TSR LTIP Unit Allocation for achievement 2 percentage points below the Index; and no payout for achievement 4 percentage points or more below the Index with interpolation between the various levels. The Compensation Committee retained the ability to use WPG's average Common Share price for the relative TSR performance determination in the event of anomalous events at year-end; however, such discretion was not used in connection with making the final awards. Set forth in the table below for each Named Executive are: (A) the cash value representing the maximum award value, (B) the multiple used to convert the cash values to the 2015 LTIP Unit Allocation, (C) 2015 TSR LTIP Unit Allocation, and (D) 2015 Strategic Goals LTIP Unit Allocation.
Named Executive
(a)
 
2015
Annual
Paid Salary
(b)
 



Multiple

(c)
 
2015 Annual LTIP Unit Awards at Maximum
(as a Multiple of 2015
Annual Paid Salary)
(d)
 
2015
LTIP Unit
Allocation(1)
(e)
 
2015 TSR LTIP Unit Allocation
(f)
 
2015 Strategic Goals LTIP
Unit Allocation
(g)
Mr. Ordan $825,000 300% $2,475,000 235,266 141,160 94,106
Mr. Glimcher $828,690 300% $2,486,070 235,318 140,791 94,527
Mr. Yale $500,000 100% $ 500.000   47,529 28,518 19,011
Mr. Knerr $494,998 100% $ 494,998   47,053 28,232 18,821
Mr. Drought $424,050 100% $ 424,050   40,309 24,185 16,124
Ms. Indest $282,442 75% $ 211,832   20,136 12,082   8,054
Ms. Tehrani $343,269 100% $ 343,269   32,630 19,578 13,052
Mr. Richards $450,000 100% $ 450,000   42,776 25,666 17,110
Mr. Gaffney $342,308 100% $ 342,308   32,539 19,523 13,016
1
The maximum number of LTIP Units that can be earned by each individual for the 2015 Annual Awards was determined by dividing the dollar amount in column (d) by $10.52, the average trading price of WPG's Common Shares on the NYSE during the last fifteen (15) trading days of 2015. Amounts are rounded to nearest whole unit.
The formula to determine the maximum award size set forth in column (d) above for the Named Executives was set forth in the respective employment agreements and Offer Letters for each Named Executive. For the Named Executives listed in the table above, the Compensation Committee determined that no award of LTIP Units would occur for the TSR Objective as none of the TSR goals were satisfied because WPG’s 2015 Common Share TSR was -33.53% compared to the Index of -1.5%. With respect to the payout for the Company’s performance on the Strategic Objectives, similar to the determination for the annual bonus payout, achievement was determined to be 100% and the Named Executives eligible to receive a payout for 2015 Annual Awards received a grant of LTIP Units equal to their respective 2015 Strategic Goal LTIP Unit Allocation. Except for Mr. Ordan, one-third of the LTIP Units for the 2015 Annual Awards granted to Named Executives will vest on each of January 1, 2017, 2018 and 2019. Under the Consulting Agreement, LTIP Units that Mr. Ordan receives in connection with the payout for the 2015 Annual Awards shall vest immediately upon grant. Lastly, with respect to Messrs. Gaffney and Richards and Ms. Tehrani, their respective award opportunity relating to the 2015 Annual Awards was forfeited in connection with their respective employment terminations because the terms of the initial award provide that recipients must be employed by the Company (or an affiliate thereof) on the date the performance payout and ultimate grant is approved by the Compensation Committee.

25



(iii)    LTIP Units – 2015 Vesting Events and Separation/Transition Payments
During 2015, certain LTIP Units granted during 2014 vested. On an individual basis, the vesting event covered one-fourth or 25% of the inducement LTIP Units granted in August 2014. Named Executives holding vesting LTIP Units that vested in August 2015 are as follows:
Named Executive
Time-Based LTIP Units
Awarded in 2014
Time-Based LTIP Units Vesting in 2015Remaining Unvested Time-Based LTIP Units Awarded in 2014
Mr. Knerr30,0007,50022,500
Mr. Richards30,0007,50022,500
Mr. Gaffney15,0003,75011,250

Additionally, accelerated vesting of LTIP Unit awards occurred for certain Named Executives in connection with either their termination of service or transition to another role in our company. Mr. Ordan transitioned from our Executive Chairman to our non-executive Chairman and pursuant to the Consulting Agreement, the unvested portion of the 153,610 time-based LTIP Units that Mr. Ordan received in June 2014 that were previously to vest in fourths (25%) on each of the first four anniversaries of May 28, 2014, all vested in their entirety on December 31, 2015, his last day as an employee of the Company. Messrs. Richards and Gaffney’s terminations, both of which were consider terminations without “cause” under their respective employment agreements, resulted in all of the remaining unvested time-based LTIP Units held by each to vest in their entirety per the terms of the award agreement on their last day of employment which for Mr. Gaffney was December 31, 2015 and for Mr. Richards was January 15, 2016. As stated earlier, Ms. Tehrani’s unvested Inducement Award of 15,000 LTIP Units vested when her employment terminated on December 31, 2015. For Messrs. Richards, Gaffney and Ms. Tehrani, the actual date on which unvested LTIP Units vested in connection with the respective terminations was the thirtieth day following each person’s respective termination date which for Mr. Richards was February 15, 2016 and January 31, 2016 for Mr. Gaffney and Ms. Tehrani.


26



A portion of the 2014 performance-based LTIP Units allocated to the Company’s executive officers, and certain Named Executives, during 2014 were to vest based upon WPG’s achievement of absolute or relative TSR goals over three performance periods beginning August 25, 2014 (May 28, 2014 with respect to Mr. Ordan’s award) and ending (A) December 31, 2015, (B) December 31, 2016, and (C) December 31, 2017 and in each case subject to continued employment through the applicable grant date. Messrs. Ordan, Gaffney, and Richards forfeited their remaining unvested and unearned performance based LTIP Units allocated in 2014 in connection with their respective termination and role transition. For the other Named Executives with such allocations, no performance based awards for the 2014 LTIP Unit allocations were earned when the first performance period ended on December 31, 2015 because WPG did not meet either of the absolute or relative TSR goals for that performance period as set forth below.
 
Performance‑Based
LTIP Units
First Performance Period
(8/25/14 through 12/31/15)
Allocation   
40% Absolute TSR
 60% Relative TSR to Index
   
Absolute TSR   
>= 8%100%
 7%83.3%
 6%66.7%
 5%50%
 4%33.3%
 <4%0%
   
Relative TSR: MSCI REIT Index   
Index+1%100%
 Index75%
 Index−2%50%
 Index−4%0%
The values relating to our equity awards which are reported in column (d) of the Summary Compensation Table for each Named Executive represent the aggregate grant date fair value computed in accordance with FASB Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”) for each Named Executive’s respective award(s) during the listed year. Generally, with respect to the fiscal year 2015, the aggregate grant date fair value of the LTIP Unit awards and allocations account for approximately 9% to 57% of a Named Executive’s total annual compensation that is reported in the Summary Compensation Table and approximately 48% to 57% of a Glimcher Named Executive’s total annual compensation that is reported in the Summary Compensation Table.
Common Share Ownership Guidelines
On February 24, 2015, our Board established Common Share ownership guidelines (the “Guidelines”) for certain executive officers and all non‑management Board members to encourage higher levels of Common Share ownership and further align director and management interests with those of our shareholders as well as further mitigate any unnecessary risk‑taking on the part of the executives covered by the Guidelines. Under the Guidelines, Common Shares acquired by Senior Executives through purchase, gift, exchange, or other means are counted toward the ownership requirement level in addition to Common Shares received through grants, awards, or payments from the Company. Additionally, unearned and earned LTIP Unit allocations, vested and unvested restricted stock units or shares, and Common Shares issuable to Senior Executives and Board members upon the redemption of operating partnership units in WPG L.P. may count toward a Senior Executive and Board member’s ownership requirement level under the Guidelines. Stock options, any share appreciation rights, pledged Common Shares or other securities of the Company do not under the Guidelines count toward a Senior Executive and Board member’s ownership requirement. Board members and Senior Executives covered by the Guidelines are prohibited from selling Common Shares received by such person as equity compensation until such person has achieved the ownership requirement under the Guidelines applicable to him or her. After reaching compliance under the Guidelines, Senior Executives and Board members may sell such number of Common Shares in excess of the respective person’s ownership guideline. Sales of Common Shares by Board members and Senior Executives are permitted to satisfy any withholding requirements or other tax liability incurred in connection with any grant or associated vesting as well as any sale of Common Shares in connection with the cashless exercise of stock options where the sale is done for purposes of funding the applicable exercise price or paying withholding taxes.

27



The Guidelines establish that Senior Executives are to reach their applicable ownership level described in the table below within five years after the later of February 24, 2015 or the date on which such person is first elected or appointed to the applicable office covered by the Guidelines. Board members are to reach their applicable ownership level described in the table below within five years after the later of February 24, 2015 or the date on which such person is first elected or appointed to the Board.
Ownership Guideline (Lesser of)
PositionNumber of Common Shares with a Market Value Equal toNumber of
Common
Shares
Chief Executive Officer5x Base Salaryor200,000
Chief Financial Officer and Chief Operating Officer3x Base Salaryor  75,000
Other Executive Officers2x Base Salaryor  20,000
Non-Management Directors
5x Cash Portion
of Annual Retainer
or  20,000
Under the Guidelines, a Senior Executive’s base salary shall be the actual paid annual salary received by the Senior Executive from the Company (or any applicable affiliated company or subsidiary) annualized for the Company’s fiscal year in which any compliance measuring occurs. Lastly, for purposes of measuring compliance with the Guidelines, the applicable per share market value of the Common Shares shall be determined by taking the average closing price of the Common Shares on the NYSE (or such other exchange that the Common Shares are principally traded on at the time compliance is measured) over the ninety trading days preceding the date on which compliance with the Guidelines is measured.
In addition to the above-described Guidelines, our policies regarding trading in our securities by Senior Executives and Board members prohibit such persons from short selling or hedging their ownership of the Common Shares, including trading in publicly‑traded options, puts, calls or other derivative instruments related to the Common Shares, our preferred shares, or debt securities. Although our employees and Board members are permitted to have margin accounts for our securities or to pledge our securities, all Senior Executives and members of the Board must notify our General Counsel prior to creating a margin account for our securities or pledging our securities and shall immediately notify the General Counsel if the broker for such an account sells the Company securities held in the pledged or margin account. Also, Senior Executives and members of the Board shall notify the General Counsel before establishing a standing or limit order to buy or sell our securities. If the General Counsel consents to the Senior Executive or Board member’s establishment of a standing or limit order then such person shall provide the details of the order to the General Counsel as well as any future changes or modifications to such order.
Other Benefits
Our executive officers are entitled to participate in our retirement plan, group medical insurance plan, short‑term and long‑term disability plan and other benefits on the same basis as other salaried employees.  In 2015, our retirement benefits were provided under the following retirement plans: The WP Glimcher Retirement Savings Plan (previously The Glimcher Realty Trust Retirement Savings Plan until January 16, 2015) (the “WP Glimcher Savings Plan”) and the Washington Prime Management Associates Savings Plan (the “WP Savings Plan,” and together with the WP Glimcher Savings Plan, the “WPG Plans”). The two plans were merged on January 1, 2016.
The WPG Plans are tax-qualified deferred compensation plans or 401(k) plans. Both plans currently have a feature that permits the Company to partially match employee contributions, including contributions made by executive officers including certain Named Executives (the “Match Feature”). During 2015, under the Match Feature, the Company matched 100% of the first 3% of salary deferrals that an employee contributed to the WPG Plans and 50% of the next 2% of salary deferrals that an employee contributed to the WPG Plans. Additionally, the Company made a profit sharing contribution of 1% of salary to the WP Savings Plan. Under the WPG Plans, salary includes payments attributed to any bonus compensation as well as salary compensation. Compensation related to the Match Feature for the Named Executives is reported in column (g) of the Summary Compensation Table.  Under the Merger agreement, the Company was obligated to cause its benefits plans to take into account, for purposes of eligibility, vesting, levels of benefits, and benefit accrual, the service of former employees of Glimcher, including each of the Glimcher Named Executives, as if such service were with the Company, to the same extent that such service was credited under a comparable Glimcher benefit plan except to the extent that payments or the provision of benefits would result in the duplication of payments or benefits for the same period of service. During 2015, for Named Executives who were participants in either of the WPG Plans, we provided matching contributions under the WP Glimcher Savings Plan and WP Savings Plan of up to $21,881 per person. We do not have a traditional pension plan or supplemental executive retirement plan.

28



Perquisites
The Compensation Committee intends to restrict the use of any perquisites to individual specific circumstances where conditions warrant individual accommodation. We believe that the limited number of perquisites provided are reasonable, competitive, and consistent with our objective to have an executive compensation program that provides compensation arrangements that are comparable with those provided by similarly-situated companies and that will attract and retain the best leaders for our Company. Only Mr. Ordan received reportable perquisite compensation during 2015. With respect to Mr. Ordan, pursuant to the terms of his Consulting Agreement, the Company paid the legal fees he incurred in connection with the negotiation of the Consulting Agreement. The aggregate fees, including the gross-up to cover Mr. Ordan’s tax liability related to the payment, was $15,798. The Compensation Committee approved this payment in connection with its approval of the Consulting Agreement. Compensation related to perquisites is included in column (g) of the Summary Compensation Table and includes, where applicable, payments for the Match Feature.
Termination Payments and Change in Control Benefits
The arrangements we currently have with certain Named Executives for payments and benefits following a termination of employment or a change in control (the “Termination Benefits”) are memorialized in the various agreements between the respective Named Executive and the Company. Messrs. Glimcher and Yale’s Termination Benefits are in their respective employment agreements, severance arrangements, and various equity award agreements. Termination Benefits for Ms. Indest and Mr. Drought are contained in their respective severance arrangements and respective equity award agreements. Mr. Knerr’s Termination Benefits are contained in his respective employment agreement and equity award agreements while Mr. Ordan’s applicable Termination Benefits are described in the Consulting Agreement and his equity award agreement. We have made payments of Termination Benefits in connection with the separations of Ms. Tehrani and Messrs. Gaffney and Richards that occurred at the end of 2015 or shortly thereafter. Each of the aforementioned arrangements and payment of Termination Benefits are more fully described in the section below entitled “Potential Payments upon Termination or Change in Control.”
Payments and benefits upon the specified termination of employment events are intended to provide protection against a termination outside of the executive’s control and to serve as a financial bridge between employment opportunities. Payments and benefits upon termination of employment in connection with a change in control are designed to encourage executives to focus on the best interests of shareholders by alleviating concerns related to the impact of a change in control event on an executive’s personal interests. These provisions were negotiated with the executives at the time of entering into their employment agreements or arrangements. The Termination Benefits are intended to be competitive with comparable benefits provided by other similarly-situated companies and to attract and retain executives that we view as key to our success following our separation from Simon and existence as a stand-alone publicly-traded REIT within the retail/shopping center sector.
The change in control severance benefits under the Company’s employment agreement with Mr. Knerr are structured as “double trigger” benefits. In other words, change in control does not itself trigger the severance benefits; rather, severance benefits only become payable in the event of a termination of employment in connection with or following a change in control. In connection with the closing of the Merger and the execution by Glimcher Named Executives of their respective employment agreements and Offer Letters, the severance arrangements each person had as an executive with Glimcher were amended to make them double trigger and not single trigger change in control arrangements. As explained in greater detail in the section below entitled “Potential Payments upon Termination or Change in Control,” the change in control arrangements for the Glimcher Named Executives include excise tax gross-up provisions that existed in their respective severance arrangements prior to the Merger, but the change in control arrangements with Mr. Knerr do not contain tax-gross up provisions. Currently, the Consulting Agreement has no provisions relating to payments or benefits to Mr. Ordan following a change in control. The Consulting Agreement provides for certain payments and benefits to be provided to Mr. Ordan in the event the period he is to provide services to the Company and CEO is terminated under certain circumstances prior to May 28, 2017.

29



Amendments to the employment agreements of certain Named Executives which became effective during 2015 following the Merger, impacted the compensation they received following their termination from our company. Amendments to Mr. Richards’ employment agreement that became effective on the Merger Closing Date in connection with his transition from Chief Financial Officer to Executive Vice President and Chief Administrative Officer provided for the following which materially impacted the payments and benefits he received when his employment terminated on January 15, 2016:
†increased his separation pay to two times the sum of his annual base salary in effect immediately prior to the date of termination plus target annual cash bonus for the year in which the date of termination occurs or if no target annual cash bonus has been set for the year in which the date of termination occurs, Mr. Richards' target annual cash bonus in effect during WPG's most recently completed fiscal year in the event we terminated his employment other than for “cause” or he terminated his employment for “good reason” (within six months after the good reason event) (instead of one times salary or one times salary and target bonus upon the occurrence of such triggering events if no change in control or a change in control had occurred within the preceding 24 months, respectively); and
†provided for, in addition to accelerated vesting of his inducement LTIP units, accelerated grant and vesting of his performance‑based LTIP units in the event we terminated his employment other than for “cause” or he terminated his employment for “good reason” (within six months after the good reason event).
In connection with his actual termination, Mr. Richards waived the application of the aforementioned provisions to the performance‑based LTIP Units allocated to him in 2014. Mr. Ordan’s employment agreement was amended also during 2015, but when his employment terminated on December 31, 2015 and he transitioned to the role of non-Executive Chairman, his employment agreement terminated and, except for certain provisions that survived as provided by the Consulting Agreement and discussed more fully in the section below entitled “Potential Payments upon Termination or Change in Control,” the severance and change in control provisions of his employment agreement became null and void.
Clawback Provisions
We have an executive compensation clawback policy that applies to any executive officer who the Compensation Committee determines engaged in fraud or intentionally illegal conduct that materially contributed to the need for a restatement of our financial statements. The clawback policy applies to all bonuses and other incentive and equity compensation awarded to the executive officer, the amount, payment and/or vesting of which was calculated based wholly or in part on the application of objective, financial performance criteria measured during any part of the period covered by the restatement. To the extent that the performance‑based compensation paid or awarded to such executive officer is greater than it would have been had it been calculated based upon the restated financial results, then the Compensation Committee may seek to recover from the executive the after‑tax portion of the difference.
In addition, a section of Mr. Ordan’s employment agreement that survived the agreement’s termination pursuant to the terms of the Consulting Agreement, provides that prior to our adoption of a clawback policy pursuant to the requirements of the Dodd‑Frank Wall Street Reform and Consumer Protection Act (the “Dodd‑Frank Act”), Mr. Ordan’s bonus and other equity or non‑equity compensation are subject to recoupment by our Board during his employment period and for three years thereafter (unless a longer period is required by law) to the extent that there is a restatement of our consolidated financial statements, and if the payment, grant or vesting of such compensation is tied to the achievement of one or more specific performance targets such that the compensation would not have been paid, granted or vested in light of such restatement. Any amounts required to be repaid shall be adjusted to take into account any taxes Mr. Ordan has already paid.
Pursuant to the terms of their inducement LTIP Unit award agreements executed in 2014, each of Messrs. Ordan, Richards, Gaffney, and Knerr has agreed, at our request, to promptly execute an amendment or modification of their respective agreements to reflect any clawback policy applicable to the executive’s inducement LTIP Units adopted by us or the Compensation Committee to comply with regulations promulgated by the SEC, NYSE, or under the Dodd‑Frank Act. The agreements for the Inducement Awards for Ms. Tehrani and each of the Glimcher Named Executives contain similar provisons.

30



Independent Compensation Advisor
The Compensation Committee selected Board Advisory as its compensation advisor for 2015. Board Advisory provides the Compensation Committee with peer executive compensation data, as well as expertise and advice on various matters brought before the Compensation Committee. The Compensation Committee has the sole authority to retain and terminate Board Advisory as its compensation consultant and approve fees and other engagement terms. Board Advisory has, through written correspondence, provided the Compensation Committee affirmation of the independence of Board Advisory, its partners, consultants, and employees as measured by the independence factors for compensation committee consultants under the listing standards of the NYSE. The affirmations were as follows:
†that Board Advisory does not provide any services to the Company except advisory services to the Compensation Committee;
†that the amount of fees received by Board Advisory from the Company is not material as a percentage of Board Advisory’s total revenue;
†that Board Advisory has policies and procedures that are designed to prevent conflicts of interest;
†that Board Advisory and its employees who provide services to the Compensation Committee do not have any business or personal relationship with any member of the Compensation Committee or any of our Senior Executives; and
†that Board Advisory and its employees who provide services to the Compensation Committee do not own any Common Shares or preferred shares of the Company.
Tax Treatment of Compensation
Substantially all of the services rendered by our Named Executives during 2015 are performed on behalf of WPG L.P. The Internal Revenue Service has issued a series of private letter rulings which indicate that compensation paid by annormal operating partnership to named executive officers of a REIT that serves as its general partner is not subject to limitation under Section 162(m) of the Internal Revenue Code, as amended (the “Code”) to the extent such compensation is attributable to services rendered to the operating partnership. Although we have not obtained a ruling on this issue, our management believes the positions taken in the rulings would apply to our operating partnership subsidiary as well. If we later determine that compensation paid by our operating partnership subsidiary to our named executive officers is subject to Section 162(m) of the Code, then this could result in an increase to our income subject to federal income tax and could require us to increase distributions to our shareholders in order to maintain our qualification as a REIT.
Company Consideration of Past Shareholder Voting Results in Determining Fiscal Year 2015 Executive Compensation
At our Company’s 2015 Annual Meeting of Shareholders (the “2015 Meeting”), we held for the first time a non-binding advisory vote on executive compensation. At that same meeting, our shareholders also voted in favor of our proposal to hold advisory shareholder votes on executive compensation on an annual basis. Over 97% of the Common Shares voted at our 2015 Meeting on the proposal relating to our executive compensation were in favor of the proposal. No changes or modifications to our executive compensation program or policies were made during fiscal year 2015 in response to the voting results from the 2015 Meeting for the non-binding shareholder advisory vote on our executive compensation. Despite the positive response of our shareholders to the non-binding advisory proposal on executive compensation presented at the 2015 Meeting, our Board and Compensation Committee will continue to review and examine the results of non-binding advisory shareholder votes on executive compensation that we hold in the future in order to discern any meaningful trends and to consider the voting results in light of our existing governance policies and procedures, bylaws, as well as our executive compensation programs, policies, and objectives.

31



Summary Compensation Table & Other Supporting Tablesresults.
The following tablesschedule reconciles comparable NOI for our core portfolio to net income and accompanying footnotes set forth certain information with respect to the cash and other compensation paid or accrued by the Companypresents comparable NOI percent change for the Named Executives for fiscal years ended December 31, 20152018 and as applicable, December 31, 2014. All values stated are rounded to the nearest dollar.
SUMMARY COMPENSATION TABLE2017 (in thousands):
Name and Principal Position





(a)
Year





(b)
Salary
($)




(c)
Bonus
($)




(d)
Stock
Awards(2
($)



(e)
Non-Equity
Incentive
Plan
Compensation(3)
($)

(f)
All Other
Compensation
($)



(g)
Total(11)
($)




(h)
Michael P. Glimcher
Vice Chairman of the Board and
Chief Executive Officer
2015

   $828,690(1)

N/A

$3,894,381$2,123,518
$ 7,763(4)

$6,854,352
Mark E. Yale
Executive Vice President and
Chief Financial Officer
2015

   $500,000(1)

N/A

$1,301,356$ 843,750
$ 10,400(4)
$2,655,506
Keric M. “Butch” Knerr
Executive Vice President and
Chief Operating Officer
2015
2014
$494,998
$154,603
N/A
$288,750
$ 324,570
$1,013,983

$1,169,433
N/A
$ 7,888(5)

$1,996,889
$1,457,336
Thomas J. Drought, Jr.
   Executive Vice President,
   Director of Leasing
2015

   $424,050(1)

N/A

$ 927,683$ 572,468
$ 10,553(6)

$1,934,754
Melissa A. Indest
   Senior Vice President, Finance and
   Chief Accounting Officer
2015

   $282,442(1)

N/A

$ 626,900$ 285,973
$ 10,400(4)

$1,205,715
Former Executive Officers
Mark S. Ordan
Former Chief Executive Officer and
Executive Chairman (current Chairman
of the Board)
2015
2014
$825,000
$597,945
N/A
$1,793,836
$1,743,153
$5,299,505
$1,985,156
N/A

 $ 55,388(7)
$ 2,600
$4,608,697
$7,743,886
C. Marc Richards
Former Chief Financial Officer and
Former Executive Vice President and
Chief Administrative Officer
2015
2014
$450,000
$283,562
N/A
$ 393,750
$ 316,937
$1,013,983
$ 675,000
N/A

 $2,263,942(8)
$ 9,000
$3,705,879
$1,700,295
Farinaz S. Tehrani
  Former Executive Vice President,
  Legal and Compliance
2015

$343,269
N/A

$ 649,548$ 386,178
$ 375,000(9)

$1,753,995
Michael Gaffney
   Former Executive Vice President,
   Head of Capital Markets
2015
2014
$342,308
$187,397

N/A
$ 218,750
$ 266,250
$ 506,991
$ 342,308
N/A

   $ 353,188(10)
$ 577
$1,304,054
$ 913,715
  For the Year Ended December 31,
  2018 2017 
Net Income $108,655
 $231,593
 
      
Income from unconsolidated entities (541) (1,395) 
Income and other taxes 1,532
 3,417
 
Gain on extinguishment of debt, net (51,395) (90,579) 
Gain on disposition of interests in properties, net (24,602) (124,771) 
Interest expense, net 141,987
 126,541
 
Operating Income 175,636
 144,806
 
      
Depreciation and amortization 257,796
 258,740
 
General and administrative 39,090
 34,892
 
Impairment loss —
 66,925
 
Fee income (9,527) (7,906) 
Management fee allocation 157
 612
 
Pro-rata share of unconsolidated joint ventures in comp NOI 73,109
 58,197
 
Property allocated corporate expense 14,591
 13,683
 
Non-comparable properties and other(1)
 (7,644) (1,464) 
NOI from sold properties (5,387) (16,143) 
Termination income (3,457) (3,492) 
Straight-line rents (3,629) (2,122) 
Ground lease adjustments for straight-line and fair market value 50
 65
 
Fair market value & inducement adjustments to base rents (8,952) (7,290) 
Less: noncore properties(2)
 (6,613) (8,300) 
      
Comparable NOI - core properties $515,220
 $531,203
 
   Comparable NOI percentage change (3.0)% 
 
      

(1)Represents salary compensationan adjustment to remove the NOI amounts from properties not owned and operated in all periods presented, certain non-recurring expenses (such as hurricane related expenses), as well as material insurance proceeds and other non-recurring income received during fiscal year 2015 includingin the fourteen day period precedingperiods presented. This also includes adjustments related to the Merger Closing Date.rents from the outparcels sold to Four Corners.
(2)With respect to fiscal year 2015,NOI from the values represented fornoncore properties held in each Named Executive are the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for the 2015 Annual Awards. Additionally, for Ms. Tehrani and the Glimcher Named Executives, in addition to the 2015 Annual Awards, the values represent the grant date fair value for the Inducement Awards and the Performance-Based LTIP Allocations. The grant date fair values for the Performance-Based LTIP Allocations and 2015 Annual Awards are based on the probable outcome of the performance conditions on the grant date (maximum achievement) for financial statement reporting purposes under FASB ASC 718 and consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC 718, excluding the effect of estimated or actual forfeitures. The assumptions used in determining the listed valuations are provided in Part IV of the Original Filing in Item 15 entitled “Exhibits and Financial Statement Schedules” in note 9 of the notes to consolidated financial statements.
(3)The listed amount represents cash bonus awards received by the respective Named Executive pursuant to the terms of the 2015 Plan.
(4)The listed amount represents the aggregate matching contributions made or credited by WPG for fiscal year 2015 under the WPG Plans.presented.

32



(5)The listed amount represents the aggregate matching contributions made or credited by WPG for fiscal year 2015 under the WPG Plans and health plan premium reimbursements.
(6)The listed amount represents $10,400 in matching contributions made by WPG for fiscal year 2015 under the WPG Plans plus health plan premium reimbursements.
(7)Represents (a) the payment of $15,798 of legal fees (including a tax gross-up relating to payment of the fees) incurred by Mr. Ordan in connection with the negotiation of the Consulting Agreement which we agreed to pay pursuant to the terms of the Consulting Agreement, (b) matching contributions made or credited by WPG for fiscal year 2015 under the WPG Plans in the amount of $21,881, and (c) health plan premium reimbursements.
(8)Represents Mr. Richards’ accrued severance payment plus $13,942 in matching contributions made or credited by WPG for fiscal year 2015 under the WPG Plans.
(9)Represents Ms. Tehrani’s accrued severance payment.
(10)Represents Mr. Gaffney’s accrued severance payment and $3,188 in matching contributions made or credited by the Company for fiscal year 2015 under the WPG Plans.
(11)For each respective Named Executive, the amount listed represents the aggregate total of the amounts listed in columns (c) through (g).
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33Item 7A.    Quantitative and Qualitative Disclosures About Market Risk



GRANTS OF PLAN-BASED AWARDS
FOR 2015

The following tableWe 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 accompanying footnotes set forth certain information concerning grantscash flows and allocationsto 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 cash and non-cash awards maderising interest rates, they also expose us to eachthe risks that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the Named Executivesagreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly effective cash flow hedges under the Company’s equity and non-equity incentive compensation plans during the fiscal year endedGAAP guidance. As of December 31, 2015. All monetary values are rounded2018, $446.5 million (net of $8.5 million of debt issuance costs) of our aggregate consolidated indebtedness (15.2% of total consolidated 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 nearest dollar and all share or unit amounts are rounded to the nearest whole share or unit. None of the Named Executives has transferred any of the awards that he or she received during the fiscal year ended December 31, 2015.
Name





(a)
Grant
Date(1)




(b)
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2)
Estimated Future Payouts Under Equity Incentive Plan Awards(3)
All Other Stock Awards: Number of Shares of Stock or Units
(#)(4)


(h)
Grant Date Fair Value of
Stock and Option Awards(5)






(i)
Threshold
($)

(c)
Target
($)

(d)
Maximum
($)

(e)
Threshold
(#)

(f)
Maximum
(#)

(g)
Mr. Glimcher
3/27/2015
2/24/2015
3/27/2015
2/24/2015
$497,214$1,657,380$2,486,070
  
N/A
  2,353
15,954

N/A
235,318
119,772

79,849
N/A
N/A

$1,399,753 – Inducement Award
$1,622,848 – Annual Award
$871,780 – Performance Award
Mr. Yale

3/27/2015
2/24/2015
3/27/2015
2/24/2015
$187,500$ 625,000$ 937,500
    
N/A
     475
  6,837

N/A
  47,529
  51,330

34,221
N/A
N/A

$599,894 – Inducement Award
$327,848 – Annual Award $373,614 – Performance Award
Mr. Knerr

3/27/2015
3/27/2015
$259,874$ 866,247$1,299,371
  
     471

  47,053

N/A

$324,570 – Annual Award
Mr. Drought
3/27/2015
2/24/2015
3/27/2015
2/24/2015
$127,215$ 424,050$ 636,074
  
N/A
     403
  4,557

N/A
  40,309
  34,221

22,814
N/A
N/A

$399,929 – Inducement Award
$278,671 – Annual Award
$249,083 – Performance Award
Ms. Indest
3/27/2015
2/24/2015
3/27/2015
2/24/2015
$ 63,550$ 211,832$ 317,748
  
N/A
     201
  3,420

N/A
  20,136
  25,665

17,110
N/A
N/A

$299,938 – Inducement Award
$140,155 – Annual Award
$186,807– Performance Award
Former Executive Officers
Mr. Ordan
3/27/2015
3/27/2015
$495,000$1,650,000$2,475,000

  2,353

235,266

N/A

$1,743,153 – Annual Award
Mr. Richards
3/27/2015
3/27/2015
$202,500$ 675,000$1,012,500

     428

  42,776

N/A

$316,937 – Annual Award
Ms. Tehrani
3/27/2015
2/24/2015
3/27/2015
2/24/2015
$115,853$ 386,178$ 579,267

N/A
     326
  2,997

N/A
  32,630
  22,500

15,000
N/A
N/A

$262,950 – Inducement Award
$222,828 – Annual Award
$163,770 – Performance Award
Mr. Gaffney
3/27/2015
3/27/2015
$102,692$ 342,308$ 513,462

     325

  32,539

N/A

$266,250 – Annual Award

(1)Represents the Compensation Committee approval date for the respective award.

34



(2)Amounts represent an estimate of possible cash payouts to the respective Named Executive pursuant to the terms of our 2015 Plan. The range of payments listed in columns (c) through (e) for each of the Named Executives represents the estimated possible bonus payment amounts under the 2015 Plan that the respective Named Executive would be eligible for under the following circumstances and assuming no use of discretion by the Compensation Committee in authorizing such payments:
Threshold:The FFO Component of an individual’s bonus payment is awarded at Threshold level with payout equal to 35% of the FFO Target Amount and Threshold performance is attained for the Strategic Objectives Component and Individual Objectives Component with the payout for both the Strategic Objectives Target Amount and Individual Objectives Target Amount at the 25% level
Target:The FFO Component, Strategic Objectives Component, and Individual Objectives Component of an individual’s bonus payment is awarded at 100% of such person’s FFO Target Amount, Individual Objectives Target Amount, and Strategic Objectives Target Amount, respectively.
Maximum:The FFO Component of an individual’s bonus payment is awarded at 150% of his FFO Target Amount. The individual attains an achievement percentage of 150% for overall performance on his or her individual objectives and receives 150% of the Individual Objectives Target Amount and performance on the Strategic Objectives is evaluated at 150% and payout on the Strategic Objectives Target Amount is 150%.
Actual payouts under the 2015 Plan are reported in column (f) of the Summary Compensation Table.
(3)The numbers shown represent an estimate of the number of LTIP Units that could be issued with respect to the 2015 Annual Awards and the Performance-Based LTIP Allocations at the threshold and maximum performance levels. There was no target level of performance. For the 2015 Annual Awards, maximum represents superior performance on the Strategic Goal Component and TSR Objectives such that the respective Named Executive qualifies to receive, in the form of granted LTIP Units, 100% of their respective 2015 LTIP Unit Allocation for maximum performance. Threshold performance is the minimum achievement resulting in the lowest number of LTIP Units earned by a Named Executive for the 2015 Annual Awards which would be represented by qualifying for only 1% of such person’s 2015 TSR LTIP Unit Allocation and 1% of the 2015 Strategic Goals LTIP Unit Allocation. For the Performance-Based LTIP Allocations, maximum performance consists of achievement of the absolute TSR and relative TSR conditions to qualify the Named Executive to receive 100% of the allocated LTIP Units in each of the three performance periods. Threshold performance is the minimum achievement of the TSR performance conditions that would result in the lowest number of LTIP Units earned. This would be achievement at the lowest level for the absolute TSR performance condition (33.3%) in each of the three performance periods. As a result of Ms. Tehrani and Messrs. Richards and Gaffney’s termination of employment, each was not eligible to receive any grants of LTIP Units from the 2015 Annual Awards.
(4)Represents Inducement Awards to each of Messrs. Glimcher, Yale, Drought and Mmes. Indest and Tehrani.
(5)The value represented for the respective Inducement Award, Performance-Based LTIP Allocations (for purposes of this table only, “Performance Award”), and 2015 Annual Awards of LTIP Units for each Named Executive was computed in accordance with FASB ASC Topic 718.
Narrative to Summary Compensation Table and Grants of Plan‑Based Awards Table
The disclosures contained in the two preceding tables include both cash and equity compensation. For Named Executives that experienced an increase in total compensation from 2014 to 2015, this increase is mainly attributable to the increase in salary compensationcurrent LIBOR rates and the payout for non-equity incentive compensation. Bonus payments from the 2015 Plan constituted the largest componentexistence of cash compensation reported. Generally, a Named Executive’s aggregate salary and bonus plan compensation account for approximately 43% to 83% of the individual’s total compensation. As statedany derivative contracts currently in the CD&A, the employment agreements and Offer Letters governed the compensation elements for the Named Executives for 2015 and, as applicable, 2014.
The data listed in column (e) of the Summary Compensation Table and column (i) of the Grants Plan-Based Awards for 2015 table represents the aggregate grant date fair value for LTIP Unit awards and allocations to the Named Executives. We determined the aggregate grant date values by taking the closing market price of the Common Shares on the NYSE on the date of grant and multiplying it by the respective award received by or allocated to the respective Named Executive in the listed year.   With respect to LTIP Unit awards and allocations that had a market-performance component impacting whether the award was earned, the aggregate grant date fair value was determined using the Monte Carlo simulation technique which establishes a value by first simulating one or more variables that may affect or influence the value of the allocated performance-based LTIP Units and then determines their average value over the range of resultant outcomes. The performance conditions of both the 2015 Annual Awards and Performance-Based LTIP Allocations are described in greater detail in the section of the CD&A subtitled Equity Compensation. The size of each Named Executive’s Inducement Award, 2015 Annual Award, and Performance-Based LTIP Allocations was determined pursuant to the terms of their employment agreement or Offer Letter. Quarterly dividends are paid on the Inducement Awards at same rates payable to the Common Shareholders on the Common Shares. No dividends, distributions, or dividend equivalents were paid or allocated during 2015 for the Performance-Based LTIP Allocations or 2015 Annual Awards. The value of dividend payments is factored into the grant date fair value reported in the preceding tables and computed in accordance with FASB ASC Topic 718.

35



OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END 2015

The following table and accompanying footnotes set forth certain information concerning unexercised WP Glimcher Converted Options to purchase Common Shares, unvested WP Glimcher Converted Restricted Share Awards, unvested LTIP Units, and allocated yet unearned LTIP Units for each Named Executive that are outstanding or allocatedeffect.  Based upon our variable rate debt balance as of December 31, 2015. None2018, a 50 basis point increase in LIBOR rates would result in a decrease in earnings and cash flow of $2.3 million annually and a 50 basis point decrease in LIBOR rates would result in an increase in earnings and cash flow of $2.3 million annually. This assumes that the amount outstanding under our variable rate debt remains at $446.5 million, the balance as of December 31, 2018.
Item 8.    Financial Statements and Supplementary Data
The financial statements of the Named Executives has transferred anyCompany included in this report are listed in Part IV, Item 15 of this report.
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.    Controls and Procedures
Controls and Procedures of 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 awardsdesign and operation of WPG Inc.'s disclosure controls and procedures. Based on that are reported in the table below.
Option AwardsStock Awards
Name












(a)
Number of
Securities Underlying Unexercised Options
(#)
Exercisable






(b)
Number of
Securities
Underlying Unexercised Options
(#)
Unexercisable






(c)
Option Exercise
Price
($)









(d)
Option
Expiration Date










(e)
Number of Shares
or Units of Stock
That Have Not
Vested
(#)





(f)
Market Value of Shares or Units of Stock That Have Not Vested
($)(1)






(g)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)(2)

(h)
Equity Incentive Plan Awards:
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
 ($)(3)





(i)
Michael P. Glimcher58,7980  $32.1705/04/16
728,321(4)
$7,727,48618,307$194,237
Mark E. Yale19,5990  $32.1705/04/16
184,215(5)
$1,954,521  7,312$ 77,580
Keric M. “Butch” KnerrN/AN/AN/AN/A
22,500(6)
$ 238,725  6,465$ 68,594
Thomas J. Drought, Jr.
Option Grant Dates
05/05/06 Award
03/05/10 Award


  7,839
  3,135


N/A
N/A


  $32.17
  $ 5.76


05/04/16
03/04/20
118,684(7)
$1,259,237  4,960$ 52,626
Melissa A Indest
Option Grant Dates
05/05/06 Award
03/08/07 Award
03/14/08 Award
03/05/10 Award


  3,919
  3,919
  3,919
  2,613


N/A
N/A
N/A
N/A


  $32.17
  $34.80
  $13.96
  $ 5.76


05/04/16
03/07/17
03/13/18
03/04/20

33,424(8)

$ 354,629

  3,621

$ 38,419
Former Executive Officers
Mark S. OrdanN/AN/AN/AN/A
  N/A(9)
N/A36,454$386,777
C. Marc RichardsN/AN/AN/AN/A
22,500(10)
$ 238,7256,422$ 68,137
Farinaz S. TehraniN/AN/AN/AN/A
15,000(11)
$ 159,1503,323$ 35,257
Michael GaffneyN/AN/AN/AN/A
11,250(12)
$ 119,3633,322$ 35,246

(1)The listed amounts represents the aggregate market value of the unvested securities listed in column (f) as computed by multiplying the Common Shares’ closing market price of $10.61 per share as listed on the NYSEevaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2015 by the number of unvested securities listed in the adjacent column (f) (amounts are stated to the nearest dollar).
(2)The listed amounts for Messrs. Glimcher, Yale, Drought and Mmes. Indest and Tehrani represents the threshold level of performance for the 2015 Annual Awards and, as applicable, the Performance-Based LTIP Unit Allocations and performance-based LTIP Unit allocations awarded during 2014 (the “2014 Performance-Based LTIP Unit Allocations”). For Messrs. Ordan, Knerr, Richards, and Gaffney, the listed amount represents threshold level of performance for each person’s 2015 Annual Awards and, with respect to each performance year/period, the 2014 Performance-Based LTIP Unit Allocations. Estimated payouts for threshold performance for Messrs. Ordan, Knerr, Richards and Gaffney with respect to their 2014 Performance-Based LTIP Allocations is 34,101, 5,994, 5,994, and 2,997, respectively. For Messrs. Richards and Gaffney, eligibility to receive a payout for the 2015 Annual Awards and 2014 Performance-Based LTIP Unit Allocations was forfeited in connection with their respective employment termination. Mr. Ordan’s eligibility to receive a payout of the 2014 Performance-Based LTIP Unit Allocations was forfeited on January 1, 2016 pursuant to the terms of the Consulting Agreement. Ms. Tehrani’s eligibility to receive a payout for the 2015 Annual Awards and Performance-Based LTIP Unit Allocations was also forfeited in connection with her termination of employment.
(3)Listed amounts represent the aggregate market value of the LTIP Units listed in column (h). The listed value was computed by multiplying the Common Shares’ closing market price of $10.61 as listed on the NYSE as of December 31, 2015 by the number of LTIP Units listed in the adjacent column (amounts are stated to the nearest dollar).

36



(4)Total represents Mr. Glimcher’s 648,472 unvested WP Glimcher Converted Restricted Share Awards and 79,849 unvested LTIP Units that comprise his Inducement Award. The vesting dates for Mr. Glimcher’s 648,472 unvested WP Glimcher Converted Restricted Share Awards are as follows subject to his continued employment on the applicable vesting date: (i) 19,586 shares vest on May 4, 2016, (ii) 36,994 shares vest in equal installments on May 10, 2016 and May 10, 2017, (iii) 249,450 shares vest on September 20, 2017, (iv) 42,247 shares vest in installments on May 9, 2016, May 9, 2017, and May 9, 2018, (v) 53,437 shares vest in installments on May 7, 2017, May 7, 2018, and May 7, 2019, and (vi) 246,758 shares vest on August 25, 2019. The LTIP Units that comprise Mr. Glimcher’s Inducement Award vest in one-fourth (25%) tranches on each of the first four anniversaries of the Merger Closing Date, subject to his continued employment on the applicable vesting date. Mr. Glimcher held an aggregate total of 58,798 outstanding WP Glimcher Converted Options at December 31, 2015. The option awards and restricted stock for Mr. Glimcher reflected in the table above are the byproduct of the conversion of GRT restricted common shares and stock options into WP Glimcher Converted Restricted Share Awards and WP Glimcher Converted Options at the Merger Closing Date using the Equity Award Exchange Ratio.
(5)
Total represents Mr. Yale’s 149,994 unvested WP Glimcher Converted Restricted Share Awards and 34,221 unvested LTIP Units that comprise his Inducement Award. The vesting dates for Mr. Yale’s 149,994 unvested WP Glimcher Converted Restricted Share Awards are as follows subject to his continued employment on the applicable vesting date: (i) 7,834 shares vest on May 4, 2016, (ii) 14,797 shares vest in installments on May 10, 2016 and May 10, 2017, (iii) 89,089 shares vest on September 20, 2017, (iv) 16,899shares vest in equal installments on May 9, 2016, May 9, 2017, and May 9, 2018, and (v) 21,375 shares vest in equal installments on May 7, 2017, May 7, 2018, and May 7, 2019. The LTIP Units that comprise Mr. Yale’s Inducement Award vest in one-fourth (25%) tranches on each of the first four anniversaries of the Merger Closing Date, subject to his continued employment on the applicable vesting date. The option awards and restricted stock for Mr. Yale reflected in the table above are the byproduct of the conversion of GRT restricted common shares and stock options into WP Glimcher Converted Restricted Share Awards and WP Glimcher Converted Options at the Merger Closing Date using the Equity Award Exchange Ratio.
(6)Total represents Mr. Knerr’s unvested time-based inducement LTIP Units which shall vest in equal installments on August 25, 2016, August 25, 2017, and August 25, 2018, subject to his continued employment on the applicable vesting date.
(7)
Total represents Mr. Drought 95,870 unvested WP Glimcher Converted Restricted Share Awards and 22,814 unvested LTIP Units that comprise his Inducement Award. The vesting dates for Mr. Drought’s 95,870 unvested WP Glimcher Converted Restricted Share Awards are as follows subject to his continued employment on the applicable vesting date: (i) 5,456 shares vest on May 4, 2016, (ii) 10,305 shares vest in installments on May 10, 2016 and May 10, 2017, (iii) 53,454shares vest on September 20, 2017, (iv) 11,769 shares vest in equal installments on May 9, 2016, May 9, 2017, and May 9, 2018, and (v) 14,886 shares vest in equal installments on May 7, 2017, May 7, 2018, and May 7, 2019. The LTIP Units that comprise Mr. Drought’s Inducement Award vest in one-fourth (25%) tranches on each of the first four anniversaries of the Merger Closing Date, subject to his continued employment on the applicable vesting date. The option awards and restricted stock for Mr. Drought reflected in the table above are the byproduct of the conversion of GRT restricted common shares and stock options into WP Glimcher Converted Restricted Share Awards and WP Glimcher Converted Options at the Merger Closing Date using the Equity Award Exchange Ratio.
(8)Total represents Ms. Indest’s 16,314 unvested WP Glimcher Converted Restricted Share Awards and 17,110 unvested LTIP Units that comprise her Inducement Award. The vesting dates for Ms. Indest’s 16,314 unvested WP Glimcher Converted Restricted Share Awards are as follows subject to her continued employment on the applicable vesting date: (i) 2,099 shares vest on May 4, 2016, (ii) 3,963 shares vest in installments on May 10, 2016 and May 10, 2017, (iii) 4,527 shares vest in equal installments on May 9, 2016, May 9, 2017, and May 9, 2018, and (iv) 5,725 shares vest in equal installments on May 7, 2017, May 7, 2018, and May 7, 2019. The LTIP Units that comprise Ms. Indest’s Inducement Award vest in one-fourth (25%) tranches on each of the first four anniversaries of the Merger Closing Date, subject to her continued employment on the applicable vesting date. The option awards and restricted stock for Ms. Indest reflected in the table above are the byproduct of the conversion of GRT restricted common shares and stock options into WP Glimcher Converted Restricted Share Awards and WP Glimcher Converted Options at the Merger Closing Date using the Equity Award Exchange Ratio.
(9)Pursuant to the terms of the Consulting Agreement, 115,207 LTIP Units that were part of Mr. Ordan’s one-time inducement LTIP Unit award received in June 2014, vested on December 31, 2015 in connection with the termination of Mr. Ordan’s employment. These units were to vest in three installments on the remaining anniversaries of May 28, 2014. These units are convertible into units of WPG L.P. and such units exchangeable into Common Shares or cash, on the later of: (i) the satisfaction of any conditions to exchange or conversion contained in WPG L.P.’s limited partnership agreement and the applicable certificate of designation and (ii) the first to occur of: (A) Mr. Ordan ceasing to serve as member of the Board for any reason, (B) May 28, 2017, and (C) immediately prior to a change in control (as such term is defined in Mr. Ordan’s employment agreement).
(10)The vesting of Mr. Richards’ 22,500 time-based inducement LTIP Units accelerated in connection with the termination of his employment on January 15, 2016. Additionally, as a result of Mr. Richards’ termination of employment, he is longer eligible to receive any grants of allocated performance-based LTIP Units or any other equity security of WPG or WPG L.P. The vesting became effective on February 15, 2016.
(11)The vesting of Ms. Tehrani’s 15,000 time-based inducement LTIP Units accelerated in connection with the termination of her employment on December 31, 2015.The vesting became effective on January 31, 2016.
(12)The vesting of Mr. Gaffney’s 11,250 time-based inducement LTIP Units accelerated in connection with the termination of his employment on December 31, 2015. The vesting became effective on January 31, 2016.

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37



OPTION EXERCISES AND STOCK VESTED
DURING THE YEAR 2015

The following table sets forth certain information concerning each exercise of WP Glimcher Converted Options to purchase Common Stock, vesting of WP Glimcher Converted Restricted Share Awards, and vesting of certain LTIP Unit awards held by certain of the Named Executives during the fiscal year ended December 31, 2015.
NameOption AwardsStock Awards
   


   
(a)
Number of Shares Acquired on Exercise
(#)



(b)
Value Realized on Exercise
($)



(c)
Number of Shares Acquired on Vesting
(#)


(d)
Value Realized
on Vesting
($)



(e)
Michael P. GlimcherN/AN/A  53,761
$ 826,459(2)
Mark E. Yale12,542
$162,231(1)
  20,460
$ 313,058(2)
Keric M. “Butch” KnerrN/AN/A    7,500
$ 90,900(3)
Melissa A. Indest      4,080
$ 60,357(2)
Thomas J. Drought, Jr.N/AN/A  13,222
$ 200,790(2)
Former Executive Officers
Mark S. OrdanN/AN/A153,610
$1,742,323(3)
C. Marc RichardsN/AN/A    7,500
$ 90,900(3)
Farinaz S. TehraniN/AN/AN/AN/A
Michael GaffneyN/AN/A    3,750
$ 45,450(3)

(1)Represents the aggregate dollar value realized by the respective Named Executive upon exercise of the listed WP Glimcher Converted Options as determined by taking the difference between the market price of the Common Shares underlying the listed WP Glimcher Converted Options (computed using the closing market price of the Common Shares as listed on the NYSE on the respective exercise date) and the exercise price of the respective WP Glimcher Converted Options. The amount stated is rounded to the nearest dollar.
(2)Represents the aggregate dollar value realized upon the lapse of the transfer restrictions (i.e., vesting) of the respective WP Glimcher Converted Restricted Share Awards listed as determined by multiplying the number of Common Shares underlying the respective award included in the adjacent column for the respective Named Executive by the market value of the Common Shares on the respective vesting dates (computed using the closing market price of the Common Shares as listed on the NYSE as of the respective vesting dates). The amount stated is rounded to the nearest dollar.
(3)Represents the aggregate dollar value realized upon the vesting of the LTIP Units listed in column (d) as determined by multiplying the number of LTIP Units included in the adjacent column for the respective Named Executive by the market value of the Common Shares on the respective vesting date (computed using the closing market price of the Common Shares as listed on the NYSE as of the respective vesting date). The amount stated is rounded to the nearest dollar.

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Pension Benefits and Non-Qualified Deferred Compensation
None of our Named Executives participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by us.
Potential Payments upon Termination or Change in Control
The arrangements we have with the Named Executives for severance payments and benefits following a termination of employment or a change in control following such a termination are memorialized in various agreements between the respective Named Executive and WPG. Additionally, for certain Named Executives, we have made such payments in connection with their separation from the Company or transition to another role within our company during 2015 or shortly after the end of 2015. An overviewthe period covered by this report, the disclosure controls and procedures of WPG Inc. were effective at a reasonable assurance level.
Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our arrangements withfinancial reporting and the Named Executivespreparation of financial statements for payments upon termination of employment or change in control will be presented below as follows: (i) the arrangements pertaining to the Glimcher Named Executives; (ii) arrangements with Messrs. Ordan and Knerr; and (iii) arrangements that resulted in WPG making an employment termination related payment due to an employment termination event occurring in 2015 or shortly thereafter. Forexternal purposes of this disclosure and except as otherwise provided, the triggering date for the payments and benefits described below shall be December 31, 2015, the last business day for our company in 2015, when the closing market price for the Common Shares was $10.61.
Potential Payments upon Termination or Change in Control for Glimcher Named Executives
For Messrs. Glimcher and Yale, the terms and conditions for payments and benefits following the termination of their respective employment or change in control are governed by their respective employment agreement, equity award agreement(s), and severance benefits agreement. With respect to Mr. Drought and Ms. Indest, the terms and conditions for payments and benefits following the termination of their respective employment or change in control are governed by their respective severance benefits agreement and equity award agreement(s).
Messrs. Glimcher and Yale
In the event of a termination of employment for any reason of either of Messrs. Glimcher or Yale under their respective employment agreement (collectively, the “Agreements” and each an “Agreement”), WPG is obligated to provide such person with a lump sum cash payment within thirty (30) days of the termination date equal to the aggregate of the following amounts: (i) the respective executive’s annual base salary and vacation pay through the date of termination, (ii) the respective executive’s accrued annual bonus for the fiscal year immediately preceding the fiscal year in which the termination date occurs (other than any portion of such annual bonus that was previously deferred, which portion shall instead be paid in accordance with generally accepted accounting principles.
As of December 31, 2018, management assessed the applicable deferral election) if such bonuseffectiveness of WPG Inc.'s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, management has not been paidconcluded that, as of December 31, 2018, WPG Inc.’s internal control over financial reporting was effective to provide reasonable assurance regarding the datereliability of termination,our financial reporting and (iii) the respective executive’s business expenses that have not been reimbursed by WPG aspreparation of the termination date and were incurred by the executive prior to the termination datefinancial statements for external purposes in accordance with applicable Company policy, in the casegenerally accepted accounting principles.
Because of each of clauses (i) through (iii), to the extentits inherent limitations, internal control over financial reporting may not previously paid (the sum of the amounts described in clauses (i) through (iii) shall be referred to as the “Accrued Obligations.”Additionally, the Agreements provide that in the event of a termination of employment and to the extent not previously paid or provided, such executive shall receive any other amounts or benefits required to be paid or provided or that the executive is eligible to receive under any plan, program, policy, practice, contract, or agreement of WPG or any affiliate through the termination date. Furthermore, under the Agreements if the employment termination is for Cause (as such term is defined in the severance benefits agreement for each executive and provided below), Accrued Obligations shall not include the respective executive’s annual bonus for the fiscal year immediately preceding the fiscal year in which the termination occurred.

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With respect to benefits received by Messrs. Glimcher and Yale under their respective equity award agreements following a termination of employment, each agreement accelerates the vesting of their Inducement Awards. In the event that Mr. Glimcher’s employment is terminated by WPG other than for Cause (including as a result of the non-renewal of his employment agreement by WPG), by Mr. Glimcher for good reason (as such term is defined in the respective severance benefits agreements of Messrs. Glimcher and Yale), or as a result of Mr. Glimcher’s death or Disability (defined below), and, with respect to WPG or Mr. Glimcher terminating employment, only following Mr. Glimcher executing (and not revoking) a general release of claims against the Company; all unvested Inducement Awards shall vest. With respect to Mr. Yale’s award agreement for his Inducement Awards, the same conditions exist for the acceleration of vesting of the underlying LTIP Units following the termination of Mr. Yale’s employment as exist for Mr. Glimcher. Also, the respective award agreements for Messrs. Glimcher and Yale subject each to certain restrictive covenants, including perpetual confidentiality and non-disparagement covenants, and one-year post-employment non-competition, non-solicitation of employees, customer, suppliers, licensees, or other business relations of our company and a non-hire covenant (all, collectively, the “Covenants”). Additionally, in the event that either of Messrs. Glimcher or Yale breach the Covenants in their respective award agreements then all unvested and vested Inducement Awards held by the respective officer will be forfeited. Lastly, Messrs. Glimcher and Yale also hold unvested restricted Common Shares that were converted from Glimcher restricted common shares to restricted Common Shares and vested stock options that were also converted from Glimcher stock options as part of the Merger. Under Messrs. Glimcher and Yale’s respective award agreements for the converted unvested restricted Common Shares and vested stock options each holds, upon the termination of their respective employment with WPG (or any affiliate), for any reason (other than in connection with a termination covered by the Benefits Agreements (defined below)), all unvested restricted Common Shares and unexercised vested stock options shall immediately be forfeited; provided that the Compensation Committee may, in its sole and absolute discretion, allow the executive to retain the unvested restricted Common Shares and unexercised vested stock options for a period of time after such termination date.
With respect to Mr. Glimcher’s Agreement, he has no obligation to seek employment or take any other action in the event employment is terminated in order to mitigate amounts payable under his Agreement. Furthermore, nothing in Mr. Glimcher’s Agreement is intended to prevent or limit continuing ordetect misstatements.  Also, projections of any evaluation of effectiveness to future participation in any plan, program, policy, contract, agreement, or practice provided by WPG or any affiliate and for which Mr. Glimcher qualifies to participate. Also, under Mr. Glimcher’s Agreement, WPG will reimburse Mr. Glimcher to the fullest extent permitted by law for legal fees and expenses reasonably incurred by Mr. Glimcher as a result of Mr. Glimcher, WPG, or others seeking to enforce the terms of the his Agreement; provided, however (i) if such contest is initiated on or after a change in control or a change in control occurs during the pendency of such a contest, reimbursement of such fees and expenses will be provided only to the extent that Mr. Glimcher is found pursuant to a judgment, decree, or order to not have acted in good faith in bringing or defending the contest and (ii) if such contest is initiated prior to a change in control and a change in control does not occur during the pendency of the contest, reimbursement of Mr. Glimcher’s legal fees and expenses shall be provided only if Mr. Glimcher substantially prevails on at least one substantive issue in the contest. The aforementioned provisions are not present in Mr. Yale’s Agreement. Lastly, under the Agreements, both of Messrs. Yale and Glimcherperiods are subject to the Covenants.risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Payments
Independent Registered Public Accounting Firm’s Report on Internal Control Over Financial Reporting. Ernst & Young LLP, an independent registered public accounting firm, has audited our consolidated financial statements included in this Annual Report on Form 10-K and, as part of its audit, has issued its report, included herein on page F-3, on the effectiveness of our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting.  There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Controls and benefits for Messrs. GlimcherProcedures of Washington Prime Group, L.P.
Evaluation of Disclosure Controls and Yale following a changeProcedures. WPG L.P. maintains disclosure controls and procedures (as defined in controlRules 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) that are set forthdesigned to provide reasonable assurance that information required to be disclosed in the severance benefits agreements (each, collectivelyreports that WPG L.P. files or submits under the Exchange Act is recorded, processed, summarized and generally,reported within the “Benefits Agreements”) for each whichtime 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 contracts assumed bymet.
Management of WPG and amended in connectionL.P., with the Merger. The change in control payments and benefits under the Benefits Agreements are structured as “double trigger” benefits in that the change in control does not itself trigger the payments and benefits; rather, benefits and payments only become due in the event of a qualifying termination of employment in connection with or following the change in control. The Benefits Agreements are unique in that the change in control event occurred following the consummationparticipation of the MergerChief Executive Officer and Chief Financial Officer of WPG Inc., WPG L.P.'s general partner, evaluated the only condition that needs to occur for payments and benefits to be made is the qualifying termination of employment. The Benefits Agreements and the Agreements are structured such that payments and benefits to either Messrs. Glimcher or Yale could be due and payable under both following their respective terminations. Under the Benefits Agreements, the conditions for the receipt of benefits and payments are the same for Messrs. Glimcher and Yale. Similar to the Agreements, neither Messrs. Yale or Glimcher need to mitigate payments or benefits due under their respective Benefits Agreements following their respective terminations by seeking other employment nor is the amount due or benefit provided reduced by compensation earned in subsequent employment or retirement benefits received after termination. Additionally, like the Agreements, the Benefits Agreements inure to the benefit of and are binding on the respective legal representatives, successors, heirs, and legatees of Messrs. Glimcher and Yale. The Benefits Agreements also condition payment on the respective execution, delivery and non-revocation by Messrs. Glimcher and Yale of a release of claims against WPG, its directors, officers, employees and affiliates as well as the expirationeffectiveness of the thirty day period followingdesign and operation of WPG L.P.'s disclosure controls and procedures. Based on that evaluation, the respective termination (the “Release Period”) in which revocation can occur, before any payments under the Benefits Agreements can be made. The conditions under which paymentsChief Executive Officer and benefits are made under the Benefits Agreements and the natureChief Financial Officer of those payments and benefits are summarized below.

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Under the Benefits Agreements, if either Messrs. Glimcher or Yale’s respective employment is terminated: (i) by the Company without Cause (includingWPG Inc., WPG L.P.'s general partner, concluded that, as a result of the Company issuing a notice of nonrenewal of either of the Agreements); (ii) by Messrs. Glimcher or Yale, respectively, for good reason (as such term is defined in the respective severance benefits agreements of Messrs. Glimcher and Yale); or (iii) as a result of the respective death or Disability (defined below) of Messrs. Glimcher or Yale, then the following payments and benefits shall be made not later than following the expiration of the Release Period (the “Release Deadline”):
(1)Glimcher Properties Limited Partnership (“GPLP”), an affiliate of WPG, shall pay a lump sum severance payment equal to three (3) times the aggregate sum of: (A) the respective executive’s annual base salary in effect immediately prior to the effective time of the Merger plus (B) the target annual cash bonus opportunity applicable to the respective executive under the applicable cash bonus plan(s) in which the respective executive participates in the year in which the effective time of the Merger occurs.
The immediate vesting of any WP Glimcher Converted Restricted Share Awards, WP Glimcher Converted Options, Inducement Awards, and Performance-Based LTIP Allocations held by the respective executive which are unvested on the date of termination of the respective executive’s employment, and such vested securities, if applicable, shall become exercisable and remain exercisable until the earlier of the second annual anniversary of the date of the termination of the respective executive’s employment and the expiration of the original term of the option, shall no longer be subject to repurchase or any other forfeiture restrictions, and shall be settled in accordance with their terms.  For any current Special Performance Period, or completed Special Performance Period as to which a grant of Performance-Based LTIP Unit Allocations has not been made by the date of the respective executive’s termination of employment, Performance-Based LTIP Unit Allocations shall be (A) granted on the fifth (5th) business day following the Release Deadline based (I) as to a current Special Performance Period, on actual performance through the date of the Executive’s termination of employment (projected to the end of the applicable performance period covered by this report, WPG L.P.'s disclosure controls and procedures were effective at a reasonable assurance level.
Management's Report on Internal Control Over Financial Reporting. Our management is responsible for absolute, but not for relative, performance goals), withestablishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the amount earned not pro-rated for the partial completionreliability of the Special Performance Period, and (II) as to a completed Special Performance Period as to which a grant of Performance-Based LTIP Unit Allocations has not been made by the date of the respective executive’s termination of employment, on actual performance through the end of such Special Performance Period, with the amount earned not pro-rated, and (B) vested without regard to any applicable service vesting condition upon grant.
(2)GPLP shall for a period of eighteen months fund the premium equal to that provided under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or COBRA, to continue coverage of all medical, dental, and vision group insurance benefit programs or arrangements in which the respective executive was entitled to participate immediately prior the termination of employment, provided that the respective executive’s continued participation is allowable under the general terms and provisions of such plans and programs and provided further, that in the event that the respective executive becomes employed by any third party during such 18-month period, then upon the date of such employment the Executive shall no longer be entitled to any medical, dental, or vision insurance benefits described in the preceding clause.  Subject to the preceding sentence, in the event that the Executive’s participation in any such plan or program is barred, WPG shall arrange to pay the value of the COBRA premium at the pricing to the Executive as it existed at the time the termination of the Executive’s employment occurs.  If the Company reasonably determines necessary to avoid benefits under the plans referenced in this paragraph being taxable to the Executive, WPG shall report the value of such continued coverage as taxable income to the Executive.
(3)In the event the aforementioned payments constitute an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code (or for which a tax is otherwise payable under Section 4999 of the Code), then GPLP shall pay an additional amount (the “Additional Amount”) equal to the sum of: (A) all taxes payable by the respective executive under Section 4999 of the Code with respect to all such excess parachute payments (or otherwise) including, without limitation, the Additional Amount, plus (B) all federal, state and local income taxes for which the respective executive may be liable with respect to the Additional Amount or with respect to any excess parachute payment that is paid following the Effective Time, as soon as reasonably practicable after the date of such payment provided that such date will be no later than December 31st of the year after the year in which the respective executive remits such taxes in respect of such payment.

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Mr. Drought and Ms. Indest
Payments and benefits to Ms. Indest and Mr. Drought following a termination or a change in control are structured similarly to how the arrangements with Messrs. Glimcher and Yale are structured, except neither has an employment agreement with the Company under which payments or benefits would be due following such an event. Both Mr. Drought and Ms. Indest executed an amendment to their existing Benefits Agreements in connection with the Merger and as a condition precedent to their respective Offer Letters becoming effective. Like the amended Benefits Agreements for Messrs. Glimcher and Yale, the change in control payments and benefits under the amended Benefits Agreements for Mr. Drought and Ms. Indest are structured as “double trigger” benefitsour financial reporting and the initial conditionpreparation of a change in control has occurred with the completion of the Merger. The termination conditionfinancial statements for both Mr. Drought and Ms. Indest is satisfied if the employment of the respective executive is terminated by the Company without Cause, by the executive for good reason (as such term is defined in the respective Benefits Agreements of Mr. Drought and Ms. Indest), or as a result of the executive’s death or Disability (defined below). Similar to Messrs. Yale and Glimcher, following the termination event and not later than the Release Deadline, Mr. Drought would be entitled to the same payments and benefits that Messrs. Glimcher and Yale are entitled to receive. Following a termination event as described in her amended Benefits Agreement and not later than the Release Deadline, Ms. Indest would be entitled to all the same benefits except the lump sum severance payment is to be two (2) times the aggregate sum of: (i) her annual base salary in effect immediately prior to the effective time of the Merger plus (ii) her target annual cash bonus opportunity under the applicable plan in effect in the year in which the effective time of the Merger occurs. Lastly, each of Mr. Drought and Ms. Indest hold vested stock options and unvested restricted Common Shares and, like Messrs. Glimcher and Yale, upon their termination for any reason such unvested restricted Common Shares and unexercised stock options would be forfeited, except as set for the in the Benefits Agreements, unless the Compensation Committee decided to allow retention of the unvested restricted Common Shares and unexercised vested stock options for a period of time after such termination date.

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The table below and its accompanying footnotes illustrate for Messrs. Glimcher, Yale, Drought and Ms. Indest the various payments and benefits due each respective Glimcher Named Executive under their respective employment arrangements, Benefits Agreements, and equity award agreements each has following the employment terminations described above. As stated earlier, the amounts in the table are provided under the assumptions that the employment termination occurred on the last business day of fiscal year 2015, December 31, 2015, when the closing market price of the Company’s Common Stock was $10.61 per share, there is no underlying dispute concerning the termination, and the Compensation Committee did not exercise any discretion in approving any of the payments or benefits described below. All amounts are rounded to the nearest dollar.
 
Termination by
Us for Cause or by the Executive
without Good
Reason1
Termination Due
to Non‑Renewal
of Employment
Period by Company
or Executive2 
Termination by Us
Other Than for Cause,
by the Executive for
Good Reason, Death or
Disability of Executive4
Mr. Glimcher   
Payment and benefits under Benefits AgreementsN/A$13,878,080$13,878,080
Payment under the Agreements$836,814$ 836,814$ 836,814
Equity Award Vesting BenefitsN/A$ 7,727,486$ 7,727,486
Total$836,814
   $22,442,380(3)
   $22,442,380(3)
Mr. Yale   
Payments under Benefits AgreementsN/A$ 5,754,201$ 5,754,201
Payment under the Agreements$502,405$ 502,405$ 502,405
Equity Award Vesting BenefitsN/A$ 1,954,521$ 1,954,521
Total$502,405
   $ 8,211,127(3)
   $ 8,211,127(3)
Mr. Drought   
Payment under Severance Benefits AgreementN/AN/A$ 4,234,614
Equity Award Vesting BenefitsN/AN/A$ 1,259,237
TotalN/AN/A$ 5,493,851
Ms. Indest   
Payment under Severance Benefits AgreementN/AN/A$ 1,482,861
Equity Award Vesting BenefitsN/AN/A$ 354,629
TotalN/AN/A$ 1,837,490

(1)Pursuant to the Agreements for Messrs Glimcher and Yale, following the termination of employment for Cause or by the respective executive without good reason, payment would consist of the respective executive’s (A) annual base salary through the date of termination, which for Mr. Glimcher would be $825,000 and for Mr. Yale would be $500,000; (B) vacation pay through the date of termination, which for Mr. Glimcher would be $3,173 and for Mr. Yale would be $1,923; and (C) the respective executive’s unreimbursed business expenses as of the date of termination which for Mr. Glimcher would be $8,641 and for Mr. Yale would be $482. Because the termination is for Cause, the payout would not include accrued annual bonus for the fiscal year immediately preceding the fiscal year in which the termination date occurred. There would be no payments or benefits payable to Messrs. Yale or Glimcher under the Benefits Agreements following a for Cause termination or termination without good reason. No acceleration of outstanding vesting of equity awards is available following a termination for Cause or by the executive without good reason. Neither Mr. Drought nor Ms. Indest are entitled to any payments or benefits under their respective Offer Letters, Benefits Agreement, or equity award agreements following a termination for Cause or without good reason.
(2)Values listed consist of the following for the listed persons under the stated circumstance. For Mr. Glimcher, payments under the: (A) Benefits Agreement are only for the non-renewal of the employment term by the Company resulting in a payment of three times the sum of his annual base salary in effect immediately prior to the effective time of the Merger which was $875,500 and target bonus under the 2015 Plan of $1,657,380; funding of premiums for COBRA benefits for an 18 month period equal to $31,560 (inclusive of a 2% administrative fee); and payment of the Additional Amount equal to $6,247,880; B) Agreement for termination of employment period by either the Company or Mr. Glimcher resulting in payments as described in footnote 1 above; and (C) vesting (pursuant to the Benefits Agreements) of all of Mr. Glimcher’s outstanding restricted stock holdings (648,472) and unvested LTIP Unit holdings (79,849) at December 31, 2015 and valued at $10.61 per share/unit. With respect to Mr. Yale, payments under the: (A) Benefits Agreement are also only for the non-renewal of the employment term by the Company resulting in a payment of three times the sum of his annual base salary in effect immediately prior to the effective time of the Merger which was $500,000 and target bonus under the 2015 Plan of $625,000; funding of premiums for COBRA benefits for an 18 month period equal to $31,560 (inclusive of a 2% administrative fee); and payment of the Additional Amount equal to $2,347,641; (B) Agreement for termination of the employment period by either the Company or Mr. Yale resulting in payments as described in footnote 1 above; and (C) vesting (pursuant to the Benefits Agreements) of all of Mr. Yale’s outstanding restricted stock holdings (149,994) and unvested LTIP Unit holdings (34,221) at December 31, 2015 and valued at $10.61 per share/unit. Because Mr. Drought and Ms. Indest are employees at-will and have no employment term, there would be no payment or benefits received for a lawful termination of Mr. Drought’s or Ms. Indest employment by the Company or either executive.
(3)Total is for circumstance where respective employment term of Mr. Glimcher and Mr. Yale is terminated by the Company. In the event termination of the employment term is by Mr. Glimcher or Mr. Yale, respectively, then such executive would only receive payments pursuant to the Agreements has detailed in footnote 1 above.

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(4)With respect payments for Messrs. Glimcher and Yale, the basis for any payments or benefits following a termination of employment of either person by the Company for other than Cause or by the respective executive for good reason is reflected in footnote 2 above. With respect to Mr. Drought and Ms Indest, in the event of a termination of employment by the Company for other than Cause or by the executive for good reason, payments and benefits would be authorized by Benefits Agreement as follows: (A) payment to Mr. Drought of three times the sum of his annual base salary in effective immediately prior to the effective time of the Merger which was $412,000 and target bonus under the 2015 Plan of $424,050; funding of premiums for COBRA benefits for an 18 month period equal to $31,560 (inclusive of 2% administrative fee); and payment of the Additional Amount equal to $1,694,904; and (B) payment to Ms. Indest of two times the sum of her annual base salary in effective immediately prior to the effective time of the Merger which was $250,000 and target bonus under the 2015 Plan of $211,832; (C) funding of premiums for COBRA benefits for an 18 month period equal to $1,298 (inclusive of 2% administrative fee); and (D) payment of the Additional Amount equal to $557,899. Additionally, Mr. Drought would be entitled to vesting (pursuant to the Benefits Agreements) of all of Mr. Drought’s outstanding restricted stock holdings (95,870) and unvested LTIP Unit holdings (22,814) at December 31, 2015 and valued at $10.61 per share/unit. Ms. Indest would be entitled to vesting (pursuant to the Benefits Agreements) of all of her outstanding restricted stock holdings (16,314) and unvested LTIP Unit holdings (17,110) at December 31, 2015 and valued at $10.61 per share/unit.
With respect to Messrs. Yale and Glimcher, the Agreements provide that the Accrued Obligations include the respective executive’s accrued annual bonus for the fiscal year immediately preceding the fiscal year in which the termination date occurs if such bonus has not been paid as of the date of termination. However, these amounts were not included in the table above for Messrs. Yale and Glimcher because fiscal year 2014 bonuses were approved by the compensation committee of the Glimcher Board of Trustees and paid as of the December 31, 2015 presumed termination date. With respect to the Performance-Based LTIP Unit Allocations, no payout under the respective Benefits Agreements was disclosed in the tables above because for the current Special Performance Period, actual performance of the Company’s TSR goals for the Common Shares through December 31, 2015 does not result in any grant of LTIP Units under the absolute or relative performance goals for the current Special Performance Period. Furthermore, no Special Performance Period has been completed, so there would be no payout on that basis.
Definitions for Cause and Disability Used Above
“Cause” shall mean: (i) the Glimcher Named Executive’s (the “Executive”) willful failure to perform or substantially perform the Executive’s material duties with the Company; (ii) illegal conduct or gross misconduct by the Executive that is willful and demonstrably and materially injurious to the Company’s business, financial condition or reputation; (iii) a willful and material breach by the Executive of the Executive’s obligations under the Benefits Agreement or the Agreement, including without limitation a material and willful breach of the restrictive covenants and confidentiality provisions set forth in the Agreement; or (iv) the Executive’s conviction of, or entry of a plea of guilty or nolo contendere with respect to, a felony crime or a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct; provided, however, that the actions in (i) and (iii) above will not be considered Cause unless the Executive has failed to cure such actions within thirty (30) days of receiving written notice specifying, with particularity, the events allegedly giving rise to Cause and, further, provided, that, such actions will not be considered Cause unless the Company provides the Executive with written notice of the events allegedly giving rise to Cause within ninety (90) days of any executive officer of the Company (excluding the Executive, if applicable at the time of such notice) having knowledge of the relevant action. Further, no act or failure to act by the Executive will be deemed “willful” unless done or omitted to be done not in good faith or without reasonable belief that such action or omission was in the Company’s best interests, and any act or omission by the Executive pursuant to authority given pursuant to a resolution duly adopted by the Board or on the advice of counsel for the Company will be deemed made in good faith and in the best interests of the Company.
Additional language in “Cause” definition applicable only to Mr. Glimcher:
The Executive will not be deemed to be discharged for Cause unless and until there is delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board (excluding the Executive), at a meeting called and duly held for such purpose (after reasonable notice to Executive and an opportunity for the Executive and the Executive’s counsel to be heard before the Board), finding in good faith that Executive is guilty of the conduct set forth above and specifying the particulars thereof in detail.
“Disability” shall mean the “permanent and total disability” of the Glimcher Named Executive’s as defined in Section 22(e)(3) of the Code, or any successor provision thereto.

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Potential Payments upon Termination or Change in Control for Messrs. Knerr and Ordan
Mr. Knerr
With respect to Mr. Knerr, payments and benefits for any termination of employment or in connection with a change in control are governed by his employment agreement and equity award agreement.
Cash payments payable to Mr. Knerr in the event of a termination of employment or change in control are set forth in his employment agreement. With respect to a termination of Mr. Knerr’s employment, if termination is by the Company other than for “Cause” (defined below) or by Mr. Knerr for “Good Reason” (defined below) (within six months after the Good Reason event), then subject to Mr. Knerr timely executing (and not revoking) a general release of claims against the Company, Mr. Knerr is entitled to receive the following payments and benefits from the Company on the fifth business day after the expiration of the release execution and revocation period:
(i)if a change in control has not occurred within the 24 months prior to Mr. Knerr’s termination of employment, a lump sum cash payment equal to his annual base salary in effect immediately prior to the date of termination which if the termination occurred on December 31, 2015 the payment would be $495,000; or
(ii)if a change in control has occurred within 24 months prior to Mr. Knerr’s termination of employment, a lump sum cash payment of $1,361,247 which is the sum of Mr. Knerr’s: (1) annual base salary in effect immediately prior to the date of termination ($495,000) and (2) target annual bonus for the year in which the date of termination occurs ($866,247), and (3) unless otherwise agreed to by Mr. Knerr, the waiver of any service‑based vesting conditions with respect to any outstanding long‑term incentive awards held by Mr. Knerr.
At December 31, 2015, Mr. Knerr held 22,500 unvested inducement LTIP Units which using the closing price of the Common Shares on December 31, 2015 had a value of $238,725. Additionally, pursuant to the terms of Mr. Knerr’s inducement LTIP unit award agreement executed in fiscal year 2014, in the event the Company terminates Mr. Knerr’s employment other than for Cause or Mr. Knerr terminates his employment for Good Reason, in each caseexternal purposes in accordance with generally accepted accounting principles.
As of December 31, 2018, management assessed the termseffectiveness of his employment agreement (subject to Mr. Knerr executing (and not revoking) a general release of claims againstWPG L.P.'s internal control over financial reporting based on the Company), all remaining unvested inducement LTIP Units will vest. Mr. Knerr’s employment agreement does not providecriteria for any payments or equity accelerationeffective internal control over financial reporting established in the event of his disability or death or termination of employmentInternal Control - Integrated Framework (2013) issued by the CompanyCommittee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, management has concluded that, as of December 31, 2018, WPG L.P.’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for causeexternal purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or by Mr. Knerr without good reason. Lastly pursuantdetect misstatements.  Also, projections of any evaluation of effectiveness to Mr. Knerr’s inducement LTIP unit award agreement, he isfuture periods are subject to the Covenants. Inrisk that controls may become inadequate because of changes in conditions, or that the event Mr. Knerr’s breaches anydegree of the Covenants then all his unvested and vested inducement LTIP units will be forfeited.
Defined Terms
“Cause”means: (i) Mr. Knerr’s willful failure to perform or substantially perform his dutiescompliance with the Company; (ii) illegal conductpolicies or gross misconduct by Mr. Knerr that is willful and demonstrably and materially injurious to the Company’s business,procedures may deteriorate.
Independent Registered Public Accounting Firm’s Report on Internal Control Over Financial Reporting. Ernst & Young LLP, an independent registered public accounting firm, has audited our consolidated financial condition or reputation; (iii) Mr. Knerr’s indictment for, or entry of a plea of guilty or nolo contendere with respect to, a felony crime or a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct; or (iv) Mr. Knerr’s willful and material breach of any noncompetition or nonsolicitation restrictive covenants or confidentiality provisions set forthstatements included in any written agreement with the Company; provided, however, that an action in (i) or (iv) above will not be considered Cause unless Mr. Knerr has failed to cure such action (to the sole satisfaction of the Company) within thirty (30) days after receiving written notice from the Company specifying with particularity the events allegedly giving rise to Cause.
“Good Reason” means the occurrence of any one of the following events without the prior written consent of Mr. Knerr: (i) a material diminution of Mr. Knerr’s base pay, duties, responsibilities, authorities, powers or functions as of the Effective Date; (ii) a relocation that would result in Mr. Knerr’s principal location of employment being moved fifty (50) miles or more away from his or her principal location as of the Effective Datethis Annual Report on Form 10-K and, as a result, the Executive’s commute increasing by fifty (50) miles or more; or (iii) the failurepart of the Company to obtain a satisfactory agreement from any successor to the Company to assume and perform the obligations of the Company hereunder as contemplated by Section 4.8 of Mr. Knerr’s employment agreement; provided, however, that an action described in (i) through (iii) above will not be considered Good Reason unless the Mr. Knerrits audit, has given the Company written notice thereof within sixty (60) days afterissued its occurrence, specifying with particularity the action that gives rise to Good Reason, and the Company has failed to remedy such action within sixty (60) days after receiving such notice.

45



Mr. Ordan
On May 31, 2015, WPG entered into the Consulting Agreement with Mr. Ordan, which provides that, as of January 1, 2016 (the "Transition Date"), Mr. Ordan will (i) cease to be an employee of WPG and Executive Chairman of the Board and will instead serve as the non-executive Chairman of the Board, and (ii) provide consulting services to the Board and the Company’s Chief Executive Officer through May 28, 2017 (the “Consulting Period”) unless his services are earlier terminated in accordance with the Consulting Agreement.
From the Transition Date, the Consulting Agreement supersedes Mr. Ordan's employment agreement, subject to certain limited exceptions set forth in the Consulting Agreement. The Consulting Agreement's effectiveness was contingentreport, included herein on Mr. Ordan remaining employed with WPG through December 31, 2015. If Mr. Ordan's employment with WPG was terminated for any reason prior to January 1, 2016, the Consulting Agreement would have been null and void and the terms of his employment agreement would have controlled. Given that Mr. Ordan was not terminated prior to December 31, 2015 and the Consulting Agreement as well as the terms of any effective equity award agreements are the relevant documents now in force, the disclosure in this section as it pertains to potential payments to Mr. Ordan following the termination of services or a change in control will deal solely with the applicable terms and conditions in the Consulting Agreement and any effective equity award agreements as those are the documents that control in the event of an actual termination of Mr. Ordan’s services or a change in control. Additionally, for purposes of disclosure relating only to Mr. Ordan, we assume the triggering event occurred on January 1, 2016, but will continue to use $10.61 for the last closing market price for the Common Shares as that price was the most recently available price on January 1, 2016.
During the term of the Consulting Agreement, Mr. Ordan receives the following compensation: (i) an annualized cash consulting fee of $350,000 (payable in equal monthly installments) (the "Consulting Fee"), (ii) while he is a member of the Board, an annual retainer (pro-rated for the period from the Transition Date through May 28, 2016) in the same amount and in the same form as other non-employee independent members of the Board, and (iii) while he is non-executive Chairman of the Board, an additional annual cash retainer of $100,000 (pro-rated for the period from the Transition Date through May 28, 2016) in respect of his services as non-executive Chairman of the Board, paid at the same time as the annual retainer.
The Consulting Agreement also provides that Mr. Ordan is entitled to: (i) an annual cash bonus in respect of the Company’s 2015 fiscal year based on actual performance, (ii) on December 31, 2015, full vesting of any then unvested inducement LTIP units; provided that such inducement LTIP units will be convertible into units of WPG L.P., and such units exchangeable into Common Shares or cash,page F-10, on the latereffectiveness of (1) the satisfaction ofour internal control over financial reporting.
Changes in Internal Control Over Financial Reporting.  There have not been any conditions to exchange or conversion containedchanges in WPG L.P.'s limited partnership agreement and the applicable certificate of designation and (2) the first to occur of (A) Mr. Ordan ceasing to serve as a member of the Board for any reason, (B) May 28, 2017, or (C) immediately prior to a change inour internal control over financial reporting (as defined in the employment agreement), and (iii) the ability to earn an annual LTIP award in respect of fiscal year 2015, subject to achievement of applicable performance targets, with any such annual LTIP award to be fully vested on the date of grant. The Consulting Agreement providesRule 13a-15(f)) that other than as described above, all equity awards held by Mr. Ordan as of the Transition Date which are then unvested shall be forfeited, and any right Mr. Ordan had under his employment agreement to receive grants of equity awards on or following the date of the Consulting Agreement shall be forfeited.
The Consulting Period may be terminated by Ordan or WPG at any time and for any reason (or no reason) by providing the other party with not less than 30 days advance written notice of such termination. Additionally, the Consulting Period will terminate immediately upon Ordan accepting full-time employment with another employer.
Except as further explained below, upon the termination of the Consulting Period, Mr. Ordan shall cease receiving the Consulting Fee, and shall only be entitled to any accrued but unpaid portion of the Consulting Fee through the date of the termination of the Consulting Period plus any incurred but unpaid business expenses that are properly submitted under WPG’s expense reimbursement policy (the “Accrued Amounts”). If the Consulting Agreement is terminated in this manner, other than the Accrued Amounts, WPG shall have no further liability to Ordan in his capacity as a consultant to WPG. The termination of the Consulting Period shall have no impact on Ordan’s continued position on the Board.
Notwithstanding anything discussed above to the contrary, in the event that the Consulting Period is terminated by WPG other than for “Cause” (as defined below) or by Ordan for “Good Reason” (as defined below), the Company shall pay to Ordan (i) the Accrued Amounts and (ii) within ten (10) business days following such termination, any portion of the Consulting Fee that would have been payable through May 28, 2017 had such termination not occurred and which remains unpaid as of the date of such termination (with no duty of mitigation and no offset for other earnings). If the Consulting Agreement is terminated in this manner, other than the payment described in the preceding sentence and the Accrued Amounts, WPG shall have no further liability to Ordan in his capacity as a consultant to WPG.

46



For purposes of this section regarding Mr. Ordan, “Cause” means, (i) Mr. Ordan’s willful failure to perform or substantially perform the services under the Consulting Agreement; (ii) illegal conduct or gross misconduct by Ordan in the performance of the such services that is willful and demonstrably and materially injurious to WPG’s business, financial condition or reputation; (iii) a willful and material breach by Ordan of his obligations under the Consulting Agreement or the release attached thereto (including for the avoidance of doubt any provisions of the Mr. Ordan’s employment agreement surviving) or that certain letter from Ordan to WPG dated the same date as the Consultant Agreement; (iv) Mr. Ordan’s conviction of, or entry of a plea of guilty or nolo contendere with respect to, a felony crime or a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct; provided, however, that the actions in (i) and (iii) above will not be considered Cause unless Ordan has failed to cure such actions within thirty (30) days of receiving written notice from the Board specifying, with particularity, the events allegedly giving rise to Cause and further provided that such actions will not be considered Cause unless the Board provides written notice within ninety (90) days of any member of the Board’s (excluding Ordan if applicable at the time of such notice) having knowledge of the relevant action. Further, no act or failure to act by Ordan will be deemed “willful” unless done or omitted to be done not in good faith or without reasonable belief that such action or omission was in WPG’s best interests, and any act or omission by Ordan pursuant to authority given pursuant to a resolution duly adopted by the Board or on the advice of counsel for WPG will be deemed made in good faith and in the best interests of WPG. The Consulting Period will not be deemed to have been terminated by WPG for Cause unless and until there is delivered to Ordan a copy of a resolution duly adopted by the affirmative vote of not less than two thirds (2/3) of the entire membership of the Board (excluding Ordan, if he is then a member of the Board), at a meeting called and duly held for such purpose (after reasonable notice to Consultant and an opportunity for Ordan and Ordan’s counsel to be heard before the Board), finding in good faith that Ordan has engaged in the conduct set forth above and specifying the particulars thereof in detail.
WPG; provided, however, that any such breach will not be considered Good Reason unless Ordan shall provide notice of such breach to WPG in writing within sixty 60 days of Ordan’s knowledge of such breach, and WPG has failed to cure such breach within thirty (30) days of receiving such written notice. Unless Ordan gives WPG written notice of any such breach within 120 days of the initial existence of such breach which, after any applicable notice and the lapse of any applicable 30-day grace period, would constitute Good Reason, such breach will cease to be an event constituting Good Reason.
Payments Made to Messrs. Richards and Gaffney and Ms. Tehrani Upon Termination of Employment
We entered into an employment agreement with Mr. Richards, dated as of June 3, 2014, as amended (the “Richards Agreement”) which was generally in the same form as the employment agreement with Mr. Knerr. On January 15, 2016 (the “Separation Date”), Mr. Richards’ employment with our company as Executive Vice President, Chief Administrative Officer was terminated thereby terminating his employment agreement.
Mr. Richard’s termination was deemed to be a termination other than for “cause” under the Richards Agreement, entitling him to receive certain payments under the Richards Agreement upon our receipt of a general release of claims. Following our receipt of such release on and the expiration of the revocation period, Mr. Richards received: (i) a lump sum cash payment equal to $2,250,000 which equaled the sum of two times Mr. Richards’: (1) annual base salary in effect immediately prior to the Separation Date which was $450,000 and (2) target annual cash bonus under the 2015 Plan which was $675,000 and (ii) upon expiration of the relevant waiting period, accelerated vesting of 22,500 unvested LTIP Units (the “Units”) held by Mr. Richards. In the general release Mr. Richards executed in connection with the termination of his employment, Mr. Richards forfeited any right to receive any payout of performance-based LTIP Units allocated to Mr. Richards pursuant to the award agreement for the Units.
With respect to Mr. Gaffney, the employment agreement between Mr. Gaffney and the Company terminated on December 31, 2015 when Mr. Gaffney’s employment as the Company’s Executive Vice President, Head of Capital Markets was terminated without “cause” (as defined in the employment agreement by and among the Company and Mr. Gaffney, dated as of June 3, 2014). Similar to the Richards Agreement, Mr. Gaffney’s employment agreement entitled him to receive a severance payment following a termination other than for cause subject to the Company receiving a general release of claims from Mr. Gaffney. Following our receipt of such release on and the expiration of the revocation period, Mr. Gaffney received: a lump sum cash payment equal to $350,000 which equaled Mr. Gaffney’s annual base salary in effect on the date immediately preceding the date of his termination. Additionally, pursuant to the terms of his equity award agreement for his unvested and outstanding LTIP Unit holdings, the vesting of the 11,250 unvested LTIP Units held by Mr. Gaffney was accelerated.

47



In connection with his termination, Mr. Gaffney entered into a Transition and Consulting Agreement (the “Gaffney Agreement”), effective as of January 1, 2016 (the “Effective Date”), pursuant to which Mr. Gaffney is to provide consulting and advisory services to the Company with respect to matters within the scope of his knowledge and expertise for a term of one month commencing on January 1, 2016; provided, that, on the last day of such one-month period, and on the last day of each subsequent one-month period, the term shall automatically extend for one additional month unless and until terminated by the Company or Mr. Gaffney for any reason (or no reason) by providing the other party with not less than ten (10) days advance written notice of such termination, except in the case of a termination for “cause” (as such term is defined in the Gaffney Agreement), which would be effective immediately (the “Gaffney Consulting Period”). Under the Gaffney Agreement, Mr. Gaffney shall receive a monthly consulting fee of $43,750 payable on or around the 15th day of each month during the Gaffney Consulting Period. In the event that the Gaffney Consulting Period is terminated for cause, Mr. Gaffney will be required to repay a prorated portion of the Consulting Fee based on the number of days remaining in the Gaffney Consulting Period as of the date of such termination. The Company terminated the Consulting Agreement without cause effective March 31, 2016.
For Ms. Tehrani, her employment also terminated at the close of business on December 31, 2015. Her severance arrangement is similar to Mr. Gaffney and Mr. Richards in that under her employment agreement she was entitled to a severance payment following a termination by the Company not for cause and after execution of general release of claims. Additionally, her equity award agreement provided for the acceleration of the vesting of any outstanding and unvested LTIP Units she held. Following WPG’s receipt of the release subsequent expiration of the release revocation period, Ms. Tehrani received a lump sum cash payment equal to $375,000 which equaled Ms. Tehrani’s annual base salary in effect on the date immediately preceding the date of her termination and, upon expiration of the relevant waiting period, the vesting accelerated for the 15,000 unvested LTIP Units she held.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Louis G. Conforti, Robert J. Laikin, Niles C. Overly, and Ms. Jacquelyn R. Soffer. Following the consummation of the Merger on the Merger Closing Date, Mr. Overly was appointed to the Compensation Committee. The aforementioned persons were the only individuals who were members of the Compensation Committee during fiscal year 2015. The Board has appointed the Compensation Committee (or a duly authorized subcommittee thereof) to serve as the administrator of the Company’s compensation and equity-based plans. The Compensation Committee is the administrator for the WGPLP Plan, Glimcher Realty Trust Amended and Restated 2004 Incentive Compensation Plan (the “2004 GRT Plan”), and the Glimcher Realty Trust 2012 Incentive Compensation Plan (the “2012 GRT Plan”). The Company assumed the 2004 GRT Plan and 2012 GRT Plan in connection with the Merger, but all equity awards issued by the Company during 2015 were from the WPGLP Plan.
As the administrator, the Compensation Committee determines the number of options and other awards granted to the directors and employees of the Company under the WPGLP Plan and, the 2004 GRT Plan and 2012 GRT Plan, to the extent that outstanding awards from those plans, are modified or adjusted. None of the current members of the Compensation Committee are or were ever officers and/or employees of the Company or any of its subsidiaries. During the fiscal yearquarter ended December 31, 2015, no member of our Compensation Committee had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K. None of our Senior Executives serve on a board of directors2018 that have materially affected, or compensation committee of a company that has an executive officer serving on the Board or Compensation Committee.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section with management. Based upon this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement.
The Compensation Committee has furnished the foregoing report.
March 18, 2016Niles C. Overly, ChairpersonLois Conforti
Robert J. LaikinJacquelyn R. Soffer



48



COMPENSATION RISK ASSESSMENT
In addition to the risk oversight responsibilities of the Board and Audit Committee, the Compensation Committee conducts, in accordance with applicable SEC rules, an annual risk assessment of the Company’s compensation plans, policies, programs, and practices to determine whether such plans, policies, programs, and practices create risks that are reasonably likely to have a material adverse effect onmaterially affect, our internal control over financial reporting.
Item 9B.    Other Information
None.

Part III
Item 10.    Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated herein by reference to the Company. The review conducted by the Compensation Committee focused on a numberdefinitive proxy statement for our 2019 annual meeting of aspects relatingstockholders to our compensation program, but primarily on whether any compensation related risks have developed inherently or otherwise in connectionbe filed with the merger integration or if any compensation incentives have been adopted that encourage high risk behavior at the expense or detriment of long-term Company value and which are reasonably likelyCommission pursuant to create a material adverse effect. Based onRegulation 14A.
Item 11.    Executive Compensation
The information required by this assessment, the Compensation Committee concluded that the Company’s compensation plans, policies, programs, and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
As part of its assessment, the Compensation Committee evaluated the Company’s compensation plans and programs, including the plans and policies relatingitem is incorporated herein by reference to the Company’s salaried compensation, cash incentive plans, and long-term equity incentive awards,definitive proxy statement for our 2019 annual meeting of stockholders to determine their propensity to cause undue risk taking by employees, including the Company’s Senior Executives, relative to the level of risk associatedbe filed with the Company’s business model and operations. At December 31, 2015, our company, on a consolidated basis, had approximately 580 employees, of which approximately 130 were part‑time. These employees were generally paid in accordance with Glimcher pay practices as we continue to complete the Merger integration. With regard to executive compensation in 2015, the emphasis is on long‑term performance in addition to traditional salaried and cash incentive compensation. Furthermore, the Company incorporates a number of design features to mitigate undue risk in its compensation programs including, limits on both annual and long-term incentive plan payouts, the use of multiple performance metrics to measure individual and corporate performance, stock ownership guidelines, and equity compensation that encourages a long-term perspective on performance. The Company has a clawback policy applicable to performance‑based compensation as well as internal controls and financial transparency that limit the degree of financial risk that can be undertaken without scrutiny. The Compensation Committee completed its annual assessment in late 2015 as part of its obligation to oversee the Company’s compensation risk assessment process and made the findings summarized above available to the full Board.
COMPENSATION OF OUR DIRECTORS
Director Compensation
On May 21, 2015, our Board, upon the recommendation of both our Governance and Nominating Committee and our Compensation Committee, approved annual compensation for the period from May 28, 2015 to May 28, 2016 (the “Governance Year”) for each of the independent members of our Board, which then included Messrs. Conforti, Overly, Laikin and White and Ms. Soffer. Each independent director’s annual compensation totaled $200,000 based on a combination of cash and restricted stock units (“RSUs”) awarded from the WPGLP Plan The compensation structure for the Board’s independent directors for the Governance Year was exactly the same as the compensation structure for the comparable period during 2014 and 2015. The annual compensation for the Governance Year is allocated as follows: (a) 60% in RSUs, equal to $120,000, and (b) 40% in cash compensation, equal to $80,000. Payment of the cash portion is made in quarterly installments. Cash compensation for Mr. Niles C. Overly, who began serving on the Board on the Merger Closing Date, was pro-rated for the quarterly period during which his Board service commenced.
In connection with the RSU awards, we entered into an RSU award agreement with each independent director,Commission pursuant to which each independent director was granted 8,403 RSUs, which number of RSUs was determined by dividing $120,000 by $14.28, the closing price of the Common Shares on May 21, 2015. Each RSU represents a contingent right to receive one Common Share, and each independent director’s RSUs will vest on May 28, 2016, subject to such director’s continued membership on the Board. In the event the independent director leaves the Board, he or she will receive one Common Share for each vested RSU. Additionally, pursuant to their applicable RSU awards agreements, while the award is outstanding, each independent director is also paid Common Share dividend equivalent payments in connection with our quarterly dividend payments for the Common Shares, in cash, equal to regular cash dividends paid on Common Shares, regardless of whether the RSUs have vested. The value of dividend equivalent payments is factored into the grant date fair value reported in the table below and computed in accordance with FASB ASC Topic 718.Regulation 14A.

49



The following table, accompanying footnotes, and narrative discussion below set forth certain information with respect to the cash and other compensation paid or accrued by the Company for services rendered by the persons serving on the Board during the fiscal year ended December 31, 2015. All values stated are rounded to the nearest dollar.
DIRECTOR COMPENSATION TABLE FOR
THE YEAR 2015(1)
Name



(a)
Fees Earned or
Paid in Cash
($)

(b)
Stock
Awards(2)
($)

(c)
All Other Compensation(3)
($)

(d)
Total(4)
($)


(f)
Louis G. Conforti$80,000$119,995$0$199,995
Robert J. Laikin$80,000$119,995$0$199,995
Niles C. Overly$69,600$164,389$0$233,989
Jacquelyn R. Soffer$80,000$119,995$0$199,995
Marvin L. White$80,000$119,995$0$199,995

1.Messrs. Michael P. Glimcher, Mark Ordan, David Simon, and Richard S. Sokolov, who were directors on the Board during all or a portion of fiscal year 2015, are not included in this table because they did not receive any compensation for their service as a director. The compensation received by Messrs. Ordan and Glimcher for their respective service during 2015 as our Chief Executive Officer and Mr. Ordan’s later service as our Executive Chairman is set forth in the Summary Compensation Table. Mr. Simon’s term ended following the 2015 Meeting and Mr. Sokolov resigned from the Board on February 24, 2016.
2.Represents the grant date fair value computed in accordance with FASB ASC Topic 718 of the RSUs granted to the listed directors during 2015. For a description of the assumptions used in computing the aggregate grant date fair values of these awards, refer to Part IV of the Original Filing in Item 15 entitled “Exhibits and Financial Statement Schedules” in note 9 of the notes to consolidated financial statements. Except for Mr. Overly, each of the named directors held 14,783 RSUs at December 31, 2015. Mr. Overly received two grants of RSUs in 2015; one grant of 2,532 RSUs following his election to the Board after the Merger Closing Date and the other during the annual grants to directors in May. Mr. Overly owned 10,935 RSUs and 6,582 WP Glimcher Converted Options at December 31, 2015. The aggregate WP Glimcher Converted Options and WP Glimcher Converted Restricted Share Award held by Mr. Michael P. Glimcher at the end of fiscal year 2015 is reported in the footnotes to the table entitled “Outstanding Equity Awards at Fiscal Year-End 2015. The stock option awards held by Mr. Overly at December 31, 2015 are a byproduct of the conversion of his GRT stock options at the Merger Closing Date into WP Glimcher Converted Options using the Equity Award Exchange Ratio.
3.The total value of all perquisites and other personal benefits received by the respective named director during the fiscal year ended December 31, 2015 was less than $10,000, and therefore is not included in this table.
4.For each respective named director, the amount listed represents the aggregate total of the amounts listed in columns (b) through (d).


50



Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The tables and accompanying footnotes set forth below underinformation required by this item is incorporated herein by reference to the heading “Security Ownershipdefinitive proxy statement for our 2019 annual meeting of Certain Beneficial Owners & Management” provide the beneficial ownership information for each incumbent director, the Named Executives, and all directors and Senior Executives as a group of WPG’s Common Shares and other equity securities as well as all other persons or entities known by the Companystockholders to be beneficial owners of more than five percent of WPG’s outstanding Common Shares and such other classes of equity securities of WPG as of April 27, 2016, except as otherwise noted. All partial Common Shares and units have been rounded up tofiled with the next whole Common Share or unit. The table under the heading “Equity Compensation Plan Information” discloses information about Common Shares issued or available to be issuedCommission pursuant to our equity compensation plans as of December 31, 2015.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
COMMON STOCK OWNERSHIP


Name of Beneficial Owner(1)
Amount
Beneficially
Owned(2), (3)
Percent
Of
Class

Michael P. Glimcher

             1,059,000(6)
(5)

Mark E. Yale
              228,469(7)
(5)

Keric M. “Butch” Knerr
                 6,823(8)
(5)

Thomas J. Drought, Jr.

            137,343(9)
(5)

Melissa A. Indest

               45,815(10)
(5)

Mark S. Ordan

              55,332(11)

(5)

C. Marc Richards

                      0(12)
(5)

Farinaz S. Tehrani

                      0(12)
(5)

Michael Gaffney

                      0(12)
(5)

Louis G. Conforti

              14,783(13)
(5)

Richard J. Laikin

            54,783(14)
(5)

Niles C. Overly

           53,298(15)
(5)

Jacquelyn R. Soffer

         114,783(16)
(5)

Marvin L. White

          19,783(17)
(5)
BlackRock, Inc
   19,596,905(18)
10.58%(4)
The Vanguard Group
   26,317,396(19)
14.20%(4)
Vanguard Specialized Funds – Vanguard
REIT Index Fund
   13,354,262(20)
7.21%(4)
All directors and executive
officers as a group (11 persons(21))
1,652,869

(5)



51



7.5% SERIES H PREFERRED STOCK OWNERSHIP
Name of Beneficial Owner(1)
Amount
Beneficially
Owned(2), (3)
Percent
Of
Class

Heitman Real Estate Securities LLC

502,408(22)
12.56%(4)
6.875% SERIES I PREFERRED STOCK OWNERSHIP
Name of Beneficial Owner(1)
Amount
Beneficially
Owned(2), (3)
Percent
Of
Class

Heitman Real Estate Securities LLC

507,999(23)
13.37%(4)

(1)Unless otherwise indicated in the footnotes below, the address for each beneficial owner listed is 180 East Broad Street, Columbus, Ohio 43215.
(2)Certain directors and Senior Executives of the Company own O.P. Units which may (at the holder's election) be redeemed at any time for, at the sole option of WPG L.P., cash (at a price equal to the fair market value of an equal number of Common Shares), Common Shares on a one-for-one basis, or any combination of cash and Common Shares (issued at fair market value on a one-for-one basis).
(3)Unless otherwise indicated, the listed beneficial owner has sole voting and investment power with respect to the Common Shares, 7.5% Series H Cumulative Redeemable Preferred Shares of Beneficial Interest (“Series H Preferred Stock”) and the 6.875% Series I Cumulative Redeemable Preferred Shares of Beneficial Interest (“Series I Preferred Stock”), as applicable.
(4)
For the entity or group listed, the Percent of Class was computed based on185,310,857 Common Shares outstanding as April 27, 2016 and, in the case of all directors and executive officers as a group, the number of Common Shares issuable upon the exercise of options and the redemption of O.P. Units or LTIP Units held by all such members of such group. Common Shares issuable upon exercise of stock options, RSU holdings and LTIP Units are included only to the extent the related stock options, RSUs, and LTIP Units are exercisable or convertible into Common Shares within sixty (60) days following April 27, 2016. With respect to WPG's preferred stock, the Percent of Class for the Series I Preferred Stock is based on 3,800,000 shares outstanding as of April 27, 2016 and for the Series H Preferred Stock, the Percent of Class is based on 4,000,000 shares outstanding as of April 27, 2016.
(5)As applicable and as April 27, 2016, the percentage ownership of the listed person does not exceed one percent (1%) WPG's outstanding Common Shares.
(6)
Includes 775,017 Common Shares held directly by Mr. Glimcher, 99 Common Shares held directly by Mr. Glimcher’s spouse, and 31,976 Common Shares held in two trusts for the benefit of Mr. Glimcher’s nieces and nephews over which Mr. Glimcher serves as trustee. Also includes 193,110 O.P. Units held directly by Mr. Glimcher and 58,798 fully vested WP Glimcher Converted Options. Of Mr. Glimcher’s 775,017 Common Shares, 648,472 are WP Glimcher Converted Restricted Share Awards that have transfer restrictions that lapse at various dates in the future. Excluded from the total are: (i) 19,962 vested LTIP Units which may be converted (at Mr. Glimcher’s option) into a corresponding number of O.P. Units on a one-for-one basis subject to the terms and conditions of the applicable certificate of designation that relates to the units, (ii) 154,414 unvested LTIP Units, and (iii) 119,772 Performance-Based LTIP Allocations. None of Mr. Glimcher’s holdings are pledged as collateral or security.
(7)
Includes 208,870 Common Shares held directly by Mr. Yale and 19,599 fully vested WP Glimcher Converted Options. Of Mr. Yale’s 208,870 Common Shares, 149,994 are WP Glimcher Converted Restricted Share Awards that have transfer restrictions that lapse at various dates in the future. Excluded from the total are: (i) 8,555 vested LTIP Units which may be converted (at Mr. Yale’s option) into a corresponding number of O.P. Units on a one-for-one basis subject to the terms and conditions of the applicable certificate of designation that relates to the units, (ii) 44,677 unvested LTIP Units, and (iii) 51,330 Performance-Based LTIP Allocations. None of Mr. Yale’s holdings are pledged as collateral or security.
(8)
Includes 6,823 unrestricted Common Shares held directly by Mr. Knerr. Excluded from the total are: (i) 7,500 vested LTIP Units which may be converted (at Mr. Knerr’s option) into a corresponding number of O.P. Units on a one-for-one basis subject to the terms and conditions of the applicable certificate of designation that relates to the units, (ii) 41,321 unvested LTIP Units, and (iii) 30,000 performance-based LTIP Unit allocations awarded to Mr. Knerr in 2014. None of Mr. Knerr’s holdings are pledged as collateral or security.
(9)
Includes 126,369 Common Shares held directly by Mr. Drought and 10,974 fully vested WP Glimcher Converted Options. Of Mr. Drought’s 126,369 Common Shares, 95,870 are WP Glimcher Converted Restricted Share Awards that have transfer restrictions that lapse at various dates in the future. Excluded from the total are: (i) 5,704 vested LTIP Units which may be converted (at Mr. Drought’s option) into a corresponding number of O.P. Units on a one-for-one basis subject to the terms and conditions of the applicable certificate of designation that relates to the units, (ii) 33,234 unvested LTIP Units, and (iii) 34,221 Performance-Based LTIP Allocations. None of Mr. Drought’s holdings are pledged as collateral or security.
(10)
Includes 31,445 Common Shares held directly by Ms. Indest and 14,370 fully vested WP Glimcher Converted Options. Of Ms. Indest’s 31,445 Common Shares, 16,314 are WP Glimcher Converted Restricted Share Awards that have transfer restrictions that lapse at various dates in the future. Excluded from the total are: (i) 4,278 vested LTIP Units which may be converted (at Ms. Indest’s option) into a corresponding number of O.P. Units on a one-for-one basis subject to the terms and conditions of the applicable certificate of designation that relates to the units, (ii) 20,886 unvested LTIP Units, and (iii) 25,665 Performance-Based LTIP Allocations. None of Ms. Indest’s holdings are pledged as collateral or security.

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(11)Includes 45,000 unrestricted Common Shares held directly by Mr. Ordan, 5,000 Common Shares held in a trust for the benefit of Mr. Ordan’s child, and 5,332 unvested RSUs Mr. Ordan received in January 2016 as a portion of his compensation for serving on the Board. RSUs represent a contingent right to receive one Common Share. Upon Mr. Ordan leaving the Board, he will receive one Common Share for each vested RSU that he holds. Excluded from the total are: (i) 94,106 vested LTIP Units which may be converted (at Mr. Ordan’s option) into a corresponding number of O.P. Units on a one-for-one basis subject to the terms and conditions of the applicable certificate of designation that relates to the units and (ii) 153,610 vested LTIP Units held by Mr. Ordan that are not eligible to be converted into O.P. Units until the later of: (a) the satisfaction of any conditions to exchange or conversion contained in the WPG L.P. partnership agreement and certificate of designation and (b) the first to occur of (I) Mr. Ordan ceasing to serve as a member of the Board for any reason, (II) May 28, 2017, or (III) immediately prior to a change in control (as defined in Mr. Ordan’s now terminated employment agreement). None of Mr. Ordan’s holdings are pledged as collateral or security.
(12)Excludes vested LTIP Units the named individual holds which may be converted into a corresponding number of O.P. Units on a one-for-one basis (at such person’s option), subject to the terms and conditions of the applicable certificate of designation(s). For Mr. Richards, 30,000 vested LTIP Units are excluded and for Ms. Tehrani and Mr. Gaffney, 15,000 vested LTIP Units for each are excluded.
(13)Reflects Mr. Conforti’s holdings of 14,783 RSUs of which 6,380 RSUs are vested and 8,403 RSUs will vest within 60 days of April 27, 2016. RSUs represent a contingent right to receive one Common Share. Upon Mr. Conforti leaving the Board, he will receive one Common Share for each vested RSU that he holds.
(14)Includes 40,000 Common Shares held directly by Mr. Laikin as well as 14,783 RSUs of which 6,380 RSUs are vested and 8,403 RSUs will vest within 60 days of April 27, 2016. RSUs represent a contingent right to receive one Common Share. Upon Mr. Laikin leaving the Board, he will receive one Common Share for each vested RSU that he holds.
(15)Includes 35,781 Common Shares held directly by Mr. Overly, 6,582 fully vested WP Glimcher Converted Options as well as 10,935 RSUs of which 2,532 RSUs are vested and 8,403 RSUs will vest within 60 days of April 27, 2016. RSUs represent a contingent right to receive one Common Share. Upon Mr. Overly leaving the Board, he will receive one Common Share for each vested RSU that he holds.
(16)Includes 100,000 Common Shares held directly by Ms. Soffer as well as 14,783 RSUs of which 6,380 RSUs are vested and 8,403 RSUs will vest within 60 days of April 27, 2016. RSUs represent a contingent right to receive one Common Share. Upon Ms. Soffer leaving the Board, she will receive one Common Share for each vested RSU that she holds.
(17)Includes 5,000 Common Shares held directly by Mr. White as well as 14,783 RSUs of which 6,380 RSUs are vested and 8,403 RSUs will vest within 60 days of April 27, 2016. RSUs represent a contingent right to receive one Common Share. Upon Mr. White leaving the Board, he will receive one Common Share for each vested RSU that he holds.
(18)Based solely upon information contained in a Schedule 13G/A filed with the SEC on January 8, 2016 in which BlackRock, Inc. ("Blackrock") reported that it held sole power to vote 17,764,481 of the Common Shares reported in the table above and owned beneficially and had sole power to dispose of all of the Common Shares reported in the table above. The address of BlackRock reported in the Schedule 13G/A is 55 East 52nd Street, New York, NY 10022.
(19)
Based solely upon information contained in a Schedule 13G/A filed with the SEC on February 11, 2016 in which The Vanguard Group, Inc. (“Vanguard”) reported that it had sole dispositive power of 26,029,989 of the Common Shares reported in the table above, shared dispositive power of 287,407 of the Common Shares reported in the table above, sole voting power over 410,869 of the Common Shares reported in the table above, and shared voting power over 150,199 of the Common Shares reported in the table above. The address of Vanguard reported in the Schedule 13G/A is 7315 Wisconsin Avenue, Bethesda, Maryland 20814.
(20)Based solely upon information contained in a Schedule 13G/A filed with the SEC on February 9, 2016 in which Vanguard Specialized Funds – Vanguard REIT Index Fund (“Vanguard REIT”) reported that it has sole voting power over all of the Common Shares reported in the table above. The address of Vanguard REIT reported in the Schedule 13G/A is 7315 Wisconsin Avenue, Bethesda, Maryland 20814.
(21)Comprised of Senior Executives and incumbent directors.
(22)Based solely on a Schedule 13G/A filed with the SEC on February 12, 2016 by Heitman Real Estate Securities LLC (“Heitman”) in which it reported sole voting and dispositive power as to the Series H Preferred Stock. Heitman reported that it beneficially owned the shares reported above. The address of Heitman is 191 N. Wacker Drive, Suite 2500, Chicago, Illinois 60606.
(23)Based solely on a Schedule 13G/A filed with the SEC on February 12, 2016 by Heitman in which it reported sole voting and dispositive power as to the Series I Preferred Stock reported above. Heitman reported that it beneficially owned the shares reported above. The address of Heitman is 191 N. Wacker Drive, Suite 2500, Chicago, Illinois 60606.


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EQUITY COMPENSATION PLAN INFORMATION
Information about our existing equity compensation plan as of December 31, 2015 is as follows:
Plan categoryNumber of securities to
be issued upon
exercise of
outstanding options,
warrants and rights		Weighted‑average
exercise price of
outstanding
options,
warrants and rights		Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(a)(b)(c)
Equity compensation plans approved by security holders
3,443,028(1)
$16.38(2)
6,556,972
Equity compensation plans not approved by security holdersN/AN/AN/A
Total
3,443,028(1)
$16.38(2)
6,556,972

(1)Consists of a total of 486,825 inducement LTIP Units, up to a total of 755,835 performance‑based LTIP Units (at maximum), a total of 128,223 RSUs, a total of 926,964 restricted Common Shares, and a total of 1,145,181 stock options awarded or authorized to be awarded under the WPGLP Plan as of December 31, 2015.
(2)
The weighted-average exercise price is only applicable to outstanding stock options.

Regulation 14A.
Item 13.    Certain Relationships and Related Transactions and Director Independence
Certain Relationships & Related Party Transactions
Related Party Transactions with Simon
Agreements RelatingThe information required by this item is incorporated herein by reference to Our Separation from Simon
In connection with our separation from Simon, we and Simon entered into a separation agreement and entered into other agreements to effectuate our separation, provide a frameworkthe definitive proxy statement for our relationship with Simon after the separation and provide for the allocation between us and Simon2019 annual meeting of Simon’s assets, liabilities and obligations (including its investments, property and employee benefits and tax‑related assets and liabilities) attributablestockholders to periods prior to, at and after our separation from Simon, such as property management agreements, a transition services agreement, a tax matters agreement and an employee matters agreement. These agreements were approved on May 6, 2014 by our then current Board. During 2015, Messrs. David S. Simon, the current Chairman and Chief Executive Officer of Simon, and Richard S. Sokolov, the current President and Chief Operating Officer of Simon, served on the WPG Board as directors.
The Separation Agreement
The separation agreement sets forth, among other things, our agreements with Simon regarding the principal transactions that were necessary to separate us from Simon, including, among other things, the transfer of assets, the assumption of liabilities and the distribution of WPG’s Common Shares. It also sets forth other agreements that govern certain aspects of our relationship with Simon following the separation. Except as expressly set forth in the separation agreement or in any ancillary agreement, we were responsible for all costs and expenses incurred prior to the distribution date in connectionbe filed with the separation, including costs and expenses relating to legal and tax counsel, financial advisors and accounting advisory work related to the separation. We incurred no expenses or fees under the separation agreement for the fiscal year ended December 31, 2015.
Property Management Agreements
In connection with the separation, we entered into property management agreements with one or more subsidiaries of Simon,Commission pursuant to which those subsidiaries agreed to provide certain services to us under the direction of our executive management team. In addition, certain property management agreements that were in effect with respect to services provided by Simon in respect of certain mall properties continue in effect after the separation.Regulation 14A.

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Pursuant to the terms of the property management agreements, during the fiscal year ended December 31, 2015, Simon managed, leased, maintained and operated our mall properties that were transferred to us from Simon in the separation. Simon was responsible for negotiating new and renewal leases with tenants, marketing these malls through advertisements and other promotional activities, billing and collecting rent and other charges from tenants, making repairs in accordance with budgets approved by us and maintenance and payment of any taxes or fees. In exchange, we paid during the fiscal year ended December 31, 2015 an annual fixed rate property management fee to Simon in amounts ranging from 2.5% to 4% of base minimum and percentage rents. We also reimburse Simon for certain costs and expenses, including the cost of on‑site employees. In addition, Simon is also paid separate fees for its leasing, re‑leasing and development services relating to our malls that were transferred to us from Simon in the separation. For fiscal year ended December 31, 2015, we paid or will pay Simon approximately $32.7 million under these property management agreements, including approximately $16.6 million for reimbursed costs and expenses.
Property Development Agreement
In connection with the separation, we have entered into a property development agreement with Simon’s management services subsidiary pursuant to which it will plan, organize, coordinate and administer further development of approximately 13 of our mall properties, redevelop portions thereof, make improvements and perform other development work. In exchange, we will pay fees to Simon to cover pre‑development and development costs and expenses as determined on a project‑by‑project basis. For fiscal year ended December 31, 2015, we paid or will pay Simon approximately $1.6 million under the property development agreement. The Company provided Simon formal written notice on November 30, 2015 to terminate the property development agreement except for certain limited ongoing development projects, effective May 31, 2016.
Transition Services Agreement
We and Simon entered into a transition services agreement prior to the distribution pursuant to which Simon and its subsidiaries agreed to provide us, on a transitional basis, with various services. The services provided include information technology, accounts payable, payroll, and other financial functions, as well as engineering support for various facilities, quality assurance support, other administrative services and management and development and redevelopment services for approximately 19 of our community shopping center properties.
For fiscal year ended December 31, 2015, pricing for community shopping center property management support and back office administration is $5.0 million billed in quarterly installments, plus direct out‑of‑pocket expenses. Development services are provided at 2.5% of development costs. The Company provided Simon formal written notice on November 30, 2015 to terminate the transition services agreement effective May 31, 2016. For fiscal year ended December 31, 2015, we have paid or will pay Simon approximately $9.6 million for services provided by it under the transition services agreement, including approximately $3.8 million for reimbursed costs and expenses.
Tax Matters Agreement
We and Simon entered into a tax matters agreement prior to the distribution which generally governs Simon’s and our respective rights, responsibilities and obligations after the distribution with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the distribution and certain related transactions to qualify as tax‑free for U.S. federal income tax purposes), tax attributes, tax returns, tax elections, tax contests and certain other tax matters.
In addition, the tax matters agreement imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax‑free status of the distribution and certain related transactions. The tax matters agreement provides special rules that allocate tax liabilities in the event the distribution, together with certain related transactions, is not tax‑free. For fiscal year ended December 31, 2015, we have not incurred any costs or expenses payable to Simon with respect to the tax matters agreement.


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Employee Matters Agreement
We and Simon entered into an employee matters agreement in connection with the separation to allocate liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters. The employee matters agreement governs Simon’s and our compensation and employee benefit obligations relating to current and former employees of each company, and generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs. For fiscal year ended December 31, 2015, we have not incurred any costs or expenses payable to Simon with respect to the employee matters agreement.
Purchase of Jersey Gardens and University Park Village
Concurrently with our entering into the Merger agreement with Glimcher, on September 16, 2014, WPG L.P. and Simon Property Group, L.P. entered into a purchase and sale agreement pursuant to which our operating partnership subsidiary agreed to sell, or cause to be sold, to Simon’s operating partnership subsidiary, (a) the equity interests in the owner of Jersey Gardens, a regional mall in Elizabeth, New Jersey and (b) the equity interests in the owner of University Park Village, an open air center in Fort Worth, Texas, for $1.09 billion, subject to certain adjustments and apportionments, including with respect to the assumption of debt encumbering such assets. These equity interests were then owned by affiliates of Glimcher. Under a separate letter agreement, Glimcher Properties Limited Partnership, Glimcher’s operating partnership subsidiary, agreed to convey the equity interests in the owners of these properties directly to Simon Property Group, L.P. substantially simultaneously with the closing of our acquisition of Glimcher. Also, on the Merger Closing Date, the parties entered into an amendment to the purchase and sale agreement, pursuant to which the parties clarified which precise equity interests were to be acquired by Simon Property Group, L.P., and agreed to customary post‑closing obligations related to documentary and transfer taxes and payment of liability insurance deductibles. After closing adjustments and apportionments, the actual purchase price paid for the properties by Simon Property Group, L.P. was $1.09 billion, including assumed indebtedness of $405.1 million. The purchase and sale agreement was approved by the independent directors on our Board on September 15, 2014 in connection with the Board’s approval of the Merger agreement with Glimcher. On January 13, 2015, the Audit Committee ratified the amended purchase and sale agreement under our related person transaction approval policy.
Consulting Agreement with Mark S. Ordan
On May 31, 2015, WPG entered into the Consulting Agreement with Mr. Ordan, the Company’s then Executive Chairman.  The Consulting Agreement provides that, as of January 1, 2016 (the “Transition Date”), Mr. Ordan would (i) cease to be an employee of the Company and Executive Chairman of the Board and will instead serve as the non-executive Chairman of the Board, and (ii) provide consulting services to the Board and the Chief Executive Officer of the Company through May 28, 2017 (the “Expiration Date”) unless his services are earlier terminated in accordance with the Consulting Agreement’s terms.
From the Transition Date, the Consulting Agreement supersedes Mr. Ordan’s employment agreement with WPG (the “Ordan Employment Agreement”), subject to certain limited exceptions set forth in the Consulting Agreement.  The Consulting Agreement became fully effective on the Transition Date after Mr. Ordan’s employment with the Company as its Executive Chairman concluded on December 31, 2015. In consideration of his provision of services under the Consulting Agreement, during the term of the Consulting Agreement Mr. Ordan will receive the following compensation:  (i) an annualized cash consulting fee of $350,000 (payable in equal monthly installments) (the “Consulting Fee”), (ii) while he is a member of the Board, an annual retainer (prorated for the period from the Transition Date through the last day of the Governance Year) in the same amount and in the same form as other non-employee independent members of the Board, and (iii) while he is non-executive Chairman of the Board, an additional annual cash retainer of $100,000 (prorated for the period from the Transition Date through the last day of the Governance Year) in respect of his services as non-executive Chairman of the Board, paid at the same time as the annual retainer described in the preceding clause (ii).


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The Consulting Agreement also provides that Mr. Ordan is entitled to the following: (i) an annual cash bonus in respect of the Company’s 2015 fiscal year based on actual performance, (ii) on December 31, 2015, full vesting of any then-unvested inducement LTIP Units; provided that such inducement LTIP Units will be convertible into units of WPG L.P., and such units exchangeable into Common Shares or cash, on the later of: (a) the satisfaction of any conditions to exchange or conversion contained in the relevant limited partnership agreement and certificate of designation and (b) the first to occur of (1) Mr. Ordan ceasing to serve as a member of the Board for any reason, (2) May 28, 2017, or (3) immediately prior to a change in control, and (iii) the ability to earn an annual LTIP Unit award in respect of fiscal year 2015, subject to achievement of applicable performance targets, with any such annual LTIP Unit award to be fully vested on the date of grant. The Consulting Agreement provides that, other than as described above, all equity awards held by Mr. Ordan as of the Transition Date which are then unvested shall be forfeited, and any right Mr. Ordan had under the Ordan Employment Agreement to receive grants of equity awards on or following the date of the Consulting Agreement shall be forfeited.
Mr. Ordan’s consulting services under the Consulting Agreement may be terminated prior to the Expiration Date by either Mr. Ordan or the Company on not less than 30 days advance written notice, but if terminated by WPG other than for cause or by Mr. Ordan as a result of a material breach of the Consulting Agreement by WPG, then WPG will pay to Mr. Ordan, in addition to accrued but unpaid amounts, any unpaid portion of the Consulting Fee that would have been payable through May 28, 2017 had such termination not occurred.
The Consulting Agreement contained a provision requiring WPG to pay reasonable legal fees incurred by Mr. Ordan in connection with the negotiation and documentation of the Consulting Agreement in an amount not to exceed $10,000.
Policies and Procedures for Reviewing and Approving Related Party Transactions
As contemplated by our code of conduct, the Audit Committee must review and approve or ratify all related party transactions. Under the code of conduct, a “related party transaction” is a transaction, arrangement or relationship in which WPG (including any subsidiary) was, is or will be a participant, and in which any related person had, has or will have a direct or indirect interest. Our code of conduct defines a “related person” to be: (i) any person who is, or at any time since the beginning of WPG’s last fiscal year was, an executive officer, director, or director nominee, (ii) any person known to be the beneficial owners of more than 5% of any class of WPG’s voting securities; and (iii) any family members of any of the foregoing persons. Pursuant to the charter of the Audit Committee, the Audit Committee may not approve a related person transaction unless (i) it is in, or not inconsistent with, the best interests of the Company and (ii) where applicable, if the terms of such transaction are not at least as favorable to the Company as could be obtained from an unrelated third party. Under our code of conduct, related person transactions are prohibited unless approved or ratified by the Audit Committee.
Director Independence and Independence Determinations
Our Board has adopted a set of Governance Principles to assist it in guiding our corporate governance practices. Our Governance Principles provide that at least a majority of our Board must be independent at all times. Independence is determined in accordance with the corporate governance requirements of the NYSE listing standards, and other applicable laws, rules and regulations regarding director independence in effect from time‑to‑time. The Governance and Nominating Committee annually reviews all commercial and charitable relationships between the Company and the directors and presents its findings and recommendations to the Board, which makes a final determination regarding the independence of the directors. For relationships not covered by the standards described above, the determination of whether a director is independent or not is made by the directors who satisfy those standards.
In conducting its annual director independence assessment following the conclusion of the Company’s 2015 fiscal year, the Governance and Nominating Committee and the Board reviewed a transaction indirectly involving Mr. Louis Conforti to determine whether his independence is impaired as a result his involvement. The transaction is a current mortgage financing transaction between the employer of Mr. Conforti and an affiliate of WPG involving a shopping center in which the WPG affiliate owns an indirect 45% equity interest. At the end of the review and assessment, the Governance and Nominating Committee concluded that the independence of Mr. Conforti is not impaired due the transaction. Upon the recommendation of the Governance and Nominating Committee, the Board determined that the following five (5) directors satisfy the aforementioned independence standards and are independent: Louis G. Conforti, Robert J. Laikin, Niles C. Overly, Jacquelyn R. Soffer, and Marvin L. White.



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Item 14.    Principal AccountantAccounting Fees and Services
Independent Registered Public Accounting Firm’s Fees
We have incurred feesThe information required by this item is incorporated herein by reference to the definitive proxy statement for the servicesour 2019 annual meeting of Ernst & Young LLP (“EY”), our independent registered public accounting firm, as shown below. EY has advised us that it has billed, or will bill, us the amounts shown below for the related categories of services for the years ended December 31, 2015 and 2014, respectively:
Type of Fee20152014
Audit Fees(1)   
$2,690,124$1,104,512
Audit‑Related Fees(2)   
    616,030     343,791
Tax Fees(3)   
    134,137     162,987
All Other Fees——
Total$3,440,291$1,611,290

(1)Audit Fees include fees for: (i) the audit of the annual financial statements and the effectiveness of internal control over financial reporting (2015 only) of WPG and, our operating partnership, WPG L.P., (ii) the review of financial statements included in our Quarterly Reports on Form 10‑Q, and (iii) other services provided in connection with other regulatory filings and out of pocket expenses.
(2)Audit‑Related Fees include fees for stand-alone audits of the annual financial statements for certain consolidated entities with mortgage debt and joint venture entities and out of pocket expenses.
(3)
Tax Fees include fees for general tax advice relating to the Merger and general tax advice related to the joint venture transaction with O’Connor.
Pre‑Approval of Audit and Non‑Audit Services
As provided in the Audit Committee’s Charter, the Audit Committee pre‑approves all auditing services and permitted non‑audit services, including the terms thereof,stockholders to be performed for us by our independent public accounting firm, subjectfiled with the Commission pursuant to the de minimus exceptions for non‑audit services described in the Exchange Act which are approved by the Audit Committee prior to completion of the audit. The Audit Committee may form and delegate authority to a subcommittee consisting of one or more members of the Audit Committee to grant pre‑approvals of audit and permitted non‑audit services. However, any pre‑approval decisions made by such a subcommittee must be presented to the full Audit Committee at its next scheduled meeting.Regulation 14A.



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Part IV

Item 15.    Exhibits and Financial Statement Schedules

1.     Financial Statements
Included herein at pages F-1 through F-51.
2.     Financial Statement Schedules
The following documentsfinancial statement schedule is included herein at pages F-52 through F-56:
Schedule III—Real Estate and Accumulated Depreciation
All other schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted.

3.     Exhibits
The following exhibits are filed as part of this Amendment:Annual Report on Form 10-K:
Exhibit
Number
Exhibit Descriptions
2.1
Separation and Distribution Agreement by and among Simon Property Group, Inc., Simon Property Group, L.P., Washington Prime Group Inc. and Washington Prime Group, L.P., dated as of May 27, 2014 (incorporated by reference to Form 8-K filed on May 29, 2014).
2.2
Purchase, Sale and Escrow Agreement, dated February 25, 2015, by and among WPG-OC Limited Partner, LLC, WPG-OC General Partner, LLC, O'Connor Mall Partners, L.P. and Fidelity National Title Insurance Company (incorporated by reference to Form 8-K filed on February 26, 2015).
2.3
Amendment No. 1 to Purchase, Sale and Escrow Agreement, dated May 29, 2015, by and among WPG-OC Limited Partner, LLC, WPG-OC General Partner, LLC, O'Connor Mall Partners, L.P. and Fidelity National Title Insurance Company (incorporated by reference to Form 10-Q filed on August 5, 2015).
2.4
Purchase, Sale and Escrow Agreement, dated November 2, 2016, by and among WPG-OC Limited Partner, LP, WPG-OC General Partner, LLC, WPG-OC General Partner II, LLC, WPG-OC General Partner III, LLC, O’Connor Mall Partners, L.P. and Fidelity National Title Insurance Company (incorporated by reference to Form 8-K filed on November 8, 2016).
2.5
First Amendment to Purchase, Sale and Escrow Agreement, dated November 2, 2016, by and among WPG-OC New Limited Partner, LP, WPG-OC General Partner, LLC, WPG-OC General Partner II, LLC, WPG-OC General Partner III, LLC, O'Connor Mall Partners, L.P. and Fidelity National Title Insurance Company, dated as of January 4, 2017 (incorporated by reference to Form 10-Q filed July 27, 2017).
2.6
Second Amendment to Purchase, Sale and Escrow Agreement, dated November 2, 2016, by and among WPG-OC New Limited Partner, LP, WPG-OC General Partner, LLC, WPG-OC General Partner II, LLC, WPG-OC General Partner III, LLC, WPG Management Associates, Inc., WPG-OC Limited Partner II, LLC, O'Connor Mall Partners, L.P., O'Connor Mall Parallel Partners, L.P. and Fidelity National Title Insurance Company, dated as of April 26, 2017 (incorporated by reference to Form 10-Q filed July 27, 2017).
2.7
Third Amendment to Purchase, Sale and Escrow Agreement, dated November 2, 2016, by and among WPG-OC New Limited Partner, LP, WPG-OC General Partner, LLC, WPG-OC General Partner II, LLC, WPG-OC General Partner III, LLC, WPG Management Associates, Inc., WPG-OC Limited Partner II, LLC, O'Connor Mall Partners, L.P., O'Connor Mall Parallel Partners, L.P. and Fidelity National Title Insurance Company, dated as of May 11, 2017 (incorporated by reference to Form 10-Q filed July 27, 2017).
3.1
Amended and Restated Articles of Incorporation for the Registrant (incorporated by reference to Form 8-K filed on May 22, 2017).
3.2
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company Relating to Name Change (incorporated by reference to Form 8-K filed on May 26, 2015).
3.3
Articles of Amendment to the Amended and Restated Articles of Incorporation of Washington Prime Group Inc. relating to corporate name change (incorporated by reference to Form 8-K filed on September 2, 2016).
3.4
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Washington Prime Group Inc. (incorporated by reference to Form 8-K filed on May 22, 2017).
3.5
Amended and Restated Bylaws of Washington Prime Group Inc., effective August 30, 2016 (incorporated by reference to Form 8-K filed on September 2, 2016).
4.1
Indenture, dated as of March 24, 2015, between Washington Prime Group, L.P. and U.S. Bank National Association, as Trustee (incorporated by reference to Form 8-K filed March 26, 2015).
4.2
First Supplemental Indenture, dated as of March 24, 2015, between Washington Prime Group, L.P. and U.S. Bank National Association, as Trustee (incorporated by reference to Form 8-K filed March 26, 2015).
4.3
Second Supplemental Indenture, dated as of August 4, 2017, between Washington Prime Group, L.P. and U.S. Bank National Association, as Trustee (incorporated by reference to Form 8-K August 4, 2017).
4.4
Registration Rights Agreement, dated as of March 24, 2015, by and among Washington Prime Group, L.P. and Citigroup Global Markets Inc., J.P. Morgan Securities LLC and RBS Securities Inc., as representatives of the initial purchasers named therein (incorporated by reference to Form 8-K filed March 26, 2015).
4.5*
Glimcher Realty Trust Amended and Restated 2004 Incentive Compensation Plan (incorporated by reference to S-8 filed January 15, 2015).
4.6*
Glimcher Realty Trust 2012 Incentive Compensation Plan (incorporated by reference to S-8 filed January 15, 2015).
4.7*
Washington Prime Group, L.P. 2014 Stock Incentive Plan (incorporated by reference to Form 8‑K filed May 29, 2014).
4.8
Articles of Amendment of Washington Prime Group Inc. setting forth the Terms of Series H Cumulative Redeemable Preferred Stock (incorporated by reference to Form 8‑A filed January 14, 2015).

4.9
Articles of Amendment of Washington Prime Group Inc. setting forth the Terms of Series I Cumulative Redeemable Preferred Stock (incorporated by reference to Form 8‑A filed January 14, 2015).
4.10
Amended and Restated Limited Partnership Agreement of Washington Prime Group, L.P. (incorporated by reference to Form 8‑K filed May 29, 2014).
4.11
Amendment No. 2 to Amended and Restated Limited Partnership Agreement of Washington Prime Group, L.P. dated as of January 14, 2015, setting forth the Terms of Series H Preferred Units (incorporated by reference to Form 10‑K filed February 26, 2015).
4.12
Amendment No. 3 to Amended and Restated Limited Partnership Agreement of Washington Prime Group, L.P. dated as of January 14, 2015, setting forth the Terms of Series I Preferred Units (incorporated by reference to Form 10‑K filed February 26, 2015).
4.13
Amendment No. 4 to Amended and Restated Limited Partnership Agreement of Washington Prime Group, L.P. dated as of January 14, 2015, setting forth the Terms of Series I‑1Preferred Units (incorporated by reference to Form 10‑K filed February 26, 2015).
10.1
Senior Secured Term Loan Agreement, dated as of June 8, 2016, by and among Washington Prime Group, L.P., WTM Glimcher, LLC, The Huntington National Bank, PNC Bank, National Association, U.S. Bank National Association, and several lenders from time to time (relates to mortgage loan for Weberstown Mall) (incorporated by reference to Form 10‑Q filed on August 4, 2016).
10.2
Term Loan Promissory Note, dated June 8, 2016 (The Huntington National Bank) (relates to mortgage loan for Weberstown Mall) (incorporated by reference to Form 10‑Q filed on August 4, 2016).
10.3
Term Loan Promissory Note, dated June 8, 2016 (U.S. Bank National Association) (relates to mortgage loan for Weberstown Mall) (incorporated by reference to Form 10‑Q filed on August 4, 2016).
10.4
Term Loan Promissory Note, dated June 8, 2016 (PNC Bank, National Association) (relates to mortgage loan for Weberstown Mall) (incorporated by reference to Form 10‑Q filed on August 4, 2016).
10.5
Environmental Indemnity Agreement, dated June 8, 2016, by Washington Prime Group, L.P. and WTM Glimcher, LLC to and for benefit of The Huntington National Bank and other lenders under Senior Secured Term Loan Agreement (relates to mortgage loan for Weberstown Mall) (incorporated by reference to Form 10‑Q filed on August 4, 2016).
10.6
Collateral Assignment of Membership Interest Agreement, dated June 8, 2016, by Weberstown Mall, LLC to The Huntington National Bank and other lenders under Senior Secured Term Loan Agreement (relates to mortgage loan for Weberstown Mall) (incorporated by reference to Form 10‑Q filed on August 4, 2016).
10.7
Purchase Agreement, dated as of March 17, 2015, by and between Washington Prime Group, L.P. and Citigroup Global Markets Inc., J.P. Morgan Securities LLC and RBS Securities Inc., as representatives of the initial purchasers named therein, relating to 2.850% Senior Notes due 2020 (incorporated by reference to Form 8-K filed March 23, 2015).
10.8
Amended and Restated Revolving Credit and Term Loan Agreement, dated January 22, 2018 (incorporated by reference to Form 8-K January 22, 2018).
10.9
Purchase and Sale Agreement, dated as of September 16, 2014, by and between Washington Prime Group, L.P. and Simon Property Group, L.P. (attached as Annex B to the proxy statement/prospectus included in the Form S‑4 filed October 28, 2014 (Commission File No. 333‑199626)).
10.10
First Amendment to Purchase and Sale Agreement, dated as of January 15, 2015, by and between Washington Prime Group, L.P. and Simon Property Group, L.P. (incorporated by reference to Form 10‑K filed February 26, 2015).
10.11
Transition Services Agreement by and among Simon Property Group, Inc., Simon Property Group, L.P., Washington Prime Group Inc. and Washington Prime Group, L.P. dated May 28, 2014 (incorporated by reference to Form 8‑K filed May 29, 2014).
10.12
Tax Matters Agreement by and among Simon Property Group, Inc., Simon Property Group, L.P., Washington Prime Group Inc. and Washington Prime Group, L.P. dated May 28, 2014 (incorporated by reference to Form 8‑K filed May 29, 2014).
10.13
Employee Matters Agreement by and among Simon Property Group, Inc., Simon Property Group, L.P., Washington Prime Group Inc. and Washington Prime Group, L.P. dated May 28, 2014 (incorporated by reference to Form 8‑K filed May 29, 2014).
10.14
Form of Indemnification Agreement between Washington Prime Group Inc. and each of its executive officers and directors (incorporated by reference to Amendment No. 3 to Form 10 filed April 21, 2014).
10.15*
Separation Agreement and General Release by and between WP Glimcher Inc. and Michael P. Glimcher, dated as of June 20, 2016 (incorporated by reference to Form 8-K filed on June 24, 2016).
10.16*
Resignation and General Release by and between WP Glimcher Inc. and Niles C. Overly, dated as of June 20, 2016 (incorporated by reference to Form 8-K filed on June 24, 2016).
10.17*
Agreement by and between WP Glimcher Inc. and Louis G. Conforti, dated as of June 20, 2016 (incorporated by reference to Form 8-K filed on June 24, 2016).
10.18*
Employment Agreement, dated October 6, 2016, by and between Washington Prime Group Inc. and Louis G. Conforti (incorporated by reference to Form 8-K filed on October 11, 2016).

10.19*
Employee Restricted Stock Unit Award Agreement, dated October 6, 2016, among Washington Prime Group Inc., Washington Prime Group, L.P. and Louis G. Conforti (incorporated by reference to Form 8-K filed on October 11, 2016).
10.20*
Description of Terms of 2015 Annual LTIP Unit Awards (incorporated by reference to Form 10‑Q filed on May 7, 2015).
10.21*
Amended and Restated Employment Agreement, dated January 31, 2017, by and between Washington Prime Group Inc. and Mark E. Yale (incorporated by reference to Form 8-K filed on February 2, 2017).
10.22*
Amended and Restated Employment Agreement, dated January 31, 2017, by and between Washington Prime Group Inc. and Robert P. Demchak (incorporated by reference to Form 8-K filed on February 2, 2017).
10.23*
Employment Agreement between the Washington Prime Group Inc. and Melissa (Lisa) A. Indest, dated August 6, 2018 and effective as of August 3, 2018 (incorporated by reference to Form 8-K filed on August 6, 2018).
10.24*
First Amendment to Employment Agreement between the Washington Prime Group Inc. and Lisa A. Indest, dated February 12, 2019 and effective as of February 12, 2019 (incorporated by reference to Form 8-K filed on February 15, 2019).
10.25*
General Release and Amendment to Employment Agreement, dated October 13, 2017, by and between Washington Prime Group Inc. and Keric M. Knerr (incorporated by reference to Form 8-K filed on October 16, 2017).
10.26*
Employment Agreement, dated November 2, 2017, by and between Washington Prime Group Inc. and Gregory E. Zimmerman (incorporated by reference to Form 8-K filed on November 8, 2017).
10.27*
Employment Agreement, dated November 2, 2017, by and between Washington Prime Group Inc. and Paul Ajdaharian (incorporated by reference to Form 8-K filed on November 8, 2017).
10.28*
Employment Agreement, dated November 2, 2017, by and between Washington Prime Group Inc. and Armand Mastropietro (incorporated by reference to Form 8-K filed on November 8, 2017).
10.29*
First Amendment to the Amended and Restated Employment Agreement between Washington Prime Group Inc. and Robert P. Demchak, dated February 21, 2017 (incorporated by reference to Form 10‑Q filed on April 27, 2017).
10.30*
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) (incorporated by reference to Form 10‑Q filed on May 6, 2016).
10.31*
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) (incorporated by reference to Form 10‑Q filed on May 6, 2016).
10.32*
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) (incorporated by reference to Form 10‑Q filed on May 6, 2016).
10.33*
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) (incorporated by reference to Form 10‑Q filed on May 6, 2016).
10.34*
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) (incorporated by reference to Form 10‑Q filed on May 6, 2016).
10.35*
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) (incorporated by reference to Form 10‑Q filed on May 6, 2016).
10.36*
Form of Certificate of Designation of Series 2015B LTIP Units of Washington Prime Group, L.P. (incorporated by reference to Form 10‑Q filed on May 6, 2016).
10.37*
Certificate of Designation of Series 2014B LTIP Units of Washington Prime Group, L.P. (incorporated by reference to Form 8‑K filed on August 28, 2014).
10.38*
Certificate of Designation of Series 2015A LTIP Units of Washington Prime Group, L.P. (incorporated by reference to Form 10‑Q filed on May 7, 2015).
10.39*
Form of Non‑Employee Director Restricted Stock Unit Award Agreement (incorporated by reference to Form 8‑K filed on August 8, 2014).
10.40*
Form of Series 2014B LTIP Unit Award Agreements with Officers (incorporated by reference to Form 8‑K filed on August 28, 2014).
10.41*
Form of Series 2015A LTIP Unit Award Agreements with Executive Officers Other Than EVP, Legal & Compliance (incorporated by reference to Form 10‑Q filed on May 7, 2015).
10.42*
Form Employee Restricted Stock Unit Award Agreement 2017 (incorporated by reference to Form 10‑Q filed on April 27, 2017).
10.43*
Form Employee Restricted Stock Unit Award Agreement (Employee with Severance Agreement) (incorporated by reference to Form 10‑Q filed on April 27, 2017).

10.44*
Form Employee Restricted Stock Unit Award Agreement (Employee with Employment Agreement) (incorporated by reference to Form 10‑Q filed on April 27, 2017).
10.45*
Form Employee Performance Share Unit Award Agreement (Employee with Employment Agreement) (incorporated by reference to Form 10‑Q filed on April 27, 2017).
10.46*
Form Employee Performance Share Unit Award Agreement (Employee without Employment Agreement) (incorporated by reference to Form 10‑Q filed on April 27, 2017).
21.1**
List of Subsidiaries
23.1**
Consent of Ernst & Young LLP for Washington Prime Group Inc.
23.2**
Consent of Ernst & Young LLP for Washington Prime Group, L.P.
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 GlimcherWashington 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 GlimcherWashington 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 GlimcherWashington 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

*    Compensatory plans or arrangements required to be filed pursuant to Item 15(b) of Form 10-K.
**    Filed electronically herewith.



59
Item 16.    Form 10-K Summary

None.

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendmentreport to be signed on its behalf by the undersigned, thereunto duly authorized.
  WP GLIMCHERWASHINGTON PRIME GROUP INC.
  WASHINGTON PRIME GROUP, L.P.
   by:WP GlimcherWashington Prime Group Inc., its sole general partner
     
  By:/s/ MICHAEL P. GLIMCHERLOUIS G. CONFORTI
   
Michael P. GlimcherLouis G. Conforti
Vice Chairman and Chief Executive Officer & Director
(Principal Executive Officer)

Dated:    April 28, 2016February 21, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934,this Amendmentreport has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
     
/s/ MARK S. ORDANROBERT J. LAIKIN Chairman of the Board of Directors April 28, 2016
Mark S. OrdanFebruary 21, 2019
 
/s/ MICHAEL P. GLIMCHERVice Chairman and Chief Executive Officer (Principal Executive Officer)April 28, 2016
Michael P. Glimcher
/s/ ROBERT J. LAIKINDirectorApril 28, 2016
Robert J. Laikin    
     
/s/ LOUIS G. CONFORTI Chief Executive Officer and Director (Principal Executive Officer) April 28, 2016February 21, 2019
Louis G. Conforti    
     
/s/ NILES C. OVERLYJ. TAGGART BIRGE Director April 28, 2016February 21, 2019
Niles C. OverlyJ. Taggart Birge    
     
/s/ JOHN J. DILLON IIIDirectorFebruary 21, 2019
John J. Dillon III
/s/ JOHN F. LEVYDirectorFebruary 21, 2019
John F. Levy
/s/ JACQUELYN R. SOFFER Director April 28, 2016February 21, 2019
Jacquelyn R. Soffer    
     
/s/ MARVIN L. WHITESHERYL G. VON BLUCHER Director April 28, 2016February 21, 2019
Marvin L. WhiteSheryl G. von Blucher    
     
/s/ MARK E. YALE Executive Vice President and Chief Financial Officer (Principal Financial Officer) April 28, 2016February 21, 2019
Mark E. Yale    
     
/s/ MELISSA A. INDEST SeniorExecutive Vice President, Finance and Chief Accounting Officer (Principal Accounting Officer) April 28, 2016February 21, 2019
Melissa A. Indest    


60WASHINGTON PRIME GROUP INC. AND WASHINGTON PRIME GROUP, L.P.
INDEX TO FINANCIAL STATEMENTS

Page
Number
Financial Statements for Washington Prime Group Inc.:
Reports of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of December 31, 2018 and 2017
F-4
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
F-6
Consolidated Statements of Equity for the years ended December 31, 2018, 2017 and 2016
F-7
Financial Statements for Washington Prime Group, L.P.:
Reports of Independent Registered Public Accounting Firm
F-9
Consolidated Balance Sheets as of December 31, 2018 and 2017
F-11
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
F-12
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
F-13
Consolidated Statements of Equity for the years ended December 31, 2018, 2017 and 2016
F-14
Notes to Consolidated Financial Statements
F-16
Schedule III—Real Estate and Accumulated Depreciation
F-52
Notes to Schedule III
F-56


Report of Independent Registered Public Accounting Firm
The Shareholders and the Board of Directors of Washington Prime Group Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Washington Prime Group Inc. (the Company) as of December 31, 2018 and 2017, the related consolidated statements of operations and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index to Financial Statements on Page F-1 (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), and our report dated February 21, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP
We have served as the Company's auditor since 2013.
Indianapolis, Indiana
February 21, 2019


Report of Independent Registered Public Accounting Firm
The Shareholders and the Board of Directors of Washington Prime Group Inc.:
Opinion on Internal Control over Financial Reporting
We have audited Washington Prime Group Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Washington Prime Group Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2018 consolidated financial statements of the Company and our report dated February 21, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP
Indianapolis, Indiana
February 21, 2019


Washington Prime Group Inc.
Consolidated Balance Sheets
(dollars in thousands, except share and par value amounts)

  December 31, 2018 December 31, 2017
ASSETS:    
Investment properties at cost $5,914,705
 $5,807,760
Less: accumulated depreciation 2,283,764
 2,139,620
  3,630,941
 3,668,140
Cash and cash equivalents 42,542
 52,019
Tenant receivables and accrued revenue, net 85,463
 90,314
Investment in and advances to unconsolidated entities, at equity 433,207
 451,839
Deferred costs and other assets 169,135
 189,095
Total assets $4,361,288
 $4,451,407
LIABILITIES:    
Mortgage notes payable $983,269
 $1,157,082
Notes payable 982,697
 979,372
Unsecured term loans 685,509
 606,695
Revolving credit facility 286,002
 154,460
Accounts payable, accrued expenses, intangibles, and deferred revenues 253,862
 264,998
Distributions payable 2,992
 2,992
Cash distributions and losses in unconsolidated entities, at equity 15,421
 15,421
Total liabilities 3,209,752
 3,181,020
Redeemable noncontrolling interests 3,265
 3,265
EQUITY:    
Stockholders' Equity:    
Series H Cumulative Redeemable Preferred Stock, $0.0001 par value, 4,000,000 shares issued and outstanding as of December 31, 2018 and 2017 104,251
 104,251
Series I Cumulative Redeemable Preferred Stock, $0.0001 par value, 3,800,000 shares issued and outstanding as of December 31, 2018 and 2017 98,325
 98,325
Common stock, $0.0001 par value, 350,000,000 shares authorized;
186,074,461 and 185,791,421 issued and outstanding as of December 31, 2018 and 2017, respectively		 19
 19
Capital in excess of par value 1,247,639
 1,240,483
Accumulated deficit (456,924) (350,594)
Accumulated other comprehensive income 6,400
 6,920
Total stockholders' equity 999,710
 1,099,404
Noncontrolling interests 148,561
 167,718
Total equity 1,148,271
 1,267,122
Total liabilities, redeemable noncontrolling interests and equity $4,361,288
 $4,451,407

The accompanying notes are an integral part of these statements.


Washington Prime Group Inc.
Consolidated Statements of Operations and Comprehensive Income
(dollars in thousands, except per share amounts)
 For the Year Ended December 31,
 2018 2017 2016
REVENUE:     
Minimum rent$492,169
 $516,386
 $572,781
Overage rent9,313
 9,115
 12,882
Tenant reimbursements191,319
 208,290
 236,510
Other income30,504
 24,331
 21,302
Total revenues723,305
 758,122
 843,475
EXPENSES:     
Property operating148,433
 146,529
 166,690
Depreciation and amortization257,796
 258,740
 281,150
Real estate taxes86,665
 89,617
 102,638
Advertising and promotion9,070
 9,107
 10,375
Provision for credit losses5,826
 5,068
 4,508
General and administrative39,090
 34,892
 37,317
Merger, restructuring and transaction costs—
 —
 29,607
Ground rent789
 2,438
 4,318
Impairment loss—
 66,925
 21,879
Total operating expenses547,669
 613,316
 658,482
 

 

 

Interest expense, net(141,987) (126,541) (136,225)
Gain (loss) on disposition of interests in properties, net24,602
 124,771
 (1,987)
Gain on extinguishment of debt, net51,395
 90,579
 34,612
Income and other taxes(1,532) (3,417) (2,232)
Income (loss) from unconsolidated entities541
 1,395
 (1,745)
NET INCOME108,655
 231,593
 77,416
Net income attributable to noncontrolling interests15,051
 34,530
 10,285
NET INCOME ATTRIBUTABLE TO THE COMPANY93,604
 197,063
 67,131
Less: Preferred share dividends(14,032) (14,032) (14,032)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$79,572
 $183,031
 $53,099
      
EARNINGS PER COMMON SHARE, BASIC AND DILUTED$0.42
 $0.98
 $0.29
      
COMPREHENSIVE INCOME:     
Net income$108,655
 $231,593
 $77,416
Unrealized (loss) income on interest rate derivative instruments(1,284) 2,401
 3,801
Comprehensive income107,371
 233,994
 81,217
Comprehensive income attributable to noncontrolling interests14,871
 34,927
 10,886
Comprehensive income attributable to common shareholders$92,500
 $199,067
 $70,331

The accompanying notes are an integral part of these statements.

Washington Prime Group Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
 For the Year Ended December 31,
 2018 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income$108,655
 $231,593
 $77,416
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 compensation259,022
 259,167
 284,960
Gain on extinguishment of debt, net(51,395) (90,579) (34,612)
(Gain) loss on disposition of interests in properties and outparcels, net(24,602) (125,063) 1,987
Impairment loss—
 66,925
 21,879
Provision for credit losses5,826
 5,068
 4,508
(Income) loss from unconsolidated entities(541) (1,395) 1,745
Distributions of income from unconsolidated entities8,619
 1,873
 804
Changes in assets and liabilities:     
Tenant receivables and accrued revenue, net327
 2,309
 (14,054)
Deferred costs and other assets(23,087) (21,209) (14,397)
Accounts payable, accrued expenses, deferred revenues and other liabilities4,421
 (4,058) (41,249)
Net cash provided by operating activities287,245
 324,631
 288,987
CASH FLOWS FROM INVESTING ACTIVITIES:     
Acquisitions, net of cash acquired(80,108) —
 —
Capital expenditures, net(153,850) (147,329) (173,593)
Net proceeds from disposition of interests in properties and outparcels39,212
 218,801
 22,653
Investments in unconsolidated entities(20,178) (50,911) (11,631)
Distributions of capital from unconsolidated entities35,096
 73,289
 38,086
Net cash (used in) provided by investing activities(179,828) 93,850
 (124,485)
CASH FLOWS FROM FINANCING ACTIVITIES:     
Distributions to noncontrolling interest holders in properties(66) (114) —
Redemption of limited partner units/preferred shares(28) (251) (6)
Net proceeds from issuance of common shares, including common stock plans—
 13
 512
Distributions to redeemable noncontrolling interest—
 —
 (24)
Purchase of redeemable noncontrolling interest—
 (6,830) (339)
Distributions on common and preferred shares/units(236,821) (236,152) (235,092)
Proceeds from issuance of debt, net of transaction costs708,563
 1,293,322
 206,740
Repayments of debt(588,182) (1,486,781) (202,939)
Net cash used in financing activities(116,534) (436,793) (231,148)
DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(9,117) (18,312) (66,646)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of year70,201
 88,513
 155,159
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of year$61,084
 $70,201
 $88,513

The accompanying notes are an integral part of these statements.


Washington Prime Group Inc.
Consolidated Statements 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 Earnings (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
Exercise of stock options —
 —
 —
 512
 —
 —
 512
 —
 512
 —
Redemption of limited partner units —
 —
 —
 —
 —
 —
 —
 (6) (6) —
Other —
 —
 —
 151
 —
 —
 151
 —
 151
 (925)
Adjustment of redemption value for redeemable noncontrolling interest —
 —
 —
 (5,464) —
 —
 (5,464) —
 (5,464) 5,464
Equity-based compensation —
 —
 —
 9,506
 —
 —
 9,506
 4,603
 14,109
 —
Adjustments to noncontrolling interests —
 —
 —
 2,007
 —
 —
 2,007
 (2,007) —
 —
Distributions on common shares/units ($1.00 per common share/unit) —
 —
 —
 —
 (185,562) —
 (185,562) (35,258) (220,820) —
Distributions declared on preferred shares —
 —
 —
 —
 (14,032) —
 (14,032) —
 (14,032) —
Other comprehensive income —
 —
 —
 —
 —
 3,200
 3,200
 601
 3,801
 —
Net income (loss), excluding $240 of distributions to preferred unitholders —
 —
 —
 —
 67,131
 —
 67,131
 10,056
 77,187
 (11)
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 —
 —
 —
 13
 —
 —
 13
 —
 13
 —
Redemption of limited partner units —
 —
 —
 —
 —
 —
 —
 (251) (251) —
Exchange of limited partner units —
 —
 —
 2,463
 —
 —
 2,463
 (2,463) —
 —
Other —
 —
 —
 (146) —
 —
 (146) —
 (146) —
Equity-based compensation —
 —
 —
 5,280
 —
 —
 5,280
 1,122
 6,402
 —
Adjustments to noncontrolling interests —
 —
 —
 (330) —
 —
 (330) 330
 —
 —
Purchase of redeemable noncontrolling interest —
 —
 —
 565
 —
 —
 565
 —
 565
 (7,395)
Distributions on common shares/units ($1.00 per common share/unit) —
 —
 —
 —
 (186,919) —
 (186,919) (35,075) (221,994) —
Distributions declared on preferred shares —
 —
 —
 —
 (14,032) —
 (14,032) —
 (14,032) —
Other comprehensive income —
 —
 —
 —
 —
 2,004
 2,004
 397
 2,401
 —
Net income, excluding $240 of distributions to preferred unitholders —
 —
 —
 —
 197,063
 —
 197,063
 34,290
 231,353
 —
Balance, December 31, 2017 104,251
 98,325
 19
 1,240,483
 (350,594)
6,920
 1,099,404
 167,718
 1,267,122
 3,265


The accompanying notes are an integral part of these statements.




Washington Prime Group Inc.
Consolidated Statements 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 Earnings (Deficit) Accumulated Other Comprehensive Income Total Stockholders' Equity Non-Controlling Interests Total Equity Redeemable Non-Controlling Interests
Cumulative effect of accounting standards —
 —
 —
 (389) 1,890
 584
 2,085
 389
 2,474
 —
Redemption of limited partner units —
 —
 —
 —
 —
 —
 —
 (28) (28) —
Other —
 —
 —
 (103) —
 —
 (103) —
 (103) —
Equity-based compensation —
 —
 —
 7,480
 —
 —
 7,480
 842
 8,322
 —
Adjustments to noncontrolling interests —
 —
 —
 168
 —
 —
 168
 (168) —
 —
Distributions on common shares/units ($1.00 per common share/unit) —
 —
 —
 —
 (187,792) —
 (187,792) (34,823) (222,615) —
Distributions declared on preferred shares —
 —
 —
 —
 (14,032) —
 (14,032) —
 (14,032) —
Other comprehensive loss —
 —
 —
 —
 —
 (1,104) (1,104) (180) (1,284) —
Net income, excluding $240 of distributions to preferred unitholders —
 —
 —
 —
 93,604
 —
 93,604
 14,811
 108,415
 —
Balance, December 31, 2018 $104,251
 $98,325
 $19
 $1,247,639
 $(456,924)
$6,400
 $999,710
 $148,561
 $1,148,271
 $3,265

The accompanying notes are an integral part of these statements.


Report of Independent Registered Public Accounting Firm
The Partners of Washington Prime Group L.P.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Washington Prime Group L.P. (the Partnership) as of December 31, 2018 and 2017, the related consolidated statements of operations and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index to Financial Statements on Page F-1 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), and our report dated February 21, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/Ernst & Young LLP

We have served as the Partnership’s auditor since 2015.
Indianapolis, Indiana
February 21, 2019



Report of Independent Registered Public Accounting Firm
The Partners of Washington Prime Group, L.P.:
Opinion on Internal Control over Financial Reporting
We have audited Washington Prime Group, L.P.’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Washington Prime Group, L.P. (the Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2018 consolidated financial statements of the Partnership and our report dated February 21, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP
Indianapolis, Indiana
February 21, 2019


Washington Prime Group, L.P.
Consolidated Balance Sheets
(dollars in thousands, except unit amounts)

  December 31, 2018 December 31, 2017
ASSETS:    
Investment properties at cost $5,914,705
 $5,807,760
Less: accumulated depreciation 2,283,764
 2,139,620
  3,630,941
 3,668,140
Cash and cash equivalents 42,542
 52,019
Tenant receivables and accrued revenue, net 85,463
 90,314
Investment in and advances to unconsolidated entities, at equity 433,207
 451,839
Deferred costs and other assets 169,135
 189,095
Total assets $4,361,288
 $4,451,407
LIABILITIES:    
Mortgage notes payable $983,269
 $1,157,082
Notes payable 982,697
 979,372
Unsecured term loans 685,509
 606,695
Revolving credit facility 286,002
 154,460
Accounts payable, accrued expenses, intangibles, and deferred revenues 253,862
 264,998
Distributions payable 2,992
 2,992
Cash distributions and losses in unconsolidated entities, at equity 15,421
 15,421
Total liabilities 3,209,752
 3,181,020
Redeemable noncontrolling interests 3,265
 3,265
EQUITY:    
Partners' Equity:    
General partner    
Preferred equity, 7,800,000 units issued and outstanding as of December 31, 2018 and 2017 202,576
 202,576
Common equity, 186,074,461 and 185,791,421 units issued and outstanding as of December 31, 2018 and 2017, respectively 797,134
 896,828
Total general partners' equity 999,710
 1,099,404
Limited partners, 34,755,660 and 34,760,026 units issued and outstanding as of December 31, 2018 and 2017, respectively 147,493
 166,660
Total partners' equity 1,147,203
 1,266,064
Noncontrolling interests 1,068
 1,058
Total equity 1,148,271
 1,267,122
Total liabilities, redeemable noncontrolling interests and equity $4,361,288
 $4,451,407

The accompanying notes are an integral part of these statements.


Washington Prime Group, L.P.
Consolidated Statements of Operations and Comprehensive Income
(dollars in thousands, except per unit amounts)
 For the Year Ended December 31,
 2018 2017 2016
REVENUE:     
Minimum rent$492,169
 $516,386
 $572,781
Overage rent9,313
 9,115
 12,882
Tenant reimbursements191,319
 208,290
 236,510
Other income30,504
 24,331
 21,302
Total revenues723,305
 758,122
 843,475
EXPENSES:     
Property operating148,433
 146,529
 166,690
Depreciation and amortization257,796
 258,740
 281,150
Real estate taxes86,665
 89,617
 102,638
Advertising and promotion9,070
 9,107
 10,375
Provision for credit losses5,826
 5,068
 4,508
General and administrative39,090
 34,892
 37,317
Merger, restructuring and transaction costs—
 —
 29,607
Ground rent789
 2,438
 4,318
Impairment loss—
 66,925
 21,879
Total operating expenses547,669
 613,316
 658,482
 

 

 

Interest expense, net(141,987) (126,541) (136,225)
Gain (loss) on disposition of interests in properties, net24,602
 124,771
 (1,987)
Gain on extinguishment of debt, net51,395
 90,579
 34,612
Income and other taxes(1,532) (3,417) (2,232)
Income (loss) from unconsolidated entities541
 1,395
 (1,745)
NET INCOME108,655
 231,593
 77,416
Net income attributable to noncontrolling interests76
 68
 11
NET INCOME ATTRIBUTABLE TO UNITHOLDERS108,579
 231,525
 77,405
Less: Preferred unit distributions(14,272) (14,272) (14,272)
NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS$94,307
 $217,253
 $63,133
      
NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS:     
General partner$79,572
 $183,031
 $53,099
Limited partners14,735
 34,222
 10,034
Net income attributable to common unitholders$94,307
 $217,253
 $63,133
      
EARNINGS PER COMMON UNIT, BASIC AND DILUTED$0.42
 $0.98
 $0.29
      
COMPREHENSIVE INCOME:     
Net income$108,655
 $231,593
 $77,416
Unrealized (loss) income on interest rate derivative instruments(1,284) 2,401
 3,801
Comprehensive income107,371
 233,994
 81,217
Comprehensive income attributable to noncontrolling interests76
 68
 11
Comprehensive income attributable to unitholders$107,295
 $233,926
 $81,206

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.
Consolidated Statements of Cash Flows
(dollars in thousands)
 For the Year Ended December 31,
 2018 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income$108,655
 $231,593
 $77,416
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 compensation259,022
 259,167
 284,960
Gain on extinguishment of debt, net(51,395) (90,579) (34,612)
(Gain) loss on disposition of interests in properties and outparcels, net(24,602) (125,063) 1,987
Impairment loss—
 66,925
 21,879
Provision for credit losses5,826
 5,068
 4,508
(Income) loss from unconsolidated entities(541) (1,395) 1,745
Distributions of income from unconsolidated entities8,619
 1,873
 804
Changes in assets and liabilities:     
Tenant receivables and accrued revenue, net327
 2,309
 (14,054)
Deferred costs and other assets(23,087) (21,209) (14,397)
Accounts payable, accrued expenses, deferred revenues and other liabilities4,421
 (4,058) (41,249)
Net cash provided by operating activities287,245
 324,631
 288,987
CASH FLOWS FROM INVESTING ACTIVITIES:     
Acquisitions, net of cash acquired(80,108) —
 —
Capital expenditures, net(153,850) (147,329) (173,593)
Net proceeds from disposition of interests in properties and outparcels39,212
 218,801
 22,653
Investments in unconsolidated entities(20,178) (50,911) (11,631)
Distributions of capital from unconsolidated entities35,096
 73,289
 38,086
Net cash (used in) provided by investing activities(179,828) 93,850
 (124,485)
CASH FLOWS FROM FINANCING ACTIVITIES:     
Distributions to noncontrolling interest holders in properties(66) (114) —
Redemption of limited partner/preferred units(28) (251) (6)
Net proceeds from issuance of common units, including equity-based compensation plans—
 13
 512
Distributions to redeemable noncontrolling interest—
 —
 (24)
Purchase of redeemable noncontrolling interest—
 (6,830) (339)
Distributions to unitholders, net(236,821) (236,152) (235,092)
Proceeds from issuance of debt, net of transaction costs708,563
 1,293,322
 206,740
Repayments of debt(588,182) (1,486,781) (202,939)
Net cash used in financing activities(116,534) (436,793) (231,148)
DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(9,117) (18,312) (66,646)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of year70,201
 88,513
 155,159
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of year$61,084
 $70,201
 $88,513

The accompanying notes are an integral part of these statements.


Washington Prime Group, L.P.
Consolidated Statements of Equity
(dollars in thousands, except per unit amounts)
  General Partner          
  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
Exercise of stock options —
 512
 512
 —
 512
 —
 512
 —
Redemption of limited partner units —
 —
 —
 (6) (6) —
 (6) —
Other —
 151
 151
 —
 151
 —
 151
 (925)
Adjustment of redemption value for redeemable noncontrolling interest —
 (5,464) (5,464) —
 (5,464) —
 (5,464) 5,464
Equity-based compensation —
 9,506
 9,506
 4,603
 14,109
 —
 14,109
 —
Adjustments to limited partners' interests —
 2,007
 2,007
 (2,007) —
 —
 —
 —
Distributions to common unitholders, net —
 (185,562) (185,562) (35,258) (220,820) —
 (220,820) —
Distributions declared on preferred units (14,032) —
 (14,032) —
 (14,032) —
 (14,032) (240)
Other comprehensive income —
 3,200
 3,200
 601
 3,801
 —
 3,801
 —
Net income 14,032
 53,099
 67,131
 10,034
 77,165
 22
 77,187
 229
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 —
 13
 13
 —
 13
 —
 13
 —
Redemption of limited partner units —
 —
 —
 (251) (251) —
 (251) —
Exchange of limited partner units —
 2,463
 2,463
 (2,463) —
 —
 —
 —
Other —
 (146) (146) —
 (146) —
 (146) —
Equity-based compensation —
 5,280
 5,280
 1,122
 6,402
 —
 6,402
 —
Adjustments to noncontrolling interests —
 (330) (330) 330
 —
 —
 —
 —
Purchase of redeemable noncontrolling interest —
 565
 565
 —
 565
 —
 565
 (7,395)
Distributions to common unitholders, net —
 (186,919) (186,919) (34,961) (221,880) (114) (221,994) —
Distributions declared on preferred units (14,032) —
 (14,032) —
 (14,032) —
 (14,032) (240)
Other comprehensive income —
 2,004
 2,004
 397
 2,401
 —
 2,401
 —
Net income 14,032
 183,031
 197,063
 34,222
 231,285
 68
 231,353
 240
Balance, December 31, 2017 202,576
 896,828
 1,099,404
 166,660
 1,266,064
 1,058
 1,267,122
 3,265

The accompanying notes are an integral part of these statements.






Washington Prime Group, L.P.
Consolidated Statements of Equity
(dollars in thousands, except per unit amounts)
  General Partner          
  Preferred Common Total Limited Partners Total
Partners'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
Cumulative effect of accounting standards —
 2,085
 2,085
 389
 2,474
 —
 2,474
 —
Redemption of limited partner units —
 —
 —
 (28) (28) —
 (28) —
Other —
 (103) (103) —
 (103) —
 (103) —
Equity-based compensation —
 7,480
 7,480
 842
 8,322
 —
 8,322
 —
Adjustments to noncontrolling interests —
 168
 168
 (168) —
 —
 —
 —
Distributions to common unitholders, net —
 (187,792) (187,792) (34,757) (222,549) (66) (222,615) —
Distributions declared on preferred units (14,032) —
 (14,032) —
 (14,032) —
 (14,032) (240)
Other comprehensive loss —
 (1,104) (1,104) (180) (1,284) —
 (1,284) —
Net income 14,032
 79,572
 93,604
 14,735
 108,339
 76
 108,415
 240
Balance, December 31, 2018 $202,576
 $797,134
 $999,710
 $147,493
 $1,147,203
 $1,068
 $1,148,271
 $3,265


The accompanying notes are an integral part of these statements.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements
(dollars in thousands, except share, unit and per share amounts and
where indicated as in millions or billions)



1.Organization
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 (the "Code"). WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. 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. On May 28, 2014, WPG separated from Simon Property Group ("SPG") through the distribution of 100% of the outstanding units of WPG L.P. to the owners of Simon Property Group L.P. and 100% of the outstanding shares of WPG Inc. to the SPG common 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. On January 15, 2015, the Company acquired Glimcher Realty Trust ("GRT") in a stock and cash transaction valued at approximately $4.2 billion, including the assumption of debt. As of December 31, 2018, our assets consisted of material interests in 108 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 58 million square feet (unaudited) of managed gross leasable area ("GLA").
Unless the context otherwise requires, references to "WPG," the "Company," "we," "us" or "our" refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated 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 expenses.
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.
Leadership Changes and Severance Impacting Financial Results
2018 Activity
On May 7, 2018, the Company's Executive Vice President, Property Management was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated without cause additional non-executive personnel in the Property Management department. In connection with and as part of the aforementioned management and personnel changes, the Company recorded aggregate severance charges of $2.0 million, including $0.5 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards, which costs are included in general and administrative expense in the accompanying consolidated statements of operations and comprehensive income for the year ended December 31, 2018.
2016 Activity
On June 20, 2016, the Company announced the following leadership changes: (1) the resignation of Mr. Michael P. Glimcher as the Company’s Chief Executive Officer and Vice Chairman of the Board; (2) the appointment of Mr. Louis G. Conforti, a current Board member, as Interim Chief Executive Officer; (3) the resignation of Mr. Mark S. Ordan as non-executive Chairman of the Board; and (4) the resignation of Mr. Niles C. Overly from the Board. In July of 2016, the Company terminated some additional executive and non-executive personnel as part of an effort to reduce overhead costs. On October 6, 2016, the Company announced that Mr. Conforti would serve as the Company's Chief Executive Officer for a term ending December 31, 2019, subject to early termination clauses and automatic renewals pursuant to his employment agreement.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


In connection with and as part of the aforementioned management changes, the Company recorded a charge of $29.6 million during the year ended December 31, 2016, of which $25.5 million related to severance and restructuring-related costs, including $9.5 million of non-cash stock compensation for accelerated vesting of equity incentive awards, and $4.1 million related to fees and expenses incurred in connection with the Company's investigation of various strategic alternatives, which costs are included in merger, restructuring and transaction costs in the accompanying consolidated statements of operations and comprehensive income.
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 December 31, 2018 and 2017 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.
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.
We consolidate a 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. As of December 31, 2018, we have two VIEs which consist of our interest in WPG L.P. and undeveloped land, respectively.
There have been no changes during the year ended December 31, 2018 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. During the year ended December 31, 2018, 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 unconsolidated entities, 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 historically committed to or intends to fund the venture.
As of December 31, 2018, our assets consisted of material interests in 108 shopping centers. The consolidated financial statements as of that date reflect the consolidation of 91 wholly owned properties and 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 13 properties, or the joint venture properties, using the equity method of accounting. While we manage the day-to-day operations of the joint venture properties, we 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 84.4%, 84.3% and 84.1% for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018 and 2017, WPG Inc.'s ownership interest in WPG L.P. was 84.4% and, 84.3% respectively. We adjust the noncontrolling limited partners' interests at the end of each period to reflect their interest in WPG L.P.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit 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 with 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. Capitalized interest for the years ended December 31, 2018, 2017 and 2016 was $2,234, $1,521 and $2,640, respectively.
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 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 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. See the "Impairment" section within Note 4 - "Investment in Real Estate" for a discussion of recent impairments.
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. We held material unconsolidated joint venture ownership interests in 13 properties as of December 31, 2018 and 2017 (see Note 5 - "Investment in Unconsolidated Entities, at Equity").
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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


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 fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Note 6 - "Indebtedness" includes a discussion of the fair value of debt measured using Level 1 and Level 2 inputs. Note 4 - "Investment in Real Estate" includes a discussion of the fair value inputs used in our impairment analyses, using Level 3 inputs, primarily. Level 3 inputs include our estimations of net operating results of the property, capitalization rates and discount rates.
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 Valuation
We record the total consideration of acquisitions, including transaction costs as permitted under Accounting Standards Update ("ASU ") 2017-1, "Business Combinations (Topic 805): Clarifying the Definition of a Business," 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 Level 2 and Level 3 inputs. Level 3 inputs include our estimations of net operating results of the property, capitalization rates and discount rates. 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.
The fair value of buildings is depreciated over the estimated remaining life of the acquired buildings 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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


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.
Segment Disclosure
Our primary business is the ownership, development and management of retail real estate. We have aggregated our operations, including enclosed retail properties and open air properties, 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
Adoption of New Standards
On January 1, 2018, we adopted Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" using the modified retrospective approach. ASU 2014-09 revised 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. 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 and other ancillary income earned from our properties. Upon adoption, we recorded a cumulative-effect adjustment to increase equity of approximately $2.5 million related to changes in the revenue recognition pattern of lease commissions earned by the Company from our joint ventures. We do not expect the adoption of ASU 2014-09 to have a material impact to our net income on an ongoing basis.
Additionally, we adopted the clarified scope guidance of ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets" in conjunction with ASU 2014-09, using the modified retrospective approach. ASC 610-20 applies to the sale, transfer and derecognition of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales, and eliminates the guidance specific to real estate in ASC 360-20. With respect to full disposals, the recognition will generally be consistent with our current measurement and pattern of recognition. With respect to partial sales of real estate to joint ventures, the new guidance requires us to recognize a full gain where an equity investment is retained. These transactions could result in a basis difference as we will be required to measure our retained equity interest at fair value, whereas the joint venture may continue to measure the assets received at carryover basis. No adjustments were required upon adoption of this standard.
On January 1, 2018, we adopted ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." ASU 2017-12 aims to reduce complexity in cash value hedges of interest rate risk and eliminates the requirement to separately measure and report hedge ineffectiveness, generally requiring the entire change in the fair value of the hedging instrument to be presented in the same income statement line as the hedged item. Upon adoption, we recorded a cumulative-effect adjustment of $0.6 million between accumulated other comprehensive income and retained earnings.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The cumulative effect of the changes to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 and ASU 2017-12 were as follows:
 Balance at December 31, 2017 Adjustments Due to
ASU 2014-09		 Adjustments Due to
ASU 2017-12		 Balance at January 1, 2018
Balance Sheet       
Liabilities       
Accounts payable, accrued expenses, intangibles, and deferred revenues$264,998
 $(2,474) $—
 $262,524
        
Equity       
Capital in excess of par value$1,240,483
 $(389) $—
 $1,240,094
Accumulated deficit$(350,594) $2,474
 $(584) $(348,704)
Accumulated other comprehensive income$6,920
 $—
 $584
 $7,504
Noncontrolling interests$167,718
 $389
 $—
 $168,107
In accordance with ASU 2014-09 requirements, the disclosure of the impact of adoption on our consolidated statements of operations for the year ended December 31, 2018 and consolidated balance sheet as of December 31, 2018 were as follows:
 For the Year Ended December 31, 2018
 As Reported Balances Without Adoption of ASU 2014-09 Effect of Change Higher/(Lower)
Consolidated Statements of Operations     
Revenues     
Other income$30,504
 $29,954
 $550
 December 31, 2018
 As Reported Balances Without Adoption of ASU 2014-09 Effect of Change Higher/(Lower)
Balance Sheet     
Liabilities     
Accounts payable, accrued expenses, intangibles, and deferred revenues$253,862
 $256,886
 $(3,024)
      
Equity     
Capital in excess of par value$1,247,639
 $1,248,111
 $(472)
Accumulated deficit$(456,924) $(459,948) $3,024
Noncontrolling interests$148,561
 $148,089
 $472
On January 1, 2018, we adopted ASU 2016-15, "Statement of Cash Flows (Topic 230)" and ASU 2016-18 "Restricted Cash" using a retrospective transition approach, which changed our statements of cash flows and related disclosures for all periods presented. ASU 2016-15 is intended to reduce diversity in practice with respect to how certain transactions are classified in the statement of cash flows and its adoption had no impact on our financial statements. ASU 2016-18 requires 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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The following is a summary of our cash, cash equivalents and restricted cash total as presented in our statements of cash flows for the years ended December 31, 2018, 2017 and 2016:
 For the Year Ended December 31,
 2018 2017 2016
Cash and cash equivalents$42,542
 $52,019
 $59,353
Restricted cash18,542
 18,182
 29,160
Total cash, cash equivalents and restricted cash$61,084
 $70,201
 $88,513
For the year ended December 31, 2017, restricted cash related to cash flows provided by operating activities of $2.9 million, restricted cash related to cash flows used in investing activities of $6.4 million, and restricted cash related to cash flows used in financing activities of $1.7 million were reclassified. For the year ended December 31, 2016, restricted cash related to cash flows provided by operating activities of $0.8 million, restricted cash related to cash flows used in investing activities of $1.5 million, and restricted cash related to cash flows used in financing activities of $10.4 million were reclassified. Restricted cash primarily relates to cash held in escrow for payment of real estate taxes and property reserves for maintenance, expansion or leasehold improvements as required by our mortgage loans. Restricted cash is included in "Deferred costs and other assets" in the accompanying balance sheets as of December 31, 2018 and December 31, 2017.
New Standards Issued But Not Yet Adopted
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 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. In July 2018, the FASB approved an amendment that provides an entity the optional transition method to initially account for the impact of the adoption ASU 2016-02 with a cumulative adjustment to retained earnings on January 1, 2019 (the effective date of the ASU), rather than January 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. We will utilize this optional transition method. From a lessee perspective, the Company currently has four material ground leases, two material office leases, and one material garage lease that, under the new guidance, will result in the recognition of a lease liability and corresponding right-of-use asset. As of December 31, 2018, undiscounted future minimum lease payments due under these leases total approximately $31.1 million with termination dates which range from 2023 to 2076 and we expect the recognized lease liability and corresponding right-of-use asset to not exceed $20.0 millionupon adoption.
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. However, the FASB's amendment to ASU 2016-02 referred to above allows lessors to elect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. This practical expedient allows lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) the combined single component would be classified as an operating lease. We believe we meet the criteria to use this practical expedient and we plan to elect this practical expedient upon the effective date. 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. For the years ended December 31, 2018 and 2017, the Company deferred $17.7 million and $16.9 million of internal leasing costs, respectively. From a lessor perspective, other than the reduction to capitalized leasing costs and increase to general and administrative expenses related to internal leasing costs based on the Company’s current leasing compensation structure, which is not expected to change significantly upon adoption of ASU 2016-02, we do not expect the adoption of ASU 2016-02 to have a material impact to the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurements (ASC 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurements." ASU 2018-13 eliminates certain disclosure requirements for all entities, requires public entities to disclose certain new information, and modifies some disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact this ASU will have on our financial statements and related disclosures.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


Deferred Costs and Other Assets
Deferred costs and other assets include the following as of December 31, 2018 and 2017:
  2018 2017
Deferred leasing costs and corporate improvements, net $74,260
 $79,079
In-place lease intangibles, net 38,453
 46,627
Acquired above market lease intangibles, net 18,827
 24,254
Mortgage and other escrow deposits 18,542
 18,182
Prepaids, notes receivable and other assets, net 19,053
 20,953
  $169,135
 $189,095
During the year ended December 31, 2018, the Company received the remaining $5.3 million outstanding on the promissory note receivable related to the August 19, 2016 sale of Knoxville Center, located in Knoxville, Tennessee (see Note 4 - "Investment in Real Estate" for details).
Deferred Leasing Costs and Corporate Improvements
Our deferred leasing costs consist of salaries and related benefits, including fees charged by SPG in conjunction with the 2014 spin-off (see Note 11- "Related Party Transactions" for further details), for salaries and related benefits incurred in connection with lease originations, and fees paid to third party brokers. We record amortization of deferred leasing costs on a straight-line basis over the terms of the related leases. Details of deferred leasing costs and corporate improvements as of December 31, 2018 and 2017 are as follows:
  2018 2017
Deferred leasing costs $142,903
 $143,667
Corporate improvements 6,072
 5,324
Accumulated amortization (74,715) (69,912)
Deferred lease costs and corporate improvements, net $74,260
 $79,079
Amortization of deferred leasing costs is a component of depreciation and amortization expense. The accompanying consolidated statements of operations include amortization expense of $27.9 million, $25.9 million, and $26.0 million for the years ended December 31, 2018, 2017 and 2016, respectively.
Revenue Recognition
The following tables disaggregate our revenue by major source for the years ended December 31, 2018, 2017 and 2016:
 For the Year Ended December 31, 2018
 Minimum rent Overage rent Tenant reimbursements Other income Total
Lease related$492,169
 $9,313
 $191,319
 $3,457
 $696,258
Ancillary—
 —
 —
 10,275
 10,275
Fee related—
 —
 —
 9,527
 9,527
Other(1)
—
 —
 —
 7,245
 7,245
Total revenues$492,169
 $9,313
 $191,319
 $30,504
 $723,305
(1) Primarily relates to insurance proceeds received from property insurance claims and excess franchise tax refunds for a previously-owned property.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


 For the Year Ended December 31, 2017
 Minimum rent Overage rent Tenant reimbursements Other income Total
Lease related$516,386
 $9,115
 $208,290
 $3,492
 $737,283
Ancillary—
 —
 —
 9,848
 9,848
Fee related—
 —
 —
 7,906
 7,906
Other—
 —
 —
 3,085
 3,085
Total revenues$516,386
 $9,115
 $208,290
 $24,331
 $758,122
 For the Year Ended December 31, 2016
 Minimum rent Overage rent Tenant reimbursements Other income Total
Lease related$572,781
 $12,882
 $236,510
 $1,310
 $823,483
Ancillary—
 —
 —
 10,111
 10,111
Fee related—
 —
 —
 6,709
 6,709
Other—
 —
 —
 3,172
 3,172
Total revenues$572,781
 $12,882
 $236,510
 $21,302
 $843,475
Minimum Rent
Minimum rent is recognized on a straight-line basis over the terms of their respective leases. Minimum rent also includes accretion related to above-market and below-market lease intangibles related to the acquisition of operating properties. We amortize any tenant inducements as a reduction of revenue utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.
Overage Rent
A large number of our retail tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. We recognize overage rents only when each tenant's sales exceed the applicable sales threshold as defined in their lease.
Tenant Reimbursements
A substantial portion of our leases require the tenant to reimburse us for a material portion of our property operating expenses, including CAM, real estate taxes and insurance. Such property operating expenses typically include utility, insurance, security, janitorial, landscaping, food court and other administrative expenses. Tenant reimbursements are established in the leases or computed based upon a formula related to real estate taxes, insurance and other property operating expenses and are recognized as revenues in the period they are earned. When not reimbursed by the fixed CAM component, CAM expense reimbursements are based on the tenant's proportionate share of the allocable operating expenses and CAM capital expenditures for the property. We accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year.
Other Income
Lease related: We collect lease termination income from tenants to allow for the tenant to vacate their space prior to their scheduled lease termination date. We recognize lease termination income in the period when a termination agreement is signed, collectability is assured, and we are no longer obligated to provide space to the tenant. In the event that a tenant is in bankruptcy when the termination agreement is signed, termination fee income is deferred and recognized when, and if, it is received.
Ancillary: We seek to monetize our common areas through robust ancillary programs. These programs include destination holiday experiences, customer service programs, sponsored children's play areas and local events, and static and digital media initiatives. We enter into agreements with unrelated third parties under these programs and charge a negotiated fee in exchange for providing the unrelated third party access to the common area as defined under the respective agreements. We recognize the fee as revenue as we satisfy our performance obligations, which typically occurs over one year.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


Fee related: We collect fee income primarily from our unconsolidated joint ventures in exchange for providing management, leasing, and development services. Management fees are charged as a percentage of revenues (as defined in the applicable management agreements) and are recognized as revenue as we render such services. Leasing fees are charged on a fixed amount per square foot signed or a percentage of net rent negotiated within the underlying lease and are recognized upon lease execution. Development fees are charged on a contractual percentage of hard costs to develop the respective asset and are recognized as we satisfy our obligation to provide the development services.
Allowance for Credit Losses
We record a provision for credit losses based on our judgment of a tenant's creditworthiness, ability to pay and probability of collection. In addition, we also consider the retail sector in which the tenant operates and our historical collection experience in cases of bankruptcy, if applicable. Accounts are written off when they are deemed to be no longer collectible. The activity in the allowance for credit losses, which are included in "Tenant receivables and accrued revenue, net" in the accompanying balance sheets, during the years ended December 31, 2018, 2017 and 2016 is as follows:
  For the Year Ended December 31,
  2018 2017 2016
Balance, beginning of year $7,867
 $8,578
 $4,222
Provision for credit losses 5,826
 5,068
 4,508
Accounts deconsolidated upon joint venture formation (see Note 5) —
 (1,271) —
Accounts written off, net of recoveries, and other (3,562) (4,508) (152)
Balance, end of year $10,131
 $7,867
 $8,578
Income and Other Taxes
WPG Inc. has elected to be taxed as a REIT under Sections 856 through 860 of the Code and applicable Treasury regulations relating to REIT qualification. In order to maintain REIT status, the regulations require the entity to distribute at least 90% of taxable income, exclusive of net capital gains, to its owners and meet certain other asset and income tests as well as other requirements. WPG Inc. intends to continue to adhere to these requirements and maintain its REIT status and that of its REIT subsidiaries. As a REIT, WPG Inc. will generally not be liable for federal corporate income taxes as long as it continues to distribute at least of 100% of its taxable income. Thus, we made no provision for federal income taxes on WPG Inc. in the accompanying consolidated financial statements. If WPG Inc. fails to qualify as a REIT, it will be subject to tax at regular corporate rates for the years in which it failed to qualify. If WPG Inc. loses its REIT status it could not elect to be taxed as a REIT for four years unless its failure to qualify was due to reasonable cause and certain other conditions were satisfied.
We have also elected taxable REIT subsidiary ("TRS") status for some of WPG Inc.'s subsidiaries. This enables us to provide services that would otherwise be considered impermissible for REITs and participate in activities that do not qualify as "rents from real property." For the years ended December 31, 2018, 2017 and 2016, we recorded federal income tax provisions (benefits) of $525, $(87), and $227, respectively, related to the taxable income generated by the TRS entities, which is included in income and other taxes in the accompanying consolidated statements of operations and comprehensive income. For these entities, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates to be in effect when the temporary differences reverse. There were no deferred tax assets or liabilities for the years ended December 31, 2018 and 2017 as a result of federal and state net operating loss carryovers.
A valuation allowance for deferred tax assets is provided if we believe all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance that results from the change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in income. There were no valuation allowances as of December 31, 2018 and 2017, respectively, as the TRS did not have any net operating loss carryovers. As of December 31, 2018 and 2017, the TRS had no net deferred tax assets related to net operating loss carryovers.
We are also subject to certain other taxes, including state and local taxes and franchise taxes, which are included in income and other taxes in the accompanying consolidated statements of operations and comprehensive income.
For federal income tax purposes, the cash distributions paid to WPG Inc.'s common and preferred shareholders may be characterized as ordinary income, return of capital (generally non-taxable) or capital gains. Tax law permits certain characterization of distributions which could result in differences between cash basis and tax basis distribution amounts.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The following characterizes distributions paid per common and preferred share on a tax basis for the years ended December 31, 2018, 2017 and 2016:
  2018 2017 2016
  $ % $ % $ %
Common shares            
Ordinary income $1.0000
 100.00% $0.4306
 43.06% $0.6128
 61.28%
Capital gain —
 —
 0.5694
 56.94% —
 —
Non-dividend distributions —
 —
 —
 —
 0.3872
 38.72%
  $1.0000
 100.00% $1.0000
 100.00% $1.0000
 100.00%
             
Series H Preferred Shares            
Ordinary income $1.8752
 100.00% $1.0093
 43.06% $1.4064
 100.00%
Capital gain —
 —
 1.3347
 56.94% —
 —
  $1.8752
 100.00% $2.3440
 100.00% $1.4064
 100.00%
             
Series I Preferred Shares            
Ordinary income $1.7188
 100.00% $0.9251
 43.06% $1.2891
 100.00%
Capital gain —
 —
 1.2234
 56.94% —
 —
  $1.7188
 100.00% $2.1485
 100.00% $1.2891
 100.00%
Noncontrolling Interests for WPG Inc.
Details of the carrying amount of WPG Inc.'s noncontrolling interests are as follows as of December 31, 2018 and 2017:
  2018 2017
Limited partners' interests in WPG L.P.  $147,493
 $166,660
Noncontrolling interests in properties 1,068
 1,058
Total noncontrolling interests $148,561
 $167,718
Net income attributable to noncontrolling interests (which includes limited partners' interests in WPG L.P. and noncontrolling interests in consolidated properties) is a component of consolidated net income of WPG Inc.
Redeemable Noncontrolling Interests for WPG Inc.
During the year ended December 31, 2017, but prior to the completion of the O'Connor Joint Venture II transaction (see Note 5 - "Investment in Unconsolidated Entities, at Equity" for further details), the Company purchased all of the redeemable noncontrolling interest equity owned by the unaffiliated third parties in consolidated joint venture entities that owned Arbor Hills, located in Ann Arbor, Michigan and 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," collectively). At December 31, 2018 and 2017, redeemable noncontrolling interests represented the outstanding 130,592 units of WPG L.P. 7.3% Series I-1 Preferred Units (the "Series I-1 Preferred Units"). Dividends accrue quarterly at an annual rate of 7.3% per share. 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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


4.Investment in Real Estate
Summary
Investment properties consisted of the following as of December 31, 2018 and 2017:
  2018 2017
Land $836,214
 $807,202
Buildings and improvements 4,980,939
 4,908,794
Total land, buildings and improvements 5,817,153
 5,715,996
Furniture, fixtures and equipment 97,552
 91,764
Investment properties at cost 5,914,705
 5,807,760
Less: accumulated depreciation 2,283,764
 2,139,620
Investment properties at cost, net $3,630,941
 $3,668,140
​ ​
 ​
Construction in progress included above $35,068
 $46,046
Real Estate Acquisitions and Dispositions
We acquire interests in properties to generate both current income and long-term appreciation in value. We acquire interests in individual properties or portfolios of retail real estate companies that meet our investment criteria and dispose of properties which no longer meet our strategic criteria. Unless otherwise noted below, gains and losses on these transactions are included in gain (loss) on sale of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income.
No acquisition activity occurred during the years ended December 31, 2017 and 2016. Acquisition activity for the year ended December 31, 2018 and disposition activity for the years ended December 31, 2018, 2017 and 2016 is highlighted as follows:
2018 Acquisitions
On April 11, 2018, we acquired, through a sale-leaseback transaction, four Sears department stores and adjacent Sears Auto Centers at Longview Mall, located in Longview, Texas; Polaris Fashion Place®, located in Columbus, Ohio; Southern Hills Mall, located in Sioux City, Iowa; and Town Center at Aurora, located in Aurora, Colorado. The purchase price was approximately $28.5 million and was funded by a combination of $13.4 million from our Facility (as defined in Note 6 - "Indebtedness"), $9.7 million from the first tranche of the Four Corners transaction, as discussed below, and $5.4 million from O'Connor Mall Partners, L.P. ("O'Connor") related to their pro-rata share of the joint venture that owns Polaris Fashion Place® (see Note 5 - "Investment in Unconsolidated Entities, at Equity").
On April 24, 2018, the Company closed on the acquisition of Southgate Mall, located in Missoula, Montana, for $58.0 million, which was funded from our Facility (as defined in Note 6 - "Indebtedness").
The following table summarizes the fair value allocation for the acquisitions, which was finalized during the three months ended June 30, 2018:
Investment properties $72,647
Investment in and advances to unconsolidated entities, at equity 5,543
Deferred costs and other assets 10,311
Accounts payable, accrued expenses, intangibles, and deferred revenue (8,393)
Net cash paid for acquisitions $80,108
Intangibles of $10.3 million, which relate primarily to above-market leases and lease in place values, are included in “Deferred costs and other assets” as of the respective acquisition dates. The initial weighted average useful life of the intangible assets was 11.5 years. Intangibles of $4.9 million, which relate primarily to below-market leases, are included in “Accounts payable, accrued expense, intangibles, and deferred revenue” as of the respective acquisition dates. The initial weighted average useful life of the intangible liabilities was 9.6 years.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The transactions were accounted for as asset acquisitions and accordingly, $0.6 million of transaction costs were capitalized as part of the allocation of fair value.
2018 Dispositions
During the year ended December 31, 2018, we completed the sale of various tranches of restaurant outparcels to FCPT Acquisitions, LLC ("Four Corners") pursuant to the purchase and sale agreement executed on September 20, 2017 between the Company and Four Corners. The following table summarizes the key terms of each tranche:
Tranche Sales Date Parcels Sold Purchase Price Sales Proceeds
Tranche 1 January 12, 2018 10
 $13,692
 $13,506
Tranche 2 June 29, 2018 5
 9,503
 9,423
Tranche 3 July 27, 2018 2
 4,607
 4,530
Tranche 4 October 31, 2018 2
 1,718
 1,714
Tranche 5 November 16, 2018 1
 3,195
 3,166
    20
 $32,715
 $32,339
The Company used the proceeds to fund a portion of the acquisition of the Sears parcels on April 11, 2018 as discussed above, to reduce corporate debt, and to fund ongoing redevelopment efforts. The Company expects to close on the remaining 24 outparcels for approximately $37.5 million during the first half of 2019, subject to due diligence and closing conditions (see Note 13 - "Subsequent Events" for additional details).
In connection with the 2018 dispositions, the Company recorded a net gain of $24.6 million 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 year ended December 31, 2018.
On October 23, 2018, Rushmore Mall, located in Rapid City, South Dakota, was transitioned to the lender (see Note 6 - "Indebtedness" for further discussion).
2017 Dispositions
On November 3, 2017, we completed the sale of Colonial Park Mall, located in Harrisburg, Pennsylvania, to an unaffiliated private real estate investor for a purchase price of $15.0 million. The net proceeds were used for general corporate purposes.
On June 13, 2017, we sold 49% of our interest in Malibu Lumber Yard, located in Malibu, California, as part of the O'Connor Joint Venture II transaction (as defined below and as discussed in in Note 5 - "Investment in Unconsolidated Entities, at Equity").
On June 7, 2017, we completed the sale of Morgantown Commons, located in Morgantown, West Virginia, to an unaffiliated private real estate investor for a purchase price of approximately $6.7 million. The net proceeds were used for general corporate purposes.
On May 16, 2017, we completed the sale of an 80,000 square foot (unaudited) vacant anchor parcel at Indian Mound Mall, located in Heath, Ohio, to an unaffiliated private real estate investor for a purchase price of approximately $0.8 million. The net proceeds were used for general corporate purposes.
On May 12, 2017, we completed the transaction with regard to the ownership and operation of six of the Company's retail properties and certain related outparcels (the "O'Connor Joint Venture II" as discussed in Note 5 - "Investment in Unconsolidated Entities, at Equity").
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, to unaffiliated private real estate investors for an aggregate purchase price of $42.0 million. The net proceeds from the transaction were used to reduce corporate debt.
On January 10, 2017, we completed the sale of Virginia Center Commons, located in Glen Allen, Virginia, to an unaffiliated private real estate investor for a purchase price of $9.0 million. The net proceeds from the transaction were used to reduce corporate debt.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


In connection with the 2017 dispositions, the Company recorded a net gain of $124.8 million 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 year ended December 31, 2017.
On October 3, 2017, Valle Vista Mall, located in Harlingen, Texas, was transitioned to the lender (see Note 6 - "Indebtedness" for further discussion).
2016 Dispositions
On November 10, 2016, we completed the sale of Richmond Town Square, located in Cleveland, Ohio, to a private real estate investor for a purchase price of $7.3 million. The net proceeds from the transaction were used to reduce the balance of corporate debt.
On August 19, 2016, the Company completed the sale of Knoxville Center to a private real estate investor (the "Buyer") for a purchase price of $10.1 million. The sales price consisted of $3.9 million paid to the Company at closing and the issuance of a promissory note for $6.2 million from the Buyer to the Company with an interest rate of 5.5% per annum (see Note 3 - "Summary of Significant Accounting Policies" for further discussion). The remaining note receivable balance of $5.3 million was received during the year ended December 31, 2018. The net proceeds from the transaction were used to reduce the balance outstanding under the Facility (see Note 6 - "Indebtedness").
On January 29, 2016, we completed the sale of Forest Mall and Northlake Mall to private real estate investors (the "Buyers") for an aggregate purchase price of $30 million. The sales price consisted of $10 million paid to us at closing and the issuance of a promissory note for $20 million from us to the Buyers with an interest rate of 6% per annum. On June 29, 2016, the Buyers repaid $4.4 million of the promissory note balance and exercised a six-month extension option. The remaining proceeds were paid in full on January 4, 2017. The net proceeds from the transaction were used to reduce the balance outstanding under the Facility (see Note 6 - "Indebtedness").
In connection with the 2016 dispositions, the Company recorded a net loss of $2.0 million, 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 year ended December 31, 2016.
On December 29, 2016, June 9, 2016 and April 28, 2016, River Valley Mall, located in Lancaster, Ohio, Merritt Square Mall, located in Merritt Island, Florida, and Chesapeake Square, located in Chesapeake, Virginia, were transitioned to the lenders, respectively (see Note 6 - "Indebtedness" for further discussion).
Intangible Assets and Liabilities Associated with Acquisitions
Intangible assets and liabilities, which were recorded at the respective acquisition dates, are associated with the Company's acquisitions of properties at fair value. The gross intangibles recorded as of their respective acquisition date are comprised of an asset for acquired above-market leases in which the Company is the lessor, a liability for acquired below-market leases in which the Company is the lessor, and an asset for in-place leases.
The following table denotes the gross carrying values of the respective intangibles as of December 31, 2018 and 2017:
  Balance as of
Intangible Asset/Liability December 31, 2018 December 31, 2017
Above-market leases - Company is lessor $48,373
 $51,315
Below-market leases - Company is lessor $117,395
 $124,475
In-place leases $109,379
 $120,159
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 $8,971, $7,323, and $9,930 for the years ended December 31, 2018, 2017 and 2016, respectively.
In-place leases are amortized to depreciation and amortization expense over the life of the leases to which they pertain, with such amortization of $14,780, $18,457, and $24,269 for the years ended December 31, 2018, 2017 and 2016, respectively.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


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 December 31, 2018 and 2017:
      Balance as of
Intangible
Asset/Liability		 Location on the
Consolidated Balance Sheets		 Weighted Average Remaining Amortization (in years) December 31, 2018 December 31, 2017
Above-market leases - Company is lessor Deferred costs and other assets 6.9 $18,827
 $24,254
Below-market leases - Company is lessor Accounts payable, accrued expenses, intangibles and deferred revenues 12.6 $66,651
 $77,870
In-place leases Deferred costs and other assets 11.1 $38,453
 $46,627
The future net amortization of intangibles as an increase (decrease) to net income as of December 31, 2018 is as follows:
  Above/Below-Market Leases-Lessor In-place Leases Total Net Intangible Amortization
2019 $4,339
 $(9,203) $(4,864)
2020 4,606
 (6,965) (2,359)
2021 4,677
 (3,584) 1,093
2022 4,187
 (2,819) 1,368
2023 3,619
 (2,285) 1,334
Thereafter 26,396
 (13,597) 12,799
  $47,824
 $(38,453) $9,371
Impairment
During the fourth quarter of 2017, a major anchor tenant of Rushmore Mall informed us of their intention to close their store at the property. The impending closure was deemed a triggering event and, therefore, we evaluated this property in conjunction with our quarterly impairment review and preparation of our financial statements for the year ended December 31, 2017. We compared the estimated fair value of $37.5 million to the related carrying value of $75.0 million, which resulted in the recording of an impairment charge of approximately $37.5 million in the consolidated statements of operations and comprehensive income for the year ended December 31, 2017.
On November 3, 2017, the Company completed the sale of Colonial Park Mall for $15.0 million. We compared the fair value measurement of the property to its relative carrying value, which resulted in the recording of an impairment charge of approximately $20.9 million in the accompanying consolidated statements of operations and comprehensive income for the year ended December 31, 2017. The impairment charge was due to the change in facts and circumstances when we decided to hold the asset for a shorter period which resulted in the carrying value not being recoverable from the projected cash flows.
During the first quarter of 2017, the Company entered into a purchase and sale agreement to dispose of Morgantown Commons, which was sold in the second quarter of 2017. Earlier in 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 represented 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 accompanying consolidated statements of operations and comprehensive income for the year ended December 31, 2017.
During the year ended December 31, 2016, we recorded an impairment charge of $21.9 million, primarily related to noncore properties consisting of Gulf View Square, Richmond Town Square, River Oaks Center, and Virginia Center Commons. The impairment charge was attributed to the continued declines in the fair value of the properties and executed agreements entered into in 2016 to sell these properties at prices below the carrying value.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


5.Investment in Unconsolidated Entities, at Equity
The Company's investment activity in unconsolidated real estate entities for the years ended December 31, 2018 and 2017 consisted of investments in the following joint ventures:
The O'Connor Joint Venture I
This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of five enclosed retail properties and related outparcels, consisting of the following: The Mall at Johnson City located in Johnson City, Tennessee; Pearlridge Center located in Aiea, Hawaii; Polaris Fashion Place®; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retain management, leasing, and development responsibilities for the O'Connor Joint Venture I.
On April 11, 2018, the O'Connor Joint Venture I closed on the acquisition of the Sears department store located at Polaris Fashion Place® in connection with our acquisition of additional Sears department stores (see Note 4 - "Investment in Real Estate").
On March 2, 2017, the O'Connor Joint Venture I closed on the purchase of Pearlridge Uptown II, an approximately 153,000 square foot (unaudited) wing of Pearlridge Center, for a gross purchase price of $70.0 million.
On March 30, 2017, the O'Connor Joint Venture I closed on a $43.2 million non-recourse mortgage note payable with an eight year term and a fixed interest rate of 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.
On March 29, 2017, the O'Connor Joint Venture I closed on a $55.0 million non-recourse mortgage note payable with a ten year term and 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.
The O'Connor Joint Venture II
During the year ended December 31, 2017, we completed an additional joint venture transaction with O'Connor with respect to the ownership and operation of seven of the Company's retail properties and certain related outparcels, consisting of the following: The Arboretum, located in Austin, Texas; Arbor Hills; the Oklahoma City Properties; Gateway Centers, located in Austin, Texas; Malibu Lumber Yard; Palms Crossing I and II, located in McAllen, Texas; and The Shops at Arbor Walk, located in Austin, Texas (the "O'Connor Joint Venture II"). The transaction valued the properties at $598.6 million before closing adjustments and debt assumptions. Under the terms of the joint venture agreement, we retained a non-controlling 51% interest in the O'Connor Joint Venture II and sold the remaining 49% to O'Connor. The transaction generated net proceeds to the Company of approximately $138.9 million, after taking into consideration costs associated with the transaction and the assumption of debt (including the new mortgage loans on The Arboretum, Gateway Centers, and Oklahoma City Properties which closed prior to the joint venture transaction; see Note 6 - "Indebtedness" for net proceeds to the Company from the new mortgage loans), which we used to reduce the Company's debt as well as for general corporate purposes. At the time of closing, we deconsolidated the properties included in the O'Connor Joint Venture II and recorded a gain in connection with this partial sale of $126.1 million, which is included in gain (loss) on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income. The gain was recorded pursuant to ASC 360-20 and calculated based upon proceeds received, less 49% of the book value of the deconsolidated net assets. Our retained 51% non-controlling equity method interest was valued at historical cost based upon the pro rata book value of the retained interest in the net assets. We retain management and leasing responsibilities for the properties included in the O'Connor Joint Venture II.
In connection with the formation of this joint venture, we recorded transaction costs of approximately $6.4 million as part of our basis in this investment.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The Seminole Joint Venture
This investment consists of a 45% non-controlling interest held by the Company in Seminole Towne Center, an approximate 1.1 million square foot (unaudited) enclosed regional retail property located in the Orlando, Florida area. The Company's effective financial interest in this property (after preferences) was approximately 6.76% for the year ended December 31, 2018. We retain day to day management, leasing, and development responsibilities for the Seminole Joint Venture. During the year ended December 31, 2017, the Company received cash of $0.7 million (after preferences) related to our share of the proceeds from the sale of two outparcels, which was recorded in income (loss) from unconsolidated entities, net in the accompanying consolidated statements of operations and comprehensive income.
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. We do not have management, leasing and development responsibilities for this joint venture.
Advances to the O'Connor Joint Venture I and O'Connor Joint Venture II totaled $5.2 million and $4.3 million as of December 31, 2018 and 2017, 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 results for the O'Connor Joint Venture I, Seminole Joint Venture, and our indirect 12.5% ownership interest are included below for all periods presented. The results for the O'Connor Joint Venture II are included below for the year ended December 31, 2018 and from May 12, 2017 (the closing date of the venture), and in the case of Malibu Lumber Yard from June 13, 2017 (the date the property was contributed to the venture), through December 31, 2017.
  For the Year Ended December 31,
  2018 2017 2016
Total revenues $264,521
 $236,415
 $191,831
Operating expenses 108,513
 95,603
 78,685
Depreciation and amortization 97,810
 89,397
 78,972
Operating income 58,198
 51,415
 34,174
Gain on sale of interests in property and unconsolidated entities, net 583
 1,585
 1,014
Interest expense, taxes, and other, net (52,477) (45,906) (32,754)
Net income from the Company's unconsolidated real estate entities $6,304
 $7,094
 $2,434
       
Our share of income (loss) from the Company's unconsolidated real estate entities $541
 $1,395
 $(1,745)
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The following table presents the combined balance sheets for the unconsolidated joint venture properties for the periods indicated above during which the Company accounted for these investments as unconsolidated entities as of December 31, 2018 and 2017:
  December 31,
  2018 2017
Assets:    
Investment properties at cost, net $1,964,699
 $1,972,208
Construction in progress 21,019
 44,817
Cash and cash equivalents 43,169
 40,955
Tenant receivables and accrued revenue, net 31,661
 30,866
Deferred costs and other assets (1)
 147,481
 174,665
Total assets $2,208,029
 $2,263,511
Liabilities and Members’ Equity:  
  
Mortgage notes payable $1,292,801
 $1,302,143
Accounts payable, accrued expenses, intangibles, and deferred revenues(2)
 137,073
 148,273
Total liabilities 1,429,874
 1,450,416
Members’ equity 778,155
 813,095
Total liabilities and members’ equity $2,208,029
 $2,263,511
Our share of members’ equity, net $396,229
 $414,245

(1)Includes value of acquired in-place leases and acquired above-market leases with a net book value of $91,609 and $107,869 as of December 31, 2018 and 2017, respectively.
(2)Includes the net book value of below market leases of $57,392 and $69,269 as of December 31, 2018 and 2017, respectively.
The following table presents the investment in and advances to (cash distributions and losses in) unconsolidated entities for the periods indicated above during which the Company accounted for these investments as unconsolidated entities as of December 31, 2018 and 2017:
  December 31,
  2018 2017
Our share of members’ equity, net $396,229
 $414,245
Advances and excess investment 21,557
 22,173
Net investment in and advances to unconsolidated entities, at equity(1)
 $417,786
 $436,418
(1)Includes $433,207 and $451,839 of investment in and advances to unconsolidated entities, at equity as of December 31, 2018 and 2017, respectively, and $15,421 and $15,421 of cash distributions and losses in unconsolidated entities, at equity as of December 31, 2018 and 2017, respectively.
6.Indebtedness
Mortgage Debt
Total mortgage indebtedness at December 31, 2018 and 2017 was as follows:
  2018 2017
Face amount of mortgage loans $980,276
 $1,152,436
Fair value adjustments, net 5,764
 8,338
Debt issuance cost, net (2,771) (3,692)
Carrying value of mortgage loans $983,269
 $1,157,082
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The mortgage debt had weighted average interest and maturity of 5.00% and 3.5 years at December 31, 2018 and 4.77% and 4.0 years at December 31, 2017.
A roll forward of mortgage indebtedness from December 31, 2017 to December 31, 2018 is summarized as follows:
Balance at December 31, 2017 $1,157,082
Debt amortization payments (18,322)
Repayment of debt (94,838)
Debt borrowings, net of issuance costs 34,782
Debt canceled upon lender foreclosures, net of debt issuance costs (93,988)
Amortization of fair value and other adjustments (2,574)
Amortization of debt issuance costs 1,127
Balance at December 31, 2018 $983,269
2018 Activity
On October 23, 2018, the $94.0 million mortgage on Rushmore Mall was canceled upon a deed-in-lieu of foreclosure agreement (see "Covenants" section below for additional details).
On October 2, 2018, an affiliate of WPG Inc. repaid the $8.3 million mortgage loan on Whitehall Mall, located in Whitehall, Pennsylvania. This repayment was funded by cash on hand.
On September 27, 2018, an affiliate of WPG Inc. closed on a $35.0 million full-recourse mortgage note payable with a three-year term and a fixed rate of 4.48% secured by Southgate Mall. The mortgage note payable requires interest only payments and will initially mature on September 27, 2021, subject to two one-year extensions available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees. The proceeds were used to reduce corporate debt and for ongoing redevelopment efforts.
On June 8, 2018, the Company exercised the first of three options to extend the maturity date of the $65.0 million term loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2019, subject to two one year extensions available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees.
On January 19, 2018, an affiliate of WPG Inc. repaid the $86.5 million mortgage loan on The Outlet Collection® | Seattle, located in Auburn, Washington. This repayment was funded by borrowings on the Revolver (as defined below).
2017 Activity
On December 29, 2017, an affiliate of WPG Inc. repaid the $11.7 million mortgage loan secured by Henderson Square, located in King of Prussia, Pennsylvania. This repayment was funded by cash on hand.
On October 17, 2017, an affiliate of WPG Inc. completed a discounted payoff of the $99.7 million mortgage loan secured by Southern Hills Mall, located in Sioux City, Iowa, for $55.0 million (see "Covenants" section below for additional details).
On October 3, 2017, the $40.0 million mortgage on Valle Vista Mall was canceled upon a deed-in-lieu of foreclosure agreement (see "Covenants" section below for additional details).
On October 2, 2017, an affiliate of WPG Inc. repaid the $99.6 million mortgage loan on WestShore Plaza, located in Tampa, Florida. This repayment was funded by borrowings on the Revolver.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


On May 10, 2017 and prior to the deconsolidation of these properties due to the sale of 49% of our interests (see Note 5 - "Investment in Unconsolidated Entities, at Equity" for further details), the Company closed on non-recourse mortgage loans encumbering The Arboretum, Gateway Centers, and Oklahoma City Properties. The following table summarizes the key terms of each mortgage loan:
Property Principal Debt issuance costs Net debt issuance Interest Rate Maturity Date
The Arboretum $59,400
 $(452) $58,948
 4.13% June 1, 2027
Gateway Centers 112,500
 (709) 111,791
 4.03% June 1, 2027
Oklahoma City Properties 43,279
 (427) 42,852
 3.90% June 1, 2027
Total $215,179
 $(1,588) $213,591
    
The Arboretum and Gateway Centers loans require monthly interest only payments until July 1, 2021, at which time monthly interest and principal payments are due until maturity. The Oklahoma City Properties loan requires monthly interest only payments until July 1, 2022, at which time monthly interest and principal payments are due until maturity. We used the net proceeds to repay a portion of the outstanding balance on the Revolver, as defined below. These three loans were deconsolidated during the year ended December 31, 2017, in connection with the completion of the O'Connor Joint Venture II transaction.
On April 25, 2017, the Company completed a discounted payoff of the $87.3 million mortgage loan secured by Mesa Mall, located in Grand Junction, Colorado, for $63.0 million (see "Covenants" section below for additional details).
Unsecured Debt
On January 22, 2018, WPG L.P. amended and restated $1.0 billion of the existing facility. The recast Facility (as defined below) can be increased to $1.5 billion through currently uncommitted Facility commitments. Excluding the accordion feature, the recast Facility includes a $650.0 million Revolver (as defined below) and $350.0 million Term Loan (as defined below). The $350.0 million Term Loan was fully funded at closing, and the Company used the proceeds to repay the $270.0 million outstanding on the June 2015 Term Loan (as defined below) and to pay down the Revolver.
On August 4, 2017, WPG L.P. completed the issuance of $750.0 million of unsecured notes. The proceeds were used to repay the $500.0 million previously outstanding Term Loan (as defined below) and partial repayment of $230.0 million on the June 2015 Term Loan (as defined below).
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The following table identifies our total unsecured debt outstanding at December 31, 2018 and December 31, 2017:
  December 31,
2018		 December 31,
2017
Notes payable:    
Face amount - 3.850% Notes due 2020 (the "Exchange Notes")(1)
 $250,000
 $250,000
Face amount - 5.950% Notes due 2024(2)
 750,000
 750,000
Debt discount, net (9,680) (11,086)
Debt issuance costs, net (7,623) (9,542)
Total carrying value of notes payable $982,697
 $979,372
     
Unsecured term loans:(8)
    
Face amount - Term Loan(3)(4)
 $350,000
 $—
Face amount - December 2015 Term Loan(5)
 340,000
 340,000
Face amount - June 2015 Term Loan(6)
 —
 270,000
Debt issuance costs, net (4,491) (3,305)
Total carrying value of unsecured term loans $685,509
 $606,695
     
Revolving credit facility:(3)(7)
    
Face amount $290,000
 $155,000
Debt issuance costs, net (3,998) (540)
Total carrying value of revolving credit facility $286,002
 $154,460
(1)The Exchange Notes were issued at a 0.028% discount, bear interest at 3.850% per annum and mature on April 1, 2020.
(2)The 5.950% Notes due 2024 were issued at a 1.533% discount, bear interest at 5.950% per annum, and mature on August 15, 2024. The interest rate could vary in the future based upon changes to the Company's credit ratings (see Note 13 - "Subsequent Events").
(3)The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."
(4)The Term Loan bears interest at one-month LIBOR plus 1.45% per annum and will mature on December 30, 2022. We had interest rate swap agreements totaling $270.0 million, which effectively fixed the interest rate on a portion of the Term Loan at 2.56% per annum through June 30, 2018. On May 9, 2018, we executed swap agreements totaling $250.0 million to replace matured swap agreements, which effectively fix the interest rate on a portion of the Term Loan at 4.21% through June 30, 2021. At December 31, 2018, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 1.45% or 3.95%.
(5)The December 2015 Term Loan bears interest at one-month LIBOR plus 1.80% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million, which effectively fix the interest rate at 3.51% per annum through maturity.
(6)The June 2015 Term Loan bore interest at one-month LIBOR plus 1.45% per annum. During the year ended December 31, 2017, the Company repaid $230.0 million of the June 2015 Term Loan and wrote off $0.9 million of debt issuance costs. On January 22, 2018, the Company repaid the remaining $270.0 million outstanding with proceeds from the amended and restated Facility (as discussed above) and wrote off $0.5 million of debt issuance costs.
(7)As of December 31, 2017, the Revolver provided borrowings on a revolving basis up to $900.0 million, bore interest at one-month LIBOR plus 1.25%, and was initially scheduled to mature on May 30, 2018. On January 22, 2018, we amended the terms of the Revolver to provide borrowings on a revolving basis up to $650.0 million at one-month LIBOR plus 1.25%. Under the amended terms, the Revolver will mature on December 30, 2021, subject to two six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. Upon the amended terms, the Company wrote off $0.3 million of debt issuance costs. At December 31, 2018, we had an aggregate available borrowing capacity of $359.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At December 31, 2018, the applicable interest rate on the Revolver was one-month LIBOR plus 1.25%, or 3.75% (see Note 13 - "Subsequent Events").
(8) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings (see Note 13 - "Subsequent Events").
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The following table presents the borrowings and paydowns on the Revolver during the years ended December 31, 2018 and December 31, 2017:
  2018 2017
Beginning Balance $155,000
 $308,000
Borrowings 332,000
 350,000
Paydowns (197,000) (503,000)
Ending Balance $290,000
 $155,000
During 2018, borrowings under the Revolver were primarily used for general corporate purposes. Paydowns of outstanding borrowings were funded using proceeds from property dispositions (see Note 4 - "Investment in Real Estate"), new mortgage activity as discussed above and cash flow from operations.
During 2017, borrowings under the Revolver were primarily used for general corporate purposes. Paydowns of outstanding borrowings were funded using proceeds from property dispositions (see Note 4 - "Investment in Real Estate"), the O'Connor Joint Venture II transaction (see Note 5 - "Investment in Unconsolidated Entities, at Equity"), including certain mortgage notes executed prior to the deconsolidation, and cash flow from operations.
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 December 31, 2018, management believes the Company is in compliance with all covenants of its unsecured debt.
The total balance of mortgages was approximately $980.3 million as of December 31, 2018. At December 31, 2018, certain of our consolidated subsidiaries were the borrowers under 21 non-recourse loans and two full-recourse loans secured by mortgages encumbering 26 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four 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 November 19, 2018, we received a notice of default letter, dated November 15, 2018, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $49.9 million mortgage loan secured by West Ridge Mall and West Ridge Plaza, located in Topeka, Kansas (collectively known as "West Ridge"). The notice was issued by the special servicer because the borrower did not make certain reserve payments or deposits as required by the loan agreement for the aforementioned loan. 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 May 29, 2018, we received a notice of default letter, dated May 25, 2018, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $94.0 million mortgage loan secured by Rushmore Mall ("Rushmore"). The notice was issued by the special servicer because the borrower notified the lender that there were insufficient funds to ensure future compliance with the mortgage loan due to the loss of certain tenants at Rushmore. On October 23, 2018, an affiliate of the Company transitioned the property to the lender.
On April 11, 2018, we received a notice of default letter, dated April 6, 2018, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $45.2 million mortgage loan secured by Towne West Square, located in Wichita, Kansas. The notice was issued by the special servicer because the borrower did not make certain reserve payments or deposits as required by the loan agreement for the aforementioned loan. On August 24, 2018, we received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company still holds title to the property.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


On March 30, 2017, the Company transferred the $40.0 million mortgage loan secured by Valle Vista Mall to the special servicer at the request of the borrower, a consolidated subsidiary of the Company. On May 18, 2017, we received a notice of default letter, dated that same date, from the special servicer because the borrower did not repay the loan in full by its May 10, 2017 maturity date. On October 3, 2017, an affiliate of WPG Inc. transitioned the property to the lender.
On June 6, 2016, we received a notice of default letter, dated June 3, 2016, from the special servicer to the borrower of the $99.7 million mortgage loan secured by 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 June 1, 2016 maturity date.  On October 27, 2016, we received notification that a receiver has been appointed to manage and lease the property. On October 17, 2017, an affiliate of WPG Inc. completed a discounted payoff of the mortgage loan for $55.0 million and retained ownership and management of 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 by its June 1, 2016 maturity date. On April 25, 2017, the Company completed a discounted payoff of the mortgage loan for $63.0 million and retained ownership and management of the property.
On August 8, 2016, we received a notice of default letter, dated August 4, 2016, from the special servicer to the borrower concerning the $44.9 million mortgage loan secured by River Valley Mall. The letter was sent because the borrower, a consolidated subsidiary of the Company, did not repay the loan in full by its January 11, 2016 maturity date. On December 29, 2016, we transferred title of the property to the mortgage lender pursuant to the terms of a deed-in-lieu of foreclosure agreement entered into by the Company's affiliate and the mortgage lender.
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 million mortgage loan secured by Merritt Square Mall.  The letter was sent because the borrower, a consolidated subsidiary of the Company, did not repay the loan in full by its September 1, 2015 maturity date. On May 25, 2016, the trustee on behalf of the mortgage lender conducted a non-judicial foreclosure sale of Merritt Square Mall, in which the Company's affiliate previously held a 100% ownership interest. The mortgage lender was the successful bidder at the sale and ownership transferred on June 9, 2016. The Company managed the property through and including July 31, 2016.
On October 30, 2015, 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 was 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. On April 21, 2016, the trustee on behalf of the mortgage lender conducted a non-judicial foreclosure of Chesapeake Square, in which the Company's affiliate previously held majority ownership interest. The mortgage lender was the successful bidder at the sale and ownership transferred on April 28, 2016.
At December 31, 2018, 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. The Company has assessed each of the defaulted properties for impairment indicators and have concluded no impairment charges were warranted as of December 31, 2018.
Gain on Extinguishment of Debt, Net
During the year ended December 31, 2018, the Company recognized a net gain of $51.4 million related to the $94.0 million mortgage debt cancellation and ownership transfer of Rushmore Mall, which is included in gain on extinguishment of debt, net in the consolidated statements of operations and comprehensive income for the year then ended.
During the year ended December 31, 2017, the Company recognized a net gain of $90.6 million based on the cancellation of mortgage debt of $108.9 million related to discounted payoff of the mortgage note payable secured by Southern Hills Mall, ownership transfer of Valle Vista Mall, and discounted payoff of the mortgage note payable secured by Mesa Mall, which is included in gain on extinguishment of debt, net in the consolidated statements of operations and comprehensive income for the year then ended.
During the year ended December 31, 2016, the Company recognized a net gain of $34.6 million related to the $160.1 million mortgage debt cancellation and ownership transfers of River Valley Mall, Merritt Square Mall, and Chesapeake Square, which is included in gain on extinguishment of debt, net in the consolidated statements of operations and comprehensive income for the year then ended.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


Debt Maturity and Cash Paid for Interest
Scheduled principal repayments on indebtedness (including extension options) as of December 31, 2018 are as follows:
2019 $64,281
2020 344,584
2021 320,513
2022 771,856
2023 404,121
Thereafter 1,054,921
Total principal maturities 2,960,276
Bond Discount (9,680)
Fair value adjustments, net 5,764
Debt issuance costs, net (18,883)
Total mortgages and unsecured indebtedness $2,937,477
Cash paid for interest for the years ended December 31, 2018, 2017 and 2016 was $141,641, $107,609 and $125,999, respectively.
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 and fixed-rate unsecured debt (including variable-rate unsecured debt swapped to fixed-rate) using cash flows discounted at current borrowing rates or Level 2 inputs. We estimate the fair values of consolidated fixed-rate unsecured notes payable using quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms and maturities or Level 1 inputs. The book value and fair value of these financial instruments along with the related discount rate assumptions as of December 31, 2018 and 2017 are summarized as follows:
  2018 2017
Book value of fixed- rate mortgages(1)
 $915,276
 $1,000,936
Fair value of fixed-rate mortgages $928,129
 $1,024,890
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages 4.57% 4.19%
     
Book value of fixed-rate unsecured debt(1)
 $1,590,000
 $1,610,000
Fair value of fixed-rate unsecured debt $1,485,672
 $1,616,810
Weighted average discount rates assumed in calculation of fair value for fixed-rate unsecured debt 5.62% 4.27%
(1) Excludes deferred financing fees 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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


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. On January 1, 2018, the Company adopted ASU 2017-12, as permitted under the standard (see Note 3 - "Summary of Significant Accounting Policies" for additional details).
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative 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 income ("AOCI") during the term of the hedged debt transaction.
Amounts reported in 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 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 $2.4 million will be reclassified as a decrease to interest expense.
On August 4, 2017, the Company terminated six interest rate derivatives and partially terminated one interest rate derivative with an aggregate notional amount of $430,000, upon the repayment of the Term Loan and partial repayment of the June 2015 Term Loan, receiving cash proceeds of approximately $2.0 million upon settlement.
On May 9, 2018, the Company entered into four three-year swaps, totaling $250.0 million with an effective date of June 29, 2018, to replace two three-year swaps totaling $270.0 million, which matured on June 30, 2018. As of December 31, 2018, the Company had 10 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a notional value of $590,000.
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheet as of December 31, 2018 and 2017:
Derivatives designated as hedging instruments:Balance Sheet
Location		 December 31, 2018 December 31, 2017
Interest rate productsAsset DerivativesDeferred costs and other assets $9,306
 $7,413
Interest rate productsLiability DerivativesAccounts payable, accrued expenses, intangibles and deferred revenues $1,913
 $—
The asset derivative instruments were reported at their fair value of $9,306 and $7,413 in deferred costs and other assets at December 31, 2018 and 2017, 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 $1,913 and $0 in accounts payable, accrued expenses, intangibles, and deferred revenues at December 31, 2018 and 2017, 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 AOCI will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations and comprehensive income for the years ended December 31, 2018, 2017 and 2016:
Derivatives in Cash Flow Hedging Relationships
(Interest rate products)		 Location of Gain or (Loss) Recognized in Income on Derivatives For the Year Ended December 31,
  2018 2017 2016
Amount of Gain or (Loss) Recognized in OCI on Derivative   $1,054
 $1,256
 $(3,580)
         
Amount of Gain or (Loss) Reclassified from AOCI into Income Interest expense $(2,338) $1,145
 $7,381
         
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016:
Effect of Cash Flow Hedges on Consolidated Statements of Operations For the year ended December 31,
 2018 2017 2016
Total interest (expense) presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded $(141,987) $(126,541) $(136,225)
       
Amount of (gain) loss reclassified from accumulated other comprehensive income into interest expense $(2,338) $1,145
 $7,381
       
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 December 31, 2018, 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 $1,913. As of December 31, 2018, 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 December 31, 2018, it would have been required to settle its obligation under these agreements at their termination value of $1,913.
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.
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 December 31, 2018 and 2017, 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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit 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 December 31, 2018 and 2017 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 December 31, 2018
Derivative instruments, net$—
 $7,393
 $—
 $7,393
 Quoted Prices in Active Markets for Identical Liabilities
(Level 1)		 Significant Other Observable Inputs
(Level 2)		 
Significant Unobservable Inputs
(Level 3)
 Balance at December 31, 2017
Derivative instruments, net$—
 $7,413
 $—
 $7,413

8.Rentals under Operating Leases
Future minimum rentals to be received under non-cancelable operating leases for each of the next five years and thereafter, excluding tenant reimbursements of operating expenses and percentage rent based on tenant sales volume, as of December 31, 2018 are as follows:
2019 $401,604
2020 336,602
2021 270,936
2022 222,569
2023 175,206
Thereafter 423,765
  $1,830,682
9.Equity
Preferred Stock
Series H Cumulative Redeemable Preferred Stock
On January 15, 2015, WPG Inc. issued 4,000,000 shares of 7.5% Series H Cumulative Redeemable Preferred Stock (the "Series H Preferred Shares") to convert the preferred stock of GRT outstanding at the time of merger. Dividends accrue quarterly at an annual rate of 7.5% per share. WPG Inc. can redeem this series, in whole or in part, at a redemption price of $25.00 per share, plus accumulated and unpaid dividends. WPG L.P. issued to WPG Inc. a like number of preferred units as consideration for the Series H Preferred Shares and can redeem this series, in whole or in part, when WPG Inc. can redeem the Series H Preferred Shares at like terms. All shares remain issued and outstanding as of December 31, 2018 and 2017.
Series I Cumulative Redeemable Preferred Stock
On January 15, 2015, WPG Inc. issued 3,800,000 shares of 6.875% Series I Cumulative Redeemable Preferred Stock (the "Series I Preferred Shares") to convert the preferred stock of GRT outstanding at the time of merger. Dividends accrue quarterly at an annual rate of 6.875% per share. WPG Inc. can redeem this series, in whole or in part, at a redemption price of $25.00 per share, plus accumulated and unpaid dividends. WPG L.P. issued to WPG Inc. a like number of preferred units as consideration for the Series I Preferred Shares and can redeem this series, in whole or in part, when WPG Inc. can redeem the Series I Preferred Shares at like terms. All shares remain issued and outstanding as of December 31, 2018 and 2017.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


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 market value of WPG Inc.'s common stock as determined pursuant to the terms of the WPG L.P. Partnership Agreement. During the year ended December 31, 2017, WPG Inc. issued 314,577 shares of common stock to a limited partner of WPG L.P. in exchange for an equal number of units pursuant to the WPG L.P. Partnership Agreement. This transaction increased WPG Inc.’s ownership interest in WPG L.P. There were no similar transactions during the years ended December 31, 2018 and 2016. At December 31, 2018, WPG Inc. had reserved 34,755,660 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.
Share Based Compensation
On May 28, 2014, the Board 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/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., long term incentive units ("LTIP units" or "LTIPs") or performance units ("Performance LTIP Units") in WPG L.P. The Plan terminates on May 28, 2024.
Long Term Incentive Awards
Time Vested LTIP Awards
The Company has issued time-vested LTIP units ("Inducement LTIP Units") to 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 and the related fair value will be expensed over a four-year vesting period. During the years ended December 31, 2018, 2017 and 2016, the Company did not grant any Inducement LTIP Units. As of December 31, 2018, the estimated future compensation expense for Inducement LTIP Units was $38. The weighted average period over which the compensation expense will be recorded for the Inducement LTIP Units is approximately 0.2 years.
A summary of the Inducement LTIP Units and changes during the year ended December 31, 2018 is listed below:
 Activity for the Year Ended December 31,
 2018
 Inducement LTIP Units Weighted
Average Grant Date
Fair Value
Outstanding unvested at beginning of year37,868
 $17.82
Units granted—
 $—
Units vested(25,036) $17.97
Units forfeited—
 $—
Outstanding unvested at end of year12,832
 $17.53
During the year ended December 31, 2017, 29,685 LTIP Units, with a weighted average grant date fair value per share of $18.33, vested. During the year ended December 31, 2016, 189,755 LTIP Units, with a weighted average grant date fair value per share of $18.07, vested.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


Performance Based Awards
2015 Awards
During 2015, the Company authorized the award of LTIP units subject to certain market conditions under ASC 718 ("Performance LTIP Units") to certain executive officers and employees of the Company in the maximum total amount of 304,818 units, to be earned and related fair value expensed over the applicable performance periods, except in certain instances that could result in accelerated vesting due to severance arrangements.
The Performance LTIP Units that were allocated during the year ended December 31, 2015 are market based awards with a service condition. Recipients could have earned between 0% -100% of the award based on the Company's achievement of absolute and relative (versus the MSCI REIT Index) total shareholder return ("TSR") goals, with 40% of the Performance LTIP Units available to be earned with respect to each performance period based on achievement of absolute TSR goals, and 60% of the Performance LTIP Units available to be earned with respect to each performance period based on achievement of relative TSR goals.
The Performance LTIP Units issued during 2015 relate to the following performance periods: from the beginning of the service period to (i) December 31, 2016 ("2015-First Special PP"), (ii) December 31, 2017 ("2015-Second Special PP"), and (iii) December 31, 2018 ("2015-Third Special PP"). There was no award for the 2015-First Special PP, 2015-Second Special PP, or 2015-Third Special PP since our TSR was below the threshold level during 2016, 2017, and 2018, respectively.
Annual Long-Term Incentive Awards
During the years ended December 31, 2018 and 2017, the Company approved the terms and conditions of the 2018 and 2017 annual awards (the "2018 Annual Long-Term Incentive Awards" and "2017 Long-Term Incentive Awards," respectively) for certain executive officers and employees of the Company. Under the terms of the awards program, each participant is provided the opportunity to receive (i) time-based RSUs and (ii) performance-based stock units ("PSUs"). RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. RSUs will vest in one-third installments on each annual anniversary of the respective Grant Date (as referenced below), subject to the participant's continued employment with the Company through each vesting date and the 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 three year vesting term, except in instances that result in accelerated vesting due to severance arrangements. Actual PSUs earned may range from 0%-150% of the PSUs allocated to the award recipient, based on the Company's TSR compared to a peer group based on companies with similar assets and revenue over a three-year performance period that commenced on the respective Grant Date (as referenced below). 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 PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the three-year performance period, except in instances that result in accelerated amortization due to severance arrangements.
The following table summarizes the issuance of the 2018 Annual Long-Term Incentive Awards and 2017 Annual Long-Term Incentive Awards, respectively:
 2018 Annual Long-Term Incentive Awards 2017 Annual Long-Term Incentive Awards
Grant DateFebruary 20, 2018 February 21, 2017
RSUs issued587,000 358,198
Grant date fair value per unit$6.10 $9.58
PSUs issued587,000 358,198
Grant date fair value per unit$4.88 $7.72
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The following table summarizes the assumptions used to value the PSUs under a Monte Carlo simulation model:
 2018 Annual Long-Term Incentive Awards 2017 Annual Long-Term Incentive Awards
Risk free rate2.39% 1.49%
Volatility24.70% 20.52%
Dividend yield16.39% 10.44%
During 2016, the Company 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 actual 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. Eventual 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 as the TSR performance were achieved at target, resulting in a 100% payout. During the year ended December 31, 2017, the Company awarded 324,237 Allocated RSUs, with a grant 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, except in instances that result in accelerated vesting due to severance arrangements.
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 actual base salary earnings, 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 LTIP units (the "Allocated Units") based on the closing price of WPG Inc.'s common shares for the final 15 trading days of 2015. 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 was based on the Company's performance on the strategic goals and the payout on the remaining 60% was based on the Company's TSR performance. The strategic goal component was achieved in 2015; however, the TSR was below threshold performance, resulting in only a 40% payout for this annual LTIP award. During the year ended December 31, 2016, the Company awarded 323,417 LTIP units related to the 2015 Annual Long-Term Incentive Awards, 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 grant date and the 121,193 LTIP units awarded to certain former executive officers fully vested on the applicable severance dates during 2016 pursuant to the underlying severance arrangements. The fair value of the portion of the awards based upon the Company's performance of the strategic goals was recognized to expense when granted.
The 2016 and 2015 Annual Long-Term Incentive Awards that are based upon TSR were calculated using a Monte Carlo simulation model. The total amount of compensation to be recognized over the performance period, and the assumptions used to value the 2016 and 2015 Annual Long-Term Incentive Awards are provided below:
 2016 2015
Fair value per share of Allocated RSUs/Units$3.81
 $7.07
Total amount to be recognized over the performance period$2,516
 $4,656
Risk free rate0.44% 0.20%
Volatility31.40% 22.66%
Dividend yield10.05% 6.03%

WPG Restricted Share Awards
The WPG Restricted Shares relate to unvested restricted shares held by certain GRT executive employees at the time of merger. The amount of compensation expense related to unvested restricted shares that we expect to recognize in future periods is $33 over a weighted average period of 0.3 years. During the year ended December 31, 2018, the aggregate intrinsic value of shares that vested was $44.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


A summary of the status of the WPG Restricted Shares at December 31, 2018 and changes during the year are presented below:
 Activity for the Year Ended December 31,
 2018
 Restricted
Shares		 Weighted
Average Grant Date
Fair Value
Outstanding at beginning of year30,535
 $18.18
Shares granted—
 $—
Shares vested/forfeited(21,502) $18.18
Outstanding at end of year9,033
 $18.18

There were no restricted shares granted during the years ended December 31, 2018, 2017 and 2016. The total original fair value of the restricted shares vested during the years ended December 31, 2018, 2017 and 2016 was $391, $2,182, and $14,115, respectively.
WPG Restricted Stock Unit Awards
The Company issues RSUs to certain executive officers, employees, and non-employee directors of the Board. During the years ended December 31, 2018, 2017 and 2016, the Company issued 812,440, 843,435 and 518,112 RSUs, respectively. Of the 812,440 RSUs issued in 2018, 587,000 RSUs with a fair value of $3.6 million relates to the annual long-term incentive award issuances that occurred in February 2018 (see "Annual Long-Term Incentive Awards" section above). Of the 843,435 RSUs issued in 2017, 682,435 RSUs with a fair value of $5.6 million relates to the annual long-term incentive award issuances that occurred in February 2017 (see "Annual Long-Term Incentive Awards" section above). Of the 518,112 RSUs issued in 2016, 284,483 RSUs with a fair value of $3.3 million relates to Mr. Louis G. Conforti's appointment as the Company's CEO in October 2016. The RSUs are service-based awards and the related fair value is expensed over the applicable service periods, except in instances that result in accelerated vesting due to severance arrangements.
The amount of compensation related to the unvested RSUs that we expect to recognize in future periods is $6.6 million over a weighted average period of 1.5 years.
A summary of the status of the WPG RSUs at December 31, 2018 and changes during the year are presented below:
 Activity for the Year Ended December 31,
 2018
 RSUs Weighted
Average Grant Date
Fair Value
Outstanding unvested at beginning of year1,157,576
 $9.40
RSUs granted812,440
 $6.28
RSUs vested/forfeited(400,703) $8.29
Outstanding unvested at end of year1,569,313
 $8.07
The weighted average grant date fair value per share of RSUs granted during the years ended December 31, 2018, 2017 and 2016 was $6.28, $8.07, and $11.48, respectively. The total fair value of the RSUs vested during the years ended December 31, 2018, 2017 and 2016 was $3,320, $1,128, and $1,082, respectively.
Stock Options
Options granted under the Company's Plan generally vest over a three year period, with options exercisable at a rate of 33.3% per annum beginning with the first anniversary on the date of the grant. These options were valued using the Black-Scholes pricing model and the expense associated with these options are amortized over the requisite vesting period.
There were no options granted during the years ended December 31, 2018 and 2017. During the year ended December 31, 2016, the Company granted 247,500 options to employees. The weighted average grant date fair value was $0.62.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


A summary of the status of the Company's option plans at December 31, 2018 and changes during the year are listed below:
 Activity for the Year Ended December 31,
 2018
 Stock Options Weighted
Average
Grant Date
Fair Value
Outstanding at beginning of year794,014
 $2.26
Options granted—
 $—
Options exercised—
 $—
Options forfeited/expired(114,273) $3.36
Outstanding at end of year679,741
 $2.08
The fair value of each option grant was the date of the grant using the Black-Scholes options pricing mode.  The weighted average per share value of options granted as well as the assumptions used to value the grants is listed below:
 2016
Weighted average per share value of options granted/converted$0.62
Weighted average risk free rates1.4%
Expected average lives in years6.0 years
Annual dividend rates$1.00
Weighted average volatility28.3%
Forfeiture rate10%
The following table summarizes information regarding the options outstanding at December 31, 2018:
Options Outstanding Options Exercisable
Range of
Exercise Prices		 Number
Outstanding at
December 31,
2018		 Weighted
Average
Remaining
Contractual Life		 Weighted
Average
Exercise Price		 Number
Exercisable at
December 31,
2018		 Weighted
Average
Remaining
Contractual Life		 Weighted
Average
Exercise Price
$1.79 2,348 0.2 $1.79 2,348 0.2 $1.79
$5.76 14,758 1.2 $5.76 14,758 1.2 $5.76
$11.97 36,267 2.3 $11.97 36,267 2.3 $11.97
$12.67 55,419 3.4 $12.67 55,419 3.4 $12.67
$16.56 105,381 4.4 $16.56 105,381 4.4 $16.56
$13.10 72,068 5.3 $13.10 72,068 5.3 $13.10
$14.28 226,000 6.4 $14.28 226,000 6.4 $14.28
$9.95 167,500 7.4 $9.95 111,663 7.4 $9.95
  679,741 5.6 $12.96 623,904 5.4 $13.23
The following table summarizes the aggregate intrinsic value of options that are: outstanding, exercisable and exercised. It also depicts the fair value of options that have vested.
 For the Year Ended December 31,
 2018
Aggregate intrinsic value of options outstanding$7
Aggregate intrinsic value of options exercisable$7
Aggregate intrinsic value of options exercised$—
Aggregate fair value of options vested$154
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The aggregate intrinsic value of options that exercised and the aggregate fair value of options that vested during the year ended December 31, 2017 was $12 and $187, respectively. The aggregate intrinsic value of options that exercised and the aggregate fair value of options that vested during the year ended December 31, 2016 was $163 and $191, respectively.
Share Award Related Compensation Expense
During the years ended December 31, 2018, 2017 and 2016, the Company recorded share award related compensation expense pertaining to the award and option plans noted above within the consolidated statements of operations and comprehensive income as indicated below (amounts in millions):
  For the Year Ended December 31,
  2018 2017 2016
Merger, restructuring and transaction costs $—
 $—
 $9.5
General and administrative and property operating 8.3
 6.4
 4.6
Total expense $8.3
 $6.4
 $14.1
Distributions
During the years ended December 31, 2018 and 2017, the Board declared common share/unit dividends of $1.00 per common share/unit, respectively.
10.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.
Lease Commitments
As of December 31, 2018, a total of four consolidated properties are subject to ground leases. The termination dates of these ground leases range from 2026 to 2076. These ground leases generally require us to make fixed annual rental payments, or a fixed annual rental plus a percentage rent component based upon the revenues or total sales of the property. Some of these leases also include escalation clauses and renewal options. We incurred ground lease expense, which is included in ground rent in the accompanying consolidated statements of operations and comprehensive income, for the years ended December 31, 2018, 2017 and 2016 of $789, $2,438 and $4,318, respectively. Additionally, the Company has two material office leases and one material garage lease. The termination dates of these leases range from 2023 to 2026. These leases generally require us to make fixed annual rental payments, plus our share of common-area maintenance expense and real estate taxes and insurance. We incurred lease expense, which is included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income, for the years ended December 31, 2018, 2017 and 2016 of $2,668, $2,397, and $2,160, respectively.
Future minimum lease payments due under these leases for each of the next five years and thereafter, excluding applicable extension options, as of December 31, 2018 are as follows:
2019 $2,029
2020 2,049
2021 2,069
2022 2,099
2023 1,427
Thereafter 21,377
  $31,050
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


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 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.
11.Related Party Transactions
Transactions with SPG
The Company was formed in 2014 through a spin-off of certain properties from SPG. SPG managed the day-to-day operations of our legacy SPG enclosed retail properties through February 29, 2016 in accordance with property management agreements that 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 date on which it was terminated, various services including administrative support for the open air properties 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 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 expenses in the consolidated statements of operations and comprehensive income. Additionally, leasing and development fees charged by SPG were capitalized by the property. WPG terminated the transition services agreement, all applicable property management agreements with SPG, and the property development agreement effective May 31, 2016.
We did not incur any charges pertaining to the transition services agreements for the years ended December 31, 2018 and 2017. Charges for properties which for the year ended December 31, 2016 are as follows:
  For the Year Ended December 31,
  2016
  Consolidated Unconsolidated
Property management and common costs, services and other $8,791
 $196
Insurance premiums $—
 $—
Advertising and promotional programs $102
 $6
Capitalized leasing and development fees $3,166
 $23
Consulting Agreement with Mark S. Ordan
Mr. Mark S. Ordan served as a member of the Board until May 18, 2017 at which time his term on the Board expired and he retired from service. During 2017, Mr. Ordan and the Company were parties to a Consulting Agreement in which Mr. Ordan provided consulting services to the Company for a fee. The Consulting Agreement was terminated on May 28, 2017. During 2017, the Company paid Mr. Ordan approximately $0.2 million in fees under the Consulting Agreement. The Company has no further payment obligations under the Consulting Agreement.
12.Earnings Per Common Share/Unit
WPG Inc. Earnings Per Common Share
We determine WPG Inc.'s basic earnings 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 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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


The following table sets forth the computation of WPG Inc.'s basic and diluted earnings per common share:
  For the Year Ended December 31,
  2018 2017 2016
Earnings Per Common Share, Basic:      
Net income attributable to common shareholders - basic $79,572
 $183,031
 $53,099
Weighted average shares outstanding - basic 187,696,339
 186,829,385
 185,633,582
Earnings per common share, basic $0.42
 $0.98
 $0.29
       
Earnings Per Common Share, Diluted:      
Net income attributable to common shareholders - basic $79,572
 $183,031
 $53,099
Net income attributable to common unitholders 14,735
 34,222
 10,034
Net income attributable to common shareholders - diluted $94,307
 $217,253
 $63,133
Weighted average common shares outstanding - basic 187,696,339
 186,829,385
 185,633,582
Weighted average operating partnership units outstanding 34,703,770
 34,808,890
 34,304,109
Weighted average additional dilutive securities outstanding 603,674
 337,508
 803,805
Weighted average common shares outstanding - diluted 223,003,783
 221,975,783
 220,741,496
Earnings per common share, diluted $0.42
 $0.98
 $0.29
For the years ended December 31, 2018, 2017 and 2016, additional potentially dilutive securities include contingently-issuable outstanding stock options and performance based components of annual awards. We accrue distributions when they are declared.
WPG L.P. Earnings Per Common Unit
We determine WPG L.P.'s basic earnings 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 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.
The following table sets forth the computation of WPG L.P.'s basic and diluted earnings per common unit:
  For the Year Ended December 31,
  2018 2017 2016
Earnings Per Common Unit, Basic and Diluted:      
Net income attributable to common unitholders - basic and diluted $94,307
 $217,253
 $63,133
Weighted average common units outstanding - basic 222,400,109
 221,638,275
 219,937,691
Weighted average additional dilutive securities outstanding 603,674
 337,508
 803,805
Weighted average shares outstanding - diluted 223,003,783
 221,975,783
 220,741,496
Earnings per common unit, basic and diluted $0.42
 $0.98
 $0.29
For the years ended December 31, 2018, 2017 and 2016, additional potentially dilutive securities include contingently-issuable units related to WPG Inc.'s outstanding stock options and WPG Inc.'s performance based components of annual awards. We accrue distributions when they are declared.
13.Subsequent Events
On January 18, 2019, we completed the sale of the sixth tranche of restaurant outparcels to Four Corners. This tranche consisted of eight restaurant outparcels. Additionally, on February 11, 2019, we closed on the sale of one additional restaurant outparcel. The allocated purchase price was approximately $12.2 million, and the net proceeds of approximately $12.1 million were used to fund ongoing redevelopment efforts and for general corporate purposes.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit, per share and per unit amounts and
where indicated as in millions or billions)


During the first quarter of 2019, Fitch Ratings & Moody's Investor Service lowered their credit rating on WPG L.P.'s unsecured long-term indebtedness, which will increase interest rates on our Facility (as defined in Note 6 - "Indebtedness"), December 2015 Term Loan, and 5.950% Notes due 2024 as of February 2, 2019. Due to the downgrade, our Revolver will bear interest at LIBOR plus 165 basis points (an increase of 40 basis points), our Term Loan will bear interest at LIBOR plus 190 basis points (an increase of 45 basis points), and our December 2015 Term Loan will bear interest at LIBOR plus 235 basis points (an increase of 55 basis points). Our 5.950% Notes due 2024 will bear interest at 6.450% (an increase of 50 basis points). Assuming the new pricing grid was effective January 1, 2018, the impact would have resulted in an increase in borrowing costs of approximately $8.5 million during 2018.
On February 5, 2019, the Company’s Executive Vice President, Head of Open Air Centers, was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated, without cause, additional non-executive personnel in the Property Management department as part of an effort to reduce overhead costs. The Company expects to record aggregate severance charges of approximately $1.9 million, including $0.1 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards.
On February 12, 2019, the Board declared common share/unit dividends of $0.25 per common share/unit. The dividend is payable on March 15, 2019 to shareholders/unitholders of record on March 4, 2019.
14.Quarterly Financial Data (Unaudited)
Quarterly 2018 and 2017 data is summarized in the table below. Quarterly amounts may not sum to annual amounts due to rounding.
  First
Quarter		 Second
Quarter		 Third
Quarter		 Fourth
Quarter
2018  
  
  
  
Total revenue $180,340
 $178,728
 $179,916
 $184,321
Net income $20,185
 $15,519
 $4,115
 $68,836
Washington Prime Group Inc.:        
Net income attributable to the Company $17,524
 $13,594
 $3,971
 $58,515
Net income attributable to common shareholders $14,016
 $10,086
 $463
 $55,007
Earnings per common share—basic and diluted $0.07
 $0.05
 $0.00
 $0.29
Washington Prime Group, L.P.:        
Net income attributable to unitholders $20,185
 $15,519
 $4,115
 $68,836
Net income attributable to common unitholders $16,617
 $11,951
 $547
 $65,192
Earnings per common unit—basic and diluted $0.07
 $0.05
 $0.00
 $0.29
2017  
  
  
  
Total revenue $202,394
 $189,171
 $179,320
 $187,237
Net income (loss) $14,624
 $164,500
 $(10,664) $63,133
Washington Prime Group Inc.:        
Net income (loss) attributable to the Company $12,810
 $138,975
 $(8,395) $53,673
Net income (loss) attributable to common shareholders $9,302
 $135,467
 $(11,903) $50,165
Earnings (loss) per common share—basic $0.05
 $0.73
 $(0.06) $0.27
Earnings (loss) per common share—diluted $0.05
 $0.72
 $(0.06) $0.27
Washington Prime Group, L.P.:        
Net income (loss) attributable to unitholders $14,624
 $164,500
 $(10,664) $63,133
Net income (loss) attributable to common unitholders $11,056
 $160,932
 $(14,232) $59,497
Earnings (loss) per common unit—basic $0.05
 $0.73
 $(0.06) $0.27
Earnings (loss) per common unit—diluted $0.05
 $0.72
 $(0.06) $0.27

SCHEDULE III
Washington Prime Group Inc. and Washington Prime Group, L.P.
Real Estate and Accumulated Depreciation
December 31, 2018
(dollars in thousands)
      Initial Cost Cost Capitalized
Subsequent to
Construction
or Acquisition		 Gross Amounts At
Which Carried
at Close of Period		    
Name Location Encumbrances(3) Land Buildings and
Improvements		 Land Buildings and
Improvements		 Land Buildings and
Improvements		 Total(1) Accumulated
Depreciation(2)		 Date of
Construction or
Acquisition
Enclosed Retail Properties    
  
  
  
  
  
  
  
  
  
Anderson Mall Anderson, SC $17,891
 $1,712
 $15,227
 $851
 $19,982
 $2,563
 $35,209
 $37,772
 $23,377
 1972
Ashland Town Center Ashland, KY 36,824
 13,462
 68,367
 —
 5,536
 13,462
 73,903
 87,365
 12,739
 2015
Bowie Town Center Bowie (Wash, D.C.), MD —
 2,479
 60,322
 235
 9,932
 2,714
 70,254
 72,968
 39,699
 2001
Boynton Beach Mall Boynton Beach (Miami), FL —
 22,240
 78,804
 4,666
 29,544
 26,906
 108,348
 135,254
 73,264
 1996
Brunswick Square East Brunswick (New York), NJ 71,154
 8,436
 55,838
 —
 35,296
 8,436
 91,134
 99,570
 57,770
 1996
Charlottesville Fashion Square Charlottesville, VA 46,099
 —
 54,738
 —
 18,814
 —
 73,552
 73,552
 43,711
 1997
Chautauqua Mall Lakewood, NY —
 3,116
 9,641
 —
 19,327
 3,116
 28,968
 32,084
 17,554
 1996
Chesapeake Square Theater Chesapeake (VA Beach), VA —
 628
 9,536
 —
 (738) 628
 8,798
 9,426
 2,162
 1996
Clay Terrace Carmel (Indianapolis), IN —
 39,030
 115,207
 43
 8,815
 39,073
 124,022
 163,095
 22,408
 2014
Cottonwood Mall Albuquerque, NM 97,203
 10,122
 69,958
 5,042
 20,239
 15,164
 90,197
 105,361
 49,900
 1996
Dayton Mall Dayton, OH 80,421
 10,899
 160,723
 —
 3,027
 10,899
 163,750
 174,649
 22,388
 2015
Edison Mall Fort Myers, FL —
 11,529
 107,350
 —
 34,178
 11,529
 141,528
 153,057
 80,587
 1997
Georgesville Square Columbus, OH —
 720
 —
 —
 —
 720
 —
 720
 —
 2015
Grand Central Mall Parkersburg, WV 39,598
 18,956
 89,736
 —
 11,799
 18,956
 101,535
 120,491
 20,627
 2015
Great Lakes Mall Mentor (Cleveland), OH —
 12,302
 100,362
 98
 43,683
 12,400
 144,045
 156,445
 80,146
 1996
Indian Mound Mall Newark, OH —
 7,109
 19,205
 (252) 1,992
 6,857
 21,197
 28,054
 4,369
 2015
Irving Mall Irving (Dallas), TX —
 6,737
 17,479
 2,533
 44,350
 9,270
 61,829
 71,099
 43,275
 1971
Jefferson Valley Mall Yorktown Heights (New York), NY —
 4,868
 30,304
 —
 70,161
 4,868
 100,465
 105,333
 49,921
 1983
Lima Mall Lima, OH —
 7,659
 35,338
 —
 15,950
 7,659
 51,288
 58,947
 32,979
 1996
Lincolnwood Town Center Lincolnwood (Chicago), IL 48,662
 7,834
 63,480
 —
 7,684
 7,834
 71,164
 78,998
 56,644
 1990
Lindale Mall Cedar Rapids, IA —
 14,106
 58,286
 (1,096) 14,083
 13,010
 72,369
 85,379
 23,392
 1998
Longview Mall Longview, TX —
 259
 3,567
 3,320
 22,498
 3,579
 26,065
 29,644
 8,791
 1978
Mall at Fairfield Commons, The Beavercreek, OH —
 18,194
 175,426
 (411) 20,928
 17,783
 196,354
 214,137
 30,830
 2015
Maplewood Mall St. Paul (Minneapolis), MN —
 17,119
 80,758
 —
 26,707
 17,119
 107,465
 124,584
 52,724
 2002
Markland Mall Kokomo, IN —
 —
 7,568
 3,005
 28,315
 3,005
 35,883
 38,888
 13,559
 1968
Melbourne Square Melbourne, FL —
 15,762
 55,891
 4,160
 40,593
 19,922
 96,484
 116,406
 53,851
 1996
Mesa Mall Grand Junction, CO —
 12,784
 80,639
 —
 3,822
 12,784
 84,461
 97,245
 29,189
 1998

      Initial Cost Cost Capitalized
Subsequent to
Construction
or Acquisition		 Gross Amounts At
Which Carried
at Close of Period		    
Name Location Encumbrances(3) Land Buildings and
Improvements		 Land Buildings and
Improvements		 Land Buildings and
Improvements		 Total(1) Accumulated
Depreciation(2)		 Date of
Construction or
Acquisition
Morgantown Mall Morgantown, WV —
 10,219
 77,599
 —
 2,405
 10,219
 80,004
 90,223
 13,801
 2015
Muncie Mall Muncie, IN 33,876
 172
 5,776
 52
 30,223
 224
 35,999
 36,223
 24,555
 1970
New Towne Mall New Philadelphia, OH —
 3,172
 33,112
 —
 7,585
 3,172
 40,697
 43,869
 7,961
 2015
Northtown Mall Blaine, MN —
 18,603
 57,341
 —
 6,881
 18,603
 64,222
 82,825
 12,860
 2015
Northwoods Mall Peoria, IL —
 1,185
 12,779
 2,689
 52,009
 3,874
 64,788
 68,662
 39,432
 1983
Oak Court Mall Memphis, TN 36,998
 15,673
 57,304
 —
 12,319
 15,673
 69,623
 85,296
 51,384
 1997
Orange Park Mall Orange Park (Jacksonville), FL —
 12,998
 65,121
 (267) 48,997
 12,731
 114,118
 126,849
 71,814
 1994
Outlet Collection® | Seattle, The
 Auburn (Seattle), WA —
 38,751
 107,094
 —
 13,263
 38,751
 120,357
 159,108
 21,622
 2015
Paddock Mall Ocala, FL —
 11,198
 39,727
 —
 23,332
 11,198
 63,059
 74,257
 35,797
 1996
Port Charlotte Town Center Port Charlotte, FL 42,196
 5,471
 58,570
 —
 18,478
 5,471
 77,048
 82,519
 51,342
 1996
Rolling Oaks Mall San Antonio, TX —
 1,929
 38,609
 —
 17,630
 1,929
 56,239
 58,168
 39,023
 1988
Southern Hills Mall Sioux City, IA —
 15,025
 75,984
 4,566
 4,141
 19,591
 80,125
 99,716
 27,806
 1998
Southern Park Mall Youngstown, OH —
 16,982
 77,767
 (236) 35,745
 16,746
 113,512
 130,258
 69,461
 1996
Southgate Mall Missoula, MT 35,000
 17,040
 35,896
 —
 205
 17,040
 36,101
 53,141
 1,204
 2018
Sunland Park Mall El Paso, TX —
 2,896
 28,900
 (171) 7,887
 2,725
 36,787
 39,512
 29,040
 1988
Town Center at Aurora Aurora (Denver), CO 52,250
 9,959
 56,832
 9,974
 58,923
 19,933
 115,755
 135,688
 81,675
 1998
Towne West Square Wichita, KS 45,205
 972
 21,203
 22
 11,071
 994
 32,274
 33,268
 24,644
 1980
Waterford Lakes Town Center Orlando, FL —
 8,679
 72,836
 —
 27,976
 8,679
 100,812
 109,491
 59,588
 1999
Weberstown Mall Stockton, CA 65,000
 9,909
 92,589
 —
 4,988
 9,909
 97,577
 107,486
 14,723
 2015
West Ridge Mall Topeka, KS 39,945
 5,453
 34,148
 (788) 20,642
 4,665
 54,790
 59,455
 37,620
 1988
Westminster Mall Westminster (Los Angeles), CA 78,375
 43,464
 84,709
 (180) 42,567
 43,284
 127,276
 170,560
 68,807
 1998
WestShore Plaza Tampa, FL —
 53,904
 120,191
 —
 4,755
 53,904
 124,946
 178,850
 17,752
 2015
Open Air Properties    
  
  
  
  
 

 

 

  
  
Bloomingdale Court Bloomingdale (Chicago), IL —
 8,422
 26,184
 (395) 19,017
 8,027
 45,201
 53,228
 29,851
 1987
Bowie Town Center Strip Bowie (Wash, D.C.), MD —
 231
 4,597
 —
 819
 231
 5,416
 5,647
 2,741
 2001
Canyon View Marketplace Grand Junction, CO 5,215
 1,370
 9,570
 —
 120
 1,370
 9,690
 11,060
 1,057
 2015
Charles Towne Square Charleston, SC —
 —
 1,768
 370
 10,890
 370
 12,658
 13,028
 12,209
 1976
Chesapeake Center Chesapeake (Virginia Beach), VA —
 4,410
 11,241
 —
 1,504
 4,410
 12,745
 17,155
 10,203
 1996
Concord Mills Marketplace Concord (Charlotte), NC 16,000
 8,036
 21,167
 —
 956
 8,036
 22,123
 30,159
 5,795
 2007
Countryside Plaza Countryside (Chicago), IL —
 332
 8,507
 2,554
 12,039
 2,886
 20,546
 23,432
 13,269
 1977
Dare Centre Kill Devil Hills, NC —
 —
 5,702
 —
 2,405
 —
 8,107
 8,107
 4,221
 2004
DeKalb Plaza King of Prussia (Philadelphia), PA —
 1,955
 3,405
 —
 1,394
 1,955
 4,799
 6,754
 2,818
 2003
Empire East Sioux Falls, SD —
 3,350
 10,552
 —
 2,799
 3,350
 13,351
 16,701
 3,698
 1998
Fairfax Court Fairfax (Wash, D.C.), VA —
 8,078
 34,997
 —
 1,470
 8,078
 36,467
 44,545
 6,309
 2014

      Initial Cost Cost Capitalized
Subsequent to
Construction
or Acquisition		 Gross Amounts At
Which Carried
at Close of Period		    
Name Location Encumbrances(3) Land Buildings and
Improvements		 Land Buildings and
Improvements		 Land Buildings and
Improvements		 Total(1) Accumulated
Depreciation(2)		 Date of
Construction or
Acquisition
Fairfield Town Center Houston, TX —
 4,745
 5,044
 168
 38,799
 4,913
 43,843
 48,756
 3,889
 2014
Forest Plaza Rockford, IL 15,588
 4,132
 16,818
 453
 12,499
 4,585
 29,317
 33,902
 17,845
 1985
Gaitway Plaza Ocala, FL —
 5,445
 26,687
 —
 2,293
 5,445
 28,980
 34,425
 5,994
 2014
Greenwood Plus Greenwood (Indianapolis), IN —
 1,129
 1,792
 (58) 4,905
 1,071
 6,697
 7,768
 4,647
 1979
Henderson Square King of Prussia (Philadelphia), PA —
 4,223
 15,124
 —
 1,080
 4,223
 16,204
 20,427
 7,228
 2003
Keystone Shoppes Indianapolis, IN —
 —
 4,232
 2,118
 5,356
 2,118
 9,588
 11,706
 4,218
 1997
Lake Plaza Waukegan (Chicago), IL —
 2,487
 6,420
 —
 2,515
 2,487
 8,935
 11,422
 5,830
 1986
Lake View Plaza Orland Park (Chicago), IL —
 4,702
 17,543
 (89) 18,646
 4,613
 36,189
 40,802
 23,456
 1986
Lakeline Plaza Cedar Park (Austin), TX 14,604
 5,822
 30,875
 —
 14,815
 5,822
 45,690
 51,512
 25,086
 1998
Lima Center Lima, OH —
 1,781
 5,151
 —
 10,056
 1,781
 15,207
 16,988
 10,259
 1996
Lincoln Crossing O'Fallon (St. Louis), IL —
 674
 2,192
 —
 9,543
 674
 11,735
 12,409
 3,597
 1990
MacGregor Village Cary, NC —
 502
 8,891
 —
 3,053
 502
 11,944
 12,446
 4,527
 2004
Mall of Georgia Crossing Buford (Atlanta), GA 22,208
 9,506
 32,892
 —
 3,011
 9,506
 35,903
 45,409
 20,776
 1999
Markland Plaza Kokomo, IN —
 206
 738
 —
 8,300
 206
 9,038
 9,244
 4,919
 1974
Martinsville Plaza Martinsville, VA —
 —
 584
 —
 3,003
 —
 3,587
 3,587
 359
 1967
Matteson Plaza Matteson (Chicago), IL —
 1,771
 9,737
 —
 47
 1,771
 9,784
 11,555
 9,655
 1988
Muncie Towne Plaza Muncie, IN 6,071
 267
 10,509
 87
 3,660
 354
 14,169
 14,523
 8,422
 1998
North Ridge Shopping Center Raleigh, NC 11,764
 385
 12,826
 —
 7,522
 385
 20,348
 20,733
 7,077
 2004
Northwood Plaza Fort Wayne, IN —
 148
 1,414
 —
 3,481
 148
 4,895
 5,043
 3,140
 1974
Plaza at Buckland Hills, The Manchester, CT —
 17,355
 43,900
 (281) 4,394
 17,074
 48,294
 65,368
 7,049
 2014
Richardson Square Richardson (Dallas), TX —
 6,285
 —
 990
 14,818
 7,275
 14,818
 22,093
 6,108
 1996
Rockaway Commons Rockaway (New York), NJ —
 5,149
 26,435
 —
 16,447
 5,149
 42,882
 48,031
 20,038
 1998
Rockaway Town Plaza Rockaway (New York), NJ —
 —
 18,698
 2,227
 5,187
 2,227
 23,885
 26,112
 9,993
 2004
Royal Eagle Plaza Coral Springs (Miami), FL —
 2,153
 24,216
 —
 3,253
 2,153
 27,469
 29,622
 6,509
 2014
Shops at North East Mall, The Hurst (Dallas), TX —
 12,541
 28,177
 402
 7,592
 12,943
 35,769
 48,712
 24,629
 1999
St. Charles Towne Plaza Waldorf (Wash, D.C.), MD —
 8,216
 18,993
 —
 10,242
 8,216
 29,235
 37,451
 17,860
 1987
Tippecanoe Plaza Lafayette, IN —
 —
 745
 234
 5,821
 234
 6,566
 6,800
 4,216
 1974
University Center Mishawaka, IN —
 2,119
 8,365
 —
 5,190
 2,119
 13,555
 15,674
 10,703
 1996
University Town Plaza Pensacola, FL —
 6,009
 26,945
 (579) 381
 5,430
 27,326
 32,756
 8,739
 2013
Village Park Plaza Carmel (Indianapolis), IN —
 19,565
 51,873
 —
 1,065
 19,565
 52,938
 72,503
 13,319
 2014
Washington Plaza Indianapolis, IN —
 263
 1,833
 —
 3,049
 263
 4,882
 5,145
 4,224
 1996
West Ridge Plaza Topeka, KS 9,986
 1,376
 4,560
 1,958
 8,498
 3,334
 13,058
 16,392
 6,799
 1988
West Town Corners Altamonte Springs (Orlando), FL —
 6,821
 24,603
 (174) 6,901
 6,647
 31,504
 38,151
 6,150
 2014
Westland Park Plaza Orange Park (Jacksonville), FL —
 5,576
 8,775
 —
 4
 5,576
 8,779
 14,355
 2,016
 2014
White Oaks Plaza Springfield, IL 12,143
 3,169
 14,267
 292
 11,204
 3,461
 25,471
 28,932
 14,004
 1986

      Initial Cost Cost Capitalized
Subsequent to
Construction
or Acquisition		 Gross Amounts At
Which Carried
at Close of Period		    
Name Location Encumbrances(3) Land Buildings and
Improvements		 Land Buildings and
Improvements		 Land Buildings and
Improvements		 Total(1) Accumulated
Depreciation(2)		 Date of
Construction or
Acquisition
Whitehall Mall Whitehall, PA —
 8,500
 28,512
 —
 4,680
 8,500
 33,192
 41,692
 7,860
 2014
Wolf Ranch Georgetown (Austin), TX —
 21,999
 51,547
 (185) 13,815
 21,814
 65,362
 87,176
 31,398
 2005
Developments In Progress  
  
  
  
  
 

 

 —
  
  
Cottonwood Mall Albuquerque, NM —
 —
 —
 —
 —
 826
 1,525
 2,351
 —
  
Dayton Mall Dayton, OH —
 —
 —
 —
 —
 —
 1,828
 1,828
 —
  
Fairfield Town Center Houston, TX —
 —
 —
 —
 —
 3,203
 779
 3,982
 —
  
Grand Central Mall Parkersburg, WV —
 —
 —
 —
 —
 —
 1,362
 1,362
 —
  
Great Lakes Mall Mentor (Cleveland), OH —
 —
 —
 —
 —
 —
 6,243
 6,243
 —
  
MacGregor Village Cary, NC —
 —
 —
 —
 —
 —
 1,790
 1,790
 —
  
Northwoods Mall Peoria, IL —
 —
 —
 —
 —
 117
 2,595
 2,712
 —
  
Southern Park Mall Youngstown, OH —
 —
 —
 —
 —
 —
 1,293
 1,293
 —
  
WestShore Plaza Tampa, FL —
 —
 —
 —
 —
 —
 6,700
 6,700
 —
  
Other Developments —
 —
 —
 —
 —
 1,200
 12,307
 13,507
 —
  
    $980,276

$782,921

$3,607,440

$47,947

$1,337,077

$836,214

$4,980,939

$5,817,153

$2,212,476
  
Washington Prime Group Inc. and Washington Prime Group, L.P.
Notes to Schedule III
December 31, 2018
(dollars in thousands)



(1)Reconciliation of Real Estate Properties:
The changes in real estate assets (which excludes furniture, fixtures and equipment) for the years ended December 31, 2018, 2017 and 2016 are as follows:
  2018 2017 2016
Balance, beginning of year $5,715,996
 $6,205,387
 $6,699,789
Acquisitions 72,647
 14,366
 297
Improvements 143,123
 135,713
 157,561
Held for sale reclasses —
 —
 (215,244)
Disposals* (114,613) (639,470) (437,016)
Balance, end of year $5,817,153
 $5,715,996
 $6,205,387
*Primarily represents properties that have been deconsolidated upon sale of controlling interest, sold properties and fully depreciated assets which have been disposed. Further, includes impairment charges of $0, $66,925, and $21,879 for the years ended December 31, 2018, 2017 and 2016, respectively.
The following reconciles investment properties at cost per the consolidated balance sheet to the balance per Schedule III as of December 31, 2018:
  2018
Investment properties at cost $5,914,705
Less: furniture, fixtures and equipment (97,552)
Total cost per Schedule III $5,817,153
The unaudited aggregate cost for federal income tax purposes of real estate assets presented was $5,334,779 as of December 31, 2018.
(2)Reconciliation of Accumulated Depreciation:
The changes in accumulated depreciation and amortization for the years ended December 31, 2018, 2017 and 2016 are as follows:
  2018 2017 2016
Balance, beginning of year $2,076,948
 $2,063,107
 $2,261,593
Depreciation expense 205,724
 205,078
 222,861
Disposals (70,196) (191,237) (421,347)
Balance, end of year $2,212,476
 $2,076,948
 $2,063,107
The following reconciles accumulated depreciation per the consolidated balance sheet to the balance per Schedule III as of December 31, 2018:
  2018
Accumulated depreciation $2,283,764
Less: furniture, fixtures and equipment (71,288)
Total accumulated depreciation per Schedule III $2,212,476
Depreciation of our investment in buildings and improvements reflected in the consolidated statements of operations is generally calculated over the estimated original lives of the assets as noted below:
Buildings and Improvements—typically 10-40 years for the structure, 15 years for landscaping and parking lot, and 10 years for HVAC equipment.
Tenant Allowances and Improvements—shorter of lease term or useful life.
(3)Encumbrances represent face amount of mortgage debt and exclude any fair value adjustments and debt issuance costs.

F-56