SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended ~~June 30, 2017~~March 31, 2018

Washington Prime Group Inc.

Washington Prime Group, L.P.

(Exact name of Registrant as specified in its charter)

Indiana (Both Registrants)

(State of incorporation or organization)



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

Washington Prime Group Inc. Yes x No ¨o

Washington Prime Group, L.P. Yes x No ¨o

Washington Prime Group Inc. (Check One):

Large accelerated filer x Accelerated filer ¨o

Non-accelerated filer ¨o Smaller reporting company ¨o

Emerging growth company ¨o

(Do not check if a smaller reporting company)

Washington Prime Group, L.P. (Check One):

Large accelerated filer ¨o Accelerated filer ¨o

Non-accelerated filer x Smaller reporting company ¨o

Emerging growth company ¨o

(Do not check if a smaller reporting company)

Washington Prime Group Inc. Yes ¨o No x

Washington Prime Group, L.P. Yes ¨o No x

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

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

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

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

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

FINANCIAL INFORMATION

Washington Prime Group Inc.

Unaudited Consolidated Balance Sheets

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

The accompanying notes are an integral part of these statements.

Washington Prime Group Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income

(dollars in thousands, except per share amounts)

The accompanying notes are an integral part of these statements.

Washington Prime Group Inc.

Unaudited Consolidated Statements of Cash Flows

(dollars in thousands)

The accompanying notes are an integral part of these statements.

Washington Prime Group Inc.

Unaudited Consolidated Statement of Equity

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

Preferred Series H Preferred Series I Common
Stock Capital in
Excess of
Par Value Accumulated Deficit Accumulated Other Comprehensive Income Total
Stockholders'
Equity Non-
Controlling
Interests Total
Equity Redeemable Non-Controlling Interests
Balance, December 31, 2016 $ 104,251
$ 98,325
$ 19
$ 1,232,638
$ (346,706 ) $ 4,916
$ 1,093,443
$ 169,368
$ 1,262,811
$ 10,660
Exercise of stock options —
—
—
13
—
—
13
—
13
—
Redemption of limited partner units —
—
—
—
—
—
—
(12 ) (12 ) —
Exchange of limited partner units —
—
—
2,463
—
—
2,463
(2,463 ) —
—
Other —
—
—
(73 ) —
—
(73 ) —
(73 ) —
Equity-based compensation —
—
—
2,631
—
—
2,631
664
3,295
—
Adjustments to noncontrolling interests —
—
—
(167 ) —
—
(167 ) 167
—
—
Purchase of redeemable noncontrolling interest —
—
—
565
—
—
565
—
565
(7,395 )
Distributions on common shares/units ($0.50 per common share/unit) —
—
—
—
(93,373 ) —
(93,373 ) (17,587 ) (110,960 ) —
Distributions declared on preferred shares —
—
—
—
(7,016 ) —
(7,016 ) —
(7,016 ) —
Other comprehensive income —
—
—
—
—
241
241
58
299
—
Net income, excluding $120 of distributions to preferred unitholders —
—
—
—
151,785
—
151,785
27,219
179,004
—
Balance, June 30, 2017 $ 104,251
$ 98,325
$ 19
$ 1,238,070
$ (295,310 ) $ 5,157
$ 1,150,512
$ 177,414
$ 1,327,926
$ 3,265



	Preferred Series H		Preferred Series I		Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income		Total Stockholders' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
Balance, December 31, 2017	$	104,251	$	98,325	$	19	$	1,240,483		$	(350,594	)	$	6,920	$	1,099,404		$	167,718		$	1,267,122		$	3,265
Cumulative effect of accounting standards	—		—		—		(389		)	1,890			584		2,085			389			2,474			—
Redemption of limited partner units	—		—		—		—			—			—		—			(11		)	(11		)	—
Other	—		—		—		(36		)	—			—		(36		)	—			(36		)	—
Equity-based compensation	—		—		—		1,523			—			—		1,523			219			1,742			—
Adjustments to noncontrolling interests	—		—		—		397			—			—		397			(397		)	—			—
Distributions on common shares/units ($0.25 per common share/unit)	—		—		—		—			(46,909		)	—		(46,909		)	(8,695		)	(55,604		)	—
Distributions declared on preferred shares	—		—		—		—			(3,508		)	—		(3,508		)	—			(3,508		)	—
Other comprehensive income	—		—		—		—			—			4,396		4,396			821			5,217			—
Net income, excluding $60 of distributions to preferred unitholders	—		—		—		—			17,524			—		17,524			2,601			20,125			—
Balance, March 31, 2018	$	104,251	$	98,325	$	19	$	1,241,978		$	(381,597	)	$	11,900	$	1,074,876		$	162,645		$	1,237,521		$	3,265

The accompanying notes are an integral part of this statement.

Washington Prime Group, L.P.

Unaudited Consolidated Balance Sheets

(dollars in thousands, except unit amounts)

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Operations and Comprehensive Income

(dollars in thousands, except per unit amounts)

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Cash Flows

(dollars in thousands)

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statement of Equity

(dollars in thousands, except per unit amounts)

The accompanying notes are an integral part of this statement.

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

Condensed Notes to Unaudited Consolidated Financial Statements

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

Washington Prime Group Inc. (“WPG Inc.”) is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Code"). ~~REITs~~WPG Inc. will generally ~~not be liable~~qualify as a REIT for U.S. federal ~~corporate~~ income ~~taxes~~tax purposes as long as ~~they continue~~it continues to distribute not less than ~~100%~~90% of ~~their~~its REIT taxable income and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. Washington Prime Group, L.P. (“WPG L.P.”) is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of ~~June 30, 2017,~~March 31, 2018, our assets consisted of material interests in ~~110~~108 shopping centers in the United States, consisting of ~~community shopping centers~~open air properties and enclosed retail properties, comprised of approximately 6059 million square feet of gross leasable area.

Unless the context otherwise requires, references to "WPG," the "Company," “we,” “us” or “our” refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated basis.

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

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

~~Leadership Transition~~

On June 20, 2016, the Company announced the following leadership changes: (1) the resignation of Mr. Michael P. Glimcher as the Company’s Chief Executive Officer and Vice Chairman of the Board; (2) the appointment of Mr. Louis G. Conforti, a current Board member, as Interim Chief Executive Officer; (3) the resignation of Mr. Mark S. Ordan as non-executive Chairman of the Board; and (4) the resignation of Mr. Niles C. Overly from the Board. In July of 2016, the Company terminated some executive and non-executive personnel as part of an effort to reduce overhead costs.

In connection with and as part of the aforementioned management changes, the Company recorded aggregate charges of $29.9 million during the three and six months ended June 30, 2016, of which $25.8 million related to severance and restructuring-related costs, including $9.5 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards, and $4.1 million related to fees and expenses incurred in connection with the Company's investigation of various strategic alternatives, which costs are included in merger, restructuring and transaction costs in the accompanying consolidated statements of operations and comprehensive income.

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The accompanying consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. Due to the seasonal nature of certain operational activities, the results for the interim period ended ~~June 30, 2017~~March 31, 2018 are not necessarily indicative of the results to be expected for the full year.

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

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

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

These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by GAAP for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading. These consolidated unaudited financial statements should be read in conjunction with the audited consolidated and combined financial statements and related notes included in the combined ~~2016~~2017 Annual Report on Form 10-K for WPG Inc. and WPG L.P. (the ~~"2016~~"2017 Form 10-K").

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

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

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

There have been no changes during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 to any of our previous conclusions about whether an entity qualifies as a VIE or whether we are the primary beneficiary of any previously identified VIE. During the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, we did not provide financial or other support to a previously identified VIE that we were not previously contractually obligated to provide.

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

As of ~~June 30, 2017,~~March 31, 2018, our assets consisted of material interests in ~~110~~108 shopping centers. The consolidated financial statements as of that date reflect the consolidation of 9391 wholly owned properties and four additional properties that are less than wholly owned, but which we control or for which we are the primary beneficiary. We account for our interests in the remaining 13 properties, or the joint venture properties, using the equity method of ~~accounting, as we have determined that we have significant influence over their operations.~~accounting. While we manage the day-to-day operations of the joint venture properties, we do not control the operations as we have determined that our partner or partners have substantive participating rights with respect to the assets and operations of these joint venture properties.

We allocate net operating results of WPG L.P. to third parties and to WPG Inc. based on the partners' respective weighted average ownership interests in WPG L.P. Net operating results of WPG L.P. attributable to third parties are reflected in net income attributable to noncontrolling interests. WPG Inc.'s weighted average ownership interest in WPG L.P. was ~~84.2%~~84.3% and 84.1% for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, WPG Inc.'s ownership interest in WPG L.P. was ~~84.3%~~84.4% and ~~84.1%~~84.3%, respectively. We adjust the noncontrolling limited partners' interests at the end of each period to reflect their interest in WPG L.P.

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

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

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


3.	Summary of Significant Accounting Policies

Fair Value Measurements

The Company measures and discloses its fair value measurements in accordance with Accounting Standards Codification ("ASC") Topic 820 - “Fair Value Measurement” (“Topic 820”). The fair value hierarchy, as defined by Topic 820, contains three levels of inputs that may be used to measure fair value as follows:

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

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

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

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under Topic 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions.

Use of Estimates

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

~~Segment Disclosure~~

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

~~New Accounting Pronouncements~~

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 revises GAAP by offering a single comprehensive revenue recognition standard instead of numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. An entity has the option to apply the provisions of ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this standard recognized at the date of initial application. On July 9, 2015, the FASB announced it would defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also decided to permit early adoption of the standard, but not before the original effective date of December 15, 2016. This new standard will be effective for the Company on January 1, 2018 and, upon effectiveness, certain of our revenue streams will be impacted. The impacted revenue streams primarily consist of fees earned from management, development and leasing services provided to joint ventures in which we own an interest and other ancillary income earned from our properties. During the six months ended June 30, 2017, these revenues were approximately 2% of consolidated revenue. We expect that fee income earned from our joint ventures for the above-mentioned services will generally be recognized in a manner consistent with our current measurement and patterns of recognition. As a result, we do not expect the adoption of this standard to have a significant impact on our consolidated results of operations upon adoption in 2018. We expect to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of adoption.

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

~~In February 2017,~~Segment Disclosure

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

New Accounting Pronouncements

Adoption of New Standards

On January 1, 2018, we adopted Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" using the modified retrospective approach. ASU 2014-09 revised GAAP by offering a single comprehensive revenue recognition standard instead of numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. The impacted revenue streams primarily consist of fees earned from management, development and leasing services provided to joint ventures in which we own an interest and other ancillary income earned from our properties. Upon adoption, we recorded a cumulative-effect adjustment to increase equity of approximately $2.5 million related to changes in the revenue recognition pattern of lease commissions earned by the Company from our joint ventures. We do not expect the adoption of ASU 2014-09 to have a material impact to our net income on an ongoing basis.

Additionally, we adopted the clarified scope guidance ~~that clarified the scope~~ of ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial ~~Assets," which was finalized~~Assets" in conjunction with ASU ~~2014-09.~~2014-09, using the modified retrospective approach. ASC 610-20 applies to the sale, transfer and derecognition of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales, and eliminates the guidance specific to real estate in ASC 360-20. With respect to full disposals, ~~we expect~~ the recognition ~~pattern to~~will generally be ~~generally~~ consistent with our current measurement and pattern of recognition. With respect to partial sales of real estate to joint ventures, ~~such as the O'Connor Joint Venture II, as defined below (see Note 5 - "Investment in Unconsolidated Entities, at Equity"),~~ the new guidance ~~will require~~requires us to recognize a full gain where an equity investment is retained. These transactions could result in a basis difference as we will be required to measure our retained equity interest at fair value, whereas the joint venture may continue to measure the assets received at carryover basis. ~~The guidance is effective at~~No adjustments were required upon adoption of this standard.

On January 1, 2018, we adopted ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." ASU 2017-12 aims to reduce complexity in cash value hedges of interest rate risk and eliminates the requirement to separately measure and report hedge ineffectiveness, generally requiring the entire change in the fair value of the hedging instrument to be presented in the same ~~time~~income statement line as the hedged item. Upon adoption, we recorded a cumulative-effect adjustment of $584 between accumulated other comprehensive income and retained earnings.

The cumulative effect of the changes to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 and ASU 2017-12 were as follows:



	Balance at December 31, 2017			Adjustments Due to ASU 2014-09			Adjustments Due to ASU 2017-12			Balance at January 1, 2018
Balance Sheet
Liabilities
Accounts payable, accrued expenses, intangibles, and deferred revenues	$	264,998		$	(2,474	)	$	—		$	262,524

Equity
Capital in excess of par value	$	1,240,483		$	(389	)	$	—		$	1,240,094
Accumulated deficit	$	(350,594	)	$	2,474		$	(584	)	$	(348,704	)
Accumulated other comprehensive income	$	6,920		$	—		$	584		$	7,504
Noncontrolling interests	$	167,718		$	389		$	—		$	168,107

In accordance with ASU 2014-09 requirements, the disclosure of the impact of adoption on our consolidated statement of operations for three months ended March 31, 2018 and consolidated balance sheet as of March 31, 2018 was as follows:

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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



	For the Three Months Ended March 31, 2018
	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Consolidated Statements of Operations
Revenues
Other income	$	6,343	$	6,203	$	140



	March 31, 2018
	As Reported			Balances Without Adoption of ASU 2014-09			Effect of Change Higher/(Lower)
Balance Sheet
Liabilities
Accounts payable, accrued expenses, intangibles, and deferred revenues	$	232,673		$	235,287		$	(2,614	)

Equity
Capital in excess of par value	$	1,241,978		$	1,242,387		$	(409	)
Accumulated deficit	$	(381,597	)	$	(384,211	)	$	2,614
Noncontrolling interests	$	162,645		$	162,236		$	409

On January 1, 2018, we ~~expect to adopt the standard~~adopted ASU 2016-15, "Statement of Cash Flows (Topic 230)" and ASU 2016-18 "Restricted Cash" using ~~the modified~~a retrospective transition approach, which changed our statements of cash flows and related disclosures for all periods presented. ASU 2016-15 is intended to reduce diversity in practice with respect to how certain transactions are classified in the statement of cash flows and its adoption had no impact on our financial statements. ASU 2016-18 requires that a ~~cumulative effect adjustment~~statement of cash flows explain the change during the period in total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents.

The following is a summary of our cash, cash equivalents and restricted cash total as presented in our statements of cash flows for the three months ended March 31, 2018 and 2017:



	For the Three Months Ended March 31,
	2018		2017
Cash and cash equivalents	$	45,871	$	94,531
Restricted cash	28,520		30,849
Total cash, cash equivalents and restricted cash	$	74,391	$	125,380

For the three months ended March 31, 2017, restricted cash related to cash flows provided by operating activities of $1.1 million and restricted cash related to cash flows used in investing activities of $0.6 million were reclassified. Restricted cash primarily relates to cash held in escrow for payment of real estate taxes and property reserves for maintenance, expansion or leasehold improvements as required by our mortgage loans. Restricted cash is included in "Deferred costs and other assets" in the accompanying balance sheets as of ~~the date of adoption.~~March 31, 2017 and December 31, 2017.

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

New Standards Issued But Not Yet Adopted

In February 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. It is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In March 2018, the FASB indicated it intended to approve an amendment that provides an entity the optional transition method to initially account for the impact of the adoption ASU 2016-02 with a cumulative adjustment to retained earnings on January 1, 2019 (the effective date of the ASU), rather than January 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. From a lessee perspective, the Company currently has ~~five~~four material ground leases and two material office leases that, under the new guidance, will result in the recognition of a lease liability and corresponding right-of-use asset.

From a lessor perspective, the new guidance remains mostly similar to current rules, though contract consideration will now be allocated between lease and non-lease components. Non-lease component allocations will be recognized under ASU 2014-09, and we expect that this will result in a different pattern of recognition for certain non-lease components, including for fixed common-area ("CAM") revenues. However, the FASB's intended amendment to ASU 2016-02 referred to above allows lessors to elect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. This practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) the combined single component would be classified as an operating lease. We believe we meet the criteria to use this practical expedient. In addition, ASU 2016-02 limits the capitalization of leasing costs to initial direct costs, which will likely result in a reduction to our capitalized leasing costs and an increase to general and administrative expenses, though the amount of such changes is highly dependent upon the leasing compensation structures in place at the time of adoption. For the three months ended March 31, 2018 and 2017, the Company deferred $4.1 million and $3.9 million of internal leasing costs, respectively. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements.

~~In August 2016,~~Revenue

The following table disaggregates our revenue by major source for the ~~FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230)." ASU 2016-15~~three months ended March 31, 2018:



	For the Three Months Ended March 31, 2018
	Minimum rent		Overage rent		Tenant reimbursements		Other income		Total
Lease related	$	123,339	$	2,014	$	48,644	$	1,766	$	175,763
Ancillary	—		—		—		1,649		1,649
Fee related	—		—		—		2,342		2,342
Other⁽¹⁾	—		—		—		586		586
Total revenues	$	123,339	$	2,014	$	48,644	$	6,343	$	180,340

⁽¹⁾Primarily relates to insurance proceeds received from property insurance claims.

Minimum Rent

Minimum rent is intended to reduce diversity in practice with respect to how certain transactions are classified in the statement of cash flows. It is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted. In addition, in November 2016, the Emerging Issues Task Force ("EITF") of the FASB issued EITF Issue 16-A "Restricted Cash," requiring that a statement of cash flows explain the change during the period in total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is also effective for fiscal years beginning after December 15, 2017, including interim periods. These new standards require a retrospective transition approach. The Company has $27.1 million and $29.2 million of restricted cash on its consolidated balance sheets as of June 30, 2017 and December 31, 2016, respectively, whose cash flow statement classification will change to align with the new guidance upon our adoption of the EITF. We are currently evaluating the impact of the adoption of these new standards.

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business," that provides guidance to assist entities with evaluating when a set of transferred assets and activities (set) is a business. The new guidance requires an acquirer to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of assets; if so, the set of transferred assets and activities is not a business. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted. The new guidance will be appliedrecognized on a ~~prospective~~straight-line basis ~~for transactions that occur within~~over the ~~period~~terms of adoption. Upon adoption of this standard, the Company anticipates that more property acquisitions will be accounted for under asset acquisition accounting rather than business combination accounting, which will result in the capitalization of transactions costs rather than expensing of said costs under the current guidance. We early adopted this standard prospectively as of January 1, 2017, as permitted under the standard.

~~Deferred Costs~~their respective leases. Minimum rent also includes accretion related to above-market and ~~Other Assets~~

~~On January 4, 2017, the remaining $15.6 million outstanding on the promissory note receivable~~below-market lease intangibles related to the ~~January 29, 2016 sale~~acquisition of ~~Forest Mall, located in Fond Du Lac, Wisconsin, and Northlake Mall, located in Atlanta, Georgia, was received by~~operating properties. We amortize any tenant inducements as a reduction of revenue utilizing the ~~Company in full. The proceeds were used to reduce corporate debt.~~

~~During~~straight-line method over the ~~six months ended June 30, 2017, the buyer of Knoxville Center, located in Knoxville, Tennessee, amended and extended the maturity~~term of the ~~promissory note receivable that was issued in connection with the August 19, 2016 sale~~related lease or occupancy term of the ~~property. In conjunction with~~tenant, if shorter.

Overage Rent

A large number of our retail tenants are also required to pay overage rents based on sales over a stated base amount during the ~~amended terms,~~lease year. We recognize overage rents only when each tenant's sales exceed the ~~buyer paid the Company $0.5 million of the outstanding principal balance.~~applicable sales threshold as defined in their lease.

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

~~Under~~Tenant Reimbursements

A substantial portion of our leases require the ~~amended~~tenant to reimburse us for a material portion of our property operating expenses, including CAM, real estate taxes and ~~extended terms,~~insurance. Such property operating expenses typically include utility, insurance, security, janitorial, landscaping, food court and other administrative expenses. Tenant reimbursements are established in the ~~buyer shall pay~~leases or computed based upon a formula related to real estate taxes, insurance and other property operating expenses and are recognized as revenues in the ~~Company monthly principal~~period they are earned. When not reimbursed by the fixed CAM component, CAM expense reimbursements are based on the tenant's proportionate share of the allocable operating expenses and ~~interest payments~~CAM capital expenditures for the property. We accrue reimbursements from tenants for recoverable portions of ~~approximately $0.1 million until December 31, 2017, at which time~~all these expenses as revenue in the ~~outstanding principal balance is due. As of June 30, 2017,~~period the ~~outstanding principal balance was $5.6 million~~applicable expenditures are incurred. We recognize differences between estimated recoveries and the ~~buyer was current on~~final billed amounts in the subsequent year.

Other Income

Lease related: We collect lease termination income from tenants to allow for the tenant to vacate their ~~principal and interest payments.~~

~~Redeemable Noncontrolling Interests for WPG Inc.~~

~~During the six months ended June 30, 2017, but~~space prior to their scheduled lease termination date. We recognize lease termination income in the ~~completion of~~period when a termination agreement is signed, collectability is assured, and we are no longer obligated to provide space to the ~~O'Connor Joint Venture II transaction (see Note 5 - "Investment~~tenant. In the event that a tenant is in ~~Unconsolidated Entities, at Equity" for further details),~~bankruptcy when the ~~Company purchased all of the redeemable noncontrolling interest equity owned by unaffiliated~~termination agreement is signed, termination fee income is deferred and recognized when it is received.

Ancillary: We seek to monetize our common areas through robust ancillary programs. These programs include destination holiday experiences, customer service programs, sponsored children's play areas and local events, and static and digital media initiatives. We enter into agreements with unrelated third parties under these programs and charge a negotiated fee in exchange for providing the unrelated third party access to the common area as defined under the respective agreements. We recognize the fee as revenue as we satisfy our performance obligation, which typically occurs over one year.

Fee related: We collect fee income primarily from our unconsolidated joint ventures in exchange for providing management, leasing, and development services. Management fees are charged as a percentage of revenues (as defined in the ~~joint venture entity that owned Arbor Hills, located in Ann Arbor, Michigan (the "Arbor Hills Venture")~~applicable management agreements) and are recognized as revenue as we render such services. Leasing fees are charged on a fixed amount per square foot signed or a percentage of net rent negotiated within the ~~joint venture that owned Classen Curve~~underlying lease and ~~The Triangle at Classen Curve, each located in Oklahoma City, Oklahoma~~are recognized upon lease execution. Development fees are charged on a contractual percentage of hard costs to develop the respective asset and ~~Nichols Hills Plaza, located in Nichols Hills, Oklahoma (the "Oklahoma City Properties Venture," collectively). As of June 30, 2017,~~are recognized as we satisfy our obligation to provide the ~~only remaining redeemable noncontrolling interests relate to the outstanding WPG L.P. 7.3% Series I-1 Preferred Units (the "Series I-1 Preferred Units").~~development services.


4.	Investment in Real Estate

~~2017~~2018 Dispositions

On ~~June 7, 2017,~~January 12, 2018, we completed the sale of ~~Morgantown Commons, located in Morgantown, West Virginia,~~the first tranche of restaurant outparcels to FCPT Acquisitions, LLC ("Four Corners") pursuant to the purchase and sale agreement executed on September 20, 2017 between the Company and Four Corners. The first tranche consisted of 10 restaurant outparcels, with an ~~unaffiliated private real estate investor for a~~allocated purchase price of approximately ~~$6.7~~$13.7 million. The net proceeds of approximately $13.5 million were used to fund a portion of the acquisition of the Sears parcels on April 11, 2018 (see Note 11 - "Subsequent Events") and for general corporate purposes. Additionally, the Company expects to close on the remaining outparcels during the second half of 2018, subject to due diligence and closing conditions.

~~On May 16,~~ In connection with the 2018 disposition activities, the Company recorded a net gain of $8.2 million for the three months ended March 31, 2018, which is included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income.

2017 we completed the sale of an 80,000 square foot vacant anchor parcel at Indian Mound Mall, located in Heath, Ohio, to an unaffiliated private real estate investor for a purchase price of approximately $0.8 million. The net proceeds were used for general corporate purposes.Dispositions

On February 21, 2017, we completed the sale of Gulf View Square, located in Port Richey, Florida, and River Oaks Center, located in Chicago, Illinois, to unaffiliated private real estate investors for an aggregate purchase price of $42.0 ~~million, which was classified as real estate held for sale on the accompanying consolidated balance sheet as of December 31, 2016.~~million. The net proceeds from the transaction were used to reduce corporate debt.

On January 10, 2017, we completed the sale of Virginia Center Commons, located in Glen Allen, Virginia, to an unaffiliated private real estate investor for a purchase price of $9.0 ~~million, which was classified as real estate held for sale on the accompanying consolidated balance sheet as of December 31, 2016.~~million. The net proceeds from the transaction were used to reduce corporate debt.

In connection with the ~~sales noted above,~~2017 disposition activities, the Company recorded a net ~~losses~~gain of ~~$0.7~~$0.1 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017, which ~~are~~is included in gain ~~(loss)~~ on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income.

~~2016 Dispositions~~

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

~~On January 29, 2016, the Company completed the sale of Forest Mall~~Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

(dollars in thousands, except share, unit and Northlake Mall to unaffiliated private real estate investors for an aggregate purchase price of $30.0 million. The net proceeds from the transaction were used to reduce the balance outstanding under the Revolver,per share amounts and where indicated as ~~defined below (see Note 6 - "Indebtedness").~~in millions or billions)

In connection with the sale noted above, the Company recorded a $2.3 million loss, which is included in gain (loss) on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income for the six months ended June 30, 2016.

On June 9, 2016 and April 28, 2016, Merritt Square Mall and Chesapeake Square were transitioned to the lenders through a deed in lieu of foreclosure, respectively (see Note 6 - "Indebtedness" for further discussion).

Impairment

During the first quarter of 2017, the Company entered into a purchase and sale agreement to dispose of Morgantown Commons, which was sold in the second quarter of 2017. We shortened the hold period used in assessing impairment for the asset during the quarter ended March 31, 2017, which resulted in the carrying value not being recoverable from the expected cash flows. The purchase offer represented the best available evidence of fair value for this property. We compared the fair value to the carrying value, which resulted in the recording of an impairment charge of approximately $8.5 million in the accompanying consolidated statements of operations and comprehensive income for the ~~six~~three months ended ~~June 30,~~March 31, 2017.

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

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

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


5.	Investment in Unconsolidated Entities, at Equity

The Company's investment activity in unconsolidated real estate entities during the ~~six~~three months ended ~~June 30,~~March 31, 2018 and March 31, 2017 ~~and June 30, 2016~~ consisted of investments in the following material joint ventures:

The O'Connor Joint Venture I

This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of five enclosed retail properties and related outparcels, consisting of the following: The Mall at Johnson City located in Johnson City, Tennessee; Pearlridge Center located in Aiea, Hawaii; Polaris Fashion Place® located in Columbus, Ohio; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retained management, leasing, and development responsibilities for the O'Connor Joint Venture I.

On March 2, 2017, the O'Connor Joint Venture I closed on the purchase of Pearlridge Uptown II, a ~~180,000~~153,000 square foot wing of Pearlridge Center, for a gross purchase price of $70.0 million.

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

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

The O'Connor Joint Venture II

During the quarter ended June 30, 2017, we completed an additional joint venture transaction with O'Connor Mall Partners, L.P. ("O'Connor"), an unaffiliated third party and our partner in the O'Connor Joint Venture I, with respect to the ownership and operation of seven ~~of the Company's~~ retail properties and certain related outparcels, ~~(the "O'Connor Joint Venture II"),~~ consisting of the following: The Arboretum, located in Austin, Texas; Arbor ~~Hills; the~~Hills, located in Ann Arbor, Michigan; Classen Curve and The Triangle at Classen Curve, each located in Oklahoma City, ~~Properties;~~Oklahoma and Nichols Hills Plaza, located in Nichols Hills, Oklahoma (the "Oklahoma City Properties"); Gateway Centers, located in Austin, Texas; Malibu Lumber Yard, located in Malibu, California; Palms Crossing I and II, located in McAllen, Texas; and The Shops at Arbor Walk, located in Austin, Texas. ~~The transaction valued the properties at $598.6 million before closing adjustments and debt assumptions.~~ Under the terms of the ~~joint venture~~ agreement, we retained a ~~non-controlling~~ 51% noncontrolling interest in the O'Connor Joint Venture II and sold the remaining 49% interest to O'Connor. The transaction generated net proceeds to the Company of approximately $138.9 million, after taking into consideration costs associated with the transaction and the assumption of debt (including the new mortgage loans on The Arboretum, Gateway Centers, and Oklahoma City Properties which closed prior to the joint venture transaction; see Note 6 - "Indebtedness" for net proceeds to the Company from the new mortgage loans), which we used to reduce the Company's debt as well as for general corporate purposes. Since we no longer control the operations of the properties included in the O'Connor Joint Venture II, we deconsolidated the properties and recorded a gain in connection with this partial sale of $126.1 million, which is included in gain (loss) on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2017. The gain was recorded pursuant to ASC 360-20 and calculated based upon proceeds received, less 49% of the book value of the deconsolidated net assets. Our retained 51% non-controlling equity method interest was valued at historical cost based upon the pro rata book value of the retained interest in the net assets. We retained management and leasing responsibilities for the properties included in the O'Connor Joint Venture II, though our partner's substantive participating rights over certain decisions most important to the operations of the O'Connor Joint Venture II preclude our control and consolidation of this venture.

~~In connection with the formation of this joint venture, we recorded transaction costs of approximately $5.4 million as part of our basis in this investment.~~

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

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

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

II.

The Seminole Joint Venture

This investment consists of a 45% legal interest held by the Company in Seminole Towne Center, an approximate 1.1 million square foot enclosed regional retail property located in the Orlando, Florida area. The Company's effective financial interest in this property (after preferences) is estimated to be approximately ~~22%~~8% for ~~2017.~~2018. We retain management and leasing responsibilities for the Seminole Joint Venture.

Individual agreements specify which services the Company is to provide to each joint venture. The Company, through its affiliates, provide management, development, construction, marketing, leasing and legal services for a fee to each of the joint ventures described above. Related to performing these services, we recorded management fees of $1.9 million and $3.5 million for the three and six months ended June 30, 2017, respectively, and $1.8 million and $3.2 million for the three and six months ended June 30, 2016, respectively, which are included in other income in the accompanying consolidated statements of operations and comprehensive income. Advances to the O'Connor Joint Venture I and O'Connor Joint Venture II totaled ~~$2.5~~$4.4 million and $4.3 million as of ~~June 30, 2017~~March 31, 2018 and ~~with respect to the O'Connor Joint Venture I only,~~ December 31, ~~2016,~~2017, respectively, which isare included in investment in and advances to unconsolidated entities, at equity in the accompanying consolidated balance sheets. Management deems this balance to be collectible and anticipates repayment within one year.

The following table presents the combined statements of operations for the O'Connor Joint Venture II from May 12, 2017, and in the case of Malibu Lumber Yard June 13, 2017, through June 30, 2017 and the O'Connor Joint Venture I, the Seminole Joint Venture, and an indirect 12.5% ownership interest in certain real estate for all periods presented during which the Company accounted for these investments as unconsolidated entities for the three and six months ended June 30, 2017 and 2016:

For the Three Months Ended June 30, For the Six Months Ended June 30,
2017 2016 2017 2016
Total revenues $ 58,852
$ 47,494
$ 107,286
$ 93,806
Operating expenses 24,404
19,257
44,995
38,562
Depreciation and amortization 22,225
19,680
41,259
39,724
Operating income 12,223
8,557
21,032
15,520
Interest expense, taxes, and other, net (11,574 ) (8,277 ) (20,033 ) (16,165 )
Net income (loss) from the Company's unconsolidated real estate entities 649
280
999
(645 )
Our share of loss from the Company's unconsolidated real estate entities $ (172 ) $ (508 ) $ (616 ) $ (1,669 )


6.	~~Indebtedness~~

~~Mortgage Debt~~

~~Total mortgage indebtedness at June 30, 2017 and December 31, 2016 was as follows:~~

June 30,
2017 December 31,
2016
Face amount of mortgage loans $ 1,411,895
$ 1,610,429
Fair value adjustments, net 9,884
12,661
Debt issuance cost, net (4,253 ) (5,010 )
Carrying value of mortgage loans $ 1,417,526
$ 1,618,080

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

The following table presents the combined balance sheets for the O'Connor Joint Venture I, O'Connor Joint Venture II, the Seminole Joint Venture, and an indirect 12.5% ownership interest in certain real estate as of March 31, 2018 and December 31, 2017:



	March 31, 2018		December 31, 2017
Assets:
Investment properties at cost, net	$	1,961,419	$	1,972,208
Construction in progress	43,139		44,817
Cash and cash equivalents	31,313		40,955
Tenant receivables and accrued revenue, net	30,869		30,866
Deferred costs and other assets ⁽¹⁾	174,266		174,665
Total assets	$	2,241,006	$	2,263,511
Liabilities and Members’ Equity:
Mortgage notes payable	$	1,299,838	$	1,302,143
Accounts payable, accrued expenses, intangibles, and deferred revenues⁽²⁾	150,573		148,273
Total liabilities	1,450,411		1,450,416
Members’ equity	790,595		813,095
Total liabilities and members’ equity	$	2,241,006	$	2,263,511
Our share of members’ equity, net	$	402,800	$	414,245

Our share of members’ equity, net	$	402,800	$	414,245
Advances and excess investment	23,359		22,173
Net investment in and advances to unconsolidated entities, at equity⁽³⁾	$	426,159	$	436,418


(1)	Includes value of acquired in-place leases and acquired above-market leases with a net book value of $103,905 and $107,869 as of March 31, 2018 and December 31, 2017, respectively.


(2)	Includes the net book value of below market leases of $65,148 and $69,269 as of March 31, 2018 and December 31, 2017, respectively.


(3)	Includes $441,580 and $451,839 of investment in and advances to unconsolidated entities, at equity as of March 31, 2018 and December 31, 2017, respectively, and $15,421 of cash distributions and losses in unconsolidated entities, at equity as of March 31, 2018 and December 31, 2017.

The following table presents the combined statements of operations for the O'Connor Joint Venture II for the three months ended March 31, 2018 and the O'Connor Joint Venture I, the Seminole Joint Venture, and an indirect 12.5% ownership interest in certain real estate for all periods presented during which the Company accounted for these investments as unconsolidated entities for the three months ended March 31, 2018 and 2017:



	For the Three Months Ended March 31,
	2018			2017
Total revenues	$	65,902		$	48,434
Operating expenses	25,869			20,591
Depreciation and amortization	23,461			19,034
Operating income	16,572			8,809
Interest expense, taxes, and other, net	(13,039		)	(8,460		)
Net income from the Company's unconsolidated real estate entities	$	3,533		$	349

Our share of income (loss) from the Company's unconsolidated real estate entities	$	1,162		$	(444	)

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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


6.	Indebtedness

Mortgage Debt

Total mortgage indebtedness at March 31, 2018 and December 31, 2017 was as follows:



	March 31, 2018			December 31, 2017
Face amount of mortgage loans	$	1,061,335		$	1,152,436
Fair value adjustments, net	7,681			8,338
Debt issuance cost, net	(3,421		)	(3,692		)
Carrying value of mortgage loans	$	1,065,595		$	1,157,082

A roll forward of mortgage indebtedness from December 31, ~~2016~~2017 to ~~June 30, 2017~~March 31, 2018 is summarized as follows:

Balance at December 31, 2016 $ 1,618,080
Debt amortization payments (10,974 )
Repayment of debt (63,000 )
Debt issuances, net of debt issuance costs 213,574
Debt cancelled upon partial paydown (24,250 )
Debt transferred to unconsolidated entities, net of debt issuance costs and fair value adjustments (314,595 )
Amortization of fair value and other adjustments (1,929 )
Amortization of debt issuance costs 620
Balance at June 30, 2017 $ 1,417,526



Balance at December 31, 2017	$	1,157,082
Debt amortization payments	(4,601		)
Repayment of debt	(86,500		)
Amortization of fair value and other adjustments	(657		)
Amortization of debt issuance costs	271
Balance at March 31, 2018	$	1,065,595

On ~~April 25, 2017,~~January 19, 2018, an affiliate of WPG Inc. repaid the ~~Company completed a discounted payoff of the $87.3~~$86.5 million mortgage loan ~~secured by Mesa Mall,~~on The Outlet Collection^® | Seattle, located in ~~Grand Junction, Colorado (see "Covenants" section below for additional details)~~Auburn, Washington. This repayment was funded by borrowings on the Revolver (as defined below).

Unsecured Debt

On ~~May 10, 2017~~January 22, 2018, WPG L.P. amended and ~~prior~~restated $1.0 billion of the existing facility. The recast Facility (as defined below) can be increased to $1.5 billion through currently uncommitted Facility commitments. Excluding the ~~deconsolidation of these properties due to~~accordion feature, the ~~sale of 49% of our interests (see Note 5 - "Investment in Unconsolidated Entities,~~recast Facility includes a $650.0 million Revolver (as defined below) and $350.0 million Term Loan (as defined below). The $350.0 million Term Loan was fully funded at ~~Equity" for further details),~~closing, and the Company ~~closed on non-recourse mortgage loans encumbering The Arboretum, Gateway Centers, and Oklahoma City Properties. The following table summarizes the key terms of each mortgage loan:~~

Property Principal Debt issuance costs Net debt issuance Interest Rate Maturity Date
The Arboretum $ 59,400
$ (452 ) $ 58,948
4.13 % June 1, 2027
Gateway Centers 112,500
(709 ) 111,791
4.03 % June 1, 2027
Oklahoma City Properties 43,279
(427 ) 42,852
3.90 % June 1, 2027
Total $ 215,179
$ (1,588 ) $ 213,591

The Arboretum and Gateway Centers loans require monthly interest only payments until July 1, 2021, at which time monthly interest and principal payments are due until maturity. The Oklahoma City Properties loan requires monthly interest only payments until July 1, 2022, at which time monthly interest and principal payments are due until maturity. We used the ~~net~~ proceeds to repay ~~a portion of~~ the $270.0 million outstanding ~~balance~~ on the ~~Revolver, as~~June 2015 Term Loan (as defined ~~below. These three loans were deconsolidated during~~below) and to pay down the ~~quarter ended June 30, 2017, in connection with the O'Connor Joint Venture II transaction.~~Revolver.

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

~~Unsecured Debt~~

The following table identifies our total unsecured debt outstanding at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	June 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Notes payable:⁽¹⁾
Face amount	$	250,000		$	250,000
Debt issuance costs and debt discount, net	(2,000		)	(2,363		)
Face amount - the Exchange Notes⁽¹⁾							$	250,000		$	250,000
Face amount - 5.950% Notes due 2024⁽²⁾							750,000			750,000
Debt discount, net							(10,742		)	(11,086		)
Debt issuance costs, net							(9,062		)	(9,542		)
Total carrying value of notes payable	$	248,000		$	247,637		$	980,196		$	979,372

Unsecured term loans:⁽⁷⁾
Face amount - Term Loan⁽²⁾⁽³⁾	$	500,000		$	500,000
Face amount - December 2015 Term Loan⁽⁴⁾	340,000			340,000
Face amount - June 2015 Term Loan⁽⁵⁾	500,000			500,000
Unsecured term loans:⁽⁸⁾
Face amount - Term Loan⁽³⁾⁽⁴⁾							$	350,000		$	—
Face amount - December 2015 Term Loan⁽⁵⁾							340,000			340,000
Face amount - June 2015 Term Loan⁽⁶⁾							—			270,000
Debt issuance costs, net	(5,003		)	(5,478		)	(5,299		)	(3,305		)
Total carrying value of unsecured term loans	$	1,334,997		$	1,334,522		$	684,701		$	606,695

Revolving credit facility:⁽²⁾⁽⁶⁾
Revolving credit facility:⁽³⁾⁽⁷⁾
Face amount	$	—		$	308,000		$	200,000		$	155,000
Debt issuance costs, net	—			(1,835		)	(4,845		)	(540		)
Total carrying value of revolving credit facility	$	—		$	306,165		$	195,155		$	154,460

⁽¹⁾ ~~The unsecured notes payable consist of the 3.850% senior unsecured notes (the "Exchange Notes").~~ The Exchange Notes were issued at a 0.028% discount, bear interest at 3.850% per annum and mature on April 1, 2020.

⁽²⁾The 5.950% Notes due 2024 were issued at a 1.533% discount, bear interest at 5.950% per annum, and mature on August 15, 2024. The interest rate could vary in the future based upon changes to the Company's credit ratings.

⁽³⁾ The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."

⁽³⁾⁽⁴⁾ The Term Loan bears interest at one-month LIBOR plus 1.45% per annum and will mature on ~~May~~December 30, ~~2018, subject to one 12-month extension available at our option and subject to compliance with terms of the Facility and payment of a customary extension fee.~~2022. We have interest rate swap agreements totaling ~~$200.0~~$270.0 million, which effectively ~~fix~~fixed the interest rate on a portion of the Term Loan at ~~2.04%~~2.56% per annum through ~~August 1,~~June 30, 2018. At ~~June 30, 2017,~~March 31, 2018, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 1.45%, or ~~2.68% per annum.~~3.33%.

⁽⁴⁾⁽⁵⁾ The December 2015 Term Loan bears interest at one-month LIBOR plus 1.80% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 3.51% per annum through maturity.

⁽⁵⁾⁽⁶⁾ The June 2015 Term Loan ~~bears~~bore interest at one-month LIBOR plus 1.45% per ~~annum~~annum. During the three months ended March 31, 2018, the Company repaid the June 2015 Term Loan and ~~will mature on March 2, 2020. We have interest rate swap agreements totaling $500.0~~wrote off $0.5 million ~~which effectively fix the interest rate at 2.56% per annum through June 30, 2018.~~of debt issuance costs.

⁽⁶⁾⁽⁷⁾ ~~The~~As of December 31, 2017, the Revolver ~~provides~~provided borrowings on a revolving basis up to $900.0 million, ~~bears~~bore interest at one-month LIBOR plus 1.25%, and ~~will~~was initially scheduled to mature on May 30, 2018. During the three months ended March 31, 2018, we amended the terms of the Revolver to provide borrowings on a revolving basis up to $650.0 million at one-month LIBOR plus 1.25%. Under the amended terms, the Revolver will mature on December 30, 2021, subject to two six-month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. Upon the amended terms, the Company wrote off $0.3 million of debt issuance costs. At ~~June 30, 2017,~~March 31, 2018, we had an aggregate available borrowing capacity of ~~$899.7~~$449.8 million under the Revolver, net of ~~$0.3~~$0.2 million reserved for outstanding letters of credit. At ~~June 30, 2017,~~March 31, 2018, the applicable interest rate on the Revolver was one-month LIBOR plus 1.25%, or ~~2.48%~~3.13%.

⁽⁷⁾⁽⁸⁾While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ~~rating.~~ratings.

~~Covenants~~

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

Covenants

Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of ~~June 30, 2017,~~March 31, 2018, management believes the Company is in compliance with all covenants of its unsecured debt.

The total balance of mortgages was approximately ~~$1.4~~$1.1 billion as of ~~June 30, 2017.~~March 31, 2018. At ~~June 30, 2017,~~March 31, 2018, certain of our consolidated subsidiaries were the borrowers under 2723 non-recourse loans ~~one full-recourse loan~~ and one ~~partial-recourse~~full-recourse loan secured by mortgages encumbering 3227 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due

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

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

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

on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the debt and enforce its right against its collateral. ~~If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral.~~

On March 30, 2017, the Company transferred the $40.0 million mortgage loan secured by Valle Vista Mall, located in Harlingen, Texas, to the special servicer at the request of the borrower, a consolidated subsidiary of the Company. On May 18, 2017, we received a notice of default letter, dated that same date, from the special servicer because the borrower did not repay the loan in full by its May 10, 2017 maturity date. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. The Company will continue to manage and lease the property.

On June 6, 2016, we received a notice of default letter, dated June 3, 2016, from the special servicer to the borrower of the $99.5 million mortgage loan secured by Southern Hills Mall, located in Sioux City, Iowa. The letter was sent because the borrower, a consolidated subsidiary of the Company, did not repay the loan in full by its June 1, 2016 maturity date. On October 27, 2016, we received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company still holds title to the property.

On June 30, 2016, we received a notice, dated that same date, that the $87.3 million mortgage loan secured by Mesa Mall had been transferred to the special servicer due to the payment default that occurred when the borrower, a consolidated subsidiary of the Company, did not repay the loan in full by its June 1, 2016 maturity date. On April 25, 2017, the Company completed a discounted payoff of the mortgage loan for $63.0 million and retained ownership and management of the property.

Upon the discounted payoff of the mortgage note payable secured for Mesa Mall, the Company recognized a gain of $21.2 million, based on the cancellation of the remaining outstanding mortgage loan balance of $24.3 million, less settlement of accrued interest, escrows and closing costs of $3.1 million, which is included in gain on extinguishment of debt, net in the accompanying consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2017. During the three and six months ended June 30, 2016, the Company recognized a net gain of $34.1 million related to the $115.3 million mortgage debt cancellation and ownership transfers of Chesapeake Square, located in Chesapeake, Virginia and Merritt Square Mall, located in Merritt Island, Florida, which is included in gain on extinguishment of debt, net in the accompanying consolidated statements of operations and comprehensive income for the periods then ended.

At ~~June 30, 2017,~~March 31, 2018, management believes the applicable borrowers under our ~~other~~ non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash ~~flows. The Company has assessed each~~flows (see Note 11 - "Subsequent Events" for details of ~~these properties for impairment indicators and have concluded no impairment charges were warranted as of June 30, 2017.~~

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

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

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

March 31, 2018).

Fair Value of Debt

The carrying values of our variable-rate loans approximate their fair values. We estimate the fair values of fixed-rate mortgages and fixed-rate unsecured debt (including variable-rate unsecured debt swapped to fixed-rate) using cash flows discounted at current borrowing rates. We estimate the fair values of consolidated fixed-rate unsecured notes payable using quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms and maturities.

The book value and fair value of these financial instruments and the related discount rate assumptions as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 are summarized as follows:


	June 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Book value of fixed-rate mortgages⁽¹⁾	$1,160,795		$1,359,329		$996,335		$1,000,936
Fair value of fixed-rate mortgages	$1,199,183		$1,403,103		$1,006,373		$1,024,890
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages	3.83	%	3.79	%	4.48	%	4.19	%

Book value of fixed-rate unsecured debt⁽¹⁾	$1,290,000		$1,290,000		$1,610,000		$1,610,000
Fair value of fixed-rate unsecured debt	$1,267,988		$1,261,858		$1,532,072		$1,616,810
Weighted average discount rates assumed in calculation of fair value for fixed-rate unsecured debt	2.87	%	2.86	%	4.90	%	4.27	%

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

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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


7.	Derivative Financial Instruments

Risk Management Objective of Using Derivatives

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

Cash Flow Hedges of Interest Rate Risk

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives the Company primarily uses interest rate swaps or caps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date. On January 1, 2018, the Company adopted ASU 2017-12, as permitted under the standard (see Note 3 - "Summary of Significant Accounting Policies" for additional details).

~~The effective portion of changes in the fair value of~~For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in other comprehensive income ("OCI") or other comprehensive loss (“OCL”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed-rate financings or refinancings continue to be included in accumulated other comprehensive income ("AOCI") during the term of the hedged debt transaction. Any ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The Company recognized $0.0 million and $0.1 million, of hedge ineffectiveness as an increase to earnings during the three and six months ended June 30, 2017, respectively. The Company recognized $0.6 million and $2.9 million of hedge ineffectiveness as a decrease to earnings during the three and six months ended June 30, 2016, primarily resulting from a mismatch in the terms of the December 2015 Term Loan and the corresponding derivative. The December 2015 Term Loan includes a 0% LIBOR floor while the corresponding derivative does not.

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

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

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

Amounts reported in AOCI relate to derivatives that will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Realized gains or losses on settled derivative instruments included in AOCI are recognized as an adjustment to income over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional ~~$1.6~~$2.7 million will be reclassified as a decrease to interest expense.

As of ~~June 30, 2017,~~March 31, 2018, the Company had 158 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a notional value of ~~$1,139,600.~~$610,000.

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:	Balance Sheet Location	June 30, 2017		December 31, 2016		Derivatives designated as hedging instruments:	Balance Sheet Location	March 31, 2018		December 31, 2017
Interest rate products	Asset derivatives	Deferred costs and other assets	$	6,236	$	5,754	Asset derivatives	Deferred costs and other assets	$	13,164	$	7,413
Interest rate products	Liability derivatives	Accounts payable, accrued expenses, intangibles and deferred revenues	$	—	$	2

The asset derivative instruments were reported at their fair value of ~~$6,236~~$13,164 and ~~$5,754~~$7,413 in deferred costs and other assets at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, with a corresponding adjustment to OCI for the unrealized gains and losses (net of noncontrolling interest allocation). ~~The~~There were no derivatives in a liability ~~derivative instruments were reported~~position at ~~their fair value of $0 and $2 in accounts payable, accrued expenses, intangibles, and deferred revenues at June 30, 2017~~March 31, 2018 and December 31, ~~2016, respectively, with a corresponding adjustment to OCL for the unrealized gains and losses (net of noncontrolling interest allocation).~~2017. Over time, the unrealized gains and losses held in AOCI will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.

The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2017 and 2016:

Derivatives in Cash Flow Hedging Relationships Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016
Interest rate products $ (2,544 ) $ (7,491 ) Interest expense $ 494
$ 1,910
Interest expense $ 36
$ (570 )

Derivatives in Cash Flow Hedging Relationships Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016
Interest rate products $ (1,281 ) $ (22,888 ) Interest expense $ 1,580
$ 3,841
Interest expense $ 128
$ (2,912 )

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of comprehensive income for the three months ended March 31, 2018 and 2017:



Derivatives in Cash Flow Hedging Relationships (Interest rate products)	Location of Gain or (Loss) Recognized in Income on Derivatives	For the Three Months Ended March 31,
		2018			2017
Amount of Gain Recognized in OCI on Derivative		$	5,997		$	1,263

Amount of (Loss) or Gain Reclassified from AOCI into Income	Interest expense	$	(780	)	$	1,086

The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2018 and 2017:



Effect of Cash Flow Hedges on Consolidated Statements of Operations	For the Three Months Ended March 31,
	2018			2017
Total interest (expense) presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(34,344	)	$	(32,488	)

Amount of (loss) gain reclassified from accumulated other comprehensive income into interest expense	$	(780	)	$	1,086

Credit Risk-Related Contingent Features

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

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

As of ~~June 30, 2017,~~March 31, 2018, the ~~fair value of derivatives~~Company did not have any derivative instruments that contain credit-risk related contingent features that are in a net liability position, plus accrued interest but excluding any adjustment for nonperformance risk, related to these agreements was $0. As of June 30, 2017, the Company has not posted any collateral related to these agreements. The Company is not in default with any of these provisions. If the Company had breached any of these provisions at June 30, 2017, it would have been required to settle its obligations under the agreements at their termination value of $0.position.

Fair Value Considerations

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

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

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The tables below presents the Company’s net assets and liabilities measured at fair value as of June 30, 2017 and December 31, 2016 aggregated by the level in the fair value hierarchy within which those measurements fall:

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

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
Balance at June 30, 2017
Derivative instruments, net $ —
$ 6,236
$ —
$ 6,236

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

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
Balance at December 31, 2016
Derivative instruments, net $ —
$ 5,752
$ —
$ 5,752

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

The tables below presents the Company’s net assets and liabilities measured at fair value as of March 31, 2018 and December 31, 2017 aggregated by the level in the fair value hierarchy within which those measurements fall:



	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2018
Derivative instruments, net	$	—	$	13,164	$	—	$	13,164



	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2017
Derivative instruments, net	$	—	$	7,413	$	—	$	7,413

Subject to the terms of the limited partnership agreement of WPG L.P., limited partners in WPG L.P. have, at their option, the right to exchange all or any portion of their units for shares of WPG Inc. common stock on a one‑for‑one basis or cash, as determined by WPG Inc. Therefore, the common units held by limited partners are considered by WPG Inc. to be share equivalents and classified as noncontrolling interests within permanent equity, and classified by WPG L.P. as permanent equity. The amount of cash to be paid if the exchange right is exercised and the cash option is selected will be based on the market value of WPG Inc.'s common stock as determined pursuant to the terms of the WPG L.P. Partnership Agreement. During the three and six months ended June 30, 2017, WPG Inc. issued 314,577 shares of common stock to a limited partner of WPG L.P. in exchange for an equal number of units pursuant to the WPG L.P. Partnership Agreement. This transaction increased WPG Inc.’s ownership interest in WPG L.P. At ~~June 30, 2017,~~March 31, 2018, WPG Inc. had reserved ~~34,811,858~~34,758,387 shares of common stock for possible issuance upon the exchange of units held by limited partners.

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

Stock Based Compensation

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

The following is a summary by type of the awards that the Company issued during the ~~six~~three months ended ~~June 30,~~March 31, 2018 and March 31, 2017 ~~and June 30, 2016~~ under the Plan.

Annual Long-Term Incentive Awards

~~On February 21,~~During the three months ended March 31, 2018 and 2017, ~~(the "Adoption Date"),~~ the Company approved the terms and conditions of the 2018 and 2017 annual ~~award ("2017~~awards (the "2018 Annual Long-Term Incentive Awards") and "2017 Long-Term Incentive Awards," respectively) for certain executive officers and employees of the Company. Under the terms of the ~~2017 Annual Long-Term Incentive Awards~~awards program, each participant is provided the opportunity to receive (i) time-based RSUs and (ii) performance-based stock units ("PSUs"). RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. ~~During the six months ended June 30, 2017, the Company issued 358,198 time-based~~ RSUs ~~with a grant date fair value of $3.4 million, which~~ will vest in one-third installments on each annual anniversary of ~~February 21, 2018, 2019, and 2020,~~the respective Grant Date (as referenced below), subject to the participant's continued employment with the Company through each vesting date and the participant's continued compliance with certain applicable covenants. During the service period, dividend equivalents will be paid with respect to the RSUs corresponding to the amount of any dividends paid by the Company to the Company's common shareholders for the applicable dividend payment dates. Compensation expense is recognized on a straight-line basis over the three year vesting term. ~~During the six months ended June 30, 2017, the Company issued 358,198 PSUs, at target, with a grant date fair value of $2.8 million.~~ Actual PSUs earned may range from 0%-150% of the ~~target~~ PSUs allocated to the award recipient, based on the Company's total shareholder return ("TSR") compared to a peer group based on companies with similar assets and revenue over a three-year performance period that commenced on the ~~Adoption Date.~~ respective Grant Date (as referenced below).

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

During the performance period, dividend equivalents corresponding to the amount of any regular cash dividends paid by the Company to the Company’s common shareholders for the applicable dividend payment dates will accrue and be deemed reinvested in additional PSUs, which will be settled in common shares at the same time and only to the extent that the underlying PSU is earned and settled in common shares. Payout of the PSUs is also subject to the participant’s continued employment with the Company through the end of the performance period. The awards were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the ~~three year~~three-year performance period.

~~During 2016,~~The following table summarizes the ~~Company approved the performance criteria and maximum dollar amount~~issuance of the ~~2016 annual awards (the "2016~~2018 Annual Long-Term Incentive ~~Awards"), that generally range from 30%-100% of annual base salary, for certain executive officers~~Awards and employees of the Company. The number of awards was determined by converting the cash value of the award to a number of RSUs (the "Allocated RSUs") based on the closing price of WPG Inc.'s common shares for the final 15 trading days of 2016. Recipients were eligible to receive a percentage of the Allocated RSUs based on the Company's performance on its strategic goals detailed in the Company's 2016 cash bonus plan and the Company's relative TSR compared to a peer group based2017 Annual Long-Term Incentive Awards, respectively:

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

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

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



	2018 Annual Long-Term Incentive Awards	2017 Annual Long-Term Incentive Awards
Grant Date	February 20, 2018	February 21, 2017

RSUs issued	587,000	358,198
Grant date fair value per unit	$6.10	$9.58

PSUs issued	587,000	358,198
Grant date fair value per unit	$4.88	$7.72

on companies with similar assets and revenue. Payout for 50% of the Allocated RSUs was based on the Company's performance on the strategic goals and the payout on the remaining 50% was based on the Company's TSR performance. Both the strategic goal component as well the TSR performance were achieved at target, resulting in a 100% payout. During the ~~six~~three months ended ~~June 30,~~March 31, 2017, the Company awarded 324,237 of ~~Allocated~~ RSUs, with a grant date fair value of $2.2 million, ~~related to~~that constituted the payout for the 2016 ~~Annual Long-Term Incentive Awards,~~annual awards and which will vest in one-third installments on each of February 21, 2018, 2019 and 2020.

During 2015, the Company approved the performance criteria and maximum dollar amount of the 2015 annual LTIP unit awards (the "2015 Annual Long-Term Incentive Awards"), that generally range from 30%-300% of annual base salary, for certain executive officers and employees of the Company. The number of awards was determined by converting the cash value of the award to a number of LTIP units (the "Allocated Units") based on the closing price of WPG Inc.'s common shares for the final 15 trading days of 2015. Eventual recipients were eligible to receive a percentage of the Allocated Units based on the Company's performance on its strategic goals detailed in the Company's 2015 cash bonus plan and the Company's relative TSR compared to the MSCI REIT Index. Payout for 40% of the Allocated Units was based on the Company's performance on the strategic goals and the payout on the remaining 60% was based on the Company's TSR performance. The strategic goal component was achieved in 2015; however, the TSR was below threshold performance, resulting in only a 40% payout for this annual LTIP award. During the six months ended June 30, 2016, the Company awarded 323,417 LTIP units related to the 2015 Annual Long-Term Incentive Awards, of which 108,118 vest in one-third installments on each of January 1, 2017, 2018 and 2019. The 94,106 LTIP units awarded to our former Executive Chairman fully vested on the grant date and the 121,193 LTIP units awarded to certain former executive officers fully vested on the applicable severance dates during 2016 pursuant to the underlying severance arrangements.

During the ~~six~~three months ended ~~June 30,~~March 31, 2018, no stock options were granted from the Plan to employees, no stock options were exercised by employees and 23,296 stock options were canceled, forfeited or expired. As of March 31, 2018, there were 770,718 stock options outstanding.

During the three months ended March 31, 2017, no stock options were granted from the Plan to employees, ~~2,739~~1,566 stock options were exercised by employees and ~~44,121~~34,452 stock options were canceled, forfeited or expired. ~~As of June 30, 2017, there were 930,716 stock options outstanding.~~

During the six months ended June 30, 2016, 247,500 stock options were granted from the Plan to employees, 13,970 stock options were exercised by employees and 161,087 stock options were canceled, forfeited or expired.

~~WPG Restricted Stock Units~~

During the six months ended June 30, 2017 and 2016, the Company issued 161,000 RSUs, with a grant-date fair value of $1.2 million, and 154,570 RSUs, with a grant-date fair value of $1.6 million, respectively, to certain employees and non-employee members of the Board. The RSUs are service-based awards and the related fair value is expensed over the applicable service periods, except in instances that result in accelerated vesting due to severance arrangements or retirement of Board members.

Share Award Related Compensation Expense

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company recorded ~~share award related~~ compensation expense pertaining to the ~~award~~awards granted under the Plan of $1.7 million and ~~option plans noted above~~$1.5 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive ~~income as indicated below (amounts in millions):~~

For the Three Months Ended June 30, For the Six Months Ended June 30,
2017 2016 2017 2016
Merger, restructuring and transaction costs $ —
$ 9.5
$ —
$ 9.5
General and administrative 1.8
1.5
3.3
2.2
Total expense $ 1.8
$ 11.0
$ 3.3
$ 11.7

income. In certain instances, employment agreements and stock compensation programs provide for accelerated vesting when executives are terminated without cause. Additionally, the Compensation Committee of the Board may, in its discretion, accelerate the vesting for retiring Board members.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Board declared common share/unit dividends of $0.25 ~~and $0.50~~ per common share/~~unit, respectively.~~unit.

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

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

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


9.	Commitments and Contingencies

Litigation

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

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

Concentration of Credit Risk

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


10.	~~Related Party Transactions~~

~~Transactions with Simon Property Group Inc.~~

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

We did not incur any charges pertaining to the transition services agreements for the three and six months ended June 30, 2017. Charges for the consolidated and unconsolidated properties for the three and six months ended June 30, 2016 are as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,
2016 2016
Consolidated Unconsolidated Consolidated Unconsolidated
Property management and common costs, services and other $ 3,209
$ —
$ 8,447
$ 124
Insurance premiums $ —
$ —
$ —
$ —
Advertising and promotional programs $ —
$ —
$ 102
$ 6
Capitalized leasing and development fees $ 1,315
$ —
$ 2,483
$ 8


~~11.~~	Earnings Per Common Share/Unit

WPG Inc. Earnings Per Common Share

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

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

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

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

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


	For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017
Earnings Per Common Share, Basic:
Net income attributable to common shareholders - basic	$	135,467	$	17,807	$	144,769	$	26,321	$	14,016	$	9,302
Weighted average shares outstanding - basic	186,844,293		185,487,373		186,562,797		185,462,152		187,309,744		186,278,173
Earnings per common share, basic	$	0.73	$	0.10	$	0.78	$	0.14	$	0.07	$	0.05

Earnings Per Common Share, Diluted:
Net income attributable to common shareholders - basic	$	135,467	$	17,807	$	144,769	$	26,321	$	14,016	$	9,302
Net income attributable to common unitholders	25,465		3,370		27,219		4,975		2,601		1,754
Net income attributable to common shareholders - diluted	$	160,932	$	21,177	$	171,988	$	31,296	$	16,617	$	11,056
Weighted average common shares outstanding - basic	186,844,293		185,487,373		186,562,797		185,462,152		187,309,744		186,278,173
Weighted average operating partnership units outstanding	34,894,953		34,304,679		34,940,575		34,304,757		34,680,058		34,986,704
Weighted average additional dilutive securities outstanding	524,354		856,562		530,684		757,293		1,288,678		525,629
Weighted average common shares outstanding - diluted	222,263,600		220,648,614		222,034,056		220,524,202		223,278,480		221,790,506
Earnings per common share, diluted	$	0.72	$	0.10	$	0.77	$	0.14	$	0.07	$	0.05

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ additional potentially dilutive securities include contingently-issuable outstanding stock options and performance based components of annual awards. We accrue distributions when they are declared.

WPG L.P. Earnings Per Common Unit

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

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

Condensed Notes to Unaudited Consolidated Financial Statements (Continued)

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

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

For the Three Months Ended June 30, For the Six Months Ended June 30,
2017 2016 2017 2016
Earnings Per Common Unit, Basic:
Net income attributable to common unitholders - basic $ 160,932
$ 21,177
$ 171,988
$ 31,296
Weighted average common units outstanding - basic 221,739,246
219,792,052
221,503,372
219,766,909
Earnings per common unit, basic $ 0.73
$ 0.10
$ 0.78
$ 0.14

Earnings Per Common Unit, Diluted:
Net income attributable to common unitholders - diluted $ 160,932
$ 21,177
$ 171,988
$ 31,296
Weighted average common units outstanding - basic 221,739,246
219,792,052
221,503,372
219,766,909
Weighted average additional dilutive securities outstanding 524,354
856,562
530,684
757,293
Weighted average units outstanding - diluted 222,263,600
220,648,614
222,034,056
220,524,202
Earnings per common unit, diluted $ 0.72
$ 0.10
$ 0.77
$ 0.14



	For the Three Months Ended March 31,
	2018		2017
Earnings Per Common Unit, Basic and Diluted:
Net income attributable to common unitholders - basic and diluted	$	16,617	$	11,056
Weighted average common units outstanding - basic	221,989,802		221,264,877
Weighted average additional dilutive securities outstanding	1,288,678		525,629
Weighted average units outstanding - diluted	223,278,480		221,790,506
Earnings per common unit, basic and diluted	$	0.07	$	0.05

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ additional potentially dilutive securities include contingently-issuable units related to WPG Inc.'s outstanding stock options, WPG Inc.'s performance based components of annual awards, and WPG L.P.'s annual LTIP unit awards. We accrue distributions when they are declared.

On April 24, 2018, the Company closed on the acquisition of Southgate Mall, located in Missoula, Montana, for $58.0 million in conjunction with a planned reverse 1031 exchange utilizing proceeds from the remaining outparcels included in the Four Corners transaction (see Note 4 - "Investment in Real Estate").

On April 11, 2018, we received a notice of default letter, dated April 6, 2018, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $46.0 million mortgage loan secured by Towne West Square, located in Wichita, Kansas. The notice was issued by the special servicer because the borrower did not make certain reserve payments or deposits as required by the loan agreement for the aforementioned loan. The borrower initiated discussions with the special servicer regarding this non-recourse over-levered loan and considered various options which included restructuring the loan, extending the terms of the loan, and transitioning the property to the mortgage lender among other options. On April 20, 2018, the borrower received a notice from the special servicer to accelerate repayment of the loan's outstanding balance. In the event the property is transitioned to the mortgage lender, the borrower does not expect or anticipate that any cash expenditure will be necessary to pay the accelerated repayment amount and borrower's obligation under the mortgage loan will be fully satisfied following transition of the property.

On April 11, 2018, we acquired, through a sale-leaseback transaction, four Sears department stores and adjacent Sears Auto Centers at Longview Mall, located in Longview, Texas; Polaris Fashion Place®; Southern Hills Mall, located in Sioux City, Iowa; and Town Center at Aurora, located in Aurora, Colorado. The purchase price was approximately $28.5 million and was funded by a combination of $13.4 million from our Facility, $9.7 million from the first tranche of the Four Corners transaction (see Note 4 - "Investment in Real Estate"), and $5.4 million from O'Connor related to their pro-rata share for the Polaris Fashion Place® store (see Note 5 - "Investment in Unconsolidated Entities, at Equity"). We have control of these stores for future redevelopment and Sears will continue to operate under new leases, providing aggregate minimum rent under these leases of approximately $1.25 million per annum. In addition, Sears will be responsible for paying common area maintenance charges, taxes, insurance and utilities.

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

Overview - Basis of Presentation

Washington Prime ~~Group™~~Group^® Inc. (“WPG Inc.”) is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Code"). ~~REITs~~WPG Inc. will generally ~~not be liable~~qualify as a REIT for U.S. federal ~~corporate~~ income ~~taxes~~tax purposes as long as ~~they continue~~it continues to distribute not less than ~~100%~~90% of ~~their~~its REIT taxable income and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. Washington Prime Group, L.P. (“WPG L.P.”) is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of ~~June 30, 2017,~~March 31, 2018, our assets consisted of material interests in ~~110~~108 shopping centers in the United States, consisting of ~~community shopping centers~~open air properties and enclosed retail properties, comprised of approximately 6059 million square feet of gross leasable area.

Unless the context otherwise requires, references to "WPG," the "Company," “we,” “us” and “our” refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated basis.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading. ~~The Company has filed a trademark application with the United States Trademark and Patent Office for the name "Washington Prime Group" and it remains pending.~~

The ~~O'Connor Joint Ventures~~Facility

On January 22, 2018, WPG L.P. amended and restated $1.0 billion of the existing unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" (collectively known as the "Facility"). The ~~Company has multiple joint ventures~~newly recasted Facility can be increased to $1.5 billion through currently uncommitted Facility commitments. Excluding the accordion feature, the newly recast Facility includes a $650.0 million Revolver and $350.0 million Term Loan. The interest rates for the Revolver and Term Loan are substantially consistent with ~~O'Connor Mall Partners, L.P. ("O'Connor").~~

•the existing terms. When considering extension options, the restated Facility will mature on December 31, 2022. The ~~O'Connor Joint Venture I~~

~~This investment consists of a 51% interest held by~~$350.0 million Term Loan was fully funded at closing, and the Company ~~in a portfolio of five enclosed retail properties~~used the proceeds to repay the $270.0 million outstanding on the June 2015 Term Loan and ~~related outparcels, consisting~~to pay down the Revolver.

On January 12, 2018, we completed the sale of the ~~following:~~first tranche of restaurant outparcels to FCPT Acquisitions, LLC ("Four Corners") pursuant to the purchase and sale agreement executed on September 20, 2017 between the Company and Four Corners. The Mall at Johnson City located in Johnson City, Tennessee; Pearlridge Center located in Aiea, Hawaii; Polaris Fashion Place® located in Columbus, Ohio; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consistsfirst tranche consisted of ~~Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retained management, leasing, and development responsibilities for the O'Connor Joint Venture I.~~

~~On March 2, 2017, the O'Connor Joint Venture I acquired~~10 restaurant outparcels, with an ~~additional section at Pearlridge Center, located in Aiea, Hawaii, for a gross~~allocated purchase price of ~~$70.0~~approximately $13.7 million. ~~Pearlridge Center is currently comprised~~The net proceeds of ~~two distinct enclosed venues commonly referred~~approximately $13.5 million were used to as Uptown and Downtown. The newly acquired 180,000-square-foot section, which is part of Uptown (and referenced herein as Pearlridge Uptown II), is anchored by Ross Dress for Less and TJ Maxx. Subsequent to the purchase, the joint venture placed secured debt on the property (see below for details). Our sharefund a portion of the ~~purchase price was funded by a combination of our share~~acquisition of the ~~secured debt~~Sears parcels on April 11, 2018 (see section "Acquisitions and ~~availability on our credit facility.~~

~~On March 30, 2017, the O'Connor Joint Venture I closed on a $43.2 million non-recourse mortgage note payable with an eight year term~~Dispositions" for further details) and a fixed interest rate of 4.071% secured by Pearlridge Uptown II. The mortgage note payable requires monthly interest only payments until April 1, 2019, at which time monthly interest and principal payments are due until maturity. Our pro-rata share of the mortgage note payable issuance is $22.0 million.

•~~The O'Connor Joint Venture II~~

During the quarter ended June 30, 2017, we completed an additional joint venture transaction with O'Connor, an unaffiliated third party and our partner in the O'Connor Joint Venture I, with respect to the ownership and operation of seven of the Company's retail properties and certain related outparcels (the "O'Connor Joint Venture II"), consisting of the following: The Arboretum, located in Austin, Texas; Arbor Hills, located in Ann Arbor, Michigan; Classen Curve and The Triangle at Classen Curve, each located in Oklahoma City, Oklahoma and Nichols Hills Plaza, located in Nichols Hills, Oklahoma (the "Oklahoma City Properties," collectively); Gateway Centers, located in Austin, Texas; Malibu Lumber Yard, located in Malibu, California; Palms Crossing I and II, located in McAllen, Texas and The Shops at Arbor Walk, located in Austin, Texas. The transaction valued the properties at $598.6 million before closing adjustments and debt assumptions. Under the terms of the joint venture agreement, we retained a non-controlling 51% interest in the O'Connor Joint Venture II and sold the remaining 49% to O'Connor. The transaction generated net proceeds to the Company of approximately $138.9 million, after taking into consideration costs associated with the transaction and the assumption of debt (including the new mortgage loans on The Arboretum, Gateway Centers, and Oklahoma City Properties which closed prior to the joint venture transaction; see "Financing and Debt" below for net proceeds to the Company from the new mortgage loans), which we used to reduce the Company's debt, as well as for general corporate purposes. Since we no longer control the operations of the properties included in the O'Connor Joint Venture II, we deconsolidated the properties and recorded a gain in connection with this partial sale of $126.1 million, which is included in gain (loss) on disposition of interests in properties, net in the consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2017. The gain was recorded pursuant to ASC 360-20 and calculated based upon proceeds received, less 49% of the book value of the deconsolidated net assets. Our retained 51% non-controlling equity method interest was valued at historical cost based upon the pro rata book value of the retained interest in the net assets. We retained management and leasing responsibilities of the properties, though our partner's substantive participating rights over the decisions most important to the operations of the O'Connor Joint Venture II preclude our control and consolidation of this venture.

~~In connection with the formation of this joint venture, we recorded transaction costs of approximately $5.4 million as part of our basis in this investment.~~

~~During the first quarter of 2017,~~Additionally, the Company ~~entered into a purchase and sale agreement~~expects to ~~dispose of Morgantown Commons, located in Morgantown, West Virginia, which was sold in~~close on the remaining outparcels during the second ~~quarter~~half of 2017. We shortened the hold period used in assessing impairment for the asset during the quarter ended March 31, 2017, which resulted in the carrying value not being recoverable from the expected cash flows. The purchase offer represented the best available evidence of fair value for this property. We compared the fair value2018, subject to ~~the carrying value, which resulted in the recording of an impairment charge of approximately $8.5 million in the consolidated statements of operations~~due diligence and ~~comprehensive income for the six months ended June 30, 2017.~~closing conditions.

Business Opportunities

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

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

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

Portfolio Data

The portfolio data discussed in this overview includes key operating statistics for the Company including ending occupancy, average base minimum rent per square foot and comparable NOI for the core properties owned and managed at ~~June 30, 2017. Southern Hills~~March 31, 2018. During the first quarter of 2018, Rushmore Mall, ~~is excluded~~located in Rapid City, South Dakota, Towne West Square, located in Wichita, Kansas, and West Ridge Mall, located in Topeka, Kansas were identified as noncore properties, and their results have been removed from the metrics ~~as the management and leasing of the property was transferred to the receiver during the fourth quarter of 2016 (see the "Financing and Debt" section for further details).~~below.

Core business fundamentals in the overall portfolio for the ~~second~~first quarter of ~~2017~~2018 were generally stable compared to ~~2016.~~2017. Ending occupancy for the core portfolio was ~~92.3%~~92.8% as of ~~June 30, 2017,~~March 31, 2018, as compared to ~~93.0%~~93.3% as of ~~June 30, 2016.~~March 31, 2017. Average base minimum rent per square foot for the core portfolio increased ~~by 0.1%~~0.2% when comparing ~~June 30, 2017~~March 31, 2018 to ~~June 30, 2016.~~March 31, 2017. Comparable NOI decreased ~~1.9%~~4.0% for the core portfolio in the ~~second~~first quarter of ~~2017~~2018 compared to the ~~second~~first quarter of ~~2016.~~2017. The core enclosed retail properties had a decrease in comparable NOI of ~~3.4%~~4.8%, ~~which was driven primarily by~~and the ~~impact of tenant bankruptcies filed in 2016 and 2017. The community shopping center~~open air properties had a decrease in comparable NOI ~~growth~~ of ~~2.8%~~1.8% in the ~~second~~first quarter of 2018. The significant drivers of the quarterly drop in NOI include (i) approximately $1.0 million of pre-petition rent from Bon-Ton and Claire's due to their first quarter 2018 bankruptcy filings, (ii) $1.3 million of higher snow removal costs than the first quarter of 2017, ~~compared~~and (iii) the continued negative impact from the 2017 tenant bankruptcy activity. These issues resulted in impacts that are most significant to the ~~second~~first quarter ~~2016.~~of 2018 and accordingly, the NOI performance for the remainder of 2018 is expected to demonstrate improved stability. Enclosed property operating metrics did demonstrate steadiness as occupancy in our tier 1 enclosed properties improved 0.1% from a year ago to 92.5%, and for our entire enclosed portfolio, tenant sales per square foot ("psf") has improved to $372, an increase from the fourth quarter of 2017 as well as March 2017.

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


	June 30, 2017	June 30, 2016	% Change	March 31, 2018	March 31, 2017	% Change
Ending occupancy (1)	92.3%	93.0%	(0.7)%	92.8%	93.3%	(0.5)%
Average base minimum rent per square foot (2)	$21.63	$21.61	0.1%	$21.75	$21.70	0.2%

Current Leasing Activities

During the ~~six~~three months ended ~~June 30,~~March 31, 2018, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the core portfolio, comprising approximately 578,900 square feet. The average annual initial base minimum rent for new leases was $23.66 psf and for renewed leases was $23.89 psf. For these leases, the average for tenant allowances was $33.55 psf for new leases and $1.85 psf for renewals. During the three months ended March 31, 2017, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the core portfolio, comprising approximately ~~1,409,000~~917,600 square feet. The average annual initial base minimum rent for new leases was ~~$27.02 per square foot ("psf")~~$27.26 psf and for renewed leases was ~~$26.30~~$23.02 psf. For these leases, the average for tenant allowances was ~~$36.03~~$34.78 psf for new leases and $2.37 psf for renewals. During the six months ended June 30, 2016, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the portfolio, comprising approximately 1,374,900 square feet. The average annual initial base minimum rent for new leases was $23.20 psf and for renewed leases was $29.57 psf. For these leases, the average for tenant allowances was $43.46 psf for new leases and $7.15$2.23 psf for renewals.

Results of Operations

Activities Affecting Results

The following ~~acquisitions and dispositions~~property related transactions affected our results in the comparative periods:

•On January 12, 2018, we completed the sale of the first tranche of restaurant outparcels with Four Corners.

•On November 3, 2017, we completed the sale of Colonial Park Mall, located in Harrisburg, Pennsylvania.

•On October 17, 2017, we completed a discounted payoff of the mortgage loan secured by Southern Hills Mall, located in Sioux City, Iowa.

•On October 3, 2017, we transitioned Valle Vista Mall, located in Harlingen, Texas, to the lender.

•On June 13, 2017, we sold 49% of our interest in Malibu Lumber Yard, located in Malibu, California, as part of the O'Connor Joint Venture II transaction.

•On June 7, 2017, we completed the sale of Morgantown Commons.

•On May 16, 2017, we completed the sale of an 80,000 square foot vacant anchor parcel at Indian Mound Mall, located in Heath, Ohio.

•On May 12, 2017, we completed the transaction forming the O'Connor Joint Venture II with regard to the ownership and operation of six of the Company's retail properties and certain related outparcels. Under the terms of the joint venture agreement, we retained a 51% non-controlling interest and sold a 49% interest to O'Connor, the third party partner.

•On April 25, 2017, we completed a discounted payoff of the mortgage loan secured by Mesa Mall, located in Grand Junction, Colorado.

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

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

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

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

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

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

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

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

For the purposes of the following comparisons, the transactions listed above (excluding the properties included in the O'Connor Joint Venture II and the discounted payoffs of Mesa Mall and Southern Hills Mall, which are referred to as ~~the "O'Connor Properties")~~their respective capitalized terms) are referred to as the "Property Transactions," and "comparable properties" refers to the remaining properties we owned and operated throughout both of the periods under comparison.

Three Months Ended ~~June 30, 2017~~March 31, 2018 vs. Three Months Ended ~~June 30, 2016~~March 31, 2017

Minimum rents decreased ~~$11.8~~$13.8 million primarily due to ~~an $8.7~~a $4.5 million decrease attributable to the Property Transactions and a ~~$5.2~~$9.5 million decrease attributable to the O'Connor Properties offset by a $2.1 million net increase attributable to the comparable properties, primarily attributable to fair value of leases and straight-line amortization and recent development activity coming online. Tenant reimbursements decreased $7.3 million due to a $3.5 million decrease attributable to the Property Transactions, a $1.4 million decrease attributable to the O'Connor Properties and a $2.4 million decrease attributable to the comparable properties, primarily due to rent restructures related to national retailers that filed bankruptcy in 2016. Other income increased $3.2 million, primarily due to a $1.9 million increase attributable to lease settlements that occurred in 2017, and a $1.3 million increase attributable to ancillary property income.

~~Property operating expenses decreased $4.4 million, of which $3.8 million was attributable to the Property Transactions and $0.8 million was~~ attributable to the O'Connor Properties, offset by a $0.2 million increase attributable to the comparable properties. ~~Depreciation and amortization~~Tenant reimbursements decreased ~~$2.6~~$8.1 million ~~primarily~~ due to a ~~$4.0~~$1.8 million decrease attributable to the Property Transactions, a $3.5 million decrease attributable to the O'Connor Properties and a ~~$1.9~~$2.8 million decrease attributable to the comparable properties, primarily due to lower real estate tax revenue due to lower real estate tax expenses, a reduction in common-area maintenance and capital expenses as well as lease amendments related to national retailers that filed bankruptcy in the first quarter of 2018 and throughout 2017.

Property operating expenses decreased $0.9 million, of which $2.1 million was attributable to the Property Transactions and $2.0 million was attributable to the O'Connor Properties, offset by a ~~$3.3~~$3.2 million increase attributable to the comparable properties, ~~which was~~ primarily ~~due~~attributed to ~~development assets placed into service. Real estate taxes~~snow removal costs, property insurance premiums and employee benefits. Depreciation and amortization decreased ~~$3.1~~$6.2 million, primarily due to a ~~$2.4~~$1.4 million decrease attributable to the Property Transactions, ~~and~~ a ~~$0.7~~$4.4 million decrease attributable to the O'Connor ~~Properties. The~~Properties, and a $0.4 million decrease ~~in merger, restructuring and transaction costs of $29.9 million was~~ attributable to the ~~management transition as well as strategic alternatives explored during 2016.~~

~~Interest expense, net,~~comparable properties. Real estate taxes decreased ~~$3.2~~$4.0 million, ~~of which $2.2~~primarily due to a $0.9 million ~~was~~decrease attributable to the Property Transactions, ~~$1.2~~a $2.3 million ~~was attributable to the payoff of the mortgage loan secured by Mesa Mall, $0.7 million was~~decrease attributable to the O'Connor Properties, and ~~$0.6~~a $0.8 million decrease attributable to the comparable properties. Provision for credit losses increased $1.8 million, primarily attributable to an increase in tenant bankruptcies during 2018. The $8.5 million impairment loss recorded in 2017 related to the write down of Morgantown Commons, as described in further detail in Note 4 in Part I, Item 1 of this report on Form 10-Q.

Interest expense, net, increased $1.9 million, of which $8.3 million was attributable to ~~swap ineffectiveness recognized in~~corporate debt activity, primarily related to the ~~second quarter~~August 2017 bond offering and amortization of ~~2016.~~deferred financing fees related to the January 2018 Facility recast. Offsetting these increases were decreases ~~were increases~~ of ~~$0.8~~$4.8 million attributable to the payoffs of the mortgage loans secured by Mesa Mall, WestShore Plaza, located in Tampa, Florida, Southern Hills Mall, Henderson Square, located in King of Prussia, Pennsylvania, and The Outlet Collection^® | Seattle, located in Auburn, Washington, $1.2 million attributable to the O'Connor Properties, and $0.4 million related to ~~default interest on properties transitioned, or~~the Property Transactions.

Income and other taxes decreased $1.5 million, which was attributable to ~~be transitioned, to lender, and $0.7 million related to other financing activities.~~a nonrecurring state use tax that was incurred in 2017.

Gain on extinguishment of debt, net recognized in the 2017 period consisted of the $21.2 million gain related to the discounted payoff of the $87.3 million mortgage loan secured by Mesa Mall. The gain on extinguishment of debt, net recognized in the 2016 period consisted of the $34.1 million net gain from the transitioning of Merritt Square Mall and Chesapeake Square to the lenders.

~~Gain (loss)~~ on disposition of interests in properties, net ~~in the 2017 period consisted of a net gain of $125.4 million from the sales of: Morgantown Commons,~~for 2018 was primarily attributable to the sale of ~~a vacant anchor parcel at Indian Mound Mall,~~the first tranche of outparcels to Four Corners. The 2017 gain was attributed to the sales of Gulf View Square, River Oaks Center, and ~~the O'Connor Joint Venture II transaction and in the 2016 period consisted of an additional $0.1 million loss from the sale of Forest Mall and Northlake Mall.~~Virginia Center Commons.

For WPG Inc., net income attributable to noncontrolling interests primarily relates to the allocation of income to third parties based on their respective weighted average ownership interest in WPG L.P., which percentage remained consistent over the periods.



PART I:	FINANCIAL INFORMATION	PAGE

Item 1.	Consolidated Financial Statements (unaudited)

	Financial Statements for Washington Prime Group Inc.:

	Consolidated Balance Sheets as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	4

	Consolidated Statements of Operations and Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	5

	Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	6

	Consolidated Statement of Equity for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018	7

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

	Consolidated Balance Sheets as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	8

	Consolidated Statements of Operations and Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	9

	Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	10

	Consolidated Statement of Equity for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018	11

	Condensed Notes to Consolidated Financial Statements	12

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4644

Item 4.	Controls and Procedures	4644

PART II:	OTHER INFORMATION

Item 1.	Legal Proceedings	4745

Item 1A.	Risk Factors	4745

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4745

Item 3.	Defaults Upon Senior Securities	4745

Item 4.	Mine Safety Disclosures	4745

Item 5.	Other Information	4745

Item 6.	Exhibits	4846

SIGNATURES		4947


	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
REVENUE:
Minimum rent	$	129,433		$	141,257		$	266,549		$	284,362		$	123,339		$	137,116
Overage rent	1,299			1,911			4,131			5,368			2,014			2,832
Tenant reimbursements	52,121			59,410			108,911			117,366			48,644			56,790
Other income	6,318			3,160			11,974			8,673			6,343			5,656
Total revenues	189,171			205,738			391,565			415,769			180,340			202,394
EXPENSES:
Property operating	35,164			39,525			72,408			83,459			36,366			37,244
Depreciation and amortization	66,620			69,232			134,131			140,635			61,294			67,511
Real estate taxes	23,253			26,397			49,260			50,888			22,041			26,007
Advertising and promotion	2,275			2,597			4,427			4,829			1,771			2,152
Provision for credit losses	1,903			1,763			3,484			2,495			3,346			1,581
General and administrative	9,091			9,432			17,919			20,236			9,654			8,828
Merger, restructuring and transaction costs	—			29,914			—			29,914
Ground rent	996			1,043			2,027			2,100			197			1,031
Impairment loss	—			—			8,509			—			—			8,509
Total operating expenses	139,302			179,903			292,165			334,556			134,669			152,863
OPERATING INCOME	49,869			25,835			99,400			81,213			45,671			49,531
Interest expense, net	(31,281		)	(34,466		)	(63,769		)	(71,814		)	(34,344		)	(32,488		)
Gain on extinguishment of debt, net	21,221			34,078			21,221			34,078
Income and other taxes	(522		)	(114		)	(2,548		)	(1,093		)	(485		)	(2,026		)
Loss from unconsolidated entities, net	(172		)	(508		)	(616		)	(1,669		)
INCOME BEFORE GAIN (LOSS) ON DISPOSITION OF INTERESTS IN PROPERTIES, NET	39,115			24,825			53,688			40,715
Gain (loss) on disposition of interests in properties, net	125,385			(88		)	125,436			(2,297		)
Income (loss) from unconsolidated entities, net													1,162			(444		)
INCOME BEFORE GAIN ON DISPOSITION OF INTERESTS IN PROPERTIES, NET													12,004			14,573
Gain on disposition of interests in properties, net													8,181			51
NET INCOME	164,500			24,737			179,124			38,418			20,185			14,624
Net income attributable to noncontrolling interests	25,525			3,422			27,339			5,081			2,661			1,814
NET INCOME ATTRIBUTABLE TO THE COMPANY	138,975			21,315			151,785			33,337			17,524			12,810
Less: Preferred share dividends	(3,508		)	(3,508		)	(7,016		)	(7,016		)	(3,508		)	(3,508		)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	135,467		$	17,807		$	144,769		$	26,321		$	14,016		$	9,302

EARNINGS PER COMMON SHARE, BASIC	$	0.73		$	0.10		$	0.78		$	0.14

EARNINGS PER COMMON SHARE, DILUTED	$	0.72		$	0.10		$	0.77		$	0.14
EARNINGS PER COMMON SHARE, BASIC & DILUTED													$	0.07		$	0.05

COMPREHENSIVE INCOME:
Net income	$	164,500		$	24,737		$	179,124		$	38,418		$	20,185		$	14,624
Unrealized (loss) income on interest rate derivative instruments	(2,050		)	(5,581		)	299			(19,047		)
Unrealized income on interest rate derivative instruments													5,217			2,349
Comprehensive income	162,450			19,156			179,423			19,371			25,402			16,973
Comprehensive income attributable to noncontrolling interests	25,206			2,532			27,397			2,045			3,482			2,191
Comprehensive income attributable to common shareholders	$	137,244		$	16,624		$	152,026		$	17,326		$	21,920		$	14,782


	For the Six Months Ended June 30,						For the Three Months Ended March 31,
	2017			2016			2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	179,124		$	38,418		$	20,185		$	14,624
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation	132,884			148,475			61,404			66,601
Gain on extinguishment of debt, net	(21,221		)	(34,078		)
(Gain) loss on disposition of interests in properties and outparcels, net	(125,710		)	2,297
Gain on disposition of interests in properties and outparcels, net							(8,181		)	(324		)
Impairment loss	8,509			—			—			8,509
Provision for credit losses	3,484			2,495			3,346			1,581
Loss from unconsolidated entities, net	616			1,669
(Income) loss from unconsolidated entities, net							(1,162		)	444
Distributions of income from unconsolidated entities	161			126			1,585			80
Changes in assets and liabilities:
Tenant receivables and accrued revenue, net	2,628			5,894			1,177			2,853
Deferred costs and other assets	(18,453		)	(9,839		)	(11,612		)	(8,853		)
Accounts payable, accrued expenses, deferred revenues and other liabilities	(7,326		)	(24,516		)	(23,082		)	(12,937		)
Net cash provided by operating activities	154,696			130,941			43,660			72,578
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net	(70,967		)	(70,975		)	(29,675		)	(25,039		)
Restricted cash reserves for future capital expenditures, net	(2,018		)	(888		)
Net proceeds from disposition of interests in properties and outparcels	209,180			13,420			13,776			62,887
Investments in unconsolidated entities	(36,747		)	(7,492		)	(10,048		)	(36,368		)
Distributions of capital from unconsolidated entities	56,962			24,815			19,884			52,479
Net cash provided by (used in) investing activities	156,410			(41,120		)
Net cash (used in) provided by investing activities							(6,063		)	53,959
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to noncontrolling interest holders in properties	(23		)	—			(5		)	(23		)
Redemption of limited partner units	(12		)	(5		)	(11		)	—
Change in lender-required restricted cash reserves on mortgage loans	—			(1,863		)
Net proceeds from issuance of common shares, including common stock plans	13			24			—			7
Purchase of redeemable noncontrolling interest	(6,830		)	—			—			(6,830		)
Distributions on common and preferred shares/units	(118,073		)	(117,471		)	(59,167		)	(59,016		)
Proceeds from issuance of debt, net of transaction costs	368,199			119,591			476,877			80,814
Repayments of debt	(536,974		)	(142,905		)	(451,101		)	(104,623		)
Net cash used in financing activities	(293,700		)	(142,629		)	(33,407		)	(89,671		)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	17,406			(52,808		)
CASH AND CASH EQUIVALENTS, beginning of period	59,353			116,253
CASH AND CASH EQUIVALENTS, end of period	$	76,759		$	63,445
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH							4,190			36,866
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period							70,201			88,514
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period							$	74,391		$	125,380


	June 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
ASSETS:
Investment properties at cost	$	5,870,510	$	6,294,628	$	5,820,287	$	5,807,760
Less: accumulated depreciation	2,095,958		2,122,572		2,182,114		2,139,620
	3,774,552		4,172,056		3,638,173		3,668,140
Cash and cash equivalents	76,759		59,353		45,871		52,019
Tenant receivables and accrued revenue, net	92,767		99,967		86,650		90,314
Real estate assets held-for-sale	—		50,642
Investment in and advances to unconsolidated entities, at equity	458,203		458,892		441,580		451,839
Deferred costs and other assets	216,519		266,556		205,245		189,095
Total assets	$	4,618,800	$	5,107,466	$	4,417,519	$	4,451,407
LIABILITIES:
Mortgage notes payable	$	1,417,526	$	1,618,080	$	1,065,595	$	1,157,082
Notes payable	248,000		247,637		980,196		979,372
Unsecured term loans	1,334,997		1,334,522		684,701		606,695
Revolving credit facility	—		306,165		195,155		154,460
Accounts payable, accrued expenses, intangibles, and deferred revenues	268,673		309,178		232,673		264,998
Distributions payable	2,992		2,992		2,992		2,992
Cash distributions and losses in unconsolidated entities, at equity	15,421		15,421		15,421		15,421
Total liabilities	3,287,609		3,833,995		3,176,733		3,181,020
Redeemable noncontrolling interests	3,265		10,660		3,265		3,265
EQUITY:
Partners' Equity:
General partner
Preferred equity, 7,800,000 units issued and outstanding as of June 30, 2017 and December 31, 2016	202,576		202,576
Common equity, 185,764,506 and 185,427,411 units issued and outstanding as of June 30, 2017 and December 31, 2016, respectively	947,936		890,867
Preferred equity, 7,800,000 units issued and outstanding as of March 31, 2018 and December 31, 2017					202,576		202,576
Common equity, 185,990,500 and 185,791,421 units issued and outstanding as of March 31, 2018 and December 31, 2017, respectively					872,300		896,828
Total general partners' equity	1,150,512		1,093,443		1,074,876		1,099,404
Limited partners, 34,811,858 and 35,127,735 units issued and outstanding as of June 30, 2017 and December 31, 2016, respectively	176,333		168,264
Limited partners, 34,758,387 and 34,760,026 units issued and outstanding as of March 31, 2018 and December 31, 2017, respectively					161,592		166,660
Total partners' equity	1,326,845		1,261,707		1,236,468		1,266,064
Noncontrolling interests	1,081		1,104		1,053		1,058
Total equity	1,327,926		1,262,811		1,237,521		1,267,122
Total liabilities, redeemable noncontrolling interests and equity	$	4,618,800	$	5,107,466	$	4,417,519	$	4,451,407


	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
REVENUE:
Minimum rent	$	129,433		$	141,257		$	266,549		$	284,362		$	123,339		$	137,116
Overage rent	1,299			1,911			4,131			5,368			2,014			2,832
Tenant reimbursements	52,121			59,410			108,911			117,366			48,644			56,790
Other income	6,318			3,160			11,974			8,673			6,343			5,656
Total revenues	189,171			205,738			391,565			415,769			180,340			202,394
EXPENSES:
Property operating	35,164			39,525			72,408			83,459			36,366			37,244
Depreciation and amortization	66,620			69,232			134,131			140,635			61,294			67,511
Real estate taxes	23,253			26,397			49,260			50,888			22,041			26,007
Advertising and promotion	2,275			2,597			4,427			4,829			1,771			2,152
Provision for credit losses	1,903			1,763			3,484			2,495			3,346			1,581
General and administrative	9,091			9,432			17,919			20,236			9,654			8,828
Merger, restructuring and transaction costs	—			29,914			—			29,914
Ground rent	996			1,043			2,027			2,100			197			1,031
Impairment loss	—			—			8,509			—			—			8,509
Total operating expenses	139,302			179,903			292,165			334,556			134,669			152,863
OPERATING INCOME	49,869			25,835			99,400			81,213			45,671			49,531
Interest expense, net	(31,281		)	(34,466		)	(63,769		)	(71,814		)	(34,344		)	(32,488		)
Gain on extinguishment of debt, net	21,221			34,078			21,221			34,078
Income and other taxes	(522		)	(114		)	(2,548		)	(1,093		)	(485		)	(2,026		)
Loss from unconsolidated entities, net	(172		)	(508		)	(616		)	(1,669		)
INCOME BEFORE GAIN (LOSS) ON DISPOSITION OF INTERESTS IN PROPERTIES, NET	39,115			24,825			53,688			40,715
Gain (loss) on disposition of interests in properties, net	125,385			(88		)	125,436			(2,297		)
NET INCOME	164,500			24,737			179,124			38,418
Net loss attributable to noncontrolling interests	—			(8		)	—			(14		)
Income (loss) from unconsolidated entities, net													1,162			(444		)
INCOME BEFORE GAIN ON DISPOSITION OF INTERESTS IN PROPERTIES, NET													12,004			14,573
Gain on disposition of interests in properties, net													8,181			51
NET INCOME ATTRIBUTABLE TO UNITHOLDERS	164,500			24,745			179,124			38,432			20,185			14,624
Less: Preferred unit distributions	(3,568		)	(3,568		)	(7,136		)	(7,136		)	(3,568		)	(3,568		)
NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS	$	160,932		$	21,177		$	171,988		$	31,296		$	16,617		$	11,056

NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS:
General partner	$	135,467		$	17,807		$	144,769		$	26,321		$	14,016		$	9,302
Limited partners	25,465			3,370			27,219			4,975			2,601			1,754
Net income attributable to common unitholders	$	160,932		$	21,177		$	171,988		$	31,296		$	16,617		$	11,056

EARNINGS PER COMMON UNIT, BASIC	$	0.73		$	0.10		$	0.78		$	0.14

EARNINGS PER COMMON UNIT, DILUTED	$	0.72		$	0.10		$	0.77		$	0.14
EARNINGS PER COMMON UNIT, BASIC & DILUTED													$	0.07		$	0.05

COMPREHENSIVE INCOME:
Net income	$	164,500		$	24,737		$	179,124		$	38,418		$	20,185		$	14,624
Unrealized (loss) income on interest rate derivative instruments	(2,050		)	(5,581		)	299			(19,047		)
Unrealized income on interest rate derivative instruments													5,217			2,349
Comprehensive income	162,450			19,156			179,423			19,371			$	25,402		$	16,973
Comprehensive loss attributable to noncontrolling interests	—			(8		)	—			(14		)
Comprehensive income attributable to unitholders	$	162,450		$	19,164		$	179,423		$	19,385



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


	General Partner																								General Partner
	Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests			Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
Balance, December 31, 2016	$	202,576		$	890,867		$	1,093,443		$	168,264		$	1,261,707		$	1,104		$	1,262,811		$	10,660
Exercise of stock options	—			13			13			—			13			—			13			—
Balance, December 31, 2017																									$	202,576		$	896,828		$	1,099,404		$	166,660		$	1,266,064		$	1,058		$	1,267,122		$	3,265
Cumulative effect of accounting standards																									—			2,085			2,085			389			2,474			—			2,474			—
Redemption of limited partner units	—			—			—			(12		)	(12		)	—			(12		)	—			—			—			—			(11		)	(11		)	—			(11		)	—
Limited partner units exchanged to common units	—			2,463			2,463			(2,463		)	—			—			—			—
Other	—			(73		)	(73		)	—			(73		)	—			(73		)	—			—			(36		)	(36		)	—			(36		)	—			(36		)	—
Equity-based compensation	—			2,631			2,631			664			3,295			—			3,295			—			—			1,523			1,523			219			1,742			—			1,742			—
Adjustments to limited partners' interests	—			(167		)	(167		)	167			—			—			—			—			—			397			397			(397		)	—			—			—			—
Purchase of redeemable noncontrolling interest	—			565			565			—			565			—			565			(7,395		)
Distributions on common units ($0.50 per common unit)	—			(93,373		)	(93,373		)	(17,564		)	(110,937		)	(23		)	(110,960		)	—
Distributions on common units ($0.25 per common unit)																									—			(46,909		)	(46,909		)	(8,690		)	(55,599		)	(5		)	(55,604		)	—
Distributions declared on preferred units	(7,016		)	—			(7,016		)	—			(7,016		)	—			(7,016		)	(120		)	(3,508		)	—			(3,508		)	—			(3,508		)	—			(3,508		)	(60		)
Other comprehensive income	—			241			241			58			299			—			299			—			—			4,396			4,396			821			5,217			—			5,217			—
Net income	7,016			144,769			151,785			27,219			179,004			—			179,004			120			3,508			14,016			17,524			2,601			20,125			—			20,125			60
Balance, June 30, 2017	$	202,576		$	947,936		$	1,150,512		$	176,333		$	1,326,845		$	1,081		$	1,327,926		$	3,265
Balance, March 31, 2018																									$	202,576		$	872,300		$	1,074,876		$	161,592		$	1,236,468		$	1,053		$	1,237,521		$	3,265



Balance at December 31, 2016	$	1,618,080
Debt amortization payments	(10,974		)
Repayment of debt	(63,000		)
Debt issuances, net of debt issuance costs	213,574
Debt cancelled upon partial paydown	(24,250		)
Debt transferred to unconsolidated entities, net of debt issuance costs and fair value adjustments	(314,595		)
Amortization of fair value and other adjustments	(1,929		)
Amortization of debt issuance costs	620
Balance at June 30, 2017	$	1,417,526



Property	Principal		Debt issuance costs			Net debt issuance		Interest Rate		Maturity Date
The Arboretum	$	59,400	$	(452	)	$	58,948	4.13	%	June 1, 2027
Gateway Centers	112,500		(709		)	111,791		4.03	%	June 1, 2027
Oklahoma City Properties	43,279		(427		)	42,852		3.90	%	June 1, 2027
Total	$	215,179	$	(1,588	)	$	213,591



Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three Months Ended							Three Months Ended					Three Months Ended
	June 30,							June 30,					June 30,
	2017			2016				2017		2016			2017		2016
Interest rate products	$	(2,544	)	$	(7,491	)	Interest expense	$	494	$	1,910	Interest expense	$	36	$	(570	)


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


	June 30, 2017			Weighted Average Interest Rate		December 31, 2016			Weighted Average Interest Rate		March 31, 2018			Weighted Average Interest Rate		December 31, 2017			Weighted Average Interest Rate
Fixed-rate debt, face amount(1)	$	2,450,795		4.18	%	$	2,649,329		4.23	%	$	2,606,335		4.72	%	$	2,610,936		4.72	%
Variable-rate debt, face amount	551,100			2.75	%	859,100			2.25	%	345,000			3.27	%	306,500			2.99	%
Total face amount of debt	3,001,895			3.92	%	3,508,429			3.75	%	2,951,335			4.55	%	2,917,436			4.54	%
Note discount	(40		)			(47		)			(10,742		)			(11,086		)
Fair value adjustments, net	9,884					12,661					7,681					8,338
Debt issuance costs, net	(11,216		)			(14,639		)			(22,627		)			(17,079		)
Total carrying value of debt	$	3,000,523				$	3,506,404				$	2,925,647				$	2,897,609



	2017		2018 - 2019		2020 - 2021		Thereafter		Total
Long term debt (1)	$	247,383	$	696,836	$	1,099,983	$	957,693	$	3,001,895
Interest payments (2)	58,509		196,353		102,427		54,150		411,439
Distributions (3)	5,801		3,028		—		—		8,829
Ground rent (4)	272		1,044		1,041		20,978		23,335
Purchase/tenant obligations (5)	77,528		1,404		913		2,359		82,204
Total	$	389,493	$	898,665	$	1,204,364	$	1,035,180	$	3,527,702



	2018		2019 - 2020		2021 - 2022		Thereafter		Total
Long term debt⁽¹⁾	$	21,059	$	502,868	$	1,003,243	$	1,424,165	$	2,951,335
Interest payments⁽²⁾	95,386		247,431		195,546		102,067		640,430
Distributions⁽³⁾	3,568		—		—		—		3,568
Ground rent⁽⁴⁾	382		1,018		1,027		20,460		22,887
Purchase/tenant obligations⁽⁵⁾	72,297		3,367		3,186		2,342		81,192
Total	$	192,692	$	754,684	$	1,203,002	$	1,549,034	$	3,699,412


~~(1)~~	Represents principal maturities only and therefore excludes net fair value adjustments of $9,884, debt issuance costs of $(11,216) and bond discount of $(40) as of June 30, 2017. In addition, the principal maturities reflect any available extension options within the control of the Company.


1.	Organization


~~(2)~~	~~Variable rate interest payments are estimated based on the LIBOR rate at June 30, 2017.~~


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


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


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


New developments	$	4,094	$	302
Redevelopments and expansions	37,079		11,839
Tenant allowances	12,680		5,642
Operational capital expenditures	9,117		4,833
Total (1)	$	62,970	$	22,616


(2)	NOI from the ~~property is still~~three noncore properties held ~~by an affiliate of the Company.~~in each period presented.



Exhibit Number	Exhibit Descriptions
2.1*10.1	~~First Amendment to Purchase, Sale~~ Amended and ~~Escrow~~Restated Revolving Credit and Term Loan Agreement dated ~~November 2, 2016,~~January 22, 2018 (incorporated by and among WPG-OC New Limited Partner, LP, WPG-OC General Partner, LLC, WPG-OC General Partner II, LLC, WPG-OC General Partner III, LLC, O'Connor Mall Partners, L.P. and Fidelity National Title Insurance Company, dated as ofreference to Form 8-K filed on January ~~4, 2017.~~
2.2*	Second Amendment to Purchase, Sale and Escrow Agreement, dated November 2, 2016, by and among WPG-OC New Limited Partner, LP, WPG-OC General Partner, LLC, WPG-OC General Partner II, LLC, WPG-OC General Partner III, LLC, WPG Management Associates, Inc., WPG-OC Limited Partner II, LLC, O'Connor Mall Partners, L.P., O'Connor Mall Parallel Partners, L.P. and Fidelity National Title Insurance Company, dated as of April 26, 2017.
2.3*	Third Amendment to Purchase, Sale and Escrow Agreement, dated November 2, 2016, by and among WPG-OC New Limited Partner, LP, WPG-OC General Partner, LLC, WPG-OC General Partner II, LLC, WPG-OC General Partner III, LLC, WPG Management Associates, Inc., WPG-OC Limited Partner II, LLC, O'Connor Mall Partners, L.P., O'Connor Mall Parallel Partners, L.P. and Fidelity National Title Insurance Company, dated as of May 11, 2017.22, 2018).
31.1*	Certification by the Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group Inc.
31.2*	Certification by the Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group Inc.
31.3*	Certification by the Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
31.4*	Certification by the Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
32.1*	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group Inc.
32.2*	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document



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

Date:	~~July 27, 2017~~April 26, 2018	By:	/s/ Mark E. Yale
			Mark E. Yale Executive Vice President and Chief Financial Officer (Principal Financial Officer)



Date:	~~July 27, 2017~~April 26, 2018	By:	/s/ Melissa A. Indest
			Melissa A. Indest Chief Accounting Officer and Senior Vice President, Finance (Principal Accounting Officer)