UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~September 30, 2019~~March 31, 2020



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

For the transition period from to

Commission File Number: 001-35481

RETAIL PROPERTIES OF AMERICA, INC.

(Exact name of registrant as specified in its charter)



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

2021 Spring Road, Suite 200, Oak Brook, Illinois 60523

(Address of principal executive offices and zip code)

(630) 634-4200

(Registrant’s telephone number, including area code)

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



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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No o

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



Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

Number of shares outstanding of the registrant’s ~~classes~~class of common stock as of ~~October 25, 2019~~May 1, 2020:

Class A common stock: ~~213,654,824~~214,121,973 shares

RETAIL PROPERTIES OF AMERICA, INC.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Investment properties:
Land	$	1,022,151		$	1,036,901		$	1,075,577		$	1,021,829
Building and other improvements	3,527,330			3,607,484			3,548,769			3,544,582
Developments in progress	100,079			48,369			126,761			113,353
	4,649,560			4,692,754			4,751,107			4,679,764
Less accumulated depreciation	(1,346,831		)	(1,313,602		)
Net investment properties (includes $8,312 and $0 from consolidated variable interest entities, respectively)	3,302,729			3,379,152
Less: accumulated depreciation							(1,416,981		)	(1,383,274		)
Net investment properties (includes $30,600 and $12,445 from consolidated variable interest entities, respectively)							3,334,126			3,296,490
Cash and cash equivalents	17,076			14,722			769,241			9,989
Accounts and notes receivable, net	76,619			78,398			72,003			73,832
Acquired lease intangible assets, net	84,639			97,090			78,439			79,832
Right-of-use lease assets	50,405			—			44,157			50,241
Other assets, net (includes $287 and $1,264 from consolidated variable interest entities, respectively)	69,072			78,108
Other assets, net (includes $344 and $164 from consolidated variable interest entities, respectively)							71,627			75,978
Total assets	$	3,600,540		$	3,647,470		$	4,369,593		$	3,586,362

Liabilities and Equity
Liabilities:
Mortgages payable, net	$	94,757		$	205,320		$	93,562		$	94,155
Unsecured notes payable, net	796,074			696,362			796,420			796,247
Unsecured term loans, net	716,254			447,367			716,792			716,523
Unsecured revolving line of credit	24,000			273,000			849,704			18,000
Accounts payable and accrued expenses	70,457			82,942			50,622			78,902
Distributions payable	35,387			35,387			35,464			35,387
Acquired lease intangible liabilities, net	65,415			86,543			67,573			63,578
Lease liabilities	90,942			—			85,340			91,129
Other liabilities (includes $2,926 and $428 from consolidated variable interest entities, respectively)	60,496			73,540
Other liabilities (includes $3,233 and $1,707 from consolidated variable interest entities, respectively)							76,815			56,368
Total liabilities	1,953,782			1,900,461			2,772,292			1,950,289

Commitments and contingencies (Note 13)

Equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, none issued or outstanding	—			—			—			—
Class A common stock, $0.001 par value, 475,000 shares authorized, 213,655 and 213,176 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	214			213
Class A common stock, $0.001 par value, 475,000 shares authorized, 214,122 and 213,600 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							214			214
Additional paid-in capital	4,509,337			4,504,702			4,512,939			4,510,484
Accumulated distributions in excess of earnings	(2,846,718		)	(2,756,802		)	(2,879,040		)	(2,865,933		)
Accumulated other comprehensive loss	(18,495		)	(1,522		)	(39,870		)	(12,288		)
Total shareholders’ equity	1,644,338			1,746,591			1,594,243			1,632,477
Noncontrolling interests	2,420			418			3,058			3,596
Total equity	1,646,758			1,747,009			1,597,301			1,636,073
Total liabilities and equity	$	3,600,540		$	3,647,470		$	4,369,593		$	3,586,362

See accompanying notes to condensed consolidated financial statements

RETAIL PROPERTIES OF AMERICA, INC.

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

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenues:
Lease income	$	119,717		$	119,137		$	360,869		$	363,143		$	118,695		$	122,703

Expenses:
Operating expenses	16,088			17,596			50,903			57,235			16,414			17,686
Real estate taxes	18,583			18,037			55,520			56,206			18,533			18,403
Depreciation and amortization	67,460			43,169			153,609			132,107			40,173			43,267
Provision for impairment of investment properties	11,177			—			11,177			1,316			346			—
General and administrative expenses	10,334			9,160			30,186			31,929			9,165			10,499
Total expenses	123,642			87,962			301,395			278,793			84,631			89,855

Other (expense) income:
Interest expense	(25,084		)	(21,336		)	(59,877		)	(56,918		)	(17,046		)	(17,430		)
Gain on sales of investment properties	1,969			2,692			18,872			37,211			—			8,449
Other (expense) income, net	(1,113		)	303			(2,244		)	853
Net (loss) income	(28,153		)	12,834			16,225			65,496
Gain on litigation settlement													6,100			—
Other expense, net													(761		)	(659		)
Net income													22,357			23,208
Net income attributable to noncontrolling interests	—			—			—			—			—			—
Net (loss) income attributable to common shareholders	$	(28,153	)	$	12,834		$	16,225		$	65,496
Net income attributable to common shareholders													$	22,357		$	23,208

(Loss) earnings per common share – basic and diluted:
Net (loss) income per common share attributable to common shareholders	$	(0.13	)	$	0.06		$	0.07		$	0.30
Earnings per common share – basic and diluted:
Net income per common share attributable to common shareholders													$	0.10		$	0.11

Net (loss) income	$	(28,153	)	$	12,834		$	16,225		$	65,496
Other comprehensive (loss) income:
Net unrealized (loss) gain on derivative instruments (Note 8)	(7,152		)	863			(16,973		)	4,476
Net income													$	22,357		$	23,208
Other comprehensive loss:
Net unrealized loss on derivative instruments (Note 8)													(27,582		)	(3,514		)
Comprehensive (loss) income attributable to the Company	$	(35,305	)	$	13,697		$	(748	)	$	69,972		$	(5,225	)	$	19,694

Weighted average number of common shares outstanding – basic	212,995			218,808			212,932			218,879			213,215			212,850

Weighted average number of common shares outstanding – diluted	212,995			219,021			213,056			219,277			213,215			213,223

See accompanying notes to condensed consolidated financial statements

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands, except per share amounts)


	Class A Common Stock					Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity			Noncontrolling Interests		Total Equity			Class A Common Stock				Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity
Three Months Ended	Shares		Amount			Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity			Noncontrolling Interests		Total Equity							Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance as of July 1, 2018	219,550		$	219		$	4,576,752		$	(2,710,081	)	$	4,699		$	1,871,589		$	—	$	1,871,589
Net income	—		—			—			12,834			—			12,834			—		12,834
Other comprehensive income	—		—			—			—			863			863			—		863
Distributions declared to common shareholders ($0.165625 per share)	—		—			—			(36,312		)	—			(36,312		)	—		(36,312		)
Shares repurchased through common stock repurchase program	(1,698	)	(1		)	(31,193		)	—			—			(31,194		)	—		(31,194		)
Stock-based compensation expense	—		—			1,599			—			—			1,599			—		1,599
Balance as of September 30, 2018	217,852		$	218		$	4,547,158		$	(2,733,559	)	$	5,562		$	1,819,379		$	—	$	1,819,379
Three Months Ended
Balance as of July 1, 2019	213,662		$	214		$	4,507,488		$	(2,783,183	)	$	(11,343	)	$	1,713,176		$	1,445	$	1,714,621
Net loss	—		—			—			(28,153		)	—			(28,153		)	—		(28,153		)
Other comprehensive loss	—		—			—			—			(7,152		)	(7,152		)	—		(7,152		)
Contributions from noncontrolling interests	—		—			—			—			—			—			975		975
Distributions declared to common shareholders ($0.165625 per share)	—		—			—			(35,382		)	—			(35,382		)	—		(35,382		)
Stock-based compensation expense, net of forfeitures	(7	)	—			1,849			—			—			1,849			—		1,849
Balance as of September 30, 2019	213,655		$	214		$	4,509,337		$	(2,846,718	)	$	(18,495	)	$	1,644,338		$	2,420	$	1,646,758
																							Shares		Amount		Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity
Nine Months Ended																											Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance as of January 1, 2018	219,237		$	219		$	4,574,428		$	(2,690,021	)	$	1,074		$	1,885,700		$	—	$	1,885,700
Cumulative effect of accounting change	—		—			—			(12		)	12			—			—		—
Net income	—		—			—			65,496			—			65,496			—		65,496
Other comprehensive income	—		—			—			—			4,476			4,476			—		4,476
Distributions declared to common shareholders ($0.496875 per share)	—		—			—			(109,022		)	—			(109,022		)	—		(109,022		)
Issuance of common stock	59		—			—			—			—			—			—		—
Shares repurchased through common stock repurchase program	(1,698	)	(1		)	(31,193		)	—			—			(31,194		)	—		(31,194		)
Issuance of restricted shares	382		—			—			—			—			—			—		—
Stock-based compensation expense, net of forfeitures	(12	)	—			5,328			—			—			5,328			—		5,328
Shares withheld for employee taxes	(116	)	—			(1,405		)	—			—			(1,405		)	—		(1,405		)
Balance as of September 30, 2018	217,852		$	218		$	4,547,158		$	(2,733,559	)	$	5,562		$	1,819,379		$	—	$	1,819,379
Nine Months Ended
Balance as of January 1, 2019	213,176		$	213		$	4,504,702		$	(2,756,802	)	$	(1,522	)	$	1,746,591		$	418	$	1,747,009		213,176		$	213	$	4,504,702		$	(2,756,802	)	$	(1,522	)	$	1,746,591		$	418		$	1,747,009
Net income	—		—			—			16,225			—			16,225			—		16,225			—		—		—			23,208			—			23,208			—			23,208
Other comprehensive loss	—		—			—			—			(16,973		)	(16,973		)	—		(16,973		)	—		—		—			—			(3,514		)	(3,514		)	—			(3,514		)
Contributions from noncontrolling interests	—		—			—			—			—			—			2,002		2,002			—		—		—			—			—			—			358			358
Distributions declared to common shareholders ($0.496875 per share)	—		—			—			(106,141		)	—			(106,141		)	—		(106,141		)
Distributions declared to common shareholders ($0.165625 per share)																							—		—		—			(35,371		)	—			(35,371		)	—			(35,371		)
Issuance of common stock	111		—			—			—			—			—			—		—			111		—		—			—			—			—			—			—
Issuance of restricted shares	469		1			—			—			—			1			—		1			392		1		—			—			—			1			—			1
Stock-based compensation expense, net of forfeitures	(16	)	—			5,672			—			—			5,672			—		5,672			(9	)	—		1,966			—			—			1,966			—			1,966
Shares withheld for employee taxes	(85	)	—			(1,037		)	—			—			(1,037		)	—		(1,037		)	(85	)	—		(1,037		)	—			—			(1,037		)	—			(1,037		)
Balance as of September 30, 2019	213,655		$	214		$	4,509,337		$	(2,846,718	)	$	(18,495	)	$	1,644,338		$	2,420	$	1,646,758
Balance as of March 31, 2019																							213,585		$	214	$	4,505,631		$	(2,768,965	)	$	(5,036	)	$	1,731,844		$	776		$	1,732,620

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

See accompanying notes to condensed consolidated financial statements

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	16,225		$	65,496		$	22,357		$	23,208
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	153,609			132,107			40,173			43,267
Provision for impairment of investment properties	11,177			1,316			346			—
Gain on sales of investment properties	(18,872		)	(37,211		)	—			(8,449		)
Amortization of loan fees and debt premium and discount, net	1,913			2,636			950			798
Amortization of stock-based compensation	5,672			5,328			2,233			1,966
Debt prepayment fees	8,151			5,791
Payment of leasing fees and inducements	(6,880		)	(6,064		)	(3,676		)	(2,739		)
Changes in accounts receivable, net	1,860			(4,384		)	778			6,312
Changes in right-of-use lease assets	1,438			—			467			485
Changes in accounts payable and accrued expenses, net	(4,222		)	(8,344		)	(26,319		)	(25,058		)
Changes in lease liabilities	(496		)	—			(230		)	(150		)
Changes in other operating assets and liabilities, net	6,156			(28		)	(2,652		)	398
Other, net	(5,043		)	(4,935		)	615			(3,083		)
Net cash provided by operating activities	170,688			151,708			35,042			36,955

Cash flows from investing activities:
Purchase of investment properties	(29,891		)	—			(54,970		)	(25,204		)
Capital expenditures and tenant improvements	(59,971		)	(51,259		)	(14,165		)	(18,746		)
Proceeds from sales of investment properties	44,656			190,321			11,343			21,605
Investment in developments in progress	(17,817		)	(9,337		)	(12,715		)	(5,841		)
Net cash (used in) provided by investing activities	(63,023		)	129,725
Net cash used in investing activities							(70,507		)	(28,186		)

Cash flows from financing activities:
Principal payments on mortgages payable	(109,917		)	(81,036		)	(619		)	(764		)
Proceeds from unsecured notes payable	100,000			—
Proceeds from unsecured term loans	270,000			—
Repayments of unsecured term loans	—			(100,000		)
Proceeds from unsecured revolving line of credit	208,000			315,000			937,704			94,000
Repayments of unsecured revolving line of credit	(457,000		)	(322,000		)	(106,000		)	(68,000		)
Payment of loan fees and deposits	(2,519		)	(5,398		)	—			(4		)
Debt prepayment fees	(8,151		)	(5,791		)
Distributions paid	(106,141		)	(109,021		)	(35,387		)	(35,383		)
Shares repurchased through common stock repurchase program	—			(20,681		)
Other, net	965			(1,405		)	(316		)	(679		)
Net cash used in financing activities	(104,763		)	(330,332		)
Net cash provided by (used in) financing activities							795,382			(10,830		)

Net increase (decrease) in cash, cash equivalents and restricted cash	2,902			(48,899		)	759,917			(2,061		)
Cash, cash equivalents and restricted cash, at beginning of period	19,601			86,335			14,447			19,601
Cash, cash equivalents and restricted cash, at end of period	$	22,503		$	37,436		$	774,364		$	17,540
(continued)	(continued)						(continued)

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Supplemental cash flow disclosure, including non-cash activities:
Cash paid for interest, net of interest capitalized	$	56,950		$	54,554		$	14,263		$	16,216
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,523		$	—		$	1,446		$	1,679
Distributions payable	$	35,387		$	36,312		$	35,464		$	35,375
Accrued shares repurchased through common stock repurchase program	$	—		$	10,513
Accrued capital expenditures and tenant improvements	$	6,048		$	10,631		$	6,246		$	9,407
Accrued leasing fees and inducements	$	1,184		$	1,305		$	683		$	754
Accrued redevelopment costs	$	565		$	511		$	2,573		$	395
Amounts reclassified to developments in progress	$	34,746		$	—		$	305		$	—
Developments in progress placed in service	$	1,377		$	9,389
Change in noncontrolling interest due to termination of joint venture							$	1,661		$	—
Lease liabilities arising from obtaining right-of-use lease assets	$	103,519		$	—		$	383		$	103,519
Straight-line ground rent liabilities reclassified to right-of-use lease asset	$	31,030		$	—		$	—		$	31,030
Straight-line office rent liability reclassified to right-of-use lease asset	$	507		$	—		$	—		$	507
Acquired ground lease intangible liability reclassified to right-of-use lease asset	$	11,898		$	—		$	—		$	11,898

Purchase of investment properties (after credits at closing):
Net investment properties	$	(28,486	)	$	—		$	(58,760	)	$	(23,894	)
Right-of-use lease assets							5,999			—
Accounts receivable, acquired lease intangibles and other assets	(1,792		)	—			(1,801		)	(1,694		)
Lease liabilities							(5,942		)	—
Accounts payable, acquired lease intangibles and other liabilities	387			—			5,534			384
Purchase of investment properties (after credits at closing)	$	(29,891	)	$	—		$	(54,970	)	$	(25,204	)

Proceeds from sales of investment properties:
Net investment properties	$	30,119		$	148,952		$	11,281		$	17,456
Right-of-use lease assets	8,242			—			—			8,242
Accounts receivable, acquired lease intangibles and other assets	1,591			10,999			167			1,417
Lease liabilities	(11,326		)	—			—			(11,326		)
Accounts payable, acquired lease intangibles and other liabilities	(2,842		)	(6,841		)	(105		)	(2,633		)
Gain on sales of investment properties	18,872			37,211			—			8,449
Proceeds from sales of investment properties	$	44,656		$	190,321		$	11,343		$	21,605

Reconciliation of cash, cash equivalents and restricted cash reported on the Company’s condensed consolidated balance sheets to such amounts shown in the Company’s condensed consolidated statements of cash flows:
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents, at beginning of period	$	14,722		$	25,185		$	9,989		$	14,722
Restricted cash, at beginning of period (included within “Other assets, net”)	4,879			61,150			4,458			4,879
Total cash, cash equivalents and restricted cash, at beginning of period	$	19,601		$	86,335		$	14,447		$	19,601

Cash and cash equivalents, at end of period	$	17,076		$	29,702		$	769,241		$	11,855
Restricted cash, at end of period (included within “Other assets, net”)	5,427			7,734			5,123			5,685
Total cash, cash equivalents and restricted cash, at end of period	$	22,503		$	37,436		$	774,364		$	17,540

See accompanying notes to condensed consolidated financial statements

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited financial statements of Retail Properties of America, Inc. for the year ended December 31, ~~2018,~~2019, which are included in its ~~2018~~2019 Annual Report on Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in the Annual Report have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary, all of which were of normal recurring nature, for a fair presentation have been included in this Quarterly Report.

(1) ORGANIZATION AND BASIS OF PRESENTATION

Retail Properties of America, Inc. (the Company) was formed on March 5, 2003 and its primary purpose is to own and operate high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of ~~September 30, 2019,~~March 31, 2020, the Company owned ~~104~~102 retail operating properties in the United States.

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

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

~~In accordance with Accounting Standards Codification Topic 205,~~ ~~Presentation of Financial Statements~~, certain prior year balances have been reclassified in order to conform to the current period presentation. Specifically, all lease-related revenues have been presented in a single line item, “Lease income,” rather than the previous presentation which separated revenues between “Rental income,” “Tenant recovery income” and “Other property income” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income.

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

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

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

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company’s property ownership as of ~~September 30, 2019~~March 31, 2020 is summarized below:



	Property Count
Retail operating properties	~~104~~102
~~Development/~~Expansion and redevelopment projects:
Circle East	1
One Loudoun Downtown – Pads G & H (a)	—
Carillon	1
The Shoppes at Quarterfield	1
Total number of properties	~~106~~105


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

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Refer to the Company’s ~~2018~~2019 Annual Report on Form 10-K for a summary of its significant accounting policies. Except as disclosed below, there have been no changes to the Company’s significant accounting policies in the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

Recently Adopted ~~Accounting Pronouncements~~

~~Effective January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02,~~ ~~Leases~~. This new guidance, including related ASUs that were subsequently issued, requires lessees to recognize a liability to make lease payments and a right-of-use lease (ROU) asset, initially measured at the present value of lease payments, for both operating and financing leases. For leases with a term of 12 months or less, lessees are permitted to make an accounting policy election, by class of underlying asset, to not recognize lease liabilities and lease assets. The guidance allows lessees and lessors to make an accounting policy election, by class of underlying asset, to not separate non-lease components from lease components. The guidance also provides an optional transition method which would allow entities to initially apply the new guidance in the period of adoption, recognizing a cumulative-effect adjustment to the opening balance of retained earnings, if necessary, and provides a package of three practical expedients whereby companies are not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification (operating vs. capital/financing leases) for any expired or existing leases and (iii) initial direct costs for any existing leases (Package of Three Practical Expedients), as well as practical expedients whereby companies are not required to reassess whether land easements contain a lease and can use hindsight in determining the lease term and assessing impairment of the ROU asset. The guidance requires changes in collectibility of operating lease receivables to be presented as an adjustment to revenue rather than the previous presentation within “Operating expenses” on the condensed consolidated statements of operations and other comprehensive (loss) income. Finally, only incremental direct leasing costs may be capitalized under the new guidance, which is consistent with the Company’s previous policies.

The Company adopted this new guidance on January 1, 2019, applied the requirements as of that date, made an accounting policy election to not separate non-lease components from lease components for all classes of assets, elected the Package of Three Practical Expedients as well as the practical expedient related to not reassessing whether land easements contain a lease. The Company did not elect the practical expedient related to hindsight for determining the lease term or assessing impairment of ROU assets. There was no retained earnings adjustment as a result of the adoption. The guidance regarding capitalization of leasing costs did not have any effect on the Company’s condensed consolidated financial statements.

Upon adoption, the Company recognized lease liabilities and ROU assets of $103,432 for operating leases where it is the lessee related to long-term ground leases and office leases, which are presented as “Right-of-use lease assets” and “Lease liabilities” in the accompanying condensed consolidated balance sheets. The ROU assets are presented net of the Company’s existing straight-line ground rent liabilities of $31,030 and acquired ground lease intangible liability of $11,898 as of January 1, 2019. For leases with a term of 12 months or less, the Company made an accounting policy election to not recognize lease liabilities and lease assets.

For leases where the Company is the lessor, as noted above, the Company made an accounting policy election to not separate non-lease components from lease components for all classes of assets and has presented all lease-related revenues in a single line item, “Lease income,” rather than the previous presentation which separated revenues between “Rental income,” “Tenant recovery income” and “Other property income” in the condensed consolidated statements of operations and other comprehensive (loss) income for the current and comparative period. This resulted in the reclassification of (i) $90,975 and $278,076 of revenue previously presented as “Rental income,” (ii) $26,817 and $80,090 of revenue previously presented as “Tenant recovery income” and (iii)

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~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

$1,345 and $4,977 of revenue previously presented as “Other property income” for the three and nine months ended September 30, 2018, respectively, into “Lease income” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. In addition, the Company began recording changes in collectibility of operating lease receivables as an adjustment to “Lease income” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. For the three and nine months ended September 30, 2018, changes in collectibility of operating lease receivables are presented within “Operating expenses” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income.

~~Effective January 1, 2019, the Company adopted ASU 2018-16,~~ ~~Derivatives and Hedging, due to the Company’s early adoption of ASU 2017-12,~~ ~~Derivatives and Hedging~~. This new guidance permits use of the Overnight Index Swap (OIS) Rate based on the Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes. SOFR represents the fifth permissible U.S. benchmark rate in addition to the following current eligible benchmark interest rates: (i) direct Treasury obligations of the U.S. government (UST), (ii) the London Interbank Offered Rate (LIBOR) swap rate, (iii) the OIS Rate based on the Fed Funds Effective Rate and (iv) the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Rate. The adoption of this pronouncement did not have any effect on the Company’s condensed consolidated financial statements as the Company did not change its benchmark rate.

~~Recently Issued~~ Accounting Pronouncements

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

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

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. This temporary guidance is effective as of ~~January 1, 2020.~~March 12, 2020 through December 31, 2022 to ease potential burdens related to the accounting for, or recognizing the effects of, reference rate reform on financial reporting. The guidance provides optional expedients for applying existing GAAP to contract modifications and hedging relationships affected by the move of global capital markets away from interbank offered rates, most notably the London Interbank Offered Rate (LIBOR). Specifically, the guidance allows for certain changes in critical terms of a designated hedging instrument or hedged item as a result of reference rate reform to not result in the dedesignation of the hedging relationship. In addition, the optional expedients related to probability and effectiveness assessments allow companies to disregard certain economic mismatches in a hedging relationship arising due to reference rate reform until both the derivative and hedged transactions have completed the transition, where current GAAP requires those mismatches to be modeled into the assessment of effectiveness.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company adopted this guidance as of the effective date and elected to apply the optional expedients related to probability and effectiveness prospectively. The Company has not modified any hedging relationship and has disregarded the potential economic mismatches in hedging relationships due to reference rate reform during the three months ended March 31, 2020.

Recently Issued Accounting Pronouncements

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

(3) ACQUISITIONS AND DEVELOPMENTS IN PROGRESS

Acquisitions

The Company closed on the following ~~acquisitions~~acquisition during the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:

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

Acquisition
Price

March 7, 2019 North Benson Center Seattle Multi-tenant retail 70,500
$ 25,340

June 10, 2019 Paradise Valley Marketplace – Parcel Phoenix Land (a) —
1,343

August 13, 2019 Southlake Town Square – Parcel Dallas Single-user parcel (b) 3,100
3,293

73,600
$ 29,976
(c)

Date

Property Name

Metropolitan
Statistical Area (MSA)

Property Type

Square

Footage

Acquisition

Price

February 6, 2020

Fullerton Metrocenter

Los Angeles

Fee interest (a)

154,700

55,000

154,700

55,000

(b)


(a)	The Company acquired ~~a parcel adjacent to its Paradise Valley Marketplace~~the fee interest in an existing multi-tenant retail operating property. ~~The total number of properties~~In connection with this acquisition, the Company also assumed the lessor position in ~~the Company’s portfolio was not affected by this transaction.~~a ground lease with a shadow anchor.


(b)	The Company acquired a single-user parcel at its Southlake Town Square multi-tenant retail operating property. The total number of properties in the Company’s portfolio was not affected by this transaction.


~~(c)~~	Acquisition price does not include capitalized closing costs and adjustments totaling ~~$316.~~$240.

The Company ~~did not acquire any properties~~closed on the following acquisition during the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019:

Date

Property Name

MSA

Property Type

Square

Footage

Acquisition

Price

March 7, 2019

North Benson Center

Seattle

Multi-tenant retail

70,500

25,340

70,500

25,340

(a)


(a)	Acquisition price does not include capitalized closing costs and adjustments totaling $90.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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


				Three Months Ended March 31,
	Nine Months Ended September 30, 2019			2020			2019
Land	$	14,819		$	57,137		$	13,275
Building and other improvements, net	13,667			1,623			10,619
Acquired lease intangible assets (a)	2,040			2,014			1,770
Acquired lease intangible liabilities (b)	(234		)	(5,534		)	(234		)
Net assets acquired	$	30,292		$	55,240		$	25,430


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


(b)	The weighted average amortization period for acquired lease intangible liabilities is 17 years and five ~~years.~~years for acquisitions completed during the three months ended March 31, 2020 and 2019, respectively.

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

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

Developments in Progress

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

Property Name MSA September 30, 2019 December 31, 2018
Active developments/redevelopments:
Circle East (a) Baltimore $ 31,334
$ 22,383
Plaza del Lago (b) Chicago —
536
One Loudoun Downtown (c) Washington, D.C. 18,852
—
Carillon (d) Washington, D.C. 24,443
—
74,629
22,919
Land held for future development:
One Loudoun Uptown (e) Washington, D.C. 25,450
25,450
Total developments in progress $ 100,079
$ 48,369

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~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~



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


(a)	During the year ended December 31, 2018, the Company received net proceeds of $11,820 in connection with the sale of air rights to a third party to develop multi-family rental units at Circle East, which is shown net in the “Developments in progress” balance as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 in the accompanying condensed consolidated balance sheets.


~~(b)~~	During the three months ended September 30, 2019, the Company placed the Plaza del Lago multi-family rental redevelopment project in service and reclassified the related costs from “Developments in progress” into “Building and other improvements” in the accompanying condensed consolidated balance sheets.

~~(c)~~

During the three months ended June 30, 2019, the Company commenced the active development of Pads G & H at One Loudoun Downtown, at which time all predevelopment costs related to the development as well as the Company’s historical basis in the pads were reclassified from “Other assets, net” and “Investment properties,” respectively, to “Developments in progress” in the accompanying condensed consolidated balance sheets.

~~(d)~~

During the three months ended September 30, 2019, the Company commenced the active redevelopment at Carillon, at which time the Company (i) recorded $26,330 of accelerated depreciation related to the write-off of assets taken out of service due to the demolition of existing structures in connection with the redevelopment and (ii) reclassified all predevelopment costs related to the redevelopment as well as the Company’s historical basis in the phases to be developed from “Other assets, net” and “Investment properties,” respectively, to “Developments in progress” in the accompanying condensed consolidated balance sheets.


~~(e)~~	~~During the three months ended December 31, 2018, the Company acquired One Loudoun Uptown, a 58-acre land parcel, of which 32 acres are developable.~~

In response to current macroeconomic conditions related to the COVID-19 pandemic, the Company halted plans for vertical construction at its Carillon redevelopment during the three months ended March 31, 2020 and has materially reduced the planned scope and spend for the project. As of March 31, 2020, the Company was actively completing site work preparation at the property in anticipation of potential future development at the site. The Company expects to complete the site work preparation during 2020 for an expected additional capital investment of approximately $4,500.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company capitalized ~~$1,204~~$1,316 and ~~$2,437~~$574 of indirect project costs related to redevelopment projects during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, respectively, including, among other costs, ~~$366~~$372 and ~~$1,066~~$365 of internal salaries and related benefits of personnel directly involved in the redevelopment projects and ~~$570~~$785 and ~~$940~~$144 of interest, respectively. The Company capitalized $499 and $1,463 of indirect project costs related to redevelopment projects during the three and nine months ended September 30, 2018, including, among other costs, $276 and $689 of internal salaries and related benefits of personnel directly involved in the redevelopment projects and $98 and $348 of interest, respectively.

Variable Interest Entities

~~During the nine months ended September 30, 2019,~~As of January 1, 2020, the Company entered into a joint venture related to the development, ownership and operation of the medical office building portion of the redevelopment project at Carillon, of which the Company owns 95% of the joint venture. During the year ended December 31, 2018, the Company entered into 2had joint ventures related to the development, ownership and operation of the (i) multi-family rental portion of the expansion project at One Loudoun Downtown – Pads G & H, ~~and~~of which joint venture the Company owned 90%; (ii) multi-family rental portion of the redevelopment project at Carillon, of which joint ~~ventures~~venture the Company ~~owns 90%~~owned 95%, and (iii) medical office building portion of the redevelopment project at Carillon, of which joint venture the Company owned 95%~~, respectively.~~.

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

As a result of ~~September 30, 2019~~halting the planned vertical construction at Carillon, the Company terminated the joint venture related to the multi-family rental portion of the redevelopment during the three months ended March 31, 2020. In accordance with the terms of the joint venture agreement, costs incurred prior to the termination were funded evenly by the partners and there was no payment between the partners upon termination. Subsequent to the termination, if the Company commences the redevelopment and uses the materials developed, or approvals obtained, by the joint venture, the Company is required to reimburse the partner’s costs incurred in connection with such materials or approvals. As a result of the termination, the Company reclassified the noncontrolling interest balance of $1,661 related to this multi-family rental joint venture from noncontrolling interests to additional paid-in capital within equity. There was no gain or loss recognized in connection with the termination. Subsequent to March 31, 2020, the Company terminated the joint venture related to the medical office building portion of the redevelopment at Carillon.

As of March 31, 2020 and December 31, ~~2018,~~2019, the Company had recorded the following related to the consolidated joint ventures:


	September 30, 2019								December 31, 2018								March 31, 2020								December 31, 2019
	One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total		One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total		One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total		One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total
Net investment properties	$	5,175	$	2,736	$	401	$	8,312	$	—	$	—	$	—	$	—	$	29,715	$	—	$	885	$	30,600	$	8,830	$	2,940	$	675	$	12,445
Other assets, net	$	287	$	—	$	—	$	287	$	579	$	685	$	—	$	1,264	$	344	$	—	$	—	$	344	$	164	$	—	$	—	$	164
Other liabilities	$	2,263	$	568	$	95	$	2,926	$	165	$	263	$	—	$	428	$	3,066	$	—	$	167	$	3,233	$	1,546	$	32	$	129	$	1,707
Noncontrolling interests	$	1,183	$	1,084	$	153	$	2,420	$	207	$	211	$	—	$	418	$	2,699	$	—	$	359	$	3,058	$	1,869	$	1,454	$	273	$	3,596

Development costs are funded by the partners, including the Company, and/or construction loan financing throughout the construction period. Under terms defined in the joint venture agreements, after construction completion and stabilization of the respective development project, the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the respective joint venture at fair value. The Company has not provided financial support to these VIEs in excess of any amounts that it is contractually required to provide. There was no income from the joint venture projects during the three months ended March 31, 2020 and 2019 and, as such, no income was attributed to the noncontrolling interests.

(4) DISPOSITIONS

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



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


(a)	Aggregate proceeds are net of transaction costs.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~no income from the joint venture projects during the nine months ended September 30, 2019 and 2018 and, as such, no income was attributed to the noncontrolling interests.~~

~~(4) DISPOSITIONS~~

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


Date	Property Name	Property Type	Square Footage	Consideration		Aggregate Proceeds, Net (a)		Gain		Property Name	Property Type	Square Footage	Consideration		Aggregate Proceeds, Net (a)		Gain
March 8, 2019	Edwards Multiplex – Fresno (b)	Single-user retail	94,600	$	25,850	$	21,605	$	8,449	Edwards Multiplex – Fresno (a)	Single-user retail	94,600	$	25,850	$	21,605	$	8,449
June 28, 2019	North Rivers Towne Center	Multi-tenant retail	141,500	18,900		17,989		6,881
			236,100	$	44,750	$	39,594	$	15,330			94,600	$	25,850	$	21,605	$	8,449


(a)	Aggregate proceeds are net of transaction costs.


~~(b)~~	Prior to the disposition, the Company was subject to a ground lease whereby it leased the underlying land from a third party. The ground lease was assumed by the purchaser in connection with the disposition.

During the nine months ended September 30, 2019, the Company also received net proceeds of $5,062 and recognized a gain of $3,542 in connection with the sale of the second and third phases of a land parcel, which included rights to develop 22 residential units, at One Loudoun Downtown. The aggregate proceeds from the property dispositions and other transactions during the nine months ended September 30, 2019 totaled $44,656, with aggregate gains of $18,872.

~~The Company closed on the following dispositions during the nine months ended September 30, 2018:~~

Date Property Name Property Type
Square
Footage
Consideration
Aggregate
Proceeds, Net (a)
Gain
January 19, 2018 Crown Theater Single-user retail 74,200
$ 6,900
$ 6,350
$ 2,952
February 15, 2018 Cranberry Square Multi-tenant retail 195,200
23,500
23,163
10,174
March 7, 2018 Rite Aid Store (Eckerd)–Crossville, TN Single-user retail 13,800
1,800
1,768
157
March 20, 2018 Home Depot Plaza (b) Multi-tenant retail 135,600
16,250
15,873
—
March 21, 2018 Governor's Marketplace (c) Multi-tenant retail 243,100
23,500
22,400
8,836
March 28, 2018 Stony Creek I & Stony Creek II (d) Multi-tenant retail 204,800
32,800
32,078
11,628
April 19, 2018 CVS Pharmacy – Lawton, OK Single-user retail 10,900
1,600
1,596
—
May 31, 2018 Schaumburg Towers Office 895,400
86,600
73,315
—
1,773,000
$ 192,950
$ 176,543
$ 33,747


~~(a)~~	Aggregate proceeds are net of transaction costs, as well as capital and tenant-related costs credited to the buyer at close, as applicable, and exclude $169 of condemnation proceeds, which did not result in any additional gain recognition.


~~(b)~~	~~The Company repaid a~~ ~~$10,750~~ ~~mortgage payable in conjunction with the disposition of the property.~~


~~(c)~~	~~The Company recorded an additional gain on sale of~~ ~~$1,407~~ ~~during the three months ended September 30, 2018 upon satisfaction of performance obligations associated with escrow agreements executed upon disposition of the property.~~


~~(d)~~	~~The terms of the disposition of Stony Creek I and Stony Creek II were negotiated as a single transaction.~~

During the nine months ended September 30, 2018, the Company also received net proceeds of $11,820 and recognized a gain of $2,179 in connection with the sale of air rights at Circle East. In addition, the Company received net proceeds of $1,789 and recognized a gain of $1,285 in connection with the first phase of the sale of a land parcel, which included rights to develop 8 residential units, at One Loudoun Downtown. The aggregate proceeds from the property dispositions and other transactions during the nine months ended September 30, 2018 totaled $190,321, with aggregate gains of $37,211.

None of the dispositions completed during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ qualified for discontinued operations treatment and none are considered individually significant.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, no properties qualified for held for sale accounting treatment.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

(5) EQUITY COMPENSATION PLANS

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

The following table summarizes the Company’s unvested restricted shares as of and for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020:

Unvested
Restricted
Shares
Weighted Average
Grant Date
Fair Value per
Restricted Share
Balance as of January 1, 2019 440

$ 13.40
Shares granted (a) 469

$ 12.22
Shares vested (233 )
$ 13.31
Shares forfeited (16 ) $ 12.77
Balance as of September 30, 2019 (b) 660

$ 12.61



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


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


(b)	As of ~~September 30, 2019,~~March 31, 2020, total unrecognized compensation expense related to unvested restricted shares was ~~$3,125,~~$4,937, which is expected to be amortized over a weighted average term of ~~1.2~~1.5 years.

The following table summarizes the Company’s unvested performance restricted stock units (RSUs) as of and for the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:


	Unvested RSUs		Weighted Average Grant Date Fair Value per RSU		Unvested RSUs		Weighted Average Grant Date Fair Value per RSU
RSUs eligible for future conversion as of January 1, 2019	649		$	14.54
RSUs eligible for future conversion as of January 1, 2020					839		$	13.10
RSUs granted (a)	382		$	10.98	331		$	13.67
Conversion of RSUs to common stock and restricted shares (b)	(192	)	$	13.74	(196	)	$	15.52
RSUs eligible for future conversion as of September 30, 2019 (c)	839		$	13.10
RSUs eligible for future conversion as of March 31, 2020 (c)					974		$	12.81

(a)

Assumptions and inputs as of the grant date included a risk-free interest rate of ~~2.47%~~1.54%, the Company’s historical common stock performance relative to the peer companies within the National Association of Real Estate Investment Trusts (NAREIT) Shopping Center Index and the Company’s common stock dividend yield of ~~6.07%~~5.07%. Subject to continued employment, in ~~2022,~~2023, following the performance period which concludes on December 31, ~~2021,~~2022, one-third of the RSUs that are earned will convert into shares of common stock and two-thirds will convert into restricted shares with a one year vesting term.

(b)

On February ~~4, 2019,~~10, 2020, ~~192~~196 RSUs converted into 82105 shares of common stock and ~~125~~175 restricted shares that will vest on December 31, ~~2019,~~2020, subject to continued employment through such date, after applying a conversion rate of ~~107.5%~~142.5% based upon the Company’s Total Shareholder Return (TSR) relative to the TSRs of its peer companies for the performance period that concluded on December 31, ~~2018.~~2019. An additional 2943 shares of common stock were also issued, representing the dividends that would have been paid on the earned awards during the performance period.


~~(c)~~	~~As of September 30, 2019, total unrecognized compensation expense related to unvested RSUs was $5,670, which is expected to be amortized over a weighted average term of 2.1 years.~~

During the three months ended September 30, 2019 and 2018, the Company recorded compensation expense of $1,849 and $1,599, respectively, related to the amortization of unvested restricted shares and RSUs. During the nine months ended September 30, 2019 and 2018, the Company recorded compensation expense of $5,672 and $5,328, respectively, related to the amortization of unvested restricted shares and RSUs. Included within the amortization of stock-based compensation expense recorded during the nine months ended September 30, 2018 is compensation expense of $330 related to the accelerated vesting of 23 restricted shares and remaining amortization related to the 29 RSUs that remained eligible for future conversion in conjunction with the departure of the Company’s former Executive Vice President, General Counsel and Secretary. The total fair value of restricted shares that vested during the nine months ended September 30, 2019 was $2,778. In addition, the total fair value of RSUs that converted into common stock during the nine months ended September 30, 2019 was $1,052.

1211

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


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

During the three months ended March 31, 2020 and 2019, the Company recorded compensation expense of $2,233 and $1,966, respectively, related to the amortization of unvested restricted shares and RSUs. The total fair value of restricted shares that vested during the three months ended March 31, 2020 was $2,513. In addition, the total fair value of RSUs that converted into common stock during the three months ended March 31, 2020 was $1,321.

Prior to 2013, non-employee directors had been granted options to acquire shares under the Company’s Third Amended and Restated Independent Director Stock Option and Incentive Plan. As of ~~September 30, 2019~~March 31, 2020, options to purchase 2216 shares of common stock remained outstanding and ~~exercisable.~~exercisable pursuant to such plan. The Company did not grant any options in ~~2019~~2020 or ~~2018~~2019 and did not record any compensation expense related to stock options during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

(6) LEASES

Leases as Lessor

The majority of revenues from the Company’s properties consist of rents received under long-term operating leases, predominantly consisting of base rent. Also, certain leases provide for percentage rent based primarily on tenant sales volume.

Also, most leases provide for reimbursement of the tenant’s pro rata share of certain operating expenses incurred by the landlord, including, among others, real estate taxes, insurance, utilities, common area maintenance and management fees, subject to the terms of the respective lease. Certain other tenants are subject to net leases where the tenant is responsible for paying base rent to the Company but is directly responsible for other costs associated with occupancy, such as real estate taxes. Expenses paid directly by the tenant rather than the landlord are not included in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. Expenses paid by the landlord, subject to reimbursement by the tenant, are included within “Operating expenses” or “Real estate taxes” and reimbursements are included within “Lease income” along with the associated base rent in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income.

The Company made an accounting policy election to not separate non-lease components (primarily reimbursement of common area maintenance costs) from the related lease components and has applied the guidance of ASC 842, ~~Leases~~, to the combined component as (i) the fixed non-lease components have the same timing and pattern of transfer as the associated lease component, (ii) the lease component, if accounted for separately, would be classified as an operating lease and (iii) the Company considers the lease component to be the predominant component of the combined contract.

In addition, the Company records lease termination fee income when (i) a termination letter agreement is signed, (ii) all of the conditions of such agreement have been fulfilled, (iii) the tenant is no longer occupying the property and (iv) collectibility is reasonably assured. Upon early lease termination, the Company provides for losses related to recognized tenant specific intangibles and other assets or adjusts the remaining useful life of the assets if determined to be appropriate. The Company recorded lease termination fee income of $331 and $1,751 for the three and nine months ended September 30, 2019, respectively, and $196 and $1,423 for the three and nine months ended September 30, 2018, respectively, which is included within “Lease income” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income.

In certain municipalities, the Company is required to remit sales taxes to governmental authorities based upon the rental income received from properties in those regions. These taxes are reimbursed by the tenant to the Company in accordance with the terms of the applicable tenant lease. The presentation of the remittance and reimbursement of these taxes is on a gross basis with sales tax expenses included within “Operating expenses” and sales tax reimbursements included within “Lease income” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. Such taxes remitted to governmental authorities, which are generally reimbursed by tenants, were $155 and $454 for the three and nine months ended September 30, 2019, respectively, and $122 and $398 for the three and nine months ended September 30, 2018, respectively.

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020			2019
Lease income related to fixed lease payments	$	90,335	$	89,708	$	270,520	$	271,873	$	91,147		$	90,434
Lease income related to variable lease payments	28,824		29,148		87,838		88,268		28,495			30,631
Other (a)	558		281		2,511		3,002		(947		)	1,638
Lease income	$	119,717	$	119,137	$	360,869	$	363,143	$	118,695		$	122,703

(a)

~~For the three and nine months ended September 30, 2019, “Other”~~“Other” is comprised of revenue adjustments related to changes in collectibility and amortization of above and below market lease intangibles and lease inducements. ~~For the three and nine months ended September 30, 2018, “Other” is comprised of amortization of above and below market lease intangibles and lease inducements.~~

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

As of September 30, 2019, undiscounted lease payments to be received under operating leases, excluding additional percentage rent based on tenants’ sales volume and tenant reimbursements of certain operating expenses and assuming no exercise of renewal options or early termination rights, for the remainder of 2019, the next five years and thereafter are as follows:

Lease Payments
2019 $ 90,896
2020 350,666
2021 312,795
2022 264,906
2023 216,923
2024 162,135
Thereafter 504,545
Total $ 1,902,866

As of December 31, 2018, undiscounted lease payments to be received under operating leases, excluding additional percentage rent based on tenants’ sales volume and tenant reimbursements of certain operating expenses and assuming no exercise of renewal options or early termination rights, were as follows:

Lease Payments
2019 $ 351,145
2020 314,081
2021 274,135
2022 227,417
2023 180,199
Thereafter 569,758
Total $ 1,916,735

~~The remaining lease terms range from less than one year to approximately 64 years as of September 30, 2019 and December 31, 2018.~~

Many of the leases at the Company’s properties contain provisions that condition a tenant’s obligation to remain open, the amount of rent payable by the tenant or potentially the tenant’s obligation to remain in the lease, upon certain factors, including: (i) the presence and continued operation of a certain anchor tenant or tenants, (ii) minimum occupancy levels at the applicable property or (iii) tenant sales amounts. If such a provision is triggered by a failure of any of these or other applicable conditions, a tenant could have the right to cease operations at the applicable property, have its rent reduced or terminate its lease early. The Company does not expect that such provisions will have a material impact on its future operating results.

The Company capitalized internal salaries and related benefits of personnel directly involved in capital upgrades and tenant improvements of $679 and $2,004 during the three and nine months ended September 30, 2019, respectively, and $514 and $1,271 during the three and nine months ended September 30, 2018, respectively. The Company also capitalized internal leasing incentives of $111 and $247 during the three and nine months ended September 30, 2019, respectively, and $71 and $241 during the three and nine months ended September 30, 2018, respectively, all of which were incremental to signed leases.

Leases as Lessee

~~The Company leases land under non-cancellable operating leases at certain of its properties expiring in various years from 2035 to 2073, exclusive of any available option periods. In addition,~~During the three months ended March 31, 2020, the Company ~~leases office space for certain management offices and its corporate offices expiring in various years from 2019 to 2023, exclusive of any available option periods.~~

~~Upon adoption of~~extended the new lease accounting standard (ASU 2016-02 and related amendments) on January 1, 2019, the Company recorded lease liabilities and ROU assets of $103,432 for long-term ground and office leases where it is the lessee, calculated by discounting future lease payments by the Company’s incremental borrowing rate as of January 1, 2019. The incremental borrowing rate was determined through consideration of (i) the Company’s entity-specific risk premium, (ii) observable market interest rates and (iii) lease term. The weighted average incremental borrowing rate used to discount the future payments was 5.91% and the Company’s operating leases had a weighted average remaining lease term of ~~44 years as~~1 office lease resulting in an additional lease liability and right-of-use lease asset of ~~January 1, 2019. The Company did not include option terms in its future lease payments as they were not reasonably certain to be exercised. The Company’s existing~~$383.

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~straight-line ground rent liabilities of $31,030 and acquired ground lease intangible liability of $11,898 were reclassified as of January 1, 2019 to be presented net of the ROU assets.~~

The following table summarizes total lease costs recognized during the period, including variable lease payments which were not significant, and non-cash rent expense. Lease costs recognized during the three and nine months ended September 30, 2019 are presented under the new lease accounting standard and lease costs recognized during the three and nine months ended September 30, 2018 are presented under the standard in effect prior to the Company’s adoption of ASU 2016-02.

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Ground lease rent expense (a) $ 1,563
$ 1,893
$ 4,831
$ 5,745
Office rent expense (b) $ 278
$ 281
$ 849
$ 855


~~(a)~~	Included within “Operating expenses” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. Includes non-cash ground rent expense of $333 and $1,023 for the three and nine months ended September 30, 2019, respectively, and $580 and $1,825 for the three and nine months ended September 30, 2018, respectively.

~~(b)~~

Office rent related to property management operations is included within “Operating expenses” and office rent related to corporate office operations is included within “General and administrative expenses” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. The Company has elected to not record a lease liability/ROU asset for leases with a term of less than 12 months. Office rent expense for the three and nine months ended September 30, 2019 includes $0 and $29, respectively, of short-term lease costs.

As of September 30, 2019, undiscounted future rental obligations to be paid under the long-term ground and office leases, including fixed rental increases, for the remainder of 2019, the next five years and thereafter are as follows:

Lease Obligations
2019 $ 1,401
2020 6,076
2021 6,110
2022 6,140
2023 6,102
2024 5,698
Thereafter 247,795
Total $ 279,322
Adjustment for discounting (188,380 )
Lease liabilities as of September 30, 2019 $ 90,942

~~The Company’s operating leases for ground leases and office leases had a weighted average remaining lease term of 44 years and a weighted average discount rate of 5.93% as of September 30, 2019.~~

~~As of December 31, 2018, future rental obligations to be paid under the ground and office leases, including fixed rental increases, were as follows:~~

Lease Obligations
2019 $ 6,448
2020 6,656
2021 6,716
2022 6,761
2023 6,769
Thereafter 279,916
Total $ 313,266

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

(7) DEBT

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

Mortgages Payable

The following table summarizes the Company’s mortgages payable:


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity	Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity	Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity	Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	95,533		4.37	%	5.4	$	205,450		4.65	%	4.5	$	94,285		4.37	%	4.8	$	94,904		4.37	%	5.1
Premium, net of accumulated amortization	—						775
Discount, net of accumulated amortization	(504		)				(536		)				(483		)				(493		)
Capitalized loan fees, net of accumulated amortization	(272		)				(369		)				(240		)				(256		)
Mortgages payable, net	$	94,757					$	205,320					$	93,562					$	94,155


(a)	The fixed rate mortgages had interest rates ranging from 3.75% to 7.48% as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company ~~repaid mortgages payable in the total amount of $107,671, which had a weighted average fixed rate of 4.91%, incurred $8,151 of debt prepayment fees and~~ made scheduled principal payments of ~~$2,246~~$619 related to amortizing loans.

~~Unsecured Notes Payable~~

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

September 30, 2019 December 31, 2018
Unsecured Notes Payable Maturity Date Balance
Interest Rate/
Weighted Average
Interest Rate
Balance
Interest Rate/
Weighted Average
Interest Rate
Senior notes – 4.12% due 2021 June 30, 2021 $ 100,000
4.12 % $ 100,000
4.12 %
Senior notes – 4.58% due 2024 June 30, 2024 150,000
4.58 % 150,000
4.58 %
Senior notes – 4.00% due 2025 March 15, 2025 250,000
4.00 % 250,000
4.00 %
Senior notes – 4.08% due 2026 September 30, 2026 100,000
4.08 % 100,000
4.08 %
Senior notes – 4.24% due 2028 December 28, 2028 100,000
4.24 % 100,000
4.24 %
Senior notes – 4.82% due 2029 June 28, 2029 100,000
4.82 % —
— %
800,000
4.27 % 700,000
4.19 %
Discount, net of accumulated amortization (645 ) (734 )
Capitalized loan fees, net of accumulated amortization (3,281 ) (2,904 )
Total $ 796,074
$ 696,362

~~Notes Due 2029~~

On June 28, 2019, the Company issued $100,000 of 10-year 4.82% senior unsecured notes due 2029 (Notes Due 2029) in a private placement transaction pursuant to a note purchase agreement it entered into with certain institutional investors on April 5, 2019. The proceeds were used to repay borrowings on the Company’s unsecured revolving line of credit.

The note purchase agreement governing the Notes Due 2029 contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of such note purchase agreement, the Company is subject to various financial covenants, which include the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) a minimum interest coverage ratio; (iii) a minimum unencumbered interest coverage ratio (as set forth in the Company’s unsecured credit facility and the note purchase agreements governing the Notes Due 2021 and 2024 and the Notes Due 2026 and 2028 defined below); and (iv) a minimum fixed charge coverage ratio (as set forth in the Company’s unsecured credit facility).

1612

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Unsecured Notes Payable

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



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

Unsecured Term Loans and Revolving Line of Credit

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


		September 30, 2019					December 31, 2018						March 31, 2020					December 31, 2019
	Maturity Date	Balance			Interest Rate		Balance			Interest Rate		Maturity Date	Balance			Interest Rate		Balance			Interest Rate
Unsecured credit facility term loan due 2021 – fixed rate (a)	January 5, 2021	$	250,000		3.20	%	$	250,000		3.20	%	January 5, 2021	$	250,000		3.20	%	$	250,000		3.20	%
Unsecured term loan due 2023 – fixed rate (b)	November 22, 2023	200,000			4.05	%	200,000			4.05	%	November 22, 2023	200,000			4.05	%	200,000			4.05	%
Unsecured term loan due 2024 – fixed rate (c)	July 17, 2024	120,000			2.88	%	—			—	%	July 17, 2024	120,000			2.88	%	120,000			2.88	%
Unsecured term loan due 2026 – fixed rate (d)	July 17, 2026	150,000			3.27	%	—			—	%	July 17, 2026	150,000			3.27	%	150,000			3.27	%
Subtotal		720,000					450,000						720,000					720,000
Capitalized loan fees, net of accumulated amortization		(3,746		)			(2,633		)				(3,208		)			(3,477		)
Term loans, net		$	716,254				$	447,367					$	716,792				$	716,523

Unsecured credit facility revolving line of credit – variable rate (e)	April 22, 2022	$	24,000		3.09	%	$	273,000		3.57	%	April 22, 2022	$	849,704		2.04	%	$	18,000		2.85	%


(a)	$250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through January 5, 2021. The applicable credit spread was 1.20% as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.


(b)	$200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging from 1.20% to 1.85% through November 22, 2023. The applicable credit spread was 1.20% as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.


(c)	$120,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2024. The applicable credit spread was 1.20% as of ~~September 30,~~March 31, 2020 and December 31, 2019.


(d)	$150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid ranging from 1.50% to 2.20% through July 17, 2026. The applicable credit spread was 1.50% as of ~~September 30,~~March 31, 2020 and December 31, 2019.

(e)

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

Unsecured Credit Facility

~~On April 23, 2018, the~~The Company ~~entered into its fifth amended and restated unsecured credit agreement (Unsecured Credit Agreement) with~~has a ~~syndicate of financial institutions led by Wells Fargo Bank, National Association serving as syndication agent and KeyBank National Association serving as administrative agent to provide for an~~$1,100,000 unsecured credit facility ~~aggregating $1,100,000 (Unsecured Credit Facility). The Unsecured Credit Facility consists~~consisting of an $850,000 unsecured revolving line of credit and a $250,000 unsecured term loan ~~and~~(Unsecured Credit Facility) that is priced on a leverage grid at a rate of LIBOR plus a credit spread. In accordance with the ~~Unsecured Credit Agreement,~~unsecured credit agreement, the Company may elect to convert to an investment grade pricing grid. As of ~~September 30, 2019,~~March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, the Company has not made

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

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

Leverage-Based Pricing

Investment Grade Pricing

Unsecured Credit Facility

Maturity Date

Extension Option

Extension Fee

Credit Spread

Facility Fee

Credit Spread

Facility Fee

$250,000 unsecured term loan due 2021

1/5/2021

N/A

1.20% - –1.70%

N/A

0.90% - –1.75%

N/A

$850,000 unsecured revolving line of credit

4/22/2022

2-six month

0.075%

1.05% - –1.50%

0.15% - –0.30%

0.825%~~-1.55%~~–1.55%

0.125% - –0.30%

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

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~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Unsecured Term Loans

~~On January 3, 2017,~~As of March 31, 2020, the Company ~~received funding on~~has the following unsecured term loans: (i) a seven-year $200,000 unsecured term loan (Term Loan Due 2023) ~~with~~, (ii) a ~~group of financial institutions, which closed during the year ended December 31, 2016 and was amended on November 20, 2018. The Term~~five-year $120,000 unsecured term loan (Term Loan Due ~~2023 is priced on~~2024) and (iii) a ~~leverage grid~~seven-year $150,000 unsecured term loan (Term Loan Due 2026) each of which bears interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit ~~spread.~~spread based on a leverage grid. In accordance with the ~~amended~~respective term loan ~~agreement (Amended Term Loan Agreement),~~agreements, the Company may elect to convert to an investment grade pricing grid. As of ~~September 30, 2019,~~March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid.

On July 17, 2019, the Company entered into a term loan agreement (2019 Term Loan Agreement) with a group of financial institutions for a five-year $120,000 unsecured term loan (Term Loan Due 2024) and a seven-year $150,000 unsecured term loan (Term Loan Due 2026). The Term Loan Due 2024 and Term Loan Due 2026 bear interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit spread based on a leverage grid. In accordance with the 2019 Term Loan Agreement, the Company may elect to convert to an investment grade pricing grid. As of September 30, 2019, making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid. The proceeds were used to repay outstanding indebtedness and for general corporate purposes.

The following table summarizes the key terms of the unsecured term loans:



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

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

The Term Loan Due 2024 has a $130,000 accordion option and the Term Loan Due 2026 has a $100,000 accordion option that, collectively, allow the Company, at its election, to increase the total of the Term Loan Due 2024 and Term Loan Due 2026 up to $500,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the ~~2019~~term loan agreement and (ii) the Company’s ability to obtain additional lender commitments.

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

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

Debt Maturities

The following table ~~shows~~summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of ~~September 30, 2019~~March 31, 2020 for the remainder of ~~2019,~~2020, each of the next four years and thereafter, and the weighted average interest rates by year. The table does not reflect the impact of any debt activity that occurred after ~~September 30, 2019~~March 31, 2020.


	2019			2020			2021			2022			2023			Thereafter			Total			2020			2021			2022			2023			2024			Thereafter			Total
Debt:
Fixed rate debt:
Mortgages payable (a)	$	613		$	2,510		$	2,626		$	26,678		$	31,758		$	31,348		$	95,533		$	1,875		$	2,626		$	26,678		$	31,758		$	1,737		$	29,611		$	94,285
Fixed rate term loans (b)	—			—			250,000			—			200,000			270,000			720,000			—			250,000			—			200,000			120,000			150,000			720,000
Unsecured notes payable (c)	—			—			100,000			—			—			700,000			800,000			—			100,000			—			—			150,000			550,000			800,000
Total fixed rate debt	613			2,510			352,626			26,678			231,758			1,001,348			1,615,533			1,875			352,626			26,678			231,758			271,737			729,611			1,614,285

Variable rate debt:
Variable rate revolving line of credit	—			—			—			24,000			—			—			24,000			—			—			849,704			—			—			—			849,704
Total debt (d)	$	613		$	2,510		$	352,626		$	50,678		$	231,758		$	1,001,348		$	1,639,533		$	1,875		$	352,626		$	876,382		$	231,758		$	271,737		$	729,611		$	2,463,989

Weighted average interest rate on debt:
Fixed rate debt	4.34		%	4.35		%	3.47		%	4.81		%	4.06		%	3.97		%	3.89		%	4.39		%	3.47		%	4.81		%	4.06		%	3.83		%	4.02		%	3.89		%
Variable rate debt (e)	—			—			—			3.09		%	—			—			3.09		%	—			—			2.04		%	—			—			—			2.04		%
Total	4.34		%	4.35		%	3.47		%	4.00		%	4.06		%	3.97		%	3.88		%	4.39		%	3.47		%	2.12		%	4.06		%	3.83		%	4.02		%	3.25		%


(a)	Excludes mortgage discount of ~~$(504)~~$(483) and capitalized loan fees of ~~$(272)~~$(240), net of accumulated amortization, as of ~~September 30, 2019.~~March 31, 2020.

(b)

Excludes capitalized loan fees of ~~$(3,746)~~$(3,208), net of accumulated amortization, as of ~~September 30, 2019.~~March 31, 2020. The following variable rate term loans have been swapped to fixed rate debt: (i) $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid through January 5, 2021; (ii) $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid through November 22, 2023; (iii) $120,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid through July 17, 2024; and (iv) $150,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid through July 17, 2026. As of ~~September 30, 2019,~~March 31, 2020, the applicable credit spread for (i), (ii) and (iii) was 1.20% and for (iv) was 1.50%.


(c)	Excludes discount of ~~$(645)~~$(586) and capitalized loan fees of ~~$(3,281)~~$(2,994), net of accumulated amortization, as of ~~September 30, 2019.~~March 31, 2020.


(d)	The weighted average years to maturity of consolidated indebtedness was ~~5.0~~3.7 years as of ~~September 30, 2019.~~March 31, 2020.


(e)	Represents interest rate as of ~~September 30, 2019.~~March 31, 2020.

The Company’s unsecured debt agreements, consisting of the (i) unsecured credit agreement governing the Unsecured Credit ~~Agreement,~~Facility, (ii) ~~Amended~~amended term loan agreement governing the Term Loan ~~Agreement,~~Due 2023, (iii) ~~2019~~term loan agreement governing the Term Loan ~~Agreement,~~Due 2024 and Term Loan Due 2026, (iv) note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024), (v) indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025), (vi) note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), and (vii) note purchase agreement governing the ~~Notes~~4.82% senior unsecured notes due 2029 (Notes Due ~~2029,~~2029), contain customary representations, warranties and covenants, and events of default. These include financial covenants such as (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage ratios; (iii) minimum fixed charge coverage ratios; (iv) minimum unencumbered interest coverage ratios; (v) minimum debt service coverage ratio; and (vi) minimum unencumbered assets to unsecured debt ~~ratio; and (vii) minimum consolidated net worth.~~ratio. All financial covenants that include operating results, or derivations thereof, in their calculations are based on the most recent four fiscal quarters of activity. As of ~~September 30, 2019,~~March 31, 2020, management believes the Company was in compliance with the financial covenants and default provisions under the unsecured debt agreements.

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

transactions.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

(8) DERIVATIVES

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

As of ~~September 30, 2019,~~March 31, 2020, the Company ~~used~~has 11 interest rate swaps to hedge the variable cash flows associated with variable rate debt. Changes in fair value of the derivatives that are designated and that qualify as cash flow hedges are recorded in “Accumulated other comprehensive ~~(loss) income”~~loss” and are reclassified into interest expense as interest payments are made on the Company’s variable rate debt. Over the next 12 months, the Company estimates that an additional $~~3,555~~12,010 will be reclassified as an increase to interest expense.

The following table summarizes the Company’s interest rate swaps as of ~~September 30, 2019,~~March 31, 2020, which effectively convert one-month floating rate LIBOR to a fixed rate:



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

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


	Number of Instruments		Notional				Number of Instruments		Notional
Interest Rate Derivatives	September 30, 2019	December 31, 2018	September 30, 2019		December 31, 2018		March 31, 2020	December 31, 2019	March 31, 2020		December 31, 2019
Interest rate swaps	11	5	$	720,000	$	450,000	11	11	$	720,000	$	720,000

The table below presents the estimated fair value of the Company’s derivative financial instruments, ~~as well as their classification~~which are presented within “Other liabilities” in the accompanying condensed consolidated balance sheets. The valuation techniques used are described in Note 12 to the condensed consolidated financial statements.


	Derivatives
	September 30, 2019			December 31, 2018			Fair Value
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		March 31, 2020		December 31, 2019
Derivatives designated as cash flow hedges:
Interest rate swaps	Other assets, net	$	—	Other assets, net	$	2,324	$	39,870	$	12,288
Interest rate swaps	Other liabilities	$	18,495	Other liabilities	$	3,846

The following table presents the effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations and other comprehensive ~~(loss) income~~loss for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:

Derivatives in
Cash Flow
Hedging
Relationships

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

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

Amount of Loss (Gain)
Reclassified from
AOCI into Income

Total Interest Expense
Presented in the Statements
of Operations in which
the Effects of Cash Flow
Hedges are Recorded

Three Months Ended
September 30,

Nine Months Ended
September 30,
Three Months Ended
September 30, Nine Months Ended
September 30, Three Months Ended
September 30, Nine Months Ended
September 30,
2019 $ 7,159
$ 16,760
Interest expense $ 7
$ (213 ) $ 25,084
$ 59,877
2018 $ (1,336 ) $ (5,141 ) Interest expense $ (473 ) $ (665 ) $ 21,336
$ 56,918



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

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~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

(9) EQUITY

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

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

may be suspended or terminated at any time without prior notice. The Company did not repurchase any shares during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019. ~~During the three and nine months ended September 30, 2018, the Company repurchased 2,567 shares at an average price per share of $12.13 for a total of $31,194.~~ As of ~~September 30, 2019,~~March 31, 2020, $189,105 remained available for repurchases of shares of the Company’s common stock under its common stock repurchase program.

(10) EARNINGS PER SHARE

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


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended March 31,
	2019				2018				2019				2018				2020				2019
Numerator:
Net (loss) income attributable to common shareholders	$	(28,153	)		$	12,834			$	16,225			$	65,496
Net income attributable to common shareholders																	$	22,357			$	23,208
Earnings allocated to unvested restricted shares	(105		)		(81		)		(295		)		(253		)		(109		)		(80		)
Net (loss) income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	(28,258	)		$	12,753			$	15,930			$	65,243
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares																	$	22,248			$	23,128

Denominator:
Denominator for (loss) earnings per common share – basic:
Denominator for earnings per common share – basic:
Weighted average number of common shares outstanding	212,995			(a)	218,808			(b)	212,932			(a)	218,879			(b)	213,215			(a)	212,850			(b)
Effect of dilutive securities:
Stock options	—			(c)	—			(c)	—			(c)	—			(c)	—			(c)	—			(c)
RSUs	—			(d)	213			(e)	124			(d)	398			(e)	—			(d)	373			(e)
Denominator for (loss) earnings per common share – diluted:
Denominator for earnings per common share – diluted:
Weighted average number of common and common equivalent shares outstanding	212,995				219,021				213,056				219,277				213,215				213,223

(a)

Excludes ~~660~~815 shares of unvested restricted common stock as of ~~September 30, 2019,~~March 31, 2020, which equate to ~~661 and 641~~677 shares ~~respectively,~~ on a weighted average basis for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the shares are released.

(b)

Excludes ~~521~~667 shares of unvested restricted common stock as of ~~September 30, 2018,~~March 31, 2019, which equate to ~~521 and 541~~602 shares ~~respectively,~~ on a weighted average basis for the three ~~and nine~~ months ended ~~September 30, 2018.~~March 31, 2019. These shares were excluded from the computation of basic EPS as the contingencies remained and the shares had not been released as of the end of the reporting period.

(c)

There were outstanding options to purchase 2216 and 2822 shares of common stock as of ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, at a weighted average exercise price of ~~$17.34~~$15.87 and ~~$18.98,~~$17.34, respectively. Of these totals, outstanding options to purchase 1816 and 2418 shares of common stock as of ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, at a weighted average exercise price of ~~$18.58~~$15.87 and ~~$20.19,~~$18.58, respectively, have been excluded from the common shares used in calculating diluted EPS as including them would be anti-dilutive.

(d)

As of ~~September 30, 2019,~~March 31, 2020, there were ~~839~~974 RSUs eligible for future conversion upon completion of the performance periods (see Note 5 to the condensed consolidated financial statements), which equate to ~~839 and 836~~969 RSUs ~~respectively,~~ on a weighted average basis for the three ~~and nine~~ months ended ~~September 30, 2019. For the three months ended September 30, 2019, these~~March 31, 2020. These contingently issuable shares have been excluded from the common shares used in calculating diluted EPS as including them would be anti-dilutive. ~~For the nine months ended September 30, 2019, these contingently issuable shares are a component of calculating diluted EPS.~~


(e)	As of ~~September 30, 2018,~~March 31, 2019, there were ~~649~~839 RSUs eligible for future conversion upon completion of the performance periods, which equate to ~~649 and 661~~832 RSUs ~~respectively,~~ on a weighted average basis for the three ~~and nine~~ months ended ~~September 30, 2018.~~March 31, 2019. These contingently issuable shares are a component of calculating diluted EPS.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

(11) PROVISION FOR IMPAIRMENT OF INVESTMENT PROPERTIES

As of ~~September 30, 2019~~March 31, 2020 ~~and 2018,~~, the Company identified indicators of impairment at certain of its properties. Such indicators included a low occupancy rate, difficulty in leasing space and related cost of re-leasing, ~~financially troubled tenants~~ or ~~reduced anticipated holding periods.~~significant change in the scope, cost or timing of planned redevelopment. As of March 31, 2019, the Company did not identify indicators of impairment at any of its properties. The following table summarizes the results of these analyses as of ~~September 30, 2019 and 2018:~~March 31, 2020.

September 30, 2019 September 30, 2018
Number of properties for which indicators of impairment were identified 2
2
(a)
Less: number of properties for which an impairment charge was recorded 1
—

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

Remaining properties for which indicators of impairment were identified but no
impairment charge was considered necessary
1
2

Weighted average percentage by which the projected undiscounted cash flows exceeded
its respective carrying value for each of the remaining properties (b)
20 % 33 %



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

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


(a)	~~Includes~~ 1 ~~property which has subsequently been sold as of~~ ~~September 30, 2019~~.


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

The Company recorded the following investment property impairment charge during the ~~nine~~three months ended ~~September 30, 2019.:~~March 31, 2020:

Property Name Property Type Impairment Date
Square
Footage

Provision for
Impairment of
Investment
Properties
Streets of Yorktown (a) Multi-tenant retail September 30, 2019 85,200
$ 11,177
$ 11,177
Estimated fair value of impaired property as of impairment date $ 5,300


~~(a)~~	The Company recorded an impairment charge as a result of a combination of factors, including expected impact on future operating results stemming from anticipated changes in lease terms related to the tenant population and a re-evaluation of the strategic alternatives for the property.

~~The Company recorded the following investment property impairment charges during the nine months ended September 30, 2018:~~

Property Name Property Type Impairment Date
Square
Footage

Provision for
Impairment of
Investment
Properties
Schaumburg Towers (a) Office Various 895,400
$ 1,116
CVS Pharmacy – Lawton, OK (b) Single-user retail March 31, 2018 10,900
200
$ 1,316
Estimated fair value of impaired properties as of impairment date $ 76,871



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


(a)	The Company recorded an impairment charge on ~~March~~December 31, ~~2018~~2019 based upon the terms and conditions of an executed sales contract. This property was ~~classified as held for sale as of March 31, 2018 and was~~ sold on ~~May 31, 2018,~~February 13, 2020, at which time additional impairment was recognized pursuant to the terms and conditions of an executed sales contract.


~~(b)~~	~~The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. The property was sold on April 19, 2018.~~

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

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

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(12) FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

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


	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Derivative asset	$	—	$	—	$	2,324	$	2,324
Financial liabilities:
Mortgages payable, net	$	94,757	$	98,917	$	205,320	$	208,173	$	93,562	$	95,831	$	94,155	$	98,082
Unsecured notes payable, net	$	796,074	$	823,016	$	696,362	$	671,492	$	796,420	$	788,109	$	796,247	$	822,883
Unsecured term loans, net	$	716,254	$	720,000	$	447,367	$	449,266	$	716,792	$	711,013	$	716,523	$	720,000
Unsecured revolving line of credit	$	24,000	$	24,000	$	273,000	$	272,553	$	849,704	$	841,529	$	18,000	$	18,000
Derivative liability	$	18,495	$	18,495	$	3,846	$	3,846	$	39,870	$	39,870	$	12,288	$	12,288

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

Recurring Fair Value Measurements

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

Fair Value
Level 1 Level 2 Level 3 Total
September 30, 2019
Derivative liability $ —
$ 18,495
$ —
$ 18,495

December 31, 2018
Derivative asset $ —
$ 2,324
$ —
$ 2,324
Derivative liability $ —
$ 3,846
$ —
$ 3,846



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

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

Derivatives: The fair value of the ~~derivative asset and~~ derivative liability is determined using a discounted cash flow analysis on the expected future cash flows of each derivative. This analysis uses observable market data including forward yield curves and implied volatilities to determine the market’s expectation of the future cash flows of the variable component. The fixed and variable components of the derivative are then discounted using calculated discount factors developed based on the LIBOR swap rate and are aggregated to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation. As a result, the Company has determined that its derivative valuations in their entirety are classified within Level 2 of the fair value hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements. The Company’s derivative instruments are further described in Note 8 to the condensed consolidated financial statements.

2319

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Nonrecurring Fair Value Measurements

The Company did not remeasure any assets to fair value on a nonrecurring basis as of March 31, 2020. The following table presents the Company’s assets measured at fair value on a nonrecurring basis as of ~~September 30,~~December 31, 2019, aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to ~~a property~~properties remeasured to fair value as a result of an impairment ~~charge~~charges recorded during the ~~nine months~~year ended ~~September 30,~~December 31, 2019, except for those properties sold prior to December 31, 2019. Methods and assumptions used to estimate the fair value of ~~this asset~~these assets as of December 31, 2019 are described after the table. ~~The Company did not remeasure any assets to fair value on a nonrecurring basis as of December 31, 2018.~~

Fair Value
Level 1 Level 2 Level 3 Total
Provision for
Impairment
September 30, 2019
Investment property $ —
$ —
$ 5,300
(a) $ 5,300
$ 11,177



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


(a)	Represents the fair value of the Company’s King Philip’s Crossing investment property as of December 31, 2019, the date the asset was measured at fair value. The estimated fair value of King Philip’s Crossing was based upon the expected sales price from an executed sales contract and determined to be a Level 2 input.

(b)

Represents the fair value of the Company’s Streets of Yorktown investment ~~property.~~property as of September 30, 2019, the date the asset was measured at fair value. The estimated fair value of Streets of Yorktown was determined using the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding period to a present value at a risk-adjusted rate. The discount rates and third-party comparable sales prices used in this approach are derived from property-specific information, market transactions and other industry data and are considered significant inputs to this valuation. The reversion value of the property was based upon third-party comparable sales prices, which contain unobservable inputs used by these third parties. A weighted average discount rate of 6.89% was used to (i) present value the estimated income stream over the estimated holding period and (ii) present value the reversion value.

Fair Value Disclosures

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


	Fair Value								Fair Value
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
September 30, 2019
March 31, 2020
Mortgages payable, net	$	—	$	—	$	98,917	$	98,917	$	—	$	—	$	95,831	$	95,831
Unsecured notes payable, net	$	251,288	$	—	$	571,728	$	823,016	$	242,485	$	—	$	545,624	$	788,109
Unsecured term loans, net	$	—	$	—	$	720,000	$	720,000	$	—	$	—	$	711,013	$	711,013
Unsecured revolving line of credit	$	—	$	—	$	24,000	$	24,000	$	—	$	—	$	841,529	$	841,529

December 31, 2018
December 31, 2019
Mortgages payable, net	$	—	$	—	$	208,173	$	208,173	$	—	$	—	$	98,082	$	98,082
Unsecured notes payable, net	$	235,788	$	—	$	435,704	$	671,492	$	255,965	$	—	$	566,918	$	822,883
Unsecured term loans, net	$	—	$	—	$	449,266	$	449,266	$	—	$	—	$	720,000	$	720,000
Unsecured revolving line of credit	$	—	$	—	$	272,553	$	272,553	$	—	$	—	$	18,000	$	18,000

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company estimates the fair value of its Level 3 financial liabilities using a discounted cash flow model that incorporates future contractual principal and interest payments. The Company estimates the fair value of its mortgages payable, net and Level 3 unsecured notes payable, net by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The Company estimates the fair value of its unsecured term loans, net and unsecured revolving line of credit by discounting the anticipated future cash flows at a reference rate, currently one-month LIBOR, plus an applicable credit spread currently offered to the Company by its lenders for similar instruments of comparable maturities. The following rates were used in the discounted cash flow model to calculate the fair value of the Company’s Level 3 financial liabilities:


	September 30, 2019	December 31, 2018	March 31, 2020	December 31, 2019
Mortgages payable, net – range of discount rates used	3.4% to 3.7%	4.2% to 4.4%	3.6% to 4.1%	3.2% to 3.6%
Unsecured notes payable, net – weighted average discount rate used	3.84%	4.91%	4.72%	3.79%
Unsecured term loans, net – weighted average credit spread portion of discount rate used	1.26%	1.25%	1.75%	1.26%
Unsecured revolving line of credit – credit spread portion of discount rate used	1.05%	1.10%	1.63%	1.05%

~~Table of Contents~~

~~RETAIL PROPERTIES OF AMERICA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

There were no transfers between the levels of the fair value hierarchy during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and the year ended December 31, ~~2018.~~2019.

(13) COMMITMENTS AND CONTINGENCIES

As of ~~September 30, 2019,~~March 31, 2020, the Company had letters of credit outstanding totaling ~~$433~~$291 that serve as collateral for certain capital improvements at 21 of its properties and reduce the available borrowings on its unsecured revolving line of credit.

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



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


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


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

In response to current macroeconomic conditions, the Company halted plans for vertical construction at its Carillon redevelopment during the three months ended March 31, 2020 and has materially reduced the planned scope and spend for the project. As of ~~September 30, 2019,~~March 31, 2020, the Company ~~had active redevelopment and expansion projects~~was actively completing site work preparation at ~~Circle East, One Loudoun Downtown and Carillon.~~the property in anticipation of potential future development at the site. The Company ~~estimates that it will incur net costs~~expects to complete the site work preparation during 2020 for an expected additional capital investment of approximately ~~$36,000 to $38,000~~$4,500. In addition, the Company terminated the joint venture related to the multi-family rental portion of the redevelopment ~~at Circle East, approximately $125,000~~and subsequent to ~~$135,000~~March 31, 2020, the Company terminated the joint venture related to the ~~expansion project at One Loudoun Downtown~~ – ~~Pads G & H and approximately $194,000 to $215,000 related to~~medical office building portion of the redevelopment at ~~Carillon~~ – phase one. As of September 30, 2019, the Company has incurred (i) $19,466, net of proceeds of $11,820 from the sale of air rights, related to the redevelopment at Circle East, (ii) $6,527, net of contributions from the Company’s joint venture partner, related to the expansion project at One Loudoun Downtown – ~~Pads G & H and (iii) $4,848, net of contributions from the Company’s joint venture partners, related to the redevelopment at Carillon~~ – ~~phase one.~~Carillon.

(14) LITIGATION

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

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(15) SUBSEQUENT EVENTS

Subsequent to ~~September 30, 2019,~~March 31, 2020, the Company:

•

~~declared the cash dividend for the fourth quarter of 2019 of~~ ~~$0.165625~~ ~~per share on its outstanding Class A common stock, which will be paid on January 10, 2020 to Class A common shareholders of record at the close of business on December 26, 2019.~~

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

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

On May 1, 2020, the Company’s board of directors temporarily suspended future quarterly dividend payments on the Company’s outstanding Class A common stock in order to preserve and enhance liquidity and capital positioning. The Company’s board of directors will evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on the Company’s operating cash flow performance as well as other factors.

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

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

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

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

our business strategy;

our projected operating results;

rental rates and/or vacancy rates;

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

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

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

interest rates or operating costs;

the ~~potential~~ discontinuation of London Interbank Offered Rate (LIBOR);

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

real estate valuations;

our leverage;

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

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

our ability to obtain necessary outside financing;

the availability, terms and deployment of capital;

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

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

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

composition of members of our senior management team;

our ability to attract and retain qualified personnel;

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

governmental regulations, tax laws and rates and similar matters;

our compliance with laws, rules and regulations;

environmental uncertainties and exposure to natural disasters;

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

insurance coverage; and

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

The extent to which COVID-19 impacts us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Part II, “Item 1A. Risk Factors” in this document and in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019, which you should interpret as being heightened as a result of the numerous and ~~in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019.~~ongoing adverse impacts of COVID-19. Readers should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements). We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q, except as required by applicable law.

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

Impact of the COVID-19 Pandemic

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

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



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

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

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

Office	23,079		6.3	%	75.7	%

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

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

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

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

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

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

Executive Summary

Retail Properties of America, Inc. (we, our, us) is a REIT that owns and operates high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of ~~September 30, 2019~~March 31, 2020, we owned ~~104~~102 retail operating properties in the United States representing ~~19,971,000~~19,961,000 square feet of gross leasable area (GLA). and had four expansion and redevelopment projects. Our retail operating portfolio includes (i) neighborhood and community centers, (ii) power centers, and (iii) lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties.

The following table summarizes our portfolio as of ~~September 30, 2019~~March 31, 2020:


Property Type	Number of Properties	GLA (in thousands)	Occupancy		Percent Leased Including Leases Signed (a)		Number of Properties	GLA (in thousands)	Occupancy		Percent Leased Including Leases Signed (a)
Retail operating portfolio:
Multi-tenant retail:
Neighborhood and community centers	63	10,245	93.8	%	95.6	%	62	10,337	94.7	%	96.0	%
Power centers	23	4,922	94.5	%	95.8	%	22	4,816	95.2	%	96.4	%
Lifestyle centers and mixed-use properties (b)	16	4,544	92.2	%	94.6	%	16	4,547	91.4	%	92.4	%
Total multi-tenant retail	102	19,711	93.6	%	95.4	%	100	19,700	94.0	%	95.3	%
Single-user retail	2	260	100.0	%	100.0	%	2	261	100.0	%	100.0	%
Total retail operating portfolio	104	19,971	93.7	%	95.5	%
Development/redevelopment projects:
Total retail operating properties							102	19,961	94.1	%	95.3	%
Expansion and redevelopment projects:
Circle East	1						1
One Loudoun Downtown – Pads G & H (c)	—						—
Carillon	1						1
The Shoppes at Quarterfield							1
Total number of properties	106						105


(a)	Includes leases signed but not commenced.


(b)	Excludes the 18 multi-family rental units at Plaza del Lago. As of ~~September 30, 2019, 13~~March 31, 2020, 16 multi-family rental units were leased at an average monthly rental rate per unit of ~~$1,288.~~$1,339.


(c)	The operating portion of this property is included in the property count of lifestyle centers and mixed-use properties within ~~the property count for~~ our retail operating portfolio.

~~During the first half of~~In 2018, we completed our portfolio transformation ~~the core objective of which was to become~~and are now a prominent owner of multi-tenant retail properties, many with a mixed-use component, primarily located in the following markets: Dallas, Washington, D.C./Baltimore, New York, Chicago, Seattle, Atlanta, Houston, San Antonio, Phoenix and Austin. As a result, our portfolio is better focused and since our inaugural investor day in 2013, we have (i) improved our retail ABR by 35% to $19.50 per square foot as of March 31, 2020 from $14.46 per square foot as of March 31, 2013, (ii) increased our concentration in lifestyle and mixed-use properties based on multi-tenant retail ABR by 1,900 basis points to 35% as of March 31, 2020 from 16% as of March 31, 2013, (iii) reduced our top 20 retail tenant concentration of total ABR by 1,130 basis points to 26.6% as of March 31, 2020 from 37.9% as of March 31, 2013, and (iv) reduced our indebtedness by 5% to $2,463,989 as of March 31, 2020, which includes our nearly fully drawn $850,000 unsecured revolving line of credit, from $2,601,912 as of March 31, 2013. Additionally, as of March 31, 2020, approximately 88.1% of our multi-tenant retail ABR was generated in the top 25 metropolitan statistical areas (MSAs), as determined by the United States Census Bureau and ranked based on the most recently available population estimates.

WeIn addition to addressing tenant lease concession requests stemming from COVID-19 in the near term, we are ~~primarily~~ focused on ~~growing~~optimizing our ~~portfolio organically~~tenancy, asset level configurations and merchandising through (i) accretive leasing activity and (ii) mixed-use ~~redevelopment~~expansion and ~~expansion~~redevelopment projects. For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we achieved positive comparable cash leasing spreads of ~~22.1%~~4.8% on signed new leases and ~~5.5%~~4.9% on signed renewal leases for a blended re-leasing spread of ~~8.4%~~4.9%. During this period, we achieved average annual contractual rent increases on signed new leases of approximately ~~180~~170 basis points. We

~~placed the redevelopment~~As of March 31, 2020, we have $16,272 of ABR related to 647,000 square feet of GLA pertaining to 2020 lease expirations and $4,545 of ABR related to 245,000 square feet of GLA pertaining to leases signed but not commenced. In light of the COVID-19 pandemic, we are unable to project the impact on our leasing volume or other leasing trends. However, while existing ~~multi-family rental units at Plaza del Lago~~tenants are continuing to pursue renewals, we have to a certain extent experienced, and may continue to experience, a slowdown in ~~service during~~(i) rent commencing on signed leases, (ii) the ~~three months ended September 30, 2019.~~ volume of renewal leases and (iii) our ability to finalize the execution of new leases given current uncertainty.

Our active and near-term expansion and redevelopment projects consist of approximately ~~$355,000~~$178,000 to ~~$388,000~~$192,000 of expected investment ~~during 2019~~ through 2022, ~~and~~equivalent to approximately 6% of the net book value of our investment properties as of March 31, 2020. These predominantly mixed-use-focused projects include the redevelopment at Circle East, ~~phase one at Carillon and~~ the expansion ~~project~~projects of Pads G & H at One Loudoun ~~Downtown.~~Downtown and site and building reconfiguration at The Shoppes at Quarterfield as well as the vacant pad development at Southlake Town Square. In response to current macroeconomic conditions due to the impact of the COVID-19 pandemic, we halted plans for vertical construction at our Carillon redevelopment during the three months ended March 31, 2020 and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately $75,000 to $100,000. As of March 31, 2020, we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to complete the site work preparation during 2020 for an expected additional capital investment of approximately $4,500. In addition, we terminated the joint venture related to the multi-family rental portion of the redevelopment. Subsequent to March 31, 2020, we terminated the joint venture related to the medical office building portion of the redevelopment at Carillon. Our current portfolio of assets contains ~~several~~numerous additional projects in the longer-term pipeline, including, among others, ~~future phases~~redevelopment at Carillon, additional pad developments at One Loudoun Downtown, pad developments and expansions at Main Street Promenade and Downtown Crown, and future projects at Merrifield Town Center, Tysons Corner, Southlake Town Square, Lakewood Towne Center and One Loudoun Uptown.

Company Highlights — ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020

Developments in Progress

During the three months ended March 31, 2020, we invested $12,715 in our expansion and redevelopment projects at Circle East, One Loudoun Downtown, Carillon, The Shoppes at Quarterfield and Southlake Town Square. We expect that the majority of our additional 2020 project spend will be for the One Loudoun Downtown project.

The following table summarizes the carrying amount of developments in progress as of March 31, 2020:



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

Acquisitions

The following table summarizes our ~~acquisitions~~acquisition activity during the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:

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

Acquisition
Price
March 7, 2019 North Benson Center Seattle Multi-tenant retail 70,500
$ 25,340
June 10, 2019 Paradise Valley Marketplace – Parcel Phoenix Land (a) —
1,343
August 13, 2019 Southlake Town Square – Parcel Dallas Single-user parcel (b) 3,100
3,293
73,600
$ 29,976

Date

Property Name

MSA

Property Type

Square

Footage

Acquisition

Price

February 6, 2020

Fullerton Metrocenter

Los Angeles

Fee interest (a)

154,700

55,000

154,700

55,000


(a)	We acquired ~~a parcel adjacent to our Paradise Valley Marketplace~~the fee interest in an existing multi-tenant retail operating property. In connection with this acquisition, we also assumed the lessor position in a ground lease with a shadow anchor. The total number of properties in our portfolio was not affected by this transaction.


~~(b)~~	~~We acquired a single-user parcel at our Southlake Town Square multi-tenant retail operating property. The total number of properties in our portfolio was not affected by this transaction.~~

~~Developments in Progress~~

During the nine months ended September 30, 2019, we invested $17,817 in our active redevelopment and expansion projects at Circle East, Plaza del Lago, One Loudoun Downtown and Carillon. In addition, during the three months ended September 30, 2019, we placed the Plaza del Lago multi-family rental redevelopment project in service and reclassified the related costs from “Developments in progress” into “Building and other improvements” in the accompanying condensed consolidated balance sheets.

~~The following table summarizes developments in progress as of September 30, 2019:~~

Property Name MSA September 30, 2019
Active developments/redevelopments:
Circle East Baltimore $ 31,334
One Loudoun Downtown Washington, D.C. 18,852
Carillon Washington, D.C. 24,443
74,629
Land held for future development:
One Loudoun Uptown Washington, D.C. 25,450
Total developments in progress $ 100,079

Dispositions

The following table summarizes our ~~dispositions~~disposition activity during the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:

Date Property Name Property Type
Square
Footage
Consideration
March 8, 2019 Edwards Multiplex – Fresno (a) Single-user retail 94,600
$ 25,850
June 28, 2019 North Rivers Towne Center Multi-tenant retail 141,500
18,900
236,100
$ 44,750



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


~~(a)~~	~~Prior to the disposition, we were subject to a ground lease whereby we leased the underlying land from a third party. The ground lease was assumed by the purchaser in connection with the disposition.~~

In addition to the property dispositions listed above, during the nine months ended September 30, 2019, we received consideration of $5,089 in connection with the second and third phases of the sale of a land parcel, which included rights to develop 22 residential units, at One Loudoun Downtown.

Market Summary

The following table summarizes our retail operating portfolio by market as of ~~September 30, 2019:~~March 31, 2020:


Property Type/Market	Number of Properties	Annualized Base Rent (ABR) (a)		% of Total Multi-Tenant Retail ABR (a)		ABR per Occupied Sq. Ft.		GLA (in thousands) (a)	% of Total Multi-Tenant Retail GLA (a)		Occupancy		% Leased Including Signed		Number of Properties	ABR (a)		% of Total Multi-Tenant Retail ABR (a)		ABR per Occupied Sq. Ft.		GLA (in thousands) (a)	% of Total Multi-Tenant Retail GLA (a)		Occupancy		% Leased Including Signed
Multi-Tenant Retail:
Top 25 MSAs (b)
Dallas	19	$	81,702	22.9	%	$	22.67	3,942	20.0	%	91.4	%	93.3	%	19	$	83,234	23.1	%	$	22.88	3,943	20.0	%	92.2	%	92.9	%
Washington, D.C.	8	39,040		10.9	%	29.21		1,387	7.0	%	96.3	%	96.5	%	8	39,300		10.9	%	29.32		1,388	7.0	%	96.5	%	96.8	%
New York	9	36,780		10.3	%	29.60		1,292	6.6	%	96.2	%	97.5	%	9	36,638		10.1	%	29.77		1,292	6.6	%	95.2	%	95.2	%
Chicago	8	28,779		8.1	%	23.72		1,358	6.9	%	89.3	%	91.1	%	8	29,603		8.2	%	24.08		1,358	6.9	%	90.5	%	90.5	%
Seattle	9	23,167		6.5	%	16.27		1,548	7.9	%	92.0	%	95.2	%	9	24,450		6.8	%	16.69		1,548	7.9	%	94.6	%	97.6	%
Baltimore	5	22,122		6.2	%	15.33		1,604	8.1	%	89.9	%	97.6	%	4	21,963		6.1	%	16.02		1,543	7.8	%	88.9	%	93.8	%
Atlanta	9	20,337		5.7	%	13.80		1,513	7.7	%	97.4	%	98.2	%	9	20,874		5.8	%	14.00		1,513	7.7	%	98.6	%	98.6	%
Houston	9	15,929		4.5	%	15.01		1,141	5.8	%	93.0	%	95.7	%	9	16,199		4.5	%	14.97		1,141	5.8	%	94.9	%	96.1	%
San Antonio	3	12,819		3.6	%	18.00		722	3.7	%	98.7	%	98.7	%	3	12,729		3.5	%	17.95		721	3.7	%	98.3	%	98.4	%
Phoenix	3	10,855		3.0	%	17.76		632	3.2	%	96.8	%	96.9	%	3	11,019		3.0	%	18.02		632	3.2	%	96.8	%	98.1	%
Los Angeles	1	5,583		1.5	%	25.60		241	1.2	%	90.4	%	93.8	%	1	6,742		1.9	%	18.06		396	2.0	%	94.3	%	96.2	%
Riverside	1	4,624		1.3	%	15.81		292	1.5	%	100.0	%	100.0	%	1	4,584		1.3	%	15.99		292	1.5	%	98.1	%	98.1	%
St. Louis	1	4,204		1.2	%	9.77		453	2.3	%	95.0	%	98.3	%	1	4,275		1.2	%	9.60		453	2.3	%	98.3	%	98.3	%
Charlotte	1	3,964		1.1	%	13.68		320	1.6	%	90.6	%	90.6	%	1	3,691		1.0	%	14.06		320	1.6	%	82.1	%	96.2	%
Tampa	1	2,379		0.7	%	19.51		126	0.6	%	97.0	%	97.0	%	1	2,401		0.7	%	19.69		126	0.6	%	97.0	%	97.0	%
Subtotal	87	312,284		87.5	%	20.18		16,571	84.1	%	93.4	%	95.5	%	86	317,702		88.1	%	20.29		16,666	84.6	%	93.9	%	95.3	%

Non-Top 25 MSAs (b)	15	44,617		12.5	%	14.97		3,140	15.9	%	94.9	%	94.9	%	14	42,719		11.9	%	14.90		3,034	15.4	%	94.5	%	95.0	%

Total Multi-Tenant Retail	102	356,901		100.0	%	19.34		19,711	100.0	%	93.6	%	95.4	%	100	360,421		100.0	%	19.46		19,700	100.0	%	94.0	%	95.3	%

Single-User Retail	2	5,865				22.49		260			100.0	%	100.0	%	2	5,864				22.49		261			100.0	%	100.0	%

Total Retail Operating Portfolio (c)	104	$	362,766			$	19.38	19,971			93.7	%	95.5	%	102	$	366,285			$	19.50	19,961			94.1	%	95.3	%

(a)

Excludes ~~$1,898~~$2,025 of multi-tenant retail ABR and ~~106~~167 square feet of multi-tenant retail GLA attributable to Circle East and The Shoppes at Quarterfield, located in the Baltimore MSA, and Carillon, ~~both~~located in the Washington, D.C. MSA, all three of which are in ~~active redevelopment and are located in the Baltimore and Washington, D.C. MSAs, respectively.~~redevelopment. Including these amounts, ~~87.6%~~88.2% of our multi-tenant retail ABR and ~~84.2%~~84.7% of our multi-tenant retail GLA is located in the top 25 MSAs.


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


(c)	Excludes the 18 multi-family rental units at Plaza del ~~Lago, which were placed in service during the three months ended September 30, 2019.~~Lago. As of ~~September 30, 2019, 13~~March 31, 2020, 16 multi-family rental units were leased at an average monthly rental rate per unit of ~~$1,288.~~$1,339.

Leasing Activity

The following table summarizes the leasing activity in our retail operating portfolio and our active and near-term expansion and redevelopment projects during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020. Leases with terms of less than 12 months have been excluded from the table.


	Number of Leases Signed	GLA Signed (in thousands)	New Contractual Rent per Square Foot (PSF) (a)		Prior Contractual Rent PSF (a)		% Change over Prior ABR (a)		Weighted Average Lease Term	Tenant Allowances PSF		Number of Leases Signed	GLA Signed (in thousands)	New Contractual Rent per Square Foot (PSF) (a)		Prior Contractual Rent PSF (a)		% Change over Prior ABR (a)		Weighted Average Lease Term	Tenant Allowances PSF (b)
Comparable Renewal Leases	230	1,601	$	20.60	$	19.53	5.5	%	5.0	$	2.21	62	195	$	22.29	$	21.25	4.9	%	4.8	$	8.73
Comparable New Leases	59	301	$	26.28	$	21.52	22.1	%	9.3	$	61.79	5	33	$	23.01	$	21.95	4.8	%	9.4	$	41.30
Non-Comparable New and Renewal Leases ~~(b)~~(c)	77	580	$	19.87	N/A		N/A		7.3	$	31.04	15	57	$	26.62	N/A		N/A		8.7	$	47.57
Total	366	2,482	$	21.50	$	19.84	8.4	%	6.1	$	16.17	82	285	$	22.39	$	21.35	4.9	%	6.2	$	18.51


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


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


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

Our near-term efforts are primarily focused on reaching resolution of tenant lease concession requests. In addition, our leasing efforts are ~~primarily~~ focused on (i) vacant anchor and small shop space, (ii) upcoming lease expirations and (iii) spaces within our expansion and redevelopment ~~and expansion~~ projects. ~~As we lease~~Through these ~~spaces,~~collective efforts, we look to ~~capitalize~~situationally focus on ~~the opportunity to mark rents to market, upgrade our~~stability, tenancy and to optimize the mix of operators and unique retailers at our properties. As of March 31, 2020, we have $16,272 of ABR related to 647,000 square feet of GLA pertaining to 2020 lease expirations and $4,545 of ABR related to 245,000 square feet of GLA pertaining to leases signed but not commenced. In light of the COVID-19 pandemic, we are unable to project the impact on our leasing volume or other leasing trends. However, while existing tenants are continuing to pursue renewals, we have to a certain extent experienced, and may continue to experience, a slowdown in (i) rent commencing on signed leases, (ii) the volume of renewal leases and (iii) our ability to finalize the execution of new leases given current uncertainty.

Capital Markets

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we:

~~issued $100,000 of 10-year 4.82% senior unsecured notes in a private placement transaction pursuant to a note purchase agreement we entered into with certain institutional investors;~~

entered into a term loan agreement with a group of financial institutions for a five-year $120,000 unsecured term loan (Term Loan Due 2024) and a seven-year $150,000 unsecured term loan (Term Loan Due 2026). The term loans bear interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% for the Term Loan Due 2024 and 1.50% to 2.20% for the Term Loan Due 2026;

entered into agreements to swap $120,000 of LIBOR-based variable rate debt to a fixed interest rate of 1.68% through July 2024 and $150,000 of LIBOR-based variable rate debt to a fixed interest rate of 1.77% through July 2026;

~~repaid $249,000,~~borrowed $831,704, net of ~~borrowings,~~repayments, on our unsecured revolving line of ~~credit;~~credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets; and


•	~~repaid~~ ~~$107,671~~ ~~of mortgages payable, incurred~~ ~~$8,151~~ ~~of debt prepayment fees and made scheduled principal payments of $2,246~~ made scheduled principal payments of $619 related to amortizing loans.

Distributions

We declared a quarterly ~~distributions totaling $0.496875~~distribution of $0.165625 per share of common stock during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020.

Results of Operations

Comparison of Results for the Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~


	Three Months Ended September 30,									Three Months Ended March 31,
	2019			2018			Change			2020			2019			Change
Revenues:
Lease income	$	119,717		$	119,137		$	580		$	118,695		$	122,703		$	(4,008	)

Expenses:
Operating expenses	16,088			17,596			(1,508		)	16,414			17,686			(1,272		)
Real estate taxes	18,583			18,037			546			18,533			18,403			130
Depreciation and amortization	67,460			43,169			24,291			40,173			43,267			(3,094		)
Provision for impairment of investment properties	11,177			—			11,177			346			—			346
General and administrative expenses	10,334			9,160			1,174			9,165			10,499			(1,334		)
Total expenses	123,642			87,962			35,680			84,631			89,855			(5,224		)

Other (expense) income:
Interest expense	(25,084		)	(21,336		)	(3,748		)	(17,046		)	(17,430		)	384
Gain on sales of investment properties	1,969			2,692			(723		)	—			8,449			(8,449		)
Other (expense) income, net	(1,113		)	303			(1,416		)
Net (loss) income	(28,153		)	12,834			(40,987		)
Gain on litigation settlement										6,100			—			6,100
Other expense, net										(761		)	(659		)	(102		)
Net income										22,357			23,208			(851		)
Net income attributable to noncontrolling interests	—			—			—			—			—			—
Net (loss) income attributable to common shareholders	$	(28,153	)	$	12,834		$	(40,987	)
Net income attributable to common shareholders										$	22,357		$	23,208		$	(851	)

Net ~~(loss)~~ income attributable to common shareholders ~~decreased $40,987 from $12,834~~was $22,357 for the three months ended ~~September 30, 2018~~March 31, 2020 compared to ~~$(28,153)~~$23,208 for the three months ended ~~September 30, 2019~~March 31, 2019. The $851 decrease was primarily due to the following:

an $8,449 decrease in gain on sales of investment properties related to the sale of one investment property consisting of approximately 105,900 square feet of GLA that was impaired during the three months ended March 31, 2020 compared

to the sale of one investment property consisting of approximately 94,600 square feet of GLA that was sold for a gain during the three months ended March 31, 2019; and

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

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

a ~~$24,291~~$1,159 decrease in straight-line rent;

a $1,104 increase in bad debt;

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

a $1,007 decrease in tenant recovery income;

partially offset by

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

partially offset by

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

a $3,094 decrease in depreciation and amortization primarily due to site improvement and in-place lease intangible assets becoming fully depreciated or amortized upon reaching the ~~write-off~~end of ~~assets taken out of service due to~~ the ~~demolition of existing structures at our Carillon redevelopment~~asset’s estimated useful life during the three months ended ~~September 30, 2019. No such write-off occurred during the three months ended September 30, 2018;~~

•

an $11,177 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 11 and 12 to the accompanying condensed consolidated financial statements), we recognized an impairment charge of $11,177 during the three months ended ~~September 30, 2019. No impairment charges were recognized during the three months ended~~ ~~September 30, 2018; and~~

~~a $3,748 increase in interest expense primarily consisting of:~~March 31, 2020;

a ~~$3,334 increase~~$1,334 decrease in ~~prepayment penalties;~~

general and administrative expenses primarily due to a ~~$1,897 increase~~decrease in ~~interest on our Term Loan Due 2024 and Term Loan Due 2026, which were entered into~~comparative cash bonus expense resulting from a significant reduction in ~~July 2019;~~cash bonus expectations for 2020; and

a ~~$1,205 increase in interest on our 4.82% senior unsecured notes due 2029 which were issued in June 2019;~~

~~partially offset by~~

~~a $1,910~~$1,272 decrease in ~~interest on mortgages payable due to a reduction in mortgage debt; and~~

~~a $929 decrease in interest on our unsecured revolving line of credit~~operating expenses primarily due to lower ~~average outstanding balances.~~snow-related expenses in 2020.

Net operating income (NOI)

We define NOI as all revenues other than (i) straight-line rental income (non-cash), (ii) amortization of lease inducements, (iii) amortization of acquired above and below market lease intangibles and (iv) lease termination fee income, less real estate taxes and all operating expenses other than lease termination fee expense and non-cash ground rent expense, which is comprised of ~~straight-line ground rent expense and amortization of acquired ground lease intangibles for the three and nine months ended September 30, 2018 and~~ amortization of right-of-use lease assets and amortization of lease ~~liabilities for the three and nine months ended September 30, 2019.~~liabilities. NOI consists of same store NOI (Same Store NOI) and NOI from other investment properties (NOI from Other Investment Properties). We believe that NOI, Same Store NOI and NOI from Other Investment Properties, which are supplemental non-GAAP financial measures, provide an additional and useful operating perspective not immediately apparent from “Net income” or “Net income attributable to common shareholders” in accordance with accounting principles generally accepted in the United States (GAAP). We use these measures to evaluate our performance on a property-by-property basis because they allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base have on our operating results. NOI, Same Store NOI and NOI from Other Investment Properties do not represent alternatives to “Net income” or “Net income attributable to common shareholders” in accordance with GAAP as indicators of our financial performance. Comparison of our presentation of NOI, Same Store NOI and NOI from Other Investment Properties to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs. For reference and as an aid in understanding our computation of NOI, a reconciliation of net income attributable to common shareholders as computed in accordance with GAAP to Same Store NOI has been presented for each comparable period presented.

Same store portfolio

For the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, our same store portfolio consisted of ~~102~~101 retail operating properties acquired or placed in service and stabilized prior to January 1, ~~2018.~~2019. The number of properties in our same store portfolio ~~did not change~~decreased to 101 as of ~~September 30, 2019~~March 31, 2020 from 102 as of ~~June 30, 2019.~~December 31, 2019 as a result of the following:


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

the removal of The Shoppes at Quarterfield, which was reclassified to active redevelopment during the three months ended March 31, 2020;

partially offset by

the addition of Reisterstown Road Plaza, a redevelopment project that was reclassified into our retail operating portfolio during 2018.

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

properties acquired during ~~2018~~2019 and ~~2019;~~

~~Reisterstown Road Plaza, which was reclassified from active redevelopment into our retail operating portfolio during 2018;~~

2020;

the multi-family rental units at Plaza del Lago, a redevelopment project that was placed in service during ~~the three months ended September 30,~~ 2019;

Circle East, which is in active redevelopment;


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

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

The Shoppes at Quarterfield, which is in active redevelopment;

investment properties that were sold or classified as held for sale ~~in 2018~~during 2019 and ~~2019;~~2020; and

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

The following tables present a reconciliation of net (loss) income attributable to common shareholders to Same Store NOI and details of the components of Same Store NOI for the three months ended September 30, 2019 and 2018:

Three Months Ended September 30,
2019 2018 Change
Net (loss) income attributable to common shareholders $ (28,153 ) $ 12,834
$ (40,987 )
Adjustments to reconcile to Same Store NOI:
Gain on sales of investment properties (1,969 ) (2,692 ) 723
Depreciation and amortization 67,460
43,169
24,291
Provision for impairment of investment properties 11,177
—
11,177
General and administrative expenses 10,334
9,160
1,174
Interest expense 25,084
21,336
3,748
Straight-line rental income, net (581 ) (946 ) 365
Amortization of acquired above and below market lease intangibles, net (1,470 ) (540 ) (930 )
Amortization of lease inducements 343
259
84
Lease termination fees, net (331 ) (196 ) (135 )
Non-cash ground rent expense, net 333
440
(107 )
Other expense (income), net 1,113
(303 ) 1,416
NOI 83,340
82,521
819
NOI from Other Investment Properties (2,850 ) (3,864 ) 1,014
Same Store NOI $ 80,490
$ 78,657
$ 1,833

Three Months Ended September 30,
2019 2018 Change
Same Store NOI:
Base rent $ 86,647
$ 84,417
$ 2,230
Percentage and specialty rent 601
887
(286 )
Tenant recoveries 25,631
25,783
(152 )
Other lease-related income 1,424
1,125
299
Bad debt, net (690 ) (561 ) (129 )
Property operating expenses (15,050 ) (15,157 ) 107
Real estate taxes (18,073 ) (17,837 ) (236 )
Same Store NOI $ 80,490
$ 78,657
$ 1,833

Same Store NOI increased $1,833, or 2.3%, primarily due to an increase of $2,230 in base rent driven by increases of (i) $939 from occupancy growth, (ii) $903 from contractual rent changes and (iii) $556 from re-leasing spreads.

~~Comparison of Results for the Nine Months Ended September 30, 2019 and 2018~~

Nine Months Ended September 30,
2019 2018 Change
Revenues:
Lease income $ 360,869
$ 363,143
$ (2,274 )

Expenses:
Operating expenses 50,903
57,235
(6,332 )
Real estate taxes 55,520
56,206
(686 )
Depreciation and amortization 153,609
132,107
21,502
Provision for impairment of investment properties 11,177
1,316
9,861
General and administrative expenses 30,186
31,929
(1,743 )
Total expenses 301,395
278,793
22,602

Other (expense) income:
Interest expense (59,877 ) (56,918 ) (2,959 )
Gain on sales of investment properties 18,872
37,211
(18,339 )
Other (expense) income, net (2,244 ) 853
(3,097 )
Net income 16,225
65,496
(49,271 )
Net income attributable to noncontrolling interests —
—
—
Net income attributable to common shareholders $ 16,225
$ 65,496
$ (49,271 )

Net income attributable to common shareholders decreased $49,271 from $65,496 for the nine months ended September 30, 2018 to $16,225 for the nine months ended September 30, 2019 primarily as a result of the following:

a $21,502 increase in depreciation and amortization primarily due to the write-off of assets taken out of service due to the demolition of existing structures at our Carillon redevelopment during the nine months ended September 30, 2019. No such write-off occurred during the nine months ended September 30, 2018;

a $18,339 decrease in gain on sales of investment properties related to the sale of two investment properties, representing approximately 236,100 square feet of GLA, and the sale of two land parcels during the nine months ended September 30, 2019 compared to the sales of nine investment properties and a land parcel, representing approximately 1,773,000 square feet of GLA, and the sale of air rights at Circle East during the nine months ended September 30, 2018; and

a $9,861 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 11 and 12 to the accompanying condensed consolidated financial statements), we recognized impairment charges of $11,177 and $1,316 during the nine months ended September 30, 2019 and 2018, respectively;

~~partially offset by~~

~~a $6,332 decrease in operating expenses primarily due to the sales of operating properties during 2018 and 2019.~~

The following tables present a reconciliation of net income attributable to common shareholders to Same Store NOI and details of the components of Same Store NOI for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	Nine Months Ended September 30,									Three Months Ended March 31,
	2019			2018			Change			2020			2019			Change
Net income attributable to common shareholders	$	16,225		$	65,496		$	(49,271	)	$	22,357		$	23,208		$	(851	)
Adjustments to reconcile to Same Store NOI:
Gain on sales of investment properties	(18,872		)	(37,211		)	18,339			—			(8,449		)	8,449
Gain on litigation settlement										(6,100		)	—			(6,100		)
Depreciation and amortization	153,609			132,107			21,502			40,173			43,267			(3,094		)
Provision for impairment of investment properties	11,177			1,316			9,861			346			—			346
General and administrative expenses	30,186			31,929			(1,743		)	9,165			10,499			(1,334		)
Interest expense	59,877			56,918			2,959			17,046			17,430			(384		)
Straight-line rental income, net	(2,697		)	(4,826		)	2,129			(341		)	(1,500		)	1,159
Amortization of acquired above and below market lease intangibles, net	(4,515		)	(3,748		)	(767		)	(976		)	(2,334		)	1,358
Amortization of lease inducements	958			746			212			419			296			123
Lease termination fees, net	(1,751		)	477			(2,228		)	(124		)	(1,188		)	1,064
Non-cash ground rent expense, net	1,023			1,405			(382		)	333			358			(25		)
Other expense (income), net	2,244			(853		)	3,097
Other expense, net										761			659			102
NOI	247,464			243,756			3,708			83,059			82,246			813
NOI from Other Investment Properties	(7,391		)	(9,981		)	2,590			(1,318		)	(1,484		)	166
Same Store NOI	$	240,073		$	233,775		$	6,298		$	81,741		$	80,762		$	979


	Nine Months Ended September 30,									Three Months Ended March 31,
	2019			2018			Change			2020			2019			Change
Same Store NOI:
Base rent	$	257,518		$	251,778		$	5,740		$	89,323		$	86,591		$	2,732
Percentage and specialty rent	2,436			2,720			(284		)	1,035			1,280			(245		)
Tenant recoveries	77,103			76,956			147			25,445			26,818			(1,373		)
Other lease-related income	4,163			3,390			773			1,466			1,289			177
Bad debt, net	(1,175		)	(1,389		)	214			(1,505		)	(428		)	(1,077		)
Property operating expenses	(45,743		)	(45,816		)	73			(15,718		)	(16,365		)	647
Real estate taxes	(54,229		)	(53,864		)	(365		)	(18,305		)	(18,423		)	118
Same Store NOI	$	240,073		$	233,775		$	6,298		$	81,741		$	80,762		$	979

Same Store NOI increased ~~$6,298,~~$979, or ~~2.7%~~1.2%, primarily due to anthe following:

a $2,732 increase ~~of $5,740~~ in base rent primarily driven by increases of (i) ~~$2,612~~$1,093 from occupancy growth, (ii) $996 from contractual rent changes ~~(ii) $1,858 from occupancy growth~~ and (iii) ~~$1,544~~$552 from re-leasing ~~spreads.~~spreads;

partially offset by

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

a $608 increase in property operating expenses and real estate taxes, net of tenant recoveries, due to a positive impact from the common area maintenance and real estate tax reconciliation process in 2019, increases in certain non-recoverable property operating expenses and higher net real estate taxes, partially offset by decreases in net recoverable property operating expenses primarily driven by lower snow-related expenses.

Funds From Operations Attributable to Common Shareholders

The National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a financial measure known as funds from operations (FFO). In December 2018, NAREIT issued “NAREIT Funds From Operations White Paper – 2018 Restatement” (2018 FFO White Paper) to incorporate interpretive guidance and clarifications made by NAREIT subsequent to their previous FFO White Paper, which was issued in April 2002. The 2018 FFO White Paper was effective for annual periods beginning after December 15, 2018 and interim periods therein.

As defined by NAREIT, FFO means net income computed in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains from sales of real estate assets, (iii) gains and losses from change in control and (iv) impairment write-downs of real estate assets and investments in entities directly attributable to decreases in the value of real estate held by the entity. We have adopted the NAREIT definition in our computation of FFO attributable to common shareholders. Management believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing our performance and operations to those of other REITs.

The 2018 FFO White Paper did not change the fundamental definition of FFO; however, it provided clarification and that, to the extent a REIT recognizes a gain on sale or impairment related to assets incidental to the main business of a REIT, the REIT has the option to include or exclude such gains or impairments in the calculation of FFO. In connection with the adoption of the 2018 FFO White Paper, we elected to exclude all gains on sale and impairments of real estate from FFO, whereas we previously only excluded gains on sale and impairments of depreciable investment properties. To be consistent with the current presentation, we

restated FFO attributable to common shareholders for the three and nine months ended September 30, 2018 to exclude the gain on sale of non-depreciable investment property of $1,285 and $3,464, respectively, which was previously included within FFO attributable to common shareholders but excluded from Operating FFO attributable to common shareholders.

We define Operating FFO attributable to common shareholders as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the impact on earnings from gains or losses associated with the early extinguishment of debt or other liabilities, litigation involving the Company, including gains recognized as a result of settlement and costs to engage outside counsel related to litigation with former tenants, the impact on earnings from executive separation and the excess of redemption value over carrying value of preferred stock redemption, which are not otherwise adjusted in our calculation of FFO attributable to common shareholders. There was no change to previously reported Operating FFO attributable to common shareholders for the three and nine months ended September 30, 2018, because gains on sale and impairments of non-depreciable investment property have been, and continue to be, excluded from our calculation of Operating FFO attributable to common shareholders.

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

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Net (loss) income attributable to common shareholders	$	(28,153	)	$	12,834		$	16,225		$	65,496
Net income attributable to common shareholders													$	22,357		$	23,208
Depreciation and amortization of real estate ~~(a)~~	67,116			42,861			152,560			131,226			39,838			42,913
Provision for impairment of investment properties	11,177			—			11,177			1,316			346			—
Gain on sales of investment properties ~~(b)~~	(1,969		)	(2,692		)	(18,872		)	(37,211		)	—			(8,449		)
FFO attributable to common shareholders ~~(b)~~	$	48,171		$	53,003		$	161,090		$	160,827		$	62,541		$	57,672

FFO attributable to common shareholders per common share outstanding – diluted (b)	$	0.23		$	0.24		$	0.76		$	0.73
FFO attributable to common shareholders per common share outstanding – diluted													$	0.29		$	0.27

FFO attributable to common shareholders	$	48,171		$	53,003		$	161,090		$	160,827		$	62,541		$	57,672
Impact on earnings from the early extinguishment of debt, net	7,581			4,892			7,581			5,944
Impact on earnings from executive separation (c)	—			—			—			1,737
Other (d)	1,241			100			2,521			323
Gain on litigation settlement													(6,100		)	—
Other (a)													1,011			711
Operating FFO attributable to common shareholders	$	56,993		$	57,995		$	171,192		$	168,831		$	57,452		$	58,383

Operating FFO attributable to common shareholders per common share outstanding – diluted	$	0.27		$	0.26		$	0.80		$	0.77		$	0.27		$	0.27


(a)	Includes $26,330 of accelerated depreciation recorded in connection with the write-off of assets taken out of service due to the demolition of existing structures at our Carillon redevelopment during the three and nine months ended September 30, 2019.

~~(b)~~

FFO attributable to common shareholders for the three and nine months ended September 30, 2018 has been restated to exclude $1,285 and $3,464, respectively, of gain on sale of non-depreciable investment property in connection with our adoption of the 2018 FFO White Paper effective January 1, 2019 on a retrospective basis. As the gain on sale of non-depreciable investment property was previously excluded from Operating FFO attributable to common shareholders, there was no change to Operating FFO attributable to common shareholders.


~~(c)~~	~~Reflected as an increase within “General and administrative expenses” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income.~~


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

Liquidity and Capital Resources

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

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



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

WeDuring the three months ended March 31, 2020, we elected to nearly fully draw on our $850,000 unsecured revolving line of credit to enhance our liquidity and provide maximum financial flexibility as the effects of the COVID-19 pandemic continue to evolve and impact the global financial markets. As of March 31, 2020, we have $769,241 of cash on hand and the ability to repay the vast majority of the amount drawn on our unsecured revolving line of credit; however, we may elect to not repay it for some time, which will increase our interest expense. Over the last several years, we have made substantial progress ~~over the last several years~~ in strengthening our balance sheet, as demonstrated by our reduced leverage, improved financial flexibility and higher unencumbered asset ratio. We believe this progress places us in a position to be able to better withstand the current unprecedented macroeconomic environment. However, there can be no assurances in this regard or that additional financing or capital will be available to us going forward, on favorable terms or at all. Additionally, through April 30, 2020, we have collected more than 52% of billed rent from our tenants. If such a trend continues, or possibly deteriorates, and if we agree with certain tenants that rent may be deferred until a later date, our operating cash flows and liquidity will be negatively impacted. As we worked to fortify our balance sheet, we funded debt maturities primarily through asset dispositions and capital markets transactions, including the public offering of our common stock and private and public offerings of senior unsecured notes. As of ~~September 30, 2019,~~March 31, 2020, we ~~had~~have no scheduled debt maturities and ~~$613~~ $1,875

of principal amortization due through the end of ~~2019,~~2020, which we plan on satisfying through a combination of cash flows from operations and working capital, ~~and our unsecured revolving line~~including cash on hand of ~~credit.~~$769,241 as of March 31, 2020.

The table below summarizes our consolidated indebtedness as of ~~September 30, 2019~~March 31, 2020:


Debt	Aggregate Principal Amount		Weighted Average Interest Rate		Maturity Date	Weighted Average Years to Maturity	Aggregate Principal Amount		Weighted Average Interest Rate		Maturity Date	Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	95,533	4.37	%	Various	5.4 years	$	94,285	4.37	%	Various	4.8 years

Unsecured notes payable:
Senior notes – 4.12% due 2021	100,000		4.12	%	June 30, 2021	1.8 years	100,000		4.12	%	June 30, 2021	1.2 years
Senior notes – 4.58% due 2024	150,000		4.58	%	June 30, 2024	4.8 years	150,000		4.58	%	June 30, 2024	4.3 years
Senior notes – 4.00% due 2025	250,000		4.00	%	March 15, 2025	5.5 years	250,000		4.00	%	March 15, 2025	5.0 years
Senior notes – 4.08% due 2026	100,000		4.08	%	September 30, 2026	7.0 years	100,000		4.08	%	September 30, 2026	6.5 years
Senior notes – 4.24% due 2028	100,000		4.24	%	December 28, 2028	9.3 years	100,000		4.24	%	December 28, 2028	8.8 years
Senior notes – 4.82% due 2029	100,000		4.82	%	June 28, 2029	9.8 years	100,000		4.82	%	June 28, 2029	9.2 years
Total unsecured notes payable (a)	800,000		4.27	%		6.1 years	800,000		4.27	%		5.6 years

Unsecured credit facility:
Term loan due 2021 – fixed rate (b)	250,000		3.20	%	January 5, 2021	1.3 years	250,000		3.20	%	January 5, 2021	0.8 years
Revolving line of credit – variable rate	24,000		3.09	%	April 22, 2022 (c)	2.6 years	849,704		2.04	%	April 22, 2022 (c)	2.1 years
Total unsecured credit facility (a)	274,000		3.19	%		1.4 years	1,099,704		2.30	%		1.8 years

Unsecured term loans:
Term Loan Due 2023 – fixed rate (d)	200,000		4.05	%	November 22, 2023	4.1 years	200,000		4.05	%	November 22, 2023	3.6 years
Term Loan Due 2024 – fixed rate (e)	120,000		2.88	%	July 17, 2024	4.8 years	120,000		2.88	%	July 17, 2024	4.3 years
Term Loan Due 2026 – fixed rate (f)	150,000		3.27	%	July 17, 2026	6.8 years	150,000		3.27	%	July 17, 2026	6.3 years
Total unsecured term loans (a)	470,000		3.50	%		5.2 years	470,000		3.50	%		4.7 years

Total consolidated indebtedness	$	1,639,533	3.88	%		5.0 years	$	2,463,989	3.25	%		3.7 years

(a)

Fixed rate mortgages payable excludes mortgage discount of ~~$(504)~~$(483) and capitalized loan fees of ~~$(272)~~$(240), net of accumulated amortization, as of ~~September 30, 2019.~~March 31, 2020. Unsecured notes payable excludes discount of ~~$(645)~~$(586) and capitalized loan fees of ~~$(3,281)~~$(2,994), net of accumulated amortization, as of ~~September 30, 2019.~~March 31, 2020. Unsecured term loans exclude capitalized loan fees of ~~$(3,746)~~$(3,208), net of accumulated amortization, as of March 31, 2020. Capitalized loan fees related to the revolving line of credit are included within “Other assets, net” in the accompanying condensed consolidated balance sheets.

~~as of September 30, 2019. Capitalized loan fees related to the revolving line of credit are included within “Other assets, net” in the accompanying condensed consolidated balance sheets.~~


(b)	Reflects $250,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through January 5, 2021. The applicable credit spread was 1.20% as of ~~September 30, 2019.~~March 31, 2020.


(c)	We have two six-month extension options on the revolving line of credit, which we may exercise as long as we are in compliance with the terms of the unsecured credit agreement and we pay an extension fee equal to 0.075% of the commitment amount being extended.


(d)	Reflects $200,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging from 1.20% to 1.85% through November 22, 2023. The applicable credit spread was 1.20% as of ~~September 30, 2019.~~March 31, 2020.


(e)	Reflects $120,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2024. The applicable credit spread was 1.20% as of ~~September 30, 2019.~~March 31, 2020.


(f)	Reflects $150,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.77% plus a credit spread based on a leverage grid ranging from 1.50% to 2.20% through July 17, 2026. The applicable credit spread was 1.50% as of ~~September 30, 2019.~~March 31, 2020.

Mortgages Payable

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we ~~repaid mortgages payable in the total amount of $107,671, which had a weighted average fixed interest rate of 4.91%, incurred $8,151 of debt prepayment fees and~~ made scheduled principal payments of ~~$2,246~~$619 related to amortizing loans.

~~Unsecured Notes Payable~~

~~Notes Due 2029~~

On June 28, 2019, we issued $100,000 of 10-year 4.82% senior unsecured notes due 2029 (Notes Due 2029) in a private placement transaction pursuant to a note purchase agreement we entered into with certain institutional investors on April 5, 2019. The proceeds were used to repay borrowings on our unsecured revolving line of credit.

The note purchase agreement governing the Notes Due 2029 contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of such note purchase agreement, we are subject to various financial covenants, which include the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) a minimum interest coverage ratio; (iii) a minimum unencumbered interest coverage ratio (as set forth in our unsecured credit facility and the note purchase agreements governing the Notes Due 2021 and 2024 and the Notes Due 2026 and 2028 defined below); and (iv) a minimum fixed charge coverage ratio (as set forth in our unsecured credit facility).

Unsecured Term Loans and Revolving Line of Credit

Unsecured Credit Facility

~~On April 23, 2018, we entered into our fifth amended and restated unsecured credit agreement (Unsecured Credit Agreement) with~~We have a ~~syndicate of financial institutions led by Wells Fargo Bank, National Association serving as syndication agent and KeyBank National Association serving as administrative agent to provide for an~~$1,100,000 unsecured credit facility ~~aggregating $1,100,000 (Unsecured Credit Facility). The Unsecured Credit Facility consists~~consisting of an $850,000 unsecured revolving line of credit and a $250,000 unsecured term loan ~~and~~(Unsecured Credit Facility) that is priced on a leverage grid at a rate of LIBOR plus a credit spread. In accordance with the ~~Unsecured Credit Agreement,~~unsecured credit agreement, we may elect to convert to an investment grade pricing grid. As of ~~September 30, 2019,~~March 31,

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

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

Leverage-Based Pricing

Investment Grade Pricing

Unsecured Credit Facility

Maturity Date

Extension Option

Extension Fee

Credit Spread

Facility Fee

Credit Spread

Facility Fee

$250,000 unsecured term loan due 2021

1/5/2021

N/A

1.20% - –1.70%

N/A

0.90% - –1.75%

N/A

$850,000 unsecured revolving line of credit

4/22/2022

2-six month

0.075%

1.05% - –1.50%

0.15% - –0.30%

0.825%~~-1.55%~~–1.55%

0.125% - –0.30%

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

As of ~~September 30, 2019,~~March 31, 2020, we had letters of credit outstanding totaling ~~$433~~$291 that serve as collateral for certain capital improvements at ~~two~~one of our properties and reduce the available borrowings on our unsecured revolving line of credit.

Unsecured Term Loans

~~On January 3, 2017,~~As of March 31, 2020, we ~~received funding on~~have the following unsecured term loans: (i) a seven-year $200,000 unsecured term loan (Term Loan Due 2023) with a group of financial institutions, which closed during the year ended December 31, 2016 and was amended on November 20, 2018. The Term Loan Due 2023 is priced on a leverage grid at a rate of LIBOR plus a credit spread. In accordance with the amended term loan agreement (Amended Term Loan Agreement), we may elect to convert to an investment grade pricing grid. As of September 30, 2019, making such an election would have resulted in a higher interest rate and, as such, we have not made the election to convert to an investment grade pricing grid.

~~On July 17, 2019, we entered into a term loan agreement (2019 Term Loan Agreement) with a group of financial institutions for~~(ii) a five-year $120,000 unsecured term loan (Term Loan Due 2024), and (iii) a seven-year $150,000 unsecured term loan (Term Loan Due 2026)~~. The Term Loan Due 2024 and Term Loan Due 2026 bear~~ each of which bears interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit spread based on a leverage grid. In accordance with the ~~2019 Term Loan Agreement,~~respective term loan agreements, we may elect to convert to an investment grade pricing grid. As of ~~September 30, 2019,~~March 31, 2020, making such an election would have resulted in a higher interest rate and, as such, we have not made the election to convert to an investment grade pricing grid. ~~The proceeds were used to repay outstanding indebtedness and for general corporate purposes.~~

The following table summarizes the key terms of the unsecured term loans:



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

The Term Loan Due 2023 has a $100,000 accordion option that allows us, at our election, to increase the Term Loan Due 2023 up to $300,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the Amended Term Loan Agreement and (ii) our ability to obtain additional lender commitments.

~~The Term Loan Due~~ 2024 has a $130,000 accordion option and the Term Loan Due 2026 has a $100,000 accordion option that, collectively, allow us, at our election, to increase the total of the Term Loan Due 2024 and Term Loan Due 2026 up to $500,000, subject to (i) customary fees and conditions, including the absence of an event of default as defined in the ~~2019 Term Loan Agreement~~term loan agreement and (ii) our ability to obtain additional lender commitments.

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

Our unsecured revolving line of credit and unsecured term loans each bear interest at a rate of LIBOR plus a credit spread, which is based on leverage grids. To the extent that our leverage ratio increases, the applicable credit spread will increase according to the tiers of each respective leverage grid. Based on our unsecured revolving line of credit and unsecured term loans balance of $1,569,704 as of March 31, 2020, the resulting increase in our leverage ratio and related movement to a higher tier on each respective leverage grid is expected to increase the weighted average credit spread portion of the interest rate by 0.11% applicable to the $1,569,704 balance for, at a minimum, the next quarterly compliance period under our debt agreements. Additionally, the facility fee on our unsecured revolving line of credit is expected to increase by 0.05% due to the increase in our leverage ratio and related movement to a higher tier on the leverage grid.

Debt Maturities

The following table summarizes the scheduled maturities and principal amortization of our indebtedness as of ~~September 30, 2019~~March 31, 2020 for the remainder of ~~2019,~~2020, each of the next four years and thereafter, and the weighted average interest rates by year, as well as the fair value of our indebtedness as of ~~September 30, 2019.~~March 31, 2020. The table does not reflect the impact of any debt activity that occurred after ~~September 30, 2019~~March 31, 2020.


	2019			2020			2021			2022			2023			Thereafter			Total			Fair Value		2020			2021			2022			2023			2024			Thereafter			Total			Fair Value
Debt:
Fixed rate debt:
Mortgages payable (a)	$	613		$	2,510		$	2,626		$	26,678		$	31,758		$	31,348		$	95,533		$	98,917	$	1,875		$	2,626		$	26,678		$	31,758		$	1,737		$	29,611		$	94,285		$	95,831
Fixed rate term loans (b)	—			—			250,000			—			200,000			270,000			720,000			720,000		—			250,000			—			200,000			120,000			150,000			720,000			711,013
Unsecured notes payable (c)	—			—			100,000			—			—			700,000			800,000			823,016		—			100,000			—			—			150,000			550,000			800,000			788,109
Total fixed rate debt	613			2,510			352,626			26,678			231,758			1,001,348			1,615,533			1,641,933		1,875			352,626			26,678			231,758			271,737			729,611			1,614,285			1,594,953

Variable rate debt:
Variable rate revolving line of credit	—			—			—			24,000			—			—			24,000			24,000		—			—			849,704			—			—			—			849,704			841,529
Total debt (d)	$	613		$	2,510		$	352,626		$	50,678		$	231,758		$	1,001,348		$	1,639,533		$	1,665,933	$	1,875		$	352,626		$	876,382		$	231,758		$	271,737		$	729,611		$	2,463,989		$	2,436,482

Weighted average interest rate on debt:
Fixed rate debt	4.34		%	4.35		%	3.47		%	4.81		%	4.06		%	3.97		%	3.89		%			4.39		%	3.47		%	4.81		%	4.06		%	3.83		%	4.02		%	3.89		%
Variable rate debt (e)	—			—			—			3.09		%	—			—			3.09		%			—			—			2.04		%	—			—			—			2.04		%
Total	4.34		%	4.35		%	3.47		%	4.00		%	4.06		%	3.97		%	3.88		%			4.39		%	3.47		%	2.12		%	4.06		%	3.83		%	4.02		%	3.25		%


(a)	Excludes mortgage discount of ~~$(504)~~$(483) and capitalized loan fees of ~~$(272)~~$(240), net of accumulated amortization, as of ~~September 30, 2019.~~March 31, 2020.

(b)


(c)	Excludes discount of ~~$(645)~~$(586) and capitalized loan fees of ~~$(3,281)~~$(2,994), net of accumulated amortization, as of ~~September 30, 2019.~~March 31, 2020.


(d)	The weighted average years to maturity of consolidated indebtedness was ~~5.0~~3.7 years as of ~~September 30, 2019.~~March 31, 2020.


(e)	Represents interest rate as of ~~September 30, 2019.~~March 31, 2020.

Our unsecured debt agreements, consisting of the (i) unsecured credit agreement governing the Unsecured Credit ~~Agreement,~~Facility, (ii) ~~Amended~~amended term loan agreement governing the Term Loan ~~Agreement,~~Due 2023, (iii) ~~2019~~term loan agreement governing the Term Loan ~~Agreement,~~Due 2024 and Term Loan Due 2026, (iv) note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024), (v) indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025), (vi) note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), and (vii) note purchase agreement governing the ~~Notes~~4.82% senior unsecured notes due 2029 (Notes Due ~~2029,~~2029), contain customary representations, warranties and covenants, and events of default. These include financial covenants such as (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage ratios; (iii) minimum fixed charge coverage ratios; (iv) minimum unencumbered interest coverage ratios; (v) minimum debt service coverage ratio; and (vi) minimum unencumbered assets to unsecured debt ~~ratio; and (vii) minimum consolidated net worth.~~ratio. All financial covenants that include operating results, or derivations thereof, in the covenant calculations are based on the most recent four fiscal quarters of activity. As such, the impact of short-term relative adverse operating results, if any, on our financial covenants is partially mitigated by previous and/or subsequent operating results. As of ~~September 30, 2019,~~March 31, 2020, management believes we were in compliance with the financial covenants and default provisions under the unsecured debt agreements.

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

Distributions and Equity Transactions

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

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

regard to the dividends paid deduction and excluding net capital gains. The Code imposes tax on any undistributed REIT taxable income.

To satisfy the requirements for qualification as a REIT and generally not be subject to U.S. federal income and excise tax, we intend to make ~~regular quarterly~~ distributions of all, or substantially all, of our taxable income to shareholders. Our future distributions will be at the discretion of our board of ~~directors.~~directors and are required to be declared 10 days prior to the record date. When determining the amount of future distributions, we expect to consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future cash flow, (iii) our determination of near-term cash needs for debt repayments and potential future share repurchases, (iv) the market of available acquisitions of new properties and redevelopment, expansion and pad development opportunities, (v) the timing of significant re-leasing activities and the establishment of additional cash reserves for anticipated tenant allowances and general property capital improvements, (vi) our ability to continue to access additional sources of capital, and (vii) the amount required to be distributed to maintain our status as a REIT, which is a requirement of our ~~Unsecured Credit Agreement,~~unsecured credit agreement, and to avoid or minimize any income and excise taxes that we otherwise would be required to pay. Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements.

We have an existing common stock repurchase program under which we may repurchase, from time to time, up to a maximum of $500,000 of shares of our Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions and are canceled upon repurchase. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of our assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program may be suspended or terminated at any time without prior notice. We did not repurchase any shares during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. As of ~~September 30, 2019,~~March 31, 2020, $189,105 remained available for repurchases of shares of our common stock under our common stock repurchase program.

Capital Expenditures and Redevelopment Activity

We anticipate that obligations related to capital improvements and redevelopments, including expansions and pad developments, can be met with (i) cash flows from operations, (ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and (iii) capital markets ~~transactions and our unsecured revolving line of credit.~~transactions.

As of ~~September 30, 2019,~~March 31, 2020, we ~~had~~have active ~~redevelopment~~expansion and ~~expansion~~redevelopment projects at Circle East, One Loudoun Downtown, The Shoppes at Quarterfield and ~~Carillon. We~~a vacant pad development at Southlake Town Square. To date, we have invested a total of approximately ~~$31,000~~$45,000 in these projects, which is net of proceeds of $11,820 from the sale of air rights at Circle East and net of contributions from our joint venture ~~partners~~partner at One Loudoun ~~Downtown and Carillon.~~Downtown. These projects are at various stages of completion, and based on our current plans and estimates, we anticipate that it will require approximately ~~$324,000~~$133,000 to ~~$357,000~~$147,000 of additional ~~funds~~investment from us to complete these projects. During the three months ended March 31, 2020, we halted plans for vertical construction at our Carillon redevelopment in response to current macroeconomic conditions due to the impact of the COVID-19 pandemic and have materially reduced the planned scope and spend for the project, driving a reduction in our expected 2020 redevelopment spend of approximately $75,000 to $100,000. As of March 31, 2020, we were actively completing site work preparation at Carillon in anticipation of potential future development at the site. We expect to complete the site work preparation during 2020 for an expected additional capital investment of approximately $4,500.

We capitalized $626 and $675 of internal salaries and related benefits of personnel directly involved in capital upgrades and tenant improvements ~~of $679 and $2,004~~ during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~respectively, and $514 and $1,271 during the three and nine months ended September 30, 2018,~~ respectively. We also capitalized $60 and $54 of internal leasing incentives, ~~of $111 and $247 during the three and nine months ended September 30, 2019, respectively, and $71 and $241 during the three and nine months ended September 30, 2018, respectively,~~ all of which were incremental to signed ~~leases.~~leases, during the three months ended March 31, 2020 and 2019, respectively.

In addition, we capitalized ~~$1,204~~$1,316 and ~~$2,437~~$574 of indirect project costs, ~~related to redevelopment projects during the three and nine months ended September 30, 2019, including,~~which includes, among other costs, ~~$366~~$372 and ~~$1,066~~$365 of internal salaries and related benefits of personnel directly involved in the redevelopment projects and ~~$570~~$785 and ~~$940~~$144 of interest, ~~respectively. We capitalized $499 and $1,463 of indirect project costs~~ related to expansion and redevelopment projects during the three ~~and nine~~ months ended ~~September 30, 2018, including, among other costs, $276~~March 31, 2020 and ~~$689 of internal salaries and related benefits of personnel directly involved in the redevelopment projects and $98 and $348 of interest,~~2019, respectively.

Dispositions

The following table highlights our property dispositions during ~~2018~~2019 and the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020:

Number of
Properties Sold (a)

Square
Footage
Consideration
Aggregate
Proceeds, Net (b)

Debt
Extinguished
2019 Dispositions (through September 30, 2019) 2
236,100
$ 44,750
$ 39,594
$ —
2018 Dispositions 10
1,831,200
$ 201,400
$ 184,109
$ 10,750



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


(a)	~~2018 dispositions include the disposition of Crown Theater, which was classified as held for sale as of December 31, 2017.~~


~~(b)~~	Represents total consideration net of transaction costs, as well as capital and tenant-related costs credited to the buyer at close, as applicable.

In addition to the transactions presented in the preceding table, during the ~~nine months~~year ended ~~September 30,~~December 31, 2019, we received net proceeds of $5,062 in connection with the second and third phases of the sale of a land parcel, which included rights to develop 22 residential units, at One Loudoun Downtown. During the year ended December 31, 2018, we also received (i) net proceeds of $11,820 in connection with the sale of air rights at Circle East, (ii) net proceeds of $1,789 in connection with the sale of the first phase of a land parcel, which included rights to develop eight residential units, at One Loudoun Downtown and (iii) proceeds of $169 from a condemnation award.

Acquisitions

The following table highlights our asset acquisitions during ~~2018~~2019 and the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:

Number of
Assets Acquired
Square Footage Acquisition Price Mortgage Debt
2019 Acquisitions (through September 30, 2019) (a) 3
73,600
$ 29,976
$ —
2018 Acquisition (b) 1
—
$ 25,000
$ —



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

(a)

~~2019 acquisitions include~~2020 acquisition is the ~~purchase of a parcel adjacent to~~fee interest in our ~~Paradise Valley Marketplace multi-tenant retail operating property and a single-user parcel at our Southlake Town Square~~Fullerton Metrocenter multi-tenant retail operating property. ~~The total number of properties~~In connection with this acquisition, we also assumed the lessor position in ~~our portfolio was not affected by either of these transactions.~~


~~(b)~~	~~2018 acquisition is~~ a ~~58-acre land parcel, of which 32 acres are developable, located adjacent to our One Loudoun Downtown multi-tenant retail operating property.~~ground lease with a shadow anchor. The total number of properties in our portfolio was not affected by this transaction.


(b)	In addition to the acquisition of one multi-tenant retail operating property, 2019 acquisitions include the purchase of the following that did not affect our property count: (i) a parcel adjacent to our Paradise Valley Marketplace multi-tenant retail operating property and (ii) a single-user parcel at our Southlake Town Square multi-tenant retail operating property.

Summary of Cash Flows


	Nine Months Ended September 30,									Three Months Ended March 31,
	2019			2018			Change			2020			2019			Change
Net cash provided by operating activities	$	170,688		$	151,708		$	18,980		$	35,042		$	36,955		$	(1,913	)
Net cash (used in) provided by investing activities	(63,023		)	129,725			(192,748		)
Net cash used in financing activities	(104,763		)	(330,332		)	225,569
Net cash used in investing activities										(70,507		)	(28,186		)	(42,321		)
Net cash provided by (used in) financing activities										795,382			(10,830		)	806,212
Increase (decrease) in cash, cash equivalents and restricted cash	2,902			(48,899		)	51,801			759,917			(2,061		)	761,978
Cash, cash equivalents and restricted cash, at beginning of period	19,601			86,335						14,447			19,601
Cash, cash equivalents and restricted cash, at end of period	$	22,503		$	37,436					$	774,364		$	17,540

Cash Flows from Operating Activities

Cash flows from operating activities consist primarily of net income from property operations, adjusted for the following, among others: (i) depreciation and amortization, (ii) provision for impairment of investment properties and (iii) gain on sales of investment properties. Net cash provided by operating activities during the ~~nine~~three months ended ~~September 30, 2019 increased $18,980~~March 31, 2020 decreased $1,913 primarily due to the following:

a ~~$3,708~~$937 increase in cash paid for leasing fees and inducements;

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

ordinary course fluctuations in working capital accounts;

partially offset by

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

an $813 increase in NOI, consisting of an increase in Same Store NOI of ~~$6,298,~~$979, partially offset by a decrease in NOI from properties that were sold or held for sale in ~~2018~~2019 and ~~2019~~2020 and other properties not included in our same store portfolio of ~~$2,590; and~~$166.

During the three months ended March 31, 2020, we distributed $35,387 to common shareholders, which is $345 in excess of net cash provided by operating activities during the period. This is primarily driven by the timing of ordinary course ~~fluctuations~~annual real estate tax payments. We used existing cash and cash equivalents in addition to net cash flows provided by operating activities to fund such distributions.

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

~~partially offset by~~

~~an $816 increase in~~Management believes that cash ~~paid for leasing fees~~flows from operations and ~~inducements;~~existing cash and

~~a $514 increase in~~ cash ~~bonuses paid.~~

equivalents will provide sufficient liquidity to sustain future operations; however, we cannot provide any such assurances.

Cash Flows from Investing Activities

Cash flows from investing activities consist primarily ~~of proceeds from the sales of investment properties, net~~ of cash paid to purchase investment properties and fund capital expenditures, tenant improvements and developments in ~~progress.~~progress, net of proceeds from the sales of investment properties. Net cash flows from investing activities during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$192,748~~$42,321 due to the following:

a ~~$145,665~~$29,766 increase in cash paid to purchase investment properties;

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

a ~~$29,891 increase in cash paid to purchase investment properties. No investment properties were acquired during the nine months ended September 30, 2018;~~

~~an $8,712 increase in capital expenditures and tenant improvements; and~~

~~an $8,480~~$6,874 increase in investment in developments in ~~progress.~~progress;

partially offset by

a $4,581 decrease in capital expenditures and tenant improvements.

For ~~the remainder of 2019,~~2020, we expect to fund redevelopment, expansion and pad development activities, capital expenditures and tenant improvements through (i) cash flows generated from operations, (ii) working capital, including cash on hand of $769,241 as of March 31, 2020, and ~~our unsecured revolving line of credit.~~(iii) capital markets transactions.

Cash Flows from Financing Activities

Cash flows ~~used in~~from financing activities primarily consist of proceeds from our unsecured revolving line of credit, partially offset by (i) repayments of our unsecured revolving line of credit, ~~unsecured term loans and mortgages payable,~~(ii) distribution payments, (iii) principal payments on mortgages payable ~~debt prepayment costs~~ and (iv) payment of loan fees and ~~deposits, partially offset by proceeds from our unsecured revolving line of credit and the issuance of debt instruments.~~deposits. Net cash flows ~~used in~~from financing activities during the ~~nine~~three months ended ~~September 30, 2019 decreased $225,569~~March 31, 2020 increased $806,212 primarily due to the following:

~~a $270,000 increase in proceeds from the Term Loan Due 2024 and the Term Loan Due 2026 during the nine months ended September 30, 2019. No such proceeds were received in 2018;~~

a $100,000 increase in proceeds from the issuance of unsecured notes payable to institutional investors in a private placement transaction during the nine months ended September 30, 2019. No such proceeds were received in 2018;

a $100,000 decrease in repayments of unsecured term loans resulting from the repayment of our unsecured term loan due 2018 during the nine months ended September 30, 2018. No such repayments were made in 2019;

~~a $20,681 decrease in cash paid to repurchase common shares through our common stock repurchase program resulting from the common stock repurchased in 2018. No such repurchases were completed in 2019;~~

~~a $2,880 decrease in distributions paid as a result of a decrease in common shares outstanding due to the repurchase of common shares through our common stock repurchase program in 2018; and~~

~~a $2,879 decrease in the payment of loan fees and deposits;~~

~~partially offset by~~

~~a $242,000~~an $805,704 change in the activity on our unsecured revolving line of credit from net ~~repayments~~proceeds of ~~$7,000~~$26,000 during the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 compared to net ~~repayments~~proceeds of ~~$249,000~~$831,704 during the ~~nine~~three months ended ~~September 30, 2019;~~March 31, 2020; and

a ~~$28,881 increase~~$145 decrease in principal payments on mortgages ~~payable; and~~

~~a $2,360 increase in debt prepayment fees.~~payable.

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

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, except as otherwise disclosed herein, there were no material changes outside the normal course of business to the contractual obligations identified in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Critical Accounting Policies and Estimates

Our ~~2018~~2019 Annual Report on Form 10-K contains a description of our critical accounting policies, including those relating to the acquisition of investment properties, impairment of long-lived assets ~~development~~ and ~~redevelopment projects, and revenue recognition.~~lease income. For the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020, there were no significant changes to these ~~policies except for the policies related to the accounting for leases as a result of the adoption of ASU 2016-02,~~ ~~Leases, as of January 1, 2019 as described in Note 2 – Summary of Significant Accounting Policies and Note 6 – Leases in the accompanying condensed consolidated financial statements.~~policies.

Impact of Recently Issued Accounting Pronouncements

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

Subsequent Events

Subsequent to ~~September 30, 2019,~~March 31, 2020, we:

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

executed amendments to our unsecured debt agreements for our Unsecured Credit Facility, Term Loan Due 2023, Term Loan Due 2024 and Term Loan Due 2026 that changed the covenant calculation for the ~~fourth quarter~~unencumbered interest coverage ratio to include operating results from the most recent four fiscal quarters. Prior to these amendments, the calculation only included operating results from the most recent fiscal quarter. As a result, the updated calculation applies to all unsecured debt instruments to which this covenant relates, including our unsecured revolving line of ~~2019~~credit, all unsecured term loans and all unsecured private placement notes payable.

On May 1, 2020, our board of ~~$0.165625 per share~~directors temporarily suspended future quarterly dividend payments on our outstanding Class A common stock ~~which~~in order to preserve and enhance liquidity and capital positioning. Our board of directors will ~~be paid~~evaluate dividend declaration decisions quarterly and consider REIT taxable income distribution requirements in these deliberations. The timing and amount of dividend resumption depends largely on ~~January 10, 2020 to Class A common shareholders of record at the close of business on December 26, 2019.~~our operating cash flow performance as well as other factors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

As of ~~September 30, 2019~~March 31, 2020, we had $720,000 of variable rate debt based on LIBOR that has been swapped to fixed rate debt through interest rate swaps. Our interest rate swaps as of ~~September 30, 2019~~March 31, 2020 are summarized in the following table:


	Notional Amount		Maturity Date	Fair Value of Derivative Liability		Notional Amount		Maturity Date	Fair Value of Derivative Liability
Unsecured credit facility term loan due 2021	$	250,000	January 5, 2021	$	1,299	$	250,000	January 5, 2021	$	3,158
Term Loan Due 2023	200,000		November 22, 2023	11,748		200,000		November 22, 2023	18,124
Term Loan Due 2024	120,000		July 17, 2024	1,695		120,000		July 17, 2024	6,672
Term Loan Due 2026	150,000		July 17, 2026	3,753		150,000		July 17, 2026	11,916
	$	720,000		$	18,495	$	720,000		$	39,870

For a discussion concerning the scheduled debt maturities and principal amortization of our indebtedness as of ~~September 30, 2019~~March 31, 2020 for the remainder of ~~2019,~~2020, each of the next four years and thereafter and the weighted average interest rates by year to evaluate the expected cash flows and sensitivity to interest rate changes, refer to Note 7 – Debt in the accompanying condensed consolidated financial statements and Part I, “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt Maturities” contained herein.

A decrease of 1% in market interest rates would result in a hypothetical increase in our derivative liability of approximately ~~$27,352.~~$25,013.

The combined carrying amount of our debt is approximately ~~$34,848 lower~~$19,996 higher than the fair value as of ~~September 30, 2019~~March 31, 2020.

We had ~~$24,000~~$849,704 of variable rate debt, excluding $720,000 of variable rate debt that has been swapped to fixed rate debt, with an interest rate of ~~3.09%~~2.04% based upon LIBOR as of ~~September 30, 2019.~~March 31, 2020. An increase in the variable interest rate on this debt constitutes a market risk. If interest rates increase by 1% based on debt outstanding as of ~~September 30, 2019,~~March 31, 2020, interest expense would increase by approximately ~~$240~~$8,497 on an annualized basis.

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

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

ITEM 4. CONTROLS AND PROCEDURES

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

Based on management’s evaluation as of ~~September 30, 2019~~March 31, 2020, our Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of ~~1934)~~1934, as amended) are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer, to allow timely decisions regarding required disclosure.

There were no changes to our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended ~~September 30, 2019~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

~~As a result of~~Except to the ~~potential discontinuation of LIBOR after 2021,~~extent updated below or to the ~~following risk factor is considered relevant to our company,~~extent additional factual information disclosed elsewhere in ~~addition to those that are presented in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018 and in our~~this Quarterly Report on Form 10-Q ~~for~~relates to such factors (including, without limitation, the ~~quarters ended March 31, 2019~~matters discussed in Part I. “Item 2 – Management’s Discussion and ~~June 30, 2019.~~

~~We may be adversely affected by the potential discontinuation~~Analysis of ~~LIBOR.~~

~~In July 2017, the~~ Financial ~~Conduct Authority in the U.K.~~Condition and Results of Operations”), which regulates LIBOR, announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. It is expected that a transition away from the widespread use of LIBOR to alternative interest rates will occur over the course of the next few years. As of September 30, 2019, we had $744,000 of debt that was indexed to LIBOR, including our unsecured credit facility term loan due 2021, unsecured credit facility revolving line of credit, Term Loan Due 2023, Term Loan Due 2024 and Term Loan Due 2026, as well as interest rate swap agreements that hedge the variable cash flows associated with variable rate debt with an aggregate notional amount of $720,000. Of the total $744,000 of debt and $720,000 notional swap amount that is indexed to LIBOR, $494,000 and $470,000, respectively, mature after 2021.

In the event that LIBOR is discontinued, the interest rate for our debt that is indexed to LIBOR will be based on a replacement rate or an alternate base rate as specified in the applicable documentation governing such debt or as otherwise agreed upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings, but the replacement rate or alternate base rate could be higher or more volatile than LIBOR prior to its discontinuance. In addition, we expect that amendments will be made to our interest rate swap agreements that will result in the LIBOR-based swap rate reverting, upon the occurrence of such events, to the same rate that would be expected to be used as the replacement rate or alternate base rate under the related debt agreements. The full impact of the expected transition away from LIBOR and the potential discontinuation of LIBOR after 2021 is not known, but these changes could adversely affect our cash flow, financial condition and results of operations.

~~There~~there have been no ~~other~~ material changes to our risk factors during the three months ended ~~September 30, 2019~~March 31, 2020 compared to those risk factors presented in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

There have been no other material changes to our risk factors during the three months ended March 31, ~~2019 and June 30,~~2020 compared to those risk factors presented in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

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


(a)	Not applicable.


(b)	Not applicable.


(c)	Issuer Purchases of Equity Securities

~~From time to time, employees surrender~~The following table summarizes the number of shares of Class A common stock surrendered to the Company by employees to satisfy their tax withholding obligations in connection with the vesting of common stock and restricted ~~shares. There were no~~ shares ~~of Class A common stock surrendered or repurchased during~~for the ~~three months ended September 30, 2019.~~

~~As of September 30, 2019, $189,105 remained available for repurchases of shares of~~specified periods and amounts outstanding under our common stock ~~under our $500,000 common stock~~ repurchase ~~program, which has no scheduled expiration date.~~program:



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


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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

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

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

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

ITEM 6. EXHIBITS



Exhibit No.		Description

10.1		~~Retention~~First Amendment to Fifth Amended and Restated Agreement, dated ~~July 29, 2019~~as of May 4, 2020, by and ~~between~~among the Registrant as Borrower and ~~Steven P. Grimes (incorporated herein by reference~~KeyBank National Association as Administrative Agent and certain lenders from time to ~~Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on July 31, 2019)~~time parties hereto, as Lenders (filed herewith).
10.2		~~Retention~~Third Amendment to Term Loan Agreement, dated ~~July 29, 2019~~as of May 4, 2020, by and ~~between~~among the Registrant as Borrower and ~~Shane C. Garrison (incorporated herein by reference~~Capital One, National Association as Administrative Agent and certain lenders from time to ~~Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on July 31, 2019)~~time parties hereto, as Lenders (filed herewith).
10.3		First Amendment to Term Loan Agreement, dated as of ~~July 17, 2019,~~May 4, 2020, by and among the Registrant as ~~borrower,~~Borrower and KeyBank National Association as ~~administrative agent, KeyBanc Capital Markets Inc.,~~Administrative Agent and certain lenders from time to time parties hereto, as book runner, KeyBanc Capital Markets Inc., Branch Banking and Trust Company, PNC Capital Markets LLC, TD Bank and Wells Fargo Bank, National Association, as joint lead arrangers, Branch Banking and Trust Company, PNC Bank, National Association, TD Bank and Wells Fargo Bank, National Association, as co-syndication agents, and the initial lenders named therein (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 23, 2019)Lenders (filed herewith).
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
31.2		Certification of Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
32.1		Certification of Chief Executive Officer and Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 (furnished herewith).
101.SCH		Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.^*) (filed herewith).

SIGNATURES

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

RETAIL PROPERTIES OF AMERICA, INC.



By:	/s/ STEVEN P. GRIMES

	Steven P. Grimes
	Chief Executive Officer
	(Principal Executive Officer)
Date:	~~October 30, 2019~~May 6, 2020

By:	/s/ JULIE M. SWINEHART

	Julie M. Swinehart
	Executive Vice President,
	Chief Financial Officer and Treasurer
	(Principal Financial Officer and
	Principal Accounting Officer)
Date:	~~October 30, 2019~~May 6, 2020

4847



PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2623

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4442

Item 4.	Controls and Procedures	4543

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	4644

Item 1A.	Risk Factors	4644

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4645

Item 3.	Defaults Upon Senior Securities	4645

Item 4.	Mine Safety Disclosures	4645

Item 5.	Other Information	4746

Item 6.	Exhibits	4746

SIGNATURES		4847



	Unvested Restricted Shares		Weighted Average Grant Date Fair Value per Restricted Share
Balance as of January 1, 2019	440		$	13.40
Shares granted (a)	469		$	12.22
Shares vested	(233	)	$	13.31
Shares forfeited	(16	)	$	12.77
Balance as of September 30, 2019 (b)	660		$	12.61



	Lease Payments
2019	$	90,896
2020	350,666
2021	312,795
2022	264,906
2023	216,923
2024	162,135
Thereafter	504,545
Total	$	1,902,866



	Lease Payments
2019	$	351,145
2020	314,081
2021	274,135
2022	227,417
2023	180,199
Thereafter	569,758
Total	$	1,916,735



	Lease Obligations
2019	$	1,401
2020	6,076
2021	6,110
2022	6,140
2023	6,102
2024	5,698
Thereafter	247,795
Total	$	279,322
Adjustment for discounting	(188,380		)
Lease liabilities as of September 30, 2019	$	90,942



	Lease Obligations
2019	$	6,448
2020	6,656
2021	6,716
2022	6,761
2023	6,769
Thereafter	279,916
Total	$	313,266



Derivatives in Cash Flow Hedging Relationships	Amount of Loss (Gain) Recognized in Other Comprehensive Income on Derivative						Location of Loss (Gain) Reclassified from Accumulated Other Comprehensive Income (AOCI) into Income	Amount of Loss (Gain) Reclassified from AOCI into Income						Total Interest Expense Presented in the Statements of Operations in which the Effects of Cash Flow Hedges are Recorded
	Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
2019	$	7,159		$	16,760		Interest expense	$	7		$	(213	)	$	25,084	$	59,877
2018	$	(1,336	)	$	(5,141	)	Interest expense	$	(473	)	$	(665	)	$	21,336	$	56,918



	September 30, 2019		September 30, 2018
Number of properties for which indicators of impairment were identified	2		2		(a)
Less: number of properties for which an impairment charge was recorded	1		—
Less: number of properties that were held for sale as of the date the analysis was performed for which indicators of impairment were identified but no impairment charge was recorded	—		—
Remaining properties for which indicators of impairment were identified but no impairment charge was considered necessary	1		2

Weighted average percentage by which the projected undiscounted cash flows exceeded its respective carrying value for each of the remaining properties (b)	20	%	33	%



Property Name	MSA	September 30, 2019
Active developments/redevelopments:
Circle East	Baltimore	$	31,334
One Loudoun Downtown	Washington, D.C.	18,852
Carillon	Washington, D.C.	24,443
		74,629
Land held for future development:
One Loudoun Uptown	Washington, D.C.	25,450
Total developments in progress		$	100,079



	Number of Properties Sold (a)	Square Footage	Consideration		Aggregate Proceeds, Net (b)		Debt Extinguished
2019 Dispositions (through September 30, 2019)	2	236,100	$	44,750	$	39,594	$	—
2018 Dispositions	10	1,831,200	$	201,400	$	184,109	$	10,750