EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2019 of Washington Prime Group^® Inc. and Washington Prime Group, L.P. Unless stated otherwise or the context requires otherwise, references to "WPG Inc." mean Washington Prime Group Inc., an Indiana corporation, and references to "WPG L.P." mean Washington Prime Group, L.P., an Indiana limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between WPG Inc. and WPG L.P. We use the terms "WPG," the "Company,” “we,” "us," and “our” to refer to WPG Inc., WPG L.P., and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material interest on a consolidated basis, unless the context indicates otherwise.

WPG Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). WPG Inc. owns properties and conducts operations through WPG L.P., of which WPG Inc. is the sole general partner and of which it held approximately 84.4% of the partnership interests (“OP units”) at ~~March 31,~~June 30, 2019. The remaining OP units are owned by various limited partners. As the sole general partner of WPG L.P., WPG Inc. has the exclusive and complete responsibility for WPG L.P.’s day-to-day management and control. Management operates WPG Inc. and WPG L.P. as one enterprise. The management of WPG Inc. consists of the same persons who direct the management of WPG L.P. As general partner with control of WPG L.P., WPG Inc. consolidates WPG L.P. for financial reporting purposes, and WPG Inc. does not have significant assets other than its investment in WPG L.P. Therefore, the assets and liabilities of WPG Inc. and WPG L.P. are substantially the same on their respective consolidated financial statements and the disclosures of WPG Inc. and WPG L.P. also are substantially similar.

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

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

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

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

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

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

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

FORM 10-Q

INDEX



PART I:	FINANCIAL INFORMATION	PAGE

Item 1.	Consolidated Financial Statements (unaudited)

	Financial Statements for Washington Prime Group Inc.:

	Consolidated Balance Sheets as of ~~March 31,~~June 30, 2019 and December 31, 2018	4

	Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended ~~March 31,~~June 30, 2019 and 2018	5

	Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018	6

	Consolidated Statements of Equity for the three and six months ended ~~March 31,~~June 30, 2019 and 2018	7

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

	Consolidated Balance Sheets as of ~~March 31,~~June 30, 2019 and December 31, 2018	9

	Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended ~~March 31,~~June 30, 2019 and 2018	10

	Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018	11

	Consolidated Statements of Equity for the three and six months ended ~~March 31,~~June 30, 2019 and 2018	12

	Condensed Notes to Consolidated Financial Statements	1314

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3033

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4651

Item 4.	Controls and Procedures	4651

PART II:	OTHER INFORMATION

Item 1.	Legal Proceedings	4752

Item 1A.	Risk Factors	4752

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4752

Item 3.	Defaults Upon Senior Securities	4752

Item 4.	Mine Safety Disclosures	4752

Item 5.	Other Information	4752

Item 6.	Exhibits	4853

SIGNATURES		4954

PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements

Washington Prime Group Inc.

Unaudited Consolidated Balance Sheets

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


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
ASSETS:
Investment properties at cost	$	5,933,785		$	5,914,705		$	5,967,014		$	5,914,705
Less: accumulated depreciation	2,334,130			2,283,764			2,379,946			2,283,764
	3,599,655			3,630,941			3,587,068			3,630,941
Cash and cash equivalents	29,244			42,542			30,683			42,542
Tenant receivables and accrued revenue, net	81,849			85,463			77,656			85,463
Investment in and advances to unconsolidated entities, at equity	428,130			433,207			421,657			433,207
Deferred costs and other assets	171,422			169,135			189,975			169,135
Total assets	$	4,310,300		$	4,361,288		$	4,307,039		$	4,361,288
LIABILITIES:
Mortgage notes payable	$	978,823		$	983,269		$	1,152,118		$	983,269
Notes payable	983,542			982,697			984,392			982,697
Unsecured term loans	685,792			685,509			686,076			685,509
Revolving credit facility	341,288			286,002			218,573			286,002
Accounts payable, accrued expenses, intangibles, and deferred revenues	216,172			253,862			245,041			253,862
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	3,224,030			3,209,752			3,304,613			3,209,752
Redeemable noncontrolling interests	3,265			3,265			3,265			3,265
EQUITY:
Stockholders' Equity:
Series H Cumulative Redeemable Preferred Stock, $0.0001 par value, 4,000,000 shares issued and outstanding as of March 31, 2019 and December 31, 2018	104,251			104,251
Series I Cumulative Redeemable Preferred Stock, $0.0001 par value, 3,800,000 shares issued and outstanding as of March 31, 2019 and December 31, 2018	98,325			98,325
Common stock, $0.0001 par value, 350,000,000 shares authorized; 186,493,797 and 186,074,461 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	19			19
Series H Cumulative Redeemable Preferred Stock, $0.0001 par value, 4,000,000 shares issued and outstanding as of June 30, 2019 and December 31, 2018							104,251			104,251
Series I Cumulative Redeemable Preferred Stock, $0.0001 par value, 3,800,000 shares issued and outstanding as of June 30, 2019 and December 31, 2018							98,325			98,325
Common stock, $0.0001 par value, 350,000,000 shares authorized; 186,587,293 and 186,074,461 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively							19			19
Capital in excess of par value	1,249,490			1,247,639			1,251,319			1,247,639
Accumulated deficit	(509,187		)	(456,924		)	(573,611		)	(456,924		)
Accumulated other comprehensive income	2,082			6,400
Accumulated other comprehensive (loss) income							(5,932		)	6,400
Total stockholders' equity	944,980			999,710			874,371			999,710
Noncontrolling interests	138,025			148,561			124,790			148,561
Total equity	1,083,005			1,148,271			999,161			1,148,271
Total liabilities, redeemable noncontrolling interests and equity	$	4,310,300		$	4,361,288		$	4,307,039		$	4,361,288

The accompanying notes are an integral part of these statements.

Washington Prime Group Inc.

Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income

(dollars in thousands, except per share amounts)


	For the Three Months Ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
REVENUE:
Rental income	$	163,273		$	172,417		$	156,230		$	170,443		$	319,503		$	342,860
Other income	5,550			4,577			5,204			7,674			10,754			12,251
Total revenues	168,823			176,994			161,434			178,117			330,257			355,111
EXPENSES:
Property operating	39,429			36,366			36,432			35,945			75,861			72,311
Depreciation and amortization	66,378			61,294			71,816			63,796			138,194			125,090
Real estate taxes	22,114			22,041			19,878			21,094			41,992			43,135
Advertising and promotion	1,893			1,771			2,025			2,240			3,918			4,011
General and administrative	14,125			9,654			13,124			11,191			27,249			20,845
Ground rent	203			197			195			198			398			395
Total operating expenses	144,142			131,323			143,470			134,464			287,612			265,787

Interest expense, net	(36,830		)	(34,344		)	(39,143		)	(34,701		)	(75,973		)	(69,045		)
Gain on disposition of interests in properties, net	9,990			8,181			6,241			8,063			16,231			16,244
Income and other taxes	(356		)	(485		)	(229		)	(601		)	(585		)	(1,086		)
(Loss) income from unconsolidated entities, net	(48		)	1,162			(1,713		)	(895		)	(1,761		)	267
NET (LOSS) INCOME	(2,563		)	20,185			(16,880		)	15,519			(19,443		)	35,704
Net (loss) income attributable to noncontrolling interests	(896		)	2,661			(3,126		)	1,925			(4,022		)	4,586
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY	(1,667		)	17,524			(13,754		)	13,594			(15,421		)	31,118
Less: Preferred share dividends	(3,508		)	(3,508		)	(3,508		)	(3,508		)	(7,016		)	(7,016		)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(5,175	)	$	14,016		$	(17,262	)	$	10,086		$	(22,437	)	$	24,102

(LOSS) EARNINGS PER COMMON SHARE, BASIC & DILUTED	$	(0.03	)	$	0.07		$	(0.09	)	$	0.05		$	(0.12	)	$	0.13

COMPREHENSIVE (LOSS) INCOME:
Net (loss) income	$	(2,563	)	$	20,185		$	(16,880	)	$	15,519		$	(19,443	)	$	35,704
Unrealized (loss) income on interest rate derivative instruments, net	(5,110		)	5,217			(9,485		)	602			(14,595		)	5,819
Comprehensive (loss) income	(7,673		)	25,402			(26,365		)	16,121			(34,038		)	41,523
Comprehensive (loss) income attributable to noncontrolling interests	(1,688		)	3,482			(4,597		)	2,024			(6,285		)	5,506
Comprehensive (loss) income attributable to common shareholders	$	(5,985	)	$	21,920		$	(21,768	)	$	14,097		$	(27,753	)	$	36,017

The accompanying notes are an integral part of these statements.

Washington Prime Group Inc.

Unaudited Consolidated Statements of Cash Flows

(dollars in thousands)


	For the Three Months Ended March 31,						For the Six Months Ended June 30,
	2019			2018			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(2,563	)	$	20,185		$	(19,443	)	$	35,704
Adjustments to reconcile net (loss) 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	65,270			61,404			137,404			126,545
Gain on disposition of interests in properties and outparcels, net	(9,990		)	(8,181		)	(16,231		)	(16,244		)
Change in estimate of collectibility of rental income	2,980			3,346			4,027			3,957
Loss (income) from unconsolidated entities, net	48			(1,162		)	1,761			(267		)
Distributions of income from unconsolidated entities	575			1,585			912			2,817
Changes in assets and liabilities:
Tenant receivables and accrued revenue, net	1,766			1,177			6,142			9,017
Deferred costs and other assets	(6,047		)	(11,612		)	(3,780		)	(15,858		)
Accounts payable, accrued expenses, deferred revenues and other liabilities	(39,388		)	(23,082		)	(17,236		)	(9,900		)
Net cash provided by operating activities	12,651			43,660			93,556			135,771
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired							—			(80,108		)
Capital expenditures, net	(35,162		)	(29,675		)	(81,131		)	(59,772		)
Net proceeds from disposition of interests in properties and outparcels	12,084			13,776			20,492			23,402
Investments in unconsolidated entities	(3,273		)	(10,048		)	(5,870		)	(12,054		)
Distributions of capital from unconsolidated entities	7,727			19,884			14,747			22,923
Net cash used in investing activities	(18,624		)	(6,063		)	(51,762		)	(105,609		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to noncontrolling interest holders in properties	(66		)	(5		)	(66		)	(5		)
Redemption of limited partner units	—			(11		)	(19		)	(25		)
Net proceeds from issuance of common shares, including common stock plans	1			—			1			—
Distributions on common and preferred shares/units	(59,336		)	(59,167		)	(118,754		)	(118,385		)
Proceeds from issuance of debt, net of transaction costs	75,000			476,877			303,088			593,714
Repayments of debt	(24,142		)	(451,101		)	(206,702		)	(492,548		)
Other financing activities							(150		)	—
Net cash used in financing activities	(8,543		)	(33,407		)	(22,602		)	(17,249		)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(14,516		)	4,190			19,192			12,913
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	61,084			70,201			61,084			70,201
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	46,568		$	74,391		$	80,276		$	83,114

The accompanying notes are an integral part of these statements.

Washington Prime Group Inc.

Unaudited Consolidated Statements of Equity

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


	Preferred Series H		Preferred Series I		Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Stockholders' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests		For the Three Months Ended June 30, 2019
Balance, December 31, 2018	$	104,251	$	98,325	$	19	$	1,247,639		$	(456,924	)	$	6,400		$	999,710		$	148,561		$	1,148,271		$	3,265
																											Preferred Series H		Preferred Series I		Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total Stockholders' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
Balance, March 31, 2019																											$	104,251	$	98,325	$	19	$	1,249,490		$	(509,187	)	$	2,082		$	944,980		$	138,025		$	1,083,005		$	3,265
Redemption of limited partner units																											—		—		—		—			—			—			—			(19		)	(19		)	—
Other	—		—		—		(7		)	—			—			(7		)	—			(7		)	—		—		—		—		(7		)	—			—			(7		)	—			(7		)	—
Exercise of stock options	—		—		—		1			—			—			1			—			1			—
Equity-based compensation	—		—		—		1,778			—			—			1,778			37			1,815			—		—		—		—		1,965			—			—			1,965			—			1,965			—
Adjustments to noncontrolling interests	—		—		—		79			—			—			79			(79		)	—			—		—		—		—		(129		)	—			—			(129		)	129			—			—
Distributions on common shares/units ($0.25 per common share/unit)	—		—		—		—			(47,088		)	—			(47,088		)	(8,746		)	(55,834		)	—		—		—		—		—			(47,162		)	—			(47,162		)	(8,688		)	(55,850		)	—
Distributions declared on preferred shares	—		—		—		—			(3,508		)	—			(3,508		)	—			(3,508		)	—		—		—		—		—			(3,508		)	—			(3,508		)	—			(3,508		)	—
Other comprehensive loss	—		—		—		—			—			(4,318		)	(4,318		)	(792		)	(5,110		)	—		—		—		—		—			—			(8,014		)	(8,014		)	(1,471		)	(9,485		)	—
Net loss, excluding $60 of distributions to preferred unitholders	—		—		—		—			(1,667		)	—			(1,667		)	(956		)	(2,623		)	—		—		—		—		—			(13,754		)	—			(13,754		)	(3,186		)	(16,940		)	—
Balance, March 31, 2019	$	104,251	$	98,325	$	19	$	1,249,490		$	(509,187	)	$	2,082		$	944,980		$	138,025		$	1,083,005		$	3,265
Balance, June 30, 2019																											$	104,251	$	98,325	$	19	$	1,251,319		$	(573,611	)	$	(5,932	)	$	874,371		$	124,790		$	999,161		$	3,265



	For the Six Months Ended June 30, 2019
	Preferred Series H		Preferred Series I		Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total Stockholders' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
Balance, December 31, 2018	$	104,251	$	98,325	$	19	$	1,247,639		$	(456,924	)	$	6,400		$	999,710		$	148,561		$	1,148,271		$	3,265
Redemption of limited partner units	—		—		—		—			—			—			—			(19		)	(19		)	—
Other	—		—		—		(14		)	—			—			(14		)	—			(14		)	—
Exercise of stock options	—		—		—		1			—			—			1			—			1			—
Equity-based compensation	—		—		—		3,743			—			—			3,743			37			3,780			—
Adjustments to noncontrolling interests	—		—		—		(50		)	—			—			(50		)	50			—			—
Distributions on common shares/units ($0.50 per common share/unit)	—		—		—		—			(94,250		)	—			(94,250		)	(17,434		)	(111,684		)	—
Distributions declared on preferred shares	—		—		—		—			(7,016		)	—			(7,016		)	—			(7,016		)	—
Other comprehensive loss	—		—		—		—			—			(12,332		)	(12,332		)	(2,263		)	(14,595		)	—
Net loss, excluding $120 of distributions to preferred unitholders	—		—		—		—			(15,421		)	—			(15,421		)	(4,142		)	(19,563		)	—
Balance, June 30, 2019	$	104,251	$	98,325	$	19	$	1,251,319		$	(573,611	)	$	(5,932	)	$	874,371		$	124,790		$	999,161		$	3,265

The accompanying notes are an integral part of this statement.

Washington Prime Group Inc.

Unaudited Consolidated Statements of Equity (Continued)

(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		For the Three Months Ended June 30, 2018
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			—
																										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, 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
Redemption of limited partner units	—		—		—		—			—			—		—			(11		)	(11		)	—		—		—		—		—			—			—		—			(14		)	(14		)	—
Other	—		—		—		(36		)	—			—		(36		)	—			(36		)	—		—		—		—		(53		)	—			—		(53		)	—			(53		)	—
Equity-based compensation	—		—		—		1,523			—			—		1,523			219			1,742			—		—		—		—		2,248			—			—		2,248			271			2,519			—
Adjustments to noncontrolling interests	—		—		—		397			—			—		397			(397		)	—			—		—		—		—		38			—			—		38			(38		)	—			—
Distributions on common shares/units ($0.25 per common share/unit)	—		—		—		—			(46,909		)	—		(46,909		)	(8,695		)	(55,604		)	—		—		—		—		—			(46,961		)	—		(46,961		)	(8,689		)	(55,650		)	—
Distributions declared on preferred shares	—		—		—		—			(3,508		)	—		(3,508		)	—			(3,508		)	—		—		—		—		—			(3,508		)	—		(3,508		)	—			(3,508		)	—
Other comprehensive income	—		—		—		—			—			4,396		4,396			821			5,217			—		—		—		—		—			—			503		503			99			602			—
Net income, excluding $60 of distributions to preferred unitholders	—		—		—		—			17,524			—		17,524			2,601			20,125			—		—		—		—		—			13,594			—		13,594			1,865			15,459			—
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
Balance, June 30, 2018																										$	104,251	$	98,325	$	19	$	1,244,211		$	(418,472	)	$	12,403	$	1,040,737		$	156,139		$	1,196,876		$	3,265



	For the Six Months Ended June 30, 2018
	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	—		—		—		—			—			—		—			(25		)	(25		)	—
Other	—		—		—		(89		)	—			—		(89		)	—			(89		)	—
Equity-based compensation	—		—		—		3,771			—			—		3,771			490			4,261			—
Adjustments to noncontrolling interests	—		—		—		435			—			—		435			(435		)	—			—
Distributions on common shares/units ($0.50 per common share/unit)	—		—		—		—			(93,870		)	—		(93,870		)	(17,384		)	(111,254		)	—
Distributions declared on preferred shares	—		—		—		—			(7,016		)	—		(7,016		)	—			(7,016		)	—
Other comprehensive income	—		—		—		—			—			4,899		4,899			920			5,819			—
Net income, excluding $120 of distributions to preferred unitholders	—		—		—		—			31,118			—		31,118			4,466			35,584			—
Balance, June 30, 2018	$	104,251	$	98,325	$	19	$	1,244,211		$	(418,472	)	$	12,403	$	1,040,737		$	156,139		$	1,196,876		$	3,265

The accompanying notes are an integral part of this statement.

Washington Prime Group, L.P.

Unaudited Consolidated Balance Sheets

(dollars in thousands, except unit amounts)


	March 31, 2019		December 31, 2018		June 30, 2019		December 31, 2018
ASSETS:
Investment properties at cost	$	5,933,785	$	5,914,705	$	5,967,014	$	5,914,705
Less: accumulated depreciation	2,334,130		2,283,764		2,379,946		2,283,764
	3,599,655		3,630,941		3,587,068		3,630,941
Cash and cash equivalents	29,244		42,542		30,683		42,542
Tenant receivables and accrued revenue, net	81,849		85,463		77,656		85,463
Investment in and advances to unconsolidated entities, at equity	428,130		433,207		421,657		433,207
Deferred costs and other assets	171,422		169,135		189,975		169,135
Total assets	$	4,310,300	$	4,361,288	$	4,307,039	$	4,361,288
LIABILITIES:
Mortgage notes payable	$	978,823	$	983,269	$	1,152,118	$	983,269
Notes payable	983,542		982,697		984,392		982,697
Unsecured term loans	685,792		685,509		686,076		685,509
Revolving credit facility	341,288		286,002		218,573		286,002
Accounts payable, accrued expenses, intangibles, and deferred revenues	216,172		253,862		245,041		253,862
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	3,224,030		3,209,752		3,304,613		3,209,752
Redeemable noncontrolling interests	3,265		3,265		3,265		3,265
EQUITY:
Partners' Equity:
General partner
Preferred equity, 7,800,000 units issued and outstanding as of March 31, 2019 and December 31, 2018	202,576		202,576
Common equity, 186,493,797 and 186,074,461 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	742,404		797,134
Preferred equity, 7,800,000 units issued and outstanding as of June 30, 2019 and December 31, 2018					202,576		202,576
Common equity, 186,587,293 and 186,074,461 units issued and outstanding as of June 30, 2019 and December 31, 2018, respectively					671,795		797,134
Total general partners' equity	944,980		999,710		874,371		999,710
Limited partners, 34,755,660 and 34,755,660 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	137,019		147,493
Limited partners, 34,752,111 and 34,755,660 units issued and outstanding as of June 30, 2019 and December 31, 2018, respectively					123,784		147,493
Total partners' equity	1,081,999		1,147,203		998,155		1,147,203
Noncontrolling interests	1,006		1,068		1,006		1,068
Total equity	1,083,005		1,148,271		999,161		1,148,271
Total liabilities, redeemable noncontrolling interests and equity	$	4,310,300	$	4,361,288	$	4,307,039	$	4,361,288

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income

(dollars in thousands, except per unit amounts)


	For the Three Months Ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
REVENUE:
Rental income	$	163,273		$	172,417		$	156,230		$	170,443		$	319,503		$	342,860
Other income	5,550			4,577			5,204			7,674			10,754			12,251
Total revenues	168,823			176,994			161,434			178,117			330,257			355,111
EXPENSES:
Property operating	39,429			36,366			36,432			35,945			75,861			72,311
Depreciation and amortization	66,378			61,294			71,816			63,796			138,194			125,090
Real estate taxes	22,114			22,041			19,878			21,094			41,992			43,135
Advertising and promotion	1,893			1,771			2,025			2,240			3,918			4,011
General and administrative	14,125			9,654			13,124			11,191			27,249			20,845
Ground rent	203			197			195			198			398			395
Total operating expenses	144,142			131,323			143,470			134,464			287,612			265,787

Interest expense, net	(36,830		)	(34,344		)	(39,143		)	(34,701		)	(75,973		)	(69,045		)
Gain on disposition of interests in properties, net	9,990			8,181			6,241			8,063			16,231			16,244
Income and other taxes	(356		)	(485		)	(229		)	(601		)	(585		)	(1,086		)
(Loss) income from unconsolidated entities, net	(48		)	1,162			(1,713		)	(895		)	(1,761		)	267
NET (LOSS) INCOME ATTRIBUTABLE TO UNITHOLDERS	(2,563		)	20,185			(16,880		)	15,519			(19,443		)	35,704
Less: Preferred unit distributions	(3,568		)	(3,568		)	(3,568		)	(3,568		)	(7,136		)	(7,136		)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS	$	(6,131	)	$	16,617		$	(20,448	)	$	11,951		$	(26,579	)	$	28,568

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS:
General partner	$	(5,175	)	$	14,016		$	(17,262	)	$	10,086		$	(22,437	)	$	24,102
Limited partners	(956		)	2,601			(3,186		)	1,865			(4,142		)	4,466
Net (loss) income attributable to common unitholders	$	(6,131	)	$	16,617		$	(20,448	)	$	11,951		$	(26,579	)	$	28,568

(LOSS) EARNINGS PER COMMON UNIT, BASIC & DILUTED	$	(0.03	)	$	0.07		$	(0.09	)	$	0.05		$	(0.12	)	$	0.13

COMPREHENSIVE (LOSS) INCOME:
Net (loss) income	$	(2,563	)	$	20,185		$	(16,880	)	$	15,519		$	(19,443	)	$	35,704
Unrealized (loss) income on interest rate derivative instruments, net	(5,110		)	5,217			(9,485		)	602			(14,595		)	5,819
Comprehensive (loss) income	$	(7,673	)	$	25,402		$	(26,365	)	$	16,121		$	(34,038	)	$	41,523

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Cash Flows

(dollars in thousands)


	For the Three Months Ended March 31,						For the Six Months Ended June 30,
	2019			2018			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(2,563	)	$	20,185		$	(19,443	)	$	35,704
Adjustments to reconcile net (loss) 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	65,270			61,404			137,404			126,545
Gain on disposition of interests in properties and outparcels, net	(9,990		)	(8,181		)	(16,231		)	(16,244		)
Change in estimate of collectibility of rental income	2,980			3,346			4,027			3,957
Loss (income) from unconsolidated entities, net	48			(1,162		)	1,761			(267		)
Distributions of income from unconsolidated entities	575			1,585			912			2,817
Changes in assets and liabilities:
Tenant receivables and accrued revenue, net	1,766			1,177			6,142			9,017
Deferred costs and other assets	(6,047		)	(11,612		)	(3,780		)	(15,858		)
Accounts payable, accrued expenses, deferred revenues and other liabilities	(39,388		)	(23,082		)	(17,236		)	(9,900		)
Net cash provided by operating activities	12,651			43,660			93,556			135,771
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired							—			(80,108		)
Capital expenditures, net	(35,162		)	(29,675		)	(81,131		)	(59,772		)
Net proceeds from disposition of interests in properties and outparcels	12,084			13,776			20,492			23,402
Investments in unconsolidated entities	(3,273		)	(10,048		)	(5,870		)	(12,054		)
Distributions of capital from unconsolidated entities	7,727			19,884			14,747			22,923
Net cash used in investing activities	(18,624		)	(6,063		)	(51,762		)	(105,609		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to noncontrolling interest holders in properties	(66		)	(5		)	(66		)	(5		)
Redemption of limited partner units	—			(11		)	(19		)	(25		)
Net proceeds from issuance of common units, including equity-based compensation plans	1			—			1			—
Distributions to unitholders	(59,336		)	(59,167		)	(118,754		)	(118,385		)
Proceeds from issuance of debt, net of transaction costs	75,000			476,877			303,088			593,714
Repayments of debt	(24,142		)	(451,101		)	(206,702		)	(492,548		)
Other financing activities							(150		)	—
Net cash used in financing activities	(8,543		)	(33,407		)	(22,602		)	(17,249		)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(14,516		)	4,190			19,192			12,913
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	61,084			70,201			61,084			70,201
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	46,568		$	74,391		$	80,276		$	83,114

The accompanying notes are an integral part of these statements.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Equity

(dollars in thousands, except per unit amounts)


	General Partner																								For the Three Months Ended June 30, 2019
	Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests			General Partner
Balance, December 31, 2018	$	202,576		$	797,134		$	999,710		$	147,493		$	1,147,203		$	1,068		$	1,148,271		$	3,265
																									Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests		Total Equity			Redeemable Non-Controlling Interests
Balance, March 31, 2019																									$	202,576		$	742,404		$	944,980		$	137,019		$	1,081,999		$	1,006	$	1,083,005		$	3,265
Redemption of limited partner units																									—			—			—			(19		)	(19		)	—		(19		)	—
Other	—			(7		)	(7		)	—			(7		)	—			(7		)	—			—			(7		)	(7		)	—			(7		)	—		(7		)	—
Exercise of stock options	—			1			1			—			1			—			1			—
Equity-based compensation	—			1,778			1,778			37			1,815			—			1,815			—			—			1,965			1,965			—			1,965			—		1,965			—
Adjustments to limited partners' interests	—			79			79			(79		)	—			—			—			—			—			(129		)	(129		)	129			—			—		—			—
Distributions on common units ($0.25 per common unit)	—			(47,088		)	(47,088		)	(8,684		)	(55,772		)	(62		)	(55,834		)	—			—			(47,162		)	(47,162		)	(8,688		)	(55,850		)	—		(55,850		)	—
Distributions declared on preferred units	(3,508		)	—			(3,508		)	—			(3,508		)	—			(3,508		)	(60		)	(3,508		)	—			(3,508		)	—			(3,508		)	—		(3,508		)	(60		)
Other comprehensive loss	—			(4,318		)	(4,318		)	(792		)	(5,110		)	—			(5,110		)	—			—			(8,014		)	(8,014		)	(1,471		)	(9,485		)	—		(9,485		)	—
Net loss	3,508			(5,175		)	(1,667		)	(956		)	(2,623		)	—			(2,623		)	60
Balance, March 31, 2019	$	202,576		$	742,404		$	944,980		$	137,019		$	1,081,999		$	1,006		$	1,083,005		$	3,265
Net income (loss)																									3,508			(17,262		)	(13,754		)	(3,186		)	(16,940		)	—		(16,940		)	60
Balance, June 30, 2019																									$	202,576		$	671,795		$	874,371		$	123,784		$	998,155		$	1,006	$	999,161		$	3,265

General Partner
Preferred Common Total Limited Partners Total
Partners'
Equity Non-
Controlling
Interests Total
Equity Redeemable Non-Controlling Interests
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 —
—
—
(11 ) (11 ) —
(11 ) —
Other —
(36 ) (36 ) —
(36 ) —
(36 ) —
Equity-based compensation —
1,523
1,523
219
1,742
—
1,742
—
Adjustments to limited partners' interests —
397
397
(397 ) —
—
—
—
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 (3,508 ) —
(3,508 ) —
(3,508 ) —
(3,508 ) (60 )
Other comprehensive income —
4,396
4,396
821
5,217
—
5,217
—
Net income 3,508
14,016
17,524
2,601
20,125
—
20,125
60
Balance, March 31, 2018 $ 202,576
$ 872,300
$ 1,074,876
$ 161,592
$ 1,236,468
$ 1,053
$ 1,237,521
$ 3,265



	For the Six Months Ended June 30, 2019
	General Partner
	Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
Balance, December 31, 2018	$	202,576		$	797,134		$	999,710		$	147,493		$	1,147,203		$	1,068		$	1,148,271		$	3,265
Redemption of limited partner units	—			—			—			(19		)	(19		)	—			(19		)	—
Other	—			(14		)	(14		)	—			(14		)	—			(14		)	—
Exercise of stock options	—			1			1			—			1			—			1			—
Equity-based compensation	—			3,743			3,743			37			3,780			—			3,780			—
Adjustments to limited partners' interests	—			(50		)	(50		)	50			—			—			—			—
Distributions on common units ($0.50 per common unit)	—			(94,250		)	(94,250		)	(17,372		)	(111,622		)	(62		)	(111,684		)	—
Distributions declared on preferred units	(7,016		)	—			(7,016		)	—			(7,016		)	—			(7,016		)	(120		)
Other comprehensive loss	—			(12,332		)	(12,332		)	(2,263		)	(14,595		)	—			(14,595		)	—
Net income (loss)	7,016			(22,437		)	(15,421		)	(4,142		)	(19,563		)	—			(19,563		)	120
Balance, June 30, 2019	$	202,576		$	671,795		$	874,371		$	123,784		$	998,155		$	1,006		$	999,161		$	3,265

The accompanying notes are an integral part of this statement.

Washington Prime Group, L.P.

Unaudited Consolidated Statements of Equity (Continued)

(dollars in thousands, except per unit amounts)



	For the Three Months Ended June 30, 2018
	General Partner
	Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests		Total Equity			Redeemable Non-Controlling Interests
Balance, March 31, 2018	$	202,576		$	872,300		$	1,074,876		$	161,592		$	1,236,468		$	1,053	$	1,237,521		$	3,265
Redemption of limited partner units	—			—			—			(14		)	(14		)	—		(14		)	—
Other	—			(53		)	(53		)	—			(53		)	—		(53		)	—
Equity-based compensation	—			2,248			2,248			271			2,519			—		2,519			—
Adjustments to limited partners' interests	—			38			38			(38		)	—			—		—			—
Distributions on common units ($0.25 per common unit)	—			(46,961		)	(46,961		)	(8,689		)	(55,650		)	—		(55,650		)	—
Distributions declared on preferred units	(3,508		)	—			(3,508		)	—			(3,508		)	—		(3,508		)	(60		)
Other comprehensive income	—			503			503			99			602			—		602			—
Net income	3,508			10,086			13,594			1,865			15,459			—		15,459			60
Balance, June 30, 2018	$	202,576		$	838,161		$	1,040,737		$	155,086		$	1,195,823		$	1,053	$	1,196,876		$	3,265



	For the Six Months Ended June 30, 2018
	General Partner
	Preferred			Common			Total			Limited Partners			Total Partners' Equity			Non- Controlling Interests			Total Equity			Redeemable Non-Controlling Interests
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	—			—			—			(25		)	(25		)	—			(25		)	—
Other	—			(89		)	(89		)	—			(89		)	—			(89		)	—
Equity-based compensation	—			3,771			3,771			490			4,261			—			4,261			—
Adjustments to limited partners' interests	—			435			435			(435		)	—			—			—			—
Distributions on common units ($0.50 per common unit)	—			(93,870		)	(93,870		)	(17,379		)	(111,249		)	(5		)	(111,254		)	—
Distributions declared on preferred units	(7,016		)	—			(7,016		)	—			(7,016		)	—			(7,016		)	(120		)
Other comprehensive income	—			4,899			4,899			920			5,819			—			5,819			—
Net income	7,016			24,102			31,118			4,466			35,584			—			35,584			120
Balance, June 30, 2018	$	202,576		$	838,161		$	1,040,737		$	155,086		$	1,195,823		$	1,053		$	1,196,876		$	3,265

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)


1.	Organization

Washington Prime Group Inc. (“WPG Inc.”) is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Code"). WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income 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 ~~March 31,~~June 30, 2019, our assets consisted of material interests in 108 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 5856 million square feet of managed 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 costs such as property operating, real estate taxes, repair and maintenance, and advertising and promotional expenses.

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

Severance

On February 5, 2019, the Company's Executive Vice President, Head of Open Air Centers was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated, without cause, additional non-executive personnel in the Property Management department as part of an effort to reduce overhead costs. In connection with and as part of the aforementioned management changes, the Company recorded aggregate severance charges of $1.9 million, including $0.1 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards, which costs are included in general and administrative expense in the accompanying consolidated statements of operations and comprehensive (loss) income for the ~~three~~six months ended ~~March 31,~~June 30, 2019.

On March 18, 2019, the Company's Executive Vice President, Development notified the Company of his resignation. The effective date of his resignation was March 28, 2019. There were no severance payments or accelerated vesting of stock compensation benefits in connection with this separation.

On May 7, 2018, the Company's Executive Vice President, Property Management was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated without cause additional non-executive personnel in the Property Management department. In connection with and as part of the aforementioned management and personnel changes, the Company recorded aggregate severance charges of $2.0 million, including $0.5 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards, which costs are included in general and administrative expense in the accompanying consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2018.


2.	Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of ~~March 31,~~June 30, 2019 and December 31, 2018 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The accompanying consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. Due to the seasonal nature of certain operational activities, the results for the interim period ended ~~March 31,~~June 30, 2019 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 2018 Annual Report on Form 10-K for WPG Inc. and WPG L.P. (the "2018 Form 10-K").

~~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)~~

General

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

There have been no changes during the three months ended March 31, 2019 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 three and six months ended ~~March 31,~~June 30, 2019, we sold our interest in undeveloped land that was previously identified as a VIE. As of June 30, 2019, we have one VIE, which consists of our interest in WPG L.P. During the six months ended June 30, 2019, we did not provide financial or other support to a previously identified VIE that we were not previously contractually obligated to provide.

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

As of ~~March 31,~~June 30, 2019, our assets consisted of material interests in 108 shopping centers. The consolidated financial statements as of that date reflect the consolidation of 91 wholly owned properties and four additional properties that are less than wholly owned, but which we control or for which we are the primary beneficiary. We account for our interests in the remaining 13 properties, or the joint venture properties, using the equity method of accounting. While we manage the day-to-day operations of the joint venture properties, we do not control the operations as we have determined that our partner or partners have substantive participating rights with respect to the assets and operations of these joint venture properties (see Note 5 - "Investment in Unconsolidated Entities, at Equity" for further details).

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 (loss) income attributable to noncontrolling interests. WPG Inc.'s weighted average ownership interest in WPG L.P. was 84.4% and ~~84.3%~~84.4% for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and ~~2018, respectively.~~2018. As of ~~March 31,~~June 30, 2019 and December 31, 2018, WPG Inc.'s ownership interest in WPG L.P. was 84.4% and 84.4%~~, 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.

~~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 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 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

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)." This new guidance, including related ASUs that were subsequently issued, was effective January 1, 2019 and required lessees to recognize a lease liability and right of use ("ROU") asset, measured as the present value of lease payments, for both operating and financing leases with a term greater than 12 months. Additionally, the new standard made targeted changes to lessor accounting. The new leases standard required a modified retrospective transition approach for all leases existing at, or entered into after, January 1, 2017, with an option to use certain transition relief which allowed an entity to account for the impact of the adoption ASU 2016-02 with a cumulative adjustment to retained earnings, if necessary, on January 1, 2019, rather than January 1, 2017, eliminating the need to restate amounts presented prior to January 1, 2019.

The Company adopted the new standard on January 1, 2019 and applied the new guidance utilizing the optional transition method noted above. The Company elected to use the "package of practical expedients," which allowed the Company not to reassess under the new standard prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not make any adjustments to the opening balance of retained earnings upon adoption of the new standard given the nature of the impacts and other transition practical expedients elected by the Company.

Upon adoption, the Company recognized a lease liability and corresponding ROU asset of approximately $14.4 million for the four material ground leases, two material office leases, and one material garage lease with a term of more than 12 months. For leases with a term of 12 months or less, the Company made an accounting policy election by underlying asset to not recognize lease liabilities and ROU assets. Additionally, the Company excluded certain office equipment leases due to materiality. All of these leases were classified as operating leases under legacy GAAP and the current classification was carried forward under ASU 2016-02. See "Note 10 - Commitments and Contingencies" for additional details.

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)

From a lessor perspective, the new guidance remained mostly similar to legacy GAAP as the Company elected the practical expedient to not separate non-lease components from lease components. This election resulted in a change on the Company's consolidated statements of operations and comprehensive (loss) income as the Company no longer presents minimum rents, overage rents, and tenant reimbursements as separate line items because the Company now accounts for these line items as a single combined lease component, rental income, on the basis of the lease component being the predominant component of the contract. As such, non-lease components, including common-area ("CAM") revenues, are now combined with lease components and are recognized on a straight-line basis to the extent the non-lease components are fixed. Additionally, ASU 2016-02 required the Company to recognize a change, after the commencement date, in their assessment of whether the collectibility of an operating lease receivable as probable as an adjustment to rental income rather than as a provision for credit losses. This requirement resulted in a change on the Company's consolidated statements of operations and comprehensive (loss) income as the Company no longer presents provision for credit losses as a separate line item and the adjustment is now recorded as a reduction to rental income. ASU 2016-02 also introduced certain changes to the lease classification rules for lessors. Accordingly, some leases may be classified as sales-type leases in the future. This change is not expected to have a material impact on the Company's financial statements. Finally, ASU 2016-02 disallowed the capitalization of internal leasing costs and legal costs, unless said costs are incremental to obtaining the lease contract, resulting in an increase in the Company's general and administrative expenses. For the three and six months ended ~~March 31,~~June 30, 2018, we capitalized approximately ~~$4.1~~$4.6 million and $8.7 million of internal legal and leasing costs, respectively, that would no longer qualify for capitalization under the new standard. The Company elected to use the practical expedient in transition to not re-evaluate costs that were previously capitalized.

~~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 cumulative effect of the change to our consolidated January 1, 2019 balance sheet for the adoption of ASU 2016-02 was as follows:



	Balance at December 31, 2018		Adjustments Due to ASU 2016-02		Balance at January 1, 2019
Balance Sheet
Assets
Deferred costs and other assets	$	169,135	$	14,412	$	183,547

Liabilities
Accounts payable, accrued expenses, intangibles, and deferred revenues	$	253,862	$	14,412	$	268,274

Balance at December 31, 2018 Adjustments Due to
ASU 2016-02 Balance at January 1, 2019
Balance Sheet
Assets
Deferred costs and other assets $ 169,135
$ 14,412
$ 183,547

Liabilities
Accounts payable, accrued expenses, intangibles, and deferred revenues $ 253,862
$ 14,412
$ 268,274

New Standards Issued But Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurements (ASC 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurements." ASU 2018-13 eliminates certain disclosure requirements for all entities, requires public entities to disclose certain new information, and modifies some disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact this ASU will have, if any, on our financial statements and related disclosures.

Reclassifications

Reclassifications were made to conform prior periods to our presentation of the consolidated statements of operations and comprehensive (loss) income due to the impact of adopting ASU 2016-02. Amounts previously disclosed as minimum rent, tenant reimbursements, and overage rent during the three and six months ended ~~March 31,~~June 30, 2018 are now included in rental income and will no longer be presented as separate line items. Additionally, termination income of ~~$1.8~~$0.3 million and $2.0 million, which was previously disclosed in other income, and provision for credit losses of ~~$3.3~~$0.6 million and $4.0 million, which was previously disclosed as a separate line item during the three and six months ended ~~March 31,~~June 30, 2018, respectively, were also reclassified to rental income to conform with the impact of adopting ASU 2016-02.

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)

Reconciliation of Cash, Cash Equivalents, and Restricted Cash

The following is a summary of our beginning and ending cash, cash equivalents and restricted cash totals as presented in our statements of cash flows for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018:



	Balance at June 30,				Balance at December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	30,683	$	53,987	$	42,542	$	52,019
Restricted cash	49,593		29,127		18,542		18,182
Total cash, cash equivalents and restricted cash	$	80,276	$	83,114	$	61,084	$	70,201

Balance at March 31, Balance at December 31,
2019 2018 2018 2017
Cash and cash equivalents $ 29,244
$ 45,871
$ 42,542
$ 52,019
Restricted cash 17,324
28,520
18,542
18,182
Total cash, cash equivalents and restricted cash $ 46,568
$ 74,391
$ 61,084
$ 70,201

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 ~~March 31,~~June 30, 2019 and December 31, 2018.

~~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)~~


4.	Investment in Real Estate

2018 Acquisitions

On April 11, 2018, we acquired, through a sale-leaseback transaction, four Sears department stores and adjacent Sears Auto Centers at Longview Mall, located in Longview, Texas; Polaris Fashion Place®, located in Columbus, Ohio; Southern Hills Mall, located in Sioux City, Iowa; and Town Center at Aurora, located in Aurora, Colorado. The purchase price was approximately $28.5 million and was funded by a combination of $13.4 million from our Facility (as defined in Note 6 - "Indebtedness"), $9.7 million from the first tranche of the Four Corners transaction, as discussed below, and $5.4 million from O'Connor Mall Partners, L.P. ("O'Connor") related to their pro-rata share of the joint venture that owns Polaris Fashion Place® (see Note 5 - "Investment in Unconsolidated Entities, at Equity").

On April 24, 2018, the Company closed on the acquisition of Southgate Mall, located in Missoula, Montana, for $58.0 million, which was funded from our Facility (as defined in Note 6 - "Indebtedness").

The following table summarizes the fair value allocation for the acquisitions, which was finalized during the three months ended June 30, 2018:



Investment properties	$	72,647
Investment in and advances to unconsolidated entities, at equity	5,543
Deferred costs and other assets	10,311
Accounts payable, accrued expenses, intangibles, and deferred revenue	(8,393		)
Net cash paid for acquisitions	$	80,108

Intangibles of $10.3 million, which relate primarily to above-market leases and lease in place values, are included in “Deferred costs and other assets” as of the respective acquisition dates. The initial weighted average useful life of the intangible assets was 11.5 years. Intangibles of $4.9 million, which relate primarily to below-market leases, are included in “Accounts payable, accrued expense, intangibles, and deferred revenue” as of the respective acquisition dates. The initial weighted average useful life of the intangible liabilities was 9.6 years. We capitalized $0.6 million of transaction costs as the transactions were accounted for as asset acquisitions.

2019 Dispositions

We completed the sale of various tranches of restaurant outparcels to FCPT Acquisitions, LLC ("Four Corners") pursuant to the purchase and sale agreement executed on September 20, 2017 between the Company and Four Corners. The following table summarizes the key terms of each tranche sold during the three and six months ended ~~March 31,~~June 30, 2019:


Tranche	Sales Date	Parcels Sold	Purchase Price		Sales Proceeds		Sales Date	Parcels Sold	Purchase Price		Sales Proceeds
Tranche 6	January 18, 2019	8	$	9,435	$	9,364	January 18, 2019	8	$	9,435	$	9,364
Tranche 7	February 11, 2019	1	2,766		2,720		February 11, 2019	1	2,766		2,720
Tranche 8							April 3, 2019	1	2,048		2,016
Tranche 9							June 28, 2019	3	3,050		3,031
		9	$	12,201	$	12,084		13	$	17,299	$	17,131

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 Company expects to close on most of the approximately $20.0 million of remaining outparcels during 2019, subject to due diligence and closing conditions. Additionally, during the three and six months ended June 30, 2019, the Company sold certain undeveloped land parcels for an aggregate purchase price of $3.6 million, receiving net proceeds of $3.4 million. The net proceeds from the disposition activities were generally used to fund ongoing redevelopment efforts and for general corporate purposes.

In connection with the 2019 disposition activities, the Company recorded ~~a gain~~gains of ~~$10.0~~$6.2 million and $16.2 million for the three and six months ended ~~March 31,~~June 30, 2019, respectively, which isare included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive (loss) income. ~~The Company expects to close on most of the approximately $25.3 million of remaining outparcels during 2019, subject to due diligence and closing conditions.~~

2018 Dispositions

~~On January 12, 2018, we completed~~The following table summarizes the ~~sale~~key terms of ~~the first~~each tranche ~~of restaurant outparcels~~sold to Four ~~Corners. The first tranche consisted of 10 outparcels, with an allocated purchase price of approximately $13.7 million.~~ Corners during the three and six months ended June 30, 2018:



Tranche	Sales Date	Parcels Sold	Purchase Price		Sales Proceeds
Tranche 1	January 12, 2018	10	$	13,692	$	13,506
Tranche 2	June 29, 2018	5	9,503		9,423
		15	$	23,195	$	22,929

The net proceeds ~~of approximately $13.5 million~~ were used to fund a portion of the acquisition of ~~certain~~the Sears parcels on April 11, 2018, as discussed above, to fund ongoing redevelopment efforts and for general corporate purposes.

In connection with the 2018 disposition activities, the Company recorded a net ~~gain~~gains of ~~$8.2~~$8.1 million and $16.2 million and for the three and six months ended ~~March 31,~~June 30, 2018, respectively, which is included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive (loss) income.


5.	Investment in Unconsolidated Entities, at Equity

The Company's investment activity in unconsolidated real estate entities during the ~~three~~six months ended ~~March 31,~~June 30, 2019 and ~~March 31,~~June 30, 2018 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;~~Place; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retain management, leasing, and development responsibilities for the O'Connor Joint Venture I.

On April 11, 2018, the O'Connor Joint Venture I closed on the acquisition of the Sears department store located at Polaris Fashion Place in connection with our acquisition of additional Sears department stores (see Note 4 - "Investment in Real Estate").

The O'Connor Joint Venture II

This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of seven retail properties and certain related outparcels, consisting of the following: The Arboretum, located in Austin, Texas; Arbor Hills, located in Ann Arbor, Michigan; Classen Curve and The Triangle at Classen Curve, each located in Oklahoma City, Oklahoma and Nichols Hills Plaza, located in Nichols Hills, Oklahoma (the "Oklahoma City Properties"); Gateway Centers, located in Austin, Texas; Malibu Lumber Yard, located in Malibu, California; Palms Crossing I and II, located in McAllen, Texas; and The Shops at Arbor Walk, located in Austin, Texas (the "O'Connor Joint Venture II"). We retain management, leasing, and development responsibilities for the O'Connor Joint Venture 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 is estimated to be 0% for 2019 due to preferences. We retain management, leasing, and development responsibilities for the Seminole Joint Venture.

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)

Individual agreements specify which services the Company is to provide to each joint venture. The Company, through its affiliates, provides management, development, construction, marketing, leasing and legal services for a fee to the joint ventures as noted above. We recorded fee income of $2.7 million and ~~$2.3~~$5.4 million for the three and six months ended ~~March 31,~~June 30, 2019, respectively, and ~~March 31,~~$2.1 million and $4.5 million for the three and six months ended June 30, 2018, respectively, which are included in other income in the accompanying consolidated statements of operations and comprehensive (loss) income. Advances to the joint ventures totaled ~~$3.3~~$2.1 million and $5.3 million as of ~~March 31,~~June 30, 2019 and December 31, 2018, respectively, which are included in investment in and advances to unconsolidated entities, at equity in the accompanying consolidated balance sheets. Management deems this balance to be collectible and anticipates repayment within one year.

The following table presents the combined 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 other real estate as of ~~March 31,~~June 30, 2019 and December 31, 2018:


	March 31, 2019		December 31, 2018		June 30, 2019		December 31, 2018
Assets:
Investment properties at cost, net	$	1,949,510	$	1,964,699	$	1,943,188	$	1,964,699
Construction in progress	22,465		21,019		17,568		21,019
Cash and cash equivalents	35,674		43,169		35,873		43,169
Tenant receivables and accrued revenue, net	30,862		31,661		30,413		31,661
Deferred costs and other assets ⁽¹⁾	315,157		147,481		308,884		147,481
Total assets	$	2,353,668	$	2,208,029	$	2,335,926	$	2,208,029
Liabilities and Members’ Equity:
Mortgage notes payable	$	1,290,376	$	1,292,801	$	1,287,874	$	1,292,801
Accounts payable, accrued expenses, intangibles, and deferred revenues⁽²⁾	293,245		137,073		289,069		137,073
Total liabilities	1,583,621		1,429,874		1,576,943		1,429,874
Members’ equity	770,047		778,155		758,983		778,155
Total liabilities and members’ equity	$	2,353,668	$	2,208,029	$	2,335,926	$	2,208,029
Our share of members’ equity, net	$	392,530	$	396,229	$	387,392	$	396,229

Our share of members’ equity, net	$	392,530	$	396,229	$	387,392	$	396,229
Advances and excess investment	20,179		21,557		18,844		21,557
Net investment in and advances to unconsolidated entities, at equity⁽³⁾	$	412,709	$	417,786	$	406,236	$	417,786


(1)	Includes value of acquired in-place leases and acquired above-market leases with a net book value of ~~$88,181~~$84,847 and $91,609 as of ~~March 31,~~June 30, 2019 and December 31, 2018, respectively. Additionally, includes ROU assets of ~~$172,733~~$172,819 related to ground leases for which our joint ventures are the lessees as of ~~March 31,~~June 30, 2019.


(2)	Includes the net book value of below market leases of ~~$53,653~~$50,983 and $57,392 as of ~~March 31,~~June 30, 2019 and December 31, 2018, respectively. Additionally, includes lease liabilities of ~~$172,733~~$172,819 related to ground leases for which our joint ventures are the lessees as of ~~March 31,~~June 30, 2019.


(3)	Includes ~~$428,130~~$421,657 and $433,207 of investment in and advances to unconsolidated entities, at equity as of ~~March 31,~~June 30, 2019 and December 31, 2018, respectively, and $15,421 of cash distributions and losses in unconsolidated entities, at equity as of ~~March 31,~~June 30, 2019 and December 31, 2018.

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 statements of operations for the O'Connor Joint Venture I, the O'Connor Joint Venture II, the Seminole Joint Venture, and an indirect 12.5% ownership interest in certain other real estate for the three and six months ended ~~March 31,~~June 30, 2019 and 2018:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Total revenues	$	63,617		$	63,735		$	129,639		$	129,111
Operating expenses	26,995			26,932			53,823			52,274
Depreciation and amortization	25,579			24,364			51,336			47,825
Operating income	11,043			12,439			24,480			29,012
Loss on sale of interests in properties	(1,289		)	—			(1,289		)	—
Interest expense, taxes, and other, net	(12,918		)	(12,949		)	(25,983		)	(25,988		)
Net (loss) income of the Company's unconsolidated real estate entities	$	(3,164	)	$	(510	)	$	(2,792	)	$	3,024

Our share of (loss) income from the Company's unconsolidated real estate entities	$	(1,713	)	$	(895	)	$	(1,761	)	$	267

For the Three Months Ended March 31,
2019 2018
Total revenues $ 66,022
$ 65,376
Operating expenses 26,829
25,343
Depreciation and amortization 25,757
23,461
Operating income 13,436
16,572
Interest expense, taxes, and other, net (13,065 ) (13,039 )
Net income of the Company's unconsolidated real estate entities $ 371
$ 3,533

(Loss) income from the Company's unconsolidated real estate entities $ (48 ) $ 1,162


6.	Indebtedness

Mortgage Debt

Total mortgage indebtedness at ~~March 31,~~June 30, 2019 and December 31, 2018 was as follows:



	June 30, 2019			December 31, 2018
Face amount of mortgage loans	$	1,151,630		$	980,276
Fair value adjustments, net	4,614			5,764
Debt issuance cost, net	(4,126		)	(2,771		)
Carrying value of mortgage loans	$	1,152,118		$	983,269

March 31,
2019 December 31,
2018
Face amount of mortgage loans $ 976,134
$ 980,276
Fair value adjustments, net 5,189
5,764
Debt issuance cost, net (2,500 ) (2,771 )
Carrying value of mortgage loans $ 978,823
$ 983,269

A roll forward of mortgage indebtedness from December 31, 2018 to ~~March 31,~~June 30, 2019 is summarized as follows:



Balance at December 31, 2018	$	983,269
Debt borrowings, net of issuance costs	178,095
Debt amortization payments	(8,646		)
Amortization of fair value and other adjustments	(1,150		)
Amortization of debt issuance costs	550
Balance at June 30, 2019	$	1,152,118

Balance at December 31, 2018 $ 983,269
Debt amortization payments (4,142 )
Amortization of fair value and other adjustments (575 )
Amortization of debt issuance costs 271
Balance at March 31, 2019 $ 978,823
On April 16, 2019, an affiliate of WPG Inc. closed on a $180.0 million non-recourse mortgage note payable with a ten-year term and a fixed rate of 4.86% secured by Waterford Lakes Town Center, located in Orlando, Florida. The mortgage note payable requires monthly principal and interest payments and will mature on May 6, 2029. The net proceeds were primarily used to reduce corporate debt.

On April 8, 2019, the Company exercised the second of three options to extend the maturity date of the $65.0 million term loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2020, subject to a one-year extension available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees.

During the ~~three~~six months ended ~~March 31,~~June 30, 2019, the Company exercised the first of two options to extend the maturity of the $52.0 million mortgage note payable on Town Center at Aurora ~~located in Aurora, Colorado,~~ for one year. The extended maturity date is April 1, 2020, subject to a one-year extension available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees. Pursuant to the terms of the extension option, the Company entered into a derivative swap agreement ~~that effectively fixed~~to fix the interest rate of the note payable at ~~4.76%~~one-month LIBOR plus 2.27% per annum through both extension periods. At June 30, 2019, the interest rate on the note payable was 4.67%.

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

During the ~~three~~six months ended ~~March 31,~~June 30, 2019, Fitch Ratings, Moody's Investor Service, and S&P Global Ratings lowered their credit rating on WPG L.P.'s unsecured long-term indebtedness, which increased interest rates on our Facility, December 2015 Term Loan, and Senior Notes due 2024 (see below definitions to these for capitalized terms) ~~as of February 2, 2019.~~. Due to the downgrade and based upon current leverage levels, as of June 30, 2019, our Revolver bears interest at LIBOR plus ~~1.65%~~1.80% (an increase of 4055 basis points), our Term Loan bears interest at LIBOR plus ~~1.90%~~2.10% (an increase of 4555 basis points), and our December 2015 Term Loan bears interest at LIBOR plus 2.35% (an increase of 55 basis points). Our Senior Notes due 2024 will bear interest at 6.450%, effective August 15, 2019 (an increase of 50 basis points).

~~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 identifies our total unsecured debt outstanding at ~~March 31,~~June 30, 2019 and December 31, 2018:


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
Notes payable:
Face amount - the Exchange Notes⁽¹⁾	$	250,000		$	250,000		$	250,000		$	250,000
Face amount - Senior Notes due 2024⁽²⁾	750,000			750,000			750,000			750,000
Debt discount, net	(9,314		)	(9,680		)	(8,944		)	(9,680		)
Debt issuance costs, net	(7,144		)	(7,623		)	(6,664		)	(7,623		)
Total carrying value of notes payable	$	983,542		$	982,697		$	984,392		$	982,697

Unsecured term loans:⁽⁷⁾
Face amount - Term Loan⁽³⁾⁽⁴⁾	$	350,000		$	350,000		$	350,000		$	350,000
Face amount - December 2015 Term Loan⁽⁵⁾	340,000			340,000			340,000			340,000
Debt issuance costs, net	(4,208		)	(4,491		)	(3,924		)	(4,491		)
Total carrying value of unsecured term loans	$	685,792		$	685,509		$	686,076		$	685,509

Revolving credit facility:⁽³⁾⁽⁶⁾
Face amount	$	345,000		$	290,000		$	222,000		$	290,000
Debt issuance costs, net	(3,712		)	(3,998		)	(3,427		)	(3,998		)
Total carrying value of revolving credit facility	$	341,288		$	286,002		$	218,573		$	286,002

Equity Activity

Exchange Rights

Subject to the terms of the limited partnership agreement of WPG L.P., limited partners in WPG L.P. have, at their option, the right to exchange all or any portion of their units for shares of WPG Inc. common stock on a one‑for‑one basis or cash, as determined by WPG Inc. Therefore, the common units held by limited partners are considered by WPG Inc. to be share equivalents and classified as noncontrolling interests within permanent equity, and classified by WPG L.P. as permanent equity. The amount of cash to be paid if the exchange right is exercised and the cash option is selected will be based on the market value of WPG Inc.'s common stock as determined pursuant to the terms of the WPG L.P. Partnership Agreement. At ~~March 31,~~June 30, 2019, WPG Inc. had reserved ~~34,755,660~~34,752,111 shares of common stock for possible issuance upon the exchange of units held by limited partners.

Stock Based Compensation

On May 28, 2014, the WPG Inc. Board of Directors (the "Board") adopted the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the ~~"Plan"~~"2014 Plan"), which ~~permits~~permitted 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~~were reserved for issuance, ~~under the Plan. In addition, the~~with a maximum number of awards to be granted to a participant in any calendar year isof 500,000 shares/units. On May 16, 2019, the common shareholders of WPG Inc. approved the Washington Prime Group, L.P. 2019 Stock Incentive Plan (the "2019 Plan"), which replaced the 2014 Plan. The Board and its Compensation Committee (the "Committee") previously approved and adopted the 2019 Plan, subject to WPG Inc. common shareholder approval, during the Board and Committee's regular meetings in February 2019. An aggregate of 7,290,000 shares of common stock are reserved for issuance, excluding carryover shares from the 2014 Plan. 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 2019 Plan terminates on May 28, 2024. The Board approved another equity incentive plan in February 2019 to replace the Plan and is presenting this new plan to the common shareholders for approval at the 2019 Annual Shareholder Meeting scheduled for May 16, ~~2019.~~2029.

The following is a summary by type of the awards that the Company issued during the ~~three~~six months ended ~~March 31,~~June 30, 2019 and ~~March 31,~~June 30, 2018 under the 2014 Plan and 2019 Plan.

Annual Long-Term Incentive Awards

During the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, the Company approved the terms and conditions of the 2019 and 2018 annual awards (the "2019 Annual Long-Term Incentive Awards" and "2018 Long-Term Incentive Awards," respectively) for certain executive officers and employees of the Company. Under the terms of the awards program, each participant is provided the opportunity to receive (i) time-based RSUs and (ii) performance-based stock units ("PSUs"). RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. RSUs will vest in one-third installments on each annual anniversary of the respective Grant Date (as referenced below), subject to the participant's continued employment with the Company through each vesting date and the participant's continued compliance with certain applicable covenants. During the service period, dividend equivalents will be paid with respect to the RSUs corresponding to the amount of any dividends paid by the Company to the Company's common shareholders for the applicable dividend payment dates. Compensation expense is recognized on a straight-line basis over the three year vesting term. Actual PSUs earned may range from 0%-150% of the 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 respective Grant Date (as referenced below). During the performance period, dividend equivalents corresponding to the amount of any regular cash dividends paid by the Company to the Company’s common shareholders for the applicable dividend payment dates will accrue and be deemed reinvested in additional PSUs, which will be settled in common shares at the same time and only to the extent that the underlying PSU is earned and settled in common shares. Payout of the PSUs is also subject to the participant’s continued employment with the Company through the end of the performance period. The PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the three-year performance period.

The following table summarizes the issuance of the 2019 Annual Long-Term Incentive Awards and 2018 Annual Long-Term Incentive Awards, respectively:



	2019 Annual Long-Term Incentive Awards	2018 Annual Long-Term Incentive Awards
Grant Date	February 20, 2019	February 20, 2018

RSUs issued	572,163	587,000
Grant date fair value per unit	$5.77	$6.10

PSUs issued	572,163	587,000
Grant date fair value per unit	$4.98	$4.88

WPG Restricted Stock Units

During the six months ended June 30, 2019 and 2018, the Company awarded 331,792 RSUs, with a grant date fair value of $1.5 million, and 225,440 RSUs, with a grant-date fair value of $1.5 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.

Stock Options

During the ~~three~~six months ended ~~March 31,~~June 30, 2019, no stock options were granted ~~from the Plan~~ to employees, 391 stock options were exercised by employees and ~~6,299~~52,152 stock options were canceled, forfeited or expired. As of ~~March 31,~~June 30, 2019, there were ~~673,051~~627,198 stock options outstanding.

During the ~~three~~six months ended ~~March 31,~~June 30, 2018, no stock options were granted ~~from the Plan~~ to employees, no stock options were exercised by employees and ~~23,296~~108,081 stock options were canceled, forfeited or expired.

Share Award Related Compensation Expense

During the three and six months ended ~~March 31,~~June 30, 2019, the Company recorded compensation expense pertaining to the awards granted ~~under the Plan~~ of ~~$1.8~~$2.0 million and ~~$1.7~~$3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive (loss) income. During the three and six months ended June 30, 2018, the Company recorded compensation expense pertaining to the awards granted of $2.5 million and $4.3 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive (loss) 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.

Distributions

During the three and six months ended ~~March 31,~~June 30, 2019 and 2018, the Board declared common share/unit dividends of $0.25 and $0.50 per common share/~~unit.~~unit, respectively.

Acquisitions and Dispositions

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

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

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

On June 28, 2019, we completed the sale of the ninth tranche of restaurant outparcels to Four Corners. This tranche consisted of three restaurant outparcels and an allocated purchase price of approximately $3.1 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). Additionally, during the three and six months ended June 30, 2019, the Company sold certain undeveloped land parcels for an aggregate purchase price of $3.6 million.

On April 3, 2019, we completed the sale of the eighth tranche of restaurant outparcels to Four Corners. This tranche consisted of one restaurant outparcel and an allocated purchase price of approximately $2.0 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale").

On February 11, 2019, we completed the sale of the seventh tranche of restaurant outparcels which consisted of one outparcel and an allocated purchase price of approximately $2.8 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). ~~The net proceeds were used to fund ongoing redevelopment efforts and for general corporate purposes.~~

On January 18, 2019, we completed the sale of the sixth tranche of restaurant outparcels which consisted of eight outparcels and an allocated purchase price of approximately $9.4 million of the total purchase price (see details under "Overview - Basis of Presentation - Outparcel Sale"). ~~The net proceeds were used to fund ongoing redevelopment efforts and for general corporate purposes.~~

In connection with the sales noted above, the Company recorded ~~a gain~~gains of ~~$10.0~~$6.2 million and $16.2 million for the three and six months ended ~~March 31,~~June 30, 2019, which is included in gain on disposition of interests in properties, net in the consolidated statements of operations and comprehensive (loss) income. The net proceeds were used to fund ongoing redevelopment efforts and for general corporate purposes.

Development Activity

New Development, Expansions and Redevelopments. We routinely incur costs related to construction for significant redevelopment and expansion projects at our properties. We expect our share of development costs for calendar year 2019 related to these activities to be approximately $100 million to $125 million. Our estimated stabilized return or yield, on invested capital typically ranges in the high single digits.

We have identified 29 department stores ~~(currently vacant or anticipated vacancies)~~(Sears, The Bon-Ton Stores, and one former Belk store) in our portfolio that we plan to redevelop and we are actively working on ~~repositioning 25~~repositioning. Of these locations, 7 are occupied by Sears, resulting in 22 that we can currently develop. At the end of the ~~locations.~~second quarter 2019, 15 of these former department store locations have been addressed via signed letters of intent (LOI), fully executed leases, or replacement tenant openings. Many projects are actively under construction and one replacement store opened in the second quarter of 2019. These department stores represent an opportunity to enhance the experience at the property by bringing in offerings such as dining, grocery, entertainment, home furnishings, mixed-use components as well as dynamic retail offerings. These stores are in our Tier 1 and open air properties and exclude department stores that are owned by third parties, such as Seritage. We project that we will invest between $300 million to $350 million over the next three to five years to complete the redevelopment of these department stores. The progress on some of these repositioning projects are discussed below:

•At Grand Central Mall in Parkersburg, West Virginia, we replaced an Elder-Beerman with a new 20,000 square foot H&M store, their first store in West Virginia, which opened in October 2018. Additionally, we added a new Five Below and Ulta Beauty, which opened in September 2018, in the former hhgregg store, and we added a Big Lots, which opened in July 2019, in the former Toys R Us location. Lastly, we have commenced construction on the former Sears space which will add an exciting exterior facing element to the center featuring dynamic first-to-market retailers. This new open air component will complete the transformation of Grand Central Mall from a traditional enclosed regional center into a hybrid town center and the new stores are expected to open before the 2020 holiday shopping season. We will invest between $31 million and $33 million in this redevelopment with an expected yield of approximately 6% - 8%.

•At Lincolnwood Town Center in Lincolnwood, Illinois, we have a signed lease with The RoomPlace, which is expected to open in the fourth quarter of 2019, to take approximately two thirds of the recently vacated Carson Pirie Scott department store. The estimated investment in the redevelopment will be between $16 million and $18 million and the yield is anticipated to be approximately 7% - 8%.

•We proactively terminated a lease with Sears at Southern Park Mall in Youngstown, Ohio and the store closed during the third quarter of 2018. We have plans to tear down the store and create an exciting line up of outward facing retail stores, as well as create some green space that can be used for community events. The planned additions include fitness, dining and shopping offerings that will diversify the mix at the property.

•At The Mall at Fairfield Commons, in Beavercreek, Ohio, the Sears store closed in December 2018. We will reposition the former department store with The RoomPlace and Round 1 Entertainment, both first to market. The RoomPlace will occupy the upper level and Round 1 Entertainment will occupy the lower level. Both The RoomPlace and Round 1 Entertainment are expected to open in late 2019.

•At WestShore Plaza, in Tampa, Florida we terminated the Sears lease during the first quarter of 2019, and we are currently in the entitlement process to bring a mixed use component to the center. In addition to gaining control of the former Sears location, we purchased a parcel that is currently leased to office tenants. Acquiring this high-visibility corner allows a more strategic approach as we add to our exciting mixed-use component to the property. We are actively working on redevelopment plans, and additional details will be announced in the future.

•Dillard’s has agreed to open and/or expand within two Tier 1 assets. Mesa Mall, located in Grand Junction, Colorado, will receive a newly constructed Dillard’s which will be their first location within the catchment area and will replace Sears which formerly occupied the site. In addition, Dillard’s added a second location within Southgate Mall, replacing a former Herberger’s (former Bon-Ton, Inc. Stores) further illustrating robust demand within the catchment area. The Dillard’s store at Southgate Mall opened in June 2019. Our combined investment in these two department store repositioning efforts is expected to be less than $7 million.

•At Morgantown Mall in Morgantown, West Virginia we have plans to add a 70,000 square foot Dunham’s Sports store to replace a former Elder-Beerman (former Bon-Ton, Inc. Stores). The lease is fully executed and the store is expected to open in mid-2020. In addition at Morgantown Mall, we have plans to tear down the former Sears store.

•At Northtown Mall in Blaine, MN, we have plans to replace a former Herberger’s store (former Bon-Ton, Inc. Stores) with two complimentary entertainment uses. We have negotiated LOI's with a theater for the upper level and a national entertainment user for the lower level.

•At Port Charlotte Town Center in Port Charlotte, FL, we have a signed LOI to add a new-to-market entertainment venue to replace a former Sears store. This premier entertainment and dining destination will offer food, family activities and the newest arcade games in the 88,000 square foot location.

During the fourth quarter of 2016, we held our grand opening of our new approximately 400,000 square foot shopping center in the Houston metropolitan area, Fairfield Town Center. The project features retailers such as H-E-B, Academy Sports, Marshall's, Party City, Old Navy, and Ulta Cosmetics. In addition, a number of dining options are at the center such as Chipotle, PeiWei, Whataburger, and Zoe's Kitchen. The project is 100% leased as of ~~March 31,~~June 30, 2019. During the third quarter of 2017, we approved the final phase of this new development for an additional investment of approximately $28 million, which will add an additional 130,000 square feet of new GLA to accommodate the strong demand at the project. Leasing for this new phase is over ~~50%~~60% committed, ~~for small shops and we are finalizing~~including deals with a national theater and a national value fashion apparel retailer, which are expected to open in late 2020.

At The Outlet Collection® | Seattle, in Auburn, Washington, we have plans to add a FieldhouseUSA to the property in a former Sam’s Club store. FieldhouseUSA specializes in sporting leagues, events and tournaments by offering year-round league and tournament play in team sports such as ~~well~~basketball, soccer, volleyball and flag football in addition to programs such as ~~an additional big box user.~~birthday parties, corporate events, performance training and skills training. This use will greatly complement the recently added Dave & Buster’s at the property and we anticipate announcing further details about this exciting redevelopment in the near future. The estimated investment in the redevelopment will be between $11 million and $13 million and the yield is anticipated to be approximately 9% - 10%.

At Scottsdale Quarter in Scottsdale, Arizona, our most recent redevelopment effort involves the final phase of the significant expansion of our initial development of the project. The first part of the expansion has been completed and consists of buildings on the north and south parcels with tenancy including Design Within Reach, as well as luxury apartment homes and office space. The final component of the expansion will be comprised of approximately 300 new luxury apartment homes and 30,000 to 35,000 square feet of new street-level retail. The street-level retail and luxury apartment homes will have substantial amenities, such as new on-site parking and roof-top terraces overlooking Scottsdale Quarter and the McDowell Mountains. On February 7, 2018, the rights to construct the luxury apartment homes on the land of this final component were sold to an unrelated third party for $12.5 million and construction has since commenced. The interest in the retail unit of the planned development was retained. ~~Tenants are expected~~We have addressed, through executed leases and signed LOI’s, more than 80% of the retail space with some first-to-market and first-to-portfolio tenants. We expect retailers to begin opening stores in this final component in 2019.

At Cottonwood Mall in Albuquerque, New Mexico, we acquired the former Macy’s store for a planned redevelopment at the property. We plan to replace the former department store with two home furnishings stores, Mor Furniture for Less and Homelife Furniture, which opened in January 2019, as well as a new Hobby Lobby store, which opened in November 2018. We will invest between $20 million and $22 million in this redevelopment with an expected yield of 6% - 7%.

At Grand Central Mall in Parkersburg, West Virginia, we replaced an Elder-Beerman with a new 20,000 square foot H&M store, their first store in West Virginia, which opened in October 2018. Additionally, we added a new Five Below and Ulta Beauty, which opened in September 2018, in the former hhgregg store, and we are adding a Big Lots in the former Toys R Us location. Lastly, we have finalized our redevelopment plans for the former Sears space which will add an exciting exterior facing element to the center featuring dynamic first-to-market retailers. This new open air component will complete the transformation of Grand Central Mall from a traditional enclosed regional center into a hybrid town center. We will invest between $31 million and $33 million in this redevelopment with an expected yield of 6% - 8%.

At Dayton Mall in Dayton, Ohio, we have signed leases with Ross Dress for Less and The RoomPlace to enhance the retail offering at the property. Ross Dress for Less will replace a former hhgregg store and The RoomPlace will be located in a newly combined larger store from previous small shop space. The estimated investment in adding these two retailers to the property will be between $8 million and $10 million with an anticipated yield of approximately 10% - 12%.

At Lincolnwood Town Center in Lincolnwood, Illinois, we have a signed lease with The RoomPlace to take approximately two thirds of the recently vacated Carson Pirie Scott department store. The estimated investment in the redevelopment will be between $16 million and $18 million and the yield is anticipated to be 7% - 8%.

On April 11, 2018 we acquired, through a sale-leaseback transaction, four Sears department stores and adjacent Sears Auto Centers located at Longview Mall, located in Longview, Texas; Polaris Fashion Place®, located in Columbus, Ohio; Southern Hills Mall, located in Sioux City, Iowa; and Town Center at Aurora, located in Aurora, Colorado. The purchase price was approximately $28.5 million. During the first quarter of 2019, the stores at Longview Mall, Polaris Fashion Place, and Southern Hills Mall all closed, and redevelopment plans have commenced.

In addition to the purchase of four Sears stores discussed above, we also proactively negotiated early termination of Sears leases to gain control of the real estate and commence redevelopment efforts at four of our Tier 1 assets. The first lease relates to the Sears store at Grand Central Mall, which closed in December 2018, and the redevelopment of the property is discussed above. The second lease relates to the Sears store at Southern Park Mall in Youngstown, Ohio which closed during the third quarter of 2018. We are in discussions with new tenants for the high visibility anchor space. The third lease relates to the Sears store at The Mall at Fairfield Commons in Beavercreek, Ohio, which closed in December 2018. We will be adding The RoomPlace and Round 1 Entertainment, both first to market. The RoomPlace will replace the upper level of Sears and complement the hybrid town center format with dynamic retail, dining and entertainment options. Round 1 Entertainment will replace the lower level of Sears. Both The RoomPlace and Round 1 Entertainment are expected to open in late 2019. The fourth lease relates to the Sears store at WestShore Plaza in Tampa, Florida which terminated during the first quarter of 2019, and we are currently in the entitlement process. We are actively working on redevelopment plans, and additional details will be announced in the future.

Dillard’s has agreed to open and/or expand within two Tier 1 assets. Mesa Mall, located in Grand Junction, Colorado, will receive a newly constructed Dillard’s which will be their first location within the catchment area and will replace Sears which formerly occupied the site. In addition, Dillard’s will add a second location within Southgate Mall, located in Missoula, Montana, replacing a former Herberger’s (former Bon-Ton, Inc. Stores) further illustrating robust demand within the catchment area. Our combined investment in these two department store repositioning efforts is expected to be less than $7 million.

At The Outlet Collection® | Seattle, in Auburn, Washington, we have plans to add a FieldhouseUSA to the property in a former Sam’s Club store. FieldhouseUSA specializes in sporting leagues, events and tournaments by offering year-round league and tournament play in team sports such as basketball, soccer, volleyball and flag football in addition to programs such as birthday parties, corporate events, performance training and skills training. This use will greatly complement the recently added Dave & Buster’s at the property and we anticipate announcing further details about this exciting redevelopment in the near future. The estimated investment in the redevelopment will be between $11 million and $13 million and the yield is anticipated to be 9% - 10%.

At Morgantown Mall in Morgantown, West Virginia we have plans to add a 70,000 square foot Dunham’s Sports store to replace a former Elder-Beerman (former Bon-Ton, Inc. Stores). The lease is fully executed and the store is expected to open in mid-2020.

Capital Expenditures

The following table summarizes total consolidated capital expenditures on a cash basis for the ~~three~~six months ended ~~March 31,~~June 30, 2019 (in thousands):


Redevelopments and expansions	$	15,623	$	36,558
Tenant allowances	9,918		14,818
Operational capital expenditures	6,958		11,722
Total⁽¹⁾	$	32,499	$	63,098

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

Forward-Looking Statements

Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and it is possible that our actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such factors include, but are not limited to: changes in asset quality and credit risk; ability to sustain revenue and earnings growth; changes in political, economic or market conditions generally and the real estate and capital markets specifically; the impact of increased competition; the availability of capital and financing; tenant or joint venture partner(s) bankruptcies; the failure to increase enclosed retail store occupancy and same-store operating income; risks associated with acquisitions, dispositions, development, re-development, expansion, leasing and management of properties; changes in market rental rates; trends in the retail industry; relationships with anchor tenants; risks relating to joint venture properties; costs of common area maintenance; competitive market forces; the level and volatility of interest rates; the rate of revenue increases as compared to expense increases; the financial stability of tenants within the retail industry; the restrictions in current financing arrangements or the failure to comply with such arrangements; the liquidity of real estate investments; the impact of changes to tax legislation and our tax positions; failure to qualify as a real estate investment trust; the failure to refinance debt at favorable terms and conditions; loss of key personnel; material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities; possible restrictions on the ability to operate or dispose of any partially-owned properties; the failure to achieve earnings/funds from operations targets or estimates; the failure to achieve projected returns or yields on development, re-development and investment properties (including joint ventures); expected gains on debt extinguishment; changes in generally accepted accounting principles or interpretations thereof; terrorist activities and international hostilities; the unfavorable resolution of legal or regulatory proceedings; the impact of future acquisitions and divestitures; assets that may be subject to impairment charges; and significant costs related to environmental issues. We discussed these and other risks and uncertainties under Part I, "Item 1A. Risk Factors" in the combined Annual Report on Form 10-K for WPG Inc. and WPG L.P. for the year ended December 31, 2018. We undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Non-GAAP Financial Measures

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

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

excluding real estate related depreciation and amortization;

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

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

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

excluding impairment charges of depreciable real estate;

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

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

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

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

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

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

The following schedule reconciles total FFO to net (loss) income for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands, except share/unit amounts):


	For the Three Months Ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
Net (loss) income	$	(2,563	)	$	20,185		$	(16,880	)	$	15,519		$	(19,443	)	$	35,704
Less: Preferred dividends and distributions on preferred operating partnership units	(3,568		)	(3,568		)	(3,568		)	(3,568		)	(7,136		)	(7,136		)
Adjustments to Arrive at FFO:
Real estate depreciation and amortization, including joint venture impact	76,214			70,199			81,691			73,355			157,905			143,554
Gain on disposition of interests in properties, net	—			(295		)	—			(1,460		)	—			(1,755		)
FFO of the Operating Partnership (1)	70,083			86,521			61,243			83,846			131,326			170,367
FFO allocable to limited partners	10,905			13,439			9,529			12,998			20,433			26,428
FFO allocable to common shareholders/unitholders	$	59,178		$	73,082		$	51,714		$	70,848		$	110,893		$	143,939

Diluted (loss) earnings per share/unit	$	(0.03	)	$	0.07		$	(0.09	)	$	0.05		$	(0.12	)	$	0.13
Adjustments to arrive at FFO per share/unit:
Real estate depreciation and amortization, including joint venture impact	0.34			0.32			0.36			0.33			0.71			0.64
Gain on disposition of interests in properties, net	0.00			0.00			0.00			(0.01		)	0.00			(0.01		)
Diluted FFO per share/unit	$	0.31		$	0.39		$	0.27		$	0.37		$	0.59		$	0.76

Weighted average shares outstanding - basic	188,082,289			187,309,744			188,486,685			187,781,293			188,285,604			187,546,821
Weighted average limited partnership units outstanding	34,731,075			34,680,058			34,752,540			34,707,251			34,741,867			34,693,730
Weighted average additional dilutive securities outstanding (2)	394,264			1,288,678			—			1,397,289			12,790			1,412,680
Weighted average shares/units outstanding - diluted	223,207,628			223,278,480			223,239,225			223,885,833			223,040,261			223,653,231

(1)

FFO of the operating partnership decreased ~~$16.4~~$39.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to the ~~three~~six months ended ~~March 31,~~June 30, 2018. During the three months ended ~~March 31,~~June 30, 2019, we received ~~$9.3~~$21.2 million less in operating income related to comparable ~~properties. This decline~~properties, which can be primarily attributed to the Anchor Store ~~Impact, and a reduction in lease termination proceeds.~~Impact. General and administrative expenses increased ~~$4.5~~$6.4 million, ~~of which $3.5 million was attributable~~primarily related to the impact of the new lease accounting standard which prohibits the Company from capitalizing non-incremental internal leasing and legal efforts, and $1.9 million was attributable to severance costs incurred during the first quarter of 2019. Offsetting these increases to general and administrative expense was a decrease of $0.9 million primarily attributable to a reduction in executive compensation and benefits.efforts. Lastly, interest expense, net, increased ~~$2.5~~$6.9 million, which was primarily attributable to corporate debt activity primarily related to higher borrowings on the Revolver and the credit rating downgrade.


(2)	The weighted average additional dilutive securities for the three and six months ended ~~March 31,~~June 30, 2019 are excluded for purposes of calculating diluted (loss) earnings per share/unit because their effect would have been anti-dilutive.

We deem NOI and comparable NOI to be important measures for investors and management to use in assessing our operating performance, as these measures enable us to present the core operating results from our portfolio, excluding certain non-cash, corporate-level and nonrecurring items. Specifically, we exclude from operating income the following items in our calculations of comparable NOI:

straight-line rents and fair value rent amortization;

management fee allocation to promote comparability across periods; and

termination income, out-parcel sales and material insurance proceeds, which are deemed to be outside of normal operating results.

The following schedule reconciles comparable NOI for our Tier 1 and open air properties to net (loss) income and presents comparable NOI percent change for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):


	For the Three Months Ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
Net (loss) income	$	(2,563	)	$	20,185		$	(16,880	)	$	15,519		$	(19,443	)	$	35,704
Loss (income) from unconsolidated entities	48			(1,162		)	1,713			895			1,761			(267		)
Income and other taxes	356			485			229			601			585			1,086
Gain on disposition of interests in properties, net	(9,990		)	(8,181		)	(6,241		)	(8,063		)	(16,231		)	(16,244		)
Interest expense, net	36,830			34,344			39,143			34,701			75,973			69,045
Operating income	24,681			45,671			17,964			43,653			42,645			89,324

Depreciation and amortization	66,378			61,294			71,816			63,796			138,194			125,090
General and administrative	14,125			9,654			13,124			11,191			27,249			20,845
Fee income	(2,747		)	(2,342		)	(2,680		)	(2,140		)	(5,427		)	(4,482		)
Management fee allocation	5			(16		)	80			—			84			(16		)
Pro-rata share of unconsolidated joint ventures in comp NOI	17,445			17,282			17,374			18,113			34,818			35,429
Property allocated corporate expense	3,495			4,124			4,210			3,685			8,333			7,181
Non-comparable properties and other⁽¹⁾	(311		)	(591		)	331			(2,733		)	709			(2,828		)
NOI from sold properties	2			(1,796		)	7			(1,802		)	14			(3,583		)
Termination income	(786		)	(1,766		)	(626		)	(258		)	(1,412		)	(2,024		)
Straight-line rents	(1,132		)	(859		)	(1,230		)	(1,164		)	(2,362		)	(2,023		)
Ground lease adjustments for straight-line and fair market value	5			13			5			12			10			25
Fair market value and inducement adjustments to base rents	(2,900		)	(3,042		)	(1,487		)	(1,072		)	(4,387		)	(4,114		)
Less: Tier 2 and noncore properties⁽²⁾	(8,938		)	(13,743		)	(8,986		)	(13,416		)	(19,243		)	(27,076		)

Comparable NOI - Tier 1 and open air properties	$	109,322		$	113,883		$	109,902		$	117,865		$	219,225		$	231,748
Comparable NOI percentage change - Tier 1 and open air properties	(4.0)%						(6.8)%						(5.4)%


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates, primarily LIBOR. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower the overall borrowing costs by closely monitoring our variable rate debt and converting such debt to fixed rates when we deem such conversion advantageous. From time to time, we may enter into interest rate swap agreements or other interest rate hedging contracts. While these agreements are intended to lessen the impact of rising interest rates, they also expose us to the risks that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly effective cash flow hedges under GAAP guidance. As of ~~March 31,~~June 30, 2019, ~~$502.1~~$379.6 million (net of ~~$7.9~~$7.4 million in debt issuance costs) of our aggregate consolidated indebtedness ~~(16.8%~~(12.5% of total consolidated indebtedness) was subject to variable interest rates, excluding amounts outstanding under variable rate loans that have been hedged to fixed interest rates.

If LIBOR rates of interest on our variable rate debt fluctuated, our future earnings and cash flows would be impacted, depending upon the current LIBOR rates and the existence of any derivative contracts currently in effect. Based upon our variable rate debt balance as of ~~March 31,~~June 30, 2019, a 50 basis point increase in LIBOR rates would result in a decrease in earnings and cash flow of ~~$2.6~~$1.9 million annually and a 50 basis point decrease in LIBOR rates would result in an increase in earnings and cash flow of ~~$2.6~~$1.9 million annually. This assumes that the amount outstanding under our variable rate debt remains at ~~$502.1~~$379.6 million, the balance as of ~~March 31,~~June 30, 2019.


Item 4.	Controls and Procedures

Controls and Procedures of Washington Prime Group Inc.

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

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

Changes in Internal Control Over Financial Reporting. There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the quarter ended ~~March 31,~~June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

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

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

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings

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


Item 1A.	Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the combined Annual Report on Form 10-K for WPG Inc. and WPG L.P. for the year ended December 31, 2018 (the “2018 Form 10-K”). Except for additional risk factors as noted below, there have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A, of the 2018 Form 10-K.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.

As of ~~March 31,~~June 30, 2019, we had approximately ~~$502.1~~$379.6 million (net of ~~$7.9~~$7.4 million in debt issuance costs) of our aggregate consolidated indebtedness that was indexed to the London Interbank Offered Rate (“LIBOR”). In addition, as of June 30, 2019, we had approximately $641.8 million of consolidated indebtedness swapped to LIBOR plus a fixed spread. Central banks around the world, including the Federal Reserve, have commissioned working groups of market participants and official sector representatives with the goal of finding suitable replacements for LIBOR based on observable market transactions. It is expected that a transition away from the widespread use of LIBOR to alternative rates will occur over the course of the next few years. The U.K. Financial Conduct Authority (FCA), which regulates LIBOR, has announced that it has commitments from panel banks to continue to contribute to LIBOR through the end of 2021, but that it will not use its powers to compel contributions beyond such date. Accordingly, there is considerable uncertainty regarding the publication of such rates beyond 2021. The Federal Reserve Bank of New York and various other authorities have commenced the publication of reforms and actions relating to alternatives to U.S. dollar LIBOR. Although the full impact of such reforms and actions, together with any transition away from LIBOR, including the potential or actual discontinuance of LIBOR publication, remains unclear, these changes may have a material adverse impact on the availability of financing, including LIBOR-based loans, and on our financing costs.

If the WPG, Inc. common stock is delisted from the New York Stock Exchange (“NYSE”) because it trades below $1.00 for an extended period of time, or otherwise, there could be a negative effect on our business that could significantly impact our financial condition, our operating results and our ability to service our debt obligations.

Although the per share price of our common stock has remained above $1.00, despite recent volatility, in the event the per share trading price of our common stock closes below $1.00 for thirty (30) consecutive days, our common stock could be delisted from the NYSE if not cured in adequate time which could necessitate extraordinary measure by us in order to accomplish. The threat of delisting our common stock could have adverse effects by, among other things:

reducing the liquidity and market price of our common stock;

eliminating the open market trading of our common stock;

reducing the number of investors willing to hold or acquire our common stock; and

reducing our ability to retain, attract and motivate the members of our board of directors, officers and employees through the use of equity-based compensation and equity incentives.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.


Item 4.	Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits



Exhibit Number	Exhibit Descriptions
4.1+	2019 Washington Prime Group, L.P. Stock Incentive Plan (incorporated by reference to Form 8-K filed on May 20, 2019).
10.1+	First Amendment to Employment Agreement, dated and effective as of May 16, 2019, by and between Washington Prime Group Inc. and Joshua P. Lindimore (incorporated by reference to Form 8-K filed on May 20, 2019).
10.2*+	Form of Restricted Stock Unit Award Agreement (Executives - 2019 Plan).
10.3*+	Form of Performance Stock Unit Award Agreement (Executives - 2019 Plan).
10.4*+	Form of Restricted Stock Unit Award Agreement (Directors - 2019 Plan).
10.5*+	Form of Restricted Stock Unit Award Agreement (Non-Executives - 2019 Plan).
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.
~~10.1*+~~	~~Form Employee Performance Share Unit Award Agreement (2019 Awards).~~
~~10.2*+~~	~~Form Employee Restricted Stock Unit Award Agreement (Employee with Employment Agreement, 2019 Awards).~~
~~10.3*+~~	~~Form Employee Restricted Stock Unit Award Agreement (Employee without Employment Agreement, 2019 Awards).~~
~~10.4*+~~	~~Employment Agreement, dated August 6, 2018, effective as of August 3, 2018, by and between Washington Prime Group Inc. and Joshua P. Lindimore.~~
101.INS*	XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

* Filed electronically herewith.

+ Represents management contract or compensatory plan or arrangement.

SIGNATURES

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



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

Date:	~~April~~July 25, 2019	By:	/s/ Mark E. Yale
			Mark E. Yale Executive Vice President and Chief Financial Officer (Principal Financial Officer)



Date:	~~April~~July 25, 2019	By:	/s/ Melissa A. Indest
			Melissa A. Indest Executive Vice President, Finance and Chief Accounting Officer (Principal Accounting Officer)

4954



~~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)~~



Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	WPG	New York Stock Exchange
7.5% Series H Cumulative Redeemable Preferred Stock, par value $0.0001 per share	WPGPRH	New York Stock Exchange
6.875% Series I Cumulative Redeemable Preferred Stock, par value $0.0001 per share	WPGPRI	New York Stock Exchange



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

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



	March 31, 2019		December 31, 2018
Book value of fixed-rate mortgages⁽¹⁾	$911,134		$915,276
Fair value of fixed-rate mortgages	$916,561		$928,129
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages	4.79	%	4.57	%

Book value of fixed-rate unsecured debt⁽¹⁾	$1,590,000		$1,590,000
Fair value of fixed-rate unsecured debt	$1,546,685		$1,485,672
Weighted average discount rates assumed in calculation of fair value for fixed-rate unsecured debt	5.52	%	5.62	%



	June 30, 2019		December 31, 2018
Book value of fixed-rate mortgages⁽¹⁾	$1,086,630		$915,276
Fair value of fixed-rate mortgages	$1,109,770		$928,129
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages	4.41	%	4.57	%

Book value of fixed-rate unsecured debt⁽¹⁾	$1,590,000		$1,590,000
Fair value of fixed-rate unsecured debt	$1,538,812		$1,485,672
Weighted average discount rates assumed in calculation of fair value for fixed-rate unsecured debt	5.52	%	5.62	%



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



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



	Balance at March 31,				Balance at December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	29,244	$	45,871	$	42,542	$	52,019
Restricted cash	17,324		28,520		18,542		18,182
Total cash, cash equivalents and restricted cash	$	46,568	$	74,391	$	61,084	$	70,201



Derivatives designated as hedging instruments:		Balance Sheet Location	June 30, 2019		December 31, 2018
Interest rate products	Asset derivatives	Deferred costs and other assets	$	—	$	9,306
Interest rate products	Liability derivatives	Accounts payable, accrued expenses, intangibles, and deferred revenue	$	7,144	$	1,913


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,						Location of Gain or Loss Recognized in Income on Derivatives	For the Three Months Ended June 30,						For the Six Months Ended June 30,
		2019			2018				2019			2018			2019			2018
Amount of (Loss) or Gain Recognized in OCI on Derivative	Interest expense	$	(4,565	)	$	5,997		Interest expense	$	(8,955	)	$	1,850		$	(13,520	)	$	7,847

Amount of Gain Reclassified from AOCI into Income	Interest expense	$	(545	)	$	(780	)	Interest expense	$	(530	)	$	(1,248	)	$	(1,075	)	$	(2,028	)



Effect of Cash Flow Hedges on Consolidated Statements of Operations	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(39,143	)	$	(34,701	)	$	(75,973	)	$	(69,045	)

Amount of gain reclassified from accumulated other comprehensive income into interest expense	$	(530	)	$	(1,248	)	$	(1,075	)	$	(2,028	)



	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, 2019
Derivative instruments, net	$	—	$	2,311	$	—	$	2,311



2019 (July - December)	$	267,470
2020	432,521
2021	355,883
2022	296,456
2023	238,734
Thereafter	747,476
	$	2,338,540



2019	$	377,282
2020	428,891
2021	352,756
2022	293,090
2023	234,351
Thereafter	707,932
	$	2,394,302



2019	$	1,016
2020	2,049
2021	2,069
2022	2,099
2023	1,427
Thereafter	21,377
Total lease payments	30,037
Less: Discount	16,374
Present value of lease liabilities	$	13,663


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



	March 31, 2019	March 31, 2018	% Change
Ending occupancy (1)	93.3%	93.7%	(0.4)%
Average base minimum rent per square foot (2)	$21.75	$21.85	(0.5)%



	June 30, 2019	June 30, 2018	% Change
Ending occupancy⁽¹⁾	92.5%	93.7%	(1.2)%
Average base minimum rent per square foot⁽²⁾	$21.50	$21.84	(1.6)%


	March 31, 2019			Weighted Average Interest Rate		December 31, 2018			Weighted Average Interest Rate		June 30, 2019			Weighted Average Interest Rate		December 31, 2018			Weighted Average Interest Rate
Fixed-rate debt, face amount⁽¹⁾	$	2,501,134		5.03	%	$	2,505,276		4.91	%	$	2,676,630		5.04	%	$	2,505,276		4.91	%
Variable-rate debt, face amount	510,000			4.28	%	455,000			3.87	%	387,000			4.36	%	455,000			3.87	%
Total face amount of debt	3,011,134			4.90	%	2,960,276			4.75	%	3,063,630			4.96	%	2,960,276			4.75	%
Note discount	(9,314		)			(9,680		)			(8,944		)			(9,680		)
Fair value adjustments, net	5,189					5,764					4,614					5,764
Debt issuance costs, net	(17,564		)			(18,883		)			(18,141		)			(18,883		)
Total carrying value of debt	$	2,989,445				$	2,937,477				$	3,041,159				$	2,937,477


	2019		2020 - 2021		2022 - 2023		Thereafter		Total		2019		2020 - 2021		2022 - 2023		Thereafter		Total
Long term debt⁽¹⁾	$	60,139	$	665,097	$	1,230,977	$	1,054,921	$	3,011,134	$	56,216	$	625,853	$	1,114,000	$	1,222,338	$	3,018,407
Interest payments⁽²⁾	114,056		257,879		180,859		33,797		586,591		90,138		263,347		192,646		77,384		623,515
Distributions⁽³⁾	3,568		—		—		—		3,568		3,568		—		—		—		3,568
Ground rent/operating leases⁽⁴⁾	1,701		4,499		3,596		21,376		31,172		1,138		4,402		3,621		21,376		30,537
Purchase/tenant obligations⁽⁵⁾	118,339		—		—		—		118,339		110,727		—		—		—		110,727
Total	$	297,803	$	927,475	$	1,415,432	$	1,110,094	$	3,750,804	$	261,787	$	893,602	$	1,310,267	$	1,321,098	$	3,786,754


(1)	Represents an adjustment to remove the NOI amounts from properties not owned and operated in all periods presented, certain non-recurring expenses (such as hurricane related expenses), as well as material insurance proceeds and other non-recurring income received in the periods presented. This also includes adjustments related to the rents from the outparcels sold to Four Corners.


(2)	NOI from the Tier 2 and noncore properties held in each period presented.