Retail Opportunity Investments
Annual Report 2013

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2013 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to . RETAIL OPPORTUNITY INVESTMENTS CORP. (Exact name of registrant as specified in its charter)Commission file number: 001-33749 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP (Exact name of registrant as specified in its charter)Commission file number: 333-189057-01 Maryland (Retail Opportunity Investments Corp.)Delaware (Retail Opportunity Investments Partnership, LP) (State or other jurisdiction ofincorporation or organization)8905 Towne Centre Drive, Suite 108San Diego, CA(Address of principal executive offices)26-0500600 (Retail Opportunity Investments Corp.)94-2969738 (Retail Opportunity Investments Partnership, LP) (I.R.S. EmployerIdentification No.)92122(Zip code)Registrant’s telephone number, including area code:(858) 677-0900Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Name of Exchange on Which RegisteredCommon Stock, $0.0001 par value per shareWarrants, exercisable for Common Stock atan exercise price of $12.00 per shareUnits, each consisting of one share ofCommon Stock and one Warrant The NASDAQ Stock Market LLCThe NASDAQ Stock Market LLCThe NASDAQ Stock Market LLCSecurities Registered Pursuant to Section 12(g) of the Act: Retail Opportunity Investments Corp. NoneRetail Opportunity Investments Partnership, LP None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Retail Opportunity Investments Corp.Yes x No o Retail Opportunity Investments Partnership, LPYes o No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Retail Opportunity Investments Corp.Yes x No o Retail Opportunity Investments Partnership, LPYes x No o 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 of1934 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 filingrequirements for the past 90 days. Retail Opportunity Investments Corp.Yes x No o Retail Opportunity Investments Partnership, LPYes x No o 1 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). Retail Opportunity Investments Corp.Yes x No o Retail Opportunity Investments Partnership, LPYes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendmentto this Form 10-K. x Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Checkone): Retail Opportunity Investments Corp. Large accelerated filer xAccelerated filer oNon-accelerated filer o(Do not check if a smaller reportingcompany)Smaller reporting company oRetail Opportunity Investments Partnership, LP Large accelerated filer oAccelerated filer oNon-accelerated filer x(Do not check if a smaller reportingcompany)Smaller reporting company o Indicate by check mark whether the registrant is a Shell Company (as defined in rule 12b-2 of the Exchange Act). Retail Opportunity Investments Corp.Yes o No x Retail Opportunity Investments Partnership, LPYes o No x The aggregate market value of the common equity held by non-affiliates of Retail Opportunity Investments Corp. as of June 30, 2013, the lastbusiness day of its most recently completed second fiscal quarter, was $983.1 million (based on the closing sale price of $13.90 per share of RetailOpportunity Investments Corp. common stock on that date as reported on the NASDAQ Global Select Market).There is no public trading market for the operating partnership units of Retail Opportunity Investments Partnership, LP. As a result the aggregatemarket value of common equity securities held by non-affiliates of this registrant cannot be determined. Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 72,699,074 shares ofcommon stock, par value $0.0001 per share, of Retail Opportunity Investments Corp. outstanding as of February 20, 2014. DOCUMENTS INCORPORATED BY REFERENCE Portions of Retail Opportunity Investments Corp.’s definitive proxy statement for its 2014 Annual Meeting, to be filed within 120 days after itsfiscal year, are incorporated by reference into Part III of this Annual Report on Form 10-K. 2 EXPLANATORY PARAGRAPHThis report combines the annual reports on Form 10-K for the year ended December 31, 2013 of Retail Opportunity Investments Corp., a Marylandcorporation (“ROIC”), and Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”) of which RetailOpportunity Investments Corp. is the parent company and through its wholly owned subsidiary, acts as general partner. Unless otherwise indicated or unlessthe context requires otherwise, all references in this report to “the Company,” “we,” “us,” “our,” or “our company” refer to ROIC together with itsconsolidated subsidiaries, including Retail Opportunity Investments Partnership, LP. Unless otherwise indicated or unless the context requires otherwise, allreferences in this report to the Operating Partnership refer to Retail Opportunity Investments Partnership, LP together with its consolidated subsidiaries.ROIC operates as a real estate investment trust (“REIT”) and as of December 31, 2013, ROIC owned an approximate 95.8% partnership interest in theOperating Partnership. Retail Opportunity Investments GP, LLC, ROIC’s wholly-owned subsidiary, is the sole general partner of the OperatingPartnership. Through this subsidiary, ROIC has full and complete authority and control over the Operating Partnership’s business.The Company believes that combining the annual reports on Form 10-K of ROIC and the Operating Partnership into a single report will result in thefollowing benefits: ·facilitate a better understanding by the investors of ROIC and the Operating Partnership by enabling them to view the business as a whole in thesame manner as management views and operates the business ·remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure appliesto both ROIC and the Operating Partnership; and ·create time and cost efficiencies through the preparation of one combined report instead of two separate reports. Management operates ROIC and the Operating Partnership as one enterprise. The management of ROIC and the Operating Partnership are the same.There are few differences between ROIC and the Operating Partnership, which are reflected in the disclosures in this report. The Company believes it isimportant to understand the differences between ROIC and the Operating Partnership in the context of how these entities operate as an interrelatedconsolidated company. ROIC is a REIT, whose only material assets are its direct or indirect partnership interests in the Operating Partnership andmembership interest in Retail Opportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does notconduct business itself, other than acting as the parent company and through Retail Opportunity Investments Partnership GP, LLC as the sole general partnerof the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownershipinterests in the Company’s real estate ventures. The Company conducts its business through the Operating Partnership, which is structured as a partnershipwith no publicly traded equity. Except for net proceeds from warrant exercises and equity issuances by ROIC, which are contributed to the OperatingPartnership, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by theOperating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance of operating partnership units (“OP Units”) ofthe Operating Partnership.Noncontrolling interests is the primary difference between the Consolidated Financial Statements for ROIC and the Operating Partnership. The OP Units inthe Operating Partnership that are not owned by ROIC are accounted for as partners’ capital in the Operating Partnership’s financial statements and asnoncontrolling interests in ROIC’s financial statements. Accordingly, this report presents the Consolidated Financial Statements for ROIC and the OperatingPartnership separately, as required, as well as Earnings Per Share / Earnings Per Unit and Capital of the Partnership.This report also includes separate Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and CapitalResources, Item 9A. Controls and Procedures sections and separate Chief Executive Officer and Chief Financial Officer certifications for each of ROIC andthe Operating Partnership as reflected in Exhibits 31 and 32. 3 RETAIL OPPORTUNITY INVESTMENTS CORP. TABLE OF CONTENTS PagePART I6Item 1.Business11Item 1A.Risk Factors22Item 1B.Unresolved Staff Comments22Item 2.Properties22Item 3.Legal Proceedings25Item 4.Mine Safety Disclosures.25PART II26Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities26Item 6.Selected Financial Data29Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations30Item 7A.Quantitative and Qualitative Disclosures About Market Risk42Item 8.Financial Statements and Supplementary Data42Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure43Item 9A.Controls and Procedures43Item 9B.Other Information44PART III44Item 10.Directors, Executive Officers and Corporate Governance44Item 11.Executive Compensation44Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters44Item 13.Certain Relationships and Related Transactions, and Director Independence44Item 14.Principal Accounting Fees and Services44PART IV44Item 15. Exhibits and Financial Statement Schedules44SIGNATURES48Index to Consolidated Financial Statements and Financial Statement Schedules52 4 Statements Regarding Forward-Looking Information When used in this discussion and elsewhere in this Annual Report on Form 10-K, the words “believes,” “anticipates,” “projects,” “should,”“estimates,” “expects,” and similar expressions are intended to identify forward-looking statements with the meaning of that term in Section 27A of theSecurities Act of 1933, as amended (the “Securities Act”), and in Section 21F of the Securities and Exchange Act of 1934, as amended (the “ExchangeAct”). Actual results may differ materially due to uncertainties including: · the Company’s ability to identify and acquire retail real estate that meet its investment standards in its markets; · the level of rental revenue and net interest income the Company achieves from its assets; · the market value of the Company’s assets and the supply of, and demand for, retail real estate in which it invests; · the state of the U.S. economy generally, or in specific geographic regions; · the impact of economic conditions on our business; · the conditions in the local markets in which the Company operates and its concentration in those markets, as well as changes in nationaleconomic and market conditions; · consumer spending and confidence trends; · the Company’s ability to enter into new leases or to renew leases with existing tenants at the properties it owns or acquires at favorablerates; · the Company’s ability to anticipate changes in consumer buying practices and the space needs of tenants; · the competitive landscape impacting the properties the Company owns or acquires and their tenants; · the Company’s relationships with its tenants and their financial condition and liquidity; · ROIC’s ability to continue to qualify as a real estate investment trust (a “REIT”) for U.S. federal income tax purposes; · the Company’s use of debt as part of its financing strategy and its ability to make payments or to comply with any covenants under itssenior unsecured notes, its unsecured credit facilities or other debt facilities it currently has or subsequently obtains; · the Company’s level of operating expenses, including amounts it is required to pay to its management team and to engage third partyproperty managers; · changes in interest rates that could impact the market price of ROIC’s common stock and the cost of the Company’s borrowings; and · the exercise, or level of exercise, of ROIC’s warrants, exercisable for Common Stock at an exercise price of $12.00 per share (the“warrants”); · legislative and regulatory changes (including changes to laws governing the taxation of REITs). Forward-looking statements are based on estimates as of the date of this Annual Report on Form 10-K. The Company disclaims any obligation to publiclyrelease the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this Annual Reporton Form 10-K. 5 The risks included here are not exhaustive. Other sections of this Annual Report on Form 10-K may include additional factors that could adversely affect theCompany’s business and financial performance. Moreover, the Company operates in a very competitive and rapidly changing environment. New risk factorsemerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on theCompany’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in anyforward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction ofactual results. PART I In this Annual Report on Form 10-K, unless the context requires otherwise, all references to “the Company,” “we,” “us,” “our,” or “our company”refer to ROIC together with its consolidated subsidiaries, including the Operating Partnership. Item 1. Business Overview Retail Opportunity Investments Corp., a Maryland corporation (“ROIC”) commenced operations in October 2009 as a fully integrated, self-managed realestate investment trust (“REIT”), and as of December 31, 2013, ROIC owned an approximate 95.8% partnership interest and other limited partners owned theremaining 4.2% partnership interest in the Operating Partnership. The Company specializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States, anchored by supermarkets and drugstores. From the commencement of its operations through December 31, 2013, the Company has completed approximately $1.3 billion of shopping centerinvestments. As of December 31, 2013, the Company’s portfolio consisted of 55 retail properties totaling approximately 5.9 million square feet of grossleasable area, or GLA.ROIC is organized in a traditional umbrella partnership real estate investment trust (“UpREIT”) format pursuant to which Retail Opportunity Investments GP,LLC, its wholly-owned subsidiary, serves as the sole general partner of, and ROIC conducts substantially all of its business through, its operating partnership,Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), together with its subsidiaries. Unless otherwiseindicated or unless the context requires otherwise, all references to the “Company”, “we,” “us,” “our,” or “our company” refer to ROIC together with itsconsolidated subsidiaries, including the Operating Partnership.ROIC’s only material assets are its direct or indirect partnership interests in the Operating Partnership and membership interest in Retail OpportunityInvestments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does not conduct business itself, other than acting asthe parent company and through this subsidiary, acts as the sole general partner of the Operating Partnership. The Operating Partnership holds substantiallyall the assets of the Company and directly or indirectly holds the ownership interests in the Company’s real estate ventures. The Operating Partnershipconducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from warrantexercises and equity issuances by ROIC, which are contributed to the Operating Partnership, the Operating Partnership generates the capital required by theCompany’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and throughsubsidiaries) or through the issuance of operating partnership units (“OP Units”) of the Operating Partnership. Investment Strategy The Company seeks to acquire shopping centers located in densely populated, supply-constrained metropolitan markets in the western and eastern regions ofthe United States, which exhibit income and population growth and high barriers to entry. The Company’s senior management team has operated in theCompany’s markets for over 25 years and has established an extensive network of relationships in these markets with key institutional and private propertyowners, brokers and financial institutions and other real estate operators. The Company’s in-depth local and regional market knowledge and expertiseprovides a distinct competitive advantage in identifying and accessing attractive acquisition opportunities, including properties that are not widelymarketed. The Company seeks to acquire high quality necessity-based community and neighborhood shopping centers anchored by national and regional supermarketsand drugstores that are well-leased, with stable cash flows. Additionally, the Company acquires shopping centers which it believes are candidates forattractive near-term retenanting or present other value-enhancement opportunities. Upon acquiring a shopping center, the Company normally commences leasing initiatives aimed at enhancing long-term value through re-leasing belowmarket space and improving the tenant mix. The Company focuses on leasing to retailers that provide necessity-based, non-discretionary goods and services,catering to the basic and daily needs of the surrounding community. The Company believes necessity-based retailers draw consistent, regular traffic to itsshopping centers, which results in stronger sales for its tenants and a more consistent revenue base. Additionally, the Company seeks to maintain a strongand diverse tenant base with a balance of large, long-term leases to major national and regional retailers, including supermarkets, drugstores and discountstores, with small, shorter-term leases to a broad mix of national, regional and local retailers. The Company believes the long-term anchor tenants provide areliable, stable base of rental revenue, while the shorter-term leases afford the Company the opportunity to drive rental growth, as well as the ongoingflexibility to adapt to evolving consumer trends. 6 The Company believes that the current market environment continues to present opportunities for it to further build its portfolio and add additionalnecessity-based community and neighborhood shopping centers that meet its investment profile. The Company’s long-term objective is to prudently buildand maintain a diverse portfolio of necessity-based community and neighborhood shopping centers aimed at providing stockholders with sustainable, long-term growth and value through all economic cycles. In implementing its investment strategy and selecting an asset for acquisition, the Company analyzes the fundamental qualities of the asset, the inherentstrengths and weaknesses of its market, sub-market drivers and trends, and potential risks and risk mitigants facing the property. The Company believes thatits acquisition process and operational expertise provide it with the capability to identify and properly underwrite investment opportunities. The Company’s aim is to seek to provide diversification of assets, tenant exposures, lease terms and locations as its portfolio expands. In order to capitalizeon the changing sets of investment opportunities that may be present in the various points of an economic cycle, the Company may expand or refocus itsinvestment strategy. The Company’s investment strategy may be amended from time to time, if approved by its board of directors. The Company is notrequired to seek stockholder approval when amending its investment strategy. Transactions During 2013 Investing ActivityProperty Acquisitions On February 1, 2013, the Company acquired the property known as Diamond Bar Town Center located in Diamond Bar, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $27.4 million. Diamond Bar Town Center is approximately 100,000 square feet and is anchored by anational grocer. The property was acquired with borrowings under the Company’s credit facility (as defined below under “Credit Facility and Term Loan”). On February 6, 2013, the Company acquired the property known as Bernardo Heights Plaza in Rancho Bernardo, California, within the San Diegometropolitan area, for a purchase price of approximately $12.4 million. Bernardo Heights Plaza is approximately 38,000 square feet and is anchored bySprouts Farmers Market. The property was acquired with cash of approximately $3.6 million and the assumption of an existing mortgage with a principalamount of approximately $8.9 million, and a fair value of approximately $9.7 million. On April 15, 2013, the Company acquired the property known as Canyon Crossing Shopping Center located in Puyallup, Washington, within the Seattlemetropolitan area, for a purchase price of approximately $35.0 million. Canyon Crossing Shopping Center is approximately 121,000 square feet and isanchored by Safeway Supermarket. The property was acquired using borrowings under the Company’s credit facility. On April 22, 2013, the Company acquired the property known as Diamond Hills Plaza located in Diamond Bar, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $48.0 million. Diamond Hills Plaza is approximately 140,000 square feet and is anchored by an HMart Supermarket and a Rite Aid Pharmacy. The property was acquired using borrowings under the Company’s credit facility. On June 27, 2013, the Company acquired the property known as Hawthorne Crossings located in San Diego, California, for a purchase price of approximately$41.5 million. Hawthorne Crossings is approximately 141,000 square feet and is anchored by Mitsuwa Supermarket, Ross Dress For Less and Staples. Theproperty was acquired using borrowings under the Company’s credit facility. On June 27, 2013, the Company acquired the property known as Granada Shopping Center located in Livermore, California, for a purchase price ofapproximately $17.5 million. Granada Shopping Center is approximately 69,000 square feet and is anchored by SaveMart (Lucky) Supermarket. Theproperty was acquired using borrowings under the Company’s credit facility. On August 23, 2013, the Company acquired the property known as Robinwood Shopping Center located in West Linn, Oregon, for a purchase price ofapproximately $14.2 million. Robinwood Shopping Center is approximately 71,000 square feet and is anchored by Walmart Neighborhood Market. Theproperty was acquired using borrowings under the Company’s credit facility. On September 18, 2013, the Company acquired a parcel of land adjacent to one of its properties located in Pomona, California, for a purchase price ofapproximately $700,000. The parcel of land was acquired using available cash on hand. 7 On October 15, 2013, the Company acquired the property known as Peninsula Marketplace located in Huntington Beach, California, for a purchase price ofapproximately $35.9 million. Peninsula Marketplace is approximately 95,000 square feet and is anchored by Kroger (Ralphs) Supermarket. The propertywas acquired using borrowings under the Company’s credit facility. On November 26, 2013, the Company acquired the property known as Country Club Village located in San Ramon, California, for a purchase price ofapproximately $30.9 million. Country Club Village is approximately 111,000 square feet and is anchored by Walmart Neighborhood Market and CVSPharmacy. The property was acquired using borrowings under the Company’s credit facility. On December 13, 2013, the Company acquired the property known as Plaza de la Canada located in La Canada Flintridge, California, for a purchase price ofapproximately $34.8 million. Plaza de la Canada is approximately 100,000 square feet and is anchored by Gelson’s Supermarket, TJ Maxx and Rite AidPharmacy. The property was acquired using borrowings under the Company’s credit facility. Acquisitions of Property-Owning Entities On September 27, 2013, the Company acquired the remaining 51% of the partnership interests in the Terranomics Crossroads Associates, LP from its jointventure partner. The purchase of the remaining interest was funded through the issuance of 2,639,632 OP Units with a fair value of approximately $36.4million and the assumption of a $49.6 million mortgage loan on the property. Prior to the acquisition date, the Company accounted for its 49% interest inthe Terranomics Crossroad Associates, LP as an equity method investment. The acquisition-date fair value of the previous equity interest was $36.0 millionand is included in the measurement of the consideration transferred. The Company recognized a gain of $20.4 million as a result of remeasuring its priorequity interest in the venture held before the acquisition. The gain is included in the line item Gain on consolidation of joint venture in the consolidatedincome statement. The primary asset of Terranomics Crossroads Associates is Crossroads Shopping Center located in Bellevue, Washington, within theSeattle metropolitan area. Crossroads Shopping Center is approximately 464,000 square feet and is anchored by Kroger (QFC) Supermarket, Sports Authorityand Bed Bath and Beyond. On September 27, 2013, the Company acquired 100% of the membership interests in SARM Five Points Plaza, LLC for an adjusted purchase price ofapproximately $52.6 million. The primary asset of SARM Five Points Plaza, LLC is Five Points Plaza located in Huntington Beach, California. Five PointsPlaza is approximately 161,000 square feet and is anchored by Trader Joes, Old Navy and Pier 1. The purchase of the membership interests was fundedthrough approximately $43.6 million in cash using borrowings under the Company’s credit facility (of which approximately $17.2 million was used by theseller to pay off the existing financing) and the issuance of 650,631 OP Units with a fair value of approximately $9.0 million. Property Dispositions On June 5, 2013, the Company sold the Nimbus Village Shopping Center, a non-grocery anchored, non-core shopping center located in Rancho Cordova,California. The sales price of this property of approximately $6.3 million, less costs to sell, resulted in proceeds to the Company of approximately $5.6million. Accordingly, the Company recorded a loss on sale of property of approximately $714,000 for the year ended December 31, 2013, which has beenincluded in discontinued operations. Financing Activities The Company employs prudent amounts of leverage and uses debt as a means of providing funds for the acquisition of its properties and the diversificationof its portfolio. The Company seeks to primarily utilize unsecured debt in order to maintain liquidity and flexibility in its capital structure.Senior Notes Due 2023On December 9, 2013, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of5.000% Senior Notes due in 2023 (the “Notes”), fully and unconditionally guaranteed by ROIC. The Notes pay interest semi-annually on June 15 andDecember 15, commencing on June 15, 2014, and mature on December 15, 2023, unless redeemed earlier by the Operating Partnership. The Notes are part ofthe Operating Partnership’s senior unsecured obligations that rank equally in right of payment with the Operating Partnership’s other unsecuredindebtedness, and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and any preferred equity of theOperating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extent of the value of thecollateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligations under the Notes on asenior unsecured basis, including the due and punctual payment of principal of, and premium, if any, and interest on, the notes, whether at stated maturity,upon acceleration, notice of redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and ranks equally in right of payment with allother senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Notes is effectively subordinated in right of payment to all liabilities, whether securedor unsecured, and any preferred equity of its subsidiaries (including the Operating Partnership and any entity ROIC accounts for under the equity method ofaccounting). 8 Credit Facility and Term Loan The Operating Partnership has a revolving credit facility (the “credit facility”) with several banks. Previously, the credit facility provided for borrowings ofup to $200.0 million. Effective September 26, 2013, the Company entered into a third amendment to the amended and restated credit agreement pursuant towhich the borrowing capacity was increased to $350.0 million. Additionally, the credit facility contains an accordion feature, which was amended to allowthe Operating Partnership to increase the facility amount up to an aggregate of $700.0 million, subject to lender consents and other conditions. The maturitydate of the credit facility has been extended by one year to August 29, 2017, subject to a further one-year extension option, which may be exercised by theOperating Partnership upon satisfaction of certain conditions. The Operating Partnership has a term loan agreement (the “term loan”) with several banks. The term loan provides for a loan of $200.0 million and containsan accordion feature, which allows the Operating Partnership to increase the facility amount up to an aggregate of $300.0 million subject to commitmentsand other conditions. The maturity date of the term loan is August 29, 2017. The Company obtained investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services (BBB-) during thesecond quarter of 2013. Prior to receiving such investment grade ratings, borrowings under the credit facility and term loan agreements (collectively, the“loan agreements”) accrued interest on the outstanding principal amount at a rate equal to an applicable rate based on the consolidated leverage ratio of theCompany and its subsidiaries, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for dollar deposits for the relevant period (the“Eurodollar Rate”), or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced byKeyBank National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00% (the “Base Rate”). Since receiving investment grade credit ratingsfrom the two rating agencies, borrowings under the loan agreements accrue interest on the outstanding principal amount at a rate equal to an applicable ratebased on the credit rating level of ROIC, plus, as applicable, (i) the Eurodollar Rate, or (ii) the Base Rate. In addition, prior to receipt of such credit ratings,the Operating Partnership was obligated to pay an unused fee of (a) 0.35% of the undrawn balance if the total outstanding principal amount was less than50% of the aggregate commitments or (b) 0.25% if the total outstanding principal amount was greater than or equal to 50% of the aggregate commitments,and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the agreements. Subsequent to June 26, 2013, the OperatingPartnership is obligated to pay a facility fee at a rate based on the credit rating level of the Company, currently 0.20%, and a fronting fee at a rate of 0.125%per year with respect to each letter of credit issued under the agreements. The loan agreements contain customary representations, financial and othercovenants. The Operating Partnership’s ability to borrow under the loan agreements is subject to its compliance with financial covenants and otherrestrictions on an ongoing basis. The Operating Partnership was in compliance with such covenants at December 31, 2013. As of December 31, 2013, $200.0 million and $56.9 million were outstanding under the term loan and credit facility, respectively. The average interest rateson the term loan and credit facility during the twelve months ended December 31, 2013 were 1.6% and 1.5%, respectively. The Company had $293.1 millionavailable to borrow under the credit facility at December 31, 2013. The Company had no available borrowings under the term loan at December 31, 2013. Mortgage Notes Payable In addition, in connection with the acquisition of two properties, the Company assumed two mortgages with an unpaid aggregate principal amount as ofDecember 31, 2013 of approximately $58.2 million. Further, during the year ended December 31, 2013, the Company repaid the outstanding principalbalance on the Gateway Village I and Gateway Village II mortgage note payables, totaling $13.4 million, without penalty, in accordance with theprepayment provisions of the notes. ATM Equity Offering During the year ended December 31, 2011, the Company entered into an ATM Equity OfferingSM Sales Agreement (“sales agreement”) with Merrill Lynch,Pierce, Fenner & Smith Incorporated to sell shares of the Company’s common stock, par value $0.0001 per share, having aggregate sales proceeds of $50.0million from time to time, through an “at the market” equity offering program under which Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as salesagent and/or principal (“agent”). During the year ended December 31, 2012 and 2011 the Company sold 3,051,445 and 131,800 shares respectively, underthe sales agreement, which resulted in gross proceeds of approximately $37.8 million and $1.5 million, respectively and commissions of approximately$657,700 and $29,900, respectively, paid to the agent. During the year ended December 31, 2013, the Company did not sell any shares under the salesagreement. Through December 31, 2013, the Company has sold a total of 3,183,245 shares under the sales agreement, which resulted in gross proceeds ofapproximately $39.3 million and commissions of approximately $687,600 paid to the agent. The Company plans to finance future acquisitions through a combination of cash, borrowings under its credit facilities, the assumption of existing mortgagedebt, and equity and debt offerings, including possible exercises by the holders of the Company’s warrants. Business Segments The Company’s primary business is the ownership, management, and redevelopment of retail real estate properties. The Company reviews operating andfinancing information for each property on an individual basis and therefore, each property represents an individual operating segment. The Companyevaluates financial performance using property operating income, defined as operating revenues (base rent and recoveries from tenants), less property andrelated expenses (property operating expenses and property taxes). No individual property constitutes more than 10% of the Company’s revenues or propertyoperating income, and the Company has no operations outside of the United States of America. Therefore, the Company has aggregated the properties intoone reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operatedusing consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes. 9 Regulation The following discussion describes certain material U.S. federal laws and regulations that may affect the Company’s operations and those of itstenants. However, the discussion does not address state laws and regulations, except as otherwise indicated. These state laws and regulations, like the U.S.federal laws and regulations, could affect the Company’s operations and those of its tenants. Generally, real estate properties are subject to various laws, ordinances and regulations. Changes in any of these laws or regulations, such as theComprehensive Environmental Response and Compensation Liability Act, increase the potential liability for environmental conditions or circumstancesexisting or created by tenants or others on the properties. In addition, laws affecting development, construction, operation, upkeep, safety and taxationrequirements may result in significant unanticipated expenditures, loss of real estate property sites or other impairments, which would adversely affect itscash flows from operating activities. Under the Americans with Disabilities Act of 1990 (the “Americans with Disabilities Act”) all places of public accommodation are required to meet certainU.S. federal requirements related to access and use by disabled persons. A number of additional U.S. federal, state and local laws also exist that may requiremodifications to properties, or restrict certain further renovations thereof, with respect to access thereto by disabled persons. Noncompliance with theAmericans with Disabilities Act could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correctany non-complying feature and in substantial capital expenditures. To the extent the Company’s properties are not in compliance, the Company may incuradditional costs to comply with the Americans with Disabilities Act. Property management activities are often subject to state real estate brokerage laws and regulations as determined by the particular real estate commission foreach state. Environmental Matters Pursuant to U.S. federal, state and local environmental laws and regulations, a current or previous owner or operator of real property may be required toinvestigate, remove and/or remediate a release of hazardous substances or other regulated materials at or emanating from such property. Further, under certaincircumstances, such owners or operators of real property may be held liable for property damage, personal injury and/or natural resource damage resultingfrom or arising in connection with such releases. Certain of these laws have been interpreted to be joint and several unless the harm is divisible and there is areasonable basis for allocation of responsibility. The failure to properly remediate the property may also adversely affect the owner’s ability to lease, sell orrent the property or to borrow funds using the property as collateral. In connection with the ownership, operation and management of the Company’s current properties and any properties that it may acquire and/or manage inthe future, the Company could be legally responsible for environmental liabilities or costs relating to a release of hazardous substances or other regulatedmaterials at or emanating from such property. In order to assess the potential for such liability, the Company conducts an environmental assessment of eachproperty prior to acquisition and manages its properties in accordance with environmental laws while it owns or operates them. All of its leases contain acomprehensive environmental provision that requires tenants to conduct all activities in compliance with environmental laws and to indemnify the owner forany harm caused by the failure to do so. In addition, the Company has engaged qualified, reputable and adequately insured environmental consulting firmsto perform environmental site assessments of its properties and is not aware of any environmental issues that are expected to materially impact the operationsof any property. Competition The Company believes that competition for the acquisition, operation and development of retail properties is highly fragmented. The Company competeswith numerous owners, operators and developers for acquisitions and development of retail properties, including institutional investors, other REITs andother owner-operators of necessity-based community and neighborhood shopping centers, primarily anchored by supermarkets and drugstores, some of whichown or may in the future own properties similar to the Company’s in the same markets in which its properties are located. The Company also facescompetition in leasing available space to prospective tenants at its properties. Economic conditions have caused a greater than normal amount of space to beavailable for lease generally and in the markets in which the Company’s properties are located. The actual competition for tenants varies depending upon thecharacteristics of each local market (including current economic conditions) in which the Company owns and manages property. The Company believes thatthe principal competitive factors in attracting tenants in its market areas are location, demographics, price, the presence of anchor stores and the appearanceof properties. 10 Many of the Company’s competitors are substantially larger and have considerably greater financial, marketing and other resources than the Company. Otherentities may raise significant amounts of capital, and may have investment objectives that overlap with those of the Company, which may create additionalcompetition for opportunities to acquire assets. In the future, competition from these entities may reduce the number of suitable investment opportunitiesoffered to the Company or increase the bargaining power of property owners seeking to sell. Further, as a result of their greater resources, such entities mayhave more flexibility than the Company does in their ability to offer rental concessions to attract tenants. If the Company’s competitors offer space at rentalrates below current market rates, or below the rental rates the Company currently charges its tenants, the Company may lose potential tenants and it may bepressured to reduce its rental rates below those it currently charges in order to retain tenants when its tenants’ leases expire. Employees As of December 31, 2013, the Company had 61 employees, including four executive officers, one of whom is also a member of its board of directors. Available Information The Company files its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports with theSecurities and Exchange Commission (the “SEC”). You may obtain copies of these documents by visiting the SEC’s Public Reference Room at 100 F StreetN.E., Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website (www.sec.gov) that contains reports, proxy andinformation statements, and other information regarding issuers that file electronically with the SEC. The Company’s website is www.roireit.net. TheCompany’s reports on Forms 10-K, 10-Q and 8-K, and all amendments to those reports are available free of charge on its Website as soon as reasonablypracticable after the reports and amendments are electronically filed with or furnished to the SEC. The contents of the Company’s website are notincorporated by reference herein.Item 1A. Risk Factors Risks Related to the Company’s Business and Operations There are risks relating to investments in real estate. Real property investments are subject to varying degrees of risk. Real estate values are affected by a number of factors, including: changes in the generaleconomic climate, local conditions (such as an oversupply of space or a reduction in demand for real estate in an area), the quality and philosophy ofmanagement, competition from other available space, the ability of the owner to provide adequate maintenance and insurance and to control variableoperating costs. Shopping centers, in particular, may be affected by changing perceptions of retailers or shoppers regarding the safety, convenience andattractiveness of the shopping center, increasing consumer purchases through online retail websites and catalogs, the ongoing consolidation in the retailsector and by the overall climate for the retail industry generally. Real estate values are also affected by such factors as government regulations, interest ratelevels, the availability of financing and potential liability under, and changes in, environmental, zoning, tax and other laws. A significant portion of theCompany’s income is derived from rental income from real property. The Company’s income, cash flow, results of operations, financial condition, liquidityand ability to service its debt obligations could be materially and adversely affected if a significant number of its tenants were unable to meet theirobligations, or if it were unable to lease on economically favorable terms a significant amount of space in its properties. In the event of default by a tenant,the Company may experience delays in enforcing, and incur substantial costs to enforce, its rights as a landlord. In addition, certain significant expendituresassociated with each equity investment (such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced when circumstancescause a reduction in income from the investment. The Company operates in a highly competitive market and competition may limit its ability to acquire desirable assets and to attract and retain tenants. The Company operates in a highly competitive market. The Company’s profitability depends, in large part, on its ability to acquire its assets at favorableprices and on trends impacting the retail industry in general, national, regional and local economic conditions, financial condition and operating results ofcurrent and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations,legislation and population trends. Many of the Company’s competitors are substantially larger and have considerably greater financial, marketing and otherresources than it does. Other entities may raise significant amounts of capital, and may have investment objectives that overlap with the Company’s. Inaddition, the properties that the Company acquires may face competition from similar properties in the same market. At the time of the commencement of theCompany’s operations, conditions in the capital markets and the credit markets reduced competitors’ ability to finance acquisitions. As access to capital andcredit have improved and the number of competitors operating in the Company’s markets have increased, the Company has faced increased competition foracquisition opportunities. This competition may create additional competition for opportunities to acquire assets and to attract and retain tenants. 11 The Company may change any of its strategies, policies or procedures without stockholder consent, which could materially and adversely affect itsbusiness. The Company may change any of its strategies, policies or procedures with respect to acquisitions, asset allocation, growth, operations, indebtedness,financing strategy and distributions, including those related to maintaining its REIT qualification, at any time without the consent of its stockholders, whichcould result in making acquisitions that are different from, and possibly riskier than, the types of acquisitions described in this Annual Report on Form 10-K. A change in the Company’s strategy may increase its exposure to real estate market fluctuations, financing risk, default risk and interest raterisk. Furthermore, a change in the Company’s asset allocation could result in the Company making acquisitions in asset categories different from thosedescribed in this Annual Report on Form 10-K. These changes could materially and adversely affect the Company’s income, cash flow, results of operations,financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends andother distributions to its securityholders. The Company’s directors are subject to potential conflicts of interest. The Company’s executive officers and directors face conflicts of interest. Except for Messrs. Tanz, Haines and Schoebel, none of the Company’s executiveofficers or directors are required to commit his full time to its affairs and, accordingly, they may have conflicts of interest in allocating management timeamong various business activities. In addition, except for Mr. Tanz, each of the Company’s directors (including the Company’s non-Executive Chairman) isengaged in several other business endeavors. In the course of their other business activities, the Company’s directors may become aware of investment andbusiness opportunities that may be appropriate for presentation to the Company as well as the other entities with which they are affiliated. They may haveconflicts of interest in determining to which entity a particular business opportunity should be presented. As a result of multiple business affiliations, the Company’s non-management directors may have legal obligations relating to presenting opportunities toacquire one or more properties, portfolios or real estate-related debt investments to other entities. The Company’s non-management directors (including theCompany’s non-executive Chairman) may present such opportunities to the other entities to which they owe pre-existing fiduciary duties before presentingsuch opportunities to the Company. In addition, conflicts of interest may arise when the Company’s board of directors evaluates a particular opportunity. Capital markets and economic conditions can materially affect the Company’s financial condition, its results of operations and the value of its assets. There are many factors that can affect the value of the Company’s assets, including the state of the capital markets and economy. The recent economicdownturn negatively affected consumer spending and retail sales, which adversely impacted the performance and value of retail properties in most regions inthe United States. In addition, loans backed by real estate were increasingly difficult to obtain and that difficulty, together with a tightening of lendingpolicies, resulted in a significant contraction in the amount of debt available to fund retail properties. Although the Company has recently seen a gradualimprovement in the credit and real estate markets, any reduction in available financing may materially and adversely affect its ability to achieve its financialobjectives. Concern about the stability of the markets generally may limit the Company’s ability and the ability of its tenants to timely refinance maturingliabilities and access the capital markets to meet liquidity needs. Although the Company will factor in these conditions in acquiring its assets, its long termsuccess depends in part on improving economic conditions and the eventual return of a stable and dependable financing market for retail real estate. Ifmarket conditions do not continue to improve, the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service itsdebt obligations, the market price of its common stock or warrants and its ability to pay dividends and other distributions to its securityholders could bematerially and adversely affected. Bankruptcy or insolvency of tenants may decrease the Company’s revenues and available cash. In the case of many retail properties, the bankruptcy or insolvency of a major tenant could cause the Company to suffer lower revenues and operationaldifficulties, and could allow other tenants to exercise so-called “kick-out” clauses in their leases and terminate their lease or reduce their rents prior to thenormal expiration of their lease terms. As a result, the bankruptcy or insolvency of major tenants could materially and adversely affect the Company’sincome, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock orwarrants and its ability to pay dividends and other distributions to its securityholders. Inflation or deflation may materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, the abilityto service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and distributions to its securityholders. Increased inflation could have a pronounced negative impact on the Company’s property operating expenses and general and administrative expenses, asthese costs could increase at a rate higher than the Company’s rents. Inflation could also have an adverse effect on consumer spending which could impactthe Company’s tenants’ sales and, in turn, the Company’s percentage rents, where applicable, and the willingness and ability of tenants to enter into or renewleases and/or honor their obligations under existing leases. Conversely, deflation could lead to downward pressure on rents and other sources of income. 12 Compliance or failure to comply with safety regulations and requirements could result in substantial costs. The Company’s properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. Ifthe Company fails to comply with these requirements, it could incur fines or private damage awards. The Company does not know whether compliance withthe requirements will require significant unanticipated expenditures that could affect its income, cash flow, results of operations, financial condition,liquidity, prospects and ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and otherdistributions to its securityholders. The Company expects to acquire additional properties and this may create risks. The Company expects to acquire additional properties consistent with its investment strategies. The Company may not, however, succeed in consummatingdesired acquisitions on time or within budget. In addition, the Company may face competition in pursuing acquisition opportunities, which could result inincreased acquisition costs. When the Company does pursue a project or acquisition, it may not succeed in leasing newly acquired properties at rentssufficient to cover its costs of acquisition. Difficulties in integrating acquisitions may prove costly or time-consuming and could result in poorer thananticipated performance. The Company may also abandon acquisition opportunities that it has begun pursuing and consequently fail to recover expensesalready incurred. Furthermore, acquisitions of new properties will expose the Company to the liabilities of those properties, including, for example,liabilities for clean-up of disclosed or undisclosed environmental contamination, claims by persons in respect of events transpiring or conditions existingbefore the Company’s acquisition and claims for indemnification by general partners, directors, officers and others indemnified by the former owners ofproperties. Factors affecting the general retail environment could adversely affect the financial condition of the Company’s retail tenants and the willingness ofretailers to lease space in its shopping centers, and in turn, materially and adversely affect the Company. The Company’s properties are focused on the retail real estate market. This means that the performance of the Company’s properties will be impacted bygeneral retail market conditions, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition fromonline retail websites and catalog companies. These conditions could adversely affect the financial condition of the Company’s retail tenants and thewillingness and ability of retailers to lease space, or renew existing leases, in the Company’s shopping centers and to honor their obligations under existingleases, and in turn, materially and adversely affect the Company. The Company’s growth depends on external sources of capital, which may not be available in the future. In order to maintain its qualification as a REIT, the Company is required under the Internal Revenue Code of 1986, as amended (the “Code”), to annuallydistribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. After theCompany invests its cash on hand, it expects to depend primarily on its credit facilities and other external financing to fund the growth of its business(including debt and equity financings). The Company’s access to debt or equity financing depends on the willingness of third parties to lend or make equityinvestments and on conditions in the capital markets generally. As a result of changing economic conditions, the Company may be limited in its ability toobtain additional financing or to refinance existing debt maturities on favorable terms or at all and there can be no assurances as to when financingconditions will improve. The Company does not have a formal policy limiting the amount of debt it may incur and its board of directors may change its leverage policy withoutstockholder consent, which could result in a different risk profile. Although the Company’s Charter and Bylaws do not limit the amount of indebtedness the Company can incur, the Company’s policy is to employ prudentamounts of leverage and use debt as a means of providing additional funds for the acquisition of its assets and the diversification of its portfolio. The amountof leverage the Company will deploy for particular investments in its assets will depend upon its management team’s assessment of a variety of factors, whichmay include the anticipated liquidity and price volatility of the assets in its investment portfolio, the potential for losses, the availability and cost offinancing the assets, the Company’s opinion of the creditworthiness of its financing counterparties, the health of the U.S. economy and commercial mortgagemarkets, the Company’s outlook for the level, slope and volatility of interest rates, the credit quality of the tenants occupying space at the Company’sproperties, and the need for the Company to comply with financial covenants contained in the Company’s credit facilities. The Company’s board of directorsmay change its leverage policies at any time without the consent of its stockholders, which could result in an investment portfolio with a different riskprofile. The Company could be adversely affected if it or any of its subsidiaries are required to register as an investment company under the Investment CompanyAct of 1940 as amended (the “1940 Act”). The Company conducts its operations so that neither it, nor the Operating Partnership nor any of the Company’s other subsidiaries, is required to register asinvestment companies under the 1940 Act. If the Company, the Operating Partnership or the Company’s other subsidiaries are required to register as aninvestment company but fail to do so, the unregistered entity would be prohibited from engaging in certain business, and criminal and civil actions could bebrought against such entity. In addition, the contracts of such entity would be unenforceable unless a court required enforcement, and a court could appointa receiver to take control of the entity and liquidate its business. 13 Real estate investments’ value and income fluctuate due to conditions in the general economy and the real estate business, which may materially andadversely affect the Company’s ability to service its debt and expenses. The value of real estate fluctuates depending on conditions in the general and local economy and the real estate business. These conditions may also limitthe Company’s revenues and available cash. The rents the Company receives and the occupancy levels at its properties may decline as a result of adversechanges in conditions in the general economy and the real estate business. If rental revenues and/or occupancy levels decline, the Company generally wouldexpect to have less cash available to pay indebtedness and for distribution to its securityholders. In addition, some of the Company’s major expenses,including mortgage payments, real estate taxes and maintenance costs, generally do not decline when the related rents decline. The lack of liquidity of the Company’s assets could materially and adversely affect the Company’s income, cash flow, results of operations, financialcondition, liquidity, the ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and otherdistributions to its securityholders, and could materially and adversely affect the Company’s ability to value and sell its assets. Real estate investments are relatively difficult to buy and sell quickly. As a result, the Company expects many of its investments will be illiquid and if it isrequired to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the value at which it had previously recorded itsinvestments. The Company depends on leasing space to tenants on economically favorable terms and collecting rent from tenants, some of whom may not be able topay. The Company’s financial results depend significantly on leasing space in its properties to tenants on economically favorable terms. In addition, as asubstantial majority of the Company’s revenue comes from renting of real property, the Company’s income, cash flow, results of operations, financialcondition, liquidity, the ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and otherdistributions to its securityholders could be materially and adversely affected if a significant number of its tenants cannot pay their rent or if the Company isnot able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, the Company may not be able to enforce its rights as landlordwithout delays and may incur substantial legal costs. Some of the Company’s properties depend on anchor stores or major tenants to attract shoppers and could be materially and adversely affected by the lossof or a store closure by one or more of these tenants. The Company’s shopping centers are primarily anchored by national and regional supermarkets and drug stores. The value of the retail properties theCompany acquires could be materially and adversely affected if these tenants fail to comply with their contractual obligations, seek concessions in order tocontinue operations or cease their operations. Adverse economic conditions may result in the closure of existing stores by tenants which may result inincreased vacancies at the Company’s properties. If there are periods of significant vacancies for the Company’s properties they could materially andadversely impact the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the marketprice of its common stock or warrants and its ability to pay dividends and other distributions to its securityholders. Loss of revenues from major tenants could reduce the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability toservice its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and other distributions to its securityholders. The Company derives significant revenues from anchor tenants such as Safeway, Inc., Kroger and Rite Aid Pharmacy. As of December 31, 2013, these tenantsare the Company’s three largest tenants and accounted for 5.0%, 3.3% and 2.6% respectively, of its annualized base rent on a pro-rata basis. The Company’sincome, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock orwarrants and its ability to pay dividends and other distributions to its securityholders could be materially and adversely affected by the loss of revenues inthe event a major tenant becomes bankrupt or insolvent, experiences a downturn in its business, materially defaults on its leases, does not renew its leases asthey expire, or renews at lower rental rates. The Company’s Common Area Maintenance (“CAM”) contributions may not allow it to recover the majority of its operating expenses from tenants. CAM costs typically include allocable energy costs, repairs, maintenance and capital improvements to common areas, janitorial services, administrative,property and liability insurance costs and security costs. The Company may acquire properties with leases with variable CAM provisions that adjust toreflect inflationary increases or leases with a fixed CAM payment methodology which fixes its tenants’ CAM contributions. With respect to both variableand fixed payment methodologies, the amount of CAM charges the Company bills to its tenants may not allow it to recover or pass on all these operatingexpenses to tenants, which may reduce operating cash flow from its properties. Such a reduction could result in a material and adverse effect on theCompany’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its commonstock or warrants and its ability to pay dividends and other distributions to its securityholders. 14 The Company may incur costs to comply with environmental laws. The Company’s operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment,including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operatorof real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liableto a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties becauseof the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused therelease. The presence of contamination or the failure to remediate contamination may impair the Company’s ability to sell or lease real estate or to borrowusing the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement orremoval of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure toasbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (“PCBs”) andunderground storage tanks are also regulated by federal and state laws. The Company is also subject to risks associated with human exposure to chemical orbiological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other healtheffects and symptoms in susceptible individuals. The Company could incur fines for environmental compliance and be held liable for the costs of remedialaction with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure tocontamination at or from its properties. Identification of compliance concerns or undiscovered areas of contamination, changes in the extent or known scopeof contamination, discovery of additional sites, human exposure to the contamination or changes in cleanup or compliance requirements could result insignificant costs to the Company. The Company faces risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions ofits information technology (IT) networks and related systems. The Company faces risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses,attachments to e-mails, persons inside the Company or persons with access to systems inside the Company, and other significant disruptions of theCompany’s IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including bycomputer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks andintrusions from around the world have increased. The Company’s IT networks and related systems are essential to the operation of its business and its abilityto perform day-to-day operations (including managing its building systems), and, in some cases, may be critical to the operations of certain of itstenants. There can be no assurance that the Company’s efforts to maintain the security and integrity of these types of IT networks and related systems will beeffective or that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involvingthe Company’s IT networks and related systems could materially and adversely impact the Company’s income, cash flow, results of operations, financialcondition, liquidity, the ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and otherdistributions to its securityholders. A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could impair the Company’s assets and have a material andadverse effect on its income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of itscommon stock or warrants and its ability to pay dividends and other distributions to its securityholders. The Company believes the risks associated with its business will be more severe during periods of economic slowdown or recession if these periods areaccompanied by declining real estate values. Because the Company has only recently acquired assets, it is not burdened by the losses experienced by certainof its competitors as a result of the recent economic downturn and declines in real estate values with respect to properties acquired before the economicdownturn. Although it will take current economic conditions into account in acquiring its assets, the Company’s long term success depends in part onimproving economic conditions and the eventual return of a stable and dependable financing market for retail real estate. If the current challengingeconomic conditions persist or worsen, the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debtobligations, the market price of its common stock or warrants and its ability to pay dividends and other distributions to its securityholders, could bematerially and adversely affected. Loss of key personnel could harm the Company’s operations. The Company is dependent on the efforts of certain key personnel of its senior management team. While the Company has employment contracts with eachof Messrs. Tanz, Haines and Schoebel, the loss of the services of any of these individuals could harm the Company’s operations and have a material andadverse effect on its income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of itscommon stock or warrants and its ability to pay dividends and other distributions to its securityholders. 15 Under their employment agreements, certain members of the Company’s senior management team will have certain rights to terminate their employmentand receive severance in connection with a change in control of the Company. The Company’s employment agreements with each of Messrs. Tanz, Haines and Schoebel, which provide that, upon termination of his employment (i) by theapplicable officer within 12 months following the occurrence of a change in control (as defined in the employment agreement), (ii) by the Company withoutcause (as defined in the employment agreement), (iii) by the applicable officer for good reason (as defined in the employment agreement), (iv) by non-renewalof the applicable officer’s employment agreement or (v) by reason of the applicable officer’s death or disability (as defined in the employment agreement),such executive officers would be entitled to certain termination or severance payments made by the Company (which may include a lump sum payment equalto defined percentages of annual salary and prior years’ average bonuses, paid in accordance with the terms and conditions of the respective agreement). Inaddition, the vesting of all his outstanding unvested equity-based incentives and awards would accelerate. These provisions make it costly to terminate theiremployment and could delay or prevent a transaction or a change in control of the Company that might involve a premium paid for shares of its commonstock or otherwise be in the best interests of its stockholders. Joint venture investments could be materially and adversely affected by the Company’s lack of sole decision-making authority or reliance on a jointventure partner’s financial condition. The Company may enter into joint venture arrangements in the future. Investments in joint ventures involve risks that are not otherwise present withproperties which the Company owns entirely. In this investment, the Company does not have exclusive control or sole decision-making authority over thedevelopment, financing, leasing, management and other aspects of these investments. As a result, the joint venture partner might have economic or businessinterests or goals that are inconsistent with the Company’s goals or interests, take action contrary to the Company’s interests or otherwise impede theCompany’s objectives. The investment involves risks and uncertainties, including the risk of the joint venture partner failing to provide capital and fulfill itsobligations, which may result in certain liabilities to the Company for guarantees and other commitments, the risk of conflicts arising between the Companyand its partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring such businessarrangements. The joint venture partner also might become insolvent or bankrupt, which may result in significant losses to the Company. Further, althoughthe Company may own a controlling interest in a joint venture and may have authority over major decisions such as the sale or refinancing of investmentproperties, the Company may have fiduciary duties to the joint venture partners or the joint venture itself that may cause, or require, it to take or refrain fromtaking actions that it would otherwise take if it owned the investment properties outright. Uninsured losses or a loss in excess of insured limits could materially and adversely affect the Company. The Company carries comprehensive general liability, fire, extended coverage, loss of rent insurance, and environmental liability where applicable on itsproperties, with policy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leasesdo not provide for abatement of rent under any circumstances, the Company generally does not maintain loss of rent insurance. In addition, there are certaintypes of losses, such as losses resulting from wars, terrorism or acts of God that generally are not insured because they are either uninsurable or noteconomically insurable. Should an uninsured loss or a loss in excess of insured limits occur, the Company could lose capital invested in a property, as wellas the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to theproperty. Any loss of these types could materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity,prospects and ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and other distributionsto its securityholders. The Company could be materially and adversely affected by poor market conditions where its properties are geographically concentrated. The Company’s performance depends on the economic conditions in markets in which its properties are concentrated. During the year ended December 31,2013, the Company’s properties in California, Oregon and Washington accounted for 66%, 13% and 21%, respectively, of its consolidated propertyoperating income. The Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, themarket price of its common stock or warrants and its ability to pay dividends and other distributions to its securityholders could be materially and adverselyaffected by this geographic concentration if market conditions, such as an oversupply of space or a reduction in demand for real estate in an area, deterioratein California, Oregon and Washington. Risks Related to Financing The Company’s credit facilities and unsecured senior notes contain restrictive covenants relating to its operations, which could limit the Company’s abilityto respond to changing market conditions and its ability to pay dividends and other distributions to its securityholders. The Company’s credit facilities and unsecured senior notes contain restrictive covenants which are described in “Management’s Discussion and Analysis ofFinancial Conditions and Results of Operations-Liquidity and Capital Resources”. These or other limitations, including those that may apply to futurecompany borrowings, may materially and adversely affect the Company’s flexibility and its ability to achieve its operating plans and could result in theCompany being limited in the amount of dividends and distributions it would be permitted to pay to its securityholders. 16 In addition, failure to comply with these covenants could cause a default under the applicable debt instrument, and the Company may then be required torepay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to the Company, or may beavailable only on unattractive terms. Certain of the Company’s mortgage financing arrangements and other indebtedness contain provisions that could limit the Company’s operatingflexibility. The Company’s existing mortgage financing contains, and future mortgage financing may in the future contain, customary covenants and provisions thatlimit the Company’s ability to pre-pay such mortgages before their scheduled maturity date or to transfer the underlying asset. Additionally, the Company’sability to satisfy prospective mortgage lenders’ insurance requirements may be materially and adversely affected if lenders generally insist upon greaterinsurance coverage against certain risks than is available to the Company in the marketplace or on commercially reasonable terms. In addition, because amortgage is secured by a lien on the underlying real property, mortgage defaults subject the Company to the risk of losing the property through foreclosure. The Company’s access to financing may be limited and thus its ability to potentially enhance its returns may be materially and adversely affected. The Company intends, when appropriate, to employ prudent amounts of leverage and use debt as a means of providing additional funds for the acquisition ofits assets and the diversification of its portfolio. To the extent market conditions improve and markets stabilize over time, the Company expects to increaseits borrowing levels. As of December 31, 2013, the Company’s outstanding mortgage indebtedness was approximately $113.4 million, and the Companymay incur significant additional debt to finance future acquisition and development activities. The Company’s credit facilities consist of a $350.0 millionunsecured revolving credit facility and a $200.0 million term loan, of which $56.9 million and $200.0 million, respectively, were outstanding as ofDecember 31, 2013.In addition, the Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2013 which were fully andunconditionally guaranteed by ROIC. The Company’s access to financing will depend upon a number of factors, over which it has little or no control, including: · general market conditions; · the market’s view of the quality of the Company’s assets; · the market’s perception of the Company’s growth potential; · the Company’s eligibility to participate in and access capital from programs established by the U.S. government; · the Company’s current and potential future earnings and cash distributions; and · the market price of the shares of the Company’s common stock. Although the Company has recently seen an improvement in the credit markets and real estate, any reduction in available financing may materially andadversely affect its ability to achieve its financial objectives. Concern about the stability of the markets generally could adversely affect one or more privatelenders and could cause one or more private lenders to be unwilling or unable to provide the Company with financing or to increase the costs of thatfinancing. In addition, if regulatory capital requirements imposed on the Company’s private lenders change, they may be required to limit, or increase thecost of, financing they provide to the Company. In general, this could potentially increase the Company’s financing costs and reduce its liquidity or requireit to sell assets at an inopportune time or price. During times when interest rates on mortgage loans are high or financing is otherwise unavailable on a timely basis, the Company has and may continue topurchase certain properties for cash. Consequently, depending on market conditions at the relevant time, the Company may have to rely more heavily onadditional equity issuances, which may be dilutive to its stockholders, or on less efficient forms of debt financing that require a larger portion of its cash flowfrom operations, thereby reducing funds available for its operations, future business opportunities, cash distributions to its securityholders and otherpurposes. The Company cannot assure you that it will have access to such equity or debt capital on favorable terms (including, without limitation, cost andterm) at the desired times, or at all, which may cause it to curtail its asset acquisition activities and/or dispose of assets, which could materially and adverselyaffect its income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its commonstock or warrants and its ability to pay dividends and other distributions to its securityholders. 17 Interest rate fluctuations could reduce the income on the Company’s investments and increase its financing costs. Changes in interest rates will affect the Company’s operating results as such changes will affect the interest it receives on any floating rate interest bearinginvestments it may then hold and the financing cost of its floating rate debt, as well as its interest rate swaps that it utilizes for hedging purposes. There canbe no guarantee that the financial condition of the counterparties with respect to the Company’s interest rate swaps will enable them to fulfill theirobligations under these agreements. These risks could materially and adversely affect the Company’s income, cash flow, results of operations, financialcondition, liquidity, the ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and otherdistributions to its securityholders. Financing arrangements that the Company may use to finance its assets may require it to provide additional collateral or pay down debt. The Company, when appropriate, uses traditional forms of financing including secured credit facilities. In the event the Company utilizes such financingarrangements, they would involve the risk that the market value of its assets which are secured may decline in value, in which case the lender may, inconnection with a refinancing of the credit facility, require it to provide additional collateral, provide additional equity, or to repay all or a portion of thefunds advanced. The Company may not have the funds available to repay its debt or provide additional equity at that time, which would likely result indefaults unless it is able to raise the funds from alternative sources, which it may not be able to achieve on favorable terms or at all. Providing additionalcollateral or equity would reduce the Company’s liquidity and limit its ability to leverage its assets. If the Company cannot meet these requirements, thelender could accelerate the Company’s indebtedness, increase the interest rate on advanced funds and terminate its ability to borrow funds from them, whichcould materially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debtobligations, the market price of its common stock or warrants and its ability to pay dividends and other distributions to its securityholders. The providers ofcredit facilities may also require the Company to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position. Asa result, the Company may not be able to leverage its assets as fully as it would choose which could reduce its return on assets. There can be no assurancethat the Company will be able to utilize such arrangements on favorable terms, or at all.A downgrade in the Company’s or the Operating Partnership’s credit ratings could materially adversely affect the Company’s business and financialcondition. The credit ratings assigned to the Company’s obligations or to the debt securities of the Operating Partnership could change based upon, among other things,the Company’s and the Operating Partnership’s results of operations and financial condition. These ratings are subject to ongoing evaluation by credit ratingagencies, and there can be no assurance that any rating will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstanceswarrant. Moreover, these credit ratings do not apply to the Company’s common stock and are not recommendations to buy, sell or hold any othersecurities. If any of the credit rating agencies that have rated the obligations of the Company or the debt securities of the Operating Partnership downgradesor lowers its credit ratings, or if any credit rating agency indicates that it has placed any such rating on a so-called “watch list” for a possible downgrading orlowering or otherwise indicates that its outlook for that rating is negative, it could have a material adverse effect on the Company’s costs and availability ofcapital, which could in turn materially and adversely impact the Company’s income, cash flow, results of operations, financial condition, liquidity, theability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and other distributions to itssecurityholders. Risks Related to the Company’s Organization and Structure The Company depends on dividends and distributions from its direct and indirect subsidiaries. The creditors and any preferred equity holders of thesesubsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to the Company. Substantially all of the Company’s assets are held through the Operating Partnership, which holds substantially all of the Company’s properties and assetsthrough subsidiaries. The Operating Partnership’s cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of theCompany’s cash flow is dependent on cash distributions to it by the Operating Partnership. The creditors and any preferred equity holders of the Company’sdirect and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made bythat subsidiary to its common equity holders. Thus, the Operating Partnership’s ability to make distributions to the Company and therefore the Company’sability to make distributions to its stockholders will depend on its subsidiaries’ ability first to satisfy their obligations to creditors and any preferred equityholders and then to make distributions to the Operating Partnership. In addition, the Company’s participation in any distribution of the assets of any of its direct or indirect subsidiaries upon the liquidation, reorganization orinsolvency, is only after the claims of the creditors, including the holders of the unsecured senior notes and trade creditors, and preferred equity holders aresatisfied. Certain provisions of Maryland law may limit the ability of a third party to acquire control of the Company. Certain provisions of the Maryland General Corporation Law, or the MGCL, may have the effect of delaying, deferring or preventing a transaction or achange in control of the Company that might involve a premium price for holders of the Company’s common stock or otherwise be in their best interests,including: 18 · “business combination” provisions that, subject to certain limitations, prohibit certain business combinations between the Company andan “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of the Company’sshares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, andthereafter impose special minimum price provisions and special stockholder voting requirements on these combinations; and · “control share” provisions that provide that “control shares” of the Company (defined as shares which, when aggregated with other sharescontrolled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors)acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have novoting rights except to the extent approved by the Company’s stockholders by the affirmative vote of at least two-thirds of all the votesentitled to be cast on the matter, excluding all interested shares. However, the provisions of the MGCL relating to business combinations do not apply to business combinations that are approved or exempted by theCompany’s board of directors prior to the time that the interested stockholder becomes an interested stockholder. In addition, the Company’s Bylaws containa provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of the Company’s common stock. There canbe no assurance that such exemption will not be amended or eliminated at any time in the future. Additionally, Title 3, Subtitle 8 of the MGCL permits the Company’s board of directors, without stockholder approval and regardless of what is currentlyprovided in the Company’s charter or bylaws, to take certain actions that may have the effect of delaying, deferring or preventing a transaction or a change incontrol of the Company that might involve a premium to the market price of its common stock or otherwise be in the stockholders’ best interests. Theseprovisions of the MGCL permit the Company, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contraryprovision in the charter or bylaws, to adopt: · a classified board; · a two-thirds vote requirement for removing a director; · a requirement that the number of directors be fixed only by vote of the board of directors; · a requirement that a vacancy on the board be filled only by the remaining directors in office and (if the board is classified) for theremainder of the full term of the class of directors in which the vacancy occurred; and · a majority requirement for the calling of a stockholder-requested special meeting of stockholders. The authorized but unissued shares of preferred stock and the ownership limitations contained in the Company’s Charter may prevent a change in control. The Charter authorizes the Company to issue authorized but unissued shares of preferred stock. In addition, the Charter provides that the Company’s boardof directors has the power, without stockholder approval, to authorize the Company to issue any authorized but unissued shares of stock, to classify anyunissued shares of preferred stock and to reclassify any unissued shares of common stock or previously-classified shares of preferred stock into other classesor series of stock. As a result, the Company’s board of directors may establish a series of shares of preferred stock or use such preferred stock to create astockholder’s rights plan or so-called “poison pill” that could delay or prevent a transaction or a change in control that might involve a premium price forshares of the Company’s common stock or otherwise be in the best interests of the Company’s stockholders. In addition, the Company’s Charter contains restrictions limiting the ownership and transfer of shares of the Company’s common stock and other outstandingshares of capital stock. The relevant sections of the Company’s Charter provide that, subject to certain exceptions, ownership of shares of the Company’scommon stock by any person is limited to 9.8% by value or by number of shares, whichever is more restrictive, of the outstanding shares of common stock(the common share ownership limit), and no more than 9.8% by value or number of shares, whichever is more restrictive, of the outstanding capital stock (theaggregate share ownership limit). The common share ownership limit and the aggregate share ownership limit are collectively referred to herein as the“ownership limits.” These provisions will restrict the ability of persons to purchase shares in excess of the relevant ownership limits. The Company’s boardof directors has established exemptions from this ownership limit which permit certain institutional investors to hold additional shares of the Company’scommon stock. The Company’s board of directors may in the future, in its sole discretion, establish additional exemptions from this ownership limit. 19 The Company’s failure to qualify as a REIT would subject it to U.S. federal income tax and potentially increased state and local taxes, which wouldreduce the amount of cash available for distribution to its stockholders. The Company intends to operate in a manner that will enable it to continue to qualify as a REIT for U.S. federal income tax purposes. The Company has notrequested and does not intend to request a ruling from the IRS that it will continue to qualify as a REIT. The U.S. federal income tax laws governing REITsare complex. The complexity of these provisions and of the applicable U.S. Treasury Department regulations that have been promulgated under the Code(“Treasury Regulations”) is greater in the case of a REIT that holds assets through a partnership, and judicial and administrative interpretations of the U.S.federal income tax laws governing REIT qualification are limited. To qualify as a REIT, the Company must meet, on an ongoing basis, various testsregarding the nature of its assets and its income, the ownership of its outstanding shares, and the amount of its distributions. Moreover, new legislation, courtdecisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or impossible for the Company to qualify as aREIT. Thus, while the Company believes that it has operated and intends to continue to operate so that it will qualify as a REIT, given the highly complexnature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in the Company’scircumstances, no assurance can be given that it has qualified or will continue to so qualify for any particular year. If the Company fails to qualify as a REIT in any taxable year, and does not qualify for certain statutory relief provisions, it would be required to pay U.S.federal income tax on its taxable income, and distributions to its stockholders would not be deductible by it in determining its taxable income. In such acase, the Company might need to borrow money or sell assets in order to pay its taxes. The Company’s payment of income tax would decrease the amount ofits income available for distribution to its stockholders. Furthermore, if the Company fails to maintain its qualification as a REIT, it would no longer berequired to distribute substantially all of its net taxable income to its stockholders. In addition, unless the Company were eligible for certain statutory reliefprovisions, it would not be eligible to re-elect to qualify as a REIT for four taxable years following the year in which it failed to qualify as a REIT. Failure to make required distributions would subject the Company to tax, which would reduce the cash available for distribution to its stockholders. In order to qualify as a REIT, the Company must distribute to its stockholders each calendar year at least 90% of its REIT taxable income, determined withoutregard to the deduction for dividends paid and excluding net capital gain. To the extent that the Company satisfies the 90% distribution requirement, butdistributes less than 100% of its taxable income, it is subject to U.S. federal corporate income tax on its undistributed income. In addition, the Company willincur a 4% non-deductible excise tax on the amount, if any, by which its distributions in any calendar year are less than a minimum amount specified underU.S. federal income tax laws. The Company intends to distribute its net income to its stockholders in a manner intended to satisfy the REIT 90% distributionrequirement and to avoid the 4% non-deductible excise tax. The Company’s taxable income may exceed its net income as determined by the U.S. generally accepted accounting principles (“GAAP”) because, forexample, realized capital losses will be deducted in determining its GAAP net income, but may not be deductible in computing its taxable income. Inaddition, the Company may invest in assets that generate taxable income in excess of economic income or in advance of the corresponding cash flow fromthe assets. For example, the Company may be required to accrue interest income on mortgage loans or other types of debt securities or interests in debtsecurities before it receives any payments of interest or principal on such assets. Similarly, some of the debt securities that the Company acquires may havebeen issued with original issue discount. The Company will be required to report such original issue discount based on a constant yield method. As a resultof the foregoing, the Company may generate less cash flow than taxable income in a particular year. To the extent that the Company generates such non-cashtaxable income in a taxable year, it may incur corporate income tax and the 4% non-deductible excise tax on that income if it does not distribute suchincome to stockholders in that year. In that event, the Company may be required to use cash reserves, incur debt or liquidate assets at rates or times that itregards as unfavorable or make a taxable distribution of its shares in order to satisfy the REIT 90% distribution requirement and to avoid U.S. federalcorporate income tax and the 4% non-deductible excise tax in that year. To maintain its REIT qualification, the Company may be forced to borrow funds during unfavorable market conditions. In order to qualify as a REIT and avoid the payment of income and excise taxes, the Company may need to borrow funds on a short-term basis, or possibly ona long-term basis, to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. Theseborrowing needs could result from, among other things, a difference in timing between the actual receipt of cash and inclusion of income for U.S. federalincome tax purposes, the effect of non-deductible capital expenditures, the creation of reserves or required debt amortization payments. Even if the Company qualifies as a REIT, it may be required to pay certain taxes. Even if the Company qualifies for taxation as a REIT, it may be subject to certain U.S. federal, state and local taxes on its income and assets, including taxeson any undistributed income, tax on income from some activities conducted as a result of a foreclosure and state or local income, franchise, property andtransfer taxes, including mortgage recording taxes. In addition, the Company holds some of its assets through taxable REIT subsidiary (“TRS”)corporations. Any TRSs or other taxable corporations in which the Company owns an interest will be subject to U.S. federal, state and local corporatetaxes. Payment of these taxes generally would materially and adversely affect the Company’s income, cash flow, results of operations, financial condition,liquidity, the ability to service its debt obligations, the market price of its common stock or warrants and its ability to pay dividends and other distributionsto its securityholders. 20 Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income from regular corporations, which could materially andadversely affect the value of the Company’s shares or warrants. The maximum U.S. federal income tax rate for certain qualified dividends payable to domestic stockholders that are individuals, trusts and estates is20%. Dividends payable by REITs, however, are generally not eligible for the reduced rates and therefore may be subject to a 39.6% maximum U.S. federalincome tax rate on ordinary income. Although the reduced U.S. federal income tax rate applicable to dividend income from regular corporate dividends doesnot adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could causeinvestors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REITcorporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the Company’s shares. The Company may be subject to adverse legislative or regulatory tax changes that could reduce the market price of its shares of common stock orwarrants. At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may bechanged, possibly with retroactive effect. The Company cannot predict if or when any new U.S. federal income tax law, regulation or administrativeinterpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated orbecome effective or whether any such law, regulation or interpretation may take effect retroactively. The Company and its stockholders or warrantholderscould be materially and adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation. In certain circumstances, the Company may be liable for certain tax obligations of certain limited partners. In certain circumstances, the Company may be liable for certain tax obligations of certain limited partners. The Company has entered into tax protectionagreements under which it has agreed to minimize the tax consequences to certain limited partners resulting from the sale or other disposition of certain of theCompany’s assets. The obligation to indemnify such limited partners against adverse tax consequences is expected to continue until 2025. During theperiod of these obligations, the Company’s flexibility to dispose of the related assets will be limited. In addition, the indemnification obligations may besignificant.The Company cannot assure you of its ability to pay distributions in the future. The Company intends to pay quarterly distributions and to make distributions to its stockholders in an amount such that it distributes all or substantially allof its REIT taxable income in each year, subject to certain adjustments. The Company’s ability to pay distributions may be materially and adversely affectedby a number of factors, including the risk factors described in this Annual Report on Form 10-K. All distributions will be made, subject to Maryland law (orDelaware law, in the case of distributions by the Operating Partnership), at the discretion of the Company’s board of directors and will depend on theCompany’s earnings, its financial condition, any debt covenants, maintenance of its REIT qualification and other factors as its board of directors may deemrelevant from time to time. The Company believes that a change in any one of the following factors could materially and adversely affect its income, cashflow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock or warrants and itsability to pay distributions to its securityholders: · the profitability of the assets acquired; · the Company’s ability to make profitable acquisitions; · margin calls or other expenses that reduce the Company’s cash flow; · defaults in the Company’s asset portfolio or decreases in the value of its portfolio; and · the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates. The Company cannot assure you that it will achieve results that will allow it to make a specified level of cash distributions or year-to-year increases in cashdistributions in the future. In addition, some of the Company’s distributions may include a return of capital. 21 The Company’s warrants may be exercised in the future, which would increase the number of shares eligible for future resale in the public market anddilute the ownership of existing stockholders. Outstanding warrants, consisting of 5,942,668 public warrants, to purchase an aggregate of 5,942,668 shares of the Company’s common stock are currentlyexercisable at an exercise price of $12.00 per share. In 2013, NRDC exercised all of their 8,000,000 warrants, exercisable for the Company’s Common Stockat an exercise price of $12.00 per share. NRDC exercised the warrants on a cashless basis and ROIC issued 688,500 shares to NRDC. NRDC is entitled tocertain registration rights with respect to the shares for which its 8,000,000 private placement warrants were exercised. The warrant exercise price may belowered under certain circumstances, including, among others, in the Company’s sole discretion at any time prior to the expiration date of the warrants for aperiod of not less than 20 business days; provided, however, that any such reduction shall be identical in percentage terms among all of the warrants. At anytime our common stock trades at prices in excess of the exercise of the warrants, it is possible that the holders of those warrants may exercise their right topurchase shares of the Company’s common stock. If such events occur, the number of shares of the Company’s common stock outstanding could increase,and the shares issued could be traded on the market. This increase, in turn, could dilute future earnings per share and the ownership of existing stockholders,and could depress the market value of the Company’s common stock. The Company cannot predict the extent to which the dilution, the availability of alarge amount of shares for sale, and the possibility of additional issuances and sales of common stock will negatively affect the trading price of theCompany’s common stock or the liquidity of its common stock. Further, if these warrants are exercised at any time in the future at a price lower than the bookvalue per share of the Company’s common stock, existing stockholders could suffer dilution of their investment, which dilution could increase in the eventthe warrant exercise price is lowered. Additionally, if the Company were to lower the exercise price in the near future, the likelihood of this dilution could beaccelerated. Item 1B. Unresolved Staff Comments None. Item 2. Properties The Company maintains its executive office at 8905 Towne Centre Drive, Suite 108, San Diego, CA 92122. As of December 31, 2013, the Company’s portfolio consisted of 55 retail properties totaling approximately 5.9 million square feet of gross leasable areawhich were approximately 95.0% leased. During the year ended December 31, 2013, the Company leased or renewed a total of 624,000 square feet in itsportfolio. The Company has committed approximately $2.9 million and $612,000 in tenant improvements and leasing commissions, respectively, for thenew leases and renewals that occurred during the year ended December 31, 2013. 22 The following table provides information regarding the Company’s properties as of December 31, 2013. Property, State YearCompleted/Renovated YearAcquired GrossLeasableSq. Feet NumberofTenants % Leased Principal Tenants Northern California Norwood Shopping Center, CA 1993 2010 88,851 15 98.9% Viva Supermarket, Rite Aid Pharmacy, Citi Trends Pleasant Hill Marketplace, CA 1980 2010 69,715 3 100.0% Buy Buy Baby, Office Depot, Basset Furniture Pinole Vista Shopping Center, CA 1981/2012 2011 165,025 29 98.9% Kmart, SaveMart (Lucky) Supermarket(1) Mills Shopping Center, CA 1955/1988 2011 239,081 23 74.2% Warehouse Markets, Dollar Tree Morada Ranch, CA 2006 2011 101,842 19 100.0% Raley’s Supermarket Round Hill Square, NV 1998 2011 115,984 25 83.1% Safeway Supermarket, U.S. Postal Service Country Club Gate Center, CA 1974/2012 2011 109,331 29 93.6% SaveMart (Lucky) Supermarket, Rite Aid Pharmacy Marlin Cove Shopping Center,CA 1972/2001 2012 73,186 23 97.2% 99 Ranch Market Green Valley Station, CA 2006/2007 2012 52,245 11 77.4% CVS Pharmacy The Village at Novato, CA 2006 2012 20,043 3 90.6% Trader Joe’s Santa Teresa Village, CA 1974-79 /2013 2012 125,162 35 97.6% Raley’s (Nob Hill) Supermarket Granada Shopping Center, CA 1962/1994 2013 69,325 15 100.0% SaveMart (Lucky) Supermarket Country Club Village, CA 1995 2013 111,172 18 91.1% Walmart Neighborhood Market, CVS Pharmacy Southern California Paramount Plaza, CA 1966/2010 2009 95,062 13 98.0% Fresh & Easy, Rite Aid Pharmacy, TJ Maxx Santa Ana Downtown Plaza, CA 1987/2010 2010 100,305 27 100.0% Kroger (Food 4 Less) Supermarket, Marshalls Gateway Village, CA 2003/2005 2010 96,959 29 93.2% Sprout’s Farmers Market Sycamore Creek, CA 2008 2010 74,198 18 100.0% Safeway (Vons) Supermarket, CVS Pharmacy (1) Phillips Village, CA 1980/2006 2010 130,872 8 100.0% Fresh Choice Supermarket Claremont Promenade, CA 1982/2011 2010 91,529 24 96.0% Super King Supermarket Marketplace Del Rio, CA 1990/2004 2011 177,136 43 98.3% Stater Brothers Supermarket, Walgreens, AceHardware Renaissance Towne Centre, CA 1991/2011 2011 53,074 29 100.0% CVS Pharmacy Desert Springs Marketplace, CA 1993-94 /2013 2011 105,157 16 97.1% Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy Euclid Plaza, CA 1982/2012 2012 77,044 9 100.0% Vallarta Supermarket, Walgreens Seabridge Marketplace, CA 2006 2012 93,784 19 95.2% Safeway (Vons) Supermarket Glendora Shopping Center, CA 1992/2012 2012 106,535 20 95.1% Albertson’s Supermarket Bay Plaza, CA 1986/2013 2012 73,324 28 95.1% Seafood City Supermarket Cypress Center West, CA 1970/1978 2012 106,451 32 97.5% Kroger (Ralph’s) Supermarket, Rite Aid Pharmacy Redondo Beach Plaza, CA 1993/2004 2012 110,509 16 100.0% Safeway (Von’s) Supermarket, Petco Harbor Place Center, CA 1994 2012 119,821 10 100.0% AA Supermarket, Ross Dress for Less Diamond Bar Town Center, CA 1981 2013 100,342 23 100.0% National grocery tenant Bernardo Heights Plaza, CA 1983/2006 2013 37,729 6 100.0% Sprouts Farmers Market Diamond Hills Plaza, CA 1973/2008 2013 139,505 38 100.0% H Mart Supermarket, Rite Aid Pharmacy Hawthorne Crossings, CA 1993-1999 2013 141,288 17 95.6% Mitsuwa Supermarket, Ross Dress for Less, Staples Five Points Plaza, CA 1961-62 /2012 2013 160,906 36 100.0% Trader Joes, Old Navy, Pier 1 Peninsula Marketplace, CA 2000 2013 95,416 16 100.0% Kroger (Ralphs) Supermarket Plaza del la Canada, CA 1968/2000 2013 100,408 14 100.0% Gelson’s Supermarket, TJ Maxx, Rite AidPharmacy Portland Metropolitan Happy Valley Town Center, OR 2007 2010 138,696 34 95.1% New Seasons Market Oregon City Point, OR 2007 2010 35,305 18 92.6% Starbucks, West Coast Bank, FedEx Kinko’s Cascade Summit, OR 2000 2010 95,508 31 100.0% Safeway Supermarket Vancouver Market Center, WA 1996/2012 2010 118,385 16 92.7% Albertson’s Supermarket Division Crossing, OR 1992 2010 104,089 17 94.8% Rite Aid Pharmacy, Ross Dress For Less Halsey Crossing, OR 1992 2010 99,428 15 95.9% Safeway Supermarket, Dollar Tree Wilsonville Old Towne Square,OR 2011 2011 49,937 21 100.0% Kroger (Fred Meyer) (1) Heritage Market Center, WA 2000 2010 107,468 17 98.1% Safeway Supermarket, Dollar Tree Hillsboro Market Center, OR 2001-2002 2011 156,021 20 97.5% Albertson’s Supermarket, Dollar Tree, Marshalls Robinwood Shopping Center, OR 1980 / 2012 2013 70,831 15 96.6% Walmart Neighborhood Market 23 Seattle Metropolitan Meridian Valley Plaza, WA 1978/2011 2010 51,597 14 100.0% Kroger (QFC) Supermarket The Market at Lake Stevens,WA 2000 2010 74,130 10 100.0% Haggen Food & Pharmacy Canyon Park, WA 1980/2012 2011 123,627 23 100.0% Albertson’s Supermarket, Rite Aid Pharmacy Hawks Prairie, WA 1988/2012 2011 154,781 21 100.0% Safeway Supermarket, Dollar Tree, Big Lots Kress Building, WA 1924/2005 2011 73,563 8 100.0% IGA Supermarket, TJ Maxx Gateway Shopping Center, WA 2007 2012 106,104 17 97.9% WinCo Foods (1), Rite Aid Pharmacy, Ross Dressfor Less Aurora Square, WA 1980 2012 38,030 4 100.0% Central SupermaketCanyon Crossing ShoppingCenter, WA 2008-2009 2013 120,504 19 87.3% Safeway SupermarketCrossroads, WA (2) 1962/2004 2010/2013 463,538 94 99.6% Kroger (QFC) Supermarket, Bed Bath & Beyond,Sports Authority_______________ (1)Retailer owns their own space and is not a tenant of the Company. (2)The Company acquired a 49% interest in Crossroads in December 2010 and acquired the remaining 51% in September 2013.As illustrated by the following tables, the Company’s shopping centers are substantially diversified by both tenant mix and by the staggering of its majortenant lease expirations. For the year ended December 31, 2013, no single tenant comprised more than 5.0% of the total annual base rent of the Company’sportfolio. The following table sets forth a summary schedule of the Company’s ten largest tenants by percent of total annual base rent, as of December 31, 2013. Tenant Number of Leases % of Total AnnualBase Rent(1) Safeway Supermarket 9 5.0%Kroger Supermarket 6 3.3%Rite Aid Pharmacy 10 2.6%Marshalls / T.J. Maxx 5 2.2%JP Morgan Chase 12 1.6%Ross Dress for Less 4 1.4%Raley’s Supermarket 2 1.4%Walmart Neighborhood Market 3 1.3%Albertson’s Supermarket 4 1.3%CVS Pharmacy 4 1.1% 59 21.2% ___________________(1) Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, 2013 (including initial cash rent for new leases). The following table sets forth a summary schedule of the annual lease expirations for leases in place across the Company’s total portfolio at December 31,2013. Year of Expiration Number ofLeasesExpiring(1) SquareFootage Annual BaseRent(2) Annual BaseRent% 2014 178 374,990 $8,761,656 8.7%2015 174 576,798 10,747,287 10.7%2016 207 680,830 12,395,758 12.4%2017 193 644,074 12,720,986 12.7%2018 158 618,783 12,776,126 12.7%Thereafter 236 2,662,865 42,910,055 42.8%Total 1,146 5,558,340 $100,311,868 100.0% ___________________(1)Assumes no tenants exercise renewal options or cancellation options.(2)Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, 2013 (including initial cash rent for new leases). 24 The following table sets forth a summary schedule of the annual lease expirations for leases in place with the Company’s anchor tenants at December 31,2013. Anchor tenants are tenants with leases occupying at least 15,000 square feet or more. Year of Expiration Number ofLeasesExpiring(1) SquareFootage Annual BaseRent(2) Annual BaseRent % 2014 1 19,251 $248,256 0.2%2015 5 182,445 1,668,085 1.7%2016 8 280,261 2,472,539 2.5%2017 7 209,115 1,865,879 1.9%2018 11 276,252 4,288,305 4.3%Thereafter 53 1,982,449 26,428,543 26.3%Total 85 2,949,773 $36,971,607 36.9% ____________________(1)Assumes no tenants exercise renewal or cancellation options.(2)Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, 2013 (including initial cash rent for new leases). Item 3. Legal ProceedingsIn the normal course of business, from time to time, the Company is involved in routine legal actions incidental to its business of the ownership andoperations of its properties. In management’s opinion, the liabilities, if any, that ultimately may result from such legal actions are not expected to have amaterial adverse effect on the consolidated financial position, results of operations or liquidity of the Company. Item 4. Mine Safety Disclosures Not applicable. 25 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ROIC Market Information ROIC’s common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “ROIC”. The following table sets forth, for the periodindicated, the high and low sales price for the ROIC’s common stock as reported by the NASDAQ and the per share dividends declared: Period High Low DividendsDeclared 2012 First Quarter $12.18 $11.53 $0.12 Second Quarter $12.80 $11.80 $0.13 Third Quarter $12.96 $12.01 $0.14 Fourth Quarter $13.00 $12.11 $0.14 2013 First Quarter $14.02 $12.63 $0.15 Second Quarter $15.79 $12.78 $0.15 Third Quarter $14.23 $12.60 $0.15 Fourth Quarter $15.20 $13.57 $0.15 On February 24, 2014, the closing price of ROIC’s common stock as reported by the NASDAQ was $14.56. Dividends Declared on Common Stock and Tax Status ROIC intends to make regular quarterly distributions to holders of its common stock. U.S. federal income tax law generally requires that a REIT distributeannually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S.federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regularquarterly dividends to stockholders in an amount not less than its net taxable income, if and to the extent authorized by its board of directors. Before ROICpays any dividend, whether for U.S. federal income tax purposes or otherwise, it must first meet both its operating requirements and its debt service ondebt. If ROIC’s cash available for distribution is less than its net taxable income, it could be required to sell assets or borrow funds to make cash distributionsor it may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. The following table sets forth the dividends declared per share of ROIC’s common stock and the tax status for U.S. federal income tax purposes of suchdividends declared during the years ended December 31, 2013 and 2012: For the year ended December 31, 2013 Record Date Payable Date Total Dividend perShare Ordinary Income perShare (1) Return of Capital perShare3/15/2013 3/29/2013 $0.150000 $0.05934 $0.090666/14/2013 6/28/2013 $0.150000 $0.05934 $0.090669/16/2013 9/30/2013 $0.150000 $0.05934 $0.0906612/16/2013 12/30/2013 $0.150000 $0.05934 $0.09066_________________(1)Ordinary Income per Share is non-qualified dividend income. For the year ended December 31, 2012 Record Date Payable Date Total Dividend perShare Ordinary Income perShare (1) Return of Capital perShare2/29/2012 3/15/2012 $0.120000 $0.07086 $0.049145/16/2012 5/30/2012 $0.130000 $0.07676 $0.053248/14/2012 8/31/2012 $0.140000 $0.08267 $0.0573311/14/2012 11/30/2012 $0.140000 $0.08267 $0.05733_________________(1)Ordinary Income per Share is non-qualified dividend income. 26 As of December 31, 2013, 95.8% of the outstanding interests in the Operating Partnership were owned by the Company. Holders As of February 21, 2014, ROIC had 39 registered holders. Such information was obtained through the registrar and transfer agent. Operating PartnershipThere is no established trading market for the Operating Partnership's OP Units. The following table sets forth the distributions per OP Unit with respect tothe periods indicated:Period Distributions 2012 First Quarter $0.12 Second Quarter $0.13 Third Quarter $0.14 Fourth Quarter $0.14 2013 First Quarter $0.15 Second Quarter $0.15 Third Quarter $0.15 Fourth Quarter $0.15 The Operating Partnership intends to make regular quarterly distributions to holders of OP Units, to the extent authorized by ROIC's board of directors. As ofDecember 31, 2013, the Operating Partnership had 24 registered holders, including Retail Opportunity Investments GP, LLC.Stockholder Return Performance The above graph compares the cumulative total return on the Company’s common stock with that of the Standard and Poor’s 500 Stock Index (“S&P 500”)and the National Association of Real Estate Investment Trusts Equity Index (“FTSE NAREIT Equity REITs”) from December 31, 2008 through December 31,2013. The stock price performance graph assumes that an investor invested $100 in each of ROIC and the indices, and the reinvestment of anydividends. The comparisons in the graph are provided in accordance with the SEC disclosure requirements and are not intended to forecast or be indicativeof the future performance of ROIC’s shares of common stock. ROIC commenced its operations as a REIT on October 20, 2009. Prior to October 20, 2009,ROIC operated as a special purpose acquisition company in pursuit of an initial business combination. 27 Period Ending Index 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 Retail Opportunity Investments Corp. 100.00 110.27 110.35 136.55 154.78 185.23 S&P 500 100.00 126.46 145.51 148.59 172.37 228.19 FTSE NAREIT Equity REITs 100.00 127.99 163.78 177.36 209.39 214.56 Except to the extent that the Company specifically incorporates this information by reference, the foregoing Stockholder Return Performance informationshall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing underthe Securities Act or under the Exchange Act. This information shall not otherwise be deemed filed under such Acts. Securities Authorized For Issuance Under Equity Compensation Plans During 2009, ROIC adopted the 2009 Equity Incentive Plan (the “2009 Plan”). For a description of the 2009 Plan, see Note 9 to the consolidated financialstatements in this Annual Report on Form 10-K. The following table presents certain information about the Company’s equity compensation plans as of December 31, 2013: Plan Category Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights(1) Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected in thefirst column ofthis table) Equity compensation plans approved by stockholders 282,000 $10.76 2,519,000 Equity compensation plans not approved by stockholders — — — Total 282,000 $10.76 2,519,000 _________________ (1)Consists of 8,000, 49,500 and 102,000 options granted during the year ended December 31, 2013, 2012 and 2011, respectively.During the three months ended December 31, 2013, ROIC purchased the following:Period Total Numberof SharesPurchased WeightedAveragePrice PaidPer Share Total Number of SharesPurchased as Partof Publicly AnnouncedPlans or Programs Dollar Value ofShares that May YetBe Purchased Underthe Program October 1, 2013 through October 31, 2013 (1) — $— — — October 1, 2013 through October 31, 2013(2) 4,404,200 $2.15 — — November 1, 2013 through November 30, 2013 (1) — $— — — November 1, 2013 through November 30, 2013 (2) — $— — — December 1, 2013 through December 31, 2013 (1) 8,468 $14.83 — — December 1, 2013 through December 31, 2013 (2) — $— — — Total (1) 8,468 $14.83 — — Total (2) 4,404,200 $2.15 — — (1)Represents shares repurchased by ROIC in connection with the net share settlement to cover the minimum taxes on vesting of restricted stock issuedunder ROIC’s 2009 Equity Incentive Plan that vested. (2)Represents shares repurchased by ROIC in connection with the acquisition of outstanding Public Warrants Sales of Unregistered Equity Securities On September 27, 2013, the Operating Partnership issued 2,639,632 OP Units, with a fair value of approximately $36.4 million as consideration for theacquisition of the 51% of the partnership interests in Terranomics Crossroads Associates, the partnership which owns the Crossroads Shopping Center, whichit did not already own. In addition, on September 27, 2013, the Operating Partnership issued 650,631 OP Units, with a fair value of approximately $9.0million as consideration for the acquisition of the membership interests in SARM Five Points Plaza, LLC (“Five Points LLC”), the entity that owned FivePoints Plaza Shopping Center. In each case, the OP Units were issued in reliance upon exemptions from registration provided under Section 4(a)(2) of theSecurities Act and Rule 506 of Regulation D promulgated thereunder. The OP Units are exchangeable into shares of common stock of the Company on aone-for-one basis, subject to the terms of the Operating Partnership's Partnership Agreement. 28 Item 6. Selected Financial Data The following tables set forth selected financial and operating information on a historical basis for ROIC and the Operating Partnership, and should be read inconjunction with Item 7, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and the Company’s financialstatements, including the notes, included elsewhere herein.RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED HISTORICAL FINANCIAL INFORMATION Year Ended December 31, Retail Opportunity Investments Corp. 2013 2012 2011 2010 Statement of Income Data: Total Revenues $111,232,031 $75,095,687 $51,737,512 $16,328,969 Operating expenses 83,456,857 63,541,899 46,782,558 21,642,505 Operating income (loss) 27,775,174 11,553,788 4,954,954 (5,313,536)Gain on consolidation of joint venture 20,381,849 2,144,696 — — Gain on bargain purchase — 3,864,145 9,449,059 2,216,824 Interest income — 11,861 19,143 1,108,507 Interest expense 15,854,978 11,379,857 6,225,084 324,126 Income (loss) from continuing operations 34,691,982 7,892,613 9,656,321 (400,921)Loss from discontinued operations (713,529) — — — Net income (loss) 33,978,453 7,892,613 9,656,321 (400,921)Net income (loss) attributable to Retail Opportunity Investments Corp. 33,813,561 7,892,613 9,656,321 (400,921)Weighted average shares outstanding- Basic: 67,419,497 51,059,408 42,477,007 41,582,401 Weighted average shares outstanding- Diluted: 71,004,380 52,371,168 42,526,288 41,582,401 Income (loss) per share – Basic: Income (loss) from continuing operations $0.51 $0.15 $0.23 $(0.01)Net (loss) income attributable to Retail Opportunity Investments Corp. $0.50 $0.15 $0.23 $(0.01)Income (loss) per share – Diluted: Income (loss) from continuing operations $0.49 $0.15 $0.23 $(0.01)Net income (loss) attributable to Retail Opportunity Investments Corp. $0.48 $0.15 $0.23 $(0.01)Dividends per common share $0.60 $0.53 $0.39 $0.18 Balance Sheet Data: Real estate investments, net $1,314,933,668 $864,624,046 $602,623,893 $344,212,083 Cash and cash equivalents $7,919,697 $4,692,230 $34,317,588 $84,736,410 Total assets $1,439,089,843 $950,911,527 $694,432,627 $464,192,502 Total liabilities $733,679,777 $484,369,456 $243,943,573 $73,668,932 Total equity $705,410,066 $466,542,071 $450,489,054 $390,523,570 29 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP CONSOLIDATED HISTORICAL FINANCIAL INFORMATION Year Ended December 31, 2013 2012 2011 2010 Statement of Income Data: Total Revenues $111,232,031 $75,095,687 $51,737,512 $16,328,969 Operating expenses 83,456,857 63,541,899 46,782,558 21,642,505 Operating income (loss) 27,775,174 11,553,788 4,954,954 (5,313,536)Gain on consolidation of joint venture 20,381,849 2,144,696 — — Gain on bargain purchase — 3,864,145 9,449,059 2,216,824 Interest income — 11,861 19,143 1,108,507 Interest expense 15,854,978 11,379,857 6,225,084 324,126 Income (loss) from continuing operations 34,691,982 7,892,613 9,656,321 (400,921)Loss from discontinued operations (713,529) — — — Net income (loss) attributable to the Operating Partnership 33,978,453 7,892,613 9,656,321 (400,921)Weighted average units outstanding- Basic: 68,258,005 51,059,408 42,477,007 41,582,401 Weighted average units outstanding- Diluted: 71,004,380 52,371,168 42,526,288 41,582,401 Income (loss) per unit – Basic: Income (loss) from continuing operations $0.51 $0.15 $0.23 $(0.01)Net income (loss) attributable to the Operating Partnership $0.50 $0.15 $0.23 $(0.01)Income (loss) per unit – Diluted: Income (loss) from continuing operations $0.49 $0.15 $0.23 $(0.01)Net income (loss) attributable to the Operating Partnership $0.48 $0.15 $0.23 $(0.01)Distributions per unit $0.60 $0.53 $0.39 $0.18 Balance Sheet Data: Real estate investments, net $1,314,933,668 $864,624,046 $602,623,893 $344,212,083 Cash and cash equivalents $7,919,697 $4,692,230 $34,317,588 $84,736,410 Total assets $1,439,089,843 $950,911,527 $694,432,627 $464,192,502 Total liabilities $733,679,777 $484,369,456 $243,943,573 $73,668,932 Total capital $705,410,066 $466,542,071 $450,489,054 $390,523,570 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Retail Opportunity Investments Corp. Consolidated Financial Statements and Notesthereto appearing elsewhere in this Annual Report on Form 10-K. The Company makes statements in this section that are forward-looking statementswithin the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Annual Report onForm 10-K entitled “Statements Regarding Forward-Looking Information.” Certain risk factors may cause actual results, performance or achievements todiffer materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in this Annual Report onForm 10-K entitled “Risk Factors.” Overview ROIC commenced operations in October 2009 as a fully integrated and self-managed REIT, and as of December 31, 2013, ROIC owned an approximate95.8% partnership interest and other limited partners owned the remaining 4.2% partnership interest in the Operating Partnership. ROIC specializes in theacquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States, anchoredby supermarkets and drugstores. From the commencement of its operations through December, 2013, the Company has completed approximately $1.3 billion of shopping centerinvestments. As of December 31, 2013, the Company’s portfolio consisted of 55 retail properties totaling approximately 5.9 million square feet of grossleasable area (“GLA”). As of December 31, 2013, the Company’s portfolio was approximately 95.0% leased. During the year ended December 31, 2013, the Company leased orrenewed a total of 624,000 square feet in its portfolio. The Company has committed approximately $2.9 million and $612,000 in tenant improvements andleasing commissions, respectively, for the new leases and renewals that occurred during the year ended December 31, 2013. ROIC is organized in an UpREIT format pursuant to which Retail Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as the generalpartner of, and ROIC conducts substantially all of its business through, its Operating Partnership, Retail Opportunity Investments Partnership, LP, a Delawarelimited partnership, and its subsidiaries. ROIC reincorporated as a Maryland corporation on June 2, 2011. ROIC has elected to be taxed as a REIT, for U.S.federal income tax purposes, commencing with the year ended December 31, 2010. 30 Results of Operations At December 31, 2013, the Company had 55 properties, all of which are consolidated (“consolidated properties”) in the accompanying financial statements.The Company believes, because of the location of the properties in densely populated areas, the nature of its investments provides for relatively stablerevenue flows even during difficult economic times. The Company has a strong capital structure with manageable debt as of December 31, 2013. TheCompany expects to continue to actively explore acquisition opportunities consistent with its business strategy. Property operating income is a non-GAAP financial measure of performance. The Company defines property operating income as operating revenues (baserent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes). Property operating income excludesgeneral and administrative expenses, mortgage interest income, depreciation and amortization, acquisition transaction costs, other expense, interest expense,gains and losses from property acquisitions and dispositions, equity in earnings from unconsolidated joint ventures, extraordinary items, tenantimprovements and leasing commissions. Other REITs may use different methodologies for calculating property operating income, and accordingly, theCompany’s property operating income may not be comparable to other REITs. Property operating income is used by management to evaluate and compare the operating performance of the Company’s properties, to determine trends inearnings and to compute the fair value of the Company’s properties as this measure is not affected by the cost of our funding, the impact of depreciation andamortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains andlosses that relate to our ownership of our properties. The Company believes the exclusion of these items from net income is useful because the resultingmeasure captures the actual revenue generated and actual expenses incurred in operating the Company’s properties as well as trends in occupancy rates,rental rates and operating costs. Property operating income is a measure of the operating performance of the Company’s properties but does not measure the Company’s performance as awhole. Property operating income is therefore not a substitute for net income or operating income as computed in accordance with GAAP. Results of Operations for the year ended December 31, 2013 compared to the year ended December 31, 2012. Property Operating Income The table below provides a reconciliation of consolidated operating income, in accordance with GAAP, to consolidated property operating income for theyears ended December 31, 2013 and 2012. For the Year Ended December 31,2013 December 30,2012 Operating income per GAAP $27,775,174 $11,553,788 Plus:Depreciation and amortization 40,397,895 29,074,709 General and administrative expenses 10,058,669 12,734,254 Acquisition transaction costs 1,688,521 1,347,611 Other expenses 314,833 324,354 Less:Mortgage interest income (623,793) (1,106,089)Property operating income $79,611,299 $53,928,627 The following comparison for the year ended December 31, 2013 compared to the year ended December 31, 2012, makes reference to the effect of the same-store properties. Same-store properties represent all operating properties owned by the Company in the same manner during the entirety of both periods whichtotaled 29 of the Company’s 55 consolidated properties. The table below provides a reconciliation of operating income in accordance with GAAP to property operating income for the years ended December 31,2013 and 2012 related to the 29 same-store properties owned by the Company during the entirety of both periods. For the Year Ended December 31,2013 December 31,2012 Same-store operating income per GAAP $25,195,308 $21,367,666 Plus:Depreciation and amortization 21,515,014 24,628,922 Acquisition transaction costs 6,997 57,720 Same-store property operating income $46,717,319 $46,054,308 31 During the year ended December 31, 2013, the Company generated property operating income of approximately $79.6 million compared to propertyoperating income of $53.9 million generated during the year ended December 31, 2012. Property operating income increased by $25.7 million during theyear ended December 31, 2013 primarily as a result of an increase in the number of properties owned by the Company in 2013 compared to 2012 and anincrease in same-store properties’ operating income. As of December 31, 2013, the Company owned 55 consolidated properties as compared to 44 propertiesat December 31, 2012. The newly acquired properties increased property operating income in 2013 by approximately $25.0 million. The 29 same-storeproperties increased property operating income by approximately $663,000. Mortgage interest income The Company generated interest income from mortgage notes receivable during the year ended December 31, 2013 of approximately $624,000 compared to$1.1 million during the year ended December 31, 2012. Mortgage interest income decreased by approximately $482,000 as a result of the cancellation of theCompany’s loan to Crossroads joint venture in connection with the Company’s acquisition of the remaining partnership interests in the Crossroads ShoppingCenter from its joint venture partner in September 2013 and loans in the prior year that were eliminated when the Company obtained the remainingownership interests. As of December 31, 2013, the Company has no remaining investments in mortgage loans on real estate. Depreciation and amortization The Company incurred depreciation and amortization expenses during the year ended December 31, 2013 of approximately $40.4 million compared to $29.1million incurred during the year ended December 31, 2012. Depreciation and amortization expenses were higher in 2013 as a result of an increase in thenumber of properties owned by the Company in 2013 compared to 2012. General and administrative Expenses The Company incurred general and administrative expenses during the year ended December 31, 2013 of approximately $10.1 million compared to $12.7million incurred during the year ended December 31, 2012. General and administrative expenses decreased approximately $2.7 million primarily as a resultof approximately $2.8 million incurred in 2012 related to severance costs and the cost for moving the Company’s corporate headquarters from White Plains,New York to San Diego, California, for which there were no comparable expenses in 2013. Acquisition transaction costs The Company incurred property acquisition costs during the year ended December 31, 2013 of approximately $1.7 million compared to $1.3 millionincurred during the year ended December 31, 2012. Property acquisition costs were higher in 2013 due to additional legal and other professional feesincurred related to acquisition activity. Interest expense and other finance expenses During the year ended December 31, 2013, the Company incurred approximately $15.9 million of interest expense compared to approximately $11.4 millionduring the year ended December 31, 2012. The increase was due to higher net borrowings on the term loan and credit facility, interest incurred on loansassumed for Santa Teresa Village, Bernardo Heights and Crossroads and interest incurred related to the issuance of the Notes due 2023, slightly offset bylower borrowing costs on the credit facility and term loan during 2013 as compared to 2012. Gain on consolidation of joint venture During the year ended December 31, 2013, the Company acquired the remaining partnership interests in the Crossroads Shopping Center from its jointventure partner. The Company recorded a gain of approximately $20.4 million when determining the fair value of the property at the time of the purchase ofthe remaining interest in the property. During the year ended December 31, 2012, the Company acquired the remaining partnership interests in WilsonvilleOld Town Square from its joint venture partner. The Company recorded a gain of approximately $2.1 million when determining the fair value of the propertyat the time of the purchase of the remaining interest in the property. Gain on bargain purchase During the year ended December 31, 2012, the Company recorded a gain on bargain purchase of approximately $3.9 million when recording the fair valuesof two properties that were acquired during the period through Conveyance in Lieu of Foreclosure Agreements. There was no comparable gain recordedduring the year ended December 31, 2013. 32 Equity in earnings from unconsolidated joint venture During the year ended December 31, 2013, the Company recorded equity in earnings from unconsolidated joint venture of approximately $2.4 millioncompared to $1.7 million during the year ended December 31, 2012. The increase of approximately $0.7 million was primarily due to the recognition of theearned preferred return of approximately $2.0 million on the Company’s initial 49% investment in the Crossroads Shopping Center in connection with theacquisition of the remaining partnership interests during the year ended December 31, 2013 for which there was no comparable preferred return in the prioryear. This increase was offset by the reduction in regular earnings from our partnership interests in Wilsonville Old Town Square that were consolidated onAugust 1, 2012, and Crossroads Shopping Center that were consolidated on September 27, 2013. As of December 31, 2013, the Company has no remainingunconsolidated joint ventures. Loss from discontinued operations In June 2013, the Company sold the Nimbus Village Shopping Center, a non-grocery anchored, non-core shopping center located in Rancho Cordova,California. The sales price of this property of approximately $6.3 million, less costs to sell, resulted in proceeds to the Company of approximately $5.6million. Accordingly, the Company recorded a loss on sale of property of approximately $714,000 for the year ended December 31, 2013, which has beenincluded in discontinued operations. There was no comparable loss recorded during the year ended December 31, 2012. Results of Operations for the year ended December 31, 2012 compared to the year ended December 31, 2011. Property Operating Income The table below provides a reconciliation of consolidated operating income, in accordance with GAAP, to consolidated property operating income for theyears ended December 31, 2012 and 2011. For the Year Ended December 31,2012 December 31,2011 Operating income per GAAP $11,553,788 $4,954,954 Plus:Depreciation and amortization 29,074,709 21,264,172 General and administrative expenses 12,734,254 9,390,091 Acquisition transaction costs 1,347,611 2,290,838 Other expenses 324,354 411,142 Less:Mortgage interest income (1,106,089) (1,908,655)Property operating income $53,928,627 $36,402,542 The following comparison for the year ended December 31, 2012 compared to the year ended December 31, 2011, makes reference to the effect of the same-store properties. Same-store properties represent all operating properties owned by the Company in the same manner during the entirety of both periods whichtotaled 17 of the Company’s 44 consolidated properties owned as of December 31, 2012. The table below provides a reconciliation of operating income in accordance with GAAP to property operating income for the years ended December 31,2012 and 2011 related to the 17 same-store properties owned by the Company during the entirety of both periods. For the Year Ended December 31,2012 December 31,2011 Same-store operating income per GAAP $12,092,619 $10,389,156 Plus:Depreciation and amortization 10,304,479 11,999,207 Acquisition transaction costs — 84,697 Other expenses — 6,349 Same-store property operating income $22,397,098 $22,479,409 During the year ended December 31, 2012, the Company generated property operating income of approximately $53.9 million compared to propertyoperating income of $36.4 million generated during the year ended December 31, 2011. Property operating income increased by $17.5 million during theyear ended December 31, 2012 primarily as a result of an increase in the number of properties owned by the Company in 2012 compared to 2011 offset by aslight decrease in same-store properties’ operating income. As of December 31, 2012, the Company owned 44 consolidated properties as compared to 30properties at December 31, 2011. The newly acquired properties increased property operating income in 2012 by approximately $17.5 million. The 17 same-store properties decreased property operating income by approximately $82,000. 33 Mortgage interest income The Company generated interest income from mortgage notes receivable during the year ended December 31, 2012 of approximately $1.1 million comparedto $1.9 million during the year ended December 31, 2011. Mortgage interest income decreased by approximately $800,000 primarily as a result of theCompany obtaining the ownership interests in three properties that were previously secured by a mortgage note. The Company obtained these propertiesthrough a Conveyance in Lieu of Foreclosure agreement during the year ended December 31, 2011. Depreciation and amortization The Company incurred depreciation and amortization expenses during the year ended December 31, 2012 of approximately $29.1 million compared to $21.3million incurred during the year ended December 31, 2011. Depreciation and amortization expenses were higher in 2012 as a result of an increase in thenumber of properties owned by the Company in 2012 compared to 2011. General and administrative expenses The Company incurred general and administrative expenses during the year ended December 31, 2012 of approximately $12.7 million compared to $9.4million incurred during the year ended December 31, 2011. General and administrative expenses increased approximately $3.3 million primarily as a result ofapproximately $2.8 million incurred in 2012 related to severance costs and the cost for moving the Company’s corporate headquarters from White Plains,New York to San Diego, California, for which there were no comparable expenses in the prior year, and increased costs related to the increase in the number ofproperties owned in 2012. Acquisition transaction costs The Company incurred property acquisition costs during the year ended December 31, 2012 of approximately $1.3 million compared to $2.3 millionincurred during the year ended December 31, 2011. Property acquisition costs were higher in 2011 due to additional professional fees incurred related to thetypes of properties acquired. Interest expense and other finance expenses During the year ended December 31, 2012, the Company incurred approximately $11.4 million of interest expense compared to approximately $6.2 millionduring the year ended December 31, 2011. The increase of approximately $5.2 million was due primarily to higher net borrowings on the term loan andcredit facility, as well as interest incurred on loans assumed during 2012. Gain on consolidation of joint venture During the year ended December 31, 2012, the Company acquired the remaining partnership interests in Wilsonville Old Town Square from its joint venturepartner. The Company recorded a gain of approximately $2.1 million when determining the fair value of the property at the time of the purchase of theremaining interest in the property. There was no comparable gain recorded during the year ended December 31, 2011. Gain on bargain purchase During the year ended December 31, 2012, the Company recorded a gain on bargain purchase of approximately $3.9 million when recording the fair valuesof two properties that were acquired during the period through Conveyance in Lieu of Foreclosure Agreements. During the year ended December 31, 2011,the Company recorded a gain on bargain purchase of approximately $9.4 million when recording the fair values of four properties that were acquired duringthe period through Conveyance in Lieu of Foreclosure Agreements. Equity in earnings from unconsolidated joint venture During the year ended December 31, 2012, the Company recorded equity in earnings from unconsolidated joint venture of approximately $1.7 millioncompared to $1.5 million during the year ended December 31, 2011. The increase of approximately $240,000 was primarily due to an increase in regularearnings of the joint ventures due to an increase in occupancy. Funds From Operations Funds from operations (“FFO”), is a widely-recognized non-GAAP financial measure for REITs that the Company believes when considered with financialstatements presented in accordance with GAAP, provides additional and useful means to assess its financial performance. FFO is frequently used by securitiesanalysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated inaccordance with GAAP. The Company computes FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts(“NAREIT”), which defines FFO as net income attributable to common stockholders (determined in accordance with GAAP) excluding gains or losses fromdebt restructuring, sales of depreciable property, and impairments, plus real estate related depreciation and amortization, and after adjustments forpartnerships and unconsolidated joint ventures. 34 However, FFO: ·does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects oftransactions and other events in the determination of net income); and ·should not be considered an alternative to net income as an indication of our performance. FFO as defined by the Company may not be comparable to similarly titled items reported by other REITs due to possible differences in the application of theNAREIT definition used by such REITs. The Financial Accounting Standards Board (“FASB”) guidance relating to business combinations requires, among other things, an acquirer of a business (orinvestment property) to expense all acquisition costs related to the acquisition, the amount of which will vary based on each specific acquisition and thevolume of acquisitions. Accordingly, the costs of acquisitions will reduce our FFO. For the years ended December 31, 2013, 2012 and 2011, the Companyexpensed $1.7 million, $1.3 million and $2.3 million, respectively, relating to real estate acquisitions. While the Company does not have any joint ventures as of December 31, 2013, in the future, the Company may acquire the remaining interests from its jointventure partners it does not already own. At that time, a gain or loss may be recorded, in accordance with GAAP, based on the Company’s determination ofthe fair value of the properties at the time of any such purchase of the remaining interests in the properties. Accordingly, the amount of the gain or loss willincrease or decrease, respectively, our FFO. During years ended December 31, 2013 and 2012, the Company acquired the remaining interests from certain ofits joint venture partners. The gains recorded upon consolidation of joint ventures for the years ended December 31, 2013 and 2012 was approximately$20.4 million and $2.1 million, respectively. The Company did not record any such gain during the year ended December 31, 2011. In the future, the Company may make real estate-related debt investments where the primary focus is to capitalize on opportunities to acquire controlpositions that will enable the Company to obtain the underlying property should a default occur. The Company’s bargain purchase gains are primarilyassociated with these types of investments. Accordingly, the amount of the gain will increase our FFO. Currently the Company does not have any real estate-related debt investments. The Company recognized bargain purchase gains of approximately $3.9 million and $9.4 million during years ended December 31,2012 and 2011. The Company did not recognize a bargain purchase gain during the year ended December 31, 2013. The table below provides a reconciliation of net income applicable to stockholders in accordance with GAAP to FFO for the years ended December 31, 2013,2012 and 2011. For the year ended December 31, 2013 2012 2011 Net income attributable to ROIC $33,813,561 $7,892,613 $9,656,321 Plus: Real property depreciation 20,111,007 13,494,776 8,730,177 Amortization of tenant improvements and allowances 5,202,756 4,349,863 2,590,234 Amortization of deferred leasing costs 15,084,132 11,230,070 9,943,761 Depreciation and amortization attributable to unconsolidated joint ventures 1,059,761 2,174,877 2,121,232 Loss from discontinued operations 713,529 — — Funds from operations $75,984,746 $39,142,199 $33,041,725 Critical Accounting Policies Critical accounting policies are those that are both important to the presentation of the Company’s financial condition and results of operations and requiremanagement’s most difficult, complex or subjective judgments. Set forth below is a summary of the accounting policies that management believes arecritical to the preparation of the consolidated financial statements. This summary should be read in conjunction with the more complete discussion of theCompany’s accounting policies included in Note 1 to the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements See Note 1 to the accompanying consolidated financial statements. 35 Revenue Recognition The Company records base rents on a straight-line basis over the term of each lease. The excess of rents recognized over amounts contractually due pursuantto the underlying leases is included in tenant and other receivables on the accompanying consolidated balance sheets. Most leases contain provisions thatrequire tenants to reimburse a pro-rata share of real estate taxes and certain common area expenses. Adjustments are also made throughout the year to tenantand other receivables and the related cost recovery income based upon the Company’s best estimate of the final amounts to be billed and collected. Inaddition, the Company also provides an allowance for future credit losses in connection with the deferred straight-line rent receivable. Allowance for Doubtful Accounts The allowance for doubtful accounts is established based on a quarterly analysis of the risk of loss on specific accounts. The analysis places particularemphasis on past-due accounts and considers information such as the nature and age of the receivables, the payment history of the tenants or other debtors,the financial condition of the tenants and any guarantors and management’s assessment of their ability to meet their lease obligations, the basis for anydisputes and the status of related negotiations, among other things. Management’s estimates of the required allowance is subject to revision as these factorschange and is sensitive to the effects of economic and market conditions on tenants, particularly those at retail properties. Estimates are used to establishreimbursements from tenants for common area maintenance, real estate tax and insurance costs. The Company analyzes the balance of its estimated accountsreceivable for real estate taxes, common area maintenance and insurance for each of its properties by comparing actual recoveries versus actual expenses andany actual write-offs. Based on its analysis, the Company may record an additional amount in its allowance for doubtful accounts related to these items. Inaddition, the Company also provides an allowance for future credit losses in connection with the deferred straight-line rent receivable. Real Estate Real Estate Investments Land, buildings, property improvements, furniture/fixtures and tenant improvements are recorded at cost. Expenditures for maintenance and repairs arecharged to operations as incurred. Renovations and/or replacements, which improve or extend the life of the asset, are capitalized and depreciated over theirestimated useful lives. Upon the acquisition of real estate properties, the fair value of the real estate purchased is allocated to the acquired tangible assets (consisting of land,buildings and improvements), and acquired intangible assets and liabilities (consisting of above-market and below-market leases and acquired in-placeleases). Acquired lease intangible assets include above-market leases and acquired in-place leases, and acquired lease intangible liabilities represent below-market leases, in the accompanying consolidated balance sheet. The fair value of the tangible assets of an acquired property is determined by valuing theproperty as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the relative fairvalues of these assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during theexpected lease-up periods, and estimates of lost rental revenue during the expected lease-up periods based on its evaluation of current marketdemand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs. The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rentalrates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market lease values are recorded based on the present value(using a discount rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received andmanagement’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time ofacquisition. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fairvalues associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances thatexisted at the time of the acquisitions. The value of the above-market and below-market leases associated with the original lease term is amortized to rentalincome, over the terms of the respective leases. The value of below-market rental lease renewal options is deferred until such time as the renewal option isexercised and subsequently amortized over the corresponding renewal period. The value of in-place leases are amortized to expense, and the above-marketand below-market lease values are amortized to rental income, over the remaining non-cancellable terms of the respective leases. If a lease were to beterminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized in operations at that time. The Company mayrecord a bargain purchase gain if it determines that the purchase price for the acquired assets was less than the fair value. The Company will record a liabilityin situations where any part of the cash consideration is deferred. The amounts payable in the future are discounted to their present value. The liability issubsequently re-measured to fair value with changes in fair value recognized in the consolidated statements of operations. If, up to one year from theacquisition date, information regarding fair value of assets acquired and liabilities assumed is received and estimates are refined, appropriate propertyadjustments are made to the purchase price allocation on a retrospective basis. The Company is required to make subjective assessments as to the useful life of its properties for purposes of determining the amount of depreciation. Theseassessments have a direct impact on its net income. 36 Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Buildings39-40 yearsProperty Improvements10-20 yearsFurniture/Fixtures3-10 yearsTenant ImprovementsShorter of lease term or their useful lifeAsset Impairment The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows(undiscounted and without interest) expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized ismeasured by the amount by which the carrying amount of the assets exceed the fair value. Management does not believe that the value of any of theCompany’s real estate investments was impaired at December 31, 2013. The Company reviews its investments in unconsolidated joint ventures for impairment periodically and the Company would record an impairment chargewhen events or circumstances change indicating that a decline in the fair values below the carrying values has occurred and such decline is other-thantemporary. The ultimate realization of the Company’s investment in an unconsolidated joint venture is dependent on a number of factors, including theperformance of each investment and market conditions. As of December 31, 2013, the Company has no unconsolidated joint ventures. REIT Qualification Requirements The Company has elected to be taxed as a REIT under the Internal Revenue Code (the “Code”), and believes that it has been organized and has operated in amanner that will allow it to continue to qualify for taxation as a REIT under the Code. The Company is subject to a number of operational and organizational requirements to qualify and then maintain qualification as a REIT. If the Companydoes not qualify as a REIT, its income would become subject to U.S. federal, state and local income taxes at regular corporate rates that would be substantialand the Company may not be permitted to re-elect to qualify as a REIT for four taxable years following the year that it failed to qualify as a REIT. Theresulting adverse effects on the Company’s results of operations, liquidity and amounts distributable to stockholders would be material.Liquidity and Capital Resources of the Company In this “Liquidity and Capital Resources of the Company” section and in the “Liquidity and Capital Resources of the Operating Partnership” section, theterm “the Company” refers to Retail Opportunity Investments Corp. on an unconsolidated basis, excluding the Operating Partnership. The Company’s business is operated primarily through the Operating Partnership, of which the Company is the parent company and which it consolidates forfinancial reporting purposes. Because the Company operates on a consolidated basis with the Operating Partnership, the section entitled “Liquidity andCapital Resources of the Operating Partnership” should be read in conjunction with this section to understand the liquidity and capital resources of theCompany on a consolidated basis and how the Company is operated as a whole. The Company issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurringcertain expenses in operating as a public company. The Company itself does not hold any indebtedness other than guarantees of indebtedness of theOperating Partnership, and its only material assets are its ownership of direct or indirect partnership interests in the Operating Partnership and membershipinterest in Retail Opportunity Investments GP, LLC, the sole general partner of the Operating Partnership. Therefore, the consolidated assets and liabilitiesand the consolidated revenues and expenses of the Company and the Operating Partnership are the same on their respective financial statements. However,all debt is held directly or indirectly by the Operating Partnership. The Company’s principal funding requirement is the payment of dividends on its commonstock. The Company’s principal source of funding for its dividend payments is distributions it receives from the Operating Partnership. As the parent company of the Operating Partnership, the Company, indirectly, has the full, exclusive and complete responsibility for the OperatingPartnership’s day-to-day management and control. The Company causes the Operating Partnership to distribute such portion of its available cash as theCompany may in its discretion determine, in the manner provided in the Operating Partnership’s partnership agreement. The Company is a well-known seasoned issuer with an effective shelf registration statement filed in June 2013 that allows the Company to registerunspecified various classes of debt and equity securities. As circumstances warrant, the Company may issue equity from time to time on an opportunisticbasis, dependent upon market conditions and available pricing. Any proceeds from such equity issuances would be contributed to the Operating Partnership.The Operating Partnership may use the proceeds to acquire additional properties, pay down debt, and for general working capital purposes. 37 Liquidity is a measure of the ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain its assetsand operations, make distributions to its stockholders and meet other general business needs. The liquidity of the Company is dependent on the OperatingPartnership’s ability to make sufficient distributions to the Company. The primary cash requirement of the Company is its payment of dividends to itsstockholders. During the year ended December 31, 2013, the Company’s primary source of cash was proceeds from the exercise of warrants. As of December 31, 2013, theCompany has determined that it has adequate working capital to meet its dividend funding obligations for the next twelve months. During the year ended December 31, 2011, the Company entered into an ATM Equity OfferingSM Sales Agreement (“sales agreement”) with Merrill Lynch,Pierce, Fenner & Smith Incorporated to sell shares of the Company’s common stock, par value $0.0001 per share, having aggregate sales proceeds of $50.0million from time to time, through an “at the market” equity offering program under which Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as salesagent and/or principal (“agent”). During the year ended December 31, 2013, the Company did not sell any shares under the sales agreement. For the year ended December 31, 2013, dividends paid to stockholders totaled approximately $42.5 million. On a consolidated basis, cash flows fromoperations for the same period totaled approximately $37.8 million. The deficiency of $4.7 million was funded through a borrowing by the OperatingPartnership under the credit facility. For the year ended December 31, 2012, dividends paid to stockholders totaled approximately $27.1 million. On aconsolidated basis, cash flows from operations for the same period totaled approximately $24.7 million. The deficiency of $2.4 million was funded through aborrowing by the Operating Partnership under the credit facility. In the future, it is expected that the cash flows from stabilized properties will be sufficient tocover the dividends paid to stockholders. Potential future sources of capital include debt and equity issuances, and if the value of its common stock continues to exceed the exercise price of itswarrants, proceeds from the exercise of warrants from time to time. Liquidity and Capital Resources of the Operating Partnership In this “Liquidity and Capital Resources of the Operating Partnership” section, the terms the “Operating Partnership,” “we”, “our” and “us” refer to theOperating Partnership together with its consolidated subsidiaries or the Operating Partnership and the Company together with their respective consolidatedsubsidiaries, as the context requires. During year ended December 31, 2013, the Operating Partnership’s primary sources of cash were (i) proceeds from the issuance of senior unsecured debt, (ii)proceeds from bank borrowings, (iii) proceeds from warrant exercises that were contributed to the Operating Partnership, and (iv) cash flow fromoperations. As of December 31, 2013, the Operating Partnership has determined that it has adequate working capital to meet its debt obligations andoperating expenses for the next twelve months. The Operating Partnership has a revolving credit facility with several banks. Previously, the credit facility provided for borrowings of up to$200.0 million. Effective September 26, 2013, the Company entered into a third amendment to the amended and restated credit agreement pursuant to whichthe borrowing capacity was increased to $350.0 million. Additionally, the credit facility contains an accordion feature, which was amended to allow theOperating Partnership to increase the facility amount up to an aggregate of $700.0 million subject to lender consents and other conditions. The maturity dateof the credit facility has been extended by one year to August 29, 2017, subject to a further one-year extension option, which may be exercised by theOperating Partnership upon satisfaction of certain conditions.The Operating Partnership has a term loan agreement with several banks. The term loan provides for a loan of $200.0 million and contains an accordionfeature, which allows the Operating Partnership to increase the facility amount up to an aggregate of $300.0 million subject to commitments and otherconditions. The maturity date of the term loan is August 29, 2017. The agreements contain customary representations, financial and other covenants. TheOperating Partnership’s ability to borrow under the credit facility is subject to its compliance with financial covenants and other restrictions. The OperatingPartnership was in compliance with such covenants at December 31, 2013. As of December 31, 2013, $200.0 million and $56.9 million were outstandingunder the term loan and credit facility, respectively. The average interest rates on the term loan and credit facility during the year ended December 31, 2013were 1.6% and 1.5%, respectively. The Company had $293.1 million available to borrow under the credit facility at December 31, 2013. The Company hadno available borrowings under the term loan. The Company obtained investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard &Poor’s Ratings Services (BBB-) during the second quarter of 2013. Prior to receiving such investment grade ratings, borrowings under the credit facility andterm loan agreements accrued interest on the outstanding principal amount at a rate equal to an applicable rate based on the consolidated leverage ratio of theCompany and its subsidiaries, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for dollar deposits for the relevant period, or(ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank NationalAssociation as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%.Since receiving the investment grade credit ratings from the two ratings agencies, borrowings under the loan agreements accrue interest on the outstandingprincipal amount at a rate equal to an applicable rate based on the credit rating level of ROIC, plus, as applicable, (i) the Eurodollar Rate, or (ii) the BaseRate. In addition, prior to receipt of such credit ratings, the Operating Partnership was obligated to pay an unused fee of (a) 0.35% of the undrawn balance ifthe total outstanding principal amount was less than 50% of the aggregate commitments or (b) 0.25% if the total outstanding principal amount was greaterthan or equal to 50% of the aggregate commitments, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under theagreements. Since receipt of the ratings, the Operating Partnership has been obligated to pay a facility fee at a rate based on the credit rating level of ROIC,currently 0.20%, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the loan agreements. 38 In December 2013, the Operating Partnership issued $250.0 million aggregate principal amount of 5.000% unsecured senior notes which were fully andunconditionally guaranteed by the Company.In February 2013, the Operating Partnership assumed an existing mortgage loan with an outstanding principal balance of approximately $8.9 million as partof the acquisition of Bernardo Heights Plaza. Additionally, in September 2013, the Operating Partnership assumed an existing mortgage loan with anoutstanding principal balance of approximately $49.6 million in connection with the acquisition of the remaining interests in the Crossroads ShoppingCenter. On September 3, 2013 and November 1, 2013, the Company repaid the outstanding principal balances on the Gateway Village I and Gateway VillageII mortgage notes payable, totaling $13.4 million, without penalty, in accordance with the prepayment provisions of the notes.While the Operating Partnership generally intends to hold its assets as long term investments, certain of its investments may be sold in order to manage theOperating Partnership’s interest rate risk and liquidity needs, meet other operating objectives and adapt to market conditions. The timing and impact offuture sales of its investments, if any, cannot be predicted with any certainty.The following table summarizes, for the periods indicated, selected items in our consolidated statements of cash flows: For the year ended December 31,2013 December 31,2012 December 31,2011 Net Cash Provided by (Used in): Operating activities $37,752,465 $24,720,566 $17,286,197 Investing activities $(344,977,110) $(261,574,478) $(225,154,948)Financing activities $310,452,112 $207,228,554 $157,449,929 Net Cash Flows from: Operating Activities Increase in cash flows provided by operating activities from 2012 to 2013: Net cash flows provided by operating activities amounted to $37.8 million during the year ended December 31, 2013, compared to $24.7 million during theyear ended December 31, 2012. During the year ended December 31, 2013, cash flows provided by operating activities increased by approximately $13.0million primarily due to an increase in property operating income of approximately $25.7 million, offset by an increase in interest expense of approximately$4.5 million due to higher borrowing amounts in 2013 as compared to 2012, and the cash settlement of two of the Company’s interest rate swaps in 2013 forapproximately $8.7 million.Increase in cash flows provided by operating activities from 2011 to 2012: Net cash flows provided by operating activities amounted to $24.7 million during the year ended December 31, 2012, as compared to $17.3 million duringthe year ended December 31, 2011. During the year ended December 31, 2012, cash flows provided by operating activities increased by approximately $7.4million primarily due to an increase in property operating income of approximately $17.5 million. This was partially offset by an increase in interest expenseof approximately $5.2 million during 2012 as compared to 2011 due to higher borrowing amounts in 2012 as compared to 2011, and an increase in generaland administrative expenses of $3.3 million, primarily as a result of expenses incurred related to severance costs and the cost for moving the Company’scorporate headquarters from White Plains, New York to San Diego, California, for which there were no comparable expenses in the prior year. Investing Activities Increase in cash flows used in investing activities from 2012 to 2013: Net cash flows used by investing activities amounted to $345.0 million during the year ended December 31, 2013, compared to $261.6 million during theyear ended December 31, 2012. During the year ended December 31, 2013, cash flows used in investing activities increased approximately $83.4 million,primarily due to the increase in investments in real estate and acquisitions of entities of approximately $76.9 million, and an increase in improvements toproperties of approximately $7.7 million, offset by proceeds from the sale of real estate of approximately $5.6 million. Additionally, in 2012, the Companyrecorded approximately $8.7 million for the return of capital from unconsolidated joint ventures, for which there was no activity recorded in the current year. 39 Increase in cash flows used in investing activities from 2011 to 2012: Net cash flows used by investing activities amounted to $261.6 million during the year ended December 31, 2012, compared to $225.2 million during theyear ended December 31, 2011. During the year ended December 31, 2012, cash flows used in investing activities increased approximately $36.4 million,primarily due to the increase in investments in real estate, net of investments in mortgage notes receivables of approximately $38.9 million, and a decrease inthe return of capital from unconsolidated joint ventures of approximately $9.4 million. This increase was offset by a decrease in investments fromunconsolidated joint ventures of approximately $18.9 million due to the consolidation of several joint ventures during 2012. Financing Activities Increase in cash flows provided by financing activities from 2012 to 2013: Net cash flows provided by financing activities amounted to $310.5 million during the year ended December 31, 2013, compared to $207.2 million duringthe year ended December 31, 2012. During the year ended December 31, 2013, cash flows provided by financing activities increased approximately $103.2million, primarily due to the receipt of $226.5 million of proceeds from the exercise of warrants, and proceeds of approximately $245.8 million from theissuance of senior unsecured bonds. These increases were offset by an increase in net payments on the credit facility of approximately $271.1 million,payments made to acquire warrants of approximately $32.8 million, an increase in dividends paid to shareholders of approximately $15.5 million, a $7.0million increase in the principal repayment on mortgages due to the principal repayments on two mortgage notes, and approximately $37.8 million inproceeds received during 2012 related to the sale of common stock under the ATM program, for which no activity occurred during 2013. Increase in cash flows provided by financing activities from 2011 to 2012: Net cash flows provided by financing activities amounted to $207.2 million during the year ended December 31, 2012, compared to $157.4 million duringthe year ended December 31, 2011. During the year ended December 31, 2012, cash flows provided by financing activities increased approximately $49.8million, primarily due to an increase in net proceeds of approximately $99.0 million from borrowings under the term loan/credit facilities and a $4.4 milliondecrease in the principal repayment on mortgages. These increases were offset by a decrease of approximately $44.8 million in proceeds received related tothe sale of common stock under the ATM program and an increase in dividends paid to shareholders of approximately $10.7 million. Contractual Obligations The following table presents the Company’s operating lease obligations and the principal and interest amounts of the Company’s long-term debt maturingeach year, including amortization of principal based on debt outstanding, at December 31, 2013: 2014 2015 2016 2017 2018 Thereafter Total Contractual obligations: Mortgage Notes Payable Principal (1) $10,002,644 $77,267,004 $7,582,838 $8,460,412 $10,136,577 $— $113,449,475 Mortgage Notes Payable Interest 6,683,686 4,427,961 1,317,579 910,889 104,635 — 13,444,750 Term loan(2) — — — 200,000,000 — — 200,000,000 Credit facility (2) — — — 56,950,000 — — 56,950,000 Senior Notes Due 2023 (3) 12,500,000 12,500,000 12,500,000 12,500,000 12,500,000 312,500,000 375,000,000 Operating lease obligations 821,365 825,279 893,333 961,508 965,786 29,048,612 33,515,883 Total $30,007,695 $95,020,244 $22,293,750 $279,782,809 $23,706,998 $341,548,612 $792,360,108 __________________ (1)Does not include unamortized mortgage premium of $5.5 million as of December 31, 2013. (2)For the purpose of the above table, the Company has assumed that borrowings under the loan agreements accrue interest at the average interestrate on the term loan and credit facility during the year ended December 31, 2013 which was 1.6% and 1.5%, respectively. Borrowings under theterm loan and credit facility bear interest at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable(i) a LIBOR rate determined by reference to the cost of funds for dollar deposits for the relevant period, or (ii) a base rate determined by referenceto the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank, National Association at its “prime rate,” and(c) the Eurodollar Rate plus 1.00%. (3)Represents both principal and interest. The Company has committed approximately $2.9 million and $612,000 in tenant improvements and leasing commissions, respectively, for the new leasesand renewals that occurred during the year ended December 31, 2013. As of December 31, 2013, the Company did not have any capital lease obligations. 40 The Company has entered into several lease agreements with an officer of the Company. Pursuant to the lease agreements, the Company is provided the useof storage space. Off-Balance Sheet Arrangements The Company had an investment in an unconsolidated joint venture which was an off-balance sheet investment. This unconsolidated joint venture wasaccounted for under the equity method of accounting as the Company had the ability to exercise significant influence, but did not control the operating andfinancial decisions of this investment. The Company’s off-balance sheet arrangements are more fully discussed in Note 2, “Real Estate Investments,” in theaccompanying consolidated financial statements. As of December 31, 2013, the Company no longer has any off-balance sheet arrangements. Real Estate Taxes The Company’s leases generally require the tenants to be responsible for a pro rata portion of the real estate taxes. Inflation The Company’s long-term leases contain provisions to mitigate the adverse impact of inflation on its operating results. Such provisions include clausesentitling the Company to receive (a) scheduled base rent increases and (b) percentage rents based upon tenants’ gross sales which generally increase as pricesrise. In addition, many of the Company’s non-anchor leases are for terms of less than ten years, which permits the Company to seek increases in rents uponrenewal at then-current market rates if rents provided in the expiring leases are below then-existing market rates. Most of the Company’s leases requiretenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Company’sexposure to increases in costs and operating expenses resulting from inflation. Leverage Policies The Company employs prudent amounts of leverage and uses debt as a means of providing additional funds for the acquisition of its properties and thediversification of its portfolio. The Company seeks to primarily utilize unsecured debt in order to maintain liquidity and flexibility in its capital structure. The Operating Partnership has a revolving credit facility with several banks. Previously, the credit facility provided for borrowings of up to$200.0 million. Effective September 26, 2013, the Company entered into a third amendment to the amended and restated credit agreement pursuant to whichthe borrowing capacity was increased to $350.0 million. Additionally, the credit facility contains an accordion feature, which was amended to allow theOperating Partnership to increase the facility amount up to an aggregate of $700.0 million subject to lender consents and other conditions. The maturity dateof the credit facility has been extended to August 29, 2017, subject to a further one-year extension option, which may be exercised by the OperatingPartnership upon satisfaction of certain conditions. Additionally, in December 2013, the Operating Partnership issued $250.0 million aggregate principal amount of 5.000% unsecured senior notes which werefully and unconditionally guaranteed by the Company.The Company may borrow on a non-recourse basis or at the corporate level or Operating Partnership level. Non-recourse indebtedness means theindebtedness of the borrower or its subsidiaries is secured only by specific assets without recourse to other assets of the borrower or any of itssubsidiaries. Even with non-recourse indebtedness, however, a borrower or its subsidiaries will likely be required to guarantee against certain breaches ofrepresentations and warranties such as those relating to the absence of fraud, misappropriation, misapplication of funds, environmental conditions andmaterial misrepresentations. Because non-recourse financing generally restricts the lender’s claim on the assets of the borrower, the lender generally mayonly proceed against the asset securing the debt. This may protect the Company’s other assets.The Company plans to evaluate each investment opportunity and determine the appropriate leverage on a case-by-case basis and also on a Company-widebasis. The Company may seek to refinance indebtedness, such as when a decline in interest rates makes it beneficial to prepay an existing mortgage, when anexisting mortgage matures or if an attractive investment becomes available and the proceeds from the refinancing can be used to purchase the investment.The Company plans to finance future acquisitions through a combination of cash, borrowings under its credit facilities, the assumption of existing mortgagedebt, the issuance of OP Units, and equity and debt offerings. In addition, the Company may acquire retail properties indirectly through joint ventures withthird parties as a means of increasing the funds available for the acquisition of properties. 41 DistributionsThe Operating Partnership and ROIC intend to make regular quarterly distributions to holders of their OP Units and common stock, respectively. TheOperating Partnership pays distributions to ROIC directly as a holder of units of the Operating Partnership, and indirectly to ROIC through distributions toRetail Opportunity Investments GP, LLC, a wholly owned subsidiary of ROIC. U.S. federal income tax law generally requires that a REIT distribute annuallyat least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S. federalincome tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regular quarterlydividends to its stockholders in an amount not less than its net taxable income, if and to the extent authorized by its board of directors. If ROIC’s cashavailable for distribution is less than its net taxable income, ROIC could be required to sell assets or borrow funds to make cash distributions or the Companymay make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company’s primary market risk exposure is to changes in interest rates related to its debt. There is inherent rollover risk for borrowings as they matureand are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and theCompany’s future financing requirements. As of December 31, 2013, the Company had $256.9 million of variable rate debt outstanding. As of December 31, 2013, the Company has primarily usedfixed-rate debt and forward starting interest rate swaps to manage its interest rate risk. See the discussion under Note 12, “Derivative and Hedging Activities,”to the accompanying consolidated financial statements for certain quantitative details related to the interest rate swaps. The Company previously entered into five interest rate swaps in order to economically hedge against the risk of rising interest rates that would affect theCompany’s interest expense related to its future anticipated debt issuances as part of its overall borrowing program. During the year ended December 31,2013, the Company settled two of its interest rate swaps in accordance with their settlement dates, and accordingly, have three remaining interest rate swapsas of December 31, 2013. The sensitivity analysis table presented below shows the estimated instantaneous parallel shift in the yield curve up and down by50 and 100 basis points, respectively, on the clean market value of its interest rate derivatives as of December 31, 2013, exclusive of non-performance risk. Swap Notional Less 100 basispoints Less 50 basispoints December 31,2013 Value Increase 50basis points Increase 100basis points$25,000,000 (3,871,657) (2,949,159) (2,042,486) (1,165,214) (320,654)$25,000,000 (1,715,359) (1,090,172) (486,338) 134,957 738,525 $25,000,000 (76,736) 967,239 1,949,707 2,918,511 3,841,179 See Note 12 of the accompanying consolidated financial statements for a discussion on how the Company values derivative financial instruments. TheCompany calculates the value of its interest rate swaps based upon the present value of the future cash flows expected to be paid and received on each leg ofthe swap. The cash flows on the fixed leg of the swap are agreed to at inception and the cash flows on the floating leg of a swap change over time as interestrates change. To estimate the floating cash flows at each valuation date, the Company utilizes a forward curve which is constructed using LIBOR fixings,Eurodollar futures, and swap rates, which are observable in the market. Both the fixed and floating legs’ cash flows are discounted at market discountfactors. For purposes of adjusting its derivative valuations, the Company incorporates the nonperformance risk for both itself and its counterparties to thesecontracts based upon management’s estimates of credit spreads, credit default swap spreads (if available) or Moody’s KMV ratings in order to derive a curvethat considers the term structure of credit. As a corporation that has elected to qualify as a REIT for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2010,ROIC’s future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers tothe risk of loss from adverse changes in market prices and interest rates. The Company will be exposed to interest rate changes primarily as a result of long-term debt used to acquire properties and make real estate-related debt investments. The Company’s interest rate risk management objectives will be to limitthe impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, the Company expects toborrow primarily at fixed rates or variable rates with the lowest margins available and, in some cases, with the ability to convert variable rates to fixedrates. In addition, the Company uses derivative financial instruments to manage interest rate risk. The Company will not use derivatives for trading orspeculative purposes and will only enter into contracts with major financial institutions based on their credit rating and other factors. Currently, theCompany uses three interest rate swaps to manage its interest rate risk. See Note 12 of the accompanying consolidated financial statements. Item 8. Financial Statements and Supplementary Data The information required by Item 8 of Part II is incorporated by reference to Item 15 of Part IV commencing on page 44 to this Annual Report on Form 10-K. 42 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures (Retail Opportunity Investments Corp.) ROIC maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed under theSecurities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities andExchange Commission's rules and forms, and that such information is accumulated and communicated to its management, including its chief executiveofficer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controlsand procedures, ROIC's management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonableassurance of achieving the desired control objectives, and its management is required to apply its judgment in evaluating the cost-benefit relationship ofpossible controls and procedures. ROIC's Chief Executive Officer and Chief Financial Officer, based on their evaluation of ROIC's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, have concluded that as of the end of the periodcovered by this report, ROIC's disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation anddisclosure of information relating to ROIC that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgatedthereunder. During the year ended December 31, 2013, there was no change in ROIC's internal control over financial reporting that has materially affected, or isreasonably likely to materially affect, ROIC's internal control over financial reporting. Evaluation of Disclosure Controls and Procedures (Retail Opportunity Investments Partnership, LP) The Operating Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reportsfiled under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in theU.S. Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to its management, including itschief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating thedisclosure controls and procedures, the Operating Partnership's management recognizes that any controls and procedures, no matter how well designed andoperated, can provide only reasonable assurance of achieving the desired control objectives, and its management is required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures. The Company's Chief Executive Officer and Chief Financial Officer, based on their evaluation of the Operating Partnership's disclosure controls andprocedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, have concludedthat as of the end of the period covered by this report, the Operating Partnership's disclosure controls and procedures were effective to give reasonableassurances to the timely collection, evaluation and disclosure of information relating to the Operating Partnership that would potentially be subject todisclosure under the Exchange Act and the rules and regulations promulgated thereunder. During the year ended December 31, 2013, there was no change in the Operating Partnership's internal control over financial reporting that has materiallyaffected, or is reasonably likely to materially affect, the Operating Partnership's internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting (Retail Opportunity Investments Corp.) Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange ActRules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of ROIC’s management, including the Chief Executive Officer and ChiefFinancial Officer, ROIC conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2013 based on theframework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992Framework). Based on that evaluation, Management concluded that its internal control over financial reporting was effective as of December 31, 2013. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. The effectiveness of internal control over financial reporting as of December 31, 2013, has been audited by Ernst & Young LLP, an independent registeredpublic accounting firm, as stated in its report which appears on page 54 of this Annual Report on Form 10-K. 43 Management’s Report on Internal Control over Financial Reporting (Retail Opportunity Investments Partnership, LP) Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange ActRules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of the Operating Partnership’s management, including the Chief ExecutiveOfficer and Chief Financial Officer of ROIC, the Operating Partnership conducted an evaluation of the effectiveness of its internal control over financialreporting as of December 31, 2013 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizationsof the Treadway Commission (1992 Framework). Based on that evaluation, Management concluded that its internal control over financial reporting waseffective as of December 31, 2013. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.Changes in Internal Control over Financial Reporting There was no change in ROIC’s or the Operating Partnership’s internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during its most recent quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financialreporting. Item 9B. Other Information None.PART III Item 10. Directors, Executive Officers and Corporate Governance Information required by this Item is hereby incorporated by reference to the material appearing in the Proxy Statement for the Company’s 2014 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2013. Item 11. Executive Compensation Information required by this Item is hereby incorporated by reference to the material appearing in the Proxy Statement for the Company’s 2014 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2013. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this Item is hereby incorporated by reference to the material appearing in the Proxy Statement for the Company’s 2014 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2013. Item 13. Certain Relationships and Related Transactions, and Director Independence Information required by this Item is hereby incorporated by reference to the material appearing in the Proxy Statement for the Company’s 2014 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2013. Item 14. Principal Accounting Fees and Services Information required by this Item is hereby incorporated by reference to the material appearing in the Proxy Statement for the Company’s 2014 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2013. PART IV Item 15. Exhibits and Financial Statement Schedules (a)(1) and (2) Financial Statements and Schedules Reference is made to the “Index To Consolidated Financial Statements and Financial Statement Schedules” on page 52 of this Annual Report on Form 10-Kand the consolidated financial statements included herein, beginning on page 56. 44 (a)(3) Exhibits 2.1Articles of Merger between Retail Opportunity Investments Corp., a Delaware corporation, and Retail Opportunity Investments Corp., aMaryland corporation, as survivor(1) 3.1Articles of Amendment and Restatement(1) 3.2Bylaws(1) 3.3Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP dated as of September 27,2013 among Retail Opportunity Investments GP, LLC as general partner, Retail Opportunity Investments Corp. and the other limitedpartners thereto(2)4.1Specimen Unit Certificate(3) 4.2Specimen Common Stock Certificate(3) 4.3Specimen Warrant Certificate(3) 4.4Letter Agreement, dated December 11, 2012, between Opportunity Investments Corp. and Computershare Trust Company, NA.(4) 4.5Form of Indenture between Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Wells Fargo Bank,National Association(12) 4.6Form of Indenture between Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp. and Wells Fargo Bank,National Association(12) 4.7 Debt Security of Retail Opportunity Investments Partnership, LP, guaranteed by Retail Opportunity Investments Corp.10.1Employment Agreement, by and between NRDC Acquisition Corp. and Stuart Tanz, dated as of October 20, 2009(2) 10.22009 Equity Incentive Plan(7) 10.3Form of Restricted Stock Award Agreement under 2009 Equity Incentive Plan(3) 10.4Form of Option Award Agreement under 2009 Equity Incentive Plan(3) 10.5Employment Agreement, by and between Retail Opportunity Investments Corp. and Richard K. Schoebel, dated as of December 9, 2009(4) 10.6Restricted Stock Award Agreement, by and between Retail Opportunity Investments Corp. and Richard K. Schoebel, dated as ofDecember 9, 2009(4) 10.7Option Award Agreement, by and between Retail Opportunity Investments Corp. and Richard K. Schoebel, dated as of December 9, 2009(4) 10.8ATM Equity OfferingSM Sales Agreement dated June 23, 2011 by and among Merrill Lynch, Pierce, Fenner & Smith Incorporated, RetailOpportunity Investments Partnership, LP and Retail Opportunity Investments Corp.(5) 10.9Letter Agreement, between Retail Opportunity Investments Corp. and Richard A. Baker, dated April 2, 2012(8) 10.10First Amended and Restatement Credit Agreement, dated as of August 29, 2012, among Retail Opportunity Investments Partnership, LP, asthe Borrower, Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein,as the Subsidiary Guarantors, KeyBank National Association, as Administrative Agent, Swing Line Lender and L/C Issuer, Bank ofAmerica, N.A., as the Syndication Agent, PNC Bank, National Association and U.S. Bank National Association, as Co-DocumentationAgents, and the other lenders party thereto(9) 10.11First Amended and Restated Term Loan Agreement, dated as of August 29, 2012, among Retail Opportunity Investments Partnership, LP, asthe Borrower, Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein,as the Subsidiary Guarantors, KeyBank National Association, as Administrative Agent, Bank of America, N.A., as the Syndication Agent,PNC Bank, National Association and U.S. Bank National Association, as Co-Documentation Agents, and the other lenders party thereto(9) 45 10.12Employment Contract, between Retail Opportunity Investments Corp. and Michael B. Haines, dated November 19, 2012(10)10.13Letter Agreement, between Retail Opportunity Investments Corp. and Laurie Sneve dated October 24, 2012(11)10.14Third Amendment to the Amended and Restated Credit Agreement among Retail Opportunity Investments Partnership, LP, as the Borrower,Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein, as theSubsidiary Guarantors, KeyBank National Association, as Administrative Agent and the other lenders party thereto, dated September 26,2013(2)10.15Third Amendment to the Amended and Restated Term Loan among Retail Opportunity Investments Partnership, LP, as the Borrower, RetailOpportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein, as the SubsidiaryGuarantors, KeyBank National Association, as Administrative Agent, and the other lenders party thereto, dated September 26, 2013(2)10.16Contribution Agreement among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the sellersidentified therein(2)10.17Contribution Agreement among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the sellersidentified therein(2)10.18Tax Protection Agreement among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the protectedpartners identified therein(2)10.19Tax Protection Agreement among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and the protectedpartners identified therein(2)10.20Registration Rights Agreement among Retail Opportunity Investments Corp. and the holders named therein(2)10.21Registration Rights Agreement among Retail Opportunity Investments Corp. and the holders named therein(2)21.1List of Subsidiaries of Retail Opportunity Investments Corp. 23.1Consent of Ernst & Young LLP for Retail Opportunity Investments Corp.23.2Consent of Ernst & Young LLP for Retail Opportunity Investments Partnership, LP 31.1Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of Retail Opportunity Investments Corp. 31.2Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of Retail Opportunity InvestmentsPartnership, LP31.3Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of Retail Opportunity Investments Corp. 31.4Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 32.1Certifications pursuant to Section 1350 101 INSXBRL Instance Document 101 SCHXBRL Taxonomy Extension Schema 101 CALXBRL Taxonomy Extension Calculation Database 101 DEFTaxonomy Extension Definition Linkbase 46 101 LABXBRL Taxonomy Extension Label Linkbase 101 PREXBRL Taxonomy Extension Presentation Linkbase________________________ (1)Incorporated by reference to the Company’s current report on Form 8-K filed on June 2, 2011(2)Incorporated by reference to the Company’s current report on Form 8-K filed on October 2, 2013(3)Incorporated by reference to the Company’s current report on Form 8-K filed on October 26, 2009.(4)Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 12, 2010.(5)Incorporated by reference to the Company’s current report on Form 8-K filed on June 23, 2011.(6)Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 12, 2010.(7)Incorporated by reference to the Company’s Post-Effective Amendment No. 1 to the Company’s registration statement on Form S-8 filed on June 3,2011 (File No. 333-170692).(8)Incorporated by reference to the Company’s current report on Form 8-K filed on April 5, 2012(9)Incorporated by reference to the Company’s current report on Form 8-K filed on September 5, 2012(10)Incorporated by reference to the Company’s current report on Form 8-K filed on November 30, 2012(11)Incorporated by reference to the Company’s current report on Form 8-K filed on January 2, 2013(12)Incorporated by reference to the Company’s current report on Form 8-K filed on December 9, 2013(13)Incorporated by reference to the Company’s current report on Form 8-K filed on June 2, 2011(14)Incorporated by reference to the Company’s current report on Form 8-K filed on October 2, 2013 47 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized. RETAIL OPPORTUNITY INVESTMENTS CORP.Registrant Date: February 25, 2014By: /s/ Stuart A. Tanz Stuart A. Tanz President and Chief Executive Officer (Principal Executive Officer) 48 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stuart A. Tanz and Michael B.Haines, and each of them, with full power to act without the other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitutionand resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all amendmentsthereto, and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and ExchangeCommission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thingnecessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying andconfirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done byvirtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated. Date: February 25, 2014/s/ Richard A. Baker Richard A. Baker Non-Executive Chairman of the Board Date: February 25, 2014/s/ Stuart A. Tanz Stuart A. Tanz President, Chief Executive Officer and Director (Principal Executive Officer) Date: February 25, 2014/s/ Michael B. Haines Michael B. Haines Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: February 25, 2014/s/ Laurie A. Sneve Laurie A. Sneve Chief Accounting Officer Date: February 25, 2014/s/ Michael J. Indiveri Michael J. Indiveri Director Date: February 25, 2014/s/ Edward H. Meyer Edward H. Meyer Director Date: February 25, 2014/s/ Lee S. Neibart Lee S. Neibart Director Date: February 25, 2014/s/ Charles J. Persico Charles J. Persico Director Date: February 25, 2014/s/ Laura H. Pomerantz Laura H. Pomerantz DirectorDate: February 25, 2014/s/ Eric S. Zorn Eric S. Zorn Director 49 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized. RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP, by RetailOpportunity Investments GP, LLC, its sole general partnerRegistrant Date: February 25, 2014By: /s/ Stuart A. Tanz Stuart A. Tanz President and Chief Executive Officer (Principal Executive Officer) 50 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stuart A. Tanz and Michael B.Haines, and each of them, with full power to act without the other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitutionand resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all amendmentsthereto, and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and ExchangeCommission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thingnecessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying andconfirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done byvirtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated. Date: February 25, 2014/s/ Richard A. Baker Richard A. Baker Non-Executive Chairman of the Board Date: February 25, 2014/s/ Stuart A. Tanz Stuart A. Tanz President, Chief Executive Officer and Director (Principal Executive Officer) Date: February 25, 2014/s/ Michael B. Haines Michael B. Haines Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: February 25, 2014/s/ Laurie A. Sneve Laurie A. Sneve Chief Accounting Officer Date: February 25, 2014/s/ Michael J. Indiveri Michael J. Indiveri Director Date: February 25, 2014/s/ Edward H. Meyer Edward H. Meyer Director Date: February 25, 2014/s/ Lee S. Neibart Lee S. Neibart Director Date: February 25, 2014/s/ Charles J. Persico Charles J. Persico Director Date: February 25, 2014/s/ Laura H. Pomerantz Laura H. Pomerantz DirectorDate: February 25, 2014/s/ Eric S. Zorn Eric S. Zorn Director 51 Retail Opportunity Investments Corp. and Retail Opportunity Investments Partnership, LPIndex to Consolidated Financial Statements and Financial Statement Schedules PageReports of Independent Registered Public Accounting Firm53 Consolidated Financial Statements of Retail Opportunity Investments Corp.: Consolidated Balance Sheets at December 31, 2013 and 201256Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2013, 2012 and 201157Consolidated Statements of Equity for the years ended December 31, 2013, 2012 and 201158Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 201159 Consolidated Financial Statements of Retail Opportunity Investments Partnership, LP: Consolidated Balance Sheets at December 31, 2013 and 201260Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2013, 2012 and 201161Consolidated Statements of Partners Capital for the years ended December 31, 2013, 2012 and 201162Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 201163 Notes to Consolidated Financial Statements64 Schedules III Real Estate and Accumulated Depreciation – December 31, 201383 IV Mortgage Loans on Real Estate – December 31, 201385 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required underthe related instructions or are inapplicable and therefore have been omitted. 52 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders ofRetail Opportunity Investments Corp. We have audited the accompanying consolidated balance sheets of Retail Opportunity Investments Corp. (the “Company”) as of December 31, 2013 and2012, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the periodended December 31, 2013. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements andschedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedulesbased on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Retail OpportunityInvestments Corp. at December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in the periodended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules,when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Retail Opportunity InvestmentsCorp.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control – Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated February 25, 2014 expressed anunqualified opinion thereon. /s/ Ernst & Young LLPNew York, New YorkFebruary 25, 2014 53 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders ofRetail Opportunity Investments Corp. We have audited Retail Opportunity Investments Corp.’s (the “Company”) internal control over financial reporting as of December 31, 2013, based oncriteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992Framework) (the COSO criteria). Retail Opportunity Investments Corp.’s management is responsible for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report onInternal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based onour audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. In our opinion, Retail Opportunity Investments Corp. maintained, in all material respects, effective internal control over financial reporting as ofDecember 31, 2013, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof Retail Opportunity Investments Corp. as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income(loss), equity, and cash flows for each of the three years in the period ended December 31, 2013 of Retail Opportunity Investments Corp. and our report datedFebruary 25, 2014 expressed an unqualified opinion thereon. /s/ Ernst & Young LLPNew York, New YorkFebruary 25, 2014 54 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Partners of Retail Opportunity Investments Partnership, LP We have audited the accompanying consolidated balance sheets of Retail Opportunity Investments Partnership, LP (the “Operating Partnership”) as ofDecember 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income (loss), Partners’ capital, and cash flows for eachof the three years in the period ended December 31, 2013. Our audits also included the financial statement schedules listed in the Index at Item 15. Thesefinancial statements and schedules are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on thesefinancial statements and schedules based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Retail OpportunityInvestments Partnership, LP at December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in theperiod ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statementschedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forththerein. /s/ Ernst & Young LLPNew York, New YorkFebruary 25, 2014 55 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED BALANCE SHEETS December 31, 2013 December 31, 2012 ASSETS Real Estate Investments: Land $458,252,028 $283,445,257 Building and improvements 914,181,620 588,248,338 1,372,433,648 871,693,595 Less: accumulated depreciation 57,499,980 32,364,772 1,314,933,668 839,328,823 Mortgage note receivable — 10,000,000 Investment in and advances to unconsolidated joint venture — 15,295,223 Real Estate Investments, net 1,314,933,668 864,624,046 Cash and cash equivalents 7,919,697 4,692,230 Restricted cash 1,298,666 1,700,692 Tenant and other receivables, net 20,389,068 12,455,190 Deposits 775,000 2,000,000 Acquired lease intangible assets, net of accumulated amortization 55,887,471 41,230,616 Prepaid expenses 1,371,296 1,245,778 Deferred charges, net of accumulated amortization 33,121,980 21,623,474 Other 3,392,997 1,339,501 Total assets $1,439,089,843 $950,911,527 LIABILITIES AND EQUITY Liabilities: Term loan $200,000,000 $200,000,000 Credit facility 56,950,000 119,000,000 Senior Notes Due 2023 245,845,320 — Mortgage notes payable 118,903,258 72,689,842 Acquired lease intangible liabilities, net of accumulated amortization 85,283,882 57,371,803 Accounts payable and accrued expenses 13,349,068 6,468,580 Tenants’ security deposits 3,422,910 2,336,680 Other liabilities 9,925,339 26,502,551 Total liabilities 733,679,777 484,369,456 Commitments and contingencies — — Equity: Preferred stock, $.0001 par value 50,000,000 shares authorized; none issued and outstanding — — Common stock, $.0001 par value 500,000,000 shares authorized; and 72,445,767 and 52,596,754 shares issued andoutstanding at December 31, 2013 and 2012, respectively 7,238 5,260 Additional paid-in-capital 732,701,858 523,540,268 Dividends in excess of earnings (47,616,570) (38,851,234)Accumulated other comprehensive loss (8,969,137) (18,154,612)Total Retail Opportunity Investments Corp. stockholders' equity 676,123,389 466,539,682 Non-controlling interests 29,286,677 2,389 Total equity 705,410,066 466,542,071 Total liabilities and equity $1,439,089,843 $950,911,527 See accompanying notes to consolidated financial statements. 56 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the year ended December 31, 2013 2012 2011 Revenues Base rents $86,194,511 $59,218,635 $39,581,142 Recoveries from tenants 22,497,745 13,483,825 9,789,903 Mortgage interest income 623,793 1,106,089 1,908,655 Other income 1,915,982 1,287,138 457,812 Total revenues 111,232,031 75,095,687 51,737,512 Operating expenses Property operating 19,749,972 12,779,758 8,403,771 Property taxes 11,246,967 7,281,213 5,022,544 Depreciation and amortization 40,397,895 29,074,709 21,264,172 General and administrative expenses 10,058,669 12,734,254 9,390,091 Acquisition transaction costs 1,688,521 1,347,611 2,290,838 Other expenses 314,833 324,354 411,142 Total operating expenses 83,456,857 63,541,899 46,782,558 Operating income 27,775,174 11,553,788 4,954,954 Non-operating income (expenses) Interest expense and other finance expenses (15,854,978) (11,379,857) (6,225,084)Gain on consolidation of joint venture 20,381,849 2,144,696 — Gain on bargain purchase — 3,864,145 9,449,059 Equity in earnings from unconsolidated joint ventures 2,389,937 1,697,980 1,458,249 Interest income — 11,861 19,143 Income from continuing operations 34,691,982 7,892,613 9,656,321 Loss from discontinued operations (713,529) — — Net income 33,978,453 7,892,613 9,656,321 Net income attributable to non-controlling interest (164,892) — — Net Income Attributable to Retail Opportunity Investments Corp. $33,813,561 $7,892,613 $9,656,321 Net income per share - basic: Income from continuing operations $0.51 $0.15 $0.23 Loss from discontinued operations (0.01) — — Net income per share $0.50 $0.15 $0.23 Net income per share - diluted: Income from continuing operations $0.49 $0.15 $0.23 Loss from discontinued operations (0.01) — — Net income per share $0.48 $0.15 $0.23 Dividends per common share $0.60 $0.53 $0.39 Comprehensive income (loss): Net income. $33,978,453 $7,892,613 $9,656,321 Other comprehensive (loss) income Unrealized gain (loss) on swap derivative Unrealized swap derivative gain (loss) arising during the period 4,564,248 (7,859,264) (14,657,235)Reclassification adjustment for amortization of interest expense included in net income 4,621,227 3,799,482 1,080,323 Other comprehensive gain (loss) 9,185,475 (4,059,782) (13,576,912)Comprehensive income (loss) 43,163,928 3,832,831 (3,920,591)Comprehensive income attributable to non-controlling interests (164,892) — — Comprehensive income (loss) attributable to Retail Opportunity Investments Corp $42,999,036 $3,832,831 $(3,920,591) See accompanying notes to consolidated financial statements. 57 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED STATEMENTS OF EQUITY Common Stock Shares Amount Additionalpaid-in capital Retainedearnings(Accumulateddeficit) Accumulatedothercomprehensiveloss Non-controllinginterests Equity Balance at December 31, 2010 41,638,100 $4,164 $403,915,775 $(12,880,840) $(517,918) $2,389 $390,523,570 Shares issued under the 2009 Plan 151,135 15 — — — — 15 Repurchase of common stock (20,297) (2) (235,544) — — — (235,546) Stock based compensation expense — — 2,185,922 — — — 2,185,922 Proceeds from the sale of stock 7,606,800 761 82,599,749 — — — 82,600,510 Registration expenditures — — (4,271,468) — — — (4,271,468) Cash dividends ($.39 per share) — — — (16,349,970) — — (16,349,970) Dividends payable to officers — — — (43,388) — — (43,388) Net income attributable to RetailOpportunity Investments Corp. — — — 9,656,321 — — 9,656,321 Other comprehensive loss — — — — (13,576,912) — (13,576,912) Balance at December 31, 2011 49,375,738 4,938 484,194,434 (19,617,877) (14,094,830) 2,389 450,489,054 Shares issued under the 2009 Plan 224,067 22 — — — — 22 Repurchase of common stock (55,496) (6) (708,170) — — — (708,176) Stock based compensation expense — — 3,393,439 — — — 3,393,439 Proceeds from the sale of stock 3,051,445 306 37,811,352 — — — 37,811,658 Registration expenditures — — (1,162,787) — — — (1,162,787) Proceeds from the exercise of warrants 1,000 — 12,000 — — — 12,000 Cash dividends ($.53 per share) — — — (27,057,495) — — (27,057,495) Dividends payable to officers — — — (68,475) — (68,475) Net income attributable to RetailOpportunity Investments Corp. — — — 7,892,613 — — 7,892,613 Other comprehensive loss — — — — (4,059,782) — (4,059,782) Balance at December 31, 2012 52,596,754 5,260 523,540,268 (38,851,234) (18,154,612) 2,389 466,542,071 Shares issued under the 2009 Plan 313,364 31 (31) — — — — Repurchase of common stock (30,333) (3) (406,539) — — — (406,542) Retirement of options — — (274,830) — — — (274,830) Stock based compensation expense — — 2,856,391 — — — 2,856,391 Proceeds from the exercise of warrants 18,877,482 1,882 226,527,896 — — — 226,529,778 Exercise of Sponsor warrants 688,500 68 (68) — — — — Buyback of warrants — — (32,785,921) — — — (32,785,921) Issuance of OP Units to non-controllinginterests — — — — — 45,372,731 45,372,731 Distributions to non-controllinginterests — — — — — (747,230) (747,230) Cash redemption for non-controllinginterests — — — — — (2,189,779) (2,189,779) Adjustment to non-controlling interestsownership in OperatingPartnership — — 13,313,937 (13,313,937) — Purchase of non-controlling interests — — — — — (2,389) (2,389) Registration expenditures — — (69,245) — — — (69,245) Cash dividends ($.60 per share) — — — (42,468,897) — — (42,468,897) Dividends payable to officers — — — (110,000) — — (110,000) Net income attributable to RetailOpportunity Investments Corp. — — — 33,813,561 — — 33,813,561 Net income attributable to non-controlling interests — — 164,892 164,892 Other comprehensive gain — — — — 9,185,475 — 9,185,475 Balance at December 31, 2013 72,445,767 $7,238 $732,701,858 $(47,616,570) $(8,969,137) $29,286,677 $705,410,066 See accompanying notes to consolidated financial statements. 58 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2013 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES Net income $33,978,453 $7,892,613 $9,656,321 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 40,397,895 29,074,709 21,264,172 Amortization of deferred financing costs and mortgage premiums, net (144,313) 494,843 156,575 Gain on consolidation of joint venture (20,381,849) (2,144,696) — Gain on bargain purchase — (3,864,145) (9,449,059)Straight-line rent adjustment (3,733,913) (3,040,510) (2,733,939)Amortization of above and below market rent (4,444,117) (3,659,011) (3,165,657)Amortization relating to stock based compensation 2,856,391 3,393,439 2,185,922 Provisions for tenant credit losses 1,621,940 1,160,568 1,146,224 Equity in earnings from unconsolidated joint ventures (2,389,937) (1,697,980) (1,458,249)Loss on sale of discontinued operations 713,529 — — Settlement of interest rate swap agreements (8,750,000) — — Distribution of cumulative earnings from unconsolidated joint ventures — 686,017 1,513,090 Other 792,244 — — Change in operating assets and liabilities Restricted cash 74,083 (225,245) (159,452)Tenant and other receivables (4,820,044) (3,679,442) (3,252,211)Prepaid expenses (104,814) (573,099) 125,976 Accounts payable and accrued expenses 2,942,797 (1,912,490) 1,729,609 Other assets and liabilities, net (855,880) 2,814,995 (273,125)Net cash provided by operating activities 37,752,465 24,720,566 17,286,197 CASH FLOWS FROM INVESTING ACTIVITIES Investments in real estate (289,399,034) (255,851,952) (206,999,678)Acquisition of entities (43,378,106) — — Proceeds from sale of real estate and land 5,607,612 — 159,973 Investments in mortgage notes receivables (294,000) — (10,000,000)Investments in unconsolidated joint ventures — (735,000) (19,663,218)Return of capital from unconsolidated joint ventures — 8,661,211 18,095,218 Improvements to properties (19,066,525) (11,404,098) (8,014,148)Deposits on real estate acquisitions, net 1,225,000 (2,000,000) (500,000)Construction escrows and other 327,943 (244,639) 1,766,905 Net cash used in investing activities (344,977,110) (261,574,478) (225,154,948) CASH FLOWS FROM FINANCING ACTIVITIES Principal repayments on mortgages (14,902,386) (7,874,618) (12,276,948)Proceeds from draws on term loan/credit facility 342,950,000 209,000,000 140,110,258 Payments on credit facility (405,000,000) — (30,110,258)Proceeds from issuance of Notes Due 2023 245,825,000 — — Payment of contingent consideration (1,864,370) — — Proceeds from exercise of warrants 226,529,778 12,000 — Payments to acquire warrants (32,785,921) — — Proceeds from the sale of stock — 37,811,658 82,600,510 Purchase of Non-controlling interest (2,389) — — Redemption of Operating Partnership Units (2,189,779) — — Distributions to Operating Partnership (747,230) — — Deferred financing and other costs (4,097,377) (2,792,050) (2,481,663)Registration expenditures (69,245) (1,162,787) (3,806,469)Dividends paid to common shareholders (42,512,597) (27,057,495) (16,349,970)Repurchase of common stock (406,542) (708,176) (235,546)Common shares issued under the 2009 Plan — 22 15 Retirement of options (274,830) — — Net cash provided by financing activities 310,452,112 207,228,554 157,449,929 Net increase (decrease) in cash and cash equivalents 3,227,467 (29,625,358) (50,418,822)Cash and cash equivalents at beginning of period 4,692,230 34,317,588 84,736,410 Cash and cash equivalents at end of period $7,919,697 $4,692,230 $34,317,588 Supplemental disclosure of cash activities: Cash paid for federal and state income taxes $241,603 $310,406 $85,075 Interest paid $14,579,450 $10,910,587 $5,961,651 Other non-cash investing and financing activities: Issuance of OP Units in connection with acquisitions of entities $45,372,731 $— $— Assumed mortgage at fair value $62,749,675 $19,668,352 $29,912,371 Intangible lease liabilities $35,383,751 $16,280,503 $30,684,243 Transfer of equity investment in property to real estate investment $15,990,769 $4,008,350 $— Interest rate swap asset $1,948,243 $— $— Interest rate swap liabilities $6,733,812 $4,156,096 $13,338,502 Accrued real estate improvement costs $591,671 $837,312 $252,189 See accompanying notes to consolidated financial statements. 59 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP CONSOLIDATED BALANCE SHEETS December 31, 2013 December 31, 2012 ASSETS Real Estate Investments: Land $458,252,028 $283,445,257 Building and improvements 914,181,620 588,248,338 1,372,433,648 871,693,595 Less: accumulated depreciation 57,499,980 32,364,772 1,314,933,668 839,328,823 Mortgage note receivable — 10,000,000 Investment in and advances to unconsolidated joint venture — 15,295,223 Real Estate Investments, net 1,314,933,668 864,624,046 Cash and cash equivalents 7,919,697 4,692,230 Restricted cash 1,298,666 1,700,692 Tenant and other receivables, net 20,389,068 12,455,190 Deposits 775,000 2,000,000 Acquired lease intangible assets, net of accumulated amortization 55,887,471 41,230,616 Prepaid expenses 1,371,296 1,245,778 Deferred charges, net of accumulated amortization 33,121,980 21,623,474 Other 3,392,997 1,339,501 Total assets $1,439,089,843 $950,911,527 LIABILITIES AND EQUITY Liabilities: Term loan $200,000,000 $200,000,000 Credit facility 56,950,000 119,000,000 Senior Notes Due 2023 245,845,320 — Mortgage notes payable 118,903,258 72,689,842 Acquired lease intangible liabilities, net of accumulated amortization 85,283,882 57,371,803 Accounts payable and accrued expenses 13,349,068 6,468,580 Tenants’ security deposits 3,422,910 2,336,680 Other liabilities 9,925,339 26,502,551 Total liabilities 733,679,777 484,369,456 Commitments and contingencies — — Capital: Partners’ capital, unlimited partnership units authorized: ROIC capital (consists of general and limited partnership interests held by ROIC) 685,092,526 484,694,294 Limited partners’ capital (consists of limited partnership interests held by third parties) 29,286,677 — Accumulated other comprehensive loss (8,969,137) (18,154,612)Total partners’ capital 705,410,066 466,539,682 Non-controlling interests — 2,389 Total capital 705,410,066 466,542,071 Total liabilities and capital $1,439,089,843 $950,911,527 See accompanying notes to consolidated financial statements. 60 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the year ended December 31, 2013 2012 2011 Revenues Base rents $86,194,511 $59,218,635 $39,581,142 Recoveries from tenants 22,497,745 13,483,825 9,789,903 Mortgage interest income 623,793 1,106,089 1,908,655 Other income 1,915,982 1,287,138 457,812 Total revenues 111,232,031 75,095,687 51,737,512 Operating expenses Property operating 19,749,972 12,779,758 8,403,771 Property taxes 11,246,967 7,281,213 5,022,544 Depreciation and amortization 40,397,895 29,074,709 21,264,172 General and administrative expenses 10,058,669 12,734,254 9,390,091 Acquisition transaction costs 1,688,521 1,347,611 2,290,838 Other expenses 314,833 324,354 411,142 Total operating expenses 83,456,857 63,541,899 46,782,558 Operating income 27,775,174 11,553,788 4,954,954 Non-operating income (expenses) Interest expense and other finance expenses (15,854,978) (11,379,857) (6,225,084)Gain on consolidation of joint venture 20,381,849 2,144,696 — Gain on bargain purchase — 3,864,145 9,449,059 Equity in earnings from unconsolidated joint ventures 2,389,937 1,697,980 1,458,249 Interest income — 11,861 19,143 Income from continuing operations 34,691,982 7,892,613 9,656,321 Loss from discontinued operations (713,529) — — Net Income Attributable to Retail Opportunity Investments Partnership, LP $33,978,453 $7,892,613 $9,656,321 Net income per unit - basic: Income from continuing operations $0.51 $0.15 $0.23 Loss from discontinued operations (0.01) — — Net income per unit $0.50 $0.15 $0.23 Net income per unit - diluted: Income from continuing operations $0.49 $0.15 $0.23 Loss from discontinued operations (0.01) — — Net income per unit $0.48 $0.15 $0.23 Distributions per unit $0.60 $0.53 $0.39 Comprehensive income (loss): Net income attributable to Retail Opportunity Investments Partnership, LP. $33,978,453 $7,892,613 $9,656,321 Other comprehensive gain (loss) Unrealized gain (loss) on swap derivative Unrealized swap derivative gain (loss) arising during the period 4,564,248 (7,859,264) (14,657,235)Reclassification adjustment for amortization of interest expense included in net income 4,621,227 3,799,482 1,080,323 Total other comprehensive gain (loss) 9,185,475 (4,059,782) (13,576,912)Comprehensive income (loss) attributable to Retail Opportunity Investments Partnership, LP $43,163,928 $3,832,831 $(3,920,591) See accompanying notes to consolidated financial statements. 61 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL Limited Partner’s Capital (1) ROIC Capital (2) Units Amount Units Amount Accumulatedothercomprehensiveloss Non-controllinginterests Capital Balance at December 31, 2010 — $— 41,638,100 $391,039,099 $(517,918) $2,389 $390,523,570 Distributions to ROIC — — (20,297) (20,900,372) — — (20,900,372)Contributions from ROIC — — 7,757,935 82,600,525 — — 82,600,525 Stock based compensation expense — — — 2,185,922 — — 2,185,922 Net loss attributable to RetailOpportunity InvestmentsPartnership, LP — — — 9,656,321 — — 9,656,321 Other comprehensive loss — — — — (13,576,912) — (13,576,912)Balance at December 31, 2011 — — 49,375,738 464,581,495 (14,094,830) 2,389 450,489,054 Distributions to ROIC — — (55,496) (28,996,933) — — (28,996,933) Contributions from ROIC — — 3,276,512 37,823,680 — — 37,823,680 Stock based compensation expense — — — 3,393,439 — — 3,393,439 Net loss attributable to RetailOpportunity InvestmentsPartnership, LP — — — 7,892,613 — — 7,892,613 Other comprehensive loss — — — — (4,059,782) — (4,059,782)Balance at December 31, 2012 — — 52,596,754 484,694,294 (18,154,612) 2,389 466,542,071 Distributions to ROIC — — (30,333) (76,115,435) — — (76,115,435) Contributions from ROIC — — 19,879,346 226,529,778 — — 226,529,778 Stock based compensation expense — — — 2,856,391 — — 2,856,391 Limited Partner OP Units issued inconnection with propertyacquisition 3,290,263 45,372,731 — — — — 45,372,731 Redemption of OP Units for cash (158,221) (2,189,779) — — — — (2,189,779) Adjustment to non-controllinginterests — (13,313,937) — 13,313,937 — — — Purchase of non-controlling interests — — — — — (2,389) (2,389)Limited Partner distributions — (747,230) — — — — (747,230)Net income attributable to RetailOpportunity InvestmentsPartnership, LP — 164,892 — 33,813,561 — — 33,978,453 Other comprehensive gain — — — — 9,185,475 — 9,185,475 Balance at December 31, 2013 3,132,042 $29,286,677 72,445,767 $685,092,526 $(8,969,137) $— $705,410,066 _____________________ (1)Consists of limited partnership interests held by third parties. (2)Consists of general and limited partnership interests held by ROIC. See accompanying notes to consolidated financial statements. 62 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2013 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES Net income $33,978,453 $7,892,613 $9,656,321 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 40,397,895 29,074,709 21,264,172 Amortization of deferred financing costs and mortgage premiums, net (144,313) 494,843 156,575 Gain on consolidation of joint venture (20,381,849) (2,144,696) — Gain on bargain purchase — (3,864,145) (9,449,059)Straight-line rent adjustment (3,733,913) (3,040,510) (2,733,939)Amortization of above and below market rent (4,444,117) (3,659,011) (3,165,657)Amortization relating to stock based compensation 2,856,391 3,393,439 2,185,922 Provisions for tenant credit losses 1,621,940 1,160,568 1,146,224 Equity in earnings from unconsolidated joint ventures (2,389,937) (1,697,980) (1,458,249)Loss on sale of discontinued operations 713,529 — — Settlement of interest rate swap agreements (8,750,000) — — Distribution of cumulative earnings from unconsolidated joint ventures — 686,017 1,513,090 Other 792,244 — — Change in operating assets and liabilities Restricted cash 74,083 (225,245) (159,452)Tenant and other receivables (4,820,044) (3,679,442) (3,252,211)Prepaid expenses (104,814) (573,099) 125,976 Accounts payable and accrued expenses 2,942,797 (1,912,490) 1,729,609 Other assets and liabilities, net (855,880) 2,814,995 (273,125)Net cash provided by operating activities 37,752,465 24,720,566 17,286,197 CASH FLOWS FROM INVESTING ACTIVITIES Investments in real estate (289,399,034) (255,851,952) (206,999,678)Acquisition of entities (43,378,106) — — Proceeds from sale of real estate and land 5,607,612 — 159,973 Investments in mortgage notes receivables (294,000) — (10,000,000)Investments in unconsolidated joint ventures — (735,000) (19,663,218)Return of capital from unconsolidated joint ventures — 8,661,211 18,095,218 Improvements to properties (19,066,525) (11,404,098) (8,014,148)Deposits on real estate acquisitions, net 1,225,000 (2,000,000) (500,000)Construction escrows and other 327,943 (244,639) 1,766,905 Net cash used in investing activities (344,977,110) (261,574,478) (225,154,948) CASH FLOWS FROM FINANCING ACTIVITIES Principal repayments on mortgages (14,902,386) (7,874,618) (12,276,948)Proceeds from draws on term loan/credit facility 342,950,000 209,000,000 140,110,258 Payments on credit facility (405,000,000) — (30,110,258)Proceeds from issuance of Notes Due 2023 245,825,000 — — Payment of contingent consideration (1,864,370) — — Deferred financing and other costs (4,097,377) (2,792,050) (2,481,663)Distributions to ROIC (76,049,135) (28,928,458) (20,391,985)Contributions from ROIC 226,529,778 37,823,680 82,600,525 Purchase of Non-controlling interest (2,389) — — Redemption of Operating Partnership Units (2,189,779) — — Limited Partner distributions (747,230) — — Net cash provided by financing activities 310,452,112 207,228,554 157,449,929 Net increase (decrease) in cash and cash equivalents 3,227,467 (29,625,358) (50,418,822)Cash and cash equivalents at beginning of period 4,692,230 34,317,588 84,736,410 Cash and cash equivalents at end of period $7,919,697 $4,692,230 $34,317,588 Supplemental disclosure of cash activities: Cash paid for federal and state income taxes $241,603 $310,406 $85,075 Interest paid $14,579,450 $10,910,587 $5,961,651 Other non-cash investing and financing activities: Issuance of OP Units in connection with acquisitions of entities $45,372,731 $— $— Assumed mortgage at fair value $62,749,675 $19,668,352 $29,912,371 Intangible lease liabilities $35,383,751 $16,280,503 $30,684,243 Transfer of equity investment in property to real estate investment $15,990,769 $4,008,350 $— Interest rate swap asset $1,948,243 $— $— Interest rate swap liabilities $6,733,812 $4,156,096 $13,338,502 Accrued real estate improvement costs $591,671 $837,312 $252,189 See accompanying notes to consolidated financial statements. 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization, Basis of Presentation and Summary of Significant Accounting Policies Business Retail Opportunity Investments Corp., a Maryland corporation (“ROIC”), is a fully integrated and self-managed real estate investment trust (“REIT”). ROICspecializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the UnitedStates anchored by supermarkets and drugstores. ROIC is organized in a traditional umbrella partnership real estate investment trust (“UpREIT”) format pursuant to which Retail Opportunity Investments GP,LLC, its wholly-owned subsidiary, serves as the general partner of, and ROIC conducts substantially all of its business through, its operating partnershipsubsidiary, Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), together with itssubsidiaries. Unless otherwise indicated or unless the context requires otherwise, all references to the “Company”, “we,” “us,” “our,” or “our company” referto ROIC together with its consolidated subsidiaries, including the Operating Partnership. With the approval of its stockholders, ROIC reincorporated as a Maryland corporation on June 2, 2011. ROIC began operations as a Delaware corporation,known as NRDC Acquisition Corp., which was incorporated on July 10, 2007, for the purpose of acquiring assets or operating businesses through a merger,capital stock exchange, stock purchase, asset acquisition or other similar business combination with one or more assets or control of one or more operatingbusinesses. On October 20, 2009, ROIC’s stockholders and warrantholders approved each of the proposals presented at the special meetings of stockholdersand warrantholders, respectively, in connection with the transactions contemplated by the Framework Agreement (the “Framework Agreement”) ROICentered into on August 7, 2009 with NRDC Capital Management, LLC, which, among other things, sets forth the steps to be taken by ROIC to continue itsbusiness as a corporation that has elected to qualify as a REIT for U.S. federal income tax purposes, commencing with its taxable year ended December 31,2010. ROIC’s only material asset is its ownership of direct or indirect partnership interests in the Operating Partnership and membership interest in RetailOpportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does not conduct business itself, otherthan acting as the parent company and issuing equity from time to time. The Operating Partnership holds substantially all the assets of the Company anddirectly or indirectly holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of theCompany’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from warrant exercises and equity issuances byROIC, which are contributed to the Operating Partnership, the Operating Partnership generates the capital required by the Company’s business through theOperating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance ofoperating partnership units (“OP Units”) of the Operating Partnership. Recent Accounting Pronouncements In February 2013, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update to improve the reporting of reclassificationsout of accumulated other comprehensive income (“AOCI”), requiring companies to present information about reclassifications out of AOCI in one place andby component. This guidance is effective for interim and annual periods beginning on or after December 15, 2012. Adoption of this guidance did not have amaterial impact on the Company’s consolidated financial statements. Principles of Consolidation The accompanying consolidated financial statements are prepared on the accrual basis in accordance with GAAP. The consolidated financial statementsinclude the accounts and those of its subsidiaries, which are wholly-owned or controlled by the Company. Entities which the Company does not controlthrough its voting interest and entities which are variable interest entities (“VIEs”), but where it is not the primary beneficiary, are accounted for under theequity method. All significant intercompany balances and transactions have been eliminated. The Company follows the FASB guidance for determining whether an entity is a VIE and requires the performance of a qualitative rather than a quantitativeanalysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to directthe activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receivebenefits from the VIE that could be significant to the VIE. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly orindirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheet andmodifies the presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests. 64 Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the disclosure ofcontingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue andexpenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the purchase price allocations,depreciable lives, revenue recognition and the collectability of tenant receivables, other receivables, notes receivables, the valuation of performance-basedrestricted stock, stock options and derivatives. Actual results could differ from these estimates. Federal Income Taxes Commencing with the Company’s taxable year ended December 31, 2010, the Company elected to qualify as a REIT under Sections 856-860 of the InternalRevenue Code (the “Code”). Under those sections, a REIT that, among other things, distributes at least 90% of its REIT taxable income (determined withoutregard to the dividends paid deduction and excluding net capital gains) and meets certain other qualifications prescribed by the Code will not be taxed onthat portion of its taxable income that is distributed. Although it may qualify as a REIT for U.S. federal income tax purposes, the Company is subject to state income or franchise taxes in certain states in whichsome of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) isfully subject to U.S. federal, state and local income taxes. For all periods from inception through September 26, 2013 the Operating Partnership has been anentity disregarded from its sole owner, ROIC, for U.S. federal income tax purposes and as such has not been subject to federal income taxes. EffectiveSeptember 27, 2013, the Operating Partnership issued 3,290,263 OP Units in connection with the acquisitions of Crossroads Shopping Center and Five PointsPlaza, which are described under Note 2 below. Accordingly, the Operating Partnership ceased being a disregarded entity and instead is being treated as apartnership for federal income tax purposes. The Company follows the FASB guidance that defines a recognition threshold and measurement attribute for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return. The FASB also provides guidance on de-recognition, classification, interest andpenalties, accounting in interim periods, disclosure, and transition. The Company records interest and penalties relating to unrecognized tax benefits, if any,as interest expense. The statute of limitations for tax years 2010 through and including 2012 are still open for examination by the Internal Revenue Service(“IRS”) and state taxing authorities. During the year ended December 31, 2011, the IRS conducted an examination of the Company’s 2009 federal taxreturn. During the year ended December 31, 2012 the Company reached a settlement with the IRS in which the Company paid to the IRS approximately$122,000. ROIC intends to make regular quarterly distributions to holders of its common stock. U.S. federal income tax law generally requires that a REIT distributeannually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S.federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regularquarterly dividends to stockholders in an amount not less than its net taxable income, if and to the extent authorized by its board of directors. Before ROICpays any dividend, whether for U.S. federal income tax purposes or otherwise, it must first meet both its operating requirements and its debt service ondebt. If ROIC’s cash available for distribution is less than its net taxable income, it could be required to sell assets or borrow funds to make cash distributionsor it may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.Real Estate Investments All costs related to the improvement or replacement of real estate properties are capitalized. Additions, renovations and improvements that enhance and/orextend the useful life of a property are also capitalized. Expenditures for ordinary maintenance, repairs and improvements that do not materially prolong thenormal useful life of an asset are charged to operations as incurred. The Company expenses transaction costs associated with business combinations in theperiod incurred. During the years ended December 31, 2013 and 2012, capitalized costs related to the improvements or replacement of real estate propertieswere approximately $19.2 million and $12.2 million, respectively. Upon the acquisition of real estate properties, the fair value of the real estate purchased is allocated to the acquired tangible assets (consisting of land,buildings and improvements), and acquired intangible assets and liabilities (consisting of above-market and below-market leases and acquired in-placeleases). Acquired lease intangible assets include above-market leases and acquired in-place leases, and acquired leases intangible liabilities represent below-market leases, in the accompanying consolidated balance sheet. The fair value of the tangible assets of an acquired property is determined by valuing theproperty as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the relative fairvalues of these assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during theexpected lease-up periods, and estimates of lost rental revenue during the expected lease-up periods based on its evaluation of current marketdemand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other relatedcosts. Leasing commissions, legal and other related costs (“lease origination costs”) are classified as deferred charges in the accompanying consolidatedbalance sheet. 65 The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rentalrates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market lease values are recorded based on the present value(using a discount rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received andmanagement’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time ofacquisition. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fairvalues associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances thatexisted at the time of the acquisitions. The value of the above-market and below-market leases associated with the original lease term is amortized to rentalincome, over the terms of the respective leases. The value of below-market rental lease renewal options is deferred until such time as the renewal option isexercised and subsequently amortized over the corresponding renewal period. The value of in-place leases are amortized to expense, and the above-marketand below-market lease values are amortized to rental income, over the remaining non-cancellable terms of the respective leases. If a lease were to beterminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized in operations at that time. The Company mayrecord a bargain purchase gain if it determines that the purchase price for the acquired assets was less than the fair value. The Company will record a liabilityin situations where any part of the cash consideration is deferred. The amounts payable in the future are discounted to their present value. The liability issubsequently re-measured to fair value with changes in fair value recognized in the consolidated statements of operations. If, up to one year from theacquisition date, information regarding fair value of assets acquired and liabilities assumed is received and estimates are refined, appropriate propertyadjustments are made to the purchase price allocation on a retrospective basis. In conjunction with the Company’s pursuit and acquisition of real estate investments, the Company expensed acquisition transaction costs during the yearsended December 31, 2013, 2012 and 2011 of approximately $1.7 million, $1.3 million and $2.3 million, respectively. Regarding certain of the Company’s 2013 property acquisitions (see Note 2), the fair value asset and liability allocations are preliminary and may be adjustedas final information becomes available. Asset Impairment The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows(undiscounted and without interest) expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized ismeasured by the amount by which the carrying amount of the assets exceed the fair value. Management does not believe that the value of any of theCompany’s real estate investments was impaired at December 31, 2013. In June 2013, the Company sold the Nimbus Village Shopping Center, a non-grocery anchored, non-core shopping center located in Rancho Cordova,California. The sales price of this property of approximately $6.3 million, less costs to sell, resulted in proceeds to the Company of approximately $5.6million. Accordingly, the Company recorded a loss on sale of property of approximately $714,000 for the year ended December 31, 2013, which has beenincluded in discontinued operations. The Company reviews its investments in unconsolidated joint ventures for impairment periodically and the Company would record an impairment chargewhen events or circumstances change indicating that a decline in the fair values below the carrying values has occurred and such decline is other-thantemporary. The ultimate realization of the Company’s investment in an unconsolidated joint venture is dependent on a number of factors, including theperformance of each investment and market conditions. As of December 31, 2013, the Company has no unconsolidated joint ventures. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash andcash equivalents are maintained at financial institutions and, at times, balances may exceed the federally insured limit by the Federal Deposit InsuranceCorporation. The Company has not experienced any losses related to these balances. Restricted Cash The terms of several of the Company’s mortgage loans payable require the Company to deposit certain replacement and other reserves with its lenders. Such“restricted cash” is generally available only for property-level requirements for which the reserves have been established and is not available to fund otherproperty-level or Company-level obligations. Revenue Recognition Management has determined that all of the Company’s leases with its various tenants are operating leases. Rental income is generally recognized based onthe terms of leases entered into with tenants. In those instances in which the Company funds tenant improvements and the improvements are deemed to beowned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space isturned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition andlease incentive amortization when possession or control of the space is turned over to the tenant for tenant work to begin. Minimum rental income fromleases with scheduled rent increases is recognized on a straight-line basis over the lease term. Percentage rent is recognized when a specific tenant’s salesbreakpoint is achieved. Property operating expense recoveries from tenants of common area maintenance, real estate taxes and other recoverable costs arerecognized in the period the related expenses are incurred. Lease incentives are amortized as a reduction of rental revenue over the respective tenant leaseterms. 66 Termination fees (included in rental revenue) are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate theirlease prior to the contractual expiration date. The Company recognizes termination fees in accordance with Securities and Exchange Commission StaffAccounting Bulletin 104, “Revenue Recognition,” when the following conditions are met: (a) the termination agreement is executed; (b) the termination feeis determinable; (c) all landlord services pursuant to the terminated lease have been rendered; and (d) collectivity of the termination fee is assured. Interestincome is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses undergenerally accepted accounting principles have been met. The Company must make estimates as to the collectability of its accounts receivable related to base rent, straight-line rent, expense reimbursements and otherrevenues. Management analyzes accounts receivable and the allowance for bad debts by considering tenant creditworthiness, current economic trends, andchanges in tenants’ payment patterns when evaluating the adequacy of the allowance for doubtful accounts receivable. The Company also provides anallowance for future credit losses of the deferred straight-line rents receivable. The provision for doubtful accounts at both December 31, 2013 and December31, 2012 was approximately $3.2 million. Depreciation and Amortization The Company uses the straight-line method for depreciation and amortization. Buildings are depreciated over the estimated useful lives which the Companyestimates to be 39-40 years. Property improvements are depreciated over the estimated useful lives that range from 10 to 20 years. Furniture and fixtures aredepreciated over the estimated useful lives that range from 3 to 10 years. Tenant improvements are amortized over the shorter of the life of the related leasesor their useful life. Deferred Charges Deferred charges consist principally of leasing commissions and acquired lease origination costs (which are amortized ratably over the life of the tenantleases) and financing fees (which are amortized over the term of the related debt obligation). Deferred charges in the accompanying consolidated balancesheets are shown at cost, net of accumulated amortization of approximately $14.9 million and $9.1 million, as of December 31, 2013 and 2012, respectively. The unamortized balances of deferred charges that will be charged to future operations as of December 31, 2013 are as follows: Lease Origination Costs Financing Costs Total 2014 $5,522,474 $1,914,356 $7,436,830 2015 4,451,946 1,661,142 6,113,088 2016 3,421,780 1,584,311 5,006,091 2017 2,568,246 1,215,727 3,783,973 2018 1,842,947 258,222 2,101,169 Thereafter 7,359,800 1,321,029 8,680,829 Total future amortization of deferred charges $25,167,193 $7,954,787 $33,121,980 Internal Capitalized Leasing CostsThe Company capitalizes a portion of payroll-related costs related to its leasing personnel associated with new leases and lease renewals. These costs areamortized over the life of the respective leases. During the years ended December 31, 2013, 2012 and 2011, the Company capitalized approximately$742,000, $695,000 and $563,000, respectively.Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenantreceivables. The Company places its cash and cash equivalents in excess of insured amounts with high quality financial institutions. The Company performsongoing credit evaluations of its tenants and requires tenants to provide security deposits. Earnings Per Share Basic earnings (loss) per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income (loss) by the weighted average numberof shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issueshares of common stock were exercised or converted into shares of common stock and then shared in the earnings of the Company. 67 During the years ended December 31, 2013 and 2012, the effect of approximately 41,400,000 warrants to purchase the Company’s common stock (the“Public Warrants”) issued in connection with the Company’s initial public offering (the “IPO”), and the 8,000,000 warrants (the “Private PlacementWarrants”) purchased by NRDC Capital Management, LLC simultaneously with the consummation of the IPO, for the time these were outstanding duringthese periods, were included in the calculation of diluted EPS since the weighted average share price was greater than the exercise price during theseperiods. During the year ended December 31, 2011, the effect of the 41,400,000 Public Warrants and the 8,000,000 Private Placement Warrants were notincluded in the calculation of diluted EPS since the weighted average share price was less than the exercise price during this period. For the years ended December 31, 2013, 2012 and 2011, basic EPS was determined by dividing net income allocable to common stockholders for theapplicable period by the weighted average number of shares of common stock outstanding during such period. Net income during the applicable period isalso allocated to the time-based unvested restricted stock as these grants are entitled to receive dividends and are therefore considered a participatingsecurity. Time-based unvested restricted stock is not allocated net losses and/or any excess of dividends declared over net income; such amounts areallocated entirely to the common stockholders other than the holders of time-based unvested restricted stock. The performance-based restricted stock grantsawarded under the 2009 Plan described in Note 9 are excluded from the basic EPS calculation, as these units are not participating securities. The following table sets forth the reconciliation between basic and diluted EPS for ROIC: For the year ended December 31, 2013 2012 2011 Numerator: Income from continuing operations $34,691,982 $7,892,613 $9,656,321 Less income from continuing operations attributable to noncontrolling interests (164,892) — — Less earnings allocated to unvested shares (78,361) (213,361) — Income from continuing operations available for common shareholders, basic 34,448,729 7,679,252 9,656,321 Loss from discontinued operations available to common shareholders, basic (713,529) — — Net income available to common stockholders, basic $33,735,200 $7,679,252 $9,656,321 Numerator: Income from continuing operations $34,691,982 $7,892,613 $9,656,321 Less earnings allocated to unvested shares (78,361) (213,361) — Income from continuing operations available for common shareholders, diluted 34,613,621 7,679,252 9,656,321 Loss from discontinued operations available to common shareholders, diluted (713,529) — — Net income available to common stockholders, diluted $33,900,092 $7,679,252 $9,656,321 Denominator: Denominator for basic EPS – weighted average common shares 67,419,497 51,059,408 42,477,007 Warrants 2,568,822 1,165,663 — OP Units 838,508 — — Restricted stock awards - performance-based 113,066 95,466 35,878 Stock Options 64,487 50,631 13,403 Denominator for diluted EPS – weighted average common equivalent shares 71,004,380 52,371,168 42,526,288 68 Earnings Per UnitThe following table sets forth the reconciliation between basic and diluted earnings per unit for the Operating Partnership: For the year ended December 31, 2013 2012 2011 Numerator: Income from continuing operations $34,691,982 $7,892,613 $9,656,321 Less earnings allocated to unvested units (78,361) (213,361) — Income from continuing operations available for unitholders, basic and diluted 34,613,621 7,679,252 9,656,321 Loss from discontinued operations available to unitholders, basic and diluted (713,529) — — Net income available to unitholders, basic and diluted $33,900,092 $7,679,252 $9,656,321 Denominator: Denominator for basic EPS – weighted average common units 68,258,005 51,059,408 42,477,007 Warrants 2,568,822 1,165,663 — Restricted stock awards - performance-based 113,066 95,466 35,878 Stock Options 64,487 50,631 13,403 Denominator for diluted EPS – weighted average common equivalent units 71,004,380 52,371,168 42,526,288 Stock-Based Compensation The Company has a stock-based employee compensation plan, which is more fully described in Note 9. The Company accounts for its stock-based compensation plans based on the FASB guidance which requires that compensation expense be recognized basedon the fair value of the stock awards less estimated forfeitures. Restricted stock grants vest based upon the completion of a service period (“time-basedgrants”) and/or the Company meeting certain established financial performance criteria (“performance-based grants”). Time-based grants are valuedaccording to the market price for the Company’s common stock at the date of grant. For performance-based grants, a Monte Carlo valuation model is used,taking into account the underlying contingency risks associated with the performance criteria. It is the Company’s policy to grant options with an exerciseprice equal to the quoted closing market price of stock on the grant date. Awards of stock options and time-based grants stock are expensed as compensationover the vesting period. Awards of performance-based grants are expensed as compensation under an accelerated method and are recognized in incomeregardless of the results of the performance criteria. Derivatives The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intendeduse of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether thehedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure tochanges in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair valuehedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecastedtransactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on thehedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair valuehedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. When the Company terminates a derivative for which cash flowhedging was being applied, the balance which was recorded in Other Comprehensive Income is amortized to interest expense over the remaining contractualterm of the swap. The Company includes cash payments made to terminate interest rate swaps as an operating activity on the statement of cash flows, giventhe nature of the underlying cash flows that the derivative was hedging. Segment Reporting The Company’s primary business is the ownership, management, and redevelopment of retail real estate properties. The Company reviews operating andfinancing information for each property on an individual basis and therefore, each property represents an individual operating segment. The Companyevaluates financial performance using property operating income, defined as operating revenues (base rent and recoveries from tenants), less property andrelated expenses (property operating expenses and property taxes). No individual property constitutes more than 10% of the Company’s revenues or propertyoperating income, and the Company has no operations outside of the United States of America. Therefore, the Company has aggregated the properties intoone reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operatedusing consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes. 69 Reclassifications Certain reclassifications have been made to the prior period consolidated financial statements and notes to conform to the current year presentation. 2. Real Estate Investments The following real estate investment transactions occurred during the years ended December 31, 2013 and 2012. Property Acquisitions in 2013On February 1, 2013, the Company acquired the property known as Diamond Bar Town Center located in Diamond Bar, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $27.4 million. Diamond Bar Town Center is approximately 100,000 square feet and is anchored by anational grocer. The property was acquired with borrowings under the Company’s credit facility. On February 6, 2013, the Company acquired the property known as Bernardo Heights Plaza in Rancho Bernardo, California, within the San Diegometropolitan area, for a purchase price of approximately $12.4 million. Bernardo Heights Plaza is approximately 38,000 square feet and is anchored bySprouts Farmers Market. The property was acquired with cash of approximately $3.6 million and the assumption of an existing mortgage with a principalamount of approximately $8.9 million, and a fair value of approximately $9.7 million. On April 15, 2013, the Company acquired the property known as Canyon Crossing Shopping Center located in Puyallup, Washington, within the Seattlemetropolitan area, for a purchase price of approximately $35.0 million. Canyon Crossing Shopping Center is approximately 121,000 square feet and isanchored by Safeway Supermarket. The property was acquired using borrowings under the Company’s credit facility. On April 22, 2013, the Company acquired the property known as Diamond Hills Plaza located in Diamond Bar, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $48.0 million. Diamond Hills Plaza is approximately 140,000 square feet and is anchored by an HMart Supermarket and Rite Aid Pharmacy. The property was acquired using borrowings under the Company’s credit facility. On June 27, 2013, the Company acquired the property known as Hawthorne Crossings located in San Diego, California, for a purchase price of approximately$41.5 million. Hawthorne Crossings is approximately 141,000 square feet and is anchored by Mitsuwa Supermarket, Ross Dress For Less and Staples. Theproperty was acquired using borrowings under the Company’s credit facility. On June 27, 2013, the Company acquired the property known as Granada Shopping Center located in Livermore, California, for a purchase price ofapproximately $17.5 million. Granada Shopping Center is approximately 69,000 square feet and is anchored by SaveMart (Lucky) Supermarket. Theproperty was acquired using borrowings under the Company’s credit facility. On August 23, 2013, the Company acquired the property known as Robinwood Shopping Center located in West Linn, Oregon, for a purchase price ofapproximately $14.2 million. Robinwood Shopping Center is approximately 71,000 square feet and is anchored by Walmart Neighborhood Market. Theproperty was acquired using borrowings under the Company’s credit facility. On September 18, 2013, the Company acquired a parcel of land adjacent to one of its properties located in Pomona, California, for a purchase price ofapproximately $700,000. The parcel of land was acquired using available cash on hand. On October 15, 2013, the Company acquired the property known as Peninsula Marketplace located in Huntington Beach, California, for a purchase price ofapproximately $35.9 million. Peninsula Marketplace is approximately 95,000 square feet and is anchored by Kroger (Ralphs) Supermarket. The propertywas acquired using borrowings under the Company’s credit facility. On November 26, 2013, the Company acquired the property known as Country Club Village located in San Ramon, California, for a purchase price ofapproximately $30.9 million. Country Club Village is approximately 111,000 square feet and is anchored by Walmart Neighborhood Market and CVSPharmacy. The property was acquired using borrowings under the Company’s credit facility. On December 13, 2013, the Company acquired the property known as Plaza de la Canada located in La Canada Flintridge, California, for a purchase price ofapproximately $34.8 million. Plaza de la Canada is approximately 100,000 square feet and is anchored by Gelson’s Supermarket, TJ Maxx and Rite AidPharmacy. The property was acquired using borrowings under the Company’s credit facility. Property Acquisitions in 2012During the year ended December 31, 2012, the Company acquired 14 properties throughout the west coast with a total of approximately 1.1 million squarefeet for a net purchase price of approximately $266.4 million. 70 Acquisitions of Property-Owning Entities On September 27, 2013, the Company acquired the remaining 51% of the partnership interests in the Terranomics Crossroads Associates, LP from its jointventure partner. The purchase of the remaining interest was funded through the issuance of 2,639,632 OP Units with a fair value of approximately $36.4million and the assumption of a $49.6 million mortgage loan on the property. Prior to the acquisition date, the Company accounted for its 49% interest inthe Terranomics Crossroad Associates, LP as an equity method investment. The acquisition-date fair value of the previous equity interest was $36.0 millionand is included in the measurement of the consideration transferred. The Company recognized a gain of $20.4 million as a result of remeasuring its priorequity interest in the venture held before the acquisition. The gain is included in the line item Gain on consolidation of joint venture in the consolidatedincome statement. The primary asset of Terranomics Crossroads Associates is Crossroads Shopping Center located in Bellevue, Washington, within theSeattle metropolitan area. Crossroads Shopping Center is approximately 464,000 square feet and is anchored by Kroger (QFC) Supermarket, Sports Authorityand Bed Bath and Beyond. On September 27, 2013, the Company acquired 100% of the membership interests in SARM Five Points Plaza, LLC for an adjusted purchase price ofapproximately $52.6 million. The primary asset of SARM Five Points Plaza, LLC is Five Points Plaza located in Huntington Beach, California. Five PointsPlaza is approximately 161,000 square feet and is anchored by Trader Joes, Old Navy and Pier 1. The purchase of the membership interests was fundedthrough approximately $43.6 million in cash using borrowings under the Company’s credit facility (of which approximately $17.2 million was used by theseller to pay off the existing financing) and the issuance of 650,631 OP Units with a fair value of approximately $9.0 million. Any reference to the square footage is unaudited and outside the scope of our independent registered public accounting firm’s audit of the Company’sfinancial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. The financial information set forth below summarizes the Company’s preliminary purchase price allocation for the properties acquired during the year endedDecember 31, 2013 and the final purchase price allocation for the properties acquired during the year ended December 31, 2012. December 31,2013 December 31,2012 ASSETS Land $176,877,353 $116,253,370 Building and improvements 310,432,135 162,343,788 Cash and cash equivalents 552,213 — Acquired lease intangible asset 28,412,933 19,273,018 Deferred charges 12,072,103 6,286,558 Tenant receivables and other assets 1,132,232 — Assets acquired $529,478,969 $304,156,734 LIABILITIES Acquired lease intangible liability 35,383,751 16,280,503 Mortgage notes assumed 62,749,675 21,507,622 Accrued expenses and other liabilities 4,282,450 — Liabilities assumed $102,415,876 $37,788,125 Pro Forma Financial Information The pro forma financial information set forth below is based upon the Company’s historical consolidated statements of operations for the year endedDecember 31, 2013 and 2012, adjusted to give effect of these transactions at the beginning of 2012. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of operations would havebeen had the transaction occurred at the beginning of each year, nor does it purport to represent the results of future operations. Year Ended December 31, Statement of operations: 2013 2012 Revenues $137,931,636 $129,962,355 Property operating and other expenses 50,673,578 62,286,188 Depreciation and amortization 51,347,742 49,408,916 Net income attributable to Retail Opportunity Investments Corp. $35,910,316 $18,267,251 71 The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the year endedDecember 31, 2013 for the properties acquired during the year ended December 31, 2013. Year EndedDecember 31, 2013 Statement of operations: Revenues $15,813,152 Property operating and other expenses 6,010,175 Depreciation and amortization 7,655,138 Net income attributable to Retail Opportunity Investments Corp. $2,147,839 The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the year endedDecember 31, 2012 for the properties acquired during the year ended December 31, 2012. Year EndedDecember 31, 2012 Statement of operations: Revenues $10,478,568 Property operating and other expenses 4,234,857 Depreciation and amortization 3,801,350 Net income attributable to Retail Opportunity Investments Corp. $2,442,361 Mortgage Notes Receivable The Company held a $10.0 million second mortgage loan and funded a $294,000 partner loan to the joint venture that owned the Crossroads ShoppingCenter at December 31, 2012. On September 27, 2013, the Company acquired the remaining interest in Crossroads Shopping Center. Accordingly, bothloans were extinguished upon consolidation of the joint venture during the year ended December 31, 2013. Unconsolidated Joint VenturesAt December 31, 2012, investment in and advances to unconsolidated joint venture consisted of a 49% ownership in Terranomics Crossroads Associates, LPof $15.3 million. On September 27, 2013, the Company acquired the remaining interests in Terranomics Crossroads Associates, LP from its joint venturepartner. The purchase of its remaining interest was funded through the issuance of 2,639,632 OP units with a fair value of approximately $36.4 million andthe assumption of a $49.6 million mortgage loan on the property. Upon the acquisition of the remaining interest in the property, the Company reclassifiedapproximately $16.0 million from “Investment in and advances to unconsolidated joint ventures” to “Real estate investments” in the accompanyingconsolidated balance sheet. The acquisition-date fair value of the previous equity interest was $36.0 million and is included in the measurement of theconsideration transferred. The Company recognized a gain of $20.4 million as a result of remeasuring its prior equity interest in the venture held before theacquisition. The gain is included in the line item Gain on consolidation of joint venture in the consolidated income statement. As of December 31, 2013, the Company has no remaining unconsolidated joint ventures. 3. Acquired Lease Intangibles Intangible assets and liabilities as of December 31, 2013 and 2012 consisted of the following: December 31,2013 December 31,2012 Assets: In-place leases $71,846,161 $50,456,414 Accumulated amortization (27,413,310) (17,704,422) Above-market leases 18,191,431 12,722,015 Accumulated amortization (6,736,811) (4,243,391) Acquired lease intangible assets, net $55,887,471 $41,230,616 Liabilities: Below-market leases 104,092,901 69,365,631 Accumulated amortization (18,809,019) (11,993,828) Acquired lease intangible liabilities, net $85,283,882 $57,371,803 72 For the years ended December 31, 2013, 2012 and 2011, the net amortization of acquired lease intangible assets and acquired lease intangible liabilities forabove and below market leases was $4.4 million, $3.7 million and $3.2 million, respectively, which amounts are included in base rents in the accompanyingconsolidated statements of operations. During the year ended December 31, 2011, the Company wrote off $1.1 million representing the fair value allocatedto the below-market rental renewal options of a tenant that did not exercise its renewal option. The amount written off resulted in an increase in base rents inthe accompanying consolidated statements of operations and is included in the $3.2 million stated above. The Company did not have any such write-offsduring the years ended December 31, 2013 and 2012. For the years ended December 31, 2013, 2012 and 2011, the net amortization of in-place leases was$10.3 million, $8.1 million and $7.4 million, respectively, which amounts are included in depreciation and amortization in the accompanying consolidatedstatements of operations.The scheduled future amortization of acquired lease intangible assets as of December 31, 2013 is as follows: Year ending December 31: 2014 $13,923,367 2015 9,903,206 2016 7,173,924 2017 5,284,556 2018 3,698,591 Thereafter 15,903,827 Total future amortization of acquired lease intangible assets $55,887,471 The scheduled future amortization of acquired lease intangible liabilities as of December 31, 2013 is as follows: Year ending December 31: 2014 $9,071,454 2015 7,796,575 2016 5,907,950 2017 4,991,033 2018 4,345,390 Thereafter 53,171,480 Total future amortization of acquired lease intangible liabilities $85,283,882 4. Tenant Leases Space in the shopping centers and other retail properties is leased to various tenants under operating leases that usually grant tenants renewal options andgenerally provide for additional rents based on certain operating expenses as well as tenants’ sales volume. Minimum future rentals to be received under non-cancellable leases for shopping centers as of December 31, 2013 are summarized as follows: Year ending December 31: 2014 $92,456,291 2015 85,007,593 2016 74,169,424 2017 62,190,030 2018 48,915,041 Thereafter 249,554,390 $612,292,769 5. Discontinued Operations On June 5, 2013, the Company sold the Nimbus Village Shopping Center, a non-grocery anchored, non-core shopping center located in Rancho Cordova,California. The sales price of this property of approximately $6.3 million, less costs to sell, resulted in proceeds to the Company of approximately $5.6million. Accordingly, the Company recorded a loss on sale of property of approximately $714,000 for the year ended December 31, 2013, which has beenincluded in discontinued operations. The carrying value of the property as of December 31, 2012 was approximately $6.3 million. 6. Mortgage Notes Payable, Credit Facilities and Senior Notes ROIC does not hold any indebtedness. All debt is held directly or indirectly by the Operating Partnership, however, ROIC has guaranteed the OperatingPartnership’s revolving credit facility, term loan, carve-out guarantees on property-level debt, and the Notes due in 2023. 73 Mortgage Notes Payable The mortgage notes payable collateralized by respective properties and assignment of leases at December 31, 2013 and December 31, 2012, respectively,were as follows:Property Maturity Date Interest Rate December 31, 2013 December 31, 2012 Gateway Village I February 2014 5.58% $— $6,718,119 Gateway Village II May 2014 5.73% — 6,872,265 Euclid Plaza November2014 5.23% 8,158,676 8,329,824 Country Club Gate January 2015 5.04% 12,236,374 12,477,997 Renaissance Towne Centre June 2015 5.13% 16,489,812 16,760,383 Crossroads Shopping Center September2015 6.50% 49,413,976 — Gateway Village III July 2016 6.10% 7,368,521 7,460,907 Bernardo Heights July 2017 5.70% 8,748,605 — Santa Teresa Village February 2018 6.20% 11,033,511 11,223,888 $113,449,475 $69,843,383 Mortgage Premium 5,453,783 2,846,459 Total mortgage notes payable $118,903,258 $72,689,842 The combined aggregate principal maturities of mortgage notes payable during the next five years and thereafter as of December 31, 2013 are as follows: PrincipalRepayments ScheduledAmortization MortgagePremium Total 2014 $8,009,623 $1,993,021 $2,738,619 $12,741,263 2015 76,012,485 1,254,519 1,793,672 79,060,676 2016 7,120,171 462,667 516,406 8,099,244 2017 8,099,320 361,092 381,009 8,841,421 2018 10,094,220 42,357 24,077 10,160,654 $109,335,819 $4,113,656 $5,453,783 $118,903,258 In February 2013, the Operating Partnership assumed an existing mortgage loan with an outstanding principal balance of approximately $8.9 million as partof the acquisition of Bernardo Heights Plaza. Additionally, in September 2013, the Operating Partnership assumed an existing mortgage loan with anoutstanding principal balance of approximately $49.6 million in connection with the acquisition of the remaining interests in Crossroads Shopping Center. On September 3, 2013 and November 1, 2013, the Company repaid the outstanding principal balances on the Gateway Village I and Gateway Village IImortgage notes payable, totaling $13.4 million, respectively, without penalty, in accordance with the prepayment provisions of the notes.Credit Facilities The Operating Partnership has a revolving credit facility with several banks. Previously, the credit facility provided for borrowings of up to$200.0 million. Effective September 26, 2013, the Company entered into a third amendment to the amended and restated credit agreement pursuant to whichthe borrowing capacity was increased to $350.0 million. Additionally, the credit facility contains an accordion feature, which was amended to allow theOperating Partnership to increase the facility amount up to an aggregate of $700.0 million, subject to lender consents and other conditions. The maturitydate of the credit facility has been extended to August 29, 2017, subject to a further one-year extension option, which may be exercised by the OperatingPartnership upon satisfaction of certain conditions. The Operating Partnership has a term loan agreement with several banks. The term loan provides for a loan of $200.0 million and contains an accordionfeature, which allows the Operating Partnership to increase the facility amount up to an aggregate of $300.0 million subject to commitments and otherconditions. The maturity date of the term loan is August 29, 2017. The Company obtained investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services (BBB-) during thesecond quarter of 2013. Prior to receiving such investment grade ratings, borrowings under the credit facility and term loan agreements (collectively, the“loan agreements”) accrued interest on the outstanding principal amount at a rate equal to an applicable rate based on the consolidated leverage ratio of theCompany and its subsidiaries, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for dollar deposits for the relevant period (the“Eurodollar Rate”), or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced byKeyBank National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00% (the “Base Rate”). Since receiving the investment grade creditratings from the two rating agencies, borrowings under the loan agreements accrue interest on the outstanding principal amount at a rate equal to anapplicable rate based on the credit rating level of ROIC, plus, as applicable, (i) the Eurodollar Rate, or (ii) the Base Rate. In addition, prior to receipt of suchcredit ratings, the Operating Partnership was obligated to pay an unused fee of (a) 0.35% of the undrawn balance if the total outstanding principal amountwas less than 50% of the aggregate commitments or (b) 0.25% if the total outstanding principal amount was greater than or equal to 50% of the aggregatecommitments, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the loan agreements. Subsequent to June 26,2013, the Operating Partnership is obligated to pay a facility fee at a rate based on the credit rating level of the Company, currently 0.20%, and a fronting feeat a rate of 0.125% per year with respect to each letter of credit issued under the loan agreements. The loan agreements contain customary representations,financial and other covenants. The Operating Partnership’s ability to borrow under the loan agreements is subject to its compliance with financial covenantsand other restrictions on an ongoing basis. The Operating Partnership was in compliance with such covenants at December 31, 2013. 74 As of December 31, 2013, $200.0 million and $56.9 million were outstanding under the term loan and credit facility, respectively. The average interest rateson the term loan and the credit facility during the year ended December 31, 2013 were 1.6% and 1.5%, respectively. The Company had $293.1 millionavailable to borrow under the credit facility at December 31, 2013. The Company had no available borrowings under the term loan at December 31, 2013. Senior Notes Due 2023The carrying value of the Company’s Senior Notes due 2023 is as follows: December 31,2013 December 31,2012 Principal amount $250,000,000 $— Unamortized debt discount (4,154,680) — Senior Notes due 2023: $245,845,320 $— On December 9, 2013, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of5.000% Senior Notes due 2023 (the “Notes”), fully and unconditionally guaranteed by ROIC. The Notes pay interest semi-annually on June 15 andDecember 15, commencing on June 15, 2014, and mature on December 15, 2023, unless redeemed earlier by the Operating Partnership. The Notes are theOperating Partnership’s senior unsecured obligations that rank equally in right of payment with the Operating Partnership’s other unsecured indebtedness,and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and any preferred equity of the Operating Partnership’ssubsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extent of the value of the collateral securing suchindebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligations under the Notes on a senior unsecured basis,including the due and punctual payment of principal of, and premium, if any, and interest on, the notes, whether at stated maturity, upon acceleration, noticeof redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and will rank equally in right of payment with all other senior unsecuredindebtedness of ROIC. ROIC’s guarantee of the Notes is effectively subordinated in right of payment to all liabilities, whether secured or unsecured, and anypreferred equity of its subsidiaries (including the Operating Partnership and any entity ROIC accounts for under the equity method of accounting). Theinterest expense recognized on the Notes during the year ended December 31, 2013 includes approximately $800,000 and $20,000 for the contractualcoupon interest and the accretion of the debt discount, respectively.In connection with the Notes offering, the Company incurred approximately $2.6 million of deferred financing costs which are being amortized over the termof the Notes.7. Preferred Stock of ROIC The Company is authorized to issue 50,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may bedetermined from time to time by the board of directors. As of December 31, 2013 and 2012, there were no shares of preferred stock outstanding. 8. Common Stock and Warrants of ROIC During the year ended December 31, 2011, the Company entered into an ATM Equity OfferingSM Sales Agreement (“sales agreement”) with Merrill Lynch,Pierce, Fenner & Smith Incorporated to sell shares of the Company’s common stock, par value $0.0001 per share, having aggregate sales proceeds of $50.0million from time to time, through an “at the market” equity offering program under which Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as salesagent and/or principal (“agent”). During the year ended December 31, 2013, ROIC did not sell any shares under the sales agreement. Through December 31,2013, ROIC has sold a total of 3,183,245 shares under the sales agreement, which resulted in gross proceeds of approximately $39.3 million and commissionsof approximately $687,600 paid to the agent. Simultaneously with the consummation of the IPO, NRDC Capital Management, LLC purchased 8,000,000 Private Placement Warrants at a purchase price of$1.00 per warrant. The Private Placement Warrants were identical to the Public Warrants except that the Private Placement Warrants were exercisable on acashless basis as long as they were still held by NRDC Capital Management, LLC or its members, members of its members’ immediate family or theircontrolled affiliates. The purchase price of the Private Placement Warrants approximated the fair value of such warrants at the purchase date. 75 During the year ended December 31, 2013, the Sponsor exercised the outstanding 8,000,000 Private Placement Warrants on a cashless basis pursuant towhich ROIC issued 688,500 shares to the Sponsor. ROIC has the right to redeem all of the outstanding warrants it issued in the IPO, at a price of $0.01 per warrant upon 30 days’ notice while thewarrants are exercisable, only in the event that the last sale price of the common stock is at least a specified price. The terms of the warrants are as follows: ·The exercise price of the warrants is $12.00. ·The expiration date of the warrants is October 23, 2014. ·The price at which ROIC’s common stock must trade before ROIC is able to redeem the warrants it issued in the IPO is $18.75. ·To provide that a warrantholder’s ability to exercise warrants is limited to ensure that such holder’s “Beneficial Ownership” or“Constructive Ownership,” each as defined in ROIC’s charter, does not exceed the restrictions contained in the charter limiting theownership of shares of ROIC’s common stock. ROIC had reserved 53,400,000 shares for the exercise of the Public Warrants and the Private Placement Warrants, and issuance of shares under ROIC’s 2009Equity Incentive Plan (the “2009 Plan”). During the year ended December 31, 2013, the third-party warrant holders exercised a total of 18,877,482 PublicWarrants, resulting in a total of $226.5 million of proceeds. During the year ended December 31, 2012, the third-party warrant holders exercised 1,000 PublicWarrants. On July 31, 2013, the Company’s board of directors authorized a stock repurchase program to repurchase up to a maximum of $50.0 million of theCompany’s common stock. Warrant Repurchase In May 2010, ROIC’s board of directors authorized a warrant repurchase program to repurchase up to a maximum of $40.0 million of ROIC’swarrants. During the year ended December 31, 2013, ROIC repurchased 744,850 warrants under the program in open market transactions for approximately$1.4 million. During the year ended December 31, 2013, ROIC repurchased an additional 15,834,000 warrants in privately negotiated transactions forapproximately $31.3 million. As of December 31, 2013, 5,942,668 of the 41,400,000 original Public Warrants remain outstanding and no Private Placement Warrants are outstanding. 9. Stock Compensation and Other Benefit Plans for ROIC The Company follows the FASB guidance related to stock compensation which establishes financial accounting and reporting standards for stock-basedemployee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer, or theemployer incurs liabilities to employees in amounts based on the price of the employer’s stock. The guidance also defines a fair value-based method ofaccounting for an employee stock option or similar equity instrument. During 2009, the Company adopted the 2009 Plan. The 2009 Plan provides for grants of restricted common stock and stock option awards up to anaggregate of 7.5% of the issued and outstanding shares of the Company’s common stock at the time of the award, subject to a ceiling of 4,000,000 shares. Restricted Stock During the year ended December 31, 2013, the Company awarded 224,500 shares of restricted common stock under the 2009 Plan, of which 86,250 shares areperformance-based grants and the remainder of the shares are time based grants. The performance-based grants vest in three equal annual tranches, based onpre-defined market-specific performance criteria with vesting dates on January 1, 2014, 2015 and 2016. 76 A summary of the status of the Company’s non-vested restricted stock awards as of December 31, 2013, and changes during the year ended December 31,2013 are presented below: Shares Weighted AverageGrant Date FairValue Non-vested at December 31, 2012 391,264 $10.48 Granted 224,500 11.82 Vested (175,114) 10.74 Forfeited — — Non-vested at December 31, 2013 440,650 $11.40 As of December 31, 2013, there remained a total of $2.8 million of unrecognized restricted stock compensation related to outstanding non-vested restrictedstock grants awarded under the 2009 Plan. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 1.8 years(irrespective of achievement of the performance conditions). Stock Options During the years ended December 31, 2013, 2012 and 2011, the Company awarded a total of 8,000, 49,500 and 102,000 options, respectively, to purchaseshares under the 2009 Plan. The Company used the Black Scholes method for purposes of estimating the fair value in determining compensation expense forthe options that were granted during the year ended December 31, 2013. The assumption for expected volatility has a significant effect on the grant fairvalue. Volatility is determined based on the historical volatilities of REITs similar to the Company. The Company used the simplified method to determinethe expected life which is calculated as an average of the vesting period and the contractual term. The fair value for the options awarded by the Companyduring the year ended December 31, 2013, was estimated at the date of the grant using the following weighted-average assumptions. Year EndedDecember 31, 2013 Average volatility 19.0%Expected dividends $0.15 Expected life (in years) 6.0 Risk-free interest rate 1.02%A summary of options activity as of December 31, 2013, and changes during the year ended December 31, 2013 are presented below: Shares Weighted AverageExercise Price Aggregate IntrinsicValue as ofDecember 31, 2013 Outstanding at December 31, 2012 384,000 $10.68 Granted 8,000 12.76 Exercised — — Forfeited (110,000) 10.63 Expired — — Outstanding at December 31, 2013 282,000 $10.76 $1,116,590 Exercisable at December 31, 2013 220,336 $10.48 $934,688 As of December 31, 2013, there remained a total of $66,000 of unrecognized stock compensation related to outstanding non-vested stock options awardedunder the 2009 Plan. Stock Based Compensation ExpenseFor the years ended December 31, 2013, 2012 and 2011, the amounts charged to expense for all stock based compensation totaled approximately $2.9million, $3.4 million and $2.2 million, respectively. Profit Sharing and Savings Plan During 2011, the Company established a profit sharing and savings plan (the “401K Plan”), which permits eligible employees to defer a portion of theircompensation in accordance with the Code. Under the 401K Plan, the Company made matching contributions on behalf of eligible employees. TheCompany made contributions to the 401K Plan of approximately $20,000, $17,000 and $12,000 for the years ended December 31, 2013, 2012 and 2011,respectively. 77 10. Capital of the Operating Partnership As of December 31, 2013, the Operating Partnership had 75,577,809 OP Units outstanding. The Company owned 95.8% of the Operating Partnership atDecember 31, 2013. As of December 31, 2013, the Company had outstanding 72,445,767 shares of ROIC common stock and 3,132,042 OperatingPartnership units (excluding Operating Partnership units owned by ROIC). A share of ROIC’s common stock and the Operating Partnership units haveessentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership.During the year ended December 31, 2013, in connection with the acquisition of the remaining interests in Crossroads Shopping Center from its joint venturepartner, the Company issued a total of 2,639,632 OP Units to limited partners. Additionally, during the year ended December 31, 2013, in connection withthe acquisition of the membership interests in SARM Five Points Plaza, LLC, the Company issued a total of 650,631 OP Units to limited partners. Subject tocertain exceptions, holders may redeem their OP Units, at the option of ROIC, for cash or for shares of ROIC common stock on a one-for-one basis. If cash ispaid in the redemption, the redemption price is equal to the average closing price on the NASDAQ Stock Market for shares of ROIC’s common stock over theten consecutive trading days immediately preceding the date a redemption notice is received by ROIC.Retail Opportunity Investments GP, LLC, ROIC’s wholly-owned subsidiary, is the sole general partner of the Operating Partnership, and as the parentcompany, ROIC has the full and complete authority over the Operating Partnership’s day-to-day management and control. As the sole general partner of theOperating Partnership, ROIC effectively controls the ability to issue common stock of ROIC upon redemption of any OP Units. The redemption provisionsthat permit ROIC to settle in either cash or common stock, at the option of ROIC, are further evaluated in accordance with applicable accounting guidance todetermine whether temporary or permanent equity classification on the balance sheet is appropriate. The Company evaluated this guidance, including therequirement to settle in unregistered shares, and determined that the OP Units meet the requirements to qualify for presentation as permanent equity.On October 17, 2013, the Company received notices of redemption for 158,221 OP Units. The Company elected to redeem the OP Units in cash, andaccordingly, a total of $2.2 million was paid on October 31, 2013 to the holders of the respective OP Units. In accordance with the Second Amended andRestated Agreement of Limited Partnership of the Operating Partnership, the redemption value was calculated based on the average closing price of theCompany’s common stock on the NASDAQ Stock Market for the ten consecutive trading days immediately preceding the date of receipt of the notices ofredemption.The redemption value of the OP Units owned by the limited partners, not including ROIC, had such units been redeemed at December 31, 2013, wasapproximately $46.5 million based on the average closing price on the NASDAQ Stock Market of ROIC common stock for the ten consecutive trading daysimmediately preceding December 31, 2013, which amounted to $14.85 per share.11. Fair Value of Financial Instruments The Company follows the FASB guidance that defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair valuemeasurements. The guidance applies to reported balances that are required or permitted to be measured at fair value under existing accountingpronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should bedetermined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participantassumptions in fair value measurements, the guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based onmarket data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and thereporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). 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 inputsare inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may includequoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), suchas interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for theasset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where thedetermination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy withinwhich the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. TheCompany’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specificto the asset or liability. The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuationmethodologies as discussed in Note 1. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, theestimates presented herein are not necessarily indicative of the amounts realizable upon disposition of the financial instruments. The use of different marketassumptions or estimation methodologies may have a material effect on the estimated fair value amounts. 78 The carrying values of cash and cash equivalents, restricted cash, tenant and other receivables, deposits, prepaid expenses, other assets, accounts payable andaccrued expenses are reasonable estimates of their fair values because of the short-term nature of these instruments. The carrying values of the revolvingcredit facility and term loan are deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR contracts. The fair value, based oninputs not quoted on active markets, but corroborated by market data, or Level 2, of the outstanding Notes at December 31, 2013 is approximately $252.2million. Mortgage notes receivables were recorded at the actual purchase price. Mortgage notes payable were recorded at their fair value at the time theywere assumed and are estimated to have a fair value of approximately $119.5 million with an interest rate range of 2.8% to 3.8% and the weighted averageinterest rate of 3.1% as of December 31, 2013. These fair value measurements fall within level 3 of the fair value hierarchy. 12. Derivative and Hedging Activities 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. Toaccomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designatedas cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the lifeof the agreements without exchange of the underlying notional amount. The following is a summary of the terms of the Company’s interest rate swaps as of December 31, 2013: Swap Counterparty Notional Amount Effective Date Maturity Date Cash Settlement DateWells Fargo Bank, N.A. $25,000,000 4/15/2011 4/15/2021 9/22/2014Wells Fargo Bank, N.A. $25,000,000 4/2/2012 4/2/2019 9/22/2014Royal Bank of Canada $25,000,000 4/1/2013 4/3/2023 10/31/2014The effective portion of changes in the fair value of the derivatives that are designated as cash flow hedges are being recorded in AOCI and will besubsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cashflows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-basedinputs, including interest rate curves, and implied volatilities. The fair value of the interest rate swaps is determined using the market standard methodologyof netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cashpayments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of its derivative contract for the effect of non-performance risk, the Company hasconsidered 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 creditvaluation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default byitself and its counterparties. However, as of December 31, 2013 the Company has assessed the significance of the impact of the credit valuation adjustmentson the overall valuation of its derivative position and has determined that the credit valuation adjustments are not significant to the overall valuation of itsderivatives. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy. 79 The table below presents the Company’s liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy withinwhich those measurements fall. Quoted Pricesin ActiveMarkets forIdentical Assetsand Liabilities(Level 1) SignificantOtherObservableInputs (Level 2) SignificantUnobservableInputs (Level 3) Total December 31, 2013: Assets Derivative financial instruments $— $1,948,243 $— $1,948,243 Liabilities Derivative financial instruments $— $(2,528,703) $— $(2,528,703) December 31, 2012: Liabilities Derivative financial instruments $— $(18,012,516) $— $(18,012,516) Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest expense is recognizedon the hedged debt. During the next twelve months, the Company estimates that $3.5 million will be reclassified as an increase to interest expense.The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of December31, 2013 and 2012, respectively: Derivatives designed as hedging instruments Balancesheetlocation December 31, 2013 Fair Value December 31, 2012Fair Value Interest rate products Other assets $1,948,243 $— Interest rate products Otherliabilities $(2,528,703) $(18,012,516) Derivatives in Cash Flow Hedging Relationships The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges forthe year ended December 31, 2013, 2012, and 2011 respectively. Amounts reclassified from other comprehensive income due to ineffectiveness arerecognized as interest expense. Year EndedDecember 31, 2013 Year EndedDecember 31, 2012 Year EndedDecember 31, 2011 Amount of gain (loss) recognized in OCI on derivative $4,564,248 $(7,859,264) $(14,657,235)Amount of loss reclassified from accumulated OCI into interest $4,621,227 $3,799,482 $1,080,323 Amount of gain (loss) recognized in income on derivative (ineffective portion andamount excluded from effectiveness testing) $3,172 $(7,534) $(12,296) 13. Commitments and Contingencies In the normal course of business, from time to time, the Company is involved in legal actions relating to the ownership and operations of its properties. Inmanagement’s opinion, the liabilities, if any, that ultimately may result from such legal actions are not expected to have a material adverse effect on theconsolidated financial position, results of operations or liquidity of the Company.The Company has signed several ground leases for certain properties. For financial reporting purposes, rent expense is recognized on a straight-line basisover the term of the lease. Accordingly, rent expense recognized in excess of rent paid is reflected as a liability in the accompanying consolidated balancesheets. Rent expense, for both ground leases and corporate office space, was approximately $1.1 million, $780,000, and $420,000 for the years endedDecember 31, 2013, 2012 and 2011, respectively. 80 The following table represents the Company’s future minimum annual lease payments under operating leases as of December 31, 2013: OperatingLeases 2014 $821,365 2015 825,279 2016 893,333 2017 961,508 2018 965,786 Thereafter 29,048,612 Total minimum lease payments $33,515,883 Additionally, in connection with the acquisition of the remaining 51% of the partnership interests in the Terranomics Crossroads Associates, LP and theacquisition of 100% of the equity interest in SARM Five Points Plaza LLC (both more fully discussed in Note 2), the Company entered into Tax ProtectionAgreements with certain limited partners of our Operating Partnership. The Tax Protection Agreements require the Company, subject to certain exceptions,for a period of 12 years, to indemnify the Crossroads Sellers and Five Points Sellers receiving OP Units against certain tax liabilities incurred by them, ascalculated pursuant to the applicable Tax Protection Agreement, if such liabilities result from a transaction involving a taxable disposition of Crossroads orFive Points Plaza, as applicable, or if the Operating Partnership fails to maintain and allocate to such holders for taxation purposes minimum levels ofOperating Partnership liabilities as specified in the Tax Protection Agreement. The Company has no present intention to sell or otherwise dispose of theproperties or interests therein in taxable transactions during the restriction period. If the Company were to trigger the tax protection provisions under theseagreements, the Company would be required to pay damages in the amount of the taxes owed by these limited partners (plus additional damages in theamount of the taxes incurred as a result of such payment). 14. Related Party Transactions The Company had entered into a Transitional Shared Facilities and Services Agreement with NRDC Real Estate Advisors, LLC, an entity wholly-owned byfour of the Company’s current and former directors. Pursuant to the Transitional Shared Facilities and Services Agreement, NRDC Real Estate Advisors, LLCprovided the Company with access to, among other things, their information technology and office space. On October 31, 2011 this agreement expired. Forthe year ended December 31, 2011, the Company incurred $75,000 of expenses relating to this agreement which is included in general and administrativeexpenses in the accompanying consolidated statements of operations. The Company did not incur any expenses relating to this agreement during the yearsended December 31, 2013 or 2012. In May 2010, the Company had entered into a Shared Facilities and Service Agreement effective January 1, 2010 with an officer of the Company. Pursuant tothe Shared Facilities and Service Agreement, the Company was provided the use of office space and other resources for a monthly fee of $1,938. Theagreement was terminated on October 31, 2011 due to the relocation of office space. For the year ended December 31, 2011, the Company incurredapproximately $19,400 of expenses relating to this agreement which is included in general and administrative expenses in the accompanying consolidatedstatements of operations. The Company did not incur any expenses relating to this agreement during the years ended December 31, 2013 or 2012, since theagreement was terminated on October 31, 2011. The Company has entered into several lease agreements with an officer of the Company, whereby pursuant to the lease agreements, the Company is providedthe use of storage space. For the years ended December 31, 2013, 2012 and 2011, the Company incurred approximately $25,000, $9,500 and $4,700,respectively, of expenses relating to the agreements which were included in general and administrative expenses in the accompanying consolidatedstatements of operations. 15. Corporate office relocation On August 2, 2012, the Company announced the relocation of its corporate headquarters from White Plains, New York to San Diego, California. TheCompany also announced that as a consequence of the relocation John B. Roche, the Company’s former Chief Financial Officer, elected not to remain withthe Company which was effective December 1, 2012. Consequently, the Company and Mr. Roche agreed to set the date of Mr. Roche’s departure forDecember 1, 2012. Under his employment agreement, Mr. Roche was entitled to receive a lump sum payment, within 30 days of his departure, equal to (i)$2,048,000, which is equal to (x) two times his annual salary and (y) two times the average of his annual bonuses awarded for the last two years immediatelypreceding the year of his departure, (ii) $18,000, which represents Mr. Roche’s automobile allowance for one year and (iii) any of Mr. Roche’s annual salary,annual bonus and other benefits which was both earned and accrued prior to the date of termination. In addition to the foregoing, all outstanding unvestedequity-based incentives and awards granted to Mr. Roche were vested and became free from restrictions and are exercisable in accordance with the terms ofthe equity-based incentive and award agreements. In connection with the corporate office relocation the Company incurred approximately $2.8 million inmoving costs inclusive of the costs incurred for John Roche as described above. These costs are included in general and administrative expenses in theaccompanying consolidated statements of operations. Effective December 1, 2012, the Company appointed Michael B. Haines as the Company’s Chief Financial Officer. 81 16. Quarterly Results of Operations (Unaudited) The unaudited quarterly results of operations for the years ended December 31, 2013 and 2012 for ROIC are as follows: Year Ended December 31, 2013 March 31 June 30 September 30 December 31 Total revenues $24,384,449 $26,063,466 $27,147,631 $33,636,485 Net income $2,289,886 $2,471,012 $25,262,291 $3,955,264 Net income attributable to ROIC $2,289,886 $2,471,012 $25,262,291 $3,790,372 Basic income per share $0.04 $0.04 $0.35 $0.05 Diluted income per share $0.04 $0.03 $0.34 $0.05 Year Ended December 31, 2012 March 31 June 30 September 30 December 31 Total revenues $16,647,684 $18,118,372 $18,889,274 $21,440,357 Net income (loss) attributable to ROIC $1,127,404 $4,424,752 $2,618,768 $(278,310) Basic and diluted income (loss) per share $0.02 $0.09 $0.05 $(0.01) The unaudited quarterly results of operations for the years ended December 31, 2013 and 2012 for the Operating Partnership are as follows (in thousands,except per share data): Year Ended December 31, 2013 March 31 June 30 September 30 December 31 Total revenues $24,384,449 $26,063,466 $27,147,631 $33,636,485 Net income attributable to the Operating Partnership $2,289,886 $2,471,012 $25,262,291 $3,955,264 Basic income per unit $0.04 $0.04 $0.35 $0.05 Diluted income per unit $0.04 $0.03 $0.34 $0.05 Year Ended December 31, 2012 March 31 June 30 September 30 December 31 Total revenues $16,647,684 $18,118,372 $18,889,274 $21,440,357 Net income (loss) attributable to the Operating Partnership $1,127,404 $4,424,752 $2,618,768 $(278,310) Basic and diluted income (loss) per unit $0.02 $0.09 $0.05 $(0.01) 17. Subsequent Events On February 18, 2014, the Company acquired the property known as Tigard Marketplace located in Portland, Oregon, for a purchase price of approximately$25.1 million. Tigard Marketplace is approximately 137,000 square feet and is anchored by H Mart Supermarkets and Bi-Mart Pharmacy. The property wasacquired with borrowings under the Company’s credit facility.The purchase price allocation has not been finalized and is expected to be completed during the first quarter of 2014. On February 21, 2014, the Company’s board of directors declared a cash dividend on its common stock of $0.16 per share, payable on March 28, 2014 toholders of record on March 14, 2014.Subsequent to December 31, 2013, the Company received notice of warrant exercises for 189,726 warrants, totaling approximately $2.3 million in proceeds. 82 SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATIONDecember 31, 2013 Initial Cost to Company Cost CapitalizedSubsequent to Acquisition Amount at Which Carriedat Close of Period Building & Building & Building & Accumulated Date ofDescription and Location Encumbrances Land Improvements Land Improvements Land Improvements Total Depreciation (1) Acquisition (a) Paramount Plaza, CA $— $6,346,871 $10,274,425 $— $158,307 $6,346,871 $10,432,732 16,779,603 $1,341,346 12/22/2009Santa Ana Downtown Plaza, CA — 7,895,272 9,890,440 — 1,105,604 7,895,272 10,996,044 18,891,316 1,359,454 1/26/2010Meridian Valley Plaza, WA — 1,880,637 4,794,789 — 565,181 1,880,637 5,359,970 7,240,607 972,289 2/1/2010Grand Mart Plaza, CA — 4,530,336 7,206,258 701,089 595,568 5,231,425 7,801,826 13,033,251 1,270,966 2/2/2010The Market at Lake Stevens, WA — 3,086,933 12,397,178 — 48,012 3,086,933 12,445,190 15,532,123 1,462,628 3/16/2010Norwood Shopping Center, CA — 3,031,309 11,534,239 — 259,052 3,031,309 11,793,291 14,824,600 1,369,119 4/5/2010Pleasant Hill Marketplace, CA — 6,359,471 6,927,347 — 740,989 6,359,471 7,668,336 14,027,807 964,290 4/8/2010Vancouver Market Center, WA — 4,080,212 6,912,155 — 169,200 4,080,212 7,081,355 11,161,567 822,379 6/17/2010Happy Valley Town Center, OR — 11,678,257 27,011,054 — 1,429,817 11,678,257 28,440,871 40,119,128 3,396,860 7/14/2010Oregon City Point, OR — 1,792,230 9,179,205 — 173,951 1,792,230 9,353,156 11,145,386 1,002,425 7/14/2010Cascade Summit, OR — 8,852,543 7,731,944 — 247,847 8,852,543 7,979,791 16,832,334 1,136,648 8/20/2010Heritage Market Center, WA — 6,594,766 17,399,233 — 460,541 6,594,766 17,859,774 24,454,540 1,731,278 9/23/2010Claremont Center, CA — 5,975,391 1,018,505 183,362 4,222,592 6,158,753 5,241,097 11,399,850 725,015 9/23/2010Shops At Sycamore Creek, CA — 3,747,011 11,583,858 — 868,448 3,747,011 12,452,306 16,199,317 1,625,662 9/30/2010Gateway Village, CA (2) 7,368,521 5,916,530 27,298,339 — 233,949 5,916,530 27,532,288 33,448,818 2,674,979 12/16/2010Division Crossing, OR — 3,705,536 8,327,097 — 3,268,554 3,705,536 11,595,651 15,301,187 869,744 12/22/2010Hasley Crossing, OR (2) — — 7,773,472 — 425,329 — 8,198,801 8,198,801 1,061,952 12/22/2010Marketplace Del Rio,CA — 13,420,202 22,251,180 — 448,504 13,420,202 22,699,684 36,119,886 2,492,378 1/3/2011Pinole Vista, CA — 9,233,728 17,553,082 — 2,053,380 9,233,728 19,606,462 28,840,190 2,045,069 1/6/2011Desert Spring Marketplace, CA — 8,517,225 18,761,350 (159,973) 1,668,923 8,357,252 20,430,273 28,787,525 2,204,250 2/17/2011Mills Shopping Center, CA — 4,083,583 16,833,059 — 4,206,597 4,083,583 21,039,656 25,123,239 2,698,596 2/17/2011Morada Ranch, CA — 2,503,605 19,546,783 — 334,702 2,503,605 19,881,485 22,385,090 1,662,200 5/20/2011Renaissance, CA 16,489,812 8,640,261 13,848,388 — 586,485 8,640,261 14,434,873 23,075,134 1,181,784 8/3/2011Country Club Gate, CA 12,236,374 6,487,457 17,340,757 — 701,565 6,487,457 18,042,322 24,529,779 1,592,125 7/8/2011Canyon Park, WA — 9,352,244 11,291,210 — 1,410,556 9,352,244 12,701,766 22,054,010 1,220,437 7/29/2011Hawks Prairie, WA — 5,334,044 20,693,920 — 343,425 5,334,044 21,037,345 26,371,389 1,763,167 9/8/2011Kress Building, WA — 5,692,748 20,866,133 — 2,620,097 5,692,748 23,486,230 29,178,978 1,738,025 9/30/2011Round Hill Square, CA — 6,358,426 17,734,397 — 462,991 6,358,426 18,197,388 24,555,814 1,457,492 8/23/2011Hillsboro, OR (2) — — 18,054,929 — 211,234 — 18,266,163 18,266,163 1,284,493 11/23/2011Gateway Shopping Center, WA — 6,241,688 23,461,824 — 43,940 6,241,688 23,505,764 29,747,452 1,290,665 2/16/2012Euclid Plaza, CA 8,158,676 7,407,116 7,752,767 — 2,333,262 7,407,116 10,086,029 17,493,145 629,378 3/28/2012Green Valley, CA — 1,684,718 8,999,134 — 261,136 1,684,718 9,260,270 10,944,988 558,340 4/2/2012Aurora Square, WA — 3,002,147 1,692,681 — — 3,002,147 1,692,681 4,694,828 195,852 5/3/2012Marlin Cove, CA — 8,814,850 6,797,289 — 765,272 8,814,850 7,562,561 16,377,411 472,549 5/4/2012Seabridge, CA — 5,098,187 17,164,319 — 485,111 5,098,187 17,649,430 22,747,617 936,288 5/31/2012Novato, CA — 5,329,472 4,411,801 — 293,642 5,329,472 4,705,443 10,034,915 213,691 7/24/2012Glendora, CA — 5,847,407 8,758,338 — 50,852 5,847,407 8,809,190 14,656,597 478,581 8/1/2012Wilsonville, WA — 4,180,768 15,394,342 — 125,267 4,180,768 15,519,609 19,700,377 675,645 8/1/2012Bay Plaza, CA — 5,454,140 14,857,031 — 1,048,849 5,454,140 15,905,880 21,360,020 655,299 10/5/2012Santa Theresa, CA 11,033,511 14,964,975 17,162,039 — 1,791,745 14,964,975 18,953,784 33,918,759 739,983 11/8/2012Cypress West, CA — 15,479,535 11,819,089 — 185,461 15,479,535 12,004,550 27,484,085 464,885 12/7/2012Redondo Beach, CA — 16,241,947 13,624,837 — 52,061 16,241,947 13,676,898 29,918,845 484,754 12/28/2012Harbor Place, CA — 16,506,423 10,527,092 — 99,584 16,506,423 10,626,676 27,133,099 361,547 12/28/2012Diamond Bar Town Center, CA — 9,540,204 16,794,637 — 161,217 9,540,204 16,955,854 26,496,058 550,775 2/1/2013Bernardo Heights, CA 8,748,605 3,191,950 8,939,685 — 383 3,191,950 8,940,068 12,132,018 252,475 2/6/2013Canyon Crossing, WA — 7,940,521 24,659,249 — 987,435 7,940,521 25,646,684 33,587,205 626,492 4/15/2013Diamond Hills, CA — 15,457,603 29,352,602 — 266,724 15,457,603 29,619,326 45,076,929 697,665 4/22/2013Granada Shopping Center, CA — 3,673,036 13,459,155 — 37,991 3,673,036 13,497,146 17,170,182 283,299 6/27/2013Hawthorne Crossings, CA — 10,382,740 29,277,254 — 4,963 10,382,740 29,282,217 39,664,957 469,446 6/27/2013Robinwood, CA — 3,996,984 11,317,359 — — 3,996,984 11,317,359 15,314,343 147,803 8/23/2013Five Points Plaza, CA — 18,417,251 37,051,590 — 80,372 18,417,251 37,131,962 55,549,213 267,916 9/27/2013Crossroads Shopping Center, CA 49,413,976 68,484,079 68,533,041 — 187,202 68,484,079 68,720,243 137,204,322 662,454 9/27/2013Peninsula Marketplace, CA — 14,730,088 19,213,763 — — 14,730,088 19,213,763 33,943,851 131,489 10/15/2013Country Club Village, CA — 10,011,865 26,578,916 — 435,858 10,011,865 27,014,774 37,026,639 85,556 11/26/2013Plaza de la Canada, CA (2) — 10,351,028 24,819,026 — 8,307 10,351,028 24,827,333 35,178,361 40,103 12/13/2013 $113,449,475 $457,527,550 $874,453,586 $724,478 $39,728,034 $458,252,028 $914,181,620 $1,372,433,648 $57,499,980 83 (a) RECONCILIATION OF REAL ESTATE – OWNED SUBJECT TO OPERATING LEASES For the Year Ended December 31, 2013 2012 2011 Balance at beginning of period: $871,693,595 $580,832,410 $272,732,844 Property improvements during the year 19,513,924 12,264,027 8,106,363 Properties acquired during the year 487,309,488 278,597,158 299,993,203 Properties sold during the year (6,083,359) — — Balance at end of period: $1,372,433,648 $871,693,595 $580,832,410 (b) RECONCILIATION OF ACCUMULATED DEPRECIATION For the Year Ended December 31, 2013 2012 2011 Balance at beginning of period: $32,364,772 $14,451,032 $3,078,160 Depreciation expenses 25,653,359 17,913,740 11,793,750 Properties sold during the year (433,342) — — Property assets fully depreciated and written off (84,809) — (420,878)Balance at end of period: $57,499,980 $32,364,772 $14,451,032 (1)Depreciation and investments in building and improvements reflected in the consolidated statement of operations is calculated over the estimateduseful life of the assets as follows: Building: 39-40 yearsProperty Improvements: 10-20 years (2)Property is subject to a ground lease. (3)The aggregate cost for Federal Income Tax Purposes for real estate was approximately $1.3 billion at December 31, 2013. 84 SCHEDULE IV – MORTGAGE LOANS ON REAL ESTATEDecember 31, 2013The Company has no remaining mortgage loans on real estate as of December 31, 2013.(a) RECONCILIATION OF MORTGAGE LOANS ON REAL ESTATE For the Year Ended December 31, 2013 2012 2011 Balance at beginning of period: $10,000,000 $10,000,000 $57,778,044 Mortgage loans acquired during the current period — — 10,000,000 Mortgage loans converted to fee interest through deed-in-lieu of foreclosure — — (49,978,044) Mortgage loans converted to joint venture — — (7,800,000) Mortgage loans eliminated upon consolidation of joint venture (10,000,000) — — Balance at end of period: $— $10,000,000 $10,000,000 85EXHIBIT 4.7 THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THENAME OF THE DEPOSITARY OR CEDE & CO., AS NOMINEE OF THE DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED INTHE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THEINDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, BY ANOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCHNOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH A SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FORREGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., ORSUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, ANY TRANSFER, PLEDGE OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS ANINTEREST HEREIN. RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP 5.000% Senior Note due 2023 REGISTEREDPRINCIPAL AMOUNT: $250,000,000No. R-1 CUSIP: 76132F AA5ISIN: US76132FAA57 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP, a Delaware limited partnership (the “Company”), which term includes any successorPerson under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal amount ofTWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000) on December 15, 2023 (the “Stated Maturity Date”) (unless redeemed on any date fixed forredemption (the “Redemption Date”) prior to the Stated Maturity Date in accordance with the terms of this Note and the Indenture) (each of the StatedMaturity Date and the Redemption Date is hereinafter referred to as the “Maturity Date” with respect to the principal repayable on such date) and to payinterest on the outstanding principal amount of this Note from and including December 9, 2013, or from the most recent Interest Payment Date to whichinterest has been paid or duly provided for, as applicable, semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2014(each, an “Interest Payment Date”), and, if applicable, on the Maturity Date, at the rate of 5.000% per annum, until said principal amount is paid or dulyprovided for. Interest on this Note will be computed on the basis of a 360-day year consisting of twelve 30-day months.  Payment of Interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the Person inwhose name this Note (or one or more predecessor Notes) is registered at the close of business on the June 1 or December 1, whether or not a Business Day, asthe case may be, immediately preceding such Interest Payment Date (the “Regular Record Date”). Any such interest not punctually paid or duly providedfor on an Interest Payment Date (“Defaulted Interest”) will forthwith cease to be payable to the Holder on such Regular Record Date, and such DefaultedInterest may be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a special record date(the “Special Record Date”) for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not lessthan 15 days prior to such Special Record Date, or may be paid at any time in any other lawful manner, all as more fully provided in the Indenture. Optional Redemption. The provisions of Article Three of the Indenture, other than Sections 3.07 and 3.08 of the Indenture, shall apply to this Note,as supplemented or amended by the following paragraph. The Company may, at its option, redeem the Notes, in whole at any time or in part from time to time, in each case prior to September 15, 2023 (threemonths prior to the Stated Maturity Date), for cash at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes to be redeemedand (ii) the Make Whole Amount (as defined below), plus, in each case, unpaid interest, if any, accrued to, but not including, the applicable RedemptionDate. In addition, at any time on or after September 15, 2023 (three months prior to the Stated Maturity Date), the Company may, at its option, redeem theNotes, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus unpaidinterest, if any, accrued to, but not including, the applicable Redemption Date. Notwithstanding the foregoing, the Company will pay any interestinstallment due on an Interest Payment Date that falls on or prior to the Redemption Date to the Holders of the Notes as of the close of business on theRegular Record Date immediately preceding such Interest Payment Date. “Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having anactual or interpolated maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance withcustomary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes. “Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of three Reference Treasury Dealer Quotations for suchRedemption Date, after excluding the highest and lowest of five Reference Treasury Dealer Quotations obtained, or (2) if the Company obtains fewer thanfive such Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained. “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company.  “Make Whole Amount” means, as determined by an Independent Investment Banker, the sum of the present values of the remaining scheduledpayments of principal of and interest on the Notes to be redeemed that would be due after the applicable Redemption Date but for such redemption,discounted to the applicable Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rateplus 0.35%. “Reference Treasury Dealer” means: (i) J.P. Morgan Securities LLC, a Primary Treasury Dealer (as defined below) selected by U.S. BancorpInvestments, Inc. and a Primary Treasury Dealer selected by Wells Fargo Securities, LLC (or an affiliate of any of the foregoing that is a Primary TreasuryDealer); provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in the United States (a “PrimaryTreasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; and (ii) two other Primary Treasury Dealers selected by theCompany. “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, asdetermined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed as a percentage of its principal amount) quoted inwriting to the Company (and provided to the Trustee) by such Reference Treasury Dealer as of 3:30 p.m., New York City time, on the third New YorkBusiness Day immediately preceding such Redemption Date. “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity (computedas of the third Business Day immediately preceding such Redemption Date) of the Comparable Treasury Issue, assuming a price for such ComparableTreasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. Place of Payment. The Company will make payment of principal of, and premium, if any, and interest on, this Note in immediately available fundsat the Corporate Trust Office of the Trustee or such other office or agency as may be designated by the Company for such purpose in Minneapolis, MN, inU.S. dollars. Time of Payment. If an Interest Payment Date or the Maturity Date falls on a day that is not a Business Day, the required payment need not be madeon such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or the MaturityDate, as the case may be, and no additional interest shall accrue on such payment as a result of payment on such next succeeding Business Day. Withholding. The Company shall be permitted to withhold from any payment of principal of, and premium, if any, and interest on, this Note,whether on an Interest Payment Date or at Maturity, any amounts that the Company is required to withhold by law.  General. This Note is one of a duly authorized issue of Securities of the Company, issued and to be issued in one or more series under an indenture(the “Base Indenture”), dated as of December 9, 2013, among the Company, Retail Opportunity Investments Corp., as guarantor (the “Guarantor”), andWells Fargo Bank, National Association, as trustee (the “Trustee,” which term includes any successor trustee under the Indenture with respect to the series ofSecurities of which this Note is a part), as supplemented by a First Supplemental Indenture thereto, dated as of December 9, 2013 (the “First SupplementalIndenture,” and together with the Base Indenture, the “Indenture”), among the Company, the Guarantor and the Trustee. Reference is hereby made to theIndenture for a statement of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Guarantor, theTrustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Note is one of aduly authorized series of Securities designated as “5.000% Senior Notes due 2023” (collectively, the “Notes”), limited, except as specified below, inaggregate principal amount to TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000). To the extent the terms of this Note conflict with the terms ofthe Indenture, the terms of this Note shall govern. Further Issuance. The Company may, from time to time, without notice to, or the consent of, the Holders of the Notes, create and issue additionalSecurities (“Additional Securities”) ranking equally and ratably with, and having the same interest rate, maturity and other terms as, the originally issuedNotes (other than the issue date and, to the extent applicable, issue price, initial date of interest accrual and initial Interest Payment Date); provided, that suchissuance complies with the covenants set forth in the Indenture. Any such Additional Securities will be consolidated, and constitute a single series ofSecurities, with the originally issued Notes for all purposes under the Indenture; provided, however, that any such Additional Securities that have the sameCUSIP, ISIN or other identifying number of any Notes then outstanding must be fungible with such Notes then outstanding for U.S. federal income taxpurposes. Events of Default. If an Event of Default with respect to the Notes shall have occurred and be continuing, the principal amount of the Notes may bedeclared, and in certain cases shall automatically become, due and payable in the manner and with the effect provided in the Indenture. Sinking Fund. The Notes are not subject to, or entitled to the benefits of, any sinking fund. Satisfaction and Discharge. The Indenture contains provisions where, upon the Company’s direction and satisfaction of certain conditions, theIndenture shall cease to be of further effect with respect to the Notes, subject to the survival of specified provisions of the Indenture. Defeasance and Covenant Defeasance. The Indenture contains provisions for defeasance of certain obligations of the Company under this Note andthe Indenture and covenant defeasance of certain obligations of the Company under the Indenture.  Modification and Waivers; Obligations of the Company Absolute. The Indenture permits, with certain exceptions as therein provided, theamendment thereof and the modification of the rights and obligations of the Company and the Guarantor and the rights of the Holders of the Securities. Suchamendment and modification may be effected under the Indenture as follows: (ii) an amendment or supplement to the Indenture or the Securities may beeffected with the written consent of the Holders of a majority in aggregate principal amount of the Securities of all series then outstanding; and (ii) asupplement with regard to a series of Securities, an amendment or supplement to a Supplemental Indenture relating to a series of Securities or an amendmentof the Securities of a series may be effected with the written consent of the Holders of a majority in aggregate principal amount of the Securities of that seriesthen outstanding. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of any seriesthen outstanding, on behalf of the Holders of all Securities of such series then outstanding, to waive compliance by the Company with certain provisions ofthe Indenture. Furthermore, provisions in the Indenture permit the Holders of a majority in aggregate principal amount of the Outstanding Securities of anyseries to waive, on behalf of the Holders of all Outstanding Securities of such series, certain past defaults under the Indenture and their consequences. Anysuch consent or waiver in respect of the Notes shall be conclusive and binding upon the Holder of this Note and upon all future Holders of this Note and ofany Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is madeupon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which isabsolute and unconditional, to pay the principal of, and premium, if any, and interest on, this Note at the time, place, and rate, and in the coin or currency,herein prescribed. The Company shall give the Trustee written notice of any modification of this Note that may be a material modification under Treasury RegulationSection 1.1471-2(b). The Trustee shall assume that no material modification for purposes of Treasury Regulation Section 1.1471-2(b) has occurred regardingthe Securities, unless the Trustee receives written notice of such modification from the Company. Limitation on Suits. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Note will have any right to pursue any remedywith respect to the Indenture, except in the case of failure of the Trustee, for 60 days, to act after it has received a written request to pursue the remedy inrespect of an Event of Default from the Holders of at least 25% in aggregate principal amount of the Notes then outstanding, as well as an offer of security orindemnity satisfactory to it, and no contrary direction has been given to the Trustee during such 60-day period by the Holders of a majority in aggregateprincipal amount of the Notes then outstanding. Notwithstanding any other provision of the Indenture, each Holder of a Note will have the right, which isabsolute and unconditional, to receive payment of the principal of, and premium, if any, and interest on, such Note on the respective due dates therefor and toinstitute suit for the enforcement therefor, and this right shall not be impaired without the consent of such Holder. Authorized Denominations. The Notes are issuable only in registered form without coupons in minimum denominations of $2,000 or any integralmultiple of $1,000 in excess thereof. Registration of Transfer or Exchange. As provided in the Indenture and subject to certain limitations herein and therein set forth, the transfer of thisNote is registrable in the register of the Notes maintained by the Registrar upon surrender of this Note for registration of transfer, at the Corporate Trust Office,duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, theHolder hereof or his or her attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the sameaggregate principal amount, will be issued to the designated transferee or transferees.  As provided in the Indenture and subject to certain limitations herein and therein set forth, this Note is exchangeable for a like aggregate principalamount of Notes of different authorized denominations, as requested by the Holders surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to coverany tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, theGuarantor or the Trustee may deem and treat the Person in whose name the Note is registered as the absolute owner hereof for all purposes, whether or not thisNote be overdue, and none of the Company, the Guarantor, the Trustee or any such agent shall be affected by notice to the contrary. Guarantee. Payment of this Note is fully and unconditionally guaranteed by the Guarantor pursuant to the Indenture. The Guarantor may bereleased from its obligations under the Indenture and the Guarantee under the circumstances specified in the Indenture. Defined Terms. All terms used but not defined in this Note shall have the meanings assigned to them in the Indenture. Governing Law. The Indenture and this Note shall be governed by, and construed in accordance with, the laws of the State of New York withoutregard to conflicts of law principles of such State other than New York General Obligations Law Sections 5-1401 and 5-1402. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefitunder the Indenture (including the Guarantee) or be valid or obligatory for any purpose. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused “CUSIP”numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIPnumber, or the ISIN number, printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon. [Remainder of Page Intentionally Left Blank]  IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by duly authorized signatories. Dated: December 9, 2013 RETAIL OPPORTUNITY INVESTMENTSPARTNERSHIP, LP, as Issuer By:Retail Opportunity Investments GP, LLC,its general partnerBy: ______________________Name:Title:By: ______________________Name:Title:  TRUSTEE’S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series described in the within-mentioned Indenture and Supplemental Indenture. WELLS FARGO BANK, NATIONALASSOCIATION, as TrusteeBy: ______________________Authorized SignatoryDated: December 9, 2013  ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ______________________________________________________________________________ ______________________________________________________________________________ PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ______________________________________________________________________________ ______________________________________________________________________________ (Please print or typewrite name and address,including postal zip code, of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ to transfer said Note on the books of the Trustee, with full power of substitution in the premises. Dated:__________________ ____________________________________________NOTICE: The signature to this assignment must correspond with the name as written upon the face of the withinNote in every particular, without alteration or enlargement or any change whatsoever. ________________________________Signature Guarantee  NOTATION OF GUARANTEE For value received, the Guarantor has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture, among the Company,the Guarantor and the Trustee and subject to the provisions in the Indenture and the terms of the Notes, the due and punctual payment of the principal of,premium, if any, and interest on, the Notes and all other amounts due and payable under the Indenture and the Notes by the Company, when and as suchprincipal of, premium, if any, and interest on, the Notes and other amounts shall become due and payable, whether at the Stated Maturity Date or bydeclaration of acceleration, call for redemption or otherwise, according to the terms of the Notes and the Indenture. The obligations of the Guarantor to theHolders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article Thirteen of the Indenture and Article VI ofthe First Supplemental Indenture thereto establishing the terms of the Notes and reference is hereby made to the Indenture and the First SupplementalIndenture thereto for the precise terms of the Guarantee, including provisions for the release thereof. Each Holder of a Note, by accepting the same, (a) agreesto and shall be bound by such provisions and (b) appoints the Trustee attorney-in-fact of such Holder for the purpose of such provisions. The Guarantorhereby agrees that its Guarantee of the Notes set forth in Article Thirteen of the Indenture and Article VI of the First Supplemental Indenture shall remain infull force and effect notwithstanding any failure to endorse on any Note this notation of the Guarantee. RETAIL OPPORTUNITY INVESTMENTS CORP. By: ______________________Name:Title: EXHIBIT 21.1 LIST OF SUBSIDIARIES OF RETAIL OPPORTUNITY INVESTMENTS CORP. Company Jurisdiction ofOrganizationRetail Opportunity Investments Partnership, LP DelawareRetail Opportunity Investments GP, LLC DelawareROIC Paramount Plaza, LLC DelawareROIC Phillips Ranch, LLC DelawareROIC Phillips Ranch, TRS DelawareROIC Santa Ana, LLC DelawareROIC Washington, LLC DelawareROIC Riverside Plaza, LLC DelawareWRT – ROIC Riverside, LLC DelawareROIC Oregon, LLC DelawareROIC California, LLC DelawareROIC Gateway III, LLC DelawareROIC Gateway Holding III, LLC DelawareROIC Crossroads GP, LLC DelawareROIC Crossroads LP, LLC DelawareROIC Pinole Vista, LLC DelawareROIC Lakeside Eagle, LLC DelawareWRT – ROIC Lakeside Eagle, LLC DelawareROIC CCG, LLC DelawareROIC CCG Holding I, LLC DelawareROIC CCG Holding II, LLC DelawareROIC RTC, LLC DelawareROIC RTC Holding I, LLC DelawareROIC RTC Holding II, LLC DelawareROIC Zephyr Cove, LLC DelawareROIC Hillsboro, LLC DelawareROIC Euclid Plaza, LLC DelawareROIC Euclid Plaza Holding I, LLC DelawareROIC Euclid Plaza Holding II, LLC DelawareROIC STV, LLC DelawareROIC Cypress West, LLC DelawareROIC Redondo Beach Plaza, LLC DelawareROIC DBTC, LLC DelawareTerranomics Crossroads Associates, LP DelawareSARM Five Points Plaza, LLC DelawareROIC BHP, LLC DelawareROIC BHP Holding I, LLC DelawareROIC BHP Holding II, LLC DelawareROIC Robinwood, LLC DelawareROIC Peninsula Marketplace, LLC DelawareEXHIBIT 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-8 No. 333-170692) pertaining to the 2009 Equity Incentive Plan of Retail Opportunity Investments Corp., (2)Registration Statement (Form S-3 ASR No. 333-189057), and the related Prospectus, of Retail Opportunity Investments Corp. and RetailOpportunity Investments Partnership, LP, and (3)Post-Effective Amendment No. 1 to Form S-1/MEF on Registration Statement (Form S-3 No. 333-14677), and in the related Prospectus, of RetailOpportunity Investments Corp;of our reports dated February 25, 2014, with respect to the consolidated financial statements and schedules of Retail Opportunity Investments Corp. and theeffectiveness of internal control over financial reporting of Retail Opportunity Investments Corp., included in this Annual Report (Form 10-K) for the yearended December 31, 2013./s/ Ernst & Young LLPNew York, New YorkFebruary 25, 2014EXHIBIT 23.2Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the Registration Statement (Form S-3 ASR No. 333-189057-01) of Retail Opportunity Investments Corp. andRetail Opportunity Investments Partnership, LP, and in the related Prospectus, of our report dated February 25, 2014, with respect to the consolidatedfinancial statements and schedules of Retail Opportunity Investments Partnership, LP, included in this Annual Report (Form 10-K) for the year endedDecember 31, 2013./s/ Ernst & Young LLPNew York, New YorkFebruary 25, 2014EXHIBIT 31.1 RETAIL OPPORTUNITY INVESTMENTS CORP.CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Stuart A. Tanz, certify that: 1.I have reviewed this Annual Report on Form 10-K of Retail Opportunity Investments Corp.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: February 25, 2014By: /s/ Stuart A. TanzName: Stuart A. TanzTitle: Chief Executive Officer  RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Stuart A. Tanz, certify that: 1.I have reviewed this Annual Report on Form 10-K of Retail Opportunity Investments Partnership, LP; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: February 25, 2014By: /s/ Stuart A. TanzName: Stuart A. TanzTitle: Chief Executive OfficerEXHIBIT 31.2 RETAIL OPPORTUNITY INVESTMENTS CORP.CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Michael B. Haines, certify that: 1.I have reviewed this Annual Report on Form 10-K of Retail Opportunity Investments Corp.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: February 25, 2014By: /s/ Michael B. HainesName: Michael B. HainesTitle: Chief Financial Officer  RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCERTIFICATION OF CHIEF FINANCIAL OFFICER I, Michael B. Haines, certify that: 1.I have reviewed this Annual Report on Form 10-K of Retail Opportunity Investments Partnership, LP; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: February 25, 2014By: /s/ Michael B. HainesName: Michael B. HainesTitle: Chief Financial OfficerEXHIBIT 32.1 RETAIL OPPORTUNITY INVESTMENTS CORP.CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERPursuant to18 U.S. C. Section 1350as adopted pursuant toSection 906 of The Sarbanes-Oxley Act of 2002 The undersigned, the Chief Executive Officer of Retail Opportunity Investments Corp. (the “Company”), hereby certifies to the best of hisknowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Annual Reporton Form 10-K for the year ended December 31, 2013 (the “Form 10-K”), filed concurrently herewith by the Company, fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-K fairly presents, in all materialrespects, the financial condition and results of operations of the Company. Date: February 25, 2014By: /s/ Stuart A. TanzName: Stuart A. TanzTitle: Chief Executive OfficerThe undersigned, the Chief Financial Officer of Retail Opportunity Investments Corp. (the “Company”), hereby certifies to the best of his knowledgeon the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Annual Report on Form10-K for the year ended December 31, 2013 (the “Form 10-K”), filed concurrently herewith by the Company, fully complies with the requirements of Section13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-K fairly presents, in all materialrespects, the financial condition and results of operations of the Company. Date: February 25, 2014By: /s/ Michael B. HainesName: Michael B. HainesTitle: Chief Financial OfficerPursuant to the Securities and Exchange Commission release 33-8238 dated June 5, 2003, this certification is being furnished and shall not bedeemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registrationstatement of the Company filed under the Securities Act of 1933, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request.  RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERPursuant to18 U.S. C. Section 1350as adopted pursuant toSection 906 of The Sarbanes-Oxley Act of 2002 The undersigned, the Chief Executive Officer of Retail Opportunity Investments GP, LLC, the sole general partner of Retail OpportunityInvestments Partnership, LP (the “Operating Partnership”), hereby certifies to the best of his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), asadopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K for the year ended December 31, 2013 (the “Form10-K”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,as amended, and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations ofthe Company. Date: February 25, 2014By: /s/ Stuart A. TanzName: Stuart A. TanzTitle: Chief Executive OfficerThe undersigned, the Chief Financial Officer of Retail Opportunity Investments GP, LLC, the sole general partner of Retail Opportunity InvestmentsPartnership, LP (the “Operating Partnership”), hereby certifies to the best of his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adoptedpursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K for the year ended December 31, 2013 (the “Form 10-K”),filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, asamended, and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: February 25, 2014By: /s/ Michael B. HainesName: Michael B. HainesTitle: Chief Financial OfficerPursuant to the Securities and Exchange Commission release 33-8238 dated June 5, 2003, this certification is being furnished and shall not bedeemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registrationstatement of the Company filed under the Securities Act of 1933, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request.

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