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

FORM 10-Q

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20192020

OR

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

Commission file number     001-36252 (Washington Prime Group Inc.)
333-205859 (Washington Prime Group, L.P.)

WASHINGTON PRIME GROUP INC.
Washington Prime Group, L.P.
(Exact name of Registrant as specified in its charter)

Indiana (Both Registrants)            46-4323686 (Washington Prime Group Inc.)
(State of incorporation or organization)            46-4674640 (Washington Prime Group, L.P.)
(I.R.S. Employer Identification No.)

180 East Broad Street
ColumbusOhio43215
(Address of principal executive offices)

(614) 621-9000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Washington Prime Group Inc.:
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, L.P.: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Washington Prime Group Inc. (Check One):
 Large accelerated filer
x 
Accelerated filer☐Emerging growth company☐
  Non-accelerated filer☐Smaller reporting company☐  
        
Washington Prime Group, L.P.   (Check One):
 Large accelerated filer☐Accelerated filer☐Emerging growth company☐
  Non-accelerated filer
x 
Smaller reporting company☐  

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

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

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

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

As of October 23, 2019,August 7, 2020, Washington Prime Group Inc. had 186,599,793187,432,335 shares of common stock outstanding. Washington Prime Group, L.P. has no publicly traded equity and no0 common stock outstanding.


EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended SeptemberJune 30, 20192020 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,”" "we," "us," and “our”"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 84.5%84.7% of the partnership interests (“("OP units”units") at SeptemberJune 30, 2019.2020. 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 INFORMATIONPAGE
   
Item 1.Consolidated Financial Statements (unaudited) 
   
 Financial Statements for Washington Prime Group Inc.: 
   
 Consolidated Balance Sheets as of SeptemberJune 30, 20192020 and December 31, 20182019
4
   
 Consolidated Statements of Operations and Comprehensive (Loss) IncomeLoss for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019
5
   
 Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20192020 and 20182019
6
   
 Consolidated Statements of Equity for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019
7
   
 Financial Statements for Washington Prime Group, L.P.: 
   
 Consolidated Balance Sheets as of SeptemberJune 30, 20192020 and December 31, 20182019
9
   
 Consolidated Statements of Operations and Comprehensive (Loss) IncomeLoss for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019
10
   
 Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20192020 and 20182019
11
   
 Consolidated Statements of Equity for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019
12
   
 Condensed Notes to Consolidated Financial Statements
14
   
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
3437
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk
5358
   
Item 4.Controls and Procedures
5358
   
PART II:OTHER INFORMATION 
   
Item 1.Legal Proceedings
5459
   
Item 1A.Risk Factors
5459
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
5462
   
Item 3.Defaults Upon Senior Securities
5462
   
Item 4.Mine Safety Disclosures
5462
   
Item 5.Other Information
5463
   
Item 6.Exhibits
5564
   
SIGNATURES
5665


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)
 September 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
ASSETS:        
Investment properties at cost $5,940,970
 $5,914,705
 $5,924,349
 $5,902,406
Less: accumulated depreciation 2,408,980
 2,283,764
 2,458,488
 2,397,736

 3,531,990
 3,630,941
 3,465,861
 3,504,670
Cash and cash equivalents 36,003
 42,542
 127,019
 41,421
Tenant receivables and accrued revenue, net 76,708
 85,463
 125,153
 82,762
Investment in and advances to unconsolidated entities, at equity 418,105
 433,207
 415,174
 417,092
Deferred costs and other assets 165,352
 169,135
 138,423
 205,034
Total assets $4,228,158
 $4,361,288
 $4,271,630
 $4,250,979
LIABILITIES:        
Mortgage notes payable $1,170,129
 $983,269
 $1,107,947
 $1,115,608
Notes payable 956,716
 982,697
 709,100
 957,566
Unsecured term loans 686,359
 685,509
 687,209
 686,642
Revolving credit facility 213,859
 286,002
 644,716
 204,145
Other indebtedness 84,355
 97,601
Accounts payable, accrued expenses, intangibles, and deferred revenues 241,569
 253,862
 257,634
 260,904
Distributions payable 3,117
 2,992
 3,323
 3,252
Cash distributions and losses in unconsolidated entities, at equity 15,421
 15,421
 —
 15,421
Total liabilities 3,287,170
 3,209,752
 3,494,284
 3,341,139
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 September 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 September 30, 2019 and December 31, 2018 98,325
 98,325
Common stock, $0.0001 par value, 350,000,000 shares authorized;
186,599,793 and 186,074,461 issued and outstanding as of September 30, 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, 2020 and December 31, 2019 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, 2020 and December 31, 2019 98,325
 98,325
Common stock, $0.0001 par value, 350,000,000 shares authorized;
187,432,335 and 186,884,276 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		 19
 19
Capital in excess of par value 1,253,152
 1,247,639
 1,259,130
 1,254,771
Accumulated deficit (625,304) (456,924) (757,985) (655,492)
Accumulated other comprehensive (loss) income (7,848) 6,400
Accumulated other comprehensive loss (17,809) (5,525)
Total stockholders' equity 822,595
 999,710
 685,931
 796,349
Noncontrolling interests 115,128
 148,561
 88,150
 110,226
Total equity 937,723
 1,148,271
 774,081
 906,575
Total liabilities, redeemable noncontrolling interests and equity $4,228,158
 $4,361,288
 $4,271,630
 $4,250,979

The accompanying notes are an integral part of these statements.


Washington Prime Group Inc.
Unaudited Consolidated Statements of Operations and Comprehensive (Loss) IncomeLoss
(dollars in thousands, except per share amounts)
For the Three Months Ended September 30, For the Nine Months Ended September 30,For the Three Months Ended June 30, For the Six Months Ended June 30,
2019 2018 2019 20182020 2019 2020 2019
REVENUE:              
Rental income$154,611
 $174,449
 $474,114
 $517,309
$96,050
 $156,230
 $243,283
 $319,503
Other income6,593
 4,970
 17,347
 17,221
2,714
 5,204
 8,081
 10,754
Total revenues161,204
 179,419
 491,461
 534,530
98,764
 161,434
 251,364
 330,257
EXPENSES:
 
    
 
    
Property operating39,007
 37,885
 114,868
 110,196
28,109
 36,432
 65,389
 75,861
Depreciation and amortization70,948
 71,010
 209,142
 196,100
55,380
 71,816
 115,084
 138,194
Real estate taxes19,014
 22,145
 61,006
 65,280
18,437
 19,878
 38,689
 41,992
Advertising and promotion2,323
 1,875
 6,241
 5,886
1,300
 2,025
 3,104
 3,918
General and administrative12,210
 9,124
 39,459
 29,969
11,350
 13,124
 23,614
 27,249
Ground rent215
 197
 613
 592
209
 195
 331
 398
Impairment loss28,936
 —
 28,936
 —
23,800
 —
 25,119
 —
Total operating expenses172,653
 142,236
 460,265
 408,023
138,585
 143,470
 271,330
 287,612


 

 

 



 

 

 

Interest expense, net(38,833) (36,582) (114,806) (105,627)(37,445) (39,143) (76,080) (75,973)
Impairment on note receivable(11,237) —
 (11,237) —
Gain on disposition of interests in properties, net9,825
 3,864
 26,056
 20,108
437
 6,241
 27,192
 16,231
Gain on extinguishment of debt, net38,913
 —
 38,913
 —
Income and other taxes120
 227
 (465) (859)(593) (229) 24
 (585)
Loss from unconsolidated entities, net(241) (577) (2,002) (310)(4,754) (1,713) (5,786) (1,761)
NET (LOSS) INCOME(1,665) 4,115
 (21,108) 39,819
Net (loss) income attributable to noncontrolling interests(752) 144
 (4,774) 4,730
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY(913) 3,971
 (16,334) 35,089
NET LOSS(93,413) (16,880) (85,853) (19,443)
Net loss attributable to noncontrolling interests(14,871) (3,126) (14,194) (4,022)
NET LOSS ATTRIBUTABLE TO THE COMPANY(78,542) (13,754) (71,659) (15,421)
Less: Preferred share dividends(3,508) (3,508) (10,524) (10,524)(3,508) (3,508) (7,016) (7,016)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$(4,421) $463
 $(26,858) $24,565
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(82,050) $(17,262) $(78,675) $(22,437)
              
(LOSS) EARNINGS PER COMMON SHARE, BASIC & DILUTED$(0.02) $0.00
 $(0.14) $0.13
LOSS PER COMMON SHARE, BASIC & DILUTED$(0.43) $(0.09) $(0.41) $(0.12)
              
COMPREHENSIVE (LOSS) INCOME:       
Net (loss) income$(1,665) $4,115
 $(21,108) $39,819
Unrealized (loss) income on interest rate derivative instruments, net(2,263) 2,471
 (16,858) 8,290
Comprehensive (loss) income(3,928) 6,586
 (37,966) 48,109
Comprehensive (loss) income attributable to noncontrolling interests(1,099) 534
 (7,384) 6,040
Comprehensive (loss) income attributable to common shareholders$(2,829) $6,052
 $(30,582) $42,069
COMPREHENSIVE LOSS:       
Net loss$(93,413) $(16,880) $(85,853) $(19,443)
Unrealized income (loss) on interest rate derivative instruments, net920
 (9,485) (14,526) (14,595)
Comprehensive loss(92,493) (26,365) (100,379) (34,038)
Comprehensive loss attributable to noncontrolling interests(14,730) (4,597) (16,436) (6,285)
Comprehensive loss attributable to common shareholders$(77,763) $(21,768) $(83,943) $(27,753)

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 Nine Months Ended September 30,For the Six Months Ended June 30,
2019 20182020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net (loss) income$(21,108) $39,819
Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 
Net loss$(85,853) $(19,443)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation209,945
 195,678
116,827
 137,404
Gain on extinguishment of debt, net(38,913) —
Impairment on note receivable11,237
 —
Gain on disposition of interests in properties and outparcels, net(26,056) (20,108)(27,192) (16,231)
Impairment loss28,936
 —
25,119
 —
Change in estimate of collectibility of rental income5,884
 4,454
27,630
 4,027
Loss from unconsolidated entities, net2,002
 310
5,786
 1,761
Distributions of income from unconsolidated entities1,812
 3,363
1,087
 912
Changes in assets and liabilities:

 


 
Tenant receivables and accrued revenue, net5,996
 9,563
(68,811) 6,142
Deferred costs and other assets(6,524) (21,164)(1,027) (3,780)
Accounts payable, accrued expenses, deferred revenues and other liabilities(24,059) (20,106)(6,887) (17,236)
Net cash provided by operating activities137,915
 191,809
Net cash (used in) provided by operating activities(2,084) 93,556
CASH FLOWS FROM INVESTING ACTIVITIES:

 
   
Acquisitions, net of cash acquired—
 (80,108)
Capital expenditures, net(119,646) (112,094)(99,807) (81,131)
Net proceeds from disposition of interests in properties and outparcels33,237
 27,931
17,987
 20,492
Investments in unconsolidated entities(13,837) (17,127)(6,744) (5,870)
Distributions of capital from unconsolidated entities21,730
 23,356
1,764
 14,747
Net cash used in investing activities(78,516) (158,042)(86,800) (51,762)
CASH FLOWS FROM FINANCING ACTIVITIES:

 
   
Distributions to noncontrolling interest holders in properties(66) (5)(51) (66)
Redemption of limited partner units(143) (25)(543) (19)
Net proceeds from issuance of common shares, including common stock plans1
 —
—
 1
Distributions on common and preferred shares/units(178,148) (177,604)(35,196) (118,754)
Proceeds from issuance of debt, net of transaction costs503,442
 678,563
500,849
 303,088
Repayments of debt(372,008) (507,051)(287,999) (206,702)
Other financing activities(150) —
—
 (150)
Net cash used in financing activities(47,072) (6,122)
Net cash provided by (used in) financing activities177,060
 (22,602)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH12,327
 27,645
88,176
 19,192
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period61,084
 70,201
75,475
 61,084
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$73,411
 $97,846
$163,651
 $80,276

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)
  For the Three Months Ended September 30, 2019
  Preferred Series H Preferred Series I Common
Stock		 Capital in
Excess of
Par Value		 Accumulated Deficit Accumulated Other Comprehensive Loss Total
Stockholders'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
Balance, June 30, 2019 $104,251
 $98,325
 $19
 $1,251,319
 $(573,611) $(5,932) $874,371
 $124,790
 $999,161
 $3,265
Redemption of limited partner units —
 —
 —
 —
 —
 —
 —
 (124) (124) —
Other —
 —
 —
 (9) —
 —
 (9) —
 (9) —
Equity-based compensation —
 —
 —
 2,142
 —
 —
 2,142
 —
 2,142
 —
Adjustments to noncontrolling interests —
 —
 —
 (300) —
 —
 (300) 300
 —
 —
Distributions on common shares/units ($0.25 per common share/unit) —
 —
 —
 —
 (47,272) —
 (47,272) (8,679) (55,951) —
Distributions declared on preferred shares —
 —
 —
 —
 (3,508) —
 (3,508) —
 (3,508) —
Other comprehensive loss —
 —
 —
 —
 —
 (1,916) (1,916) (347) (2,263) —
Net loss, excluding $60 of distributions to preferred unitholders —
 —
 —
 —
 (913) —
 (913) (812) (1,725) —
Balance, September 30, 2019 $104,251
 $98,325
 $19
 $1,253,152
 $(625,304) $(7,848) $822,595
 $115,128
 $937,723
 $3,265
 For the Nine Months Ended September 30, 2019 For the Three Months Ended June 30, 2020
 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 Preferred Series H Preferred Series I Common
Stock		 Capital in
Excess of
Par Value		 Accumulated Deficit Accumulated Other Comprehensive Loss 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
Balance, March 31, 2020 $104,251
 $98,325
 $19
 $1,257,040
 $(675,935) $(18,588) $765,112
 $103,163
 $868,275
 $3,265
Redemption of limited partner units —
 —
 —
 —
 —
 —
 —
 (143) (143) —
 —
 —
 —
 —
 —
 —
 —
 (22) (22) —
Other —
 —
 —
 (23) —
 —
 (23) —
 (23) —
 —
 —
 —
 (9) —
 —
 (9) —
 (9) —
Exercise of stock options —
 —
 —
 1
 —
 —
 1
 —
 1
 —
Equity-based compensation —
 —
 —
 5,885
 —
 —
 5,885
 37
 5,922
 —
 —
 —
 —
 1,898
 —
 —
 1,898
 —
 1,898
 —
Adjustments to noncontrolling interests —
 —
 —
 (350) —
 —
 (350) 350
 —
 —
 —
 —
 —
 201
 —
 —
 201
 (201) —
 —
Distributions on common shares/units ($0.75 per common share/unit) —
 —
 —
 —
 (141,522) —
 (141,522) (26,113) (167,635) —
Distributions declared on preferred shares —
 —
 —
 —
 (3,508) —
 (3,508) —
 (3,508) —
Other comprehensive income —
 —
 —
 —
 —
 779
 779
 141
 920
 —
Net loss, excluding $60 of distributions to preferred unitholders —
 —
 —
 —
 (78,542) —
 (78,542) (14,931) (93,473) —
Balance, June 30, 2020 $104,251
 $98,325
 $19
 $1,259,130
 $(757,985) $(17,809) $685,931
 $88,150
 $774,081
 $3,265
                    
                    
 For the Six Months Ended June 30, 2020
 Preferred Series H Preferred Series I Common
Stock		 Capital in
Excess of
Par Value		 Accumulated Deficit Accumulated Other Comprehensive Loss Total
Stockholders'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
Balance, December 31, 2019 $104,251
 $98,325
 $19
 $1,254,771
 $(655,492) $(5,525) $796,349
 $110,226
 $906,575
 $3,265
Redemption of limited partner units —
 —
 —
 —
 —
 —
 —
 (543) (543) —
Other —
 —
 —
 (18) —
 —
 (18) —
 (18) —
Equity-based compensation —
 —
 —
 3,764
 —
 —
 3,764
 —
 3,764
 —
Adjustments to noncontrolling interests —
 —
 —
 613
 —
 —
 613
 (613) —
 —
Distributions on common shares/units ($0.125 per common share/unit) —
 —
 —
 —
 (23,818) —
 (23,818) (4,364) (28,182) —
Distributions declared on preferred shares —
 —
 —
 —
 (10,524) —
 (10,524) —
 (10,524) —
 —
 —
 —
 —
 (7,016) —
 (7,016) —
 (7,016) —
Other comprehensive loss —
 —
 —
 —
 —
 (14,248) (14,248) (2,610) (16,858) —
 —
 —
 —
 —
 —
 (12,284) (12,284) (2,242) (14,526) —
Net loss, excluding $180 of distributions to preferred unitholders —
 —
 —
 —
 (16,334) —
 (16,334) (4,954) (21,288) —
Balance, September 30, 2019 $104,251
 $98,325
 $19
 $1,253,152
 $(625,304) $(7,848) $822,595
 $115,128
 $937,723
 $3,265
Net loss, excluding $120 of distributions to preferred unitholders —
 —
 —
 —
 (71,659) —
 (71,659) (14,314) (85,973) —
Balance, June 30, 2020 $104,251
 $98,325
 $19
 $1,259,130
 $(757,985) $(17,809) $685,931
 $88,150
 $774,081
 $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)
  For the Three Months Ended September 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, 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
Other —
 —
 —
 (7) —
 —
 (7) —
 (7) —
Equity-based compensation —
 —
 —
 1,864
 —
 —
 1,864
 186
 2,050
 —
Adjustments to noncontrolling interests —
 —
 —
 (125) —
 —
 (125) 125
 —
 —
Distributions on common shares/units ($0.25 per common share/unit) —
 —
 —
 —
 (46,962) —
 (46,962) (8,689) (55,651) —
Distributions declared on preferred shares —
 —
 —
 —
 (3,508) —
 (3,508) —
 (3,508) —
Other comprehensive income —
 —
 —
 —
 —
 2,081
 2,081
 390
 2,471
 —
Net income, excluding $60 of distributions to preferred unitholders —
 —
 —
 —
 3,971
 —
 3,971
 84
 4,055
 —
Balance, September 30, 2018 $104,251
 $98,325
 $19
 $1,245,943
 $(464,971) $14,484
 $998,051
 $148,235
 $1,146,286
 $3,265
  For the Nine Months Ended September 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 —
 —
 —
 (96) —
 —
 (96) —
 (96) —
Equity-based compensation —
 —
 —
 5,635
 —
 —
 5,635
 676
 6,311
 —
Adjustments to noncontrolling interests —
 —
 —
 310
 —
 —
 310
 (310) —
 —
Distributions on common shares/units ($0.75 per common share/unit) —
 —
 —
 —
 (140,832) —
 (140,832) (26,073) (166,905) —
Distributions declared on preferred shares —
 —
 —
 —
 (10,524) —
 (10,524) —
 (10,524) —
Other comprehensive income —
 —
 —
 —
 —
 6,980
 6,980
 1,310
 8,290
 —
Net income, excluding $180 of distributions to preferred unitholders —
 —
 —
 —
 35,089
 —
 35,089
 4,550
 39,639
 —
Balance, September 30, 2018 $104,251
 $98,325
 $19
 $1,245,943
 $(464,971) $14,484
 $998,051
 $148,235
 $1,146,286
 $3,265
  For the Three Months Ended June 30, 2019
  Preferred Series H Preferred Series I Common
Stock		 Capital in
Excess of
Par Value		 Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total
Stockholders'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
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) —
Equity-based compensation —
 —
 —
 1,965
 —
 —
 1,965
 —
 1,965
 —
Adjustments to noncontrolling interests —
 —
 —
 (129) —
 —
 (129) 129
 —
 —
Distributions on common shares/units ($0.25 per common share/unit) —
 —
 —
 —
 (47,162) —
 (47,162) (8,688) (55,850) —
Distributions declared on preferred shares —
 —
 —
 —
 (3,508) —
 (3,508) —
 (3,508) —
Other comprehensive loss —
 —
 —
 —
 —
 (8,014) (8,014) (1,471) (9,485) —
Net loss, excluding $60 of distributions to preferred unitholders —
 —
 —
 —
 (13,754) —
 (13,754) (3,186) (16,940) —
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 Income (Loss) 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, L.P.
Unaudited Consolidated Balance Sheets
(dollars in thousands, except unit amounts)
 September 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
ASSETS:        
Investment properties at cost $5,940,970
 $5,914,705
 $5,924,349
 $5,902,406
Less: accumulated depreciation 2,408,980
 2,283,764
 2,458,488
 2,397,736

 3,531,990
 3,630,941
 3,465,861
 3,504,670
Cash and cash equivalents 36,003
 42,542
 127,019
 41,421
Tenant receivables and accrued revenue, net 76,708
 85,463
 125,153
 82,762
Investment in and advances to unconsolidated entities, at equity 418,105
 433,207
 415,174
 417,092
Deferred costs and other assets 165,352
 169,135
 138,423
 205,034
Total assets $4,228,158
 $4,361,288
 $4,271,630
 $4,250,979
LIABILITIES:        
Mortgage notes payable $1,170,129
 $983,269
 $1,107,947
 $1,115,608
Notes payable 956,716
 982,697
 709,100
 957,566
Unsecured term loans 686,359
 685,509
 687,209
 686,642
Revolving credit facility 213,859
 286,002
 644,716
 204,145
Other indebtedness 84,355
 97,601
Accounts payable, accrued expenses, intangibles, and deferred revenues 241,569
 253,862
 257,634
 260,904
Distributions payable 3,117
 2,992
 3,323
 3,252
Cash distributions and losses in unconsolidated entities, at equity 15,421
 15,421
 —
 15,421
Total liabilities 3,287,170
 3,209,752
 3,494,284
 3,341,139
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 September 30, 2019 and December 31, 2018 202,576
 202,576
Common equity, 186,599,793 and 186,074,461 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 620,019
 797,134
Preferred equity, 7,800,000 units issued and outstanding as of June 30, 2020 and December 31, 2019 202,576
 202,576
Common equity, 187,432,335 and 186,884,276 units issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 483,355
 593,773
Total general partners' equity 822,595
 999,710
 685,931
 796,349
Limited partners, 34,714,281 and 34,755,660 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 114,122
 147,493
Limited partners, 34,479,892 and 34,682,956 units issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 87,168
 109,193
Total partners' equity 936,717
 1,147,203
 773,099
 905,542
Noncontrolling interests 1,006
 1,068
 982
 1,033
Total equity 937,723
 1,148,271
 774,081
 906,575
Total liabilities, redeemable noncontrolling interests and equity $4,228,158
 $4,361,288
 $4,271,630
 $4,250,979

The accompanying notes are an integral part of these statements.



Washington Prime Group, L.P.
Unaudited Consolidated Statements of Operations and Comprehensive (Loss) IncomeLoss
(dollars in thousands, except per unit amounts)
For the Three Months Ended September 30, For the Nine Months Ended September 30,For the Three Months Ended June 30, For the Six Months Ended June 30,
2019 2018 2019 20182020 2019 2020 2019
REVENUE:              
Rental income$154,611
 $174,449
 $474,114
 $517,309
$96,050
 $156,230
 $243,283
 $319,503
Other income6,593
 4,970
 17,347
 17,221
2,714
 5,204
 8,081
 10,754
Total revenues161,204
 179,419
 491,461
 534,530
98,764
 161,434
 251,364
 330,257
EXPENSES:              
Property operating39,007
 37,885
 114,868
 110,196
28,109
 36,432
 65,389
 75,861
Depreciation and amortization70,948
 71,010
 209,142
 196,100
55,380
 71,816
 115,084
 138,194
Real estate taxes19,014
 22,145
 61,006
 65,280
18,437
 19,878
 38,689
 41,992
Advertising and promotion2,323
 1,875
 6,241
 5,886
1,300
 2,025
 3,104
 3,918
General and administrative12,210
 9,124
 39,459
 29,969
11,350
 13,124
 23,614
 27,249
Ground rent215
 197
 613
 592
209
 195
 331
 398
Impairment loss28,936
 —
 28,936
 —
23,800
 —
 25,119
 —
Total operating expenses172,653
 142,236
 460,265
 408,023
138,585
 143,470
 271,330
 287,612
              
Interest expense, net(38,833) (36,582) (114,806) (105,627)(37,445) (39,143) (76,080) (75,973)
Impairment on note receivable(11,237) —
 (11,237) —
Gain on disposition of interests in properties, net9,825
 3,864
 26,056
 20,108
437
 6,241
 27,192
 16,231
Gain on extinguishment of debt, net38,913
 —
 38,913
 —
Income and other taxes120
 227
 (465) (859)(593) (229) 24
 (585)
Loss from unconsolidated entities, net(241) (577) (2,002) (310)(4,754) (1,713) (5,786) (1,761)
NET (LOSS) INCOME ATTRIBUTABLE TO UNITHOLDERS(1,665) 4,115
 (21,108) 39,819
NET LOSS ATTRIBUTABLE TO UNITHOLDERS(93,413) (16,880) (85,853) (19,443)
Less: Preferred unit distributions(3,568) (3,568) (10,704) (10,704)(3,568) (3,568) (7,136) (7,136)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS$(5,233) $547
 $(31,812) $29,115
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS$(96,981) $(20,448) $(92,989) $(26,579)
              
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS:       
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS:       
General partner$(4,421) $463
 $(26,858) $24,565
$(82,050) $(17,262) $(78,675) $(22,437)
Limited partners(812) 84
 (4,954) 4,550
(14,931) (3,186) (14,314) (4,142)
Net (loss) income attributable to common unitholders$(5,233) $547
 $(31,812) $29,115
Net loss attributable to common unitholders$(96,981) $(20,448) $(92,989) $(26,579)
              
(LOSS) EARNINGS PER COMMON UNIT, BASIC & DILUTED$(0.02) $0.00
 $(0.14) $0.13
LOSS PER COMMON UNIT, BASIC & DILUTED$(0.43) $(0.09) $(0.41) $(0.12)
              
COMPREHENSIVE (LOSS) INCOME:       
Net (loss) income$(1,665) $4,115
 $(21,108) $39,819
Unrealized (loss) income on interest rate derivative instruments, net(2,263) 2,471
 (16,858) 8,290
Comprehensive (loss) income$(3,928) $6,586
 $(37,966) $48,109
COMPREHENSIVE LOSS:       
Net loss$(93,413) $(16,880) $(85,853) $(19,443)
Unrealized income (loss) on interest rate derivative instruments, net920
 (9,485) (14,526) (14,595)
Comprehensive loss$(92,493) $(26,365) $(100,379) $(34,038)

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 Nine Months Ended September 30,For the Six Months Ended June 30,
2019 20182020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net (loss) income$(21,108) $39,819
Adjustments to reconcile net (loss) income to net cash provided by operating activities:   
Net loss$(85,853) $(19,443)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:   
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation209,945
 195,678
116,827
 137,404
Gain on extinguishment of debt, net(38,913) —
Impairment on note receivable11,237
 —
Gain on disposition of interests in properties and outparcels, net(26,056) (20,108)(27,192) (16,231)
Impairment loss28,936
 —
25,119
 —
Change in estimate of collectibility of rental income5,884
 4,454
27,630
 4,027
Loss from unconsolidated entities, net2,002
 310
5,786
 1,761
Distributions of income from unconsolidated entities1,812
 3,363
1,087
 912
Changes in assets and liabilities:      
Tenant receivables and accrued revenue, net5,996
 9,563
(68,811) 6,142
Deferred costs and other assets(6,524) (21,164)(1,027) (3,780)
Accounts payable, accrued expenses, deferred revenues and other liabilities(24,059) (20,106)(6,887) (17,236)
Net cash provided by operating activities137,915
 191,809
Net cash (used in) provided by operating activities(2,084) 93,556
CASH FLOWS FROM INVESTING ACTIVITIES:      
Acquisitions, net of cash acquired—
 (80,108)
Capital expenditures, net(119,646) (112,094)(99,807) (81,131)
Net proceeds from disposition of interests in properties and outparcels33,237
 27,931
17,987
 20,492
Investments in unconsolidated entities(13,837) (17,127)(6,744) (5,870)
Distributions of capital from unconsolidated entities21,730
 23,356
1,764
 14,747
Net cash used in investing activities(78,516) (158,042)(86,800) (51,762)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Distributions to noncontrolling interest holders in properties(66) (5)(51) (66)
Redemption of limited partner units(143) (25)(543) (19)
Net proceeds from issuance of common units, including equity-based compensation plans1
 —
—
 1
Distributions to unitholders(178,148) (177,604)(35,196) (118,754)
Proceeds from issuance of debt, net of transaction costs503,442
 678,563
500,849
 303,088
Repayments of debt(372,008) (507,051)(287,999) (206,702)
Other financing activities(150) —
—
 (150)
Net cash used in financing activities(47,072) (6,122)
Net cash provided by (used in) financing activities177,060
 (22,602)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH12,327
 27,645
88,176
 19,192
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period61,084
 70,201
75,475
 61,084
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$73,411
 $97,846
$163,651
 $80,276

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)
  For the Three Months Ended September 30, 2019
  General Partner          
  Preferred Common Total Limited Partners Total
Partners'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
Balance, June 30, 2019 $202,576
 $671,795
 $874,371
 $123,784
 $998,155
 $1,006
 $999,161
 $3,265
Redemption of limited partner units —
 —
 —
 (124) (124) —
 (124) —
Other —
 (9) (9) —
 (9) —
 (9) —
Equity-based compensation —
 2,142
 2,142
 —
 2,142
 —
 2,142
 —
Adjustments to limited partners' interests —
 (300) (300) 300
 —
 —
 —
 —
Distributions on common units ($0.25 per common unit) —
 (47,272) (47,272) (8,679) (55,951) —
 (55,951) —
Distributions declared on preferred units (3,508) —
 (3,508) —
 (3,508) —
 (3,508) (60)
Other comprehensive loss —
 (1,916) (1,916) (347) (2,263) —
 (2,263) —
Net income (loss) 3,508
 (4,421) (913) (812) (1,725) —
 (1,725) 60
Balance, September 30, 2019 $202,576
 $620,019
 $822,595
 $114,122
 $936,717
 $1,006
 $937,723
 $3,265
 For the Nine Months Ended September 30, 2019 For the Three Months Ended June 30, 2020
 General Partner           General Partner          
 Preferred Common Total Limited Partners Total
Partners'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests Preferred Common Total Limited Partners Total
Partners'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
Balance, December 31, 2018 $202,576
 $797,134
 $999,710
 $147,493
 $1,147,203
 $1,068
 $1,148,271
 $3,265
Balance, March 31, 2020 $202,576
 $562,536
 $765,112
 $102,181
 $867,293
 $982
 $868,275
 $3,265
Redemption of limited partner units —
 —
 —
 (143) (143) —
 (143) —
 —
 —
 —
 (22) (22) —
 (22) —
Other —
 (23) (23) —
 (23) —
 (23) —
 —
 (9) (9) —
 (9) —
 (9) —
Exercise of stock options —
 1
 1
 —
 1
 —
 1
 —
Equity-based compensation —
 5,885
 5,885
 37
 5,922
 —
 5,922
 —
 —
 1,898
 1,898
 —
 1,898
 —
 1,898
 —
Adjustments to limited partners' interests —
 (350) (350) 350
 —
 —
 —
 —
 —
 201
 201
 (201) —
 —
 —
 —
Distributions on common units ($0.75 per common unit) —
 (141,522) (141,522) (26,051) (167,573) (62) (167,635) —
Distributions declared on preferred units (3,508) —
 (3,508) —
 (3,508) —
 (3,508) (60)
Other comprehensive income —
 779
 779
 141
 920
 —
 920
 —
Net income (loss) 3,508
 (82,050) (78,542) (14,931) (93,473) —
 (93,473) 60
Balance, June 30, 2020 $202,576
 $483,355
 $685,931
 $87,168
 $773,099
 $982
 $774,081
 $3,265
                
 For the Six Months Ended June 30, 2020
 General Partner          
 Preferred Common Total Limited Partners Total
Partners'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
Balance, December 31, 2019 $202,576
 $593,773
 $796,349
 $109,193
 $905,542
 $1,033
 $906,575
 $3,265
Redemption of limited partner units —
 —
 —
 (543) (543) —
 (543) —
Other —
 (18) (18) —
 (18) —
 (18) —
Equity-based compensation —
 3,764
 3,764
 —
 3,764
 —
 3,764
 —
Adjustments to limited partners' interests —
 613
 613
 (613) —
 —
 —
 —
Distributions on common units ($0.125 per common unit) —
 (23,818) (23,818) (4,313) (28,131) (51) (28,182) —
Distributions declared on preferred units (10,524) —
 (10,524) —
 (10,524) —
 (10,524) (180) (7,016) —
 (7,016) —
 (7,016) —
 (7,016) (120)
Other comprehensive loss —
 (14,248) (14,248) (2,610) (16,858) —
 (16,858) —
 —
 (12,284) (12,284) (2,242) (14,526) —
 (14,526) —
Net income (loss) 10,524
 (26,858) (16,334) (4,954) (21,288) —
 (21,288) 180
 7,016
 (78,675) (71,659) (14,314) (85,973) —
 (85,973) 120
Balance, September 30, 2019 $202,576
 $620,019
 $822,595
 $114,122
 $936,717
 $1,006
 $937,723
 $3,265
Balance, June 30, 2020 $202,576
 $483,355
 $685,931
 $87,168
 $773,099
 $982
 $774,081
 $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 September 30, 2018
  General Partner          
  Preferred Common Total Limited Partners Total
Partners'
Equity		 Non-
Controlling
Interests		 Total
Equity		 Redeemable Non-Controlling Interests
Balance, June 30, 2018 $202,576
 $838,161
 $1,040,737
 $155,086
 $1,195,823
 $1,053
 $1,196,876
 $3,265
Other —
 (7) (7) —
 (7) —
 (7) —
Equity-based compensation —
 1,864
 1,864
 186
 2,050
 —
 2,050
 —
Adjustments to limited partners' interests —
 (125) (125) 125
 —
 —
 —
 —
Distributions on common units ($0.25 per common unit) —
 (46,962) (46,962) (8,689) (55,651) —
 (55,651) —
Distributions declared on preferred units (3,508) —
 (3,508) —
 (3,508) —
 (3,508) (60)
Other comprehensive income —
 2,081
 2,081
 390
 2,471
 —
 2,471
 —
Net income 3,508
 463
 3,971
 84
 4,055
 —
 4,055
 60
Balance, September 30, 2018 $202,576
 $795,475
 $998,051
 $147,182
 $1,145,233
 $1,053
 $1,146,286
 $3,265
  For the Nine Months Ended September 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 —
 (96) (96) —
 (96) —
 (96) —
Equity-based compensation —
 5,635
 5,635
 676
 6,311
 —
 6,311
 —
Adjustments to limited partners' interests —
 310
 310
 (310) —
 —
 —
 —
Distributions on common units ($0.75 per common unit) —
 (140,832) (140,832) (26,068) (166,900) (5) (166,905) —
Distributions declared on preferred units (10,524) —
 (10,524) —
 (10,524) —
 (10,524) (180)
Other comprehensive income —
 6,980
 6,980
 1,310
 8,290
 —
 8,290
 —
Net income 10,524
 24,565
 35,089
 4,550
 39,639
 —
 39,639
 180
Balance, September 30, 2018 $202,576
 $795,475
 $998,051
 $147,182
 $1,145,233
 $1,053
 $1,146,286
 $3,265
  For the Three 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, 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) —
Equity-based compensation —
 1,965
 1,965
 —
 1,965
 —
 1,965
 —
Adjustments to limited partners' interests —
 (129) (129) 129
 —
 —
 —
 —
Distributions on common units ($0.25 per common unit) —
 (47,162) (47,162) (8,688) (55,850) —
 (55,850) —
Distributions declared on preferred units (3,508) —
 (3,508) —
 (3,508) —
 (3,508) (60)
Other comprehensive loss —
 (8,014) (8,014) (1,471) (9,485) —
 (9,485) —
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
                 
  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 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, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. Washington Prime Group, L.P. (“("WPG L.P.”") is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of SeptemberJune 30, 2019,2020, our assets consisted of material interests in 107101 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 5653 million square feet of managed gross leasable area.
Unless the context otherwise requires, references to "WPG," the "Company," “we,” “us”"we," "us" or “our”"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, rent payments pursuant to the terms of 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
During the six months ended June 30, 2020, and in response to the COVID-19 pandemic (as discussed in Note 2 - "Basis of Presentation and Principles of Consolidation"), the Company recorded aggregate severance costs of $0.1 million related to workforce reductions, which costs are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss for period then ended.
On February 5, 2019, the Company's then 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 aforementionedthese 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) incomeloss for the ninesix months ended SeptemberJune 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 nine months ended September 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 SeptemberJune 30, 20192020 and December 31, 20182019 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 and the fiscal impact of the COVID-19 pandemic, the results for the interim period ended SeptemberJune 30, 20192020 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 20182019 Annual Report on Form 10-K for WPG Inc. and WPG L.P. (the "2018"2019 Form 10-K").
COVID-19
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects since March 2020 as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. During a portion of the second quarter of 2020, and in the interest of public health and safety, jurisdictions (national, state and local) where our shopping centers are located, required mandatory closures or capacity limitations or other restrictions for those that continue to operate, which impacted our tenants' ability to operate as well as pay rent and other related charges or otherwise fulfill their obligations of their respective leases. As of June 30, 2020, all of our enclosed retail properties were open in some capacity and our open air properties have remained open to the extent permitted by applicable law. In response to requests from tenants, we have granted rent relief to certain of our tenants in a combination of rent deferrals and rent abatements. We continue to assess requests from our tenants as they are received. As a result of these developments, the Company has experienced, and expects to continue to experience, a material adverse impact on its revenues, results of operations and cash flows for the year ending December 31, 2020. The situation continues to evolve as certain geographic regions across the United States have experienced a surge in new cases, which could result in shoppers limiting their in-store purchases in exchange for curbside or on-line purchases. Additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change, including the timing of possible additional closure requirements or the subsequent lifting of any said restrictions.
As described in Note 8 - "Rental Income", we derive almost all of our income from rental payments and other tenant charges. Our revenues and cash flow have been adversely affected as a significant number of our tenants have been unable to meet their obligations to us. Additionally, certain of our tenants have sought the protection of the bankruptcy laws as a result of the COVID-19 pandemic during the second quarter of 2020, which could result in the modification or termination of its lease, causing a further reduction in our revenues and cash flow. Furthermore, certain of our tenants, including anchor tenants, hold the right under their lease(s) to terminate their lease(s) or reduce their rental rate if certain occupancy conditions are not met, if certain anchor tenants close, if certain sales levels or profit margins are not achieved, all of which could be triggered in the event of one or more tenant bankruptcies and resulting lease terminations.
While the full outcome of the COVID-19 pandemic is unknown, it has and continues to negatively impact the revenues and business of our tenants. Many of our tenants have requested some form of rent relief, and relief provided thus far has reduced our second quarter revenues by $22.0 million due to rent abatements, while additional relief in the form of rent deferrals to future periods has impacted our second quarter operating cash flows. Additionally, as part of our continual assessment of the future collectibility of rents, we recorded an adjustment to rental income of $22.3 million, including the write-off of accrued (straight-line) rent. A further worsening of the financial condition of our tenants may impact our continual assessment of future collectibility of rents, which could cause us to write-off additional straight-line rent that has not yet been billed. We continue to assess rent relief requests from our tenants as they are received but are unable to predict the resolution or impact of these discussions.
We evaluate our real estate assets and other assets for impairment indicators whenever events or changes in circumstances indicate that recoverability of our investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. The prolonged outbreak of the COVID-19 pandemic has resulted in sustained closure of our centers as well as the cessation or reduction of the operations of certain of our tenants, which has resulted in a reduction in our revenues, due to the impaired financial stability of our tenants, and ultimately our cash flows for many of our centers as well as other sources of income generated by our properties. In addition to reduced revenues generated by our centers as a result of the COVID-19 outbreak, our ability to obtain sufficient financing for such properties may be impaired as well as our ability to lease or re-lease centers as a result of worsening market and economic conditions produced by the persistence of the COVID-19 pandemic.
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)


As of June 30, 2020, our evaluation of impairment considered our estimate of cash flow declines caused by the COVID-19 pandemic, but our other assumptions, including estimated hold period, were generally unchanged given the highly uncertain environment. The worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our properties adversely impacted by the COVID-19 outbreak could result in the recognition of substantial impairment charges imposed on our assets which could adversely impact our financial results. See Note 4 - "Investment in Real Estate" for discussion of impairment charges recognized as of June 30, 2020.
We continuously project our cash flow sources and needs. In accordance with Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period, including interim periods. In evaluating the Company’s ability to continue as a going concern, management evaluated the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements were issued (August 10, 2020). Management considered the Company’s current projections of future cash flows, current financial condition, sources of liquidity and debt obligations due on or before August 10, 2021 in considering whether it has the ability to meet its obligations for at least one year from the date of issuance of this Form 10-Q.
Our ability to meet our obligations as they come due may be impacted by our ability to remain compliant with financial covenants in our unsecured debt arrangements or to obtain waivers or amendments that impact the related covenants. We have received requisite lender consents and expect to close, within the next week, on amendments to our Facility and December 2015 Term Loan (as defined in Note 6 - "Indebtedness") that will provide certain covenant relief through the third quarter of 2021. Based upon these modified covenant requirements, we project that we would remain in compliance with these revised financial covenants along with other unsecured debt covenants through at least August 10, 2021. However, with the continued uncertainty caused by the COVID-19 pandemic, significant risks remain with respect to these projections and any material adverse effect on our income and expenses could impact our ability to maintain compliance with our credit facility and bond covenants. Additionally, if we are unable to close on the amendments within a timely fashion, we could end up in default with such arrangements, impacting our ability to continue as a going concern.
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, 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 six months ended June 30, 2020 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 ninesix months ended SeptemberJune 30, 2019, we sold our interest in undeveloped land that was previously identified as a VIE. As of September 30, 2019, we have 1 VIE, which consists of our interest in WPG L.P. During the nine months ended September 30, 2019,2020, 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.
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)


As of SeptemberJune 30, 2019,2020, our assets consisted of material interests in 107101 shopping centers. The consolidated financial statements as of that date reflect the consolidation of 9085 wholly owned properties and 4 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 1312 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) incomeloss attributable to noncontrolling interests. WPG Inc.'s weighted average ownership interest in WPG L.P. was 84.7% and 84.4% for both the ninesix months ended SeptemberJune 30, 2020 and 2019, and 2018.respectively. As of SeptemberJune 30, 20192020 and December 31, 2018,2019, WPG Inc.'s ownership interest in WPG L.P. was 84.5%84.7% and 84.4%84.5%, respectively. We adjust the noncontrolling limited partners' interests at the end of each period to reflect their interest in WPG L.P.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


3.Summary of Significant Accounting Policies
Fair Value Measurements
The Company measures and discloses its fair value measurements in accordance with Accounting Standards Codification ("ASC") Topic 820 - “Fair Value Measurement” (“Topic 820”). The fair value hierarchy, as defined by Topic 820, contains three levels of inputs that may be used to measure fair value as follows:
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as interest rates, foreign exchange rates, and yield curves, that are observable at commonly quoted intervals.
Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity's own assumptions, as there is little, if any, related market activity.
The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under Topic 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions.
Use of Estimates
We prepared the accompanying consolidated financial statements in accordance with GAAP. This requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Our actual results could differ from these estimates.
Segment Disclosure
Our primary business is the ownership, development and management of retail real estate. We have aggregated our operations, including enclosed retail properties and open air properties, into 1 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 4 material ground leases, 2 material office leases, and 1 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 statementsNew Accounting Pronouncements
Adoption 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 nine months ended September 30, 2018, we capitalized approximately $4.3 million and $13.0 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.
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

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.
In June 2016, the FASBFinancial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. This standard willWe adopted this ASU on January 1, 2020, noting our seller-provided bridge financing associated with our other indebtedness (see Note 6 - "Indebtedness" for further details) and certain other miscellaneous accounts are in scope of ASU 2016-13. However, there was no impact to our consolidated financial statements at adoption.
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, "Leases." Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can account for the concession as though enforceable rights and obligations for those concessions existed (regardless of whether these enforceable rights and obligations for the concessions explicitly exist in the contract). Both lessees and lessors may make this election. For all concessions that did not result in a substantial increase in the rights of the lessor or the obligations of the lessees, the Company elected to adopt this optional relief in the second quarter of 2020, resulting in abatements granted in the period being recognized as negative variable revenue during the period of abatement. Concessions in the form of rent deferrals were effectively accounted for as if the lease was unchanged, though in all cases receivables were evaluated under the collectibility guidance in Topic 842.
New Standards Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Inter-Bank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. If elected, an entity would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities electing relief would need to apply it consistently for all eligible modified contracts accounted for under a particular codification topic or industry subtopic. Additionally, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Entities electing relief related to hedging relationships can generally elect to apply the optional expedients on a hedge-by-hedge basis.
The guidance is effective upon issuance and can be effective for fiscal years beginningapplied to modifications of existing contracts made after January 1, 2020 and can be applied to eligible hedging relationships existing as of or entered into after the same date. The relief is temporary and cannot be applied to contract modifications that occur after December 15, 2019.31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. As of June 30, 2020, we had approximately $812.0 million (excluding debt issuance costs of $5.1 million) of our aggregate consolidated indebtedness that was indexed to LIBOR. In addition, as of June 30, 2020, we had approximately $640.8 million of consolidated indebtedness swapped to LIBOR plus a fixed spread under hedging relationships. We expect that upon modification, these contracts will generally qualify for the temporary relief upon meeting the certain criteria and we are currently evaluating the impact this ASU will have, if any, onassessing our financial statements.
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 nine months ended September 30, 2018 are now included in rental income and will no longer be presented as separate line items. Additionally, termination income of $0.2 million and $2.2 million, which was previously disclosed in other income, and provisionplans for credit losses of $0.5 million and $4.5 million, which was previously disclosed as a separate line item during the three and nine months ended September 30, 2018, respectively, were also reclassified to rental income for comparability of prior periods to the current period.adoption.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


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 ninesix months ended SeptemberJune 30, 20192020 and 2018:2019:
Balance at September 30, Balance at December 31,Balance at June 30, Balance at December 31,
2019 2018 2018 20172020 2019 2019 2018
Cash and cash equivalents$36,003
 $73,107
 $42,542
 $52,019
$127,019
 $30,683
 $41,421
 $42,542
Restricted cash37,408
 24,739
 18,542
 18,182
36,632
 49,593
 34,054
 18,542
Total cash, cash equivalents and restricted cash$73,411
 $97,846
 $61,084
 $70,201
$163,651
 $80,276
 $75,475
 $61,084

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 SeptemberJune 30, 20192020 and December 31, 2018.2019.
4.Investment in Real Estate
2018 Acquisitions2020 Dispositions
On April 11, 2018, we acquired, through a sale-leaseback transaction, 4 Sears department stores and adjacent Sears Auto Centers at Longview Mall,March 13, 2020, Seminole Towne Center, located in Longview, Texas; Polaris Fashion Place®, locatedSanford, Florida, was transitioned to the lender pursuant to the terms within a deed-in-lieu of foreclosure agreement. This property was held 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 thean unconsolidated joint venture that owns Polaris Fashion Place®and all operational involvement between us and the related property ceased in connection with this transition (see Note 5 - "Investment in Unconsolidated Entities, at Equity") for additional details).
On April 24, 2018,January 14, 2020, we completed the sale of Matteson Plaza, located in Matteson, Illinois, to an unaffiliated private real estate investor for a purchase price of $1.1 million. The net proceeds of $0.4 million was used for general corporate purposes.
On January 31, 2020, we completed the sale of Dekalb Plaza, located in King of Prussia, Pennsylvania, to an unaffiliated private real estate investor for a purchase price of $13.6 million. The net proceeds of $13.4 million was used to fund ongoing redevelopment efforts and general corporate purposes.
We are party to 2 separate purchase and sale agreements to sell certain outparcels to FCPT Acquisitions, LLC ("Four Corners"). The following table summarizes the key terms of each of the closings that occurred during the six months ended June 30, 2020:
Sales Date Parcels Sold Purchase Price Sales Proceeds
February 13, 2020 2
 $1,961
 $1,945
Excluding any subsequent amendments thereto, the Company closedhas approximately $4.6 million of remaining outparcels from the first purchase and sale agreement and approximately $26.9 million from the second purchase and sale agreement to close, subject to due diligence and closing conditions. Additionally, during the six months ended June 30, 2020, the Company sold certain undeveloped land parcels and developed outparcels for an aggregate purchase price of approximately $2.4 million, receiving net proceeds of approximately $2.2 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 2020 disposition activities, the Company recorded net gains of $0.4 million and $27.2 million for the three and six months ended June 30, 2020, which are included in gain on disposition of interests in properties, net in the acquisitionaccompanying consolidated statements of Southgate Mall, located in Missoula, Montana, for $58.0 million, which was funded from our Facility (as defined in Note 6 - "Indebtedness").operations and comprehensive loss.
2019 Dispositions
The following table summarizes the fair value allocation forkey terms of each of the acquisitions, which was finalizedclosings with Four Corners that occurred during the three and six months ended June 30, 2018:2019:
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
Sales Date Parcels Sold Purchase Price Sales Proceeds
January 18, 2019 8
 $9,435
 $9,364
February 11, 2019 1
 2,766
 2,720
April 3, 2019 1
 2,048
 2,016
June 28, 2019 3
 3,050
 3,031
  13
 $17,299
 $17,131
       

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.
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)


2019 Dispositions
We are partyThe net proceeds were used to two separate purchasefund ongoing redevelopment efforts and sale agreements to sell certain outparcels to FCPT Acquisitions, LLC ("Four Corners"). The following table summarizes the key terms of each of the closings that occurred during the nine months ended September 30, 2019:
Sales Date Parcels Sold Purchase Price Sales Proceeds
January 18, 2019 8
 $9,435
 $9,364
February 11, 2019 1
 2,766
 2,720
April 3, 2019 1
 2,048
 2,016
June 28, 2019 3
 3,050
 3,031
August 1, 2019 1
 1,210
 1,199
August 29, 2019 1
 3,397
 3,394
September 16, 2019 1
 3,205
 3,118
September 27, 2019 2
 4,412
 4,377
  18
 $29,523
 $29,219
       
The Company expects to close on most of the approximately $13.0 million of remaining outparcels from the first purchase and sale agreement during 2019, subject to due diligence and closing conditions, and the Company expects to close on the majority of the remaining $33.1 million from the second purchase and sale agreement in 2020, subject to due diligence and closing conditions.for general corporate purposes. Additionally, during the ninethree and six months ended SeptemberJune 30, 2019, the Company sold certain undeveloped land parcels for an aggregate purchase price of $4.4$3.6 million, receiving net proceeds of $4.0$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 gains of $9.8$6.2 million and $26.1$16.2 million for the three and ninesix months ended SeptemberJune 30, 2019, respectively, which are included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive (loss) income.
2018 Dispositions
The following table summarizes the key terms of each of the closings with Four Corners that occurred during the nine months ended September 30, 2018:
Sales Date Parcels Sold Purchase Price Sales Proceeds
January 12, 2018 10
 $13,692
 $13,506
June 29, 2018 5
 9,503
 9,423
July 27, 2018 2
 4,607
 4,530
  17
 $27,802
 $27,459

The net proceeds were used to fund a portion of the acquisition of 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 net gains of $3.9 million and $20.1 million and for the three and nine months ended September 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.
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)


loss.
Impairment
During the three and nine monthsquarter ended SeptemberJune 30, 2019,2020, and in connection with the preparation of the financial statements included in this report, we recorded an impairment charge of approximately $28.9$23.8 million related to Chautauqua Mall, located in Lakewood, New York, Matteson Plaza, located in Matteson, Illinois,two enclosed retail properties based on the total estimated fair value of $12.6 million and New Towne Mall, located in New Philadelphia, Ohio.
In the case of Chautauqua Mall and New Towne Mall, therelated carrying value. The impairment charge was attributed to declines in the estimated undiscounted cash flows which resulted in the carrying value of each property not being recoverable. The fair value of each property was based on the respective discounted estimated future cash flows of each property, using a discount rate range of 18.5%18.8% to 19.3% and a terminal capitalization rate range of 15.5%16.8% to 17.3%, which were determined using management's assessment of the property operating performance and general market conditions (Level 3 inputs).
As it relates to Matteson Plaza,During the quarter ended March 31, 2020, we recorded an impairment charge wasof approximately $1.3 million related to vacant land at Georgesville Square, located in Columbus, Ohio and a single tenant outparcel located in Topeka, Kansas. The impairment charges in both instances were due to the changechanges in facts and circumstances when we decided to hold the assetassets for a shorter period which resulted in the carrying value not being recoverable from the projected cash flows. TheIn the case of the vacant land at Georgesville Square, which was sold during the second quarter of 2020, the fair value was based on a recently negotiated purchase and sale agreement with a potential buyerthe sales price (Level 1 input). In the case of the single tenant outparcel, the fair value was based on general market conditions (Level 3 inputs).
Except as described above, the Company recorded no additional impairment charges during the three and ninesix months ended SeptemberJune 30, 2020. NaN impairment charges were recorded during the three and six months ended June 30, 2019.
5.Investment in Unconsolidated Entities, at Equity
The Company's investment activity in unconsolidated real estate entities during the ninesix months ended SeptemberJune 30, 20192020 and SeptemberJune 30, 20182019 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 5 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;Place, located in Columbus, Ohio; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retain management, leasing, legal, construction, and development responsibilities for the O'Connor Joint Venture I.
On April 11, 2018,December 20, 2019, the O'Connor Joint Venture I closed on the acquisitionextension of the Sears department store locatedmortgage loan secured by The Mall at Polaris Fashion PlaceJohnson City. The extension was effective May 6, 2020 and extended the maturity of the mortgage loan to May 6, 2023, with 2 additional one-year extension options available to the joint venture. The extension required a $5.0 million principal prepayment on May 6, 2020, in connectionaddition to funding certain reserve accounts of $10.0 million for future redevelopment and property improvements. On June 11, 2020, and in response to the COVID-19 pandemic, the O'Connor Joint Venture I executed a standstill agreement with our acquisitionthe lender that extended the effective date of the extension to December 2020, at which time the O'Connor Joint Venture I may extend the maturity of the mortgage loan pursuant to the terms and payment requirements noted above (see additional Sears department stores (see Note 4 - "Investment in Real Estate")details within the forbearance table below).
The O'Connor Joint Venture II
This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of 7 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, legal, construction, and development responsibilities for the O'Connor Joint Venture II.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The Seminole Joint Venture
This investment consistsconsisted 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.property. The Company hashad 0 effective financial interest in this property due to preferences. On March 13, 2020, the property held through this venture was transitioned to the lender pursuant to the terms within a deed-in-lieu of foreclosure agreement and all involvement between us and the related property ceased in connection with this transition. We retain management, leasing,recorded a gain of $15.4 million related to our cash distributions and development responsibilities forlosses in the Seminole Joint Venture.Venture, which is included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive loss.
Individual agreements specify which services the Company is to provide to each joint venture. The Company, through its affiliates, provides management, development,leasing, legal, construction marketing, leasing and legaldevelopment services for a fee to the joint ventures as noted above. We recorded fee income of $3.2$1.2 million and $8.7$3.4 million for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, and $2.6$2.7 million and $7.0$5.4 million for the three and ninesix months ended SeptemberJune 30, 2018,2019, respectively, which are included in other income in the accompanying consolidated statements of operations and comprehensive (loss) income.loss. Advances to the joint ventures totaled $0.5$0.7 million and $5.3$0.5 million as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively, which are included in investment in and advances to unconsolidated entities, at equity in the accompanying consolidated balance sheets. Management deems this balance to be collectible and anticipates repayment within one year.
The following table presents the combined statements of operations for our joint ventures for the three and six months ended June 30, 2020 and 2019:
 For the Three Months Ended June 30, For the Six Months Ended June 30,
 2020 2019 2020 2019
Total revenues$44,342
 $63,617
 $107,565
 $129,639
Operating expenses20,869
 26,995
 47,769
 53,823
Depreciation and amortization20,916
 25,579
 46,305
 51,336
Operating income2,557
 11,043
 13,491
 24,480
Gain (loss) on sale of interests in properties2,039
 (1,289) 2,039
 (1,289)
Gain on extinguishment of debt—
 —
 15,605
 —
Interest expense, taxes, and other, net(12,142) (12,918) (24,569) (25,983)
Net (loss) income of the Company's unconsolidated real estate entities$(7,546) $(3,164) $6,566
 $(2,792)
        
Our share of loss from the Company's unconsolidated real estate entities$(4,754) $(1,713) $(5,786) $(1,761)

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 nine months ended September 30, 2019 and 2018:
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2019 2018 2019 2018
Total revenues$66,173
 $66,206
 $195,812
 $195,317
Operating expenses27,597
 26,548
 81,419
 78,822
Depreciation and amortization26,451
 26,204
 77,787
 74,029
Operating income12,125
 13,454
 36,606
 42,466
Loss on sale of interests in properties—
 (467) (1,289) (467)
Interest expense, taxes, and other, net(13,249) (12,939) (39,232) (38,927)
Net (loss) income of the Company's unconsolidated real estate entities$(1,124) $48
 $(3,915) $3,072
        
Loss from the Company's unconsolidated real estate entities$(241) $(577) $(2,002) $(310)

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 estateof our joint ventures as of SeptemberJune 30, 20192020 and December 31, 2018:2019:
 September 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
Assets:        
Investment properties at cost, net $1,920,084
 $1,964,699
 $1,850,156
 $1,905,336
Construction in progress 33,927
 21,019
 42,179
 38,280
Cash and cash equivalents 41,856
 43,169
 37,263
 43,137
Tenant receivables and accrued revenue, net 29,106
 31,661
 46,684
 31,238
Deferred costs and other assets (1)
 309,190
 147,481
 287,669
 301,133
Total assets $2,334,163
 $2,208,029
 $2,263,951
 $2,319,124
Liabilities and Members’ Equity:  
  
  
  
Mortgage notes payable $1,285,286
 $1,292,801
 $1,225,547
 $1,282,307
Accounts payable, accrued expenses, intangibles, and deferred revenues(2)
 296,135
 137,073
 288,407
 297,163
Total liabilities 1,581,421
 1,429,874
 1,513,954
 1,579,470
Members’ equity 752,742
 778,155
 749,997
 739,654
Total liabilities and members’ equity $2,334,163
 $2,208,029
 $2,263,951
 $2,319,124
Our share of members’ equity, net $385,213
 $396,229
 $394,785
 $384,332
        
Our share of members’ equity, net $385,213
 $396,229
 $394,785
 $384,332
Advances and excess investment 17,471
 21,557
 20,389
 17,339
Net investment in and advances to unconsolidated entities, at equity(3)
 $402,684
 $417,786
 $415,174
 $401,671

(1)Includes value of acquired in-place leases and acquired above-market leases with a net book value of $81,939$73,053 and $91,609$79,457 as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively. Additionally, includes ROUright-of-use assets of $172,905$173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of SeptemberJune 30, 2019.2020 and December 31, 2019, respectively.
(2)Includes the net book value of below market leases of $47,648$40,174 and $57,392$45,757 as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively. Additionally, includes lease liabilities of $172,905$173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of SeptemberJune 30, 2019.2020 and December 31, 2019, respectively.
(3)Includes $418,105$415,174 and $433,207$417,092 of investment in and advances to unconsolidated entities, at equity as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively, and $0 and $15,421 of cash distributions and losses in unconsolidated entities, at equity as of SeptemberJune 30, 20192020 and December 31, 2018.2019, respectively.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


In response to the COVID-19 pandemic, the Company, on behalf of the O'Connor Joint Venture I and O'Connor Joint Venture II, has executed the following forbearance agreements related to various mortgage notes outstanding as of June 30, 2020:
Property Principal Outstanding Interest Rate Monthly Service Terms Description of Relief Duration 
Repayment Terms1
Arbor Hills $24,035
 4.27% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020
Arboretum, The $59,400
 4.13% Interest only Interest 3 months commencing May 2020 5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve $52,779
 3.90% Interest only Interest 3 months commencing May 2020 5 months commencing August 2020
Gateway Centers $112,500
 4.03% Interest only Interest 3 months commencing May 2020 5 months commencing August 2020
Mall at Johnson City, The $47,768
 6.76% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020
Nichols Hills Plaza $12,571
 2.66% Interest and principal Interest and principal 3 months commencing May 2020 Due at maturity (Jan. 1, 2023)
Polaris Fashion Place $240,170
 3.94% Interest and principal Interest 3 months commencing May 2020 5 months commencing August 2020
Town Center Crossing $32,534
 4.25% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020
Town Center Plaza $65,830
 5.00% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020
Scottsdale Quarter (Blocks K & M) $55,000
 4.36% Interest only Interest 3 months commencing May 2020 Commencing August 2020 with payments made from excess property cash flow until repaid in full
1Maturity dates noted include any applicable extension options available to the borrower.
In addition, the Company is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations. Certain other mortgage notes may be placed into special servicing during the forbearance negotiation and repayment periods.
6.Indebtedness
Mortgage Debt
Total mortgage indebtedness at SeptemberJune 30, 20192020 and December 31, 20182019 was as follows:
 September 30,
2019		 December 31,
2018		 June 30,
2020		 December 31,
2019
Face amount of mortgage loans $1,171,508
 $980,276
 $1,110,243
 $1,117,242
Fair value adjustments, net 4,038
 5,764
 2,312
 3,463
Debt issuance cost, net (5,417) (2,771) (4,608) (5,097)
Carrying value of mortgage loans $1,170,129
 $983,269
 $1,107,947
 $1,115,608

A roll forward of mortgage indebtedness from December 31, 2018 to September 30, 2019 is summarized as follows:
Balance at December 31, 2018$983,269
Debt borrowings, net of issuance costs293,442
Debt canceled upon lender foreclosures, net of debt issuance costs(45,160)
Debt amortization payments(13,367)
Repayment of debt(47,175)
Amortization of fair value and other adjustments(1,726)
Amortization of debt issuance costs846
Balance at September 30, 2019$1,170,129

On September 16, 2019, an affiliate of WPG Inc. repaid its existing $47.2 million, 7.50% fixed rate cross-defaulted and cross-collateralized pool of mortgages that encumbered Forest Plaza, located in Rockford, Illinois; Lakeline Plaza, located in Cedar Park, Texas; Muncie Towne Plaza, located in Muncie, Indiana; and White Oaks Plaza, located in Springfield, Illinois, which was scheduled to mature on October 16, 2019. Simultaneously, the Company closed on a new $117.0 million, 3.67% fixed rate cross-defaulted and cross-collateralized pool of mortgages encumbering the same properties. The new loan requires monthly interest-only payments and will mature on October 1, 2029.
On July 1, 2019, the $45.2 million mortgage on Towne West Square, located in Wichita, Kansas, was canceled upon a deed-in-lieu of foreclosure agreement (see "Covenants" section below for additional details).
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 3 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.
On April 1, 2019, the Company exercised the first of 2 options to extend the maturity of the $52.0 million mortgage note payable on Town Center at Aurora 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 to fix the interest rate of the note payable at one-month LIBOR plus 2.27% per annum through both extension periods. At September 30, 2019, the interest rate on the note payable was 4.28%.
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 DebtA roll forward of mortgage indebtedness from December 31, 2019 to June 30, 2020 is summarized as follows:
During the nine months ended September 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 (effective May 2, 2019), December 2015 Term Loan (effective February 15, 2019), and Senior Notes due 2024 (effective August 15, 2019) (see below definitions to these for capitalized terms). Due
Balance at December 31, 2019$1,115,608
Debt amortization payments(6,999)
Issuance costs incurred upon debt modifications(151)
Amortization of fair value and other adjustments(1,151)
Amortization of debt issuance costs640
Balance at June 30, 2020$1,107,947

In response to the downgrade and based upon current leverage levels,COVID-19 pandemic, the Company has executed the following forbearance agreements on its various mortgage notes outstanding as of SeptemberJune 30, 2019, our Revolver bears interest at LIBOR plus 1.80% (an increase of 55 basis points), our Term Loan bears interest at LIBOR plus 2.10% (an increase of 55 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 bear interest at 6.450% (an increase of 50 basis points).2020:
During
Property Principal Outstanding Interest Rate Monthly Service Terms Description of Relief Duration 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza $117,000
 3.67% Interest only Interest 6 months commencing May 2020 6 months commencing November 2020
Southgate Mall $35,000
 4.48% Interest only Interest 3 months commencing May 2020 Due at maturity (Sept. 27, 2023)
Town Center at Aurora $51,000
 4.92% Interest and principal Interest and principal 6 months commencing May 2020 Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall $76,086
 4.65% Interest and principal Interest and principal 3 months commencing June 2020, paid from escrows Not applicable
1Maturity dates noted include any applicable extension options available to the three and nine months ended September 30, 2019,borrower.
In addition, the Company retired $29.1is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations (see Note 12 - "Subsequent Events" for additional detail). Certain other mortgage notes payable may be in formal default (see "Covenants" for further details) or placed into special servicing during the forbearance negotiation and repayment periods.
On April 3, 2020, the Company exercised the third of 3 options to extend the maturity of the $65.0 million outstanding principal onterm loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2021.
On February 14, 2020, the SeniorCompany exercised the second of 2 options to extend the maturity of the $51.0 million mortgage note payable secured by Town Center at Aurora, located in Aurora, Colorado, for one year. The extended maturity is April 1, 2021. Additionally, as part of the aforementioned forbearance agreement, the Company was granted an additional one year extension option, which would extend the maturity to April 1, 2022. The extension option is subject to continued compliance with the terms of the mortgage agreement.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes due 2024to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and recognized a gain of approximately $1.2 million, which is recordedper share amounts and where indicated as in gain on extinguishment of debt, net in the accompanying consolidated statements of operations and comprehensive (loss) income for the period then ended.millions or billions)


Corporate Debt
The following table identifies our total unsecuredcorporate debt outstanding at SeptemberJune 30, 20192020 and December 31, 2018:2019:
 September 30,
2019		 December 31,
2018		 June 30,
2020		 December 31,
2019
Notes payable:        
Face amount - the Exchange Notes(1)
 $250,000
 $250,000
 $—
 $250,000
Face amount - Senior Notes due 2024(2)
 720,900
 750,000
 720,900
 720,900
Debt discount, net (8,234) (9,680) (7,111) (7,864)
Debt issuance costs, net (5,950) (7,623) (4,689) (5,470)
Total carrying value of notes payable $956,716
 $982,697
 $709,100
 $957,566
        
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 (3,641) (4,491) (2,791) (3,358)
Total carrying value of unsecured term loans $686,359
 $685,509
 $687,209
 $686,642
        
Revolving credit facility:(3)(6)
        
Face amount $217,000
 $290,000
 $647,000
 $207,000
Debt issuance costs, net (3,141) (3,998) (2,284) (2,855)
Total carrying value of revolving credit facility $213,859
 $286,002
 $644,716
 $204,145
    
Other indebtedness:(8)
    
Face amount $98,900
 $98,900
Debt issuance costs, net (1,535) (1,561)
Accretion adjustment, net (13,010) 262
Total carrying value of other indebtedness $84,355
 $97,601
(1) The Exchange Notes were issued at a 0.028% discount bearand bore interest at 3.850% per annum and mature on April 1, 2020.annum.
(2) The Senior Notes due 2024 were issued at a 1.533% discount, bore interest at 5.950% per annum through August 14, 2019, at which time the interest rate increased to 6.450% per annum due to the credit downgrade.annum. The Senior Notes due 2024 mature on August 15, 2024. The interest rate could vary in the future based upon changes to the Company's credit ratings.
(3) The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."
(4) The Term Loan bears interest at one-month LIBOR plus 2.10% per annum and will mature on December 30, 2022. We have interest rate swap agreements totaling $250.0 million, which effectively fix the interest rate on a portion of the Term Loan at 4.86% through June 30, 2021. At SeptemberJune 30, 2019,2020, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 2.10% or 4.12%2.26%.
(5) The December 2015 Term Loan bears interest at one-month LIBOR plus 2.35% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 4.06% per annum through maturity.
(6) The Revolver provides borrowings on a revolving basis up to $650.0 million, bears interest at one-month LIBOR plus 1.80%, and will initially mature on December 30, 2021, subject to 2 six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. At SeptemberJune 30, 2019,2020, we had an aggregate available borrowing capacity of $432.8$2.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At SeptemberJune 30, 2019,2020, the applicable interest rate on the Revolver was one-month LIBOR plus 1.80% or 3.82%1.96%. The interest rate on the Revolver may vary in the future based upon the Company's credit rating and leveraged levels.
(7) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings and leveraged levels.
(8) Represents the financial liability associated with our failed sale and leaseback of land at Edison Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas; and Jefferson Valley Mall, located in Yorktown Heights, New York (collectively, the "Properties"). The face amount represents the sales price of the fee interest in the land at the Properties. The master ground lease has a 99-year term and includes fixed annual payments at an initial annualized rate of 7.4%, with annual rent escalators over the aforementioned term. The agreement also includes an option to repurchase the fee interest in the land at $109.3 million in year 30 of the master ground lease, to which the financial liability is being accreted to during the repurchase period. Proceeds received at closing were net of $55.0 million in bridge financing provided by the Company. Expense is being recognized utilizing an effective interest rate of 8.52% during the repurchase period.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


On June 22, 2020, in order to accelerate repayment and bolster liquidity, the Company accepted the terms of a reduced payoff of the $55.0 million bridge financing provided in connection with the failed sale and leaseback noted above. In exchange for settling the bridge financing, the Company received $30.0 million in cash and the buyer/lessor reduced monthly payments that we owe under the leases totaling approximately $15.7 million over 27 months, commencing July 1, 2020. The present value of the reduced rent payments was reclassified from note receivable to other indebtedness, which is presented net of the accretion adjustment in the table above, and the Company recorded an impairment on the note receivable of approximately $11.2 million in connection with the extinguishment. The proceeds were used for general corporate purposes.
On February 28, 2020, the Company redeemed the Exchange Notes in advance of the April 1, 2020 maturity date. The repayment was funded utilizing borrowings on the Revolver.
Covenants
Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of SeptemberJune 30, 2019,2020, based on the amendments to our Facility and December 2015 Term Loan that we expect to close within the next week, as discussed in Note 2 - "Basis of Presentation and Principles of Consolidation," management believes the Company iswould be in compliance with all covenants of its unsecured debt.
The total balance of mortgages was approximately $1.2$1.1 billion as of SeptemberJune 30, 2019.2020. At SeptemberJune 30, 2019,2020, certain of our consolidated subsidiaries were the borrowers under 2120 non-recourse loans and 2 full-recourse loans secured by mortgages encumbering 2624 properties, including 1 separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of 4 properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least 2 consecutive quarters, the lender could accelerate the debt and enforce its right against its collateral.
On November 19, 2018,May 26, 2020, we received a notice of default letter, dated November 15, 2018,May 14, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $49.5$40.9 million mortgage loan secured by West Ridge Mall and West Ridge Plaza,Port Charlotte Town Center, located in Topeka, Kansas (collectively known as "West Ridge").Port Charlotte, Florida. The notice was issued by the special servicer because the borrower didelected to not make certain reserve repayments or deposits as requiredpay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan agreement forin an effort to cure the aforementioned loan. On May 9, 2019, we received notification that a receiver had been appointeddefault. The Company continues to manage and lease West Ridge. An affiliate of the Company still holds title to the property.
On April 11, 2018,May 22, 2020, we received a notice of default letter, dated April 6, 2018,May 21, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $45.2$47.3 million mortgage loan secured by Towne West Square.Lincolnwood Town Center, located in Lincolnwood, Illinois. The notice was issued by the special servicer because the borrower didelected to not makepay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On February 21, 2020, we received a letter, dated that same date, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $33.1 million mortgage loan secured by Muncie Mall, located in Muncie, Indiana, was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain reserve payments or deposits as required bytenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan agreement forand is considering various options. On April 14, 2020, the aforementioned loan. On July 1, 2019, anCompany received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company transitioned the propertycontinues to hold title to the property.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


On November 5, 2019, we received a letter dated October 30, 2019, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $45.1 million mortgage loan secured by Charlottesville Fashion Square, located in Charlottesville, Virginia, was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and recordedis considering various options. On March 17, 2020, we received notification that a net gainreceiver had been appointed to manage and lease the property. An affiliate of $37.7 million, which is included in gain on extinguishment of debt, net in the accompanying consolidated statements of operations and comprehensive (loss) income forCompany still holds title to the three and nine months ended September 30, 2019.property.
At SeptemberJune 30, 2019,2020, management believes the applicable borrowers under our other non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows. The Company has assessed each of the defaulted properties for impairment indicators and have concluded no impairment charges were warranted as of SeptemberJune 30, 2019.2020.
Fair Value of Debt
The carrying values of our variable-rate loans approximate their fair values. We estimate the fair values of fixed-rate mortgages and fixed-rate unsecuredcorporate debt (including variable-rate unsecured debt swapped to fixed-rate)fixed-rate and our other indebtedness, as discussed above) using cash flows discounted at current borrowing rates or Level 2 inputs. We estimate the fair values of consolidated fixed-rate unsecured notes payable using Level 1 quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms and maturities or Level 12 inputs.
The book value and fair value of these financial instruments and the related discount rate assumptions as of June 30, 2020 and December 31, 2019 are summarized as follows:
  June 30, 2020 December 31, 2019
Book value of fixed-rate mortgages(1)
 $1,045,243 $1,052,242
Fair value of fixed-rate mortgages $1,073,408 $1,062,205
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages 3.81% 4.24%
     
Book value of fixed-rate corporate debt(1)
 $1,396,790 $1,660,062
Fair value of fixed-rate corporate debt $1,156,446 $1,673,105
Weighted average discount rates assumed in calculation of fair value for fixed-rate corporate debt 9.52% 6.03%
(1) Excludes debt issuance costs and applicable debt discounts.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The book value and fair value of these financial instruments and the related discount rate assumptions as of September 30, 2019 and December 31, 2018 are summarized as follows:
  September 30, 2019 December 31, 2018
Book value of fixed-rate mortgages(1)
 $1,106,508 $915,276
Fair value of fixed-rate mortgages $1,130,082 $928,129
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages 4.21% 4.57%
     
Book value of fixed-rate unsecured debt(1)
 $1,560,900 $1,590,000
Fair value of fixed-rate unsecured debt $1,553,490 $1,485,672
Weighted average discount rates assumed in calculation of fair value for fixed-rate unsecured debt 5.29% 5.62%
(1) Excludes debt issuance costs and applicable debt discounts.
7.Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash payments related to the Company's borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives the Company primarily uses interest rate swaps or caps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in other comprehensive income ("OCI") or other comprehensive loss (“OCL”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed-rate financings or refinancings continue to be included in accumulated other comprehensive income or loss ("AOCI" or "AOCL") during the term of the hedged debt transaction.
Amounts reported in AOCIAOCL relate to derivatives that will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Realized gains or losses on settled derivative instruments included in AOCIAOCL are recognized as an adjustment to income over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional $3.3$12.7 million will be reclassified as an increase to interest expense.
On March 29, 2019, the Company entered into 1 two-year swap, totaling $52.0 million with an effective date of April 1, 2019, pursuant to the terms of the extension option executed on the mortgage note payable loan at Town Center at Aurora. As of SeptemberJune 30, 2019,2020, the Company had 11 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a current notional value of $641.5$640.8 million.
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2020 and December 31, 2019:
Derivatives designated as hedging instruments:Balance Sheet
Location		 June 30, 2020 December 31, 2019
Interest rate productsLiability derivativesAccounts payable, accrued expenses, intangibles, and deferred revenue $21,089
 $6,592

There were 0 asset derivative instruments at June 30, 2020 and December 31, 2019. The liability derivative instruments were reported at their fair value of $21,089 and $6,592 at June 30, 2020 and December 31, 2019, respectively, with a corresponding adjustment to OCL for the unrealized gains and losses (net of noncontrolling interest allocation). Over time, the unrealized gains and losses held in AOCL will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2019 and December 31, 2018:
Derivatives designated as hedging instruments:Balance Sheet
Location		 September 30, 2019 December 31, 2018
Interest rate productsAsset derivativesDeferred costs and other assets $—
 $9,306
Interest rate productsLiability derivativesAccounts payable, accrued expenses, intangibles, and deferred revenue $9,378
 $1,913

The asset derivative instruments were reported at their fair value of $0 and $9,306 in deferred costs and other assets at September 30, 2019 and December 31, 2018, respectively, with a corresponding adjustment to OCI for the unrealized gains and losses (net of noncontrolling interest allocation). The liability derivative instruments were reported at their fair value of $9,378 and $1,913 at September 30, 2019 and December 31, 2018, respectively, with a corresponding adjustment to OCL for the unrealized gains and losses (net of noncontrolling interest allocation). Over time, the unrealized gains and losses held in AOCI will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of comprehensive (loss) incomeloss for the three and ninesix months ended SeptemberJune 30, 20192020 and 2018:2019:
Derivatives in Cash Flow Hedging Relationships
(Interest rate products)		 Location of Gain or Loss Recognized in Income on Derivatives For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2019 2018 2019 2018
Amount of (Loss) or Gain Recognized in OCI on Derivative Interest expense $(2,099) $2,534
 $(15,619) $10,381
           
Amount of Gain Reclassified from AOCI into Income Interest expense $(164) $(63) $(1,239) $(2,091)
Derivatives in Cash Flow Hedging Relationships
(Interest rate products)		 Location of Gain or Loss Recognized in Income on Derivatives For the Three Months Ended June 30, For the Six Months Ended June 30,
 2020 2019 2020 2019
Amount of Loss Recognized in OCL on Derivative Interest expense $(1,760) $(8,955) $(17,969) $(13,520)
           
Amount of Loss or (Gain) Reclassified from AOCL into Income Interest expense $2,680
 $(530) $3,443
 $(1,075)
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the three and ninesix months ended SeptemberJune 30, 20192020 and 2018:2019:
Effect of Cash Flow Hedges on Consolidated Statements of Operations For the Three Months Ended September 30, For the Nine Months Ended September 30, For the Three Months Ended June 30, For the Six Months Ended June 30,
2019 2018 2019 2018 2020 2019 2020 2019
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded $(38,833) $(36,582) $(114,806) $(105,627) $(37,445) $(39,143) $(76,080) $(75,973)
                
Amount of gain reclassified from accumulated other comprehensive income into interest expense $(164) $(63) $(1,239) $(2,091)
Amount of loss or (gain) reclassified from accumulated other comprehensive loss into interest expense $2,680
 $(530) $3,443
 $(1,075)
                

Credit Risk-Related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision that if the Company either defaults or is capable of being declared in default on any of its consolidated indebtedness, then the Company could also be declared in default on its derivative obligations.
The Company has agreements with its derivative counterparties that incorporate the loan covenant provisions of the Company's indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.
As of SeptemberJune 30, 2019,2020, the fair value of the derivatives in a net liability position, plus accrued interest but excluding any adjustment for nonperformance risk, related to these agreements was $9,378.$21,089. As of SeptemberJune 30, 2019,2020, the Company has not posted any collateral related to these agreements. The Company is not in default with any of these provisions as of SeptemberJune 30, 2019.2020. If the Company had breached any of these provisions at SeptemberJune 30, 2019,2020, it would have been required to settle its obligation under these agreements at their termination value of $9,378.
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)


$21,089.
Fair Value Considerations
Currently, the Company uses interest rate swaps and caps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. Based on these inputs the Company has determined that its interest rate swap and cap valuations are classified within Level 2 of the fair value hierarchy.
To comply with the provisions of Topic 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of SeptemberJune 30, 20192020 and December 31, 2018,2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The tables below presents the Company’s net assets and (liabilities) measured at fair value as of SeptemberJune 30, 20192020 and December 31, 20182019 aggregated by the level in the fair value hierarchy within which those measurements fall:
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 Balance at September 30, 2019
Derivative instruments, net$—
 $(9,378) $—
 $(9,378)
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 Balance at June 30, 2020
Derivative instruments, net$—
 $(21,089) $—
 $(21,089)
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 Balance at December 31, 2018
Derivative instruments, net$—
 $7,393
 $—
 $7,393
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 Balance at December 31, 2019
Derivative instruments, net$—
 $(6,592) $—
 $(6,592)

8.Rental Income
We receive rental income from the leasing of retail and other space under operating leases, as we retain substantially all of the risks and benefits of ownership of the investment properties. The majority of these leases contain extension options, typically at the lessee's election, and/or early termination provisions. Further, our leases do not contain any provisions that would allow the lessee to purchase the underlying assets throughout the lease term. In most cases, consideration received typically includes a fixed minimum rent component, reimbursement of a fixed portion of our property operating expenses, including utility, security, janitorial, landscaping, food court and other administrative expenses (also known as CAM),included in common area maintenance, or CAM, and reimbursement of lessor costs such as real estate taxes and insurance, computed based upon a formula in accordance with the lease terms. When not reimbursed by the fixed CAM component, CAM expense reimbursements and lessor costs are based on the tenant's proportionate share of the allocable operating expenses and CAM capital expenditures for the property. We accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year. Additionally, a large number of our tenants are also required to pay overage rents based on sales during the applicable lease year over a base amount stated in the lease agreement. We recognize overage rents only when each tenant's sales exceed the applicable sales threshold as defined in their lease. We also collect lease termination income from tenants to allow for the tenant to vacate their space prior to their scheduled lease termination date. We recognize lease termination income in the period when a termination agreement is signed, collectability is assured, and we are no longer obligated to provide space to the tenant. In the event that a tenant is in bankruptcy when the termination agreement is signed, termination fee income is deferred and recognized when, and if, it is received. We record an adjustment to rental income in the period there is a change in our assessment of whether the collectibility of an operating lease receivablepayments is probable.
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)


We have elected the practical expedient in ASU 2016-02 to not separate non-lease components from lease components as our underlying leases qualify as operating leases and the timing and pattern of transfer of the lease and non-lease components are the same. We note that the predominant component of our leases is the lease component and thus account for the combined lease and non-lease (CAM) component of the non-cancelable lease term on a straight-line basis in accordance with ASC 842.
Rental income also includes accretion related to above-market and below-market lease intangibles related to the acquisition of operating properties. We amortize any tenant inducements as a reduction of rental income utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.
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 summarizes our rental income for the three and ninesix months ended SeptemberJune 30, 20192020 and 2018:2019:
 For the Three Months Ended September 30, For the Nine Months Ended September 30, For the Three Months Ended June 30, For the Six Months Ended June 30,
 2019 2018 2019 2018 2020 2019 2020 2019
Operating lease payments, fixed $135,046
 $150,785
 $417,395
 $456,917
 $125,366
 $138,173
 $256,871
 $282,349
Operating lease payments, variable 19,220
 19,313
 53,679
 54,193
 12,897
 16,397
 32,001
 34,459
Amortization of straight-line rent, inducements, and rent abatements 1,227
 996
 3,499
 2,677
 (21,586) 1,163
 (20,777) 2,272
Net amortization/accretion of above and below-market leases 975
 3,852
 5,425
 7,976
 1,712
 1,544
 2,818
 4,450
Change in estimate of collectibility of rental income (1,857) (497) (5,884) (4,454) (22,339) (1,047) (27,630) (4,027)
Total rental income $154,611
 $174,449
 $474,114
 $517,309
 $96,050
 $156,230
 $243,283
 $319,503

Included in the amounts presented for the three and six months ended June 30, 2020 are rent abatements of $22.0 million and a change in our estimate of collectibility of rental income of $22.3 million, including the write-off of accrued (straight-line) rent, in response to the COVID-19 pandemic.
Future payments to be received under non-cancelable operating leases for each of the next five years and thereafter, excluding variable payments of tenant reimbursements, percentage or overage rents, and lease termination payments as of SeptemberJune 30, 20192020 are as follows:
2019 (October - December) $122,730
2020 448,442
2020 (July - December) $234,763
2021 372,360
 403,817
2022 311,494
 338,531
2023 253,518
 276,796
2024 216,380
Thereafter 793,873
 655,045
 $2,302,417
 $2,125,332

9.Equity
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 SeptemberJune 30, 2019,2020, WPG Inc. had reserved 34,714,28134,479,892 shares of common stock for possible issuance upon the exchange of units held by WPG L.P. limited partners.
The holders of the Series I-1 Preferred Units have, at their option, the right to have their units purchased by WPG L.P. subject to the satisfaction of certain conditions. Therefore, the Series I-1 Preferred Units are classified as redeemable noncontrolling interests outside of permanent equity.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


Stock 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 "2014 Plan"), which 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 were reserved for issuance, with a maximum number of awards to be granted to a participant in any calendar year of 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 with respect to the issuance of new awards. 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 16, 2029.
The following is a summary by type of the awards that the Company issued during the ninesix months ended SeptemberJune 30, 20192020 and SeptemberJune 30, 20182019 under the 2014 Plan and 2019 Plan.
Annual Long-Term Incentive Awards
During the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, the Company approved the terms and conditions of the 20192020 and 20182019 annual awards (the "2019"2020 Annual Long-Term Incentive Awards" and "2018"2019 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 1 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 in cash accruals or under some circumstances, common shares, with respect to the RSUs corresponding to the amount of any cash 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 20192020 Annual Long-Term Incentive Awards and 20182019 Annual Long-Term Incentive Awards, respectively:
 2019 Annual Long-Term Incentive Awards 2018 Annual Long-Term Incentive Awards 2020 Annual Long-Term Incentive Awards 2019 Annual Long-Term Incentive Awards
Grant Date February 20, 2019 February 20, 2018 February 25, 2020 February 20, 2019
  
RSUs issued 572,163 587,000 1,373,422 572,163
Grant date fair value per unit $5.77 $6.10 $2.41 $5.77
  
PSUs issued 572,163 587,000 1,373,422 572,163
Grant date fair value per unit $4.98 $4.88 $1.74 $4.98

During the six months ended June 30, 2020, the performance period related to PSUs awarded in conjunction with the 2017 annual awards ended. There was 0 payout as the Company's TSR rank did not exceed the minimum required threshold for payout and 262,787 PSUs were forfeited.
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)


WPG Restricted Stock Units
During the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, the Company awarded 331,7921,231,188 RSUs, with a grant date fair value of $1.5$0.8 million, and 225,440331,792 RSUs, with a grant-date fair value of $1.5 million, respectively, to certain non-executive 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.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


Stock Options
During the ninesix months ended SeptemberJune 30, 2020, 0 stock options were granted to employees, 0 stock options were exercised by employees and 31,434 stock options were canceled, forfeited or expired. As of June 30, 2020, there were 569,855 stock options outstanding. During the six months ended June 30, 2019, 0 stock options were granted to employees, 391 stock options were exercised by employees and 66,05352,152 stock options were canceled, forfeited or expired. As of September 30, 2019, there were 613,297 stock options outstanding.
During the nine months ended September 30, 2018, 0 stock options were granted to employees, 0 stock options were exercised by employees and 114,273 stock options were canceled, forfeited or expired.
Other Compensation Arrangements
On August 2, 2019, in connection with the execution of an employment agreement, the Committee granted Mr. Louis G. Conforti, the Company's Chief Executive Officer and Director, a retention award of 500,000 RSUs, with a grant date fair value of $1.8 million, and 500,000 PSUs, at target with a grant date fair value of $1.2 million, for his continued service through August 2, 2024. RSUs represent a contingent right to receive 1 WPG Inc. common share for each vested RSU. 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 RSUs, which themselves will accrue dividend equivalents, and will be paid out if and when the underlying RSU vests. The RSUs will vest in one-third installments on August 2, 2022, 2023, and 2024, subject to Mr. Conforti's continued employment through such applicable date. Compensation expense is recognized on a straight-line basis over the five year vesting term.
Actual PSUs earned may range from 0%-200% of the PSUs awarded based on the Company's annualized TSR over a three year performance period that commenced on August 2, 2019, provided Mr. Conforti's continued employment through the vesting date. 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 themselves will accrue dividend equivalents, and will be earned when and if the underlying PSU vests. Earned PSUs, if any, vest in one-third installments on August 2, 2022, 2023, and 2024. The PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the five year term on a straight-line basis based on the applicable vesting period of the PSUs.
Share Award Related Compensation Expense
During the three and ninesix months ended SeptemberJune 30, 2019,2020, the Company recorded compensation expense pertaining to the awards granted of $2.1$1.9 million and $5.9$3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive (loss) income.loss. During the three and ninesix months ended SeptemberJune 30, 2018,2019, the Company recorded compensation expense pertaining to the awards granted of $2.0 million and $6.3$3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive (loss) income.loss. In certain instances, employment agreements and stock compensation programs provide for accelerated vesting when executives are terminated without cause. Additionally, the Committee may, in its discretion, accelerate the vesting for retiring Board members.
Distributions
For the three months ended June 30, 2020, 0 common share/unit dividends were declared by the Board as common share/unit dividends were suspended in response to the COVID-19 pandemic. For the six months ended June 30, 2020, the Board declared common share/unit dividends of $0.125. During the three and ninesix months ended SeptemberJune 30, 2019, and 2018, the Board declared common share/unit dividends of $0.25 and $0.75$0.50 per common share/unit, respectively.
10.Commitments and Contingencies
Litigation
We are involved from time-to-time in various legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such litigation, claims and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.
Concentration of Credit Risk
Our properties rely heavily upon anchor or major tenants to attract customers; however, these retailers do not constitute a material portion of our financial results. Additionally, many anchor retailers in the enclosed retail properties own their spaces further reducing their contribution to our operating results. All operations are within the United States and no customer or tenant accounts for 5% or more of our consolidated revenues.
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)


Lease Commitments
As of SeptemberJune 30, 2019,2020, a total of 4 consolidated properties are subject to ground leases. The termination dates of these ground leases range from 2026 to 2076. These ground leases generally require us to make fixed annual rental payments, or a fixed annual rental plus a percentage rent component based upon the revenues or total sales of the property. Some of these leases also include escalation clauses and renewal options. For the three and ninesix months ended SeptemberJune 30, 2019,2020, we incurred ground lease expense of $215$209 and $613,$331, respectively, of which $5 and $15$10, respectively, related to straight-line rent expense, respectively, which is included in ground rent in the accompanying consolidated statements of operations and comprehensive (loss) income.loss. For the three and ninesix months ended SeptemberJune 30, 2018,2019, we incurred ground lease expense of $197$195 and $592,$398, respectively, of which $13$5 and $38$10, respectively, related to straight-line rent expense, respectively.expense. Additionally, the Company has 2 material office leases and 1 material garage lease. The termination dates of these leases range from 2023 to 2026. These leases generally require us to make fixed annual rental payments, plus our share of CAM expense and real estate taxes and insurance. For the three and ninesix months ended SeptemberJune 30, 2019,2020, we incurred lease expense of $681$612 and $1,975,$1,261, respectively, which is included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive (loss) income.loss. For the three and ninesix months ended SeptemberJune 30, 2018,2019, we incurred lease expense of $611$663 and $2,020,$1,294, respectively. On January 1, 2019, we recorded a
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)


Future minimum lease liabilitypayments due under these leases for each of the next five years and corresponding ROU assetthereafter, excluding applicable extension options, as of approximately $14.4 million. June 30, 2020 are as follows:
2020 (July - December) $1,026
2021 2,069
2022 2,099
2023 1,427
2024 999
Thereafter 20,378
Total lease payments 27,998
Less: Discount 15,919
Present value of lease liabilities $12,079

The weighted average remaining lease term for our consolidated operating leases was 18.519.8 years and the weighted average discount rate for determining the lease liabilities was 8.7%8.8% at January 1, 2019.June 30, 2020. The discount rates utilized in calculating the lease liabilities represents our estimate of the Company's incremental borrowing rate over the terms that correspond to the leases.
Future minimum lease payments due under these leases for each of the next five years and thereafter, excluding applicable extension options, as of September 30, 2019 are as follows:
2019 (October - December) $508
2020 2,049
2021 2,069
2022 2,099
2023 1,427
Thereafter 21,377
Total lease payments 29,529
Less: Discount 16,240
Present value of lease liabilities $13,289

The weighted average remaining lease term for our consolidated operating leases was 18.9 years and the weighted average discount rate for determining the lease liabilities was 8.7% at September 30, 2019. We had no financing leases as of SeptemberJune 30, 2019.2020.
11.(Loss) EarningsLoss Per Common Share/Unit
WPG Inc. (Loss) EarningsLoss Per Common Share
We determine WPG Inc.'s basic (loss) earningsloss per common share based on the weighted average number of shares of common stock outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG Inc.'s diluted (loss) earningsloss per share based on the weighted average number of shares of common stock outstanding combined with the incremental weighted average shares that would have been outstanding assuming all potentially dilutive securities were converted into common shares at the earliest date possible.
Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The following table sets forth the computation of WPG Inc.'s basic and diluted (loss) earningsloss per common share:
  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2019 2018 2019 2018
(Loss) Earnings Per Common Share, Basic:        
Net (loss) income attributable to common shareholders - basic $(4,421) $463
 $(26,858) $24,565
Weighted average shares outstanding - basic 188,603,382
 187,845,587
 188,392,694
 187,647,504
(Loss) Earnings per common share, basic $(0.02) $0.00
 $(0.14) $0.13
         
(Loss) Earnings Per Common Share, Diluted:        
Net (loss) income attributable to common shareholders - basic $(4,421) $463
 $(26,858) $24,565
Net (loss) income attributable to limited partner unitholders (812) 84
 (4,954) 4,550
Net (loss) income attributable to common shareholders - diluted $(5,233) $547
 $(31,812) $29,115
Weighted average common shares outstanding - basic 188,603,382
 187,845,587
 188,392,694
 187,647,504
Weighted average operating partnership units outstanding 34,735,136
 34,711,788
 34,739,598
 34,699,815
Weighted average additional dilutive securities outstanding —
 1,435,195
 —
 1,449,179
Weighted average common shares outstanding - diluted 223,338,518
 223,992,570
 223,132,292
 223,796,498
(Loss) Earnings per common share, diluted $(0.02) $0.00
 $(0.14) $0.13
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2019 2020 2019
Loss Per Common Share, Basic:        
Net loss attributable to common shareholders - basic $(82,050) $(17,262) $(78,675) $(22,437)
Weighted average shares outstanding - basic 190,541,074
 188,486,685
 189,842,197
 188,285,604
Loss per common share, basic $(0.43) $(0.09) $(0.41) $(0.12)
         
Loss Per Common Share, Diluted:        
Net loss attributable to common shareholders - basic $(82,050) $(17,262) $(78,675) $(22,437)
Net loss attributable to limited partner unitholders (14,931) (3,186) (14,314) (4,142)
Net loss attributable to common shareholders - diluted $(96,981) $(20,448) $(92,989) $(26,579)
Weighted average common shares outstanding - basic 190,541,074
 188,486,685
 189,842,197
 188,285,604
Weighted average operating partnership units outstanding 34,485,545
 34,752,540
 34,539,716
 34,741,867
Weighted average common shares outstanding - diluted 225,026,619
 223,239,225
 224,381,913
 223,027,471
Loss per common share, diluted $(0.43) $(0.09) $(0.41) $(0.12)

For the three and ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, additional potentially dilutive securities include contingently-issuable outstanding stock options, restricted stock units, and performance based components of annual or special arrangement awards. For the three and ninesix months ended SeptemberJune 30, 2020, the potential dilutive effect of 569,855 contingently-issuable outstanding stock options, 601,711 restricted stock units and 1,305,005 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2019, the potential dilutive effect of 613,297627,198 contingently-issuable outstanding stock options 538,700 restricted stock units, and 1,765,3081,269,427 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. We accrue distributions when they are declared.
WPG L.P. (Loss) EarningsLoss Per Common Unit
We determine WPG L.P.'s basic (loss) earningsloss per common unit based on the weighted average number of common units outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG L.P.'s diluted (loss) earningsloss per unit based on the weighted average number of common units outstanding combined with the incremental weighted average units that would have been outstanding assuming all potentially dilutive securities were converted into common units at the earliest date possible.
The following table sets forth the computation of WPG L.P.'s basic and diluted (loss) earningsloss per common unit:
  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2019 2018 2019 2018
(Loss) Earnings Per Common Unit, Basic & Diluted:        
Net (loss) income attributable to common unitholders - basic and diluted $(5,233) $547
 $(31,812) $29,115
Weighted average common units outstanding - basic 223,338,518
 222,557,375
 223,132,292
 222,347,319
Weighted average additional dilutive securities outstanding —
 1,435,195
 —
 1,449,179
Weighted average units outstanding - diluted 223,338,518
 223,992,570
 223,132,292
 223,796,498
(Loss) Earnings per common unit, basic & diluted $(0.02) $0.00
 $(0.14) $0.13
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2019 2020 2019
Loss Per Common Unit, Basic & Diluted:        
Net loss attributable to common unitholders - basic and diluted $(96,981) $(20,448) $(92,989) $(26,579)
Weighted average common units outstanding - basic & diluted 225,026,619
 223,239,225
 224,381,913
 223,027,471
Loss per common unit, basic & diluted $(0.43) $(0.09) $(0.41) $(0.12)

For the three and ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, additional potentially dilutive securities include contingently-issuable units related to WPG Inc.'s outstanding stock options, restricted stock units, and WPG Inc.'s performance based components of annual or special arrangement awards. For the three and ninesix months ended SeptemberJune 30, 2020, the potential dilutive effect of 569,855 contingently-issuable outstanding stock options, 601,711 restricted stock units and 1,305,005 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2019, the potential dilutive effect of 613,297627,198 contingently-issuable outstanding stock options 538,700 restricted stock units, and 1,765,3081,269,427 performance based components of annual awards were excluded as their inclusion would be anti-dilutive. We accrue distributions when they are declared.
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)


12.Subsequent Events
On October 10, 2019, WPG L.P. closed onCOVID-19 Updates
Subsequent to June 30, 2020, we executed the sale and leaseback of four assets (collectively,following forbearance agreements:
Property Principal Outstanding Interest Rate Monthly Service Terms Description of Relief Duration Repayment Terms
Canyon View Marketplace $5,087
 5.47% Interest and principal Interest and principal 3 months commencing May 2020 6 months commencing August 2020
Grand Central Mall $38,378
 6.05% Interest and principal Interest and principal 3 months commencing June 2020 12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)

In connection with the "Properties") pursuant to the purchase and saleforbearance agreement executed on July 24, 2019 between WPG L.P. and Mall Ground Portfolio, LLC, an affiliate of Perennial Investment & Advisors, LLC and Kawa Capital Partners ("the Ground Lessor"). The Properties are: Edisonmortgage note payable secured by Grand Central Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas;Parkersburg, West Virginia, the maturity date of the mortgage note payable was extended one year to July 6, 2021.
On August 6, 2020, the Board authorized a one-for-nine reverse share split of the Company’s common shares and Jefferson Valley Mall, located in Yorktown Heights, New York. Under the agreement, the Ground Lessor acquired a fee interest in the land at the Properties for a price of approximately $98.9 million. Concurrently, WPG L.P. entered intooperating units, subject to shareholder approval. Upon shareholder approval and as a new 99-year master ground lease for the leasehold interest at the Properties. The master ground lease includes fixed annual payments to the Ground Lessor at an initial annualized rate of 7.4% and contains annual rent escalators over the aforementioned term. The agreement includes an option for WPG L.P. to repurchase the fee interest in the land at a fixed price in year 30result of the master ground lease. If WPG L.P. does not exercise this option, thenreverse share split, each nine shares of the Ground LessorCompany's issued and outstanding common shares/units will retainbe automatically combined and converted into one issued and outstanding common share/unit. The Company plans to hold a special meeting of shareholders to vote on the fee interest in the land, and the fee interest in the improvements and development rights will transfer to the Ground Lessor atrecommendation before the end of the 99-year ground lease term. WPG L.P. received approximately $42.4 million in proceeds upon closing, net of $55.0 million in bridge financing provided by WPG L.P. to the Ground Lessor and closing costs.2020. The bridge financing has a maximum five-year balloon term, which can be pre-paid without penalty, and carries an interest rate of 4.0%. The net proceeds were generally used to fund ongoing redevelopment efforts and for general corporate purposes. WPG L.P. continues to own a fee interest in the improvements and development rights through the termimplementation of the aforementioned master ground lease and continuesreverse share split is intended to manage, lease and developincrease the Properties and maintains full control over the leasehold interest and in the land and fee interest in the improvements and development rights at the respective Properties. For accounting purposes, the repurchase option will preclude WPG L.P. from meeting the criteria for sales recognition. As such, the gross proceeds received will be accounted for as a financial liability during the termper share trading price of the option.Company’s common shares in order to satisfy the continued listing criteria set forth in Section 802.01C of the Listed Company Manual of the New York Stock Exchange and cure the noncompliance notification received by the Company on April 28, 2020.



Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this report.
Overview - Basis of Presentation
Washington Prime Group Inc. (“("WPG Inc.”") is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Code"). WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. Washington Prime Group, L.P. (“("WPG L.P.”") is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of SeptemberJune 30, 2019,2020, our assets consisted of material interests in 107101 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 5653 million square feet of managed gross leasable area.
Unless the context otherwise requires, references to "WPG," the "Company," “we,” “us”"we," "us" and “our”"our" refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated basis.
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of SeptemberJune 30, 20192020 and December 31, 20182019 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading.
ImpactCOVID-19
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects since March 2020 as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. During a portion of the Adoptionsecond quarter of 2020, and in the New Lease Accounting Standard
On January 1, 2019,interest of public health and safety, jurisdictions (national, state and local) where our shopping centers are located, required mandatory closures or capacity limitations or other restrictions for those that continue to operate, which impacted our tenants' ability to operate as well as pay rent and other related charges or otherwise fulfill their obligations of their respective leases. As of June 30, 2020, all of our enclosed retail properties were open in some capacity and our open air properties have remained open to the extent permitted by applicable law. In response to the mandatory shutdowns, we adopted Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)." This new guidance, including related ASUs that were subsequently issued, required ushave granted rent relief to recognizecertain of our tenants through a lease liabilitycombination of rent deferrals 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 underrent abatements, which we were the lessee. Upon adoption, we 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. We elected to use the "package of practical expedients," which allowed us not to reassess under the new standard prior conclusions about lease identification, lease classification, and initial direct costs.
From a lessor perspective, the new guidance remained mostly similar as we elected the practical expedient to not separate non-lease components from lease components. This electionhave resulted in a change on the Company's consolidated statements of operations and comprehensive (loss) income as we no longer present minimum rents, overage rents, and tenant reimbursements as separate line items because we now account for these line items as a single combined lease component,reduction to our second quarter 2020 rental income onby $22.0 million due to the basisrent abatements, with additional impact to our second quarter operating cash flows due to the rent deferrals. Additionally, as part of our continual assessment 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 us to recognize a change, after the commencement date, in assessment of whether thefuture collectibility of an operating lease receivable as probable asrents, we recorded an adjustment to rental income rather thanof $22.3 million, including the write-off of accrued (straight-line) rent. We continue to assess requests from our tenants as they are received. As a provision for credit losses. This requirement resulted inresult of these developments, the Company has experienced, and expects to continue to experience, a changematerial adverse impact on the Company's consolidated statementsits revenues, results of operations and comprehensive (loss)cash flows for the year ending December 31, 2020. The situation continues to evolve as certain geographic regions across the United States have experienced a surge in new cases, which could result in shoppers limiting their in-store purchases in exchange for curbside or on-line purchases. Additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change, including the timing of potential additional closure requirements or the subsequent lifting of any said restrictions.
In response to this pandemic, we took the following cost saving and capital preservations steps, effective April 2020:
•Furloughed or laid off approximately 20% of our workforce, with gradual rehiring occurring as property operations resumed. Additionally, we implemented a hiring freeze and terminated third party vendor contracts when applicable;
•Temporarily reduced senior management base compensation ranging from 5% to 25%;
•Drew an additional $120.0 million under the Revolver to increase liquidity and preserve financial flexibility; and


•Temporarily suspended the quarterly common share and operating partnership unit cash dividend for the remainder of 2020 (with a potential true up of the fourth quarter 2020 dividend payment which could be paid in 2021 in order to address the Company's REIT taxable income distribution requirements), which will result in cash savings in excess of $80.0 million for the remainder of the year, exclusive of any potential true up payments.
Additionally, the Company has executed the following forbearance agreements on its various consolidated and unconsolidated mortgage notes outstanding as of and subsequent to June 30, 2020 (dollars in thousands; unconsolidated mortgages shown non pro-rata):
Consolidated Mortgages
Property Principal Outstanding Interest Rate Monthly Service Terms Description of Relief Duration 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza $117,000
 3.67% Interest only Interest 6 months commencing May 2020 6 months commencing November 2020
Southgate Mall $35,000
 4.48% Interest only Interest 3 months commencing May 2020 Due at maturity (Sept. 27, 2023)
Town Center at Aurora $51,000
 4.92% Interest and principal Interest and principal 6 months commencing May 2020 Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall $76,086
 4.65% Interest and principal Interest and principal 3 months commencing June 2020, paid from escrows Not applicable
Canyon View Marketplace $5,087
 5.47% Interest and principal Interest and principal 3 months commencing May 2020 6 months commencing August 2020
Grand Central Mall $38,378
 6.05% Interest and principal Interest and principal 3 months commencing June 2020 12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)
             
Unconsolidated Mortgages
Property Principal Outstanding Interest Rate Monthly Service Terms Description of Relief Duration 
Repayment Terms1
Arbor Hills $24,035
 4.27% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020
Arboretum, The $59,400
 4.13% Interest only Interest 3 months commencing May 2020 5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve $52,779
 3.90% Interest only Interest 3 months commencing May 2020 5 months commencing August 2020
Gateway Centers $112,500
 4.03% Interest only Interest 3 months commencing May 2020 5 months commencing August 2020
Mall at Johnson City, The $47,768
 6.76% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020


Property Principal Outstanding Interest Rate Monthly Service Terms Description of Relief Duration 
Repayment Terms1
Nichols Hills Plaza $12,571
 2.66% Interest and principal Interest and principal 3 months commencing May 2020 Due at maturity (Jan. 1, 2023)
Polaris Fashion Place $240,170
 3.94% Interest and principal Interest 3 months commencing May 2020 5 months commencing August 2020
Town Center Crossing $32,534
 4.25% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020
Town Center Plaza $65,830
 5.00% Interest and principal Interest and principal 3 months commencing May 2020 12 months commencing August 2020
Scottsdale Quarter (Blocks K & M) $55,000
 4.36% Interest only Interest 3 months commencing May 2020 Commencing August 2020 with payments made from excess property cash flow until repaid in full
1Maturity dates noted include any applicable extension options available to the borrower.
While these forbearance agreements will not reduce the Company’s debt obligations, they will enhance cash flow during the period of lower rent collections from tenants. The Company estimates approximately $10 million to $15 million of delayed payments from these arrangements during the forbearance period. In addition, the Company is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations from lenders. Certain other mortgage notes payable may be in formal default (see "Covenants" for further details) or placed into special servicing during the forbearance negotiation and repayment periods.
Our ability to meet our obligations as they come due may be impacted by our ability to remain compliant with financial covenants in our unsecured debt arrangements or to obtain waivers or amendments that impact the related covenants. We have received requisite lender consents and expect to close, within the next week, on amendments to our Facility and December 2015 Term Loan (as defined in "Financing and Debt") that will provide certain covenant relief through the third quarter of 2021. Based upon these modified covenant requirements, we no longer present provision forproject that we would remain in compliance with these revised financial covenants along with other unsecured debt covenants through at least August 10, 2021. However, with the continued uncertainty caused by the COVID-19 pandemic, significant risks remain with respect to these projections and any material adverse effect on our income and expenses could impact our ability to maintain compliance with our credit lossesfacility and bond covenants. Additionally, if we are unable to close on the amendments within a timely fashion, we could end up in default with such arrangements, impacting our ability to continue as a separate line itemgoing concern.
Impairment
During the quarter ended June 30, 2020, and in connection with the preparation of the financial statements included in this report, we recorded an impairment charge of approximately $23.8 million related to two Tier 2 properties based on the total estimated fair value of $12.6 million and the adjustment is now recorded as a reductionrelated carrying value. The impairment charge was attributed to rental income. 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 increasedeclines in the Company'sestimated undiscounted cash flows which resulted in the carrying value not being recoverable. The fair value of each property was based on the respective discounted future cash flows of each property, using a discount rate range of 18.8% to 19.3% and a terminal capitalization rate range of 16.8% to 17.3%, which were determined using management's assessment of the property operating performance and general market conditions (Level 3 inputs).
During the quarter ended March 31, 2020, we recorded an impairment charge of approximately $1.3 million related to vacant land at Georgesville Square, located in Columbus, Ohio and administrative expenses (see "Resultsa single tenant outparcel located in Topeka, Kansas. The impairment charges in both instances were due to changes in facts and circumstances when we decided to hold the assets for a shorter period which resulted in the carrying value not being recoverable from the projected cash flows. In the case of Operations")the vacant land at Georgesville Square, which was sold during the second quarter of 2020, the fair value was based on the sales price (Level 1 input). The Company elected to useIn the practical expedient in transition to not re-evaluate costs that were previously capitalized.case of the single tenant outparcel, the fair value was based on general market conditions (Level 3 inputs).


Perennial Sale LeasebackNew Accounting Pronouncements
On October 10, 2019, WPG L.P. closedAdoption of New Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. We adopted this ASU on January 1, 2020, noting our seller-provided bridge financing associated with our other indebtedness (see "Financing and Debt" for further details) and certain other miscellaneous accounts are in scope of ASU 2016-13. However, there was no impact to our consolidated financial statements at adoption.
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the saleapplication of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and leaseback of four assets (collectively,obligations within the "Properties") pursuant toexisting lease agreement (precluded from applying the purchase and sale agreement executed on July 24, 2019 between WPG L.P. and Mall Ground Portfolio, LLC, an affiliate of Perennial Investment & Advisors, LLC and Kawa Capital Partners ("the Ground Lessor")lease modification accounting framework). The Properties are: Edison Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas;Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, "Leases." Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can account for the concession as though enforceable rights and Jefferson Valley Mall, located in Yorktown Heights, New York. Underobligations for those concessions existed (regardless of whether these enforceable rights and obligations for the agreement, the Ground Lessor acquired a fee interestconcessions explicitly exist in the land at the Properties forcontract). Both lessees and lessors may make this election. For all concessions that did not result in a price of approximately $98.9 million. Concurrently, WPG L.P. entered into a new 99-year master ground lease for the leasehold interest at the Properties. The master ground lease includes fixed annual payments to the Ground Lessor at an initial annualized rate of 7.4% and contains annual rent escalators over the aforementioned term. The agreement includes an option for WPG L.P. to repurchase the fee interestsubstantial increase in the land at a fixed price in year 30rights of the master ground lease. If WPG L.P. does not exerciselessor or the obligations of the lessees, the Company elected to adopt this option, then the Ground Lessor will retain the fee interestoptional relief in the land, and the fee interestsecond quarter of 2020, resulting in abatements granted in the improvements and development rights will transfer toperiod being recognized as negative variable revenue during the Ground Lessor at the endperiod of the 99-year ground lease term. WPG L.P. received approximately $42.4 million in proceeds upon closing, net of $55.0 million in bridge financing provided by WPG L.P. to the Ground Lessor and closing costs. The bridge financing has a maximum five-year balloon term, which can be pre-paid without penalty, and carries an interest rate of 4.0%. The net proceeds were generally used to fund ongoing redevelopment efforts and for general corporate purposes. WPG L.P. continues to own a fee interestabatement. Concessions in the improvements and development rights through the termform of the aforementioned master ground lease and continues to manage, lease and develop the Properties and maintains full control over the leasehold interest and in the land and fee interest in the improvements and development rights at the respective Properties. For accounting purposes, the repurchase option will preclude WPG L.P. from meeting the criteria for sales recognition. As such, the gross proceeds received will berent deferrals were effectively accounted for as a financial liability duringif the termlease was unchanged, though in all cases receivables were evaluated under the collectibility guidance in Topic 842.
New Standards Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the option.Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Inter-Bank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. If elected, an entity would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities electing relief would need to apply it consistently for all eligible modified contracts accounted for under a particular codification topic or industry subtopic. Additionally, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Entities electing relief related to hedging relationships can generally elect to apply the optional expedients on a hedge-by-hedge basis.
The guidance is effective upon issuance and can be applied to modifications of existing contracts made after January 1, 2020 and can be applied to eligible hedging relationships existing as of or entered into after the same date. The relief is temporary and cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. As of June 30, 2020, we had approximately $812.0 million (excluding debt issuance costs of $5.1 million) of our aggregate consolidated indebtedness that was indexed to LIBOR. In addition, as of June 30, 2020, we had approximately $640.8 million of consolidated indebtedness swapped to LIBOR plus a fixed spread under hedging relationships. We expect that upon modification, these contracts will generally qualify for the temporary relief upon meeting the certain criteria and we are currently assessing our plans for adoption.


Four Corners Outparcel Sales
We are party to two separate purchase and sale agreements to sell certain outparcels to FCPT Acquisitions, LLC ("Four Corners"). The following table summarizes the key terms of each of the closings that occurred during the three and ninesix months ended SeptemberJune 30, 20192020 (dollars in thousands):
Sales Date Parcels Sold Purchase Price Sales Proceeds
January 18, 2019 8
 $9,435
 $9,364
February 11, 2019 1
 2,766
 2,720
April 3, 2019 1
 2,048
 2,016
June 28, 2019 3
 3,050
 3,031
August 1, 2019 1
 1,210
 1,199
August 29, 2019 1
 3,397
 3,394
September 16, 2019 1
 3,205
 3,118
September 27, 2019 2
 4,412
 4,377
  18
 $29,523
 $29,219
       
Sales Date Parcels Sold Purchase Price Sales Proceeds
February 13, 2020 2
 $1,961
 $1,945
The net proceeds were generally used to fund ongoing redevelopment efforts and for general corporate purposes. TheExcluding any subsequent amendments thereto, the Company expects to close on most of the approximately $13.0$4.6 million of remaining outparcels from the first purchase and sale agreement during 2019, subject to due diligence and closing conditions, and the Company expects to close on the majority of the remaining $33.1$26.9 million from the second purchase and sale agreement in 2020, subject to due diligence and closing conditions.
Impairment
During the quarter ended September 30, 2019, and in connection with the preparation of the financial statements included in this report, we recorded an impairment charge of approximately $28.9 million related to Chautauqua Mall, located in Lakewood, New York, Matteson Plaza, located in Matteson, Illinois, and New Towne Mall, located in New Philadelphia, Ohio.
In the case of Chautauqua Mall and New Towne Mall, the impairment charge was attributed to declines in the estimated undiscounted cash flows which resulted in the carrying value not being recoverable. The fair value of each property was based on the respective discounted estimated future cash flows of each property, using a discount rate of 18.5% and a terminal capitalization rate of 15.5%, which were determined using management's assessment of the property operating performance and general market conditions (Level 3 inputs).


As it relates to Matteson Plaza, the impairment charge was due to the change in facts and circumstances when we decided to hold the asset for a shorter period which resulted in the carrying value not being recoverable from the projected cash flows. The fair value was based on a recently negotiated purchase and sale agreement with a potential buyer (Level 1 input). Except as described above, the Company recorded no additional impairment charges during the three and nine months ended September 30, 2019.
Business Opportunities
We derive our revenues primarily from retail tenant leases, including fixed minimum rent leases, percentage rent leases based on tenants' sales volumes and reimbursements from tenants for certain expenses. We seek to re-lease our spaces at higher rents and increase our occupancy rates, and to enhance the performance of our properties and increase our revenues by, among other things, adding or replacing anchors or big-box tenants, re-developing or renovating existing properties to increase the leasable square footage, and increasing the productivity of occupied locations through aesthetic upgrades, re-merchandising and/or changes to the retail use of the space. We seek growth in earnings, funds from operations ("FFO") and cash flows by enhancing the profitability and operation of our properties and investments.
Additionally, we feel there are opportunities to enhance our portfolio and balance sheet through active portfolio management. We believe that there are opportunities for us to acquire additional shopping centers that match our investment and strategic criteria. We invest in real estate properties to maximize total financial return which includes both operating cash flows and capital appreciation. We also seek to dispose of assets that no longer meet our strategic criteria. These dispositions will be a combination of asset sales and transitions of over-levered properties to lenders.
We consider FFO, net operating income, or NOI, and comparable NOI (NOI for properties owned and operating in both periods under comparison) to be key measures of operating performance that are not specifically defined by GAAP. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Reconciliations of these measures to the most comparable GAAP measure are included elsewhere in this report.
Portfolio Data
The portfolio data discussed in this overview includes key operating statistics for the Company including period ending occupancy, average base minimum rent per square foot and comparable NOI for the core properties owned and managed at SeptemberJune 30, 2019.2020. The Company generates approximately 93% of the NOI from our Tier 1 and open air properties. As these properties are core to our future growth and receive the majority of our capital allocation, we disclose our operating metrics for this portion of our portfolio and exclude our four noncore properties as well as our ten Tier 2 properties. Refer to Item 7 of Part II of the 20182019 Form 10-K for our property listing.
When excluding the impact of bankruptcies, store closings, and co-tenancy impact primarily related to the bankruptcies of Bon-Ton Stores, Inc., Sears, and Toys R' Us (the "Anchor Store Impact") and additional 2019 bankruptcies, which include Charlotte Russe, Gymboree, and Payless Shoesource, business fundamentals in our core portfolio for the third quarter of 2019 were generally stable compared to 2018. Ending occupancy for the Tier 1 and open air properties was 92.9%91.9% as of SeptemberJune 30, 2019,2020, as compared to 94.0%93.0% as of SeptemberJune 30, 2018.2019. Average base minimum rent per square foot for the core portfolio decreased 2.7%0.6% when comparing SeptemberJune 30, 20192020 to SeptemberJune 30, 2018, primarily due to temporary reductions related to tenants subject to co-tenancy claims.2019. Comparable NOI for the Tier 1 and open air properties decreased 5.5%44.6% in the thirdsecond quarter of 20192020 when compared to the thirdsecond quarter of 2018.2019. The Tier 1 properties had a decrease in comparable NOI of 8.8%53.1%, and the open air properties had an increasea decrease in comparable NOI of 2.6%24.5% in the thirdsecond quarter of 20192020 as compared to the same period in 2018.2019. This quarterlyyear-over-year decrease in NOI of $6.4$47.5 million for the Tier 1 and open air properties relateprimarily relates to lowerthe large number of our tenants that temporarily closed for business as a result of COVID-19 global pandemic as well as the impact of national tenant bankruptcies. NOI was impacted by $28.5 million during the second quarter 2020 from rent abatements and deferrals deemed uncollectible in response to the pandemic. Additionally, bad debt expense increased by $10.9 million primarily due to unpaid pre-petition bankruptcy rents. Through July 23, 2020, 17 national retailers, totaling 5.3 million square feet in our portfolio, filed for bankruptcy protection. Filings included retailers such as JCPenney, Ascena Brands, GNC, Pier 1 and New York & Company. Other revenue of $4.3 millionimpacts resulting from the Anchor Store Impacttemporary tenant closures were declines of revenues from percentage rent and an additional $2.1 million from the 2019 bankruptcies as noted above.short-term tenants for a combined $9.2 million.


The following table sets forth key operating statistics for the combined portfolio of the Tier 1 and open air properties:
 September 30, 2019 September 30, 2018 % Change June 30, 2020 June 30, 2019 % Change
Ending occupancy(1)
 92.9% 94.0% (1.1)% 91.9% 93.0% (1.1)%
Average base minimum rent per square foot(2)
 $21.28 $21.86 (2.7)% $21.39 $21.52 (0.6)%
(1)Ending occupancy is the percentage of managed gross leasable area, or GLA, which is leased as of the last day of the reporting period. We include all Company-owned space except for anchors, majors, freestanding office and outlots at our enclosed retail properties in the calculation of ending occupancy. Open air property GLA included in the calculation relates to all Company-owned space other than office space.
(2)Average base minimum rent per square foot is the average base minimum rent charge in effect for the reporting period for all tenants that would qualify to be included in ending occupancy.


Current Leasing Activities
During the ninesix months ended SeptemberJune 30, 2020, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the Tier 1 and open air portfolio, comprising approximately 905,300 square feet. The average annual initial base minimum rent for new leases was $21.10 per square foot ("psf") and for renewed leases was $17.53 psf. For these leases, the average for tenant allowances was $27.89 psf for new leases and $4.46 psf for renewals. During the six months ended June 30, 2019, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the Tier 1 and open air portfolio, comprising approximately 1,742,000 square feet, an increase of 23% from the prior year. The average annual initial base minimum rent for new leases was $20.36 per square foot ("psf") and for renewed leases was $30.96 psf. For these leases, the average for tenant allowances was $33.52 psf for new leases and $9.87 psf for renewals. During the nine months ended September 30, 2018, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the Tier 1 and open air portfolio, comprising approximately 1,419,100998,300 square feet. The average annual initial base minimum rent for new leases was $24.18$24.31 psf and for renewed leases was $28.19$29.75 psf. For these leases, the average for tenant allowances was $34.11$38.09 psf for new leases and $5.18$9.17 psf for renewals. The leasing activity for the first six months of 2020 compared to the same period in 2019, when including all leases, increased 7% to 2.2 million square feet.
Results of Operations
Activities Affecting Results
The COVID-19 pandemic had a material impact on our 2020 results and is discussed throughout. In addition, the following property related transactions affected our results in the comparative periods:
•During 2019,On January 31, 2020, we completed the sale of 18Dekalb Plaza, located in King of Prussia, Pennsylvania, to an unaffiliated private real estate investor.
•On January 14, 2020, we completed the sale of Matteson Plaza, located in Matteson, Illinois, to an unaffiliated private real estate investor.
•During 2020, we completed the sale of 2 outparcels withto Four Corners (see further details in Note 4 of the Condensed Notes to the Unaudited Consolidated Financial Statements in Part I, Item 1).
•On December 19, 2019, we completed the sale of Charles Towne Square, located in Charleston, South Carolina, to an unaffiliated private real estate investor.
•On December 18, 2019, we transitioned West Ridge Mall and Plaza ("West Ridge," collectively), located in Topeka, Kansas, to the lender.
•On July 1, 2019, we transitioned Towne West Square, located in Wichita, Kansas, to the lender.
•During 2018,2019, we completed the sale of 1725 outparcels withto Four Corners (see further details in Note 4 of the Condensed Notes to the Unaudited Consolidated Financial Statements in Part I, Item 1).
•On October 23, 2018, we transitioned Rushmore Mall, located in Rapid City, South Dakota, to the lender.
•On April 24, 2018, we closed on the acquisition of Southgate Mall, located in Missoula, Montana.
•On April 11, 2018, we closed on the acquisition of four Sears department stores located at Longview Mall, located in Longview, Texas; Polaris Fashion Place (unconsolidated), located in Columbus, Ohio; Southern Hills Mall, located in Sioux City, Iowa; and Town Center at Aurora, located in Aurora, Colorado.
For the purposes of the following comparisons, the transactions listed above are referred to as the "Property Transactions," and "comparable properties" refers to the remaining properties we owned and operated throughout both of the periods under comparison.


Three Months Ended SeptemberJune 30, 20192020 vs. Three Months Ended SeptemberJune 30, 20182019
Rental income decreased $19.8$60.2 million due to a $15.6$56.2 million decrease attributable to the comparable properties, primarily attributedthe majority of which was driven by the temporary cessation of property operations, rent relief provided to tenants, and changes in our assessment of collectibility of tenant receivables as a result of the Anchor Store Impact, and a $4.2COVID-19 pandemic as well as specific bankruptcy activity during the period. A further decrease of $4.0 million decreasewas attributable to the Property Transactions. Other income increased $1.6decreased $2.5 million primarily due to increases of $0.9a $1.5 million in ancillary propertydecrease related to fee income and temporary easement proceeds and $0.7a $1.0 million in fee revenue.decrease related to less property ancillary income, both of which were impacted by closures mandated by the COVID-19 pandemic.
Property operating expenses increased $1.1decreased $8.3 million, of which $2.0$6.8 million was attributabledue to reduced operating expenses at the comparable properties primarily driven by an overall increase in compensation costs,as a result of temporary property closures due to the COVID-19 pandemic and utility costs, offset by a decrease of $0.9$1.5 million was attributable to the Property Transactions. Depreciation and amortization decreased $0.1$16.4 million, primarily due to a $1.7$1.6 million decrease attributable to the Property Transactions, offset byand a $1.6$14.8 million increasedecrease in the comparable properties related to the accelerated depreciation of certain building and land improvement assets and tenant related improvements and intangibles in addition to development assets placed into service.that occurred during the second quarter of 2019. Real estate taxes decreased $3.1$1.4 million, primarily due to a $2.5$0.7 million decrease in the comparable properties due to reduced tax assessments and capitalization of real estate taxes associated with redevelopment efforts and a $0.6$0.7 million decrease attributable to the Property Transactions. General and administrative expenses increased $3.1decreased $1.8 million, which was primarily attributable to the impactreduced compensation costs and less corporate travel as a result of the new lease accounting standard which prohibits the Company from capitalizing non-incremental internal costs attributable to leasing and legal efforts.COVID-19 pandemic. The $28.9$23.8 million impairment charge recorded in the 20192020 period related to the write down of Chautauqua Mall, Matteson Plaza,two Tier 2 enclosed retail properties.
Interest expense, net, decreased $1.7 million, which was primarily attributable to the transitions to the lenders of Towne West Square and New Towne Mall,West Ridge. The $11.2 million impairment on note receivable recorded in the 2020 period was attributed to the discounted payoff of the seller financing provided in conjunction with our other indebtedness (see "Financing and Debt" for further details).
Gain on disposition of interests in properties, net decreased $5.8 million which is primarily attributable to the timing of closings associated with the Four Corners transactions in the comparable periods.
Loss from unconsolidated entities increased $3.0 million which was primarily attributable to the temporary cessation of property operations, rent relief provided to tenants, and changes in our assessment of collectibility of tenant receivables as describeda result of the COVID-19 pandemic.
For WPG Inc., net loss attributable to noncontrolling interests primarily relates to the allocation of loss to third parties based on their respective weighted average ownership of limited partnership interest in WPG L.P., which percentage remained consistent over the periods.
Six Months Ended June 30, 2020 vs. Six Months Ended June 30, 2019
Rental income decreased $76.2 million due to a $67.9 million decrease attributable to the comparable properties, the majority of which was driven by the temporary cessation of property operations, rent relief provided to tenants, and changes in our assessment of collectibility of tenant receivables as a result of the COVID-19 pandemic as well as specific bankruptcy activity during the period. A further detail under "Impairment."decrease of $8.3 million was attributable to the Property Transactions. Other income decreased $2.7 million due to a $2.0 million decrease related to fee income and a $0.7 million decrease related to less property ancillary income, both of which were impacted by closures mandated by the COVID-19 pandemic.
Property operating expenses decreased $10.5 million, of which $7.2 million was due to reduced operating expenses at the comparable properties as a result of temporary property closures due to the COVID-19 pandemic and $3.3 million was attributable to the Property Transactions. Depreciation and amortization decreased $23.1 million, primarily due to a $4.2 million decrease attributable to the Property Transactions, and an $18.9 million decrease in the comparable properties related to the accelerated depreciation of certain building and land improvement assets and tenant related improvements and intangibles during 2019. Real estate taxes decreased $3.3 million, primarily due to a $1.7 million decrease in the comparable properties due to reduced tax assessments and capitalization of real estate taxes associated with redevelopment efforts and a $1.6 million decrease attributable to the Property Transactions. General and administrative expenses decreased $3.6 million, of which $1.8 million was primarily attributable to reduced compensation costs and less corporate travel as a result of the COVID-19 pandemic in addition to a reduction in severance costs of $1.8 million, which were incurred during the first quarter of 2019. The $25.1 million impairment charge recorded in the 2020 period related to the write down of two Tier 2 enclosed retail properties, vacant land at Georgesville Square, located in Columbus, Ohio, and a single tenant outparcel located in Topeka, Kansas.


Interest expense, net, increased $2.3$0.1 million, of which a net $1.3$1.9 million increase was attributable to corporate debt activity primarily related to higher interest rates due to the credit rating downgradeour other indebtedness (see "Financing and increased leverage levels in addition toDebt" for further details) and a $2.4$1.2 million increase primarily attributable to the April 2019 financing of Waterford Lakes Town Center, located in Orlando, Florida. Offsetting these increases was a decrease of $1.3$3.0 million primarily attributable to the Property Transactionstransitions to the lenders of Towne West Square and a $0.1West Ridge. The $11.2 million relatedimpairment on note receivable recorded in the 2020 period was attributed to repaid mortgagesthe discounted payoff of the seller financing provided in conjunction with our other indebtedness (see "Financing and interest on properties transitions, or to be transitioned, to lenders.Debt" for further details).
Gain on disposition of interests in properties, net increased $6.0$11.0 million which is primarily attributed to the recording of a $15.4 million gain related to our disposition of interests in Seminole Towne Center, located in Sanford, Florida, in 2020 as this property, which was held in an unconsolidated joint venture, was transitioned to the lender pursuant to the terms of a deed-in-lieu of foreclosure agreement and our obligations related to this property ceased in connection with this transition. Offsetting this increase is a net decrease of $4.4 million which is primarily attributable to the timing of closings associated with the closing of the various Four Corners tranches withintransactions in the comparable periods.


Gain on extinguishmentLoss from unconsolidated entities increased $4.0 million which was primarily attributable to the temporary cessation of debt, net recognizedproperty operations, rent relief provided to tenants, and changes in the 2019 period consistedour assessment of collectibility of tenant receivables as a result of the $37.7 million gain related to the transitioning of Towne West Square and a $1.2 million gain related to the partial retirement of the Senior Notes due 2024, as defined in "Financing and Debt." There were no such transactions in the comparable period.COVID-19 pandemic.
For WPG Inc., net (loss) incomeloss attributable to noncontrolling interests primarily relates to the allocation of (loss) income to third parties based on their respective weighted average ownership of limited partnership interest in WPG L.P., which percentage remained consistent over the periods.
Nine Months Ended September 30, 2019 vs. Nine Months Ended September 30, 2018
Rental income decreased $43.2 million due to a $36.7 million decrease attributable to the comparable properties, primarily attributed to the Anchor Store Impact, and a $6.5 million decrease attributable to the Property Transactions.
Property operating expenses increased $4.7 million, of which $5.5 million was attributable to the comparable properties, primarily driven by an overall increase in property and liability insurance costs, professional fees, repairs and maintenance costs, compensation costs, and trash removal costs, offset by a decrease of $0.8 million attributable to the Property Transactions. Depreciation and amortization increased $13.0 million, primarily due to a $15.0 million increase in the comparable properties related to the accelerated depreciation of certain building assets, tenant related improvements, and intangibles in addition to development assets placed into service, offset by a $2.0 million decrease attributable to the Property Transactions. Real estate taxes decreased $4.3 million, primarily due to a $3.7 million decrease in the comparable properties due to reduced tax assessments and capitalization of real estate taxes associated with redevelopment efforts, and a $0.6 million decrease attributable to the Property Transactions. General and administrative expenses increased $9.5 million, of which $10.3 million was attributable to the impact of the new lease accounting standard which prohibits the Company from capitalizing non-incremental internal costs attributable to leasing and legal efforts. Offsetting this increase was a decrease of $0.8 million, which was primarily attributable to a reduction in executive compensation and benefits. The $28.9 million impairment charge recorded in 2019 related to the write down of Chautauqua Mall, Matteson Plaza, and New Towne Mall, as described in further detail under "Impairment."
Interest expense, net, increased $9.2 million, of which a net $7.4 million was attributable to corporate debt activity primarily related to higher interest rates due to the credit rating downgrade and increased leverage levels in addition to a $4.3 million increase primarily attributable to the April 2019 financing of Waterford Lakes Town Center. Offsetting these increases was a decrease of $2.2 million primarily attributable to the Property Transactions and a decrease of $0.3 million related to repaid mortgages and interest on properties transitioned, or to be transitioned, to lenders.
Gain on disposition of interests in properties, net increased $5.9 million which is primarily attributed to the timing of the closing of the various Four Corners tranches within the comparable periods.
Gain on extinguishment of debt, net recognized in the 2019 period consisted of the $37.7 million gain related to the transitioning of Towne West Square and $1.2 million gain related to the partial retirement of the Senior Notes due 2024, as defined in "Financing and Debt." There were no such transactions in the comparable period.
For WPG Inc., net (loss) income attributable to noncontrolling interests primarily relates to the allocation of (loss) incomeloss to third parties based on their respective weighted average ownership of limited partnership interest in WPG L.P., which percentage remained consistent over the periods.
Liquidity and Capital Resources
Our primary uses of cash include payment of operating expenses, working capital, debt repayment, including principal and interest, reinvestment in properties, development and redevelopment of properties, tenant allowance and dividends. Our primary sources of cash are operating cash flow and borrowings under our debt arrangements, including our Revolver (as defined in "Financing and Debt"), unsecured notes payable and senior unsecured term loans as further discussed below.
WeAnnually, we derive most of our liquidity from leases that generate positive net cash flow from operations. However, total cash flows used in operations during the totalsix months ended June 30, 2020 was $2.1 million as compared to cash flows from operations of which was $137.9$93.6 million during the ninesix months ended SeptemberJune 30, 2019.2019, which was a direct result of the temporary closing of our properties, rent relief provided to our tenants, and higher tenant receivable balances as a result of the COVID-19 pandemic. Due to the seasonal nature of certain operational activities as well as the ongoing impact of COVID-19 pandemic, the cash flows from operations for the six months ended June 30, 2020 are not necessarily indicative of the cash flows from operations expected for rest of 2020.
Our balance of cash and cash equivalents decreased $6.5increased $85.6 million during 2019the six months ended June 30, 2020 to $36.0$127.0 million as of SeptemberJune 30, 2019.2020. The decreaseincrease was primarily due to dividend distributions,net proceeds from the issuance of debt and capital expenditures, partially offset by operating cash flow from properties, net distributions from our joint ventures, the net proceeds from the disposition of properties, partially offset by capital expenditures, dividend distributions, net contributions to our joint ventures, and net proceeds from the issuance of debt.cash flow used to fund operating activities. See "Cash Flows" below for more information.


Because we own primarily long-lived income-producing assets, our financing strategy relies on a combination of long-term mortgage debt as well as unsecured debt supported by a quality unencumbered asset pool, providing us with ample flexibility from a liquidity perspective. Our strategy is to have the majority of our debt fixed either through fixed rate mortgages or interest rate swaps that effectively fix the interest rate. At SeptemberJune 30, 2019,2020, floating rate debt (excluding loans hedged to fixed interest) comprised 12.4%25.6% of our total consolidated debt. We will continue to monitor our borrowing mix to limit market risk.
During 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 (effective May 2, 2019), December 2015 Term Loan (effective February 15, 2019), and Senior Notes due 2024 (effective August 15, 2019) (as defined in "Overview - Basis of Presentation - Financing and Debt"). Due to the downgrade and based upon current leverage levels, as of SeptemberOn June 30, 2019, our Revolver bears interest at LIBOR plus 1.80% (an increase of 55 basis points), our Term Loan bears interest at LIBOR plus 2.10% basis points (an increase of 55 basis points), and our December 2015 Term Loan bears interest at LIBOR plus 2.35% basis points (an increase of 55 basis points). Our Senior Notes due 2024 bear interest at 6.450% (an increase of 50 basis points). Such a downgrade may also impact terms and conditions of future borrowings in addition to adversely affecting our ability to access the public markets.
On September 30, 2019,2020, we had an aggregate available borrowing capacity of $432.8$2.8 million under the Revolver, net of outstanding borrowings of $217.0$647.0 million and $0.2 million reserved for outstanding letters of credit. The weighted average interest rate on the Revolver was 4.1%2.3% and 2.7% during the three and ninesix months ended SeptemberJune 30, 2019.2020. The decrease in our borrowing capacity is primarily attributed to utilizing our Revolver to complete the payoff of the $250.0 million Exchange Notes on February 28, 2020 (capitalized terms as defined in "Financing and Debt"), and borrowings to enhance our liquidity as a result of lower cash receipts due to the COVID-19 global pandemic (refer to "COVID-19" for additional details on our response to enhance short-term liquidity).
The consolidated indebtedness of our business was approximately $3.0$3.2 billion as of SeptemberJune 30, 2019,2020, or an increase of approximately $89.6$171.8 million from December 31, 2018.2019. The change in consolidated indebtedness from December 31, 20182019 is described in greater detail under "Financing and Debt."
LIBOR Transition

In July 2017, the Financial Conduct Authority ("FCA") that regulates the LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Rates Committee ("AARC"), which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.
As of September 30, 2019, the Company has three consolidated variable rate debt contracts, totaling approximately $382.0 million, and one unconsolidated variable rate debt contract, totaling $6.5 million (pro-rata share), indexed to LIBOR. In addition, we have three consolidated variable rate debt contracts, totaling approximately $641.5 million, swapped to LIBOR plus a fixed spread under 11 outstanding interest rate derivatives. When including extension options, approximately $907.0 million of the consolidated indebtedness and the $6.5 million (pro-rata share) of unconsolidated indebtedness referenced above have maturity dates outside of the expected discontinuance date. The Company is currently monitoring and evaluating the related risks, which include interest on loans, and amounts received or paid on the derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with a respective counterparty.
If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.
While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transitions to an alternative reference rate will be accelerated or magnified.
Outlook
Our business model and WPG Inc.'s status as a REIT require us to regularly access the debt markets to raise funds for acquisition, development and redevelopment activity, and to refinance maturing debt. We may also, from time to time, access the equity capital markets to accomplish our business objectives. We believe we have sufficient cash on hand availability under the Revolver and cash flow from operations to address our debt maturities, distributions and capital needs throughout 2019 and beyond.


2020.
The successful execution of our business strategy will require the availability of substantial amounts of operating and development capital both currently and over time. Sources of such capital could include additional bank borrowings, public and private offerings of debt or equity, including rights offerings, sale of certain assets and joint ventures.
Cash Flows
Our net cash flow fromused in operating activities totaled $137.9$2.1 million during the ninesix months ended SeptemberJune 30, 2020, as compared to $93.6 million of cash flow provided by operating activities during the six months ended June 30, 2019. This decrease was directly attributable to the temporary closing of our properties, rent relief provided to our tenants, and higher tenant receivable balances as a result of the COVID-19 pandemic. During this period we also:
funded capital expenditures and redevelopment projects of $119.6$99.8 million;
received net proceeds from the sale of interests in properties and outparcels of $33.2$18.0 million;
funded investments in unconsolidated entities of $13.8$6.7 million;
received distributions of capital from unconsolidated entities of $21.7$1.8 million;
received net proceeds from our debt financing, refinancing and repayment activities of $131.4$212.9 million; and
funded distributions to common and preferred shareholders and unitholders of $178.1$35.2 million.
In general,Prior to the COVID-19 global pandemic, we anticipateanticipated that cash generated from operations will bewould have been sufficient in 20192020 to meet operating expenses, monthly debt service, recurring capital expenditures, and cover the majority of distributions to shareholders necessary to maintain WPG Inc.'s status as a REIT on a long-term basis. In addition, we expectexpected to be able to generate or obtain capital for nonrecurring capital expenditures, such as acquisitions, major building renovations and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from:
excess cash generated from operating performance and working capital reserves;
borrowings on our debt arrangements;
opportunistic asset sales;
additional secured or unsecured debt financing; or
additional equity raised in the public or private markets.
We expectHowever, due to generate positive cash flow from operations in 2019, andthe COVID-19 global pandemic, we consider these projected cash flows in our sources and uses of cash. These cash flows are principally derived from rents paid by our retail tenants. Ahave experienced a significant deterioration in projected cash flows from operations could causewhich has caused us to increase our reliance on available funds from our debt arrangements, curtail planned capital expenditures reducedue to tenant-related delays, temporarily suspend common dividend distributions, orand seek other additional sources of financing as discussed above. Based on our current projections that have been stress tested for various COVID-19 scenario outcomes, we anticipate that the $127.0 million of consolidated cash on hand, along with our pro-rata share of joint venture cash, will provide us with sufficient liquidity to meet our financial obligations for the remainder of 2020.


Financing and Debt
Mortgage Debt
Total mortgage indebtedness at SeptemberJune 30, 20192020 and December 31, 20182019 was as follows (in thousands):
  September 30,
2019		 December 31,
2018
Face amount of mortgage loans $1,171,508
 $980,276
Fair value adjustments, net 4,038
 5,764
Debt issuance cost, net (5,417) (2,771)
Carrying value of mortgage loans $1,170,129
 $983,269


  June 30,
2020		 December 31,
2019
Face amount of mortgage loans $1,110,243
 $1,117,242
Fair value adjustments, net 2,312
 3,463
Debt issuance cost, net (4,608) (5,097)
Carrying value of mortgage loans $1,107,947
 $1,115,608
A roll forward of mortgage indebtedness from December 31, 20182019 to SeptemberJune 30, 20192020 is summarized as follows (in thousands):
Balance at December 31, 2018$983,269
Debt borrowings, net of issuance costs293,442
Debt canceled upon lender foreclosures, net of debt issuance costs(45,160)
Debt amortization payments(13,367)
Repayment of debt(47,175)
Amortization of fair value and other adjustments(1,726)
Amortization of debt issuance costs846
Balance at September 30, 2019$1,170,129
Balance at December 31, 2019$1,115,608
Debt amortization payments(6,999)
Issuance costs incurred upon debt modifications(151)
Amortization of fair value and other adjustments(1,151)
Amortization of debt issuance costs640
Balance at June 30, 2020$1,107,947
On September 16, 2019, an affiliate of WPG Inc. repaid its existing $47.2 million, 7.50% fixed rate cross-defaulted and cross-collateralized pool of mortgages encumbering Forest Plaza,In connection with the forbearance agreement executed on the mortgage note payable secured by Grand Central Mall, located in Rockford, Illinois; Lakeline Plaza, located in Cedar Park, Texas; Muncie Towne Plaza, located in Muncie, Indiana; and White Oaks Plaza, located in Springfield, Illinois, whichParkersburg, West Virginia, the maturity date of the mortgage note payable was scheduledextended one year to mature on October 16, 2019. Simultaneously, the Company closed on a new $117.0 million, 3.67% fixed rate cross-defaulted and cross-collateralized pool of mortgages encumbering the same properties. The new loan requires monthly interest-only payments and will mature on October 1, 2029.
On July 1, 2019, the $45.2 million mortgage on Towne West Square, located in Wichita, Kansas, was canceled upon a deed-in-lieu of foreclosure agreement6, 2021 (see "Covenants" section below"COVID-19" for additional details).
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. 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, 2019,3, 2020, the Company exercised the secondthird 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.2021.
On April 1, 2019,February 14, 2020, the Company exercised the firstsecond of two options to extend the maturity of the $52.0$51.0 million mortgage note payable onsecured by Town Center at Aurora, located in Aurora, Colorado, for one year. The extended maturity date is April 1, 2020,2021. Additionally, as part of the forbearance agreement executed in conjunction with our COVID-19 relief efforts (see "COVID-19" for additional details), the Company was granted an additional one year extension option, which would extend the maturity to April 1, 2022. The extension option is subject to a one-year extension available at our option subject tocontinued 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 to fix the interest rate of the note payable at one-month LIBOR plus 2.27% per annum through both extension periods. At September 30, 2019, the interest rate on the note payable was 4.28%.mortgage agreement.
Highly-levered Assets
As of SeptemberJune 30, 2019,2020, we have identified threetwo consolidated mortgage loans that have leverage levels in excess of our targeted leverage and have plans to workare working with the special servicers on these non-recourse mortgages. These mortgage loans total $128.3$78.2 million and encumber Charlottesville Fashion Square, located in Charlottesville, Virginia and Muncie Mall, located in Muncie, Indiana, and West Ridge Mall and West Ridge Plaza, located in Topeka, Kansas, allboth of which have been identified as noncore properties.
Additionally, we have identified the $52.8 million unconsolidated mortgage loan encumbering Seminole Towne Center, located in Sanford, Florida, as having leverage levels in excess of our targeted leverage. Our pro-rata share of this mortgage loan is $0.0 million based upon our effective interest in the property due to preferences. We expect to improve our leverage once all,both, or a portion of them, are transitioned to the lenders, with minimal impact to net cash flows. See "Covenants" below for further discussion on these highly-levered assets and for events that occurred subsequent to Septemberas of June 30, 2019.2020.



UnsecuredCorporate Debt
During the three and nine months ended September 30, 2019, the Company retired $29.1 million outstanding principal on the Senior Notes due 2024 and recognized a gain of approximately $1.2 million, which is recorded in gain on extinguishment of debt, net in the consolidated statements of operations and comprehensive (loss) income for the period then ended.
The following table identifies our total unsecuredcorporate debt outstanding at SeptemberJune 30, 20192020 and December 31, 20182019 (in thousands):
 September 30,
2019		 December 31,
2018		 June 30,
2020		 December 31,
2019
Notes payable:        
Face amount - the Exchange Notes(1)
 $250,000
 $250,000
 $—
 $250,000
Face amount - Senior Notes due 2024(2)
 720,900
 750,000
 720,900
 720,900
Debt discount, net (8,234) (9,680) (7,111) (7,864)
Debt issuance costs, net (5,950) (7,623) (4,689) (5,470)
Total carrying value of notes payable $956,716
 $982,697
 $709,100
 $957,566
        
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 (3,641) (4,491) (2,791) (3,358)
Total carrying value of unsecured term loans $686,359
 $685,509
 $687,209
 $686,642
        
Revolving credit facility:(3)(6)
        
Face amount $217,000
 $290,000
 $647,000
 $207,000
Debt issuance costs, net (3,141) (3,998) (2,284) (2,855)
Total carrying value of revolving credit facility $213,859
 $286,002
 $644,716
 $204,145
    
Other indebtedness:(8)
    
Face amount $98,900
 $98,900
Debt issuance costs, net (1,535) (1,561)
Accretion adjustment, net (13,010) 262
Total carrying value of other indebtedness $84,355
 $97,601
(1) The Exchange Notes were issued at a 0.028% discount bearand bore interest at 3.850% per annum and mature on April 1, 2020.annum.
(2) The Senior Notes due 2024 were issued at a 1.533% discount, bore interest at 5.950% per annum through August 14, 2019, at which time the interest rate increased to 6.450% per annum due to the credit downgrade.annum. The Senior Notes due 2024 mature on August 15, 2024. The interest rate could vary in the future based upon changes to the Company's credit ratings.
(3) The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."
(4) The Term Loan bears interest at one-month LIBOR plus 2.10% per annum and will mature on December 30, 2022. We have interest rate swap agreements totaling $250.0 million, which effectively fix the interest rate on a portion of the Term Loan at 4.86% through June 30, 2021. At SeptemberJune 30, 2019,2020, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 2.10% or 4.12%2.26%.
(5) The December 2015 Term Loan bears interest at one-month LIBOR plus 2.35% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 4.06% per annum through maturity.
(6)The Revolver provides borrowings on a revolving basis up to $650.0 million, bears interest at one-month LIBOR plus 1.80%, and will initially mature on December 30, 2021, subject to two six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. At SeptemberJune 30, 2019,2020, we had an aggregate available borrowing capacity of $432.8$2.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At SeptemberJune 30, 2019,2020, the applicable interest rate on the Revolver was one-month LIBOR plus 1.80% or 3.82%1.96%. The interest rate on the Revolver may vary in the future based upon the Company's credit rating and leveraged levels.
(7) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings and leveraged levels.

(8) Represents the financial liability associated with our failed sale and leaseback of land at Edison Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas; and Jefferson Valley Mall, located in Yorktown Heights, New York (collectively, the "Properties"). The face amount represents the sales price of the fee interest in the land at the Properties. The master ground lease has a 99-year term and includes fixed annual payments at an initial annualized rate of 7.4%, with annual rent escalators over the aforementioned term. The agreement also includes an option to repurchase the fee interest in the land at $109.3 million in year 30 of the master ground lease, to which the financial liability is being accreted to during the repurchase period. Proceeds received at closing were net of $55.0 million in bridge financing provided by the Company, which was included in "Deferred costs and other assets" on the consolidated balance sheet at December 31, 2019. Expense is being recognized utilizing an effective interest rate of 8.52% during the repurchase period.


On June 22, 2020, in order to accelerate repayment and bolster liquidity, the Company accepted the terms of a reduced payoff of the $55.0 million bridge financing provided in connection with the failed sale and leaseback noted above. In exchange for settling the bridge financing, the Company received $30.0 million in cash and the buyer/lessor reduced monthly rent payments totaling approximately $15.7 million over 27 months, commencing July 1, 2020. The present value of the reduced rent payments was reclassified from note receivable to other indebtedness, which is presented net of the accretion adjustment in the table above, and the Company recorded an impairment on the note receivable of approximately $11.2 million in connection with the extinguishment. The proceeds were used for general corporate purposes.
Covenants
Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of SeptemberJune 30, 2019,2020, based on the amendments to our Facility and December 2015 Term Loan that we expect to close within the next week, as discussed in "COVID-19," management believes the Company iswould be in compliance with all covenants of its unsecured debt.
The total balance of mortgages was approximately $1.2$1.1 billion as of SeptemberJune 30, 2019.2020. At SeptemberJune 30, 2019,2020, certain of our consolidated subsidiaries were the borrowers under 2120 non-recourse loans and two full-recourse loans secured by mortgages encumbering 2624 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. If the borrower fails to comply with these covenants, the lender could accelerate the maturity for the debt and enforce its right against their collateral. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the maturity for the debt and enforce its right against its collateral.
On November 19, 2018,May 26, 2020, we received a notice of default letter, dated November 15, 2018,May 14, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $49.5$40.9 million mortgage loan secured by West Ridge Mall and West Ridge Plaza (collectively known as "West Ridge").Port Charlotte Town Center, located in Port Charlotte, Florida. The notice was issued by the special servicer because the borrower didelected to not make certain reserve repayments or deposits as requiredpay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan agreement forin an effort to cure the aforementioned loan. On May 9, 2019, we received notification that a receiver had been appointeddefault. The Company continues to manage and lease West Ridge. An affiliate of the Company still holds title to the property.
On April 11, 2018,May 22, 2020, we received a notice of default letter, dated April 6, 2018,May 21, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $45.2$47.3 million mortgage loan secured by Towne West Square.Lincolnwood Town Center, located in Lincolnwood, Illinois. The notice was issued by the special servicer because the borrower didelected to not makepay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On February 21, 2020, we received a letter, dated that same date, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $33.1 million mortgage loan secured by Muncie Mall, located in Muncie, Indiana was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain reserve payments or deposits as required bytenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan agreement forand is considering various options. On April 14, 2020, the aforementioned loan. On July 1, 2019, anCompany received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company transitioned the propertycontinues to hold title to the property.
On November 5, 2019, we received a notice of default letter, dated October 30, 2019, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $45.1 million mortgage loan secured by Charlottesville Fashion Square, located in Charlottesville, Virginia was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and recordedis considering various options. On March 17, 2020, we received notification that a net gainreceiver had been appointed to manage and lease the property. An affiliate of $37.7 million, which is included in gain on extinguishment of debt, net in the consolidated statements of operations and comprehensive (loss) income forCompany still holds title to the three and nine months ended September 30, 2019.property.
At SeptemberJune 30, 2019,2020, management believes the applicable borrowers under our other non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.


Summary of Financing
Our consolidated debt and the effective weighted average interest rates as of SeptemberJune 30, 20192020 and December 31, 2018,2019, consisted of the following (dollars in thousands):
 September 30, 2019 
Weighted
Average
Interest Rate
 December 31, 2018 
Weighted
Average
Interest Rate
 June 30, 2020 
Weighted
Average
Interest Rate
 December 31, 2019 
Weighted
Average
Interest Rate
Fixed-rate debt, face amount (1)
 $2,667,408
 5.05% $2,505,276
 4.91% $2,442,033
 5.43% $2,712,304
 5.17%
Variable-rate debt, face amount 382,000
 3.98% 455,000
 3.87% 812,000
 2.04% 372,000
 3.73%
Total face amount of debt 3,049,408
 4.91% 2,960,276
 4.75% 3,254,033
 4.58% 3,084,304
 5.00%
Note discount (8,234)   (9,680)   (7,111)   (7,864)  
Fair value adjustments, net 4,038
   5,764
   2,312
   3,463
  
Debt issuance costs, net (18,149)   (18,883)   (15,907)   (18,341)  
Total carrying value of debt $3,027,063
   $2,937,477
   $3,233,327
   $3,061,562
  
(1) Includes variable rate debt whose interest rates have been fixed via swap agreements.


Contractual Obligations
The following table summarizes the material aspects of the Company's future obligations for consolidated entities as of SeptemberJune 30, 2019,2020, for the remainder of 20192020 and for subsequent years thereafter assuming the obligations remain outstanding through maturities noted below (in thousands):
 2019 2020 - 2021 2022 - 2023 Thereafter Total 2020 2021 - 2022 2023 - 2024 Thereafter Total
Long term debt(1)
 $4,567
 $625,603
 $1,109,000
 $1,310,238
 $3,049,408
 $50,507
 $1,446,229
 $1,390,559
 $390,133
 $3,277,428
Interest payments(2)
 37,123
 265,356
 196,694
 101,246
 600,419
 68,931
 255,705
 136,440
 291,405
 752,481
Distributions(3)
 3,568
 —
 —
 —
 3,568
 3,568
 —
 —
 —
 3,568
Ground rent/operating leases(4)
 570
 4,402
 3,621
 21,376
 29,969
 1,105
 4,321
 2,470
 20,378
 28,274
Purchase/tenant obligations(5)
 30,964
 92,893
 —
 —
 123,857
 67,549
 67,549
 —
 —
 135,098
Total $76,792
 $988,254
 $1,309,315
 $1,432,860
 $3,807,221
 $191,660
 $1,773,804
 $1,529,469
 $701,916
 $4,196,849
(1) Represents principal maturities only and therefore excludes net fair value adjustments of $4,038,$2,312, debt issuance costs of $(18,149)$(15,907) and bondnote discount of $(8,234)$(7,111) as of SeptemberJune 30, 2019. In addition, the2020. The principal maturities reflect any available extension options within the control of the Company. Additionally, includes the difference between our carrying value of the financial liability of $85.9 million and the repurchase option payment of $109.3 million related to our failed sale and leaseback transaction (see "Financing and Debt - Corporate Debt" for additional details).
(2) Variable rate interest payments are estimated based on the LIBOR rate at SeptemberJune 30, 2019.2020.
(3) Since there is no required redemption, distributions on the Series H Preferred Shares/Units, Series I Preferred Shares/Units and Series I-1 Preferred Units may be paid in perpetuity; for purposes of this table, such distributions are included upon declaration by the Board as the preferred shares/units are callable at the Company's discretion.
(4) Represents minimum future lease payments due through the end of the initial lease term under executed leases.
(5) Includes amounts due under executed leases and commitments to vendors for development and other matters.


The following table summarizes the material aspects of the Company's proportionate share of future obligations for unconsolidated entities as of SeptemberJune 30, 2019,2020, for the remainder of 20192020 and for subsequent years thereafter assuming the obligations remain outstanding through maturities noted below (in thousands):
 2019 2020 - 2021 2022 - 2023 Thereafter Total 2020 2021 - 2022 2023 - 2024 Thereafter Total
Long term debt(1)
 $875
 $69,938
 $20,062
 $528,068
 $618,943
 $5,618
 $48,354
 $21,374
 $541,178
 $616,524
Interest payments(2)
 6,394
 47,858
 42,381
 44,655
 141,288
 15,779
 47,984
 44,393
 22,652
 130,808
Ground rent/operating leases(3)
 985
 7,942
 8,053
 189,002
 205,982
 1,992
 8,058
 8,470
 185,327
 203,847
Purchase/tenant obligations(4)
 4,436
 13,307
 —
 —
 17,743
 16,054
 16,054
 —
 —
 32,108
Total $12,690
 $139,045
 $70,496
 $761,725
 $983,956
 $39,443
 $120,450
 $74,237
 $749,157
 $983,287
(1) Represents principal maturities only and therefore excludes net fair value adjustments of $4,324$3,414 and debt issuance costs of $(2,138)$(2,102) as of SeptemberJune 30, 2019.2020. In addition, the principal maturities reflect any available extension options.
(2) Variable rate interest payments are estimated based on the LIBOR rate at SeptemberJune 30, 2019.2020.
(3) Represents minimum future lease payments due through the end of the initial lease term under executed leases.
(4) Includes amounts due under executed leases and commitments to vendors for development and other matters.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements consist primarily of investments in joint ventures which are common in the real estate industry. Joint ventures typically fund their cash needs through secured debt financings obtained by and in the name of the joint venture entity. The joint venture debt is secured by a first mortgage, is without recourse to the joint venture partners, and does not represent a liability of the partners, except to the extent the partners or their affiliates expressly guarantee the joint venture debt. As of SeptemberJune 30, 2019,2020, there were no guarantees of joint venture related mortgage indebtedness. In addition to obligations under mortgage indebtedness, our joint ventures have obligations under ground leases and purchase/tenant obligations. Our share of obligations under joint venture debt, ground leases and purchase/tenant obligations is quantified in the unconsolidated entities table within "Contractual Obligations" above. WPG may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not required contractually or otherwise.


Equity Activity
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 SeptemberJune 30, 2019,2020, WPG Inc. had reserved 34,714,28134,479,892 shares of common stock for possible issuance upon the exchange of units held by WPG L.P. 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 "2014 Plan"), which 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 were reserved for issuance, with a maximum number of awards to be granted to a participant in any calendar year of 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 with respect to the issuance of new awards. 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 16, 2029.
The following is a summary by type of the awards that the Company issued during the ninesix months ended SeptemberJune 30, 20192020 and SeptemberJune 30, 20182019 under the 2014 Plan and 2019 Plan.


Annual Long-Term Incentive Awards
During the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, the Company approved the terms and conditions of the 20192020 and 20182019 annual awards (the "2019"2020 Annual Long-Term Incentive Awards" and "2018"2019 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 in cash accruals or under some circumstances, common shares, 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 20192020 Annual Long-Term Incentive Awards and 20182019 Annual Long-Term Incentive Awards, respectively:
 2019 Annual Long-Term Incentive Awards 2018 Annual Long-Term Incentive Awards 2020 Annual Long-Term Incentive Awards 2019 Annual Long-Term Incentive Awards
Grant Date February 20, 2019 February 20, 2018 February 25, 2020 February 20, 2019
  
RSUs issued 572,163 587,000 1,373,422 572,163
Grant date fair value per unit $5.77 $6.10 $2.41 $5.77
  
PSUs issued 572,163 587,000 1,373,422 572,163
Grant date fair value per unit $4.98 $4.88 $1.74 $4.98
During the six months ended June 30, 2020, the performance period related to PSUs awarded in conjunction with the 2017 annual award ended. There was no payout as the Company's TSR rank did not exceed the minimum required threshold for payout and 262,787 PSUs were forfeited.
WPG Restricted Stock Units
During the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, the Company awarded 331,7921,231,188 RSUs, with a grant date fair value of $1.5$0.8 million, and 225,440331,792 RSUs, with a grant-date fair value of $1.5 million, respectively, to certain non-executive 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 ninesix months ended SeptemberJune 30, 2020, no stock options were granted to employees, no stock options were exercised by employees and 31,434 stock options were canceled, forfeited or expired. As of June 30, 2020, there were 569,855 stock options outstanding. During the six months ended June 30, 2019, no stock options were granted to employees, 391 stock options were exercised by employees and 66,05352,152 stock options were canceled, forfeited or expired. As of September 30, 2019, there were 613,297 stock options outstanding.
During the nine months ended September 30, 2018, no stock options were granted to employees, no stock options were exercised by employees and 114,273 stock options were canceled, forfeited or expired.
Other Compensation Arrangements
On August 2, 2019, in connection with the execution of an employment agreement, the Committee granted Mr. Louis G. Conforti, the Company's Chief Executive Officer and Director, a retention award of 500,000 RSUs, with a grant date fair value of $1.8 million, and 500,000 PSUs, at target with a grant date fair value of $1.2 million, for his continued service through August 2, 2024. RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. 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 RSUs, which themselves will accrue dividend equivalents, and will be paid out if and when the underlying RSU vests. The RSUs will vest in one-third installments on August 2, 2022, 2023, and 2024, subject to Mr. Conforti's continued employment through such applicable date. Compensation expense is recognized on a straight-line basis over the five year vesting term.
Actual PSUs earned may range from 0%-200% of the PSUs awarded based on the Company's annualized TSR over a three year performance period that commenced on August 2, 2019, provided Mr. Conforti's continued employment through the vesting date. 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 themselves will accrue dividend equivalents, and will be earned when and if the underlying PSU vests. Earned PSUs, if any, vest in one-third installments on August 2, 2022, 2023, and 2024. The PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the five year term on a straight-line basis based on the applicable vesting period of the PSUs.
Share Award Related Compensation Expense
During the three and ninesix months ended SeptemberJune 30, 2019,2020, the Company recorded compensation expense pertaining to the awards granted of $2.1$1.9 million and $5.9$3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive (loss) income.loss. During the three and ninesix months ended SeptemberJune 30, 2018,2019, the Company recorded compensation expense pertaining to the awards granted of $2.0 million and $6.3$3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive (loss) income.loss. In certain instances, employment agreements and stock compensation programs provide for accelerated vesting when executives are terminated without cause. Additionally, the Committee may, in its discretion, accelerate the vesting for retiring Board members.



Distributions
For the three months ended June 30, 2020, no common share/unit dividends were declared by the Board as common share/unit dividends were suspended in response to the COVID-19 pandemic. For the six months ended June 30, 2020, the Board declared common share/unit dividends of $0.125. During the three and ninesix months ended SeptemberJune 30, 2019, and 2018, the Board declared common share/unit dividends of $0.25 and $0.75$0.50 per common share/unit, respectively.
Reverse Share Split
On August 6, 2020, the Board authorized a one-for-nine reverse share split of the Company’s common shares and WPG L.P. operating units, subject to shareholder approval. Upon shareholder approval and as a result of the reverse share split, each nine shares of the Company's issued and outstanding common shares/units will be automatically combined and converted into one issued and outstanding common share/unit. The Company plans to hold a special meeting of shareholders to vote on the recommendation before the end of 2020. The implementation of the reverse share split is intended to increase the per share trading price of the Company’s common shares in order to satisfy the continued listing criteria set forth in Section 802.01C of the Listed Company Manual of the New York Stock Exchange and cure the noncompliance notification received by the Company on April 28, 2020.
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. No acquisitions were completed during the six months ended June 30, 2020.
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.
DuringOn March 13, 2020, Seminole Towne Center, located in Sanford, Florida, was transitioned to the nine months ended September 30, 2019,lender pursuant to the terms within a deed-in-lieu of foreclosure agreement. This property was held in an unconsolidated joint venture and all involvement between us and the related property ceased in connection with this transition.
On January 31, 2020, we completed the sale of 18Dekalb Plaza, located in King of Prussia, Pennsylvania, to an unaffiliated private real estate investor for a purchase price of $13.6 million. The net proceeds of $13.4 million was used to fund ongoing redevelopment efforts and general corporate purposes.
On January 14, 2020, we completed the sale of Matteson Plaza, located in Matteson, Illinois, to an unaffiliated private real estate investor for a purchase price of $1.1 million. The net proceeds of $0.4 million was used for general corporate purposes.
During the six months ended June 30, 2020, we completed the sale of 2 outparcels withto Four Corners. The allocated purchase price was $29.5$2.0 million (see details under "Overview - Basis of Presentation - Four Corners Outparcel Sales").
Additionally, during the ninesix months ended SeptemberJune 30, 2019,2020, the Company sold certain undeveloped and developed land parcels for an aggregate purchase price of $4.4$2.4 million.
In connection with the sales noted above, the Company recorded net gains of $9.8$0.4 million and $26.1$27.2 million for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, which isare included in gain on disposition of interests in properties, net in the consolidated statements of operations and comprehensive (loss) income.loss. 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 expectPrior to the COVID-19 pandemic, we planned to invest approximately $90 million to $110 million for our pro-rata share of development costs for fiscal year 2019 related2020. While we maintain our commitment to these activitiescomplete our redevelopment projects, we have deferred some of the capital spend to 2021 as some of our retailers plan to open later than originally planned. We now anticipate our share of development costs to be approximately $90$50 million to $115 million.for the remainder of fiscal year 2020. Our estimated stabilized return or yield, on invested capital typically ranges in the high single digits.


We have identified 2930 department stores (Sears, The Bon-Ton Stores, and one former Belk store) in our Tier 1 and open air portfolio that we plan to redevelop and we are actively working on repositioning. Of these locations, 6two are expected to remain occupied byoperating Sears through the remainder of 2019,locations, resulting in 2328 that we can currently develop. At the end of the thirdsecond quarter 2019, 172020, 18 of these former department store locations have been addressed viawith signed letters of intent (LOI)(LOIs), fully executed leases, or replacement tenant openings. Many projects are actively under construction and twothree replacement stores haveopened in 2019. Three additional replacement tenants opened recently, opened.one each in April, June and July of 2020. These former department store locations represent an opportunity to enhance the experience at the property by bringing in offerings such as dining, grocery, entertainment, home furnishings, and 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 thatWith $50 million already incurred as of the end of 2019, we will invest betweenplan to spend up to an additional $300 million to $350 million over the next three to fivefour years to complete the redevelopment of these former 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, including Home Goods, PetSmart, Ross Dress for Less, and TJ Maxx. 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 beforein the 2020 holiday shopping season.spring of 2021. 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, The RoomPlace opened in August of 2019, taking approximately two thirds of the 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 downIn 2019, we completed the demolition of the former Sears store and createplans include an exciting line up of outward facing retail stores and restaurants, 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 repositionhave repositioned the former department store with The RoomPlacea Morris Home Furniture and a first to market Round 1 Entertainment, both first to market. The RoomPlace will occupyEntertainment. Morris Home Furniture opened in June 2020, and occupies the upper level and Round 1 Entertainment will occupyopened in November 2019 and occupies the lower level. The RoomPlace is expected to open in the first quarter of 2020 and Round 1 Entertainment is expected to open in November of 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. The store at Mesa Mall is expected to open in the fall of 2021. 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 $7approximately $8 million.
•At Morgantown Mall in Morgantown, West Virginia, we have plans to addadded a 70,000 square foot Dunham’s Sports store, which opened in April 2020, 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 downWVU Medicine repurposed the former Sears store.location as a logistics, distribution and fulfillment center serving the broader WVU Medicine network, and opened in July 2020. Finally, we have plans to add a new retaileran Ollie's Bargain Outlet and entertainment user in the former Belk location and are working on the final lease negotiations with the replacement tenants.entertainment user.
•At Port Charlotte Town Center in Port Charlotte, Florida, 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.
•At Polaris Fashion Place® in Columbus, Ohio, FieldhouseUSA (see below for information on FieldhouseUSA) will replace the former Sears department store location. In addition, Sears announced plans to close their storelocations at both Polaris Fashion Place® in Columbus, Ohio and Town Center at AuroraAurora® in Aurora, Colorado, during the third quarter of 2019. FieldhouseUSA will also replace the Sears location there.Colorado. The Company proactively gained control of both Sears spaces in 2018 for redevelopment efforts. New retail and complementary mixed uses are planned for both projects with additional details being announced in the future.
During


•At The Mall at Johnson City in Johnson City, Tennessee, we plan to replace the fourth quarter of 2016, we held our grand opening of ourformer Sears with a first-to-market Home Goods. We proactively negotiated an early termination with Sears in January 2020 to gain control to bring this tenant to the market. We are also adding a new approximately 400,000 square foot shopping centermulti-tenant building 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,location of the former Sears Auto Center to add new dining options including Chipotle Mexican Grill and Ulta Cosmetics.Chicken Salad Chick. In addition a numberto these new retail additions, we will complete an extensive renovation of dining options are at the center such as Chipotle, PeiWei, Whataburger, and Zoe's Kitchen. The project is 99.6% leased as of September 30, 2019. During the third quarter of 2017, we approvedproperty.
We continue construction on the final phase of this new development for an additional investment of approximately $28 million, whichFairfield Town Center, located in the Houston, Texas metropolitan area. This final phase will add an additional 130,000 square feet of new GLA to accommodate the strong demand, at the project.resulting in close to 500,000 square feet of GLA upon completion. Leasing for this new phase is over 60%97% committed, including deals with a national theater and a national value fashion apparel retailer, which are expectedretailer. The estimated investment in this development will be approximately $28 million, and we expect tenants to openbegin opening in late 2020.2020 and throughout 2021.
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 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. 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 had one tenant, Paige, open in September of 2019, and we expect the remaining retailers to open stores in this final component during the fourth quarter of 2019.
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 opened in October of 2019 and replaced a former hhgregg store and The RoomPlace will be locatedMorris Furniture recently opened in a newly combined larger store from previous small shop space. The estimated investmentAdditionally, during the fourth quarter of 2019, we purchased the former Elder-Beerman store from a third party in order to gain control of the redevelopment. Our plans involve adding these two retailersnew uses to the property will be between $8 million and $10 million with an anticipated yield of approximately 10% - 12%.
We continuecenter to make progress replacing our former Toys R' Us locations. We have three recent openings, includingcompliment the previously discussed Big Lots store at Grand Central Mall. At the Plaza at Buckland Hills in Manchester, Connecticut, a new K&G Superstore opened in September 2019 and Marshall's opened in October 2019 in the former Toys R' Us locationstrong retail offerings at the center.property.
Capital Expenditures
The following table summarizes total consolidated capital expenditures on a cash basis for the ninesix months ended SeptemberJune 30, 20192020 (in thousands):
Redevelopments and expansions $55,433
 $70,245
Tenant allowances 19,759
 10,528
Operational capital expenditures 20,785
 11,018
Total(1)
 $95,977
 $91,791
(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; losses associated with closures, failures and stoppages associated with the spread and proliferation of the COVID-19 (coronavirus) outbreak; 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 (re)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.issues; and changes in LIBOR reporting practices or the method in which LIBOR is determined. 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, 2018.2019 and other reports filed with the Securities and Exchange Commission. We undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.


Non-GAAP Financial Measures
Industry practice is to evaluate real estate properties in part based on FFO, NOI and comparable NOI. We believe that these non-GAAP measures are helpful to investors because they are widely recognized measures of the performance of REITs and provide a relevant basis for our comparison among REITs. We also use these measures internally to measure the operating performance of our portfolio.
We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts, or NAREIT, as net income (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) incomeloss for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019 (in thousands, except share/unit amounts):
 For the Three Months Ended September 30, For the Nine Months Ended September 30, For the Three Months Ended June 30, For the Six Months Ended June 30,
 2019 2018 2019 2018 2020 2019 2020 2019
Net (loss) income $(1,665) $4,115
 $(21,108) $39,819
Net loss $(93,413) $(16,880) $(85,853) $(19,443)
Less: Preferred dividends and distributions on preferred operating partnership units (3,568) (3,568) (10,704) (10,704) (3,568) (3,568) (7,136) (7,136)
Adjustments to Arrive at FFO:                
Real estate depreciation and amortization, including joint venture impact 81,155
 81,525
 239,060
 225,079
 63,732
 81,691
 133,501
 157,905
Impairment loss, including (gain) on disposition of interests in properties, net 24,992
 —
 24,992
 (1,755) 23,817
 —
 (293) —
FFO of the Operating Partnership (1) 100,914
 82,072
 232,240
 252,439
 (9,432) 61,243
 40,219
 131,326
FFO allocable to limited partners 15,695
 12,719
 36,165
 39,156
 (1,467) 9,529
 6,258
 20,433
FFO allocable to common shareholders/unitholders $85,219
 $69,353
 $196,075
 $213,283
 $(7,965) $51,714
 $33,961
 $110,893
                
Diluted (loss) earnings per share/unit $(0.02) $0.00
 $(0.14) $0.13
Diluted loss per share/unit $(0.43) $(0.09) $(0.41) $(0.12)
Adjustments to arrive at FFO per share/unit:                
Real estate depreciation and amortization, including joint venture impact 0.36
 0.37
 1.07
 1.01
 0.28
 0.36
 0.59
 0.71
Impairment loss, including (gain) on disposition of interests in properties, net 0.11
 0.00
 0.11
 (0.01) 0.11
 0.00
 0.00
 0.00
Diluted FFO per share/unit $0.45
 $0.37
 $1.04
 $1.13
 $(0.04) $0.27
 $0.18
 $0.59
                
Weighted average shares outstanding - basic 188,603,382
 187,845,587
 188,392,694
 187,647,504
 190,541,074
 188,486,685
 189,842,197
 188,285,604
Weighted average limited partnership units outstanding 34,735,136
 34,711,788
 34,739,598
 34,699,815
 34,485,545
 34,752,540
 34,539,716
 34,741,867
Weighted average additional dilutive securities outstanding (2) 837,529
 1,435,195
 543,925
 1,449,179
 —
 —
 —
 12,790
Weighted average shares/units outstanding - diluted 224,176,047
 223,992,570
 223,676,217
 223,796,498
 225,026,619
 223,239,225
 224,381,913
 223,040,261

(1)FFO of the operating partnership decreased $20.2$91.1 million for the ninesix months ended SeptemberJune 30, 20192020 compared to the ninesix months ended SeptemberJune 30, 2018.2019. During the ninesix months ended SeptemberJune 30, 2019, we received $36.22020, comparable NOI, inclusive of sold centers, decreased $56.6 million, less in operating income related to comparable properties, which can be primarily attributed to the Anchor Store Impact andeconomic impact of the COVID-19 pandemic. Additionally, during the quarter ended June 30, 2020 we recorded an $11.2 million impairment on a note receivable that related to seller bridge financing that the Company provided in connection with a failed sale-leaseback transaction that occurred during the fourth quarter of 2019. Also, we received $17.5 million less in FFO from the sale of certain outparcels. Additionally, generaloutparcels and administrative expenses increased $9.5properties when comparing the six months ending June 30, 2020 to 2019. Lastly, we experienced a decrease of $4.9 million primarily related to the impact of the newin mark-to-market lease accounting standard which prohibits the Company from capitalizing non-incremental internal leasingrevenue, fee income, and legal efforts. Lastly, interest expense, net, increased $9.2 million, which was primarily attributable to corporate debt activity primarily related to higher interest rates due to the credit rating downgrade. Offsetting these decreases was a $38.9 million increase related to the gain on extinguishment of debt which primarily related to the transition of Towne West Square to the lender.lease termination income.

(2)The weighted average additional dilutive securities for the three and ninesix months ended SeptemberJune 30, 2019 are excluded for purposes of calculating diluted (loss) earningsloss 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) incomeloss and presents comparable NOI percent change for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019 (in thousands):
 For the Three Months Ended September 30, For the Nine Months Ended September 30, For the Three Months Ended June 30, For the Six Months Ended June 30,
 2019 2018 2019 2018 2020 2019 2020 2019
Net (loss) income $(1,665) $4,115
 $(21,108) $39,819
Net loss $(93,413) $(16,880) $(85,853) $(19,443)
Loss from unconsolidated entities 241
 577
 2,002
 310
 4,754
 1,713
 5,786
 1,761
Income and other taxes (120) (227) 465
 859
 593
 229
 (24) 585
Gain on extinguishment of debt, net (38,913) —
 (38,913) —
Impairment on note receivable 11,237
 —
 11,237
 —
Gain on disposition of interests in properties, net (9,825) (3,864) (26,056) (20,108) (437) (6,241) (27,192) (16,231)
Interest expense, net 38,833
 36,582
 114,806
 105,627
 37,445
 39,143
 76,080
 75,973
Operating (loss) income (11,449) 37,183
 31,196
 126,507
 (39,821) 17,964
 (19,966) 42,645
                
Depreciation and amortization 70,948
 71,010
 209,142
 196,100
 55,380
 71,816
 115,084
 138,194
Impairment loss 28,936
 —
 28,936
 —
 23,800
 —
 25,119
 —
General and administrative 12,210
 9,124
 39,459
 29,969
 11,350
 13,124
 23,614
 27,249
Fee income (3,242) (2,562) (8,669) (7,044) (1,230) (2,680) (3,417) (5,427)
Management fee allocation 39
 21
 124
 5
 36
 80
 36
 84
Pro-rata share of unconsolidated joint ventures in comp NOI 17,619
 18,434
 52,437
 53,859
 10,577
 17,372
 27,979
 34,824
Property allocated corporate expense 4,342
 3,577
 12,675
 10,758
 4,192
 4,209
 8,947
 8,333
Non-comparable properties and other (1)
 788
 (212) 558
 (2,559) 1,221
 (248) 1,221
 (1,214)
NOI from sold properties 674
 (2,100) (462) (7,427) (28) (1,295) (75) (1,700)
Termination income (100) (197) (1,512) (2,221) (27) (626) (106) (1,412)
Straight-line rents (1,293) (1,131) (3,655) (3,154) (128) (1,165) 1,493
 (1,907)
Ground lease adjustments for straight-line and fair market value 5
 13
 15
 38
 5
 5
 10
 10
Fair market value and inducement adjustments to base rents (915) (3,847) (5,302) (7,962) (1,647) (1,487) (2,631) (4,387)
Less: Tier 2 and noncore properties (2)
 (8,280) (12,643) (25,435) (38,450) (4,661) (10,522) (14,904) (22,212)
                
Comparable NOI - Tier 1 and open air properties $110,282
 $116,670
 $329,507
 $348,419
 $59,019
 $106,547
 $162,404
 $213,080
Comparable NOI percentage change - Tier 1 and open air properties (5.5)% 
 (5.4)% 
 (44.6)% 
 (23.8)% 

(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.


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 SeptemberJune 30, 2019, $382.02020, $812.0 million (excluding debt issuance costs of $6.8$5.1 million) of our aggregate consolidated indebtedness (12.4%(25.6% 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 SeptemberJune 30, 2019,2020, a 50 basis point increase in LIBOR rates would result in a decrease in earnings and cash flow of $1.9$4.1 million annually and a 50 basis point decrease in LIBOR rates (or to 0% for LIBOR rates that are below 0.50%) would result in an increase in earnings and cash flow of $1.9$1.3 million annually.  This assumes that the amount outstanding under our variable rate debt remains at $382.0$812.0 million, the balance as of SeptemberJune 30, 2019. See the additional discussion of the LIBOR transition under "Liquidity and Capital Resources."2020.
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 SeptemberJune 30, 20192020 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.
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 SeptemberJune 30, 20192020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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, 20182019 (the “2018“2019 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 20182019 Form 10-K.
We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.
As of September 30, 2019, we had approximately $382.0 million (excluding debt issuance costs of $6.8 million) of our aggregate consolidated indebtedness that was indexed In addition to the London Interbank Offered Rate (“LIBOR”). In addition,Company, WPG Inc., WPG L.P. and each of its affiliates, may, on a collective basis, be referred to in this Item as of September 30, 2019, we had approximately $641.5 million of consolidated indebtedness swapped to LIBOR plus“we,” “us” or “our.”
The COVID-19 global pandemic has caused a fixed spread. Central banks around the world, including the Federal Reserve, have commissioned working groups of market participantssignificant disruption in non-essential retail commerce 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 upon the Company’s financial condition and results of operations.
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of COVID-19. The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects since March 2020, as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. During our second 2020 fiscal quarter, in the interest of public health and safety, jurisdictions (national, state and local) where our shopping centers are located, required mandatory closures, capacity limitations or other restrictions for those that continue to operate which impacted our tenants' ability to operate as well as pay rent and other related lease charges or otherwise fulfill the obligations of their respective leases. As a result of these developments, the Company expects a material adverse impact on its revenues, results of operations and cash flows for the year ending December 31, 2020 despite the fact that as of the filing date of this Form 10-Q, the majority of our enclosed retail properties were open in some capacity and our open air properties operated throughout much of the period of mandatory closures to extent permitted by applicable law. However, this situation is ever evolving and additional impacts to the business may arise of which we are not currently aware. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or relaxation of closure requirements, when our enclosed shopping centers and tenants will reopen at full capacity, and when shoppers will fully re-engage with our brand.
In addition to the impacts and uncertainties listed above, the outbreak of COVID-19 has caused the Company to significantly modify and alter the working environment and practices of its employees at its corporate offices and properties which could adversely impact the efficiency and effectiveness of the Company’s personnel in managing and operating its properties as well as completing other operating and administrative functions that are important to its business. Continued efforts by large numbers of the Company’s employees to work extensively and, in some cases, exclusive remotely could also expose the Company to additional risks, such as increased cybersecurity risk.
Our revenues are dependent on the availabilitylevel of financing,revenues realized by our tenants, and a decline in their revenues could materially and adversely affect our business, results of operations and financial condition.
We are subject to various risks that affect the retail environment generally, including LIBOR-based loans,levels of consumer spending, seasonality, changes in economic conditions, unemployment rates, an increase in the use of the Internet by retailers and consumers, and natural disasters. Levels of consumer spending could be adversely affected by, for example, increases in consumer savings rates, increases in tax rates, reduced levels of income, interest rate increases, other declines in consumer net worth, unemployment levels, and a strengthening of the U.S. dollar as compared to non-U.S. currencies.


The existence and persistence of the COVID-19 pandemic and related mitigation efforts have resulted in travel restrictions and plant shutdowns, all of which have impacted, and could continue to impact, our tenants’ supply chains and, ultimately, retail product availability. State and local stay at home orders, occupancy restrictions, masking/face covering requirements and social distancing as a result of the COVID-19 outbreak have impacted and continue to impact customer traffic at our properties. Even though such orders have been lifted in places, customer traffic may continue to be adversely impacted. The COVID-19 outbreak has resulted in property shutdowns, and may result in additional shutdowns of our retail properties, particularly in certain geographies reporting increasing diagnoses of the virus or related illnesses. The extent of the outbreak and its impact on our financing costs.tenants and our operations is uncertain, but a prolonged outbreak as well as related mitigation efforts could continue to have a material impact on our revenues and could materially and adversely affect our business, results of operations and financial condition.
As a result of these and other economic and market-based factors, our tenants might be unable to pay their existing minimum rents or pay landlord recovery charges. Because substantially all of our income is derived from rentals of commercial real property, our income and cash flow would be adversely affected if a significant number of tenants are unable to meet their obligations or their revenues decline, especially if they were tenants with a significant number of locations within our portfolio. Some of our tenants have not re-opened after the closure restrictions were lifted and operating limitations eased, which will likely have a material impact on occupancy at our properties which could result in an increase in the number of co-tenancy claims because required occupancy thresholds were not satisfied. Additionally, a further or continued decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates.
Many of the Company’s properties depend on anchor stores or major tenants to attract shoppers and drive customer traffic and the existence and persistence of the COVID-19 pandemic and related mitigation efforts could adversely impact in a material way the viability of a respective center or property as well as its tenants.
Our open air properties and enclosed retail properties are typically anchored by department stores and other large nationally or regionally recognized tenants. The existence and persistence of the COVID-19 pandemic and related mitigation efforts may result in department store or major tenant closing or reducing operations for a significant period of time which might result in decreased customer traffic, which could lead to decreased sales at our properties and adversely impact our ability to successfully execute our leasing strategy and operational objectives. Department store or major tenants may seek, and have sought, concessions from us for paying lease charges as a result of such mandatory closures or reduced hours. There are no assurances that customer traffic will return as high as pre-COVID-19 rates.
If the WPG, Inc. common stocksales of stores operating in our properties decline significantly due to the closing or limited operation of anchor stores or other national retailers because of the existence and persistence of the COVID-19 pandemic and related mitigation efforts, tenants might be unable to pay their minimum rents or expense recovery charges, which would likely negatively impact our financial results.
The existence and persistence of the COVID-19 pandemic and related mitigation efforts may adversely impact the Company’s ability to successfully and timely complete its various redevelopment projects as budgeted.
The onset of the COVID-19 pandemic may cause, as a result of governmental imposed closures or work stoppages, interrupted supply chains, reduced personnel due to closures or illnesses, unforeseen delays in the planning, execution and completion of construction projects associated with our redevelopment plans. Additionally, related permitting, inspections and reviews by jurisdictional planning commissions and authorities is delisted fromalso likely to be delayed or postponed which will materially impact the New York Stock Exchange (“NYSE”) because it trades below $1.00timeline and budgets for completing such projects.
As a result of such conditions and other factors, projects in our redevelopment pipeline may not be pursued or may be completed later or with higher costs than anticipated. In the event of an extended periodunsuccessful or delayed redevelopment project, our loss could exceed our investment in the project. Redevelopment activities involve significant risks, including: the expenditure of funds on and devotion of time to projects which may not come to fruition; increased construction costs that may make the project economically unattractive; an inability to obtain construction financing and permanent financing on favorable terms; and occupancy rates and rents not sufficient to make a project profitable.


The existence and persistence of the COVID-19 pandemic and related mitigation efforts may result in increased and more frequent bankruptcy filings of a number of our tenants or otherwise, theredownturns in our tenants’ businesses that may reduce our cash flow.
Because the Company derives almost all of our income from rental payments and other tenant charges, our cash available for distribution would be adversely affected if a significant number of our tenants were unable to meet their obligations to us, or if we were unable to lease vacant space in our properties on economically favorable terms. One or more of our tenants may seek the protection of the federal bankruptcy laws, or similar proceedings on the state level or in a foreign jurisdiction, as a result of the prolonged impact of the COVID-19 pandemic which could result in the termination of its lease causing a reduction in our cash available for distribution. Furthermore, certain of our tenants, including anchor tenants, hold the right under their lease(s) to terminate their lease(s) or reduce their rental rate if certain occupancy conditions are not met, if certain anchor tenants close, if certain sales levels or profit margins are not achieved, or if an exclusive use provision is violated, which all could be triggered in the event of one or more tenant bankruptcies. A significant increase in the number of tenant bankruptcies, particularly amongst anchor tenants, may make it more difficult for us to lease the remainder of the property or properties in which the bankrupt tenant operates and adversely impact our ability to successfully execute our re-leasing strategy.
The existence and persistence of the COVID-19 pandemic and related mitigation efforts may result in increased and more substantial impairment charges that may materially affect our financial results.
We evaluate our real estate assets and other assets for impairment indicators whenever events or changes in circumstances indicate that recoverability of our investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. Our determination of whether a negativeparticular held-for-use asset is impaired is based upon the undiscounted projected cash flows used for the impairment analysis and our determination of the asset's estimated fair value, that in turn are based upon our plans for the respective asset and our views of market and economic conditions. With respect to assets held-for-sale, our determination of whether such an asset is impaired is based upon market and economic conditions. If we determine that an impairment has occurred, then we would be required under Generally Accepted Accounting Principles in the United States (GAAP) to make an adjustment to the net carrying value of the asset, which could have a material adverse effect on our business thatresults of operations in the accounting period in which the adjustment is made. Furthermore, changes in estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions could significantlyresult in the recognition of additional impairment losses for already impaired assets, which, under the applicable accounting guidance, could be substantial.
The outbreak of the COVID-19 pandemic resulted in the sustained closure of our centers as well as the cessation of the operations of certain of our tenants which caused a reduction in our revenues due to the impaired financial stability of our tenants and ultimately our cash flows for many of our centers as well as other sources of income generated by our properties. In addition to reduced revenues generated by our centers as a result of the COVID-19 outbreak, our ability to obtain sufficient financing in the future for such properties may be impaired as well as our ability in the future to lease or re-lease centers as a result of worsening market and economic conditions produced by the persistence of the COVID-19 pandemic. The worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our properties adversely impacted by the COVID-19 outbreak as well as its persistence could result in the recognition of substantial impairment charges imposed on our assets which could adversely impact our financial condition,results.
The existence and persistence of the COVID-19 pandemic and related mitigation efforts may promote prolonged instability or volatility in the U.S. economy that may adversely impact consumer spending and therefore our operating results.
A sustained downturn in the U.S. economy and reduced consumer spending as well as consumer activity at brick-and-mortar commercial establishments due to the prolonged existence, persistence and threat of the COVID-19 pandemic could impose a prolonged economic recession in the U.S. which could impact our tenants’ ability to meet their lease obligations due to poor operating results, lack of liquidity or other reasons and therefore decrease the revenue generated by our properties or the value of our properties. Our ability to lease space and negotiate and maintain favorable rents could also be negatively impacted by a prolonged recession in the U.S. economy. Moreover, the demand for leasing space in our existing shopping centers as well as our redevelopment properties could also substantially decline during a significant downturn in the U.S. economy which could result in a decline in our occupancy percentage and reduction in rental revenues.


The existence and persistence of the COVID-19 pandemic could result in further significant reduction of our workforce due to continued mitigation efforts, medically related absences or quarantines.
The Company’s workforce is maintained at two corporate offices and at certain of its shopping centers. Reductions in personnel either due to budgetary reasons or further mitigation efforts in response to the existence and persistence of the COVID-19 pandemic would hamper the Company’s ability to effectively achieve its fiscal, operational, and strategic objectives. Certain of the Company’s personnel, including its executive officers, have substantial experience in owning, operating, managing, acquiring and developing shopping centers. The Company’s success depends in large part upon the efforts of these executives and other personnel, and we cannot guarantee that they will remain with us throughout this pandemic. The Company already reduced approximately 20% of its workforce for budgetary reasons related to the COVID-19 pandemic and, although some personnel have since been rehired, the loss of key management personnel in leasing, finance, legal, construction, development, or operations could have a negative impact on the Company’s operations. In addition, except for isolated examples amongst our senior executive personnel, there are generally no restrictions on the ability of terminated personnel to compete with us after the termination of their employment.
The continuing spread of COVID-19 may have a material adverse effect on our ability to servicemake distributions to our debt obligations.common shareholders.
AlthoughThe impact of the per share priceCOVID-19 pandemic on the U.S. and world economies is uncertain and could result in a prolonged world-wide economic downturn that may lead to corporate bankruptcies in the most affected industries and an increase in unemployment. As a result of the real estate assets in our real estate portfolio being comprised entirely of retail properties located in the United States, the COVID-19 pandemic will impact our tenants’ ability to pay rent, and therefore impact the income received by us, to the extent that its continued spread within the United States reduces occupancy, decreases customer traffic or results in quarantines where our properties are located, increases the cost of operation, results in reduced hours or necessitates the further closure or re-closure of our common stock has remained above $1.00, despite recent volatility,properties. Since the onset of the COVID-19 pandemic, certain owners of shopping center properties located in the eventUnited States have announced temporary closures of such properties and even re-closures of properties as a result of the per share trading pricepersistence of the COVID-19 pandemic. During a portion of our second 2020 fiscal quarter, our enclosed shopping centers were required to close and, upon reopening, then operated at reduced hours and enforced occupancy restrictions which materially impacted our revenues and adversely affect our results of operations and financial condition. Additionally, customer traffic at our properties has been reduced because of COVID-19 related concerns.
As a result of the adverse impact of the COVID-19 pandemic on the Company’s fiscal condition and in an effort to preserve its cash position, the Company announced in April 2020 the temporary suspension of its quarterly common stock closes below $1.00share and operating partnership unit cash dividend for thirty (30) consecutive days, our common stock could be delisted from the NYSE if not curedremainder of 2020 (with a potential true up of the fourth quarter 2020 dividend payment in adequate time which could necessitate extraordinary measures by us2021 in order to accomplish.comply with the Company's REIT taxable income distribution requirements). The threat of delistingextent to which COVID-19 further impacts our income, our expenses and ability to pay distributions to our common stock couldshareholders and unitholders of WPG’s affiliate will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, new information that may emerge concerning the severity of the COVID-19 pandemic, consumer acceptance of the safety of retail center shopping and the actions taken to contain COVID-19 or treat its impact, among others.
The continuing spread of COVID-19 may have a material 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
reducingeffect on our ability to retain, attractmaintain compliance with our debt covenants and, motivateunder certain circumstances, remain a going concern.
As a result of the membersrelated events due to the COVID-19 pandemic, we may experience a material adverse effect on our income and expenses. COVID-19’s impact on our income and expenses may also impact our ability to maintain compliance with our credit facility and bond covenants. We are engaged in discussions with our unsecured creditors and based upon these discussions we believe, to the extent that the impact of COVID-19 results in potential non-compliance with financial covenants, it is probable that we will remain compliant with such covenants through some combination of waivers, modifications or other amendments to the related agreements. However, no assurances can be made in this regard, and if we are unable to agree on the terms of such waivers and changes, this could create substantial doubt about our board of directors, officers and employeesability to continue as a going concern through the use of equity-based compensation and equity incentives.August 10, 2021.
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
10.1+
Amendment to Employment Agreement, dated and effective asForm of August 2, 2019, by and between Washington Prime Group Inc. and Louis G. Conforti (incorporated by reference to Form 8-K filed on August 2, 2019).
10.2+
Non-Employee Director Restricted Stock Unit Award Agreement dated and effective as of August 2, 2019, by and between Washington Prime Group Inc. and Louis G. Conforti (incorporated by reference to Form 8-K filed on August 2, 2019).
10.3+
Performance Stock Unit Award Agreement, dated and effective as of August 2, 2019, by and between Washington Prime Group Inc. and Louis G. Conforti (incorporated by reference to Form 8-K filed on August 2, 2019).
10.4
Loan Agreement, dated October 10, 2019, by and between Washington Prime Group, L.P. and Mall Ground Portfolio, LLC (incorporated by reference to Form 8-K filed on October 17, 2019)(June 2020 Awards).
31.1*
Certification by the Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group Inc.
31.2*
Certification by the Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group Inc.
31.3*
Certification by the Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
31.4*
Certification by the Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
32.1*
Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group Inc.
32.2*
Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Washington Prime Group, L.P.
101.INS*XBRL Instance Document - 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:October 24, 2019August 10, 2020By:/s/ Mark E. Yale
   
Mark E. Yale
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Date:October 24, 2019August 10, 2020By:/s/ Melissa A. Indest
   
Melissa A. Indest
Executive Vice President, Finance and Chief Accounting Officer
(Principal Accounting Officer)

5665