Retail Opportunity Investments
Annual Report 2014

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 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, 2014 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 of incorporation 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. Employer Identification 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 share The NASDAQ Stock Market LLC Securities 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 ☒ No ☐ Retail Opportunity Investments Partnership, LPYes ☐ No ☒ Indicate 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 ☒ No ☐ Retail Opportunity Investments Partnership, LPYes ☒ No ☐ 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 ☒ No ☐ Retail Opportunity Investments Partnership, LPYes ☒ No ☐ 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 ☒ No ☐ Retail Opportunity Investments Partnership, LPYes ☒ No ☐ 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. ☐ 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 ☒Accelerated filer ☐Non-accelerated filer ☐(Do not check if a smaller reporting company)Smaller reporting company ☐ Retail Opportunity Investments Partnership, LP Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☒(Do not check if a smaller reporting company)Smaller reporting company ☐ 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 ☐ No ☒ Retail Opportunity Investments Partnership, LPYes ☐ No ☒ The aggregate market value of the common equity held by non-affiliates of Retail Opportunity Investments Corp. as of June 30, 2014, the lastbusiness day of its most recently completed second fiscal quarter, was $1.4 billion (based on the closing sale price of $15.73 per share of Retail OpportunityInvestments 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: 93,306,923 shares ofcommon stock, par value $0.0001 per share, of Retail Opportunity Investments Corp. outstanding as of February 20, 2015 DOCUMENTS INCORPORATED BY REFERENCE Portions of Retail Opportunity Investments Corp.’s definitive proxy statement for its 2015 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 PARAGRAPH This report combines the annual reports on Form 10-K for the year ended December 31, 2014 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, 2014, ROIC owned an approximate 95.9% partnership interest in theOperating Partnership. Retail Opportunity Investments GP, LLC, ROIC’s wholly-owned subsidiary, is the sole general partner of the Operating Partnership.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 the samemanner 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 and membershipinterest in Retail Opportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does not conductbusiness itself, other than acting as the parent company and through Retail Opportunity Investments Partnership GP, LLC as the sole general partner of theOperating Partnership. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownership interests inthe Company’s real estate ventures. The Company conducts its business through the Operating Partnership, which is structured as a partnership with nopublicly traded equity. Except for net proceeds from warrants exercised and equity issuances by ROIC, which are contributed to the Operating Partnership,the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the OperatingPartnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance of operating partnership units (“OP Units”) of theOperating Partnership. Non-controlling 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 as non-controlling 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. Business6Item 1A. Risk Factors10Item 1B. Unresolved Staff Comments21Item 2. Properties21Item 3. Legal Proceedings24Item 4. Mine Safety Disclosures.24PART II25Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities25Item 6. Selected Financial Data28Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations29Item 7A. Quantitative and Qualitative Disclosures About Market Risk42Item 8. Financial Statements and Supplementary Data44Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure76Item 9A. Controls and Procedures76Item 9B. Other Information77PART III77Item 10. Directors, Executive Officers and Corporate Governance77Item 11. Executive Compensation77Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters77Item 13. Certain Relationships and Related Transactions, and Director Independence77Item 14. Principal Accounting Fees and Services77PART IV78Item 15. Exhibits and Financial Statement Schedules78SIGNATURES81 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 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 the Company’s business; •the conditions in the local markets in which the Company operates and its concentration in those markets, as well as changes in national economic andmarket 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 favorable rates; •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 its senior unsecurednotes, its unsecured credit facility 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; •changes in interest rates that could impact the market price of ROIC’s common stock and the cost of the Company’s borrowings; and •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 otherwise indicated or 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, 2014, ROIC owned an approximate 95.9% partnership interest and other limited partners owned theremaining 4.1% 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, 2014, the Company has completed approximately $1.7 billion of shopping centerinvestments. As of December 31, 2014, the Company’s portfolio consisted of 61 retail properties totaling approximately 7.3 million square feet of grossleasable area (“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. 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 regions of the UnitedStates, which exhibit income and population growth and high barriers to entry. The Company’s senior management team has operated in the Company’smarkets for over 25 years and has established an extensive network of relationships in these markets with key institutional and private property owners,brokers and financial institutions and other real estate operators. The Company’s in-depth local and regional market knowledge and expertise provides adistinct competitive advantage in identifying and accessing attractive acquisition opportunities, including properties that are not widely marketed. 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 2014 Investing Activity Property Acquisitions On February 18, 2014, the Company acquired the property known as Tigard Marketplace located in Tigard, Oregon, within the Portland metropolitan area,for a purchase price of approximately $25.1 million. Tigard Marketplace is approximately 137,000 square feet and is anchored by H-Mart Supermarket. Theproperty was acquired with borrowings under the Company’s credit facility. On February 28, 2014, the Company acquired the property known as Creekside Plaza located in Poway, California, within the San Diego metropolitan area,for a purchase price of approximately $44.0 million. Creekside Plaza is approximately 129,000 square feet and is anchored by Stater Brothers Supermarket.The property was acquired with borrowings under the Company’s credit facility. On April 30, 2014, the Company acquired the property known as North Park Plaza located in San Jose, California, within the San Francisco Bay Areametropolitan area, for a purchase price of approximately $27.8 million. North Park Plaza is approximately 77,000 square feet and is anchored by SFSupermarket. The property was acquired with borrowings under the Company’s credit facility and available cash. On May 22, 2014, the Company acquired the property known as Aurora Square II located in Shoreline, Washington, within the Seattle metropolitan area, fora purchase price of approximately $15.8 million. Aurora Square II is approximately 66,000 square feet and is contiguous to an existing ROIC grocery-anchored shopping center, Aurora Square. Aurora Square II, together with Aurora Square, aggregate 104,000 square feet and are anchored by Marshall’s(Aurora Square II) and Central Supermarket (Aurora Square). The property was acquired with borrowings under the Company’s credit facility and availablecash. On June 13, 2014, the Company acquired the property known as Fallbrook Shopping Center located in West Hills, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $210.0 million. Fallbrook Shopping Center has approximately 1.1 million square feet of GLA ofwhich approximately 756,000 square feet is owned by the Company. Key tenants include Trader Joe’s, Sprouts Market, Home Depot, Kohl’s, TJ Maxx, RossDress For Less, AMC Theaters and 24 Hour Fitness. Fallbrook Shopping Center also features Target, Walmart and Kroger (Ralph’s) Supermarket, whichoccupy substantially all of the GLA not owned by the Company. The property was acquired with borrowings under the Company’s credit facility andavailable cash. On December 3, 2014, the Company acquired the property known as Moorpark Town Center located in Moorpark, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $27.3 million. Moorpark Town Center is approximately 134,000 square feet and is anchored byKroger (Ralph’s) Supermarket and CVS Pharmacy. The property was acquired with borrowings under the Company’s credit facility. On December 4, 2014, the Company acquired the property known as Mission Foothill Marketplace located in Mission Viejo, California, within the OrangeCounty metropolitan area, for a purchase price of approximately $29.0 million. Mission Foothill Marketplace is approximately 111,000 square feet and isanchored by Haggen Supermarket and CVS Pharmacy. The property was acquired with borrowings under the Company’s credit facility. On December 11, 2014, the Company acquired the property known as Wilsonville Town Center located in Wilsonville, Oregon, within the Portlandmetropolitan area, for an adjusted purchase price of approximately $35.6 million. Wilsonville Town Center is approximately 168,000 square feet and isanchored by Thriftway Supermarket, Rite Aid Pharmacy and Dollar Tree. The acquisition was funded through approximately $19.4 million in cash and theissuance of 989,272 OP Units with a fair value of approximately $16.3 million. 7 Property Dispositions On June 5, 2014, the Company sold Phillips Village Shopping Center, a non-core shopping center located in Pomona, California with an occupancy rate ofapproximately 10.4% as of May 31, 2014. The sales price of this property of approximately $16.0 million, less costs to sell, resulted in net proceeds to theCompany of approximately $15.6 million. Accordingly, the Company recorded a gain on sale of approximately $3.3 million for the year ended December 31,2014 related to this property. On August 25, 2014, the Company sold the Oregon City Point Shopping Center, a non-core shopping center located in Oregon City, Oregon. The sales priceof this property of approximately $12.4 million, less costs to sell, resulted in net proceeds of approximately $12.0 million. Accordingly, the Companyrecorded a gain on sale of approximately $1.6 million for year ended December 31, 2014 related to this property. 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 2024 On December 3, 2014, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of4.000% Senior Notes due 2024 (the “Senior Notes Due 2024”), fully and unconditionally guaranteed by ROIC. The Senior Notes Due 2024 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2015, and mature on December 15, 2024, unless redeemed earlier by the OperatingPartnership. The Senior Notes Due 2024 are part of the Operating Partnership’s senior unsecured obligations that rank equally in right of payment with theOperating 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’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to theextent of the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’sobligations under the Senior Notes Due 2024 on a senior unsecured basis, including the due and punctual payment of principal of, and premium, if any, andinterest on, the notes, whether at stated maturity, upon acceleration, notice of redemption or otherwise. The guarantee is a senior unsecured obligation ofROIC and ranks equally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Senior Notes Due 2024 iseffectively subordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including theOperating Partnership and any entity ROIC accounts for under the equity method of accounting). Credit Facility The Operating Partnership has a revolving credit facility (the “credit facility”) with several banks. Previously, the credit facility provided for borrowings ofup to $350.0 million. Effective December 12, 2014, the Company entered into a fourth amendment to the amended and restated credit agreement pursuant towhich the borrowing capacity was increased to $500.0 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 $1.0 billion, subject to lender consents and other conditions. The maturitydate of the credit facility has been extended to January 31, 2019 subject to a further one-year extension option, which may be exercised by the OperatingPartnership upon satisfaction of certain conditions. The Operating Partnership previously had a term loan agreement with several banks which provided for a loan of $200.0 million. In connection with thefourth amendment to the credit facility, effective December 12, 2014, the term loan agreement was retired. 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. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based onthe 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 relevantperiod (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 interestannounced by KeyBank, National Association at its “prime rate,” and (c) the Eurodollar Rate plus 1.00% (the “Base Rate”). Additionally, 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 credit facility. The credit facility contains customary representations, financial and othercovenants. The Operating Partnership’s ability to borrow under the credit facility is subject to its compliance with financial covenants and other restrictionson an ongoing basis. The Operating Partnership was in compliance with such covenants at December 31, 2014. As of December 31, 2014, $156.5 million was outstanding under the credit facility. The average interest rate on the credit facility during the twelve monthsended December 31, 2014 was 1.3%. The Company had $343.5 million available to borrow under the credit facility at December 31, 2014. 8 Mortgage Notes Payable During the year ended December 31, 2014, the Company repaid the outstanding principal balance on the Euclid Plaza and Country Club Gate mortgagenotes payable of $8.0 million and $12.0 million, respectively, without penalty, in accordance with the prepayment provisions of the notes. Equity Issuance On June 18, 2014, ROIC issued 14,375,000 shares of common stock in a registered public offering, including shares issued upon the exercise in full of theunderwriters’ option to purchase additional shares, resulting in net proceeds of approximately $205.5 million, after deducting the underwriters’ discounts andcommissions and offering expenses. ATM Equity Offering On September 19, 2014, ROIC entered into four separate Sales Agreements (the “2014 sales agreements”) with Jefferies LLC, KeyBanc Capital Markets Inc.,MLV & Co. LLC and Raymond James & Associates, Inc. (each individually, an “Agent” and collectively, the “Agents”) pursuant to which ROIC may sell,from time to time, shares of ROIC’s common stock, par value $0.0001 per share, having an aggregate offering price of up to $100.0 million through theAgents either as agents or principals. During the year ended December 31, 2014, ROIC did not sell any shares under the 2014 sales agreements. The Company plans to finance future acquisitions through a combination of cash, borrowings under its credit facility, the assumption of existing mortgagedebt, the issuance of equity securities including OP Units, and equity and debt offerings. Business Segments The Company’s primary business is the ownership, management, and redevelopment of retail real estate properties. The Company reviews operating andfinancial 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). The Company has aggregated the properties into one reportable segment as the propertiesshare similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, aretypically located in major metropolitan areas, and have similar tenant mixes. 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. 9 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. The actual competition for tenants varies depending upon the characteristicsof each local market (including current economic conditions) in which the Company owns and manages property. The Company believes that the principalcompetitive factors in attracting tenants in its market areas are location, demographics, price, the presence of anchor stores and the appearance of properties. 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, 2014, the Company had 65 employees, including three 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. 10 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, as well as from e-commerce websites. Atthe time of the commencement of the Company’s operations, conditions in the capital markets and the credit markets reduced competitors’ ability to financeacquisitions. As access to capital and credit have improved and the number of competitors operating in the Company’s markets have increased, the Companyhas faced increased competition for opportunities to acquire assets and to attract and retain tenants. The presence of competitive alternatives affects theCompany's ability to lease space and the level of rents it can obtain. New construction, renovations and expansions at competing sites could also negativelyaffect the Company's properties. 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 and its ability to pay dividends and otherdistributions 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 their 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 great recessionnegatively affected consumer spending and retail sales, which adversely impacted the performance and value of retail properties in most regions in the UnitedStates. In addition, loans backed by real estate were difficult to obtain and that difficulty, together with a tightening of lending policies, resulted in asignificant contraction in the amount of debt available to fund retail properties. Although there has been improvement in the credit and real estate markets,any reduction in available financing may materially and adversely affect the Company’s ability to achieve its financial objectives. Concern about thestability of the markets generally may limit the Company’s ability and the ability of its tenants to timely refinance maturing liabilities and access the capitalmarkets to meet liquidity needs. Although the Company will factor in these conditions in acquiring its assets, its long term success depends in part ongeneral economic conditions and the stability and dependability of the financing market for retail real estate. If the national economy or the local economiesin which the Company operates continue to experience uncertainty, or if general economic conditions were to worsen, 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 and its ability to paydividends and other distributions to its securityholders could be materially and adversely affected. 11 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 and itsability 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 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. 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 and its ability to pay dividends and other distributions toits 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, within budget or at all. In addition, the Company may face competition in pursuing acquisition opportunities, which couldresult in increased acquisition costs. When the Company does pursue a project or acquisition, it may not succeed in leasing newly acquired properties atrents sufficient 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 facility and other external financing (including debt and equity financings) tofund the growth of its business. 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. 12 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 will depend upon its management team’s assessment of a variety of factors, which mayinclude the anticipated liquidity and price volatility of the assets in its portfolio, the potential for losses, the availability and cost of financing the assets, theCompany’s opinion of the creditworthiness of its financing counterparties, the health of the U.S. economy and commercial mortgage markets, the Company’soutlook for the level, slope and volatility of interest rates, the credit quality of the tenants occupying space at the Company’s properties, and the need for theCompany to comply with financial covenants contained in the Company’s credit facility. The Company’s board of directors may change its leveragepolicies at any time without the consent of its stockholders, which could result in an investment portfolio with a different risk profile. 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. 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 and its ability to pay dividends and other distributionsto 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 real property, 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 and its ability to pay dividends and other distributions to itssecurityholders could be materially and adversely affected if a significant number of its tenants cannot pay their rent or if the Company is not able tomaintain occupancy levels on favorable terms. If a tenant does not pay its rent, the Company may not be able to enforce its rights as landlord without delaysand 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 and its ability to pay dividends and other distributions to its securityholders. 13 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 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, 2014, these tenantsare the Company’s three largest tenants and accounted for 3.9%, 2.9% and 2.3% 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 and itsability to pay dividends and other distributions to its securityholders could be materially and adversely affected by the loss of revenues in the event a majortenant becomes bankrupt or insolvent, experiences a downturn in its business, materially defaults on its leases, does not renew its leases as they expire, orrenews 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 based on the terms of the respective lease agreements maynot allow it to recover or pass on all these operating expenses to tenants, which may reduce operating cash flow from its properties. Such a reduction couldresult in a material and adverse effect on 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 and its ability to pay dividends and other distributions to its securityholders. 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 its tenants.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 be effectiveor that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving theCompany’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 and its ability to pay dividends and other distributions toits securityholders. 14 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 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. Declines in real estate values, among other factors, could result in a determination that the Company's assetshave been impaired. If the Company determines that an impairment has occurred, the Company would be required to make an adjustment to the net carryingvalue of the asset which could have an adverse effect on its results of operations in the period in which the impairment charge is recorded. Although theCompany will take current economic conditions into account in acquiring its assets, the Company’s long term success, and the value of its assets, depends inpart on general economic conditions and other factors beyond the Company's control. If the national economy or the local economies in which the Companyoperates experience uncertainty, or if general economic conditions were to worsen, the value of the Company's properties could decline, and 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 and itsability to pay dividends and other distributions to its securityholders, could be materially 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 and its ability to pay dividends and other distributions to its securityholders. 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 a joint venture investment, the Company may not have exclusive control or sole decision-making authorityover the development, financing, leasing, management and other aspects of these investments. As a result, the joint venture partner might have economic orbusiness interests or goals that are inconsistent with the Company’s goals or interests, take action contrary to the Company’s interests or otherwise impedethe Company’s objectives. Joint venture investments involve risks and uncertainties, including the risk of the joint venture partner failing to provide capitaland fulfill its obligations, which may result in certain liabilities to the Company for guarantees and other commitments, the risk of conflicts arising betweenthe Company and its partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring suchbusiness arrangements. The joint venture partner also might become insolvent or bankrupt, which may result in significant losses to the Company. Further,although the Company may own a controlling interest in a joint venture and may have authority over major decisions such as the sale or refinancing ofinvestment properties, the Company may have fiduciary duties to the joint venture partners or the joint venture itself that may cause, or require, it to take orrefrain from taking 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 and its ability to pay dividends and other distributions to itssecurityholders. 15 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 31,2014, the Company’s properties in California, Oregon and Washington accounted for 64%, 13% and 23%, 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 and its ability to pay dividends and other distributions to its securityholders could be materially and adversely affected bythis geographic concentration if market conditions, such as an oversupply of space or a reduction in demand for real estate in an area, deteriorate inCalifornia, Oregon and Washington. Should the Company decide at some point in the future to expand into new markets, it may not be successful, which could materially and adversely affectits business, financial condition, liquidity and results of operations. The Company's properties are concentrated in California, Oregon and Washington. If the opportunity arises, the Company may explore acquisitions ofproperties in new markets inside or outside of these states. Each of the risks applicable to the Company's ability to successfully acquire, integrate and operateproperties in its current markets may also apply to its ability to successfully acquire, integrate and operate properties in new markets. In addition to theserisks, the Company's management team may not possess the same level of knowledge with respect to market dynamics and conditions of any new market inwhich the Company may attempt to expand, which could materially and adversely affect its ability to operate in any such markets. The Company may beunable to obtain the desired returns on its investments in these new markets, which 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 and its abilityto pay dividends and other distributions to its securityholders. Risks Related to Financing The Company’s credit facility 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 facility 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. 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, 2014, the Company’s outstanding mortgage indebtedness was approximately $91.5 million, and the Company mayincur significant additional debt to finance future acquisition and development activities. The Company’s credit facility consists of a $500.0 millionunsecured revolving credit facility, of which $156.5 million was outstanding as of December 31, 2014. 16 In addition, the Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2013 and $250.0 millionaggregate principal amount of unsecured senior notes in December 2014, each of which were fully and unconditionally 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 there has been improvement in the credit markets and real estate, any reduction in available financing may materially and adversely affect theCompany’s ability to achieve its financial objectives. Concern about the stability of the markets generally could adversely affect one or more private lendersand could cause one or more private lenders to be unwilling or unable to provide the Company with financing or to increase the costs of that financing. Inaddition, if regulatory capital requirements imposed on the Company’s private lenders change, they may be required to limit, or increase the cost of,financing they provide to the Company. In general, this could potentially increase the Company’s financing costs and reduce its liquidity or require it to sellassets 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 or equity securities, including OP Units, or a combination thereof. Consequently, depending on market conditions at therelevant time, the Company may have to rely more heavily on additional equity issuances, which may be dilutive to its stockholders, or on less efficientforms of debt financing that require a larger portion of its cash flow from operations, thereby reducing funds available for its operations, future businessopportunities, cash distributions to its securityholders and other purposes. The Company cannot assure you that it will have access to such equity or debtcapital on favorable terms (including, without limitation, cost and term) at the desired times, or at all, which may cause it to curtail its asset acquisitionactivities and/or dispose of assets, which could materially and adversely affect its income, cash flow, results of operations, financial condition, liquidity, theability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions to its securityholders. Increases in interest rates could increase the amount of the Company's debt payments and materially and adversely affect its business, financial condition,liquidity and results of operations. Interest the Company pays could reduce cash available for distributions. As of December 31, 2014, the Company had approximately $156.5 millionoutstanding under the Company’s $500.0 million unsecured revolving credit facility that bears interest at a variable rate. In addition, the Company may incurvariable rate debt in the future, including mortgage debt, borrowings under the unsecured revolving credit facility or new credit facilities. An increase ininterest rates would increase the Company's interest costs, which could adversely affect the Company's cash flow, results of operations, ability to payprincipal and interest on debt and pay dividends and other distributions to its securityholders, and reduce the Company's access to capital markets. Inaddition, if the Company needs to repay existing debt during periods of rising interest rates, it may be required to incur additional indebtedness at higherrates. From time to time, the Company may enter into interest rate swap agreements and other interest rate hedging contracts with the intention of lesseningthe impact of rising interest rates. However, increased interest rates may increase the risk that the counterparties to such agreements may not be able to fulfilltheir obligations under these agreements, and there can be no assurance that these arrangements will be effective in reducing the Company's exposure tointerest rate changes. These risks could materially and adversely affect the Company’s cash flow, results of operations, financial condition, liquidity, theability to service its debt obligations, the market price of its common stock and its ability to pay dividends and other distributions 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 debt. In the event the Company utilizes such financing arrangements,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, in connection with arefinancing, require it to provide additional collateral, provide additional equity, or to repay all or a portion of the funds advanced. The Company may nothave the funds available to repay its debt or provide additional equity at that time, which would likely result in defaults unless it is able to raise the fundsfrom alternative sources, which it may not be able to achieve on favorable terms or at all. Providing additional collateral or equity would reduce theCompany’s liquidity and limit its ability to leverage its assets. If the Company cannot meet these requirements, the lender could accelerate the Company’sindebtedness, increase the interest rate on advanced funds and terminate its ability to borrow funds from them, which could materially and adversely affectthe Company’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of itscommon stock and its ability to pay dividends and other distributions to its securityholders. The providers of secured debt may also require the Company tomaintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position. As a result, the Company may not be able toleverage its assets as fully as it would choose which could reduce its return on assets. There can be no assurance that the Company will be able to utilize sucharrangements on favorable terms, or at all. 17 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 other securities. Ifany of the credit rating agencies that have rated the obligations of the Company or the debt securities of the Operating Partnership downgrades or lowers itscredit 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 or lowering orotherwise indicates that its outlook for that rating is negative, it could have a material adverse effect on the Company’s costs and availability of capital,which could in turn materially and adversely impact 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 and its ability to pay dividends and other distributions to its securityholders. 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: •“business combination” provisions that, subject to certain limitations, prohibit certain business combinations between the Company and an “interestedstockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of the Company’s shares or an affiliate thereof) forfive years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose special minimum price provisionsand 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 shares controlled bythe stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control shareacquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approvedby the Company’s stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interestedshares. 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. 18 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 the remainder of the fullterm 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. 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, such as the Company, and judicial and administrativeinterpretations of the U.S. federal income tax laws governing REIT qualification are limited. To qualify as a REIT, the Company must meet, on an ongoingbasis, various tests regarding the nature of its assets and its income, the ownership of its outstanding shares, and the amount of its distributions. Moreover,new legislation, court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or impossible for theCompany to qualify as a REIT. 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 complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in theCompany’s circumstances, 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. 19 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 may hold 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 and its ability to pay dividends and other distributions to itssecurityholders. 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. 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. 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 could be materiallyand adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation. 20 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 the periodof 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 and its ability to paydistributions 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. 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, 2014, the Company’s portfolio consisted of 61 retail properties totaling approximately 7.3 million square feet of gross leasable areawhich were approximately 97.6% leased. During the year ended December 31, 2014, the Company leased or renewed a total of 864,000 square feet in itsportfolio. The Company has committed approximately $3.4 million, or $7.74 per square foot, in tenant improvements for new leases that occurred during theyear ended December 31, 2014. The Company has committed approximately $1.1 million, or $2.42 per square foot, in leasing commissions, for the newleases that occurred during the year ended December 31, 2014. Additionally, the Company has committed approximately $109,000, or $0.26 per square foot,in tenant improvements for renewed leases that occurred during the year ended December 31, 2014. Leasing commission commitments for renewed leaseswere not material for the year ended December 31, 2014. 21 The following table provides information regarding the Company’s properties as of December 31, 2014. Property, State YearCompleted/Renovated YearAcquired GrossLeasableSq. Feet NumberofTenants %Leased Principal TenantsNorthern California Norwood Shopping Center, CA 1993 2010 88,851 14 95.5% Viva Supermarket, Rite Aid Pharmacy, Citi TrendsPleasant Hill Marketplace, CA 1980 2010 69,715 3 100.0% Buy Buy Baby, Office Depot, Basset FurniturePinole Vista Shopping Center, CA 1981/2012 2011 165,025 30 98.7% Kmart, SaveMart (Lucky) Supermarket (1)Mills Shopping Center, CA 1955/1988 2011 239,081 28 84.6% Save Maxx Foods Supermarket, Dollar Tree, PlanetFitnessMorada Ranch, CA 2006 2011 101,842 16 96.0% Raleys SupermarketCountry Club Gate Center, CA 1974/2012 2011 109,331 29 94.5% SaveMart (Lucky) Supermarket, Rite Aid PharmacyRound Hill Square, NV 1998 2011 115,984 24 95.8% Safeway Supermarket, Dollar Tree, US PostalServiceMarlin Cove Shopping Center, CA 1972/2001 2012 73,186 25 100.0% 99 Ranch MarketGreen Valley Station, CA 2006/2007 2012 52,245 12 82.0% CVS PharmacyThe Village at Novato, CA 2006 2012 20,043 3 90.6% Trader Joe’sSanta Teresa Village, CA 1974-79 / 2013 2012 125,162 34 92.0% Raleys (Nob Hill) SupermarketGranada Shopping Center, CA 1962/1994 2013 69,325 15 100.0% SaveMart (Lucky) SupermarketCountry Club Village, CA 1995 2013 111,172 23 99.5% Walmart Neighborhood Market, CVS PharmacyNorth Park Plaza, CA 1997 2014 76,697 15 100.0% SF Supermarket Southern California Paramount Plaza, CA 1966/2010 2009 95,062 14 100.0% 99¢ Only Stores, Rite Aid Pharmacy, TJ MaxxSanta Ana Downtown Plaza, CA 1987/2010 2010 100,305 28 100.0% Kroger (Food 4 Less) Supermarket, Marshall’sClaremont Promenade, CA 1982/2011 2010 91,529 24 95.7% Super King SupermarketSycamore Creek, CA 2008 2010 74,198 18 100.0% Safeway (Vons) Supermarket, CVS Pharmacy (1)Gateway Village, CA 2003/2005 2010 96,959 26 92.5% Sprouts MarketMarketplace Del Rio, CA 1990/2004 2011 177,136 44 96.0% Stater Brothers Supermarket, WalgreensDesert Springs Marketplace, CA 1993-94 / 2013 2011 105,157 17 98.5% Kroger (Ralph’s) Supermarket, Rite Aid PharmacyRenaissance Towne Centre, CA 1991/2011 2011 53,074 28 100.0% CVS PharmacyEuclid Plaza, CA 1982/2012 2012 77,044 10 100.0% Vallarta Supermarket, WalgreensSeabridge Marketplace, CA 2006 2012 93,630 21 100.0% Safeway (Vons) SupermarketGlendora Shopping Center, CA 1992/2012 2012 106,535 22 99.3% Albertson’s SupermarketBay Plaza, CA 1986/2013 2012 73,324 28 91.0% Seafood City SupermarketCypress Center West, CA 1970/1978 / 2014 2012 106,451 34 100.0% Kroger (Ralph’s) Supermarket, Rite Aid PharmacyRedondo Beach Plaza, CA 1993/2004 2012 110,509 16 100.0% Safeway (Von’s) Supermarket, PetcoHarbor Place Center, CA 1994 2012 119,821 10 100.0% AA Supermarket, Ross Dress for LessDiamond Bar Town Center, CA 1981 2013 100,342 23 100.0% National grocery tenant, Crunch FitnessBernardo Heights Plaza, CA 1983/2006 2013 37,729 5 100.0% Sprouts Market Diamond Hills Plaza, CA 1973/2008 2013 139,505 38 100.0% H-Mart Supermarket, Rite Aid PharmacyHawthorne Crossings, CA 1993-1999 2013 141,288 18 100.0% 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 1Peninsula Marketplace, CA 2000 2013 95,416 16 100.0% Kroger (Ralph’s) SupermarketPlaza de la Canada, CA 1968/2000 2013 100,408 14 100.0% Gelson’s Supermarket, TJ Maxx, Rite AidPharmacyCreekside Plaza, CA 1993/2005 2014 128,852 27 100.0% Stater Brothers Supermarket, DigiPlex TheatreFallbrook Shopping Center, CA 1966/1986/ 2003 2014 756,040 44 100.0% Sprouts Market, Trader Joe’s, Kroger (Ralph’s)Supermarket (1), TJ MaxxMoorpark Town Center, CA 1984/2014 2014 133,538 26 88.2% Kroger (Ralph’s) Supermarket, CVS PharmacyMission Foothill Marketplace, CA 1996 2014 110,678 19 92.9% Haggen Supermarket, CVS Pharmacy Portland Metropolitan Vancouver Market Center, WA 1996/2012 2010 118,385 17 97.3% Albertson’s SupermarketHappy Valley Town Center, OR 2007 2010 138,696 37 100.0% New Seasons SupermarketWilsonville Old Town Square, OR 2011 2012 49,937 21 100.0% Kroger (Fred Meyer) Supermarket (1)Cascade Summit, OR 2000 2010 95,508 31 100.0% Safeway SupermarketHeritage Market Center, WA 2000 2010 107,468 18 100.0% Safeway Supermarket, Dollar TreeDivision Crossing, OR 1992 2010 104,089 19 97.5% Ross Dress For Less, Rite Aid Pharmacy, AceHardware 22 Halsey Crossing, OR 1992 2010 99,428 16 97.3% Safeway Supermarket, Dollar TreeHillsboro Market Center, OR 2001-2002 2011 156,021 21 99.3% Albertson’s Supermarket, Dollar Tree, Marshall’sRobinwood Shopping Center, OR 1980 / 2012 2013 70,831 15 96.6% Walmart Neighborhood MarketTigard Marketplace, OR 1988/2005 2014 136,889 18 99.1% H-Mart Supermarket, Bi-Mart PharmacyWilsonville Town Center, OR 1991 2014 167,829 35 94.1% Thriftway Supermarket, Rite Aid Pharmacy, DollarTree Seattle Metropolitan Meridian Valley Plaza, WA 1978/2011 2010 51,597 12 83.2% Kroger (QFC) SupermarketThe Market at Lake Stevens, WA 2000 2010 74,130 9 100.0% Haggen SupermarketCanyon Park, WA 1980/2012 2011 123,627 23 100.0% Albertson’s Supermarket, Rite Aid PharmacyHawks Prairie, WA 1988/2012 2011 154,781 20 98.6% Safeway Supermarket, Dollar Tree, Big LotsKress Building, WA 1924/2005 2011 74,819 8 100.0% IGA Supermarket, TJ MaxxGateway Shopping Center, WA 2007 2012 106,104 16 97.1% WinCo Foods (1), Rite Aid Pharmacy, Ross Dressfor LessAurora Square, WA 1980 2012 38,030 4 100.0% Central SupermaketCanyon Crossing, WA 2008-2009 2013 120,510 22 94.3% Safeway SupermarketCrossroads Shopping Center, WA (2) 1962/2004 2010/2013 463,436 90 100.0% Kroger (QFC) Supermarket, Bed Bath & Beyond,Sports AuthorityAurora Square II, WA 1987 2014 65,680 11 100.0% Marshall’s, Pier 1 Imports _______________(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, 2014, no single tenant comprised more than 3.9% 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, 2014. Tenant Number of Leases % of Total Annual Base Rent(1)Safeway Supermarket 9 3.9%Kroger Supermarket 7 2.9%Rite Aid Pharmacy 11 2.3%Marshall’s / TJMaxx 7 2.2%Sprouts Market 3 1.5%JP Morgan Chase 14 1.4%Ross Dress for Less 5 1.4%CVS Pharmacy 6 1.2%H-Mart Supermarket 2 1.2%Haggen Supermarket 2 1.1% 66 19.1%___________________ (1) Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, 2014 (including initial cash rent for new leases). 23 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 31,2014. Year of Expiration NumberofLeasesExpiring(1) Square Footage Annual Base Rent(2) Annual Base Rent%2015 209 461,142 $10,378,455 8.2%2016 232 802,544 14,298,315 11.3%2017 243 799,715 16,274,017 12.8%2018 197 895,871 18,526,942 14.6%2019 164 717,277 14,371,115 11.3%2020 67 667,384 9,013,242 7.1%2021 41 274,458 4,351,246 3.4%2022 51 442,323 8,118,124 6.4%2023 33 337,417 6,585,817 5.2%2024 45 332,200 4,626,449 3.6%Thereafter 67 1,410,106 20,491,932 16.1%Total 1,349 7,140,437 $127,035,654 100.0%___________________(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, 2014 (including initial cash rent for new leases). 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 31,2014. Anchor tenants are tenants with leases occupying at least 15,000 square feet or more. Year of Expiration Number ofLeasesExpiring(1) Square Footage Annual BaseRent(2) Annual Base Rent %2015 1 21,211 $339,376 0.3%2016 10 357,717 3,251,126 2.6%2017 9 275,066 2,708,792 2.1%2018 16 459,155 7,041,785 5.5%2019 13 362,208 5,458,393 4.3%2020 13 473,930 4,764,895 3.7%2021 4 138,289 1,177,151 0.9%2022 10 297,340 4,296,125 3.4%2023 6 245,991 4,154,052 3.3%2024 4 207,789 1,770,758 1.4%Thereafter 25 1,179,120 15,205,891 12.0%Total 111 4,017,816 $50,168,344 39.5%____________________(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, 2014 (including initial cash rent for new leases). Item 3. Legal Proceedings In 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. 24 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 ROIC’s common stock as reported by the NASDAQ and the per share dividends declared: Period High Low Dividends Declared2014 First Quarter $15.18 $13.85 $0.16 Second Quarter $16.30 $14.82 $0.16 Third Quarter $16.26 $14.50 $0.16 Fourth Quarter $17.22 $14.61 $0.16 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 20, 2015, the closing price of ROIC’s common stock as reported by the NASDAQ was $16.93. 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, including capital gains, if any, if and to the extent authorized by itsboard of directors. Before ROIC pays any dividend, whether for U.S. federal income tax purposes or otherwise, it must first meet both its operatingrequirements and its debt service on debt. If ROIC’s cash available for distribution is less than its net taxable income, it could be required to sell assets orborrow funds to make cash distributions or it may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debtsecurities. 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, 2014 and 2013: Year Ended December 31, 2014 Record Date Payable Date TotalDividend perShare OrdinaryIncome per Share (1) Return ofCapital per ShareTotal Capital Gain per Share Section 1250 Recapture per Share3/14/2014 3/28/2014 $0.160000 $0.09568 $0.04423$0.02009$0.001276/13/2014 6/27/2014 $0.160000 $0.09568 $0.04423$0.02009$0.001279/15/2014 9/29/2014 $0.160000 $0.09568 $0.04423$0.02009$0.0012712/15/2014 12/29/2014 $0.160000 $0.09568 $0.04423$0.02009$0.00127_________________(1)Ordinary Income per Share is non-qualified dividend income. Year Ended December 31, 2013 Record Date Payable Date Total Dividend per Share Ordinary Income per Share (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. 25 As of December 31, 2014, 95.9% of the outstanding interests in the Operating Partnership were owned by the Company. Holders As of February 20, 2015, ROIC had 51 registered holders. Such information was obtained through the registrar and transfer agent. Operating Partnership There is no established trading market for the Operating Partnership's OP Units. The following table sets forth the distributions per OP Unit with respect to theperiods indicated: Period Distributions2014 First Quarter $0.16 Second Quarter $0.16 Third Quarter $0.16 Fourth Quarter $0.16 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, 2014, the Operating Partnership had 25 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, 2009 through December 31,2014. 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. 26 Period EndingIndex 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14Retail Opportunity Investments Corp. 100.00 100.07 123.83 140.36 167.97 199.62 S&P500 100.00 115.06 117.49 136.30 180.44 205.14 FTSE NAREIT Equity REITs 100.00 127.96 138.57 163.60 167.63 218.16 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, 2014: Plan Category Number of securitiesto be issued upon exercise of outstanding options, warrants and rights(1) Weighted-average exercise price of outstanding options, warrants and rights Number of securitiesremaining available for futureissuance under equitycompensation plans (excludingsecurities reflected in the firstcolumn of this table)Equity compensation plans approved by stockholders 284,000 $10.81 2,202,833 Equity compensation plans not approved by stockholders — — — Total 284,000 $10.81 2,202,333 _________________(1)Includes 3,000, 8,000, and 49,500 options granted during the years ended December 31, 2014, 2013 and 2012, respectively. During the three months ended December 31, 2014, ROIC purchased the following: Period Total Number of Shares Purchased (1) Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans orPrograms Dollar Value of Shares that MayYet Be PurchasedUnder the ProgramOctober 1, 2014 through October 31, 2014 — $— — — November 1, 2014 through November 30, 2014 — $— — — December 1, 2014 through December 31, 2014 2,597 $16.75 — — Total 2,597 $16.75 — — (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. Sales of Unregistered Equity Securities On December 11, 2014, the Operating Partnership acquired Wilsonville Town Center, a shopping center comprising approximately 168,000 square feet ofrentable space located in Wilsonville, Oregon, for an adjusted purchase price of approximately $35.6 million, with approximately $19.4 million paid in cashand the remaining consideration paid through the issuance of 989,272 OP Units. The OP Units are exchangeable for cash, or at the election of the Company,into shares of common stock of the Company on a one-for-one basis, subject to the terms of the Operating Partnership’s partnership agreement. The OP Unitswere issued in a private placement in reliance on Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgatedthereunder. 27 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. 2014 2013 2012 2011 2010Statement of Operations Data: Total revenues $155,863,511 $111,232,031 $75,095,687 $51,737,512 $16,328,969 Operating expenses 112,089,583 83,456,857 63,541,899 46,782,558 21,642,505 Operating income(loss) 43,773,928 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 Gain on sale of real estate 4,868,553 — — — — Interest income — — 11,861 19,143 1,108,507 Interest expense 27,593,259 15,854,978 11,379,857 6,225,084 324,126 Income (loss) from continuing operations 21,049,222 34,691,982 7,892,613 9,656,321 (400,921)Loss from discontinued operations — (713,529) — — — Net income (loss) 21,049,222 33,978,453 7,892,613 9,656,321 (400,921)Net income (loss) attributable to Retail Opportunity InvestmentsCorp. 20,301,045 33,813,561 7,892,613 9,656,321 (400,921)Weighted average shares outstanding- Basic: 83,411,230 67,419,497 51,059,408 42,477,007 41,582,401 Weighted average shares outstanding- Diluted: 87,453,409 71,004,380 52,371,168 42,526,288 41,582,401 Income (loss) per share – Basic: Income (loss) from continuing operations $0.24 $0.51 $0.15 $0.23 $(0.01)Net income (loss) attributable to Retail OpportunityInvestments Corp. $0.24 $0.50 $0.15 $0.23 $(0.01)Income (loss) per share – Diluted: Income (loss) from continuing operations $0.24 $0.49 $0.15 $0.23 $(0.01)Net income (loss) attributable to Retail OpportunityInvestments Corp. $0.24 $0.48 $0.15 $0.23 $(0.01)Dividends per common share $0.64 $0.60 $0.53 $0.39 $0.18 Balance Sheet Data: Real estate investments, net $1,697,724,972 $1,314,933,668 $864,624,046 $602,623,893 $344,212,083 Cash and cash equivalents $10,773,406 $7,919,697 $4,692,230 $34,317,588 $84,736,410 Total assets $1,851,696,385 $1,439,089,843 $950,911,527 $694,432,627 $464,192,502 Total liabilities $888,914,167 $733,679,777 $484,369,456 $243,943,573 $73,668,932 Total equity $962,782,218 $705,410,066 $466,542,071 $450,489,054 $390,523,570 28 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP CONSOLIDATED HISTORICAL FINANCIAL INFORMATION Year Ended December 31,Retail Opportunity Investments Partnership, LP 2014 2013 2012 2011 2010Statement of Operations Data: Total revenues $155,863,511 $111,232,031 $75,095,687 $51,737,512 $16,328,969 Operating expenses 112,089,583 83,456,857 63,541,899 46,782,558 21,642,505 Operating income (loss) 43,773,928 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 Gain on sale of real estate 4,868,553 — — — — Interest income — — 11,861 19,143 1,108,507 Interest expense 27,593,259 15,854,978 11,379,857 6,225,084 324,126 Income (loss) from continuing operations 21,049,222 34,691,982 7,892,613 9,656,321 (400,921)Loss from discontinued operations — (713,529) — — — Net income (loss) 21,049,222 33,978,453 7,892,613 9,656,321 (400,921)Net income (loss) attributable to the Operating Partnership 21,049,222 33,813,561 7,892,613 9,656,321 (400,921)Weighted average units outstanding- Basic: 83,411,230 67,419,497 51,059,408 42,477,007 41,582,401 Weighted average units outstanding- Diluted: 87,453,409 71,004,380 52,371,168 42,526,288 41,582,401 Income (loss) per unit – Basic: Income from continuing operations $0.24 $0.51 $0.15 $0.23 $(0.01)Net income (loss) attributable to the Operating Partnership $0.24 $0.50 $0.15 $0.23 $(0.01)Income (loss) per unit – Diluted: Income from continuing operations $0.24 $0.49 $0.15 $0.23 $(0.01)Net income attributable to the Operating Partnership $0.24 $0.48 $0.15 $0.23 $(0.01)Distributions per unit $0.64 $0.60 $0.53 $0.39 $0.18 Balance Sheet Data: Real estate investments, net $1,697,724,972 $1,314,933,668 $864,624,046 $602,623,893 $344,212,083 Cash and cash equivalents $10,773,406 $7,919,697 $4,692,230 $34,317,588 $84,736,410 Total assets $1,851,696,385 $1,439,089,843 $950,911,527 $694,432,627 $464,192,502 Total liabilities $888,914,167 $733,679,777 $484,369,456 $243,943,573 $73,668,932 Total capital $962,782,218 $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, 2014, ROIC owned an approximate95.9% partnership interest and other limited partners owned the remaining 4.1% 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 31, 2014, the Company has completed approximately $1.7 billion of shopping centerinvestments. As of December 31, 2014, the Company’s portfolio consisted of 61 retail properties totaling approximately 7.3 million square feet of GLA. As of December 31, 2014, the Company’s portfolio was approximately 97.6% leased. During the year ended December 31, 2014, the Company leased andrenewed approximately 441,000 and 423,000 square feet, respectively, in its portfolio. 29 The table below provides a reconciliation of beginning of year vacant space to end of year vacant space as of December 31, 2014. Vacant Space Square FootageVacant space at December 31, 2013 293,271 Square footage vacated 133,939 Vacant space in acquired properties 64,680 Square footage leased (238,667)Vacant space at December 31, 2014 253,223 The Company has committed approximately $3.4 million, or $7.74 per square foot, in tenant improvements for new leases that occurred during the yearended December 31, 2014. The Company has committed approximately $1.1 million, or $2.42 per square foot, in leasing commissions for the new leases thatoccurred during the year ended December 31, 2014. Additionally, the Company has committed approximately $109,000, or $0.26 per square foot, in tenantimprovements for renewed leases that occurred during the year ended December 31, 2014. Leasing commission commitments for renewed leases were notmaterial for the year ended December 31, 2014. 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, together with its subsidiaries. ROIC reincorporated as a Maryland corporation on June 2, 2011. ROIC elected to be taxed as a REIT, forU.S. federal income tax purposes, commencing with the year ended December 31, 2010. Results of Operations At December 31, 2014, the Company had 61 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, 2014. 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, recoveries from tenants and other income), less property and related expenses (property operating expenses and property taxes). Property operatingincome excludes general 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,tenant improvements and leasing commissions. Other REITs may use different methodologies for calculating property operating income, and accordingly,the Company’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. 30 Results of Operations for the year ended December 31, 2014 compared to the year ended December 31, 2013. 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, 2014 and 2013. Year Ended December 31, 2014 2013Operating income per GAAP $43,773,928 $27,775,174 Plus: Depreciation and amortization 58,434,981 40,397,895 General and administrative expenses 11,199,632 10,058,669 Acquisition transaction costs 961,167 1,688,521 Other expenses 504,828 314,833 Less: Mortgage interest income — (623,793)Property operating income $114,874,536 $79,611,299 The following comparison for the year ended December 31, 2014 compared to the year ended December 31, 2013, makes reference to the effect of the same-store properties. Same-store properties, which totaled 41 of the Company’s 61 properties as of December 31, 2014, represent all operating properties ownedby the Company during the entirety of both periods presented and consolidated into the Company’s financial statements during such periods. The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year endedDecember 31, 2014 related to the 41 same-store properties owned by the Company during the entirety of both the years ended December 31, 2014 and 2013and consolidated into the Company’s financial statements during such periods. Year Ended December 31, 2014 Same-Store Non Same-Store TotalOperating income per GAAP $36,473,754 $7,300,174 $43,773,928 Plus: Depreciation and amortization 32,105,414 26,329,567 58,434,981 General and administrative expenses (1) — 11,199,632 11,199,632 Acquisition transaction costs 5,638 955,529 961,167 Other expenses (1) — 504,828 504,828 Property operating income $68,584,806 $46,289,730 $114,874,536 ______________________1 For illustration purposes, general and administrative expenses and other expenses are included in non same-store because the Company does not allocatethese types of expenses between same-store and non same-store. The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year endedDecember 31, 2013 related to the 41 same-store properties owned by the Company during the entirety of both the years ended December 31, 2014 and 2013and consolidated into the Company’s financial statements during such periods. Year Ended December 31, 2013 Same-Store Non Same-Store TotalOperating income per GAAP $35,757,054 $(7,981,880) $27,775,174 Plus: Depreciation and amortization 31,487,242 8,910,653 40,397,895 General and administrative expenses (1) — 10,058,669 10,058,669 Acquisition transaction costs 229,434 1,459,087 1,688,521 Other expenses (1) — 314,833 314,833 Less: Mortgage interest income — (623,793) (623,793) Property operating income $67,473,730 $12,137,569 $79,611,299 ______________________1 For illustration purposes, general and administrative expenses and other expenses are included in non same-store because the Company does not allocatethese types of expenses between same-store and non same-store. 31 During the year ended December 31, 2014, the Company generated property operating income of approximately $114.9 million compared to propertyoperating income of $79.6 million generated during the year ended December 31, 2013. Property operating income increased by $35.3 million during theyear ended December 31, 2014 primarily as a result of an increase in the number of properties owned by the Company in 2014 compared to 2013 and anincrease in same-store properties’ operating income. As of December 31, 2014, the Company owned 61 consolidated properties as compared to 55 propertiesat December 31, 2013. The properties acquired during 2014 and 2013 increased property operating income in 2014 by approximately $34.2 million. The 41same-store properties increased property operating income by approximately $1.1 million. Mortgage interest income The Company generated interest income from mortgage notes receivable during the year ended December 31, 2013 of approximately $624,000 and nocomparable income was recorded during the year ended December 31, 2014. This decrease was a result of the cancellation of the Company’s loan to theCrossroads joint venture in connection with the Company’s acquisition of the remaining partnership interests in the Crossroads Shopping Center from itsjoint venture partner in September 2013. As of December 31, 2014, 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, 2014 of approximately $58.4 million compared to $40.4million incurred during the year ended December 31, 2013. Depreciation and amortization expenses were higher in 2014 as a result of an increase in thenumber of properties owned by the Company in 2014 compared to 2013. General and administrative expenses The Company incurred general and administrative expenses during the year ended December 31, 2014 of approximately $11.2 million compared to $10.1million incurred during the year ended December 31, 2013. General and administrative expenses increased approximately $1.1 million primarily as a result ofan increase in compensation-related expenses. Acquisition transaction costs The Company incurred property acquisition costs during the year ended December 31, 2014 of approximately $961,000 compared to $1.7 million incurredduring the year ended December 31, 2013. Property acquisition costs were lower in 2014 primarily due to decreased legal and other professional fees incurredrelated to acquisition activity in 2014 compared to 2013, as well as a reduction in the number of assets acquired period over period. Interest expense and other finance expenses During the year ended December 31, 2014, the Company incurred approximately $27.6 million of interest expense compared to approximately $15.9 millionduring the year ended December 31, 2013. Interest expense increased approximately $11.7 million primarily due to a higher debt level as a result ofacquisitions, interest incurred related to the Senior Notes Due 2023 issued in December 2013 and the Senior Notes Due 2024 issued in December 2014,slightly offset be a decrease in interest related to the Company’s interest rate swaps, as the Company’s remaining swaps were cash settled in 2014. Gain on consolidation of joint venture During the year ended December 31, 2013, the Company acquired the remaining partnership interests in Terranomics Crossroads Associates from its jointventure partner. Prior to the acquisition date, the Company accounted for its 49% interest in the Terranomics Crossroads Associates, LP as an equity methodinvestment. In accordance with the authoritative accounting guidance for business combinations, as the Company obtained control of the Crossroads jointventure, the Company determined that it should re-measure the fair value of its previously held equity interest. The Company, with the assistance of a thirdparty valuation firm, calculated the fair value of its historical ownership interest in the Crossroads joint venture to be $36.0 million based on the $13.79value per OP Unit issued as of the date the Company obtained control of Crossroads on September 27, 2013. In accordance with the accounting guidance forbusiness combinations, the Company then compared the fair value of the equity of $36.0 million to the carrying value of its investment in Crossroads of$15.6 million, which resulted in a gain of $20.4 million that was included in earnings on the date the acquisition closed. There was no comparable gainrecorded during the year ended December 31, 2014. 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 million andno comparable income was recorded during the year ended December 31, 2014. This decrease was a result of the consolidation of Crossroads ShoppingCenter in September 2013. As of December 31, 2014, the Company has no remaining unconsolidated joint ventures. 32 Gain on sale of property On June 5, 2014, the Company sold Phillips Village Shopping Center, a non-core shopping center located in Pomona, California with an occupancy rate ofapproximately 10.4% as of May 31, 2014. The sales price of this property of approximately $16.0 million, less costs to sell, resulted in net proceeds to theCompany of approximately $15.6 million. The Company recorded a gain on sale of approximately $3.3 million for the year ended December 31, 2014.Additionally, on August 25, 2014, the Company sold the Oregon City Point Shopping Center, a non-core shopping center located in Oregon City, Oregon.The sales price of this property of approximately $12.4 million, less costs to sell, resulted in net proceeds of approximately $12.0 million. The Companyrecorded a gain on sale of approximately $1.6 million for the year ended December 31, 2014. There were no comparable gains recorded during the year endedDecember 31, 2013. 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, 2014. 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. Year Ended December 31, 2013 2012Operating 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, which totaled 29 of the Company’s 55 properties as of December 31, 2013, represent all operating properties ownedby the Company during the entirety of both periods presented and consolidated into the Company’s financial statements during such periods. The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year endedDecember 31, 2013 related to the 29 same-store properties owned by the Company during the entirety of both the years ended December 31, 2013 and 2012and consolidated into the Company’s financial statements during such periods. Year Ended December 31, 2013 Same-Store Non Same-Store TotalOperating income per GAAP $25,195,308 $2,579,866 $27,775,174 Plus: Depreciation and amortization 21,515,014 18,882,881 40,397,895 General and administrative expenses (1) — 10,058,669 10,058,669 Acquisition transaction costs 6,997 1,681,524 1,688,521 Other expenses (1) — 314,833 314,833 Less: Mortgage interest income — (623,793) (623,793)Property operating income $46,717,319 $32,893,980 $79,611,299 ______________________1 For illustration purposes, general and administrative expenses and other expenses are included in non same-store because the Company does not allocatethese types of expenses between same-store and non same-store. 33 The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year endedDecember 31, 2012 related to the 29 same-store properties owned by the Company during the entirety of both the years ended December 31, 2013 and 2012and consolidated into the Company’s financial statements during such periods. Year Ended December 31, 2012 Same-Store Non Same-Store TotalOperating income per GAAP $21,367,666 $(9,813,878) $11,553,788 Plus: Depreciation and amortization 24,628,922 4,445,787 29,074,709 General and administrative expenses (1) — 12,734,254 12,734,254 Acquisition transaction costs 57,720 1,289,891 1,347,611 Other expenses (1) — 324,354 324,354 Less: Mortgage interest income — (1,106,089) (1,106,089)Property operating income $46,054,308 $7,874,319 $53,928,627 ______________________1 For illustration purposes, general and administrative expenses and other expenses are included in non same-store because the Company does not allocatethese types of expenses between same-store and non same-store. 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 properties acquired during 2013 and 2012 increased property operating income in 2013 by approximately $25.0 million. The 29same-store properties 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 the Crossroads joint venture in connection with the Company’s acquisition of the remaining partnership interests in the CrossroadsShopping Center 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 had 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 Senior Notes Due 2023 issued in December 2013,slightly offset by lower borrowing costs on the credit facility and term loan during 2013 as compared to 2012. 34 Gain on consolidation of joint venture During the year ended December 31, 2013, the Company acquired the remaining partnership interests in Terranomics Crossroads Associates from its jointventure partner. Prior to the acquisition date, the Company accounted for its 49% interest in the Terranomics Crossroads Associates, LP as an equity methodinvestment. In accordance with the authoritative accounting guidance for business combinations, as the Company obtained control of the Crossroads jointventure, the Company determined that it should re-measure the fair value of its previously held equity interest. The Company, with the assistance of a thirdparty valuation firm, calculated the fair value of its historical ownership interest in the Crossroads joint venture to be $36.0 million based on the $13.79value per OP Unit issued as of the date the Company obtained control of Crossroads on September 27, 2013. In accordance with the accounting guidance forbusiness combinations, the Company then compared the fair value of the equity of $36.0 million to the carrying value of its investment in Crossroads of$15.6 million, which resulted in a gain of $20.4 million that was included in earnings on the date the acquisition closed. 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. 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. 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 the Company’s partnership interests in Wilsonville Old Town Square that wereconsolidated on August 1, 2012, and Crossroads Shopping Center that were consolidated on September 27, 2013. As of December 31, 2013, the Companyhad no remaining unconsolidated 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. 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. 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. 35 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, 2014, 2013 and 2012, the Companyexpensed $1.0 million, $1.7 million and $1.3 million, respectively, relating to real estate acquisitions. While the Company does not have any joint ventures as of December 31, 2014, 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 the years ended December 31, 2013 and 2012, the Company acquired the remaining interests from certainof its joint venture partners. The gains recorded upon consolidation of joint ventures for the years ended December 31, 2013 and 2012 were approximately$20.4 million and $2.1 million, respectively. The Company did not record any such gain or loss during the year ended December 31, 2014. 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 a bargain purchase gain of approximately $3.9 million during year ended December 31, 2012. TheCompany did not recognize any such gain during the years ended December 31, 2014 or 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, 2014,2013 and 2012. Year Ended December 31, 2014 2013 2012Net income attributable to ROIC $20,301,045 $33,813,561 $7,892,613 Plus: Depreciation and amortization 58,434,981 40,397,895 29,074,709 Depreciation and amortization attributable to unconsolidated joint ventures — 1,059,761 2,174,877 Gain on sale of real estate (4,868,553) — — Loss from discontinued operations — 713,529 — Funds from operations - basic 73,867,473 75,984,746 39,142,199 Net income attributable to non-controlling interests 748,177 165,892 — Funds from operations - diluted $74,615,650 $76,150,638 $39,142,199 Critical Accounting Estimates Critical accounting estimates 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 estimates 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. 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. 36 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 sheets. 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 in-place leases are amortized to expense over the remaining non-cancellable terms of therespective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized inoperations at that time. The Company may record a bargain purchase gain if it determines that the purchase price for the acquired assets was less than the fairvalue. The Company will record a liability in situations where any part of the cash consideration is deferred. The amounts payable in the future arediscounted to their present value. The liability is subsequently re-measured to fair value with changes in fair value recognized in the consolidated statementsof operations. If, up to one year from the acquisition date, information regarding fair value of assets acquired and liabilities assumed is received and estimatesare refined, appropriate property adjustments 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. 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 years Property Improvements10-20 years Furniture/Fixtures3-10 years Tenant ImprovementsShorter of lease term or their useful life 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, 2014. REIT Qualification Requirements The Company 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. 37 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, alldebt 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. Liquidity is a measure of the Company’s ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund andmaintain its assets and operations, make distributions to its stockholders and meet other general business needs. The liquidity of the Company is dependenton the Operating Partnership’s ability to make sufficient distributions to the Company. The primary cash requirement of the Company is its payment ofdividends to its stockholders. During the year ended December 31, 2014, the Company’s primary source of cash was proceeds from the issuance of common stock, distributions from theOperating Partnership, and proceeds from the exercise of warrants. Effective October 2014, all remaining outstanding warrants expired. As of December 31,2014, the Company has determined that it has adequate working capital to meet its dividend funding obligations for the next twelve months. On June 18, 2014, the Company issued 14,375,000 shares of common stock in a registered public offering, including shares issued upon the exercise in fullof the underwriters’ option to purchase additional shares, resulting in net proceeds of approximately $205.5 million, after deducting the underwriters’discounts and commissions and offering expenses. On September 19, 2014, the Company entered into four separate Sales Agreements (the “2014 sales agreements”) with Jefferies LLC, KeyBanc CapitalMarkets Inc., MLV & Co. LLC and Raymond James & Associates, Inc. (each individually, an “Agent” and collectively, the “Agents”) pursuant to which theCompany may sell, from time to time, shares of the Company’s common stock, par value $0.0001 per share, having an aggregate offering price of up to$100.0 million through the Agents either as agents or principals. During the year ended December 31, 2014, the Company did not sell any shares under the2014 sales agreements. For the year ended December 31, 2014, dividends paid to stockholders totaled approximately $53.6 million. Additionally, for the year ended December 31,2014, the Operating Partnership made distributions of approximately $2.0 million to the non-controlling interest OP Unitholders. On a consolidated basis,cash flows from operations for the same period totaled approximately $65.2 million. For the year ended December 31, 2013, dividends paid to stockholderstotaled approximately $42.5 million. Additionally, for the year ended December 31, 2013, the Operating Partnership made distributions of approximately$470,000 to the non-controlling interest OP Unitholders. On a consolidated basis, cash flows from operations for the same period totaled approximately$37.8 million. The deficiency of $5.2 million for the year ended December 31, 2013 was funded through borrowings by the Operating Partnership under thecredit facility. In the future, it is expected that the cash flows from stabilized properties will be sufficient to cover the dividends paid to stockholders. 38 Potential future sources of capital include debt and equity issuances, and distributions from the Operating Partnership. 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 the year ended December 31, 2014, 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 the equity offering and from warrant exercises that were contributed to the Operating Partnership, and(iv) cash flow from operations. As of December 31, 2014, the Operating Partnership has determined that it has adequate working capital to meet its debtobligations and operating expenses for the next twelve months. The Operating Partnership has a revolving credit facility (the “credit facility”) with several banks. Previously, the credit facility provided for borrowings ofup to $350.0 million. Effective December 12, 2014, the Company entered into a fourth amendment to the amended and restated credit agreement pursuant towhich the borrowing capacity was increased to $500.0 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 $1.0 billion, subject to lender consents and other conditions. The maturitydate of the credit facility has been extended to January 31, 2019 subject to a further one-year extension option, which may be exercised by the OperatingPartnership upon satisfaction of certain conditions. The Operating Partnership previously had a term loan agreement with several banks which provided for a loan of $200.0 million. In connection with thefourth amendment to the credit facility, effective December 12, 2014, the term loan agreement was retired. As of December 31, 2014, $156.5 million was outstanding under the credit facility. The average interest rate on the credit facility during the twelve monthsended December 31, 2014 was 1.3%. The Company had $343.5 million available to borrow under the credit facility at December 31, 2014. 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. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based onthe 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 relevantperiod (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 interestannounced by KeyBank, National Association at its “prime rate,” and (c) the Eurodollar Rate plus 1.00% (the “Base Rate”). Additionally, 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 credit facility. The credit facility contains customary representations, financial and othercovenants. The Operating Partnership’s ability to borrow under the credit facility is subject to its compliance with financial covenants and other restrictionson an ongoing basis. The Operating Partnership was in compliance with such covenants at December 31, 2014. The Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2014 and $250.0 million aggregateprincipal amount of unsecured senior notes in December 2013, each of which were fully and unconditionally guaranteed by the Company. 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. Cash Flows The following table summarizes, for the periods indicated, selected items in our consolidated statements of cash flows: Year ended December 31, 2014 2013 2012Net Cash Provided by (Used in): Operating activities $65,206,927 $37,752,465 $24,720,566 Investing activities $(399,855,825) $(344,977,110) $(261,574,478)Financing activities $337,502,607 $310,452,112 $207,228,554 39 Net Cash Flows from: Operating Activities Increase in cash flows provided by operating activities from 2013 to 2014: Net cash flows provided by operating activities amounted to $65.2 million during the year ended December 31, 2014, compared to $37.8 million during theyear ended December 31, 2013. During the year ended December 31, 2014, cash flows provided by operating activities increased by approximately $27.5million primarily due to an increase in property operating income of approximately $35.3 million, the decrease of approximately $5.5 million related to thesettlement of the Company’s interest rate swaps year over year, offset by an increase in interest expense of approximately $11.7 million due to higherborrowing amounts in 2014 as compared to 2013. 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. Investing Activities Increase in cash flows used in investing activities from 2013 to 2014: Net cash flows used by investing activities amounted to $399.9 million during the year ended December 31, 2014, compared to $345.0 million during theyear ended December 31, 2013. During the year ended December 31, 2014, cash flows used in investing activities increased approximately $54.9 million,primarily due to the increase in investments in real estate of approximately $65.4 million, an increase in improvements to properties of approximately $7.1million, and an increase in deposits on real estate acquisitions of approximately $5.0 million, offset by an increase in proceeds from the sale of real estate ofapproximately $22.0 million. 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 year endedDecember 31, 2013. Financing Activities Increase in cash flows provided by financing activities from 2013 to 2014: Net cash flows provided by financing activities amounted to $337.5 million during the year ended December 31, 2014, compared to $310.5 million duringthe year ended December 31, 2013. During the year ended December 31, 2014, cash flows provided by financing activities increased approximately $27.0million, primarily due to the receipt of $205.5 million of net proceeds from the issuance of common stock and a reduction in payments made to acquirewarrants of approximately $32.8 million. These increases were offset by a decrease in proceeds from the exercise of warrants of approximately $155.8 million,an increase in net payments on the credit facility and term loan of approximately $38.4 million, an increase in dividends paid to shareholders ofapproximately $11.1 million, and a $7.1 million increase in the principal repayment on mortgages primarily due to the principal repayments on twomortgage notes. 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. 40 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, 2014: 2015 2016 2017 2018 2019 Thereafter TotalContractual obligations: Mortgage Notes Payable Principal(1) $65,287,726 $7,582,838 $8,460,412 $10,136,577 $— $— $91,467,553 Mortgage Notes Payable Interest 4,375,959 1,317,579 910,889 104,635 — — 6,709,062 Credit facility (2) — — — — 156,500,000 — 156,500,000 Senior Notes Due 2023 (3) 12,500,000 12,500,000 12,500,000 12,500,000 12,500,000 300,000,000 362,500,000 Senior Notes Due 2024 (3) 10,333,333 10,000,000 10,000,000 10,000,000 10,000,000 300,000,000 350,333,333 Operating lease obligations 910,164 980,650 1,048,825 1,053,877 1,058,807 37,271,404 42,323,727 Total $93,407,182 $32,381,067 $32,920,126 $33,795,089 $180,058,807 $637,271,404 $1,009,833,675 __________________ (1)Does not include unamortized mortgage premium of $2.7 million as of December 31, 2014.(2)For the purpose of the above table, the Company has assumed that borrowings under the credit facility accrue interest at the average interest rateon the credit facility during the year ended December 31, 2014 which was 1.3%. Borrowings under the credit facility bear interest at a rate equal toan 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 fundsfor 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) therate of interest announced by KeyBank, National Association at its “prime rate,” and (c) the Eurodollar Rate plus 1.00%.(3)Represents payments of interest only in years 2015 through 2019 and payments of both principal and interest thereafter. The Company has committed approximately $3.5 million and $1.1 million in tenant improvements and leasing commissions, respectively, for the new leasesand renewals that occurred during the year ended December 31, 2014. As of December 31, 2014, the Company did not have any capital lease obligations. 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 As of December 31, 2014, the Company does not have 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. 41 The Operating Partnership has a revolving credit facility with several banks. Previously, the credit facility provided for borrowings of up to $350.0 million.Effective December 12, 2014, the Company entered into a fourth amendment to the amended and restated credit agreement pursuant to which the borrowingcapacity was increased to $500.0 million. Additionally, the credit facility contains an accordion feature, which was amended to allow the OperatingPartnership to increase the facility amount up to an aggregate of $1.0 billion subject to lender consents and other conditions. The maturity date of the creditfacility has been extended to January 31, 2019, subject to a further one-year extension option, which may be exercised by the Operating Partnership uponsatisfaction of certain conditions. The Operating Partnership previously had a term loan agreement with several banks which provided for a loan of $200.0 million. In connection with thefourth amendment to the credit facility, effective December 12, 2014, the term loan agreement was retired. In addition, the Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2014 and $250.0 millionaggregate principal amount of unsecured senior notes in December 2013, each of which were fully and unconditionally guaranteed by ROIC. 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 its subsidiaries.Even with non-recourse indebtedness, however, a borrower or its subsidiaries will likely be required to guarantee against certain breaches of representationsand warranties such as those relating to the absence of fraud, misappropriation, misapplication of funds, environmental conditions and materialmisrepresentations. Because non-recourse financing generally restricts the lender’s claim on the assets of the borrower, the lender generally may only proceedagainst 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 facility, 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. Distributions The 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, 2014, the Company had $156.5 million of variable rate debt outstanding. The Company has primarily used fixed-rate debt and forwardstarting interest rate swaps to manage its interest rate risk. See the discussion under Note 12, “Derivative and Hedging Activities,” to the accompanyingconsolidated 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 years ended December 31,2014 and 2013, the Company settled three and two of its interest rate swaps in accordance with their settlement dates, respectively, and there are no interestrate swaps outstanding as of December 31, 2014. 42 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. The Company’s interest rate risk management objectives will be to limit the impact of interest rate changes on earningsand cash flows and to lower overall borrowing costs. To achieve these objectives, the Company expects to borrow primarily at fixed rates or variable rateswith the lowest margins available and, in some cases, with the ability to convert variable rates to fixed rates. In addition, the Company can use derivativefinancial instruments to manage interest rate risk. The Company will not use derivatives for trading or speculative purposes and will only enter into contractswith major financial institutions based on their credit rating and other factors. Currently the Company has no interest rate swaps outstanding. See Note 12 ofthe accompanying consolidated financial statements. 43 Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements and Financial Statement Schedules PageReports of Independent Registered Public Accounting Firm45 Consolidated Financial Statements of Retail Opportunity Investments Corp.: Consolidated Balance Sheets at December 31, 2014 and 201348Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2014, 2013 and 201249Consolidated Statements of Equity for the years ended December 31, 2014, 2013 and 201250Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 201251 Consolidated Financial Statements of Retail Opportunity Investments Partnership, LP: Consolidated Balance Sheets at December 31, 2014 and 201352Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2014, 2013 and 201253Consolidated Statements of Partners Capital for the years ended December 31, 2014, 2013 and 201254Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 201255 Notes to Consolidated Financial Statements56 Schedules III Real Estate and Accumulated Depreciation – December 31, 201474 IV Mortgage Loans on Real Estate – December 31, 201475 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. 44 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, 2014 and2013, 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, 2014. Our audits also included the financial statement schedules listed in the Index at Item 8. These financial statements and schedulesare the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on ouraudits. 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, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the periodended December 31, 2014, 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, 2014, based on criteria established in Internal Control – Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 25, 2015 expressed anunqualified opinion thereon. As discussed in Note 1 to the consolidated financial statements, the Company changed its reporting of discontinued operations as a result of the adoption ofthe amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2014-08, “Presentation of FinancialStatements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components ofan Entity”. /s/ Ernst & Young LLP San Diego, CaliforniaFebruary 25, 2015 45 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, 2014, based oncriteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013Framework) (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, 2014, 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, 2014 and 2013, 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, 2014 of Retail Opportunity Investments Corp. and our report datedFebruary 25, 2015 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP San Diego, CaliforniaFebruary 25, 2015 46 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, 2014 and 2013, 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, 2014. Our audits also included the financial statement schedules listed in the Index at Item 8. 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, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in theperiod ended December 31, 2014, 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. As discussed in Note 1 to the consolidated financial statements, the Operating Partnership changed its reporting of discontinued operations as a result of theadoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2014-08, “Presentation ofFinancial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals ofComponents of an Entity”. /s/ Ernst & Young LLP San Diego, CaliforniaFebruary 25, 2015 47 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED BALANCE SHEETS December 31,2014 December 31,2013ASSETS Real Estate Investments: Land $550,078,150 $458,252,028 Building and improvements 1,235,820,156 914,181,620 1,785,898,306 1,372,433,648 Less: accumulated depreciation 88,173,334 57,499,980 Real Estate Investments, net 1,697,724,972 1,314,933,668 Cash and cash equivalents 10,773,406 7,919,697 Restricted cash 513,918 1,298,666 Tenant and other receivables, net 23,024,678 20,389,068 Deposits 4,500,100 775,000 Acquired lease intangible assets, net of accumulated amortization 71,432,664 55,887,471 Prepaid expenses 2,454,341 1,371,296 Deferred charges, net of accumulated amortization 39,730,973 33,121,980 Other 1,541,333 3,392,997 Total assets $1,851,696,385 $1,439,089,843 LIABILITIES AND EQUITY Liabilities: Term loan $— $200,000,000 Credit facility 156,500,000 56,950,000 Senior Notes Due 2023 246,173,927 245,845,320 Senior Notes Due 2024 246,521,114 — Mortgage notes payable 94,183,258 118,903,258 Acquired lease intangible liabilities, net of accumulated amortization 118,358,661 85,283,882 Accounts payable and accrued expenses 12,173,382 11,923,998 Tenants’ security deposits 3,960,699 3,422,910 Other liabilities 11,043,126 11,350,409 Total liabilities 888,914,167 733,679,777 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 92,991,333 and 72,445,767 sharesissued and outstanding at December 31, 2014 and 2013, respectively 9,293 7,238 Additional paid-in-capital 1,013,561,443 732,701,858 Dividends in excess of earnings (80,975,650) (47,616,570)Accumulated other comprehensive loss (8,882,417) (8,969,137)Total Retail Opportunity Investments Corp. stockholders' equity 923,712,669 676,123,389 Non-controlling interests 39,069,549 29,286,677 Total equity 962,782,218 705,410,066 Total liabilities and equity $1,851,696,385 $1,439,089,843 See accompanying notes to consolidated financial statements. 48 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Year Ended December 31, 2014 2013 2012Revenues Base rents $119,841,623 $86,194,511 $59,218,635 Recoveries from tenants 32,945,321 22,497,745 13,483,825 Mortgage interest income — 623,793 1,106,089 Other income 3,076,567 1,915,982 1,287,138 Total revenues 155,863,511 111,232,031 75,095,687 Operating expenses Property operating 25,035,765 19,749,972 12,779,758 Property taxes 15,953,210 11,246,967 7,281,213 Depreciation and amortization 58,434,981 40,397,895 29,074,709 General and administrative expenses 11,199,632 10,058,669 12,734,254 Acquisition transaction costs 961,167 1,688,521 1,347,611 Other expenses 504,828 314,833 324,354 Total operating expenses 112,089,583 83,456,857 63,541,899 Operating income 43,773,928 27,775,174 11,553,788 Non-operating income (expenses) Interest expense and other finance expenses (27,593,259) (15,854,978) (11,379,857)Gain on consolidation of joint venture — 20,381,849 2,144,696 Gain on bargain purchase — — 3,864,145 Equity in earnings from unconsolidated joint ventures — 2,389,937 1,697,980 Gain on sale of real estate 4,868,553 — — Interest income — — 11,861 Income from continuing operations 21,049,222 34,691,982 7,892,613 Loss from discontinued operations — (713,529) — Net income 21,049,222 33,978,453 7,892,613 Net income attributable to non-controlling interest (748,177) (164,892) — Net Income Attributable to Retail Opportunity Investments Corp. $20,301,045 $33,813,561 $7,892,613 Net income per share - basic: Income from continuing operations $0.24 $0.51 $0.15 Loss from discontinued operations — (0.01) — Net income per share $0.24 $0.50 $0.15 Net income per share - diluted: Income from continuing operations $0.24 $0.49 $0.15 Loss from discontinued operations — (0.01) — Net income per share $0.24 $0.48 $0.15 Dividends per common share $0.64 $0.60 $0.53 Comprehensive income: Net income. $21,049,222 $33,978,453 $7,892,613 Other comprehensive income (loss) Unrealized gain (loss) on swap derivative Unrealized swap derivative (loss) gain arising during the period (3,131,969) 4,564,248 (7,859,264)Reclassification adjustment for amortization of interest expense included in netincome 3,218,689 4,621,227 3,799,482 Other comprehensive income (loss) 86,720 9,185,475 (4,059,782)Comprehensive income 21,135,942 43,163,928 3,832,831 Comprehensive income attributable to non-controlling interests (748,177) (164,892) — Comprehensive income attributable to Retail Opportunity Investments Corp. $20,387,765 $42,999,036 $3,832,831 See accompanying notes to consolidated financial statements. 49 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED STATEMENTS OF EQUITY Common Stock Shares Amount Additional paid-in capital Retainedearnings(Accumulateddeficit) Accumulatedothercomprehensiveloss Non-controllinginterests EquityBalance 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 ($0.53 per share) — — — (27,057,495) — — (27,057,495)Dividends payable to officers — — — (68,475) — (68,475)Net income attributable to Retail OpportunityInvestments 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-controlling interests — — — — — (277,424) (277,424)Cash redemption for non-controlling interests — — — — — (2,189,779) (2,189,779)Adjustment to non-controlling interestsownership in Operating Partnership — — 13,313,937 — — (13,313,937) — Purchase of non-controlling interests — — — — — (2,389) (2,389)Registration expenditures — — (69,245) — — — (69,245)Cash dividends ($0.60 per share) — — — (42,468,897) — (469,806) (42,938,703)Dividends payable to officers — — — (110,000) — — (110,000)Net income attributable to Retail OpportunityInvestments Corp. — — — 33,813,561 — — 33,813,561 Net income attributable to non-controllinginterests — — — — — 164,892 164,892 Other comprehensive income — — — — 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 Shares issued under the 2009 Plan 340,621 34 (34) — — — — Repurchase of common stock (42,438) (4) (630,891) — — — (630,895)Cancellation of restricted stock (5,833) — — — — — — Stock based compensation expense — — 3,662,034 — — — 3,662,034 Proceeds from the exercise of warrants 5,878,216 587 70,538,004 — — — 70,538,591 Issuance of OP Units to non-controllinginterests — — — — — 16,342,775 16,342,775 Cash redemption for non-controlling interests — — — — — (3,280,000) (3,280,000)Adjustment to non-controlling interestsownership in Operating Partnership — — 2,019,444 — — (2,019,444) — Proceeds from the issuance of common stock 14,375,000 1,438 214,904,813 — — — 214,906,251 Registration expenditures — — (9,633,785) — — — (9,633,785)Cash dividends ($0.64 per share) — — — (53,522,261) — (2,008,636) (55,530,897)Dividends payable to officers — — — (137,864) — — (137,864)Net income attributable to Retail OpportunityInvestments Corp. — — — 20,301,045 — — 20,301,045 Net income attributable to non-controllinginterests — — — — — 748,177 748,177 Other comprehensive income — — — — 86,720 — 86,720 Balance at December 31, 2014 92,991,333 $9,293 $1,013,561,443 $(80,975,650) $(8,882,417) $39,069,549 $962,782,218 See accompanying notes to consolidated financial statements. 50 RETAIL OPPORTUNITY INVESTMENTS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2014 2013 2012CASH FLOWS FROM OPERATING ACTIVITIES Net income $21,049,222 $33,978,453 $7,892,613 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 58,434,981 40,397,895 29,074,709 Amortization of deferred financing costs and mortgage premiums, net (432,327) (144,313) 494,843 Gain on consolidation of joint venture — (20,381,849) (2,144,696)Gain on bargain purchase — — (3,864,145)Straight-line rent adjustment (3,794,936) (3,733,913) (3,040,510)Amortization of above and below market rent (6,944,572) (4,444,117) (3,659,011)Amortization relating to stock based compensation 3,662,034 2,856,391 3,393,439 Provisions for tenant credit losses 2,315,972 1,621,940 1,160,568 Equity in earnings from unconsolidated joint ventures — (2,389,937) (1,697,980)Other noncash interest expense 1,847,640 — — Gain on sale of real estate (4,868,553) — — Loss on sale of discontinued operations — 713,529 — Settlement of interest rate swap agreements (3,230,000) (8,750,000) — Distribution of cumulative earnings from unconsolidated joint ventures — — 686,017 Other — 792,244 — Change in operating assets and liabilities Restricted cash 190,011 74,083 (225,245)Tenant and other receivables (1,604,811) (4,820,044) (3,679,442)Prepaid expenses (1,106,227) (104,814) (573,099)Accounts payable and accrued expenses (1,164,032) 2,942,797 (1,912,490)Other assets and liabilities, net 852,525 (855,880) 2,814,995 Net cash provided by operating activities 65,206,927 37,752,465 24,720,566 CASH FLOWS FROM INVESTING ACTIVITIES Investments in real estate (398,205,203) (289,399,034) (255,851,952)Acquisition of entities — (43,378,106) — Proceeds from sale of real estate and land 27,622,089 5,607,612 — Investments in mortgage notes receivables — (294,000) — Investments in unconsolidated joint ventures — — (735,000)Return of capital from unconsolidated joint ventures — — 8,661,211 Improvements to properties (26,142,347) (19,066,525) (11,404,098)Deposits on real estate acquisitions, net (3,725,100) 1,225,000 (2,000,000)Construction escrows and other 594,736 327,943 (244,639)Net cash used in investing activities (399,855,825) (344,977,110) (261,574,478) CASH FLOWS FROM FINANCING ACTIVITIES Principal repayments on mortgages (21,981,922) (14,902,386) (7,874,618)Proceeds from draws on term loan/credit facility 549,300,000 342,950,000 209,000,000 Payments on credit facility (449,750,000) (405,000,000) — Payments on term loan (200,000,000) — — Proceeds from issuance of Senior Notes Due 2023 — 245,825,000 — Proceeds from issuance of Senior Notes Due 2024 246,500,000 — — Payment of contingent consideration — (1,864,370) — Proceeds from exercise of warrants 70,723,391 226,529,778 12,000 Payments to acquire warrants — (32,785,921) — Proceeds from the sale of stock 214,906,251 — 37,811,658 Purchase of non-controlling interest — (2,389) — Redemption of Operating Partnership Units (3,280,000) (2,189,779) — Distributions to Operating Partnership (2,008,636) (747,230) — Deferred financing and other costs (3,188,618) (4,097,377) (2,792,050)Registration expenditures (9,512,944) (69,245) (1,162,787)Dividends paid to common shareholders (53,574,020) (42,512,597) (27,057,495)Repurchase of common stock (630,895) (406,542) (708,176)Common shares issued under the 2009 Plan — — 22 Retirement of options — (274,830) — Net cash provided by financing activities 337,502,607 310,452,112 207,228,554 Net increase (decrease) in cash and cash equivalents 2,853,709 3,227,467 (29,625,358)Cash and cash equivalents at beginning of period 7,919,697 4,692,230 34,317,588 Cash and cash equivalents at end of period $10,773,406 $7,919,697 $4,692,230 Supplemental disclosure of cash activities: Cash paid on gross receipts and income for federal and state purposes $331,902 $241,603 $310,406 Interest paid $26,005,827 $14,579,450 $10,910,587 Other non-cash investing and financing activities – increase (decrease): Issuance of OP Units in connection with acquisitions $16,342,775 $45,372,731 $— Assumed mortgage at fair value $— $62,749,675 $19,668,352 Intangible lease liabilities $44,287,149 $35,039,360 $16,280,503 Transfer of equity investment in property to real estate investment $— $15,990,769 $4,008,350 Interest rate swap asset $(1,948,243) $1,948,243 $— Interest rate swap liabilities $(2,528,703) $6,733,812 $4,156,096 Accrued real estate improvement costs $1,372,626 $591,671 $837,312 See accompanying notes to consolidated financial statements. 51 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED BALANCE SHEETS December 31,2014 December 31,2013ASSETS Real Estate Investments: Land $550,078,150 $458,252,028 Building and improvements 1,235,820,156 914,181,620 1,785,898,306 1,372,433,648 Less: accumulated depreciation 88,173,334 57,499,980 Real Estate Investments, net 1,697,724,972 1,314,933,668 Cash and cash equivalents 10,773,406 7,919,697 Restricted cash 513,918 1,298,666 Tenant and other receivables, net 23,024,678 20,389,068 Deposits 4,500,100 775,000 Acquired lease intangible assets, net of accumulated amortization 71,432,664 55,887,471 Prepaid expenses 2,454,341 1,371,296 Deferred charges, net of accumulated amortization 39,730,973 33,121,980 Other 1,541,333 3,392,997 Total assets $1,851,696,385 $1,439,089,843 LIABILITIES AND CAPITAL Liabilities: Term loan $— $200,000,000 Credit facility 156,500,000 56,950,000 Senior Notes Due 2023 246,173,927 245,845,320 Senior Notes Due 2024 246,521,114 — Mortgage notes payable 94,183,258 118,903,258 Acquired lease intangible liabilities, net of accumulated amortization 118,358,661 85,283,882 Accounts payable and accrued expenses 12,173,382 11,923,998 Tenants’ security deposits 3,960,699 3,422,910 Other liabilities 11,043,126 11,350,409 Total liabilities 888,914,167 733,679,777 Commitments and contingencies — — Capital: Partners’ capital, unlimited partnership units authorized: ROIC capital (consists of general and limited partnership interests held by ROIC) 932,595,086 685,092,526 Limited partners’ capital (consists of limited partnership interests held by third parties) 39,069,549 29,286,677 Accumulated other comprehensive loss (8,882,417) (8,969,137)Total capital 962,782,218 705,410,066 Total liabilities and capital $1,851,696,385 $1,439,089,843 See accompanying notes to consolidated financial statements. 52 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Year Ended December 31, 2014 2013 2012Revenues Base rents $119,841,623 $86,194,511 $59,218,635 Recoveries from tenants 32,945,321 22,497,745 13,483,825 Mortgage interest income — 623,793 1,106,089 Other income 3,076,567 1,915,982 1,287,138 Total revenues 155,863,511 111,232,031 75,095,687 Operating expenses Property operating 25,035,765 19,749,972 12,779,758 Property taxes 15,953,210 11,246,967 7,281,213 Depreciation and amortization 58,434,981 40,397,895 29,074,709 General and administrative expenses 11,199,632 10,058,669 12,734,254 Acquisition transaction costs 961,167 1,688,521 1,347,611 Other expenses 504,828 314,833 324,354 Total operating expenses 112,089,583 83,456,857 63,541,899 Operating income 43,773,928 27,775,174 11,553,788 Non-operating income (expenses) Interest expense and other finance expenses (27,593,259) (15,854,978) (11,379,857)Gain on consolidation of joint venture — 20,381,849 2,144,696 Gain on bargain purchase — — 3,864,145 Equity in earnings from unconsolidated joint ventures — 2,389,937 1,697,980 Gain on sale of real estate 4,868,553 — — Interest income — — 11,861 Income from continuing operations 21,049,222 34,691,982 7,892,613 Loss from discontinued operations — (713,529) — Net Income Attributable to Retail Opportunity Investments Partnership, LP $21,049,222 $33,978,453 $7,892,613 Net income per unit - basic: Income from continuing operations $0.24 $0.51 $0.15 Loss from discontinued operations — (0.01) — Net income per unit $0.24 $0.50 $0.15 Net income per unit - diluted: Income from continuing operations $0.24 $0.49 $0.15 Loss from discontinued operations — (0.01) — Net income per unit $0.24 $0.48 $0.15 Distributions per unit $0.64 $0.60 $0.53 Comprehensive income: Net income attributable to Retail Opportunity Investments Partnership, LP $21,049,222 $33,978,453 $7,892,613 Other comprehensive income (loss) Unrealized gain (loss) on swap derivative Unrealized swap derivative (loss) gain arising during the period (3,131,969) 4,564,248 (7,859,264)Reclassification adjustment for amortization of interest expense included in netincome 3,218,689 4,621,227 3,799,482 Other comprehensive income (loss) 86,720 9,185,475 (4,059,782)Comprehensive income attributable to Retail Opportunity Investments Partnership, LP $21,135,942 $43,163,928 $3,832,831 See accompanying notes to consolidated financial statements. 53 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL Limited Partner’s Capital(1) ROIC Capital (2) Units Amount Units Amount Accumulatedothercomprehensiveloss Non-controllinginterests CapitalBalance at December 31, 2011 — $— 49,375,738 $464,581,495 $(14,094,830) $2,389 $450,489,054 OP Units issued under the 2009 Plan — — 224,067 22 — — 22 Repurchase of OP Units — — (55,496) (708,176) — — (708,176)Stock based compensation expense — — — 3,393,439 — — 3,393,439 Proceeds from the sale of OP Units — — 3,051,445 37,811,658 — — 37,811,658 Registration expenditures — — — (1,162,787) — — (1,162,787)Issuance of OP Units upon exercise of warrants — — 1,000 12,000 — — 12,000 Cash distributions ($0.53 per unit) — — — (27,057,495) — — (27,057,495)Dividends payable to officers — — — (68,475) — — (68,475)Net income attributable to Retail OpportunityInvestments Partnership, 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 OP Units issued under the 2009 Plan — — 313,364 — — — — Repurchase of OP Units — — (30,333) (406,542) — — (406,542)Retirement of options — — — (274,830) — — (274,830)Stock based compensation expense — — — 2,856,391 — — 2,856,391 Issuance of OP Units upon exercise of warrants — — 18,877,482 226,529,778 — — 226,529,778 Issuance of OP Units upon exercise of Sponsorwarrants — — 688,500 — — — — Repurchase of warrants — — — (32,785,921) — — (32,785,921)Issuance of OP Units in connection withacquisition 3,290,263 45,372,731 — — — — 45,372,731 Limited Partner distributions — (277,424) — — — — (277,424)Cash redemption of OP Units (158,221) (2,189,779) — — — — (2,189,779)Adjustment to non-controlling interests — (13,313,937) — 13,313,937 — — — Purchase of non-controlling interests — — — — — (2,389) (2,389)Registration expenditures — — — (69,245) — — (69,245)Cash distributions ($0.60 per unit) — (469,806) — (42,468,897) — — (42,938,703)Dividends payable to officers — — — (110,000) — — (110,000)Net income attributable to Retail OpportunityInvestments Partnership, LP — 164,892 — 33,813,561 — — 33,978,453 Other comprehensive income — — — — 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 OP Units issued under the 2009 Plan — — 340,621 — — — — Repurchase of OP Units — — (42,438) (630,895) — — (630,895)Cancellation of OP Units — — (5,833) — — — — Stock based compensation expense — — — 3,662,034 — — 3,662,034 Issuance of OP Units upon exercise of warrants — — 5,878,216 70,538,591 — — 70,538,591 Issuance of OP Units in connection withacquisition 989,272 16,342,775 — — — — 16,342,775 Cash redemption of OP Units (200,000) (3,280,000) — — — — (3,280,000)Adjustment to non-controlling interests — (2,019,444) — 2,019,444 — — — Issuance of OP Units in connection withcommon stock offering — — 14,375,000 214,906,251 — — 214,906,251 Registration expenditures — — — (9,633,785) — — (9,633,785)Cash distributions ($0.64 per unit) — (2,008,636) — (53,522,261) — — (55,530,897)Dividends payable to officers — — — (137,864) — — (137,864)Net income attributable to Retail OpportunityInvestments Partnership, LP — 748,177 — 20,301,045 — — 21,049,222 Other comprehensive income — — — — 86,720 — 86,720 Balance at December 31, 2014 3,921,314 $39,069,549 92,991,333 $932,595,086 $(8,882,417) $— $962,782,218 _______________________________(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. 54 RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2014 2013 2012CASH FLOWS FROM OPERATING ACTIVITIES Net income $21,049,222 $33,978,453 $7,892,613 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 58,434,981 40,397,895 29,074,709 Amortization of deferred financing costs and mortgage premiums, net (432,327) (144,313) 494,843 Gain on consolidation of joint venture — (20,381,849) (2,144,696)Gain on bargain purchase — — (3,864,145)Straight-line rent adjustment (3,794,936) (3,733,913) (3,040,510)Amortization of above and below market rent (6,944,572) (4,444,117) (3,659,011)Amortization relating to stock based compensation 3,662,034 2,856,391 3,393,439 Provisions for tenant credit losses 2,315,972 1,621,940 1,160,568 Equity in earnings from unconsolidated joint ventures — (2,389,937) (1,697,980)Other noncash interest expense 1,847,640 — — Gain on sale of real estate (4,868,553) — — Loss on sale of discontinued operations — 713,529 — Settlement of interest rate swap agreements (3,230,000) (8,750,000) — Distribution of cumulative earnings from unconsolidated joint ventures — — 686,017 Other — 792,244 — Change in operating assets and liabilities Restricted cash 190,011 74,083 (225,245)Tenant and other receivables (1,604,811) (4,820,044) (3,679,442)Prepaid expenses (1,106,227) (104,814) (573,099)Accounts payable and accrued expenses (1,164,032) 2,942,797 (1,912,490)Other assets and liabilities, net 852,525 (855,880) 2,814,995 Net cash provided by operating activities 65,206,927 37,752,465 24,720,566 CASH FLOWS FROM INVESTING ACTIVITIES Investments in real estate (398,205,203) (289,399,034) (255,851,952)Acquisition of entities — (43,378,106) — Proceeds from sale of real estate and land 27,622,089 5,607,612 — Investments in mortgage notes receivables — (294,000) — Investments in unconsolidated joint ventures — — (735,000)Return of capital from unconsolidated joint ventures — — 8,661,211 Improvements to properties (26,142,347) (19,066,525) (11,404,098)Deposits on real estate acquisitions, net (3,725,100) 1,225,000 (2,000,000)Construction escrows and other 594,736 327,943 (244,639)Net cash used in investing activities (399,855,825) (344,977,110) (261,574,478) CASH FLOWS FROM FINANCING ACTIVITIES Principal repayments on mortgages (21,981,922) (14,902,386) (7,874,618)Proceeds from draws on term loan/credit facility 549,300,000 342,950,000 209,000,000 Payments on credit facility (449,750,000) (405,000,000) — Payments on term loan (200,000,000) — — Proceeds from issuance of Senior Notes Due 2023 — 245,825,000 — Proceeds from issuance of Senior Notes Due 2024 246,500,000 — — Payment of contingent consideration — (1,864,370) — Proceeds from exercise of warrants 70,723,391 226,529,778 12,000 Payments to acquire warrants — (32,785,921) — Proceeds from the sale of stock 214,906,251 — 37,811,658 Purchase of non-controlling interest — (2,389) — Redemption of Operating Partnership Units (3,280,000) (2,189,779) — Distributions to Operating Partnership (2,008,636) (747,230) — Deferred financing and other costs (3,188,618) (4,097,377) (2,792,050)Registration expenditures (9,512,944) (69,245) (1,162,787)Dividends paid to common shareholders (53,574,020) (42,512,597) (27,057,495)Repurchase of common stock (630,895) (406,542) (708,176)Common shares issued under the 2009 Plan — — 22 Retirement of options — (274,830) — Net cash provided by financing activities 337,502,607 310,452,112 207,228,554 Net increase (decrease) in cash and cash equivalents 2,853,709 3,227,467 (29,625,358)Cash and cash equivalents at beginning of period 7,919,697 4,692,230 34,317,588 Cash and cash equivalents at end of period $10,773,406 $7,919,697 $4,692,230 Supplemental disclosure of cash activities: Cash paid on gross receipts and income for federal and state purposes $331,902 $241,603 $310,406 Interest paid $26,005,827 $14,579,450 $10,910,587 Other non-cash investing and financing activities: Issuance of OP Units in connection with acquisitions of entities $16,342,775 $45,372,731 $— Assumed mortgage at fair value $— $62,749,675 $19,668,352 Intangible lease liabilities $44,287,149 $35,039,360 $16,280,503 Transfer of equity investment in property to real estate investment $— $15,990,769 $4,008,350 Interest rate swap asset $(1,948,243) $1,948,243 $— Interest rate swap liabilities $(2,528,703) $6,733,812 $4,156,096 Accrued real estate improvement costs $1,372,626 $591,671 $837,312 See accompanying notes to consolidated financial statements. 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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 its subsidiaries.Unless otherwise indicated or unless the context requires otherwise, all references to the “Company”, “we,” “us,” “our,” or “our company” refer to ROICtogether 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. 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 warrants exercised and equity issuancesby ROIC, 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 April 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that raises the threshold for a disposal toqualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definitionof a discontinued operation. This guidance is effective for interim and annual periods beginning on or after December 15, 2014, with early adoptionpermitted. The Company elected to early adopt the provisions of this guidance effective January 1, 2014. The adoption will result in most individualproperty disposals not qualifying for discontinued operations presentation, and accordingly, the results of the individual property disposals that occurredduring 2014 remained in “Income from continuing operations.” In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” The pronouncement was issued to clarify the principles forrecognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and International Financial Reporting Standards.The pronouncement is effective for reporting periods beginning after December 15, 2016. The Company is in the process of evaluating the impact thispronouncement will have 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. 56 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 The Company has elected to qualify as a REIT under Sections 856-860 of the Internal Revenue Code (the “Code”). Under those sections, a REIT that, amongother things, distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains)and meets certain other qualifications prescribed by the Code will not be taxed on that 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”),if any, is fully subject to U.S. federal, state and local income taxes. For all periods from inception through September 26, 2013 the Operating Partnership hasbeen an entity 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. As of December 31, 2014, the statute of limitations for tax years 2011 through and including 2013 remain open for examination by theInternal Revenue Service (“IRS”) and state taxing authorities. During the year ended December 31, 2011, the IRS conducted an examination of theCompany’s 2009 federal tax return. During the year ended December 31, 2012 the Company reached a settlement with the IRS in which the Company paidto 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, 2014 and 2013, capitalized costs related to the improvements or replacement of real estate propertieswere approximately $27.5 million and $19.2 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 lease intangible liabilities represent below-market leases, in the accompanying consolidated balance sheets. 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 management’s evaluation of current marketdemand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs.Leasing commissions, legal and other related costs (“lease origination costs”) are classified as deferred charges in the accompanying consolidated balancesheets. 57 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 of acquisition.Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fair valuesassociated with below-market rental renewal options are determined based on the Company's experience and the relevant facts and circumstances that existedat the time of the acquisitions. The value of the above-market and below-market leases is amortized to rental income, over the terms of the respective leasesincluding option periods, if applicable. The value of in-place leases are amortized to expense over the remaining non-cancellable terms of the respectiveleases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized in operations at thattime. The Company may record a bargain purchase gain if it determines that the purchase price for the acquired assets was less than the fair value. TheCompany will record a liability in situations where any part of the cash consideration is deferred. The amounts payable in the future are discounted to theirpresent value. The liability is subsequently re-measured to fair value with changes in fair value recognized in the consolidated statements of operations. If, upto one year from the acquisition date, information regarding fair value of assets acquired and liabilities assumed is received and estimates are refined,appropriate property adjustments 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, 2014, 2013 and 2012 of approximately $1.0 million, $1.7 million and $1.3 million, respectively. Regarding certain of the Company’s 2014 and 2013 property acquisitions (see Note 2), the fair value of in-place leases and other intangibles have beenallocated to intangible asset and liability accounts. Sales of real estate are recognized only when sufficient down payments have been obtained, possession and other attributes of ownership have beentransferred to the buyer and the Company has no significant continuing involvement. The application of these criteria can be complex and requires theCompany to make assumptions. Management has determined that all of these criteria were met for all real estate sold during the periods presented. In June 2014, the Company sold the Phillips Village Shopping Center, a non-core shopping center located in Pomona, California with an occupancy rate ofapproximately 10.4% as of May 31, 2014. The sales price of this property of approximately $16.0 million, less costs to sell, resulted in net proceeds to theCompany of approximately $15.6 million. The Company recorded a gain on sale of property of approximately $3.3 million for the year ended December 31,2014. In August 2014, the Company sold the Oregon City Point Shopping Center, a non-core shopping center located in Oregon City, Oregon. The sales price ofthis property of approximately $12.4 million, less costs to sell, resulted in net proceeds of approximately $12.0 million. The Company recorded a gain onsale of property of approximately $1.6 million for the year ended December 31, 2014. Any reference to square footage or occupancy is unaudited and outside the scope of our independent registered public accounting firm’s audit of theCompany’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. 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, 2014. 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. 58 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. 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’s guidancewhen the following conditions are met: (a) the termination agreement is executed; (b) the termination fee is determinable; (c) all landlord services pursuantto the terminated lease have been rendered; and (d) collectivity of the termination fee is assured. Interest income is recognized as it is earned. Gains or losseson disposition of properties are recorded when the criteria for recognizing such gains or losses under generally 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 December 31, 2014 and December 31,2013 was approximately $3.6 million and $3.2 million, respectively. 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 $18.8 million and $14.9 million, as of December 31, 2014 and 2013, respectively. The unamortized balances of deferred charges as of December 31, 2014 that will be charged to future operations are as follows: Lease Origination Costs Financing Costs Total2015 $6,655,924 $1,722,372 $8,378,296 2016 5,366,837 1,668,862 7,035,699 2017 4,212,704 1,627,525 5,840,229 2018 3,128,972 1,607,781 4,736,753 2019 2,379,626 576,295 2,955,921 Thereafter 8,621,371 2,162,704 10,784,075 $30,365,434 $9,365,539 $39,730,973 Internal Capitalized Leasing Costs The 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, 2014, 2013 and 2012, the Company capitalized approximately$947,000, $742,000 and $695,000, respectively, of such payroll-related costs. 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. 59 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. During the years ended December 31, 2014, 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. For the years ended December 31, 2014, 2013 and 2012, 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: Year Ended December 31, 2014 2013 2012Numerator: Income from continuing operations $21,049,222 $34,691,982 $7,892,613 Less income from continuing operations attributable to non-controlling interests (748,177) (164,892) — Less earnings allocated to unvested shares (159,489) (78,361) (213,361)Income from continuing operations available for common shareholders, basic 20,141,556 34,448,729 7,679,252 Loss from discontinued operations available to common shareholders, basic — (713,529) — Net income available to common stockholders, basic $20,141,556 $33,735,200 $7,679,252 Numerator: Income from continuing operations $21,049,222 $34,691,982 $7,892,613 Less earnings allocated to unvested shares (159,489) (78,361) (213,361)Income from continuing operations available for common shareholders, diluted 20,889,733 34,613,621 7,679,252 Loss from discontinued operations available to common shareholders, diluted — (713,529) — Net income available to common stockholders, diluted $20,889,733 $33,900,092 $7,679,252 Denominator: Denominator for basic EPS – weighted average common shares 83,411,230 67,419,497 51,059,408 Warrants 631,086 2,568,822 1,165,663 OP Units 3,162,658 838,508 — Restricted stock awards - performance-based 162,327 113,066 95,466 Stock Options 86,108 64,487 50,631 Denominator for diluted EPS – weighted average common equivalent shares 87,453,409 71,004,380 52,371,168 60 Earnings Per Unit The following table sets forth the reconciliation between basic and diluted earnings per unit for the Operating Partnership: Year Ended December 31, 2014 2013 2012Numerator: Income from continuing operations $21,049,222 $34,691,982 $7,892,613 Less earnings allocated to unvested units (159,489) (78,361) (213,361)Income from continuing operations available for unitholders, basic and diluted 20,889,733 34,613,621 7,679,252 Loss from discontinued operations available to unitholders, basic and diluted — (713,529) — Net income available to unitholders, basic and diluted $20,889,733 $33,900,092 $7,679,252 Denominator: Denominator for basic EPS – weighted average common units 86,573,888 68,258,005 51,059,408 Warrants 631,086 2,568,822 1,165,663 Restricted stock awards - performance-based 162,327 113,066 95,466 Stock Options 86,108 64,487 50,631 Denominator for diluted EPS – weighted average common equivalent units 87,453,409 71,004,380 52,371,168 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 of stock are expensed ascompensation on a straight-line basis over the vesting period. Awards of performance-based grants are expensed as compensation under an acceleratedmethod and are recognized in income regardless 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). The Company has aggregated the properties into one reportable segment as the propertiesshare similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, aretypically located in major metropolitan areas, and have similar tenant mixes. 61 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, 2014 and 2013. Property Acquisitions in 2014 On February 18, 2014, the Company acquired the property known as Tigard Marketplace located in Tigard, Oregon, within the Portland metropolitan area,for a purchase price of approximately $25.1 million. Tigard Marketplace is approximately 137,000 square feet and is anchored by H-Mart Supermarket. Theproperty was acquired with borrowings under the Company’s credit facility. On February 28, 2014, the Company acquired the property known as Creekside Plaza located in Poway, California, within the San Diego metropolitan area,for a purchase price of approximately $44.0 million. Creekside Plaza is approximately 129,000 square feet and is anchored by Stater Brothers Supermarket.The property was acquired with borrowings under the Company’s credit facility. On April 30, 2014, the Company acquired the property known as North Park Plaza located in San Jose, California, within the San Francisco Bay Areametropolitan area, for a purchase price of approximately $27.8 million. North Park Plaza is approximately 77,000 square feet and is anchored by SFSupermarket. The property was acquired with borrowings under the Company’s credit facility and available cash. On May 22, 2014, the Company acquired the property known as Aurora Square II located in Shoreline, Washington, within the Seattle metropolitan area, fora purchase price of approximately $15.8 million. Aurora Square II is approximately 66,000 square feet and is contiguous to an existing ROIC grocery-anchored shopping center, Aurora Square. Aurora Square II, together with Aurora Square, aggregate 104,000 square feet and are anchored by Marshall’s(Aurora Square II) and Central Supermarket (Aurora Square). The property was acquired with borrowings under the Company’s credit facility and availablecash. On June 13, 2014, the Company acquired the property known as Fallbrook Shopping Center located in West Hills, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $210.0 million. Fallbrook Shopping Center has approximately 1.1 million square feet of grossleasable area (“GLA”) of which approximately 756,000 square feet is owned by the Company. Key tenants include Trader Joe’s, Sprouts Market, HomeDepot, Kohl’s, TJ Maxx, Ross Dress For Less, AMC Theaters and 24 Hour Fitness. Fallbrook Shopping Center also features Target, Walmart and Kroger(Ralph’s) Supermarket, which occupy substantially all of the GLA not owned by the Company. The property was acquired with borrowings under theCompany’s credit facility and available cash. On December 3, 2014, the Company acquired the property known as Moorpark Town Center located in Moorpark, California, within the Los Angelesmetropolitan area, for a purchase price of approximately $27.3 million. Moorpark Town Center is approximately 134,000 square feet and is anchored byKroger (Ralph’s) Supermarket and CVS Pharmacy. The property was acquired with borrowings under the Company’s credit facility. On December 4, 2014, the Company acquired the property known as Mission Foothill Marketplace located in Mission Viejo, California, within the OrangeCounty metropolitan area, for a purchase price of approximately $29.0 million. Mission Foothill Marketplace is approximately 111,000 square feet and isanchored by Haggen Supermarket and CVS Pharmacy. The property was acquired with borrowings under the Company’s credit facility. On December 11, 2014, the Company acquired the property known as Wilsonville Town Center located in Wilsonville, Oregon, within the Portlandmetropolitan area, for an adjusted purchase price of approximately $35.6 million. Wilsonville Town Center is approximately 168,000 square feet and isanchored by Thriftway Supermarket, Rite Aid Pharmacy and Dollar Tree. The acquisition was funded through approximately $19.4 million in cash and theissuance of 989,272 OP Units with a fair value of approximately $16.3 million. Property Acquisitions in 2013 During the year ended December 31, 2013, the Company acquired 10 properties throughout the west coast with a total of approximately 1.0 million squarefeet for a net purchase price of approximately $297.6 million Acquisitions of Property-Owning Entities in 2013 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 in theTerranomics Crossroad Associates, LP as an equity method investment. The acquisition-date fair value of the previous equity interest was $36.0 million andis included in the measurement of the consideration transferred. The Company recognized a gain of $20.4 million as a result of remeasuring its prior equityinterest in the venture held before the acquisition. The gain is included in the line item Gain on consolidation of joint venture in the consolidated statementsof operations and comprehensive income. The primary asset of Terranomics Crossroads Associates is Crossroads Shopping Center located in Bellevue,Washington, within the Seattle metropolitan area. Crossroads Shopping Center is approximately 464,000 square feet and is anchored by Kroger (QFC)Supermarket, Sports Authority and Bed Bath and Beyond. 62 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. The financial information set forth below summarizes the Company’s preliminary purchase price allocation for the properties acquired during the year endedDecember 31, 2014 and the final purchase price allocation for the properties acquired during the year ended December 31, 2013. December 31,2014 December 31,2013ASSETS Land $98,897,045 $176,977,162 Building and improvements 317,400,652 310,098,731 Cash and cash equivalents — 552,213 Acquired lease intangible asset 32,201,585 28,332,445 Deferred charges 10,335,846 12,041,794 Tenant receivables and other assets — 1,132,232 Assets acquired $458,835,128 $529,134,577 LIABILITIES Acquired lease intangible liability $44,287,149 $35,039,360 Mortgage notes assumed — 62,749,675 Accrued expenses and other liabilities — 4,282,450 Liabilities assumed $44,287,149 $102,071,485 With respect to these acquisitions, the fair value of in-place leases and other intangibles have been allocated to intangible asset and liability accounts. Allallocations are preliminary and may be adjusted as final information becomes available. 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 years endedDecember 31, 2014 and 2013, adjusted to give effect to these transactions at the beginning of 2013. 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 transactions 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: 2014 2013Revenues $171,900,319 $169,032,796 Property operating and other expenses 83,532,767 59,987,450 Depreciation and amortization 64,650,002 64,885,935 Net income attributable to Retail Opportunity Investments Corp. $23,717,550 $44,159,411 The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the year endedDecember 31, 2014 for the properties acquired during the year ended December 31, 2014. Year Ended December 31, 2014Statement of operations: Revenues $16,234,264 Property operating and other expenses 4,643,335 Depreciation and amortization 7,673,714 Net income attributable to Retail Opportunity Investments Corp. $3,917,215 63 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 Ended December 31, 2013Statement 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 Property Dispositions On June 5, 2014, the Company sold Phillips Village Shopping Center, a non-core shopping center located in Pomona, California with an occupancy rate ofapproximately 10.4% as of May 31, 2014. The sales price of this property of approximately $16.0 million, less costs to sell, resulted in net proceeds to theCompany of approximately $15.6 million. Accordingly, the Company recorded a gain on sale of approximately $3.3 million for the year ended December 31,2014 related to this property. On August 25, 2014, the Company sold the Oregon City Point Shopping Center, a non-core shopping center located in Oregon City, Oregon. The sales priceof this property of approximately $12.4 million, less costs to sell, resulted in net proceeds of approximately $12.0 million. Accordingly, the Companyrecorded a gain on sale of approximately $1.6 million for year ended December 31, 2014 related to this property. Unconsolidated Joint Ventures At 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 sheets. 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 statements of operations and comprehensiveincome. As of December 31, 2014, the Company has no remaining unconsolidated joint ventures. 3. Acquired Lease Intangibles Intangible assets and liabilities as of December 31, 2014 and 2013 consisted of the following: December 31,2014 December 31,2013Assets: In-place leases $78,548,975 $71,846,161 Accumulated amortization (25,482,306) (27,413,310)Above-market leases 26,197,169 18,191,431 Accumulated amortization (7,831,174) (6,736,811)Acquired lease intangible assets, net $71,432,664 $55,887,471 Liabilities: Below-market leases $141,552,303 $104,092,901 Accumulated amortization (23,193,642) (18,809,019)Acquired lease intangible liabilities, net $118,358,661 $85,283,882 For the years ended December 31, 2014, 2013 and 2012, the net amortization of acquired lease intangible assets and acquired lease intangible liabilities forabove and below market leases was $6.9 million, $4.4 million and $3.7 million, respectively, which amounts are included in base rents in the accompanyingconsolidated statements of operations and comprehensive income. For the years ended December 31, 2014, 2013 and 2012, the net amortization of in-placeleases was $12.5 million, $10.3 million and $8.1 million, respectively, which amounts are included in depreciation and amortization in the accompanyingconsolidated statements of operations and comprehensive income. 64 The scheduled future amortization of acquired lease intangible assets as of December 31, 2014 is as follows: Year ending December 31: 2015 $14,563,383 2016 11,074,212 2017 8,839,630 2018 6,450,192 2019 4,460,270 Thereafter 26,044,977 Total future amortization of acquired lease intangible assets $71,432,664 The scheduled future amortization of acquired lease intangible liabilities as of December 31, 2014 is as follows: Year ending December 31: 2015 $10,630,084 2016 9,084,320 2017 8,257,567 2018 7,623,632 2019 6,956,023 Thereafter 75,807,035 Total future amortization of acquired lease intangible liabilities $118,358,661 4. Tenant Leases Space in the Company’s shopping centers is leased to various tenants under operating leases that usually grant tenants renewal options and generally providefor additional rents based on certain operating expenses as well as tenants’ sales volume. Future minimum rents to be received under non-cancellable leases as of December 31, 2014 are summarized as follows: Year ending December 31: 2015 $117,472,132 2016 106,814,051 2017 92,470,433 2018 75,006,572 2019 59,197,187 Thereafter 287,159,418 Total minimum lease payments $738,119,793 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 Facility 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, carve-out guarantees on property-level debt, the Senior Notes Due 2023 and the Senior Notes Due 2024. 65 Mortgage Notes Payable The mortgage notes payable collateralized by respective properties and assignment of leases at December 31, 2014 and December 31, 2013, respectively,were as follows: Property Maturity Date Interest Rate December 31, 2014 December 31, 2013Euclid Plaza November 2014 5.23% $— 8,158,676 Country Club Gate Center January 2015 5.04% — 12,236,374 Renaissance Towne Centre June 2015 5.13% 16,204,826 16,489,812 Crossroads Shopping Center September 2015 6.50% 48,581,419 49,413,976 Gateway Village III July 2016 6.10% 7,270,256 7,368,521 Bernardo Heights Plaza July 2017 5.70% 8,581,168 8,748,605 Santa Teresa Village February 2018 6.20% 10,829,884 11,033,511 $91,467,553 $113,449,475 Mortgage Premium 2,715,705 5,453,783 Total mortgage notes payable $94,183,258 $118,903,258 The combined aggregate principal maturities of mortgage notes payable during the next five years and thereafter are as follows: PrincipalRepayments ScheduledAmortization Mortgage Premium Total2015 $64,051,173 $1,236,553 $1,793,132 $67,080,858 2016 7,120,172 462,666 515,867 8,098,705 2017 8,099,320 361,092 380,470 8,840,882 2018 10,094,220 42,357 26,236 10,162,813 $89,364,885 $2,102,668 $2,715,705 $94,183,258 During the year ended December 31, 2014, the Company repaid the outstanding principal balance on the Euclid Plaza and Country Club Gate mortgagenotes payable of $8.0 million and $12.0 million, respectively, without penalty, in accordance with the prepayment provisions of the notes. Credit Facility The Operating Partnership has a revolving credit facility with several banks. Previously, the credit facility provided for borrowings of up to $350.0 million.Effective December 12, 2014, the Company entered into a fourth amendment to the amended and restated credit agreement pursuant to which the borrowingcapacity was increased to $500.0 million. Additionally, the credit facility contains an accordion feature, which allows the Operating Partnership to increasethe facility amount up to an aggregate of $1.0 billion, subject to lender consents and other conditions. The maturity date of the credit facility has beenextended to January 31, 2019, subject to a further one-year extension option, which may be exercised by the Operating Partnership upon satisfaction ofcertain conditions. The Operating Partnership previously had a term loan agreement with several banks which provided for a loan of $200.0 million. In connection with thefourth amendment to the credit facility, effective December 12, 2014, the term loan agreement was retired. 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. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based onthe 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 relevantperiod (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 interestannounced by KeyBank, National Association at its “prime rate,” and (c) the Eurodollar Rate plus 1.00% (the “Base Rate”). Additionally, 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 credit facility. The credit facility contains customary representations, financial and othercovenants. The Operating Partnership’s ability to borrow under the credit facility is subject to its compliance with financial covenants and other restrictionson an ongoing basis. The Operating Partnership was in compliance with such covenants at December 31, 2014. As of December 31, 2014, $156.5 million was outstanding under the credit facility. The average interest rate on the credit facility during the year endedDecember 31, 2014 was 1.3%. The Company had $343.5 million available to borrow under the credit facility at December 31, 2014. 66 Senior Notes Due 2024 The carrying value of the Company’s Senior Notes Due 2024 is as follows: December 31,2014 December 31,2013Principal amount $250,000,000 $— Unamortized debt discount (3,478,886) — Senior Notes Due 2024: $246,521,114 $— On December 3, 2014, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of4.000% Senior Notes due 2024 (the “Senior Notes Due 2024”), fully and unconditionally guaranteed by ROIC. The Senior Notes Due 2024 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2015, and mature on December 15, 2024, unless redeemed earlier by the OperatingPartnership. The Senior Notes Due 2024 are the Operating Partnership’s senior unsecured obligations that rank equally in right of payment with the OperatingPartnership’s other unsecured indebtedness, and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and anypreferred equity of the Operating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extentof the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligationsunder the Senior Notes Due 2024 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, notice of redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and ranksequally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Senior Notes Due 2024 is effectively subordinatedin right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including the Operating Partnership and anyentity ROIC accounts for under the equity method of accounting). The interest expense recognized on the Senior Notes Due 2024 during the year endedDecember 31, 2014 includes $750,000 and approximately $21,000 for the contractual coupon interest and the accretion of the debt discount, respectively. In connection with the Senior Notes Due 2024 offering, the Company incurred approximately $2.2 million of deferred financing costs which are beingamortized over the term of the Senior Notes Due 2024. Senior Notes Due 2023 The carrying value of the Company’s Senior Notes Due 2023 is as follows: December 31,2014 December 31,2013Principal amount $250,000,000 $250,000,000 Unamortized debt discount (3,826,073) (4,154,680)Senior Notes Due 2023: $246,173,927 $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 “Senior Notes Due 2023”), fully and unconditionally guaranteed by ROIC. The Senior Notes Due 2023 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2014, and mature on December 15, 2023, unless redeemed earlier by the OperatingPartnership. The Senior Notes Due 2023 are the Operating Partnership’s senior unsecured obligations that rank equally in right of payment with the OperatingPartnership’s other unsecured indebtedness, and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and anypreferred equity of the Operating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extentof the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligationsunder the Senior Notes Due 2023 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, notice of redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and willrank equally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Senior Notes Due 2023 is effectivelysubordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including the OperatingPartnership and any entity ROIC accounts for under the equity method of accounting). The interest expense recognized on the Senior Notes Due 2023 duringthe year ended December 31, 2014 includes approximately $12.4 million and approximately $329,000 for the contractual coupon interest and the accretionof the debt discount, respectively. The interest expense recognized on the Senior Notes Due 2023 during the year ended December 31, 2013 includesapproximately $800,000 and $20,000 for the contractual coupon interest and the accretion of the debt discount, respectively. In connection with the Senior Notes Due 2023 offering, the Company incurred approximately $2.6 million of deferred financing costs which are beingamortized over the term of the Senior Notes Due 2023. 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, 2014 and 2013, there were no shares of preferred stock outstanding. 67 8. Common Stock and Warrants of ROIC ATM During the year ended December 31, 2011, ROIC entered into an ATM Equity OfferingSM Sales Agreement (the “sales agreement”) with Merrill Lynch,Pierce, Fenner & Smith Incorporated to sell shares of ROIC’s common stock par value $0.0001 per share, having aggregate sales proceeds of $50.0 millionfrom time to time, through an “at the market” equity offering program under which Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as sales (agent)and/or principal agent. During the year ended December 31, 2014, ROIC did not sell any shares under the sales agreement. Additionally, the registrationstatement related to the sales agreement expired, and accordingly, the Company will not issue any additional shares under this program. Through December31, 2014, ROIC had sold a total of 3,183,245 shares under the sales agreement, which resulted in gross proceeds of approximately $39.3 million andcommissions of approximately $687,600 paid to the agent. On September 19, 2014, ROIC entered into four separate Sales Agreements (the “2014 sales agreements”) with Jefferies LLC, KeyBanc Capital Markets Inc.,MLV & Co. LLC and Raymond James & Associates, Inc. (each individually, an “Agent” and collectively, the “Agents”) pursuant to which ROIC may sell,from time to time, shares of ROIC’s common stock, par value $0.0001 per share, having an aggregate offering price of up to $100.0 million through theAgents either as agents or principals. During the year ended December 31, 2014, ROIC did not sell any shares under the 2014 sales agreements. Warrants 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. On February 4, 2013, NRDC exercised the outstanding 8,000,000 Private Placement Warrants on a cashless basis pursuant to which ROIC issued 688,500shares to NRDC. ROIC had 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 the warrants wereexercisable, only in the event that the last sale price of the common stock is at least a specified price. The terms of the warrants were as follows: ·The exercise price of the warrants was $12.00. ·The price at which ROIC’s common stock must trade before ROIC was able to redeem the warrants it issued in the IPO was $18.75. ·To provide that a warrantholder’s ability to exercise warrants was limited to ensure that such holder’s “Beneficial Ownership” or“Constructive Ownership,” each as defined in ROIC’s charter, did 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, 2014, the third-party warrant holders exercised a total of 5,878,216 PublicWarrants, resulting in approximately $70.5 million of proceeds. During the year ended December 31, 2013, the third-party warrant holders exercised a total of18,877,482 Public Warrants, resulting in approximately $226.5 million of proceeds. 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’s warrants. Duringthe 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 for approximately $31.3million. No such repurchases occurred during the year ended December 31, 2014. On October 23, 2014, ROIC's remaining outstanding warrants expired and 64,452 warrants expired unexercised. Stock Repurchase Program On July 31, 2013, ROIC’s board of directors authorized a stock repurchase program to repurchase up to a maximum of $50.0 million of the Company’scommon stock. During the year ended December 31, 2014, the Company did not repurchase any shares of common stock under this program. 68 Equity Issuance On June 18, 2014, ROIC issued 14,375,000 shares of common stock in a registered public offering, including shares issued upon the exercise in full of theunderwriters’ option to purchase additional shares, resulting in net proceeds of approximately $205.5 million, after deducting the underwriters’ discounts andcommissions and offering expenses. 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, 2014, the Company awarded 320,500 shares of restricted common stock under the 2009 Plan, of which 118,750 sharesare performance-based grants and the remainder of the shares are time based grants. The performance-based grants vest in three equal annual tranches, basedon pre-defined market-specific performance criteria with vesting dates on January 1, 2015, 2016 and 2017. A summary of the status of the Company’s non-vested restricted stock awards as of December 31, 2014, and changes during the year ended December 31,2014 are presented below: Shares Weighted Average Grant Date Fair ValueNon-vested at December 31, 2013 440,650 $11.40 Granted 320,500 $13.42 Vested (192,459) $12.76 Forfeited (9,333) $13.65 Non-vested at December 31, 2014 559,358 $11.51 As of December 31, 2014, there remained a total of $3.4 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 1.7 years(irrespective of achievement of the performance conditions). The total fair value of restricted stock that vested during the years ended December 31, 2014,2013 and 2012 was $2.9 million, $2.4 million and $2.5 million, respectively. Stock Based Compensation Expense For the years ended December 31, 2014, 2013 and 2012, the amounts charged to expense for all stock based compensation totaled approximately $3.7million, $2.9 million and $3.4 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 $25,000, $20,000 and $17,000 for the years ended December 31, 2014, 2013 and 2012,respectively. 10. Capital of the Operating Partnership As of December 31, 2014, the Operating Partnership had 96,912,647 OP Units outstanding. The Company owned 95.9% of the Operating Partnership atDecember 31, 2014. As of December 31, 2014, the Company had outstanding 92,991,333 shares of ROIC common stock and 3,921,314 OP Units (excludingOP Units owned by ROIC). A share of ROIC’s common stock and the OP Units have essentially the same economic characteristics as they share equally in thetotal 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. OnDecember 11, 2014, in connection with the acquisition of Wilsonville Town Center, the Company issued a total of 989,272 OP Units to limited partners. 69 Subject to certain 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 is paid in the redemption, the redemption price is equal to the average closing price on the NASDAQ Stock Market for shares of ROIC’s common stockover the ten consecutive trading days immediately preceding the date a redemption notice is received by ROIC. 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. Further, on November 14, 2014, the Companyreceived notices of redemption for 200,000 OP Units. The Company elected to redeem the OP Units in cash, and accordingly, a total of $3.3 million was paidon December 1, 2014 to the holders of the respective OP Units. In accordance with the Second Amended and Restated Agreement of Limited Partnership ofthe Operating Partnership, the redemption values were calculated based on the average closing price of the Company’s common stock on the NASDAQ StockMarket for the ten consecutive trading days immediately preceding the date of receipt of the notices of redemption. 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. The redemption value of the OP Units owned by the limited partners, not including ROIC, had such units been redeemed at December 31, 2014, wasapproximately $65.8 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, 2014, which amounted to $16.79 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. 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 value of the revolving creditfacility is deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR contracts. The fair value, based on inputs not quoted onactive markets, but corroborated by market data, or Level 2, of the outstanding Senior Notes Due 2023 at December 31, 2014 is approximately $269.7million. The fair value, based on inputs not quoted on active markets, but corroborated by market data, or Level 2, of the outstanding Senior Notes Due 2024at December 31, 2014 is approximately $249.4 million. Mortgage notes payable were recorded at their fair value at the time they were assumed and areestimated to have a fair value of approximately $94.7 million with an interest rate range of 2.8% to 3.6% and a weighted average interest rate of 2.9% as ofDecember 31, 2014. These fair value measurements fall within level 3 of the fair value hierarchy. 70 12. Derivative and Hedging Activities During the year ended December 31, 2014, the Company cash settled the remaining outstanding interest rate swaps, and accordingly, none are outstanding asof December 31, 2014. The Company’s objectives in using interest rate derivatives historically were to add stability to interest expense and to manage itsexposure to interest rate movements. To accomplish this objective, the Company used interest rate swaps as part of its interest rate risk managementstrategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Companymaking fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges are recorded in AOCI and will be subsequentlyreclassified 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 interest rate swaps is determined using the market standard methodology ofnetting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments(or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporated 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 Companyconsidered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company had 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 assessed the significance of the impact of the credit valuation adjustments onthe overall valuation of its derivative position and determined that the credit valuation adjustments were not significant to the overall valuation of itsderivatives. As a result, the Company determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy. 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 Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) TotalDecember 31, 2013: Assets Derivative financial instruments $— $1,948,243 $— $1,948,243 Liabilities Derivative financial instruments $— $(2,528,703) $— $(2,528,703) 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 $2.1 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, 2014 and 2013, respectively: Derivatives designed as hedging instruments Balance sheet location December 31, 2014 Fair Value December 31, 2013 Fair ValueInterest rate products Other assets $— $1,948,243 Interest rate products Other liabilities $— $(2,528,703) 71 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 years ended December 31, 2014, 2013, and 2012 respectively. Amounts reclassified from other comprehensive income (“OCI”) due to ineffectivenessare recognized as interest expense. Year EndedDecember 31, 2014 Year EndedDecember 31, 2013 Year EndedDecember 31, 2012Amount of (loss) gain recognized in OCI on derivative $(3,131,969) $4,564,248 $(7,859,264)Amount of loss reclassified from accumulated OCI into interest $3,218,689 $4,621,227 $3,799,482 Amount of gain (loss) recognized in income on derivative (ineffective portion andamount excluded from effectiveness testing) $112 $3,172 $(7,534) 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 basis overthe term of the lease. Accordingly, rent expense recognized in excess of rent paid is reflected as a liability in the accompanying consolidated balance sheets.Rent expense, for both ground leases and corporate office space, was approximately $1.2 million, $1.1 million, and $780,000 for the years ended December31, 2014, 2013 and 2012, respectively. The following table represents the Company’s future minimum annual lease payments under operating leases as of December 31, 2014: Operating Leases2015 $910,164 2016 980,650 2017 1,048,825 2018 1,053,877 2019 1,058,807 Thereafter 37,271,404 Total minimum lease payments $42,323,727 Tax Protection Agreements In connection with the acquisition of the remaining 51% of the partnership interests in the Terranomics Crossroads Associates, LP and the acquisition of100% of the equity interest in SARM Five Points Plaza LLC in 2013 and the acquisition of Wilsonville Town Center in 2014 (all more fully discussed inFootnote 2), the Company entered into Tax Protection Agreements with certain limited partners of the Operating Partnership. The Tax Protection Agreementsrequire the Company, subject to certain exceptions, to indemnify the respective Sellers receiving OP Units against certain tax liabilities incurred by them, ascalculated pursuant to the respective Tax Protection Agreements. If the Company were to trigger the tax protection provisions under these agreements, theCompany would be required to pay damages in the amount of the taxes owed by these limited partners (plus additional damages in the amount of the taxesincurred as a result of such payment). The Tax Protection periods for Terranomics Crossroads Associates, LP and SARM Five Points Plaza LLC, andWilsonville, were provided for twelve and ten years, respectively. 14. Related Party Transactions 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, 2014, 2013 and 2012, the Company incurred approximately $37,000, $25,000 and $9,500,respectively, of expenses relating to the agreements which were included in general and administrative expenses in the accompanying consolidatedstatements of operations and other comprehensive income. 72 15. Quarterly Results of Operations (Unaudited) The unaudited quarterly results of operations for the years ended December 31, 2014 and 2013 for ROIC are as follows: Year Ended December 31, 2014 March 31 June 30 September 30 December 31Total revenues $36,350,136 $36,914,834 $40,855,871 $41,742,670 Net income $3,266,243 $6,050,762 $6,980,696 $4,751,521 Net income attributable to ROIC $3,131,685 $5,833,750 $6,748,847 $4,586,763 Basic income per share $0.04 $0.08 $0.07 $0.05 Diluted income per share $0.04 $0.07 $0.07 $0.05 Year Ended December 31, 2013 March 31 June 30 September 30 December 31Total 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 The unaudited quarterly results of operations for the years ended December 31, 2014 and 2013 for the Operating Partnership are as follows: Year Ended December 31, 2014 March 31 June 30 September 30 December 31Total revenues $36,350,136 $36,914,834 $40,855,871 $41,742,670 Net income attributable to the Operating Partnership $3,266,243 $6,050,762 $6,980,696 $4,751,521 Basic income per unit $0.04 $0.07 $0.07 $0.05 Diluted income per unit $0.04 $0.07 $0.07 $0.05 Year Ended December 31, 2013 March 31 June 30 September 30 December 31Total 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 16. Subsequent Events On January 6, 2015, the Company acquired the property known as Ontario Plaza located in Ontario, California, for a purchase price of approximately $31.0million. Ontario Plaza is approximately 150,000 square feet and is anchored by El Super Supermarket and Rite Aid Pharmacy. The property was acquiredwith borrowings under the Company’s credit facility. On January 6, 2015, the Company acquired the property known as Park Oaks Shopping Center located in Thousand Oaks, California, for a purchase price ofapproximately $47.7 million. Park Oaks Shopping Center is approximately 110,000 square feet and is anchored by Safeway (Vons) Supermarket. Theproperty was acquired with borrowings under the Company’s credit facility. On January 7, 2015, the Company acquired the property known as Winston Manor Shopping Center located in South San Francisco, California, for apurchase price of approximately $20.5 million. Winston Manor Shopping Center is approximately 50,000 square feet and is anchored by Grocery OutletSupermarket. The property was acquired with borrowings under the Company’s credit facility. The purchase price allocations have not been finalized and are expected to be completed during the first quarter of 2015. On February 24, 2015, the Company’s board of directors declared a cash dividend on its common stock of $0.17 per share, payable on March 30, 2015 toholders of record on March 16, 2015. Subsequent to December 31, 2014, the Company sold 247,722 shares under the 2014 sales agreement, which resulted in gross proceeds of approximately$4.5 million and commissions of approximately $67,000 paid to the agent. 73 SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATIONDecember 31, 2014 Initial Cost to Company Cost CapitalizedSubsequent to Acquisition Amount at Which Carried atClose of Period DescriptionandLocation Encumbrances Land Building &Improvements Land Building &Improvements Land Building &Improvements Total (a) AccumulatedDepreciation(b)(1) Date ofAcquisition ParamountPlaza, CA $— $6,346,871 $10,274,425 $94,202 $1,300,527 $6,441,073 $11,574,952 18,016,025 $1,636,418 12/22/2009 Santa AnaDowntownPlaza, CA — 7,895,272 9,890,440 — 1,013,833 7,895,272 10,904,273 18,799,545 1,623,119 1/26/2010 MeridianValley Plaza,WA — 1,880,637 4,794,789 — 304,352 1,880,637 5,099,141 6,979,778 857,027 2/1/2010 The Marketat LakeStevens, WA — 3,086,933 12,397,178 — 28,045 3,086,933 12,425,223 15,512,156 1,828,016 3/16/2010 NorwoodShoppingCenter, CA — 3,031,309 11,534,239 — 616,789 3,031,309 12,151,028 15,182,337 1,750,339 4/5/2010 Pleasant HillMarketplace,CA — 6,359,471 6,927,347 — 741,054 6,359,471 7,668,401 14,027,872 1,251,013 4/8/2010 VancouverMarketCenter, WA — 4,080,212 6,912,155 — 417,874 4,080,212 7,330,029 11,410,241 932,838 6/17/2010 HappyValley TownCenter, OR — 11,678,257 27,011,054 — 1,658,102 11,678,257 28,669,156 40,347,413 4,084,559 7/14/2010 CascadeSummit, OR — 8,852,543 7,731,944 — 317,464 8,852,543 8,049,408 16,901,951 1,298,293 8/20/2010 HeritageMarketCenter, WA — 6,594,766 17,399,233 — 450,562 6,594,766 17,849,795 24,444,561 2,345,418 9/23/2010 ClaremontCenter, CA(2) — 5,975,391 1,018,505 183,362 4,262,940 6,158,753 5,281,445 11,440,198 1,151,120 9/23/2010 Shops AtSycamoreCreek, CA — 3,747,011 11,583,858 — 818,932 3,747,011 12,402,790 16,149,801 2,061,442 9/30/2010 GatewayVillage, CA 7,270,256 5,916,530 27,298,339 — 63,677 5,916,530 27,362,016 33,278,546 3,220,700 12/16/2010 DivisionCrossing,OR — 3,705,536 8,327,097 — 5,582,839 3,705,536 13,909,936 17,615,472 1,300,209 12/22/2010 HalseyCrossing,OR (2) — — 7,773,472 — 533,823 — 8,307,295 8,307,295 1,086,018 12/22/2010 MarketplaceDel Rio,CA — 13,420,202 22,251,180 — 1,180,925 13,420,202 23,432,105 36,852,307 3,187,779 1/3/2011 Pinole Vista,CA — 9,233,728 17,553,082 — 1,935,156 9,233,728 19,488,238 28,721,966 2,694,503 1/6/2011 DesertSpringMarketplace,CA — 8,517,225 18,761,350 (159,973) 1,368,969 8,357,252 20,130,319 28,487,571 2,570,171 2/17/2011 MillsShoppingCenter, CA — 4,083,583 16,833,059 — 4,483,090 4,083,583 21,316,149 25,399,732 2,820,007 2/17/2011 MoradaRanch, CA — 2,503,605 19,546,783 — 344,846 2,503,605 19,891,629 22,395,234 2,344,922 5/20/2011 Renaissance,CA 16,204,826 8,640,261 13,848,388 — 453,255 8,640,261 14,301,643 22,941,904 1,538,941 8/3/2011 CountryClub Gate,CA — 6,487,457 17,340,757 — 761,367 6,487,457 18,102,124 24,589,581 2,057,986 7/8/2011 CanyonPark, WA — 9,352,244 11,291,210 — 1,317,512 9,352,244 12,608,722 21,960,966 1,829,222 7/29/2011 HawksPrairie, WA — 5,334,044 20,693,920 — 418,156 5,334,044 21,112,076 26,446,120 2,344,695 9/8/2011 KressBuilding,WA — 5,692,748 20,866,133 — 4,411,012 5,692,748 25,277,145 30,969,893 2,427,821 9/30/2011 Round HillSquare, CA — 6,358,426 17,734,397 — 784,336 6,358,426 18,518,733 24,877,159 2,003,528 8/23/2011 Hillsboro,OR (2) — — 18,054,929 — 524,993 — 18,579,922 18,579,922 1,826,652 11/23/2011 GatewayShoppingCenter, WA(2) — 6,241,688 23,461,824 — 36,902 6,241,688 23,498,726 29,740,414 2,027,163 2/16/2012 Euclid Plaza,CA — 7,407,116 7,752,767 — 2,718,623 7,407,116 10,471,390 17,878,506 1,052,527 3/28/2012 GreenValley, CA — 1,684,718 8,999,134 — 259,758 1,684,718 9,258,892 10,943,610 920,097 4/2/2012 AuroraSquare, WA — 3,002,147 1,692,681 — — 3,002,147 1,692,681 4,694,828 286,108 5/3/2012 Marlin Cove,CA — 8,814,850 6,797,289 — 1,353,773 8,814,850 8,151,062 16,965,912 776,448 5/4/2012 Seabridge,CA — 5,098,187 17,164,319 — 540,926 5,098,187 17,705,245 22,803,432 1,581,515 5/31/2012 Novato, CA — 5,329,472 4,411,801 — 629,040 5,329,472 5,040,841 10,370,313 364,275 7/24/2012 Glendora,CA — 5,847,407 8,758,338 — 157,145 5,847,407 8,915,483 14,762,890 808,081 8/1/2012 Wilsonville,WA — 4,180,768 15,394,342 — 230,572 4,180,768 15,624,914 19,805,682 1,183,988 8/1/2012 Bay Plaza,CA — 5,454,140 14,857,031 — 1,023,146 5,454,140 15,880,177 21,334,317 1,182,562 10/5/2012 SantaTheresa, CA 10,829,884 14,964,975 17,162,039 — 2,031,796 14,964,975 19,193,835 34,158,810 1,453,022 11/8/2012 CypressWest, CA — 15,479,535 11,819,089 — 1,924,075 15,479,535 13,743,164 29,222,699 938,737 12/7/2012 RedondoBeach, CA — 16,241,947 13,624,837 — 84,973 16,241,947 13,709,810 29,951,757 956,869 12/28/2012 HarborPlace, CA — 16,506,423 10,527,092 — 333,180 16,506,423 10,860,272 27,366,695 645,918 12/28/2012 DiamondBar TownCenter, CA — 9,540,204 16,794,637 — 3,976,039 9,540,204 20,770,676 30,310,880 1,159,965 2/1/2013 BernardoHeights, CA 8,581,168 3,191,950 8,939,685 — 51,868 3,191,950 8,991,553 12,183,503 531,355 2/6/2013 CanyonCrossing,WA — 7,940,521 24,659,249 — 2,311,882 7,940,521 26,971,131 34,911,652 1,495,164 4/15/2013 DiamondHills, CA — 15,457,603 29,352,602 — 360,963 15,457,603 29,713,565 45,171,168 1,707,176 4/22/2013 GranadaShoppingCenter, CA — 3,673,036 13,459,155 — 62,418 3,673,036 13,521,573 17,194,609 760,336 6/27/2013 HawthorneCrossings,CA — 10,382,740 29,277,254 — 270,950 10,382,740 29,548,204 39,930,944 1,426,033 6/27/2013 Robinwood,CA — 3,996,984 11,317,359 — 273,267 3,996,984 11,590,626 15,587,610 520,197 8/23/2013 Five PointsPlaza, CA — 18,419,733 36,965,189 — 339,524 18,419,733 37,304,713 55,724,446 1,346,888 9/27/2013 CrossroadsShoppingCenter, CA 48,581,419 68,366,245 67,755,526 — 1,636,435 68,366,245 69,391,961 137,758,206 3,100,476 9/27/2013 PeninsulaMarketplace,CA — 14,730,088 19,213,763 — 232,920 14,730,088 19,446,683 34,176,771 770,754 11/1/2013 CountryClub Village,CA — 9,985,749 26,578,916 — 1,270,337 9,985,749 27,849,253 37,835,002 1,065,833 11/26/2013 Plaza de laCanada, CA — 10,351,028 24,819,026 — 331,346 10,351,028 25,150,372 35,501,400 798,279 12/13/2013 TigardMarketplace,CA — 13,586,729 9,603,492 — 257,816 13,586,729 9,861,308 23,448,037 386,341 2/18/2014 CreeksidePlaza, CA — 14,806,966 29,475,850 — 8,024 14,806,966 29,483,874 44,290,840 918,875 2/28/2014 North ParkPlaza, CA — 13,592,522 17,733,266 — — 13,592,522 17,733,266 31,325,788 355,356 4/30/2014 AuroraSquare II,WA — 6,861,740 9,797,749 — 4,113 6,861,740 9,801,862 16,663,602 249,028 5/22/2014 FallbrookShoppingCenter (2) — 21,232,016 186,197,471 — 2,409,052 21,232,016 188,606,523 209,838,539 3,200,972 6/13/2014 MoorparkTownCenter, CA — 7,062,639 19,693,955 — — 7,062,639 19,693,955 26,756,594 44,277 12/3/2014 MissionFoothillMarketplace,CA — 11,414,592 17,782,506 — — 11,414,592 17,782,506 29,197,098 38,956 12/4/2014 WilsonvilleTownCenter, OR — 10,339,839 27,116,367 — — 10,339,839 27,116,367 37,456,206 47,007 12/11/2014 $91,467,553 $549,960,559 $1,174,604,863 $117,591 $61,215,293 $550,078,150 $1,235,820,156 $1,785,898,306 $88,173,334 74 (a) RECONCILIATION OF REAL ESTATE – OWNED SUBJECT TO OPERATING LEASES Year Ended December 31, 2014 2013 2012Balance at beginning of period: $1,372,433,648 $871,693,595 $580,832,410 Property improvements during the year 27,514,974 19,513,924 12,264,027 Properties acquired during the year 416,297,696 487,309,488 278,597,158 Properties sold during the year (23,675,678) (6,083,359) — Assets written off during the year (6,672,334) — — Balance at end of period: $1,785,898,306 $1,372,433,648 $871,693,595 (b) RECONCILIATION OF ACCUMULATED DEPRECIATION Year Ended December 31, 2014 2013 2012Balance at beginning of period: $57,499,980 $32,364,772 $14,451,032 Depreciation expenses 38,890,425 25,653,359 17,913,740 Properties sold during the year (2,081,460) (433,342) — Property assets fully depreciated and written off (6,135,611) (84,809) — Balance at end of period: $88,173,334 $57,499,980 $32,364,772 (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 $1.7 billion at December 31, 2014. SCHEDULE IV – MORTGAGE LOANS ON REAL ESTATEDecember 31, 2014 The Company has no remaining mortgage loans on real estate as of December 31, 2014. (a) RECONCILIATION OF MORTGAGE LOANS ON REAL ESTATE Year Ended December 31, 2014 2013 2012Balance at beginning of period: $— $10,000,000 $10,000,000 Mortgage loans eliminated upon consolidation of joint venture — (10,000,000) — Balance at end of period: $— $— $10,000,000 75 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 disclosurecontrols and procedures, ROIC's management recognizes that any controls and procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and its management is required to apply its judgment in evaluating the cost-benefitrelationship of possible 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, 2014, 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, 2014, 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, 2014 based on theframework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013Framework). Based on that evaluation, Management concluded that its internal control over financial reporting was effective as of December 31, 2014. 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, 2014, has been audited by Ernst & Young LLP, an independent registeredpublic accounting firm, as stated in its report which appears on page 46 of this Annual Report on Form 10-K. 76 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, 2014 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizationsof the Treadway Commission (2013 Framework). Based on that evaluation, Management concluded that its internal control over financial reporting waseffective as of December 31, 2014. 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, 2014. 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, 2014. 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, 2014. 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, 2014. 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, 2014. 77 PART IV Item 15. Exhibits and Financial Statement Schedules (a)(1) and (2) Financial Statements and Schedules Please refer to the Index to Consolidated Financial Statements included under Part II, Item 8. Financial Statements and Supplementary Data. (a)(3) Exhibits 2.1Articles of Merger, by and between Retail Opportunity Investments Corp., a Delaware corporation, and Retail Opportunity InvestmentsCorp., a Maryland corporation, as survivor, dated as of June 1, 2011 (3) 3.1Articles of Amendment and Restatement (3) 3.2Bylaws (3) 3.3Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP, by and among RetailOpportunity Investments GP, LLC as general partner, Retail Opportunity Investments Corp. and the other limited partners thereto, dated asof September 27, 2013 (9) 4.1Specimen Unit Certificate (1) 4.2Specimen Common Stock Certificate (1) 4.3Indenture, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Wells Fargo Bank,National Association, dated as of December 9, 2013 (10) 4.4First Supplemental Indenture, by and among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp. andWells Fargo Bank, National Association, dated as of December 9, 2013 (10) 4.55.000% Senior Notes due 2023 of Retail Opportunity Investments Partnership, LP, guaranteed by Retail Opportunity Investments Corp.,dated as of December 9, 2013 (11) 4.6Second Supplemental Indenture, by and among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp. andWells Fargo Bank, National Association (including Form of 4.000% Senior Notes due 2024 of Retail Opportunity Investments Partnership,LP, guaranteed by Retail Opportunity Investments Corp.), dated as of December 3, 2014 (13) 10.1Employment Agreement, by and between NRDC Acquisition Corp. and Stuart Tanz, dated as of October 20, 2009 (1) 10.22009 Equity Incentive Plan (1) 10.3Form of Restricted Stock Award Agreement under 2009 Equity Incentive Plan (1) 10.4Form of Option Award Agreement under 2009 Equity Incentive Plan (1) 10.5Employment Agreement, by and between Retail Opportunity Investments Corp. and Richard K. Schoebel, dated as of December 9, 2009 (2) 10.6Letter Agreement, by and between Retail Opportunity Investments Corp. and Richard A. Baker, dated as of April 2, 2012 (5) 10.7First Amended and Restated Credit Agreement, by and 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, Swing Line Lender and L/C Issuer, Bank of America, N.A., as theSyndication Agent, PNC Bank, National Association and U.S. Bank National Association, as Co-Documentation Agents, and the otherlenders party thereto, dated as of August 29, 2012 (6) 10.8First Amended and Restated Term Loan Agreement, by and 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, 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, dated as ofAugust 29, 2012 (6) 78 10.9Employment Contract, by and between Retail Opportunity Investments Corp. and Michael B. Haines, dated as of November 19, 2012 (7) 10.10Letter Agreement, by and between Retail Opportunity Investments Corp. and Laurie Sneve, dated as of October 24, 2012 (8) 10.11Third Amendment to the Amended and Restated Credit Agreement, by and among Retail Opportunity Investments Partnership, LP, as theBorrower, Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein, asthe Subsidiary Guarantors, KeyBank National Association, as Administrative Agent and the other lenders party thereto, dated as ofSeptember 26, 2013 (9) 10.12Third Amendment to the Amended and Restated Term Loan, by and among Retail Opportunity Investments Partnership, LP, as theBorrower, Retail Opportunity Investments Corp., as the Parent Guarantor, certain subsidiaries of the Parent Guarantor identified therein, asthe Subsidiary Guarantors, KeyBank National Association, as Administrative Agent, and the other lenders party thereto, dated as ofSeptember 26, 2013 (9) 10.13Contribution Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and thesellers identified therein, dated as of September 27, 2013 (9) 10.14Contribution Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and thesellers identified therein, dated as of September 27, 2013 (9) 10.15Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and theprotected partners identified therein, dated as of September 27, 2013 (9) 10.16Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and theprotected partners identified therein, dated as of September 27, 2013 (9) 10.17Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of September27, 2013 (9) 10.18Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of September27, 2013 (9) 10.19Sales Agreements, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and each ofJefferies LLC, KeyBanc Capital Markets, Inc., MLV & Co. and Raymond James & Associates, Inc., each dated as of September 19, 2014 (12) 10.20Fourth Amendment to the First Amended and Restated Credit Agreement, by and among Retail Opportunity Investments Partnership, LP, asthe Borrower, Retail Opportunity Investments Corp., as the Parent Guarantor, KeyBank National Association, as Administrative Agent andthe other lenders party thereto, dated as of December 12, 2014 (14) 10.21*Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and theprotected partners identified therein, dated as of December 11, 2014 10.22*Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holder named therein, dated as of December11, 2014 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, LP 31.3Certification 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 79 101 INSXBRL Instance Document 101 SCHXBRL Taxonomy Extension Schema 101 CALXBRL Taxonomy Extension Calculation Database 101 DEFTaxonomy Extension Definition Linkbase 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 October 26, 2009 (File No. 001-33479)(2)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 (FileNo. 001-33749)(3)Incorporated by reference to the Company’s current report on Form 8-K filed on June 2, 2011(4)Incorporated by reference to the Company’s current report on Form 8-K, filed on June 23, 2011(5)Incorporated by reference to the Company’s current report on Form 8-K filed on April 5, 2012(6)Incorporated by reference to the Company’s current report on Form 8-K filed on September 5, 2012(7)Incorporated by reference to the Company’s current report on Form 8-K filed on November 30, 2012(8)Incorporated by reference to the Company’s current report on Form 8-K filed on January 2, 2013(9)Incorporated by reference to the Company’s current report on Form 8-K filed on October 2, 2013(10)Incorporated by reference to the Company’s current report on Form 8-K filed on December 9, 2013(11)Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 25, 2014(12)Incorporated by reference to the Company’s current report on Form 8-K filed on September 24, 2014(13)Incorporated by reference to the Company’s current report on Form 8-K filed on December 3, 2014(14)Incorporated by reference to the Company’s current report on Form 8-K filed on December 17, 2014*Filed herewith 80 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, 2015By: /s/ Stuart A. Tanz Stuart A. Tanz President and Chief Executive Officer (Principal Executive Officer) 81 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, 2015/s/ Richard A. Baker Richard A. Baker Non-Executive Chairman of the BoardDate: February 25, 2015/s/ Stuart A. Tanz Stuart A. Tanz President, Chief Executive Officer and Director (Principal Executive Officer)Date: February 25, 2015/s/ Michael B. Haines Michael B. Haines Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: February 25, 2015/s/ Laurie A. Sneve Laurie A. Sneve Chief Accounting Officer Date: February 25, 2015/s/ Michael J. Indiveri Michael J. Indiveri Director Date: February 25, 2015/s/ Edward H. Meyer Edward H. Meyer DirectorDate: February 25, 2015/s/ Lee S. Neibart Lee S. Neibart Director Date: February 25, 2015/s/ Charles J. Persico Charles J. Persico DirectorDate: February 25, 2015/s/ Laura H. Pomerantz Laura H. Pomerantz DirectorDate: February 25, 2015/s/ Eric S. Zorn Eric S. Zorn Director82 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, 2015By: /s/ Stuart A. Tanz Stuart A. Tanz President and Chief Executive Officer (Principal Executive Officer) 83 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, 2015/s/ Richard A. Baker Richard A. Baker Non-Executive Chairman of the Board Date: February 25, 2015/s/ Stuart A. Tanz Stuart A. Tanz President, Chief Executive Officer and Director (Principal Executive Officer) Date: February 25, 2015/s/ Michael B. Haines Michael B. Haines Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: February 25, 2015/s/ Laurie A. Sneve Laurie A. Sneve Chief Accounting Officer Date: February 25, 2015/s/ Michael J. Indiveri Michael J. Indiveri Director Date: February 25, 2015/s/ Edward H. Meyer Edward H. Meyer Director Date: February 25, 2015/s/ Lee S. Neibart Lee S. Neibart Director Date: February 25, 2015/s/ Charles J. Persico Charles J. Persico Director Date: February 25, 2015/s/ Laura H. Pomerantz Laura H. Pomerantz Director Date: February 25, 2015/s/ Eric S. Zorn Eric S. Zorn DirectorExhibit 10.21Tax Protection AgreementThis TAX PROTECTION AGREEMENT (this “Agreement”) is entered into as of December 11, 2014, by and among Retail Opportunity InvestmentsCorp., a Maryland corporation (the “REIT”), Retail Opportunity Investments Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”),and each Protected Partner identified as a signatory on Schedule I, as amended from time to time.RECITALSWHEREAS, pursuant to that certain Purchase and Sale Agreement dated July 16, 2014, between the REIT, the Operating Partnership and the “Seller”signatory thereto (the “Purchase Agreement”), the REIT intends cause the Operating Partnership or its assignee to purchase the real property andimprovements commonly known as the Wilsonville Town Center located at 8235 SW Wilsonville Road, Wilsonville, Oregon (the “Property”) from theSeller;WHEREAS, in connection with the Purchase Agreement, the REIT and the Operating Partnership shall enter into this Agreement with WS Harrison,LLC, sole owner of the Seller, who is electing to receive common units of partnership interest in the Operating Partnership (“OP Units”) in exchange for aportion of the purchase price for the Property pursuant to the Purchase Agreement;NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:ARTICLE I - DEFINED TERMSCapitalized terms employed herein and not otherwise defined shall have the meanings assigned to them in the Purchase Agreement. Otherwise, forpurposes of this Agreement the following definitions shall apply:Section 1.1 Intentionally omitted.Section 1.2 “Agreement” has the meaning set forth in the preamble.Section 1.3 “Closing Date” means the closing of the Operating Partnership’s or its assignee's purchase of the Property pursuant to the PurchaseAgreement.Section 1.4 “Code” means the United States Internal Revenue Code of 1986, as amended.Section 1.5 Intentionally omittedSection 1.6 Intentionally omitted  Section 1.7 Intentionally omittedSection 1.8 “Exchange” has the meaning set forth in Section 2.1(b) of this Agreement.Section 1.9 “Fundamental Transaction” means a merger, consolidation or other combination of the Operating Partnership with or into any otherentity, a transfer of all or substantially all of the assets of the Operating Partnership, any reclassification, recapitalization or change of the outstanding equityinterests of the Operating Partnership, or a conversion of the Operating Partnership into another form of entity. Notwithstanding the above, a FundamentalTransaction shall not include any transaction to the extent that a Protected Party is provided with an opportunity to participate in such transaction in amanner that does not result in the recognition of taxable income or gain by such Protected Partner under Section 704(c) of the Code, regardless of whethersuch Protected Partner elects to participate in such transaction in such manner or otherwise.Section 1.10 “Gross Up Amount” has the meaning set forth in Section 1.15 under the definition of “Make Whole Amount.”Section 1.11 Intentionally omittedSection 1.12 Intentionally omittedSection 1.13 Intentionally omittedSection 1.14 Intentionally omittedSection 1.15 “Make Whole Amount” means, with respect to any Protected Partner that recognizes gain under Section 704(c) of the Code as a resultof a Tax Protection Period Transfer, the sum of (i) the product of (x) the income and gain recognized by such Protected Partner under Section 704(c) of theCode in respect of such Tax Protection Period Transfer (taking into account any adjustments under Section 743 of the Code to which such Protected Partneris entitled) multiplied by (y) the Make Whole Tax Rate, plus (ii) an amount equal to the combined Federal, applicable state and local income taxes(calculated using the Make Whole Tax Rate) imposed on such Protected Partner as a result of the receipt by such Protected Partner of a payment underSection 2.2 (the “Gross Up Amount”); provided, however, that the Gross Up Amount shall be computed without regard to any losses, credit, or other taxattributes that such Protected Partner might have that would reduce its actual tax liability. For purposes of calculating the amount of Section 704(c) gain that is allocated to a Protected Partner, any “reverse Section 704(c) gain” allocated to suchpartner pursuant to Treasury Regulations § 1.704-3(a)(6) shall not be taken into account; provided that the total amount of 704(c) gain and income takeninto account for purpose of calculating the Make Whole Amount shall not exceed the initial Section 704(c) gain amount as of the Closing Date (as set forthon Exhibit A).  Section 1.16 “Make Whole Tax Rate” means, with respect to a Protected Partner who is entitled to receive a payment under Section 2.2, the highestcombined statutory Federal, state and local tax rate in respect of the income or gain that gave rise to such payment, taking into account the character of theincome and gain in the hands of such Protected Partner, as applicable (reduced, in the case of Federal taxes, assuming a full deduction is allowed for incometaxes paid to a state or locality), for the taxable year in which the event that gave rise to such payment under Section 2.2 occurred.Section 1.17 “OP Agreement” means the Agreement of Limited Partnership of Retail Opportunity Investments Partnership, L.P., as amended fromtime to time.Section 1.18 “Partners’ Representative” means WS Harrison, LLC and its executors, administrators or permitted assigns.Section 1.19 “Pass Through Entity” means a partnership, grantor trust, or S corporation for Federal income tax purposes.Section 1.20 “Permitted Disposition” means a sale, exchange or other disposition of OP Units (i) by a Protected Partner: (a) to such ProtectedPartner’s children, spouse or issue; (b) to a trust for such Protected Partner or such Protected Partner’s children, spouse or issue; (c) in the case of a trust whichis a Protected Partner, to its beneficiaries, or any of them, whether current or remainder beneficiaries; (d) to a revocable inter vivos trust of which suchProtected Partner is a trustee; (e) in the case of any partnership or limited liability company which is a Protected Partner, to its partners or members; and/or (f)in the case of any corporation which is a Protected Partner, to its shareholders, and (ii) by a party described in clauses (a), (b), (c) or (d) to a partnership,limited liability company or corporation of which the only partners, members or shareholders, as applicable, are parties described in clauses (a), (b), (c) or (d);provided, that for purposes of the definition of Tax Protection Period, such Protected Partner shall be treated as continuing to own any OP Units which weresubject to a Permitted Disposition unless and until there has been a sale, exchange or other disposition of such OP Units by a permitted transferee which is notanother Permitted Disposition.Section 1.21 “Person” means an individual or a corporation, partnership, trust, unincorporated organization, association, limited liability companyor other entity.Section 1.22 “Protected Partner” means: (i) each signatory on Schedule I attached hereto, as amended from time to time; (ii) any person who holdsOP Units and who acquired such OP Units from another Protected Partner in a transaction in which such person’s adjusted basis in such OP Units, asdetermined for Federal income tax purposes, is determined, in whole or in part, by reference to the adjusted basis of the other Protected Partner in such OPUnits; and (iii) with respect to a Protected Partner that is Pass Through Entity, and solely for purposes of computing the amount to be paid under Section 2.2with respect to such Protected Partner, any person who (y) holds an interest in such Protected Partner, either directly or through one or more Pass ThroughEntities, and (z) is required to include all or a portion of the income of such Protected Partner in its own gross income.Section 1.23 “Protected Property” means that certain project commonly known as the Wilsonville Town Center in the City of Wilsonville, Countyof Clackamas, State of Oregon, with street address of 8235 SW Wilsonville Road, Wilsonville, Oregon, and related personal property, and any propertyacquired in Exchange for the Protected Property as set forth in Section 2.1(b).  Section 1.24 Intentionally omittedSection 1.25 Intentionally omittedSection 1.26 Intentionally omittedSection 1.27 “Tax Protection Period” means the period beginning on the Closing Date after the Operating Partnership’s or its assignee's purchase ofthe Property pursuant to the Purchase Agreement and ending ten (10) years after the Closing Date; provided, however, that such period shall end with respectto any Protected Partner to the extent that such Partner owns less than fifty percent (50%) of the OP Units originally owned by the Protected Partner as of theClosing Date, disregarding the sale, exchange or other disposition of any such OP Units sold, exchanged or otherwise disposed of by the Protected Partner ina Permitted Disposition.Section 1.28 “Tax Protection Period Transfer” has the meaning set forth in Section 2.1(a) of this Agreement.Section 1.29 “Transfer” means any direct or indirect sale, exchange, transfer or other disposition, whether voluntary or involuntary.Section 1.30 “Treasury Regulations” means the income tax regulations under the Code, whether such regulations are in proposed, temporary or finalform, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).ARTICLE II - TAX PROTECTIONSSection 2.1 Taxable Transfers.(a) Unless the Partners’ Representative expressly consents in writing to a Tax Protection Period Transfer, during the Tax Protection Period, theOperating Partnership shall indemnify the Protected Partners as set forth in Section 2.2 if the Operating Partnership or any entity in which the OperatingPartnership holds a direct or indirect interest shall cause or permit: (i) any Transfer of all or any portion of the Protected Property (including any interest in theProtected Property or in any entity owning, directly or indirectly, an interest in the Protected Property, other than the Operating Partnership) in a transactionthat results in the recognition of taxable income or gain by any Protected Partner under Section 704(c) of the Code with respect to the Protected Property; or(ii) any Fundamental Transaction that results in the recognition of taxable income or gain by any Protected Partner under Section 704(c) of the Code withrespect to the Protected Property (such a Transfer or Fundamental Transaction, a “Tax Protection Period Transfer”).(b) Section 2.1(a) shall not apply to any Tax Protection Period Transfer of the Protected Property (including any interest therein or in the entityowning, directly or indirectly, the Protected Property): (i) in a transaction in which no gain is required to be recognized by a Protected Partner (an“Exchange”), including a transaction qualifying under Section 1031 or Section 721 (or any successor statutes) of the Code; provided, however, that anyproperty acquired by the Operating Partnership in the Exchange shall remain subject to the provisions of this Article II in place of the exchanged ProtectedProperty for the remainder of the Tax Protection Period; (ii) as a result of the condemnation or other taking of the Protected Property by a governmental entityin an eminent domain proceeding or otherwise, provided that the Operating Partnership shall use commercially reasonable efforts to structure suchdisposition as either a tax-free like-kind exchange under Section 1031 or a tax-free reinvestment of proceeds under Section 1033, provided that in no eventshall the Operating Partnership be obligated to acquire or invest in any property that it otherwise would not have acquired or invested in.  Section 2.2 Indemnification for Taxable Transfers.(a) In the event of a Tax Protection Period Transfer described in Section 2.1(a), each Protected Partner shall receive from the Operating Partnership anamount of cash equal to the Make Whole Amount applicable to such Tax Protection Period Transfer. Any Make Whole Payments required under this Section2.2(a) shall be made to each Protected Partner on or before April 15 of the year following the year in which the Tax Protection Period Transfer took place;provided that, if the Protected Partner is required to make estimated tax payments that would include such gain, the Operating Partnership shall makepayment to such Protected Partner on or before the due date for such estimated tax payment and such payment from the Operating Partnership shall be in anamount that corresponds to the estimated tax being paid by the Protected Partner at such time.(b) Notwithstanding any provision of this Agreement to the contrary, the sole and exclusive rights and remedies of any Protected Partner underSection 2.1(a) shall be a claim against the Operating Partnership for the Make Whole Amount as set forth in this Section 2.2, and no Protected Partner shall beentitled to pursue a claim for specific performance of the covenants set forth in Section 2.1(a) or bring a claim against any person that acquires the ProtectedProperty from the Operating Partnership in violation of Section 2.1(a).(c) The parties acknowledge that one or more Protected Partners may recognize taxable gain in connection with the transfer of the Protected Propertyto the Operating Partnership and the pay off of the Seller Loan (as defined in the Purchase Agreement). The parties acknowledge that notwithstanding anyprovision hereof, any such recognized gain, as well as any gain recognized as a result of a transfer of an interest in the Seller in connection with the transfer ofthe Protected Property to the Operating Partnership, shall not be subject to the indemnification provisions of this Agreement and shall not be included in thecalculation of Section 704(c) gain.Section 2.3 Section 704(c) Gains. The initial amount of Section 704(c) gain allocable to each Protected Partner as of the Closing Date is set forth onExhibit A hereto. The parties acknowledge that the initial amount of such Section 704(c) gain may be adjusted over time as required by Section 704(c) of theCode and the Regulations promulgated thereunder.Section 2.4 Intentionally omittedSection 2.5 Dispute Resolution. Any controversy, dispute, or claim of any nature arising out of, in connection with, or in relation to theinterpretation, performance, enforcement or breach of this Agreement (and any closing document executed in connection herewith) shall be governed bySection 18.13 of the Purchase Agreement.  ARTICLE III - GENERAL PROVISIONSSection 3.1 Notices. All notices, demands, declarations, consents, directions, approvals, instructions, requests and other communications required orpermitted by the terms of this Agreement shall be given in the same manner as in the OP Agreement.Section 3.2 Titles and Captions. All Article or Section titles or captions in this Agreement are for convenience only. They shall not be deemed partof this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise,references to “Articles” and “Sections” are to Articles and Sections of this Agreement.Section 3.3 Pronouns and Plurals. Whenever the context may require, any pronoun used in this Agreement shall include the correspondingmasculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.Section 3.4 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as maybe necessary or appropriate to achieve the purposes of this Agreement.Section 3.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors,administrators, successors, legal representatives and permitted assigns.Section 3.6 Creditors. Other than as expressly set forth herein, none of the provisions of this Agreement shall be for the benefit of, or shall beenforceable by, any creditor of the Operating Partnership.Section 3.7 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement orto exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any covenant, duty, agreement or condition.Section 3.8 Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all ofthe parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by thisAgreement immediately upon affixing its signature hereto.Section 3.9 Applicable Law. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of California,without regard to the principles of conflicts of law.Section 3.10 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity,legality or enforceability of other remaining provisions contained herein shall not be affected thereby.  Section 3.11 Entire Agreement. This Agreement contains the entire understanding and agreement among the Partners with respect to the subjectmatter hereof and amends, restates and supersedes the OP Agreement and any other prior written or oral understandings or agreements among them withrespect thereto.Section 3.12 No Rights as Stockholders. Nothing contained in this Agreement shall be construed as conferring upon the holders of the OP Units anyrights whatsoever as stockholders of the REIT, including, without limitation, any right to receive dividends or other distributions made to stockholders of theREIT or to vote or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the REIT or anyother matter.Section 3.13 Tax Advice and Cooperation. Each party hereto acknowledges and agrees that it has not received and is not relying upon tax advicefrom any other party hereto, and that it has and will continue to consult its own tax advisors. Each party hereto agrees to cooperate to the extent reasonablyrequested by any other party in connection with the filing of any tax returns or any audit, litigation or other proceeding related to taxes associated with thematters described herein, such cooperation shall include the retention and, upon request, provision of records and information that are relevant to suchmatters, and making employees available on a mutually convenient basis to provide such additional information as may reasonably be requested.[Remainder of Page Left Blank Intentionally]  IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.REIT:RETAIL OPPORTUNITY INVESTMENTS CORP.,a Maryland corporationBy: /s/ Michael B. Haines Name: Michael B. HainesTitle: Chief Financial Officer OPERATING PARTNERSHIP:RETAIL OPPORTUNITY INVESTMENTSPARTNERSHIP, LP,a Delaware limited partnership By:Retail Opportunity Investments GP, LLC,its general partner By: /s/ Michael B. Haines Name: Michael B. HainesTitle: Authorized Person PROTECTED PARTNER:WS Harrison, LLC By: ___/s/ Derek Harrison__________________________Derek Harrison, Authorized Member  SCHEDULE IPROTECTED PARTNERSWS Harrison, LLC  EXHIBIT A704(C) GAINWS Harrison, LLC$11,462,207.72 Exhibit 10.22Registration Rights AgreementThis REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of December 11, 2014, is made and entered into by and between RetailOpportunity Investments Corp., a Maryland corporation (the “Company”), and WS Harrison, LLC, an Oregon limited liability company, in its capacity as aholder of the Registrable Securities (as defined below), the “Holder”).WITNESSETH:WHEREAS, the operating partnership of the Company, Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (“ROIP”),and the Holder have entered into a Contribution Agreement, dated December 11, 2014 (the “Contribution Agreement”), pursuant to which the Holdercontributed the real property and improvements commonly known as the Wilsonville Town Center located at 8235 SW Wilsonville Road, Wilsonville,Oregon, to ROIP in exchange for 989,272 operating partnership units of ROIP (such units in the aggregate, the “OP Units”), which such OP Units uponpresentation for redemption by the Holder in accordance with the provisions of the First Amended and Restated Agreement of Limited Partnership of ROIP,may be redeemed for shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”); andWHEREAS, the Company desires to enter into this Agreement with the Holder in order to grant the Holder the registration rights contained herein.NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained in this Agreement, and for other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings:“Affiliate” shall mean, when used with reference to a specified Person, (i) any Person that directly or indirectly through one or more intermediaries,Controls or is Controlled by or is under common Control with the specified Person; (ii) any Person who, from time to time, is a member of the ImmediateFamily of a specified Person; (iii) any Person who, from time to time, is an officer or director or manager of a specified Person; or (iv) any Person who, directlyor indirectly, is the beneficial owner of 50% or more of any class of equity securities or other ownership interests of the specified Person, or of which thespecified Person is directly or indirectly the owner of 50% or more of any class of equity securities or other ownership interests.“Agreement” shall mean this Registration Rights Agreement as originally executed and as amended, supplemented or restated from time to time.“Board” shall mean the Board of Directors of the Company.  “Business Day” shall mean each day other than a Saturday, a Sunday or any other day on which banking institutions in the State of California areauthorized or obligated by law or executive order to be closed.“Commission” shall mean the Securities and Exchange Commission and any successor thereto.“Common Stock” shall have the meaning set forth in the Recitals hereof.“Company” shall have the meaning set forth in the introductory paragraph hereof.“Contribution Agreement” shall have the meaning set forth in the Recitals hereof.“Control” (including the terms “Controlling,” “Controlled by” and “under common Control with”) shall mean the possession, direct or indirect, ofthe power to direct or cause the direction of the management and policies of a Person through the ownership of Voting Power, by contract or otherwise.“Controlling Person” shall have the meaning set forth in Section 5 hereof.“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or any corresponding provision of succeeding law) and the rules andregulations thereunder.“Holder” shall have the meaning set forth in the introductory paragraph hereof.“OP Units” shall have the meaning set forth in the Recitals hereof.“Person” shall mean any individual, partnership, corporation, limited liability company, joint venture, association, trust, unincorporatedorganization or other governmental or legal entity.“Registrable Securities” shall mean the Common Stock that may be acquired by the Holder in connection with the exercise by such Holder of theredemption rights associated with the OP Units; provided, however, such Registrable Securities shall cease to be Registrable Securities upon the occurrenceof the earliest of the following: (i) the date on which a registration statement with respect to the sale of such Registrable Securities shall have becomeeffective under the Securities Act and all such Registrable Securities shall have been sold, transferred, disposed of or exchanged in accordance with suchregistration statement, (ii) the date on which such Registrable Securities shall have been sold and all transfer restrictions and restrictive legends with respectto such Registrable Securities are removed upon the consummation of such sale, (iii) the date on which such Registrable Securities become eligible to bepublicly sold pursuant to Rule 144 (or any successor provision) under the Securities Act, or (iv) such Registrable Securities have ceased to be outstanding.“Registration Expenses” shall mean (i) the fees and disbursements of counsel and independent public accountants for the Company incurred inconnection with the Company’s performance of or compliance with this Agreement, including the expenses of any special audits or “comfort” letters requiredby or incident to such performance and compliance, and any premiums and other costs of policies of insurance obtained by the Company against liabilitiesarising out of the sale of any securities and (ii) all registration, filing and stock exchange fees, all fees and expenses of complying with securities or “bluesky” laws, all fees and expenses of custodians, transfer agents and registrars, and all printing expenses, messenger and delivery expenses; provided, however,“Registration Expenses” shall not include any out-of-pocket expenses of the Holder, transfer taxes, underwriting or brokerage commissions or discountsassociated with effecting any sales of Registrable Securities that may be offered.  “ROIP” shall have the meaning set forth in the Recitals hereof.“Securities Act” shall mean the Securities Act of 1933, as amended (or any successor corresponding provision of succeeding law), and the rules andregulations thereunder.“Shelf Registration Statement” shall have the meaning set forth in Section 2(a) hereof.“Underwritten Offering” shall mean a sale of securities of the Company to an underwriter or underwriters for reoffering to the public.“Voting Power” shall mean voting securities or other voting interests ordinarily (and apart from rights accruing under special circumstances) havingthe right to vote in the election of board members or Persons performing substantially equivalent tasks and responsibilities with respect to a particular entity.Section 2. Shelf Registrations.a. Shelf Registration. The Company agrees to use commercially reasonable efforts to file with the Commission a registration statement under theSecurities Act for the offering on a continuous or delayed basis in the future covering resales of the Registrable Securities (the “Shelf RegistrationStatement”), such filing to be made (subject to Section 3) no later than the date that is one-year after the date on which the OP Units were issued as providedin the Contribution Agreement. Subject to Section 3, the Company shall use commercially reasonable efforts to cause such Shelf Registration Statement to bedeclared effective by the Commission as soon as practicable thereafter. The Shelf Registration Statement shall be on an appropriate form and the registrationstatement and any form of prospectus included therein (or prospectus supplement relating thereto) shall reflect the plan of distribution or method of sale asthe Holder may from time to time notify the Company.b. Effectiveness. The Company shall use commercially reasonable efforts to keep the Shelf Registration Statement continuously effective for theperiod beginning on the date on which the Shelf Registration Statement is declared effective and ending on the date that all of the Registrable Securitiesregistered under the Shelf Registration Statement cease to be Registrable Securities. During the period that the Shelf Registration Statement is effective, theCompany shall supplement or make amendments to the Shelf Registration Statement, if required by the Securities Act or if reasonably requested by theHolder (whether or not required by the form on which the securities are being registered), including to reflect any specific plan of distribution or method ofsale, and shall use commercially reasonable efforts to have such supplements and amendments declared effective, if required, as soon as practicable afterfiling.  Section 3. Black-Out Periods.Notwithstanding anything herein to the contrary, the Company shall have the right to postpone the filing of a registration statement and the right,exercisable from time to time by delivery of a notice authorized by the Board at such times as the Company in its good faith judgment may reasonablydetermine is necessary and advisable, to require the Holder not to sell pursuant to a registration statement or similar document under the Securities Act filedpursuant to Section 2 or to suspend the use or effectiveness thereof if at the time of the delivery of such notice (i) it has determined that the use of anyregistration statement or similar document under the Securities Act filed pursuant to Section 2 would require the disclosure of material information that theCompany has a bona fide business purpose for preserving as confidential or the disclosure of which would impede the Company’s ability to consummate asignificant transaction, and that the Company is not otherwise required by applicable securities laws or regulations to disclose, (ii) all reports required to befiled by the Company pursuant to the Exchange Act have not been filed by the required date without regard to any extension, or (iii) the consummation ofany business combination by the Company has occurred or is probable for purposes of Rule 3-05, Rule 3-14 or Article 11 of Regulation S-X under theSecurities Act or (iv) the Company is not eligible to use Form S-3 for purposes of registering the resale of the Registrable Securities. The Company, as soon aspracticable, shall (i) give the Holder prompt written notice in the event that the Company has suspended sales of Registrable Securities pursuant to thisSection 3, (ii) give the Holder prompt written notice of the termination of such suspension of sales of the Registrable Securities and (iii) promptly file anyamendment or reports necessary for any registration statement or prospectus of the Holder in connection with the completion of such event.The Holder agrees by acquisition of the Registrable Securities that upon receipt of any notice from the Company of the happening of any event ofthe kind described in this Section 3, the Holder will forthwith discontinue its disposition of Registrable Securities pursuant to the registration statementrelating to such Registrable Securities until the Holder’s receipt of the notice of completion of such event.Section 4. Registration Procedures.a. In connection with the filing of any registration statement as provided in this Agreement, the Company shall use commercially reasonable effortsto, as expeditiously as reasonably practicable:(i) prepare and file with the Commission the requisite registration statement (including a prospectus therein and any supplement thereto) toeffect such registration and use commercially reasonable efforts to cause such registration statement to become effective; provided, however, that beforefiling such registration statement or any amendments or supplements thereto, the Company will furnish copies of all such documents proposed to be filed tocounsel for the sellers of Registrable Securities covered by such registration statement and provide reasonable time for such sellers and their counsel tocomment upon such documents if so requested by the Holder;  (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used inconnection therewith as may be necessary to maintain the effectiveness of such registration and to comply with the provisions of the Securities Act withrespect to the disposition of all securities covered by such registration statement during the period in which such registration statement is required to be kepteffective; (iii) furnish to the Holder, without charge, such number of conformed copies of such registration statement and of each such amendment andsupplement thereto (in each case including all exhibits other than those which are being incorporated into such registration statement by reference), suchnumber of copies of the prospectus contained in such registration statements (including each complete prospectus and any summary prospectus) and anyother prospectus filed under Rule 424 under the Securities Act in conformity with the requirements of the Securities Act, and such other documents, as theHolder may reasonably request;(iii) register or qualify all Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as the Holder and theunderwriters of the securities being registered, if any, shall reasonably request, to keep such registration or qualification in effect for so long as suchregistration statement remains in effect, and take any other action which may be reasonably necessary or advisable to enable the Holder to consummate thedisposition in such jurisdiction of the securities owned by the Holder, except that the Company shall not for any such purpose be required to qualifygenerally to do business as a foreign company or to register as a broker or dealer in any jurisdiction where it would not otherwise be required to qualify butfor this Section 4(a)(iv), or to consent to general service of process in any such jurisdiction, or to be subject to any material tax obligation in any suchjurisdiction where it is not then so subject;(iv) immediately notify the Holder at any time when the Company becomes aware that a prospectus relating thereto is required to be deliveredunder the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includesan untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein notmisleading in light of the circumstances under which they were made, and, at the request of the Holder, promptly prepare and furnish to the Holder areasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers ofsuch securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein not misleading in the light of the circumstances under which they were made;(v) comply or continue to comply in all material respects with the Securities Act and the Exchange Act and with all applicable rules andregulations of the Commission thereunder so as to enable the Holder to sell its Registrable Securities pursuant to Rule 144 promulgated under the SecuritiesAct, as further agreed to in Section 6 hereof;(vi) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective dateof such registration statement;(viii) cooperate with the Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearingany Securities Act legend; and enable certificates for such Registrable Securities to be issued for such number of shares and registered in such names as theHolder may reasonably request in writing at least three (3) Business Days prior to any sale of Registrable Securities;  (vii) list all Registrable Securities covered by such registration statement on any securities exchange or national quotation system on whichany such class of securities is then listed or quoted and cause to be satisfied all requirements and conditions of such securities exchange or national quotationsystem to the listing or quoting of such securities that are reasonably within the control of the Company including, without limitation, registering theapplicable class of Registrable Securities under the Exchange Act, if appropriate, and using commercially reasonable efforts to cause such registration tobecome effective pursuant to the rules of the Commission;(viii) in connection with any sale, transfer or other disposition by the Holder of any Registrable Securities pursuant to Rule 144 promulgatedunder the Securities Act, cooperate with the Holder to facilitate the timely preparation and delivery of certificates representing the Registrable Securities tobe sold and not bearing any Securities Act legend, and enable certificates for such Registrable Securities to be issued for such number of shares and registeredin such names as the Holder may reasonably request in writing at least three (3) Business Days prior to any sale of Registrable Securities;(ix) notify the Holder, promptly after it shall receive notice thereof, of the time when such registration statement, or any post-effectiveamendments to the registration statement, shall have become effective, or a supplement to any prospectus forming part of such registration statement has beenfiled;(x) notify the Holder of any request by the Commission for the amendment or supplement of such registration statement or prospectus foradditional information; and(xi) advise the Holder, promptly after it shall receive notice or obtain knowledge thereof, of (A) the issuance of any stop order, injunction orother order or requirement by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceedingfor such purpose, and use commercially reasonable efforts to prevent the issuance of any stop order, injunction or other order or requirement or to obtain itswithdrawal if such stop order, injunction or other order or requirement should be issued, (B) the suspension of the registration of the subject shares of theRegistrable Securities in any state jurisdiction and (C) the removal of any such stop order, injunction or other order or requirement or proceeding or thelifting of any such suspension.b. In connection with the filing of any registration statement covering Registrable Securities and as a condition to Holder’s participation in theregistration, the Holder shall furnish in writing to the Company such information regarding the Holder (and any of its Affiliates), the Registrable Securities tobe sold, the intended method of distribution of such Registrable Securities and such other information requested by the Company as is necessary or advisablefor inclusion in the registration statement relating to such offering pursuant to the Securities Act. Such writing shall expressly state that it is being furnishedto the Company for use in the preparation of a registration statement, preliminary prospectus, supplementary prospectus, final prospectus or amendment orsupplement thereto, as the case may be.  The Holder agrees by acquisition of the Registrable Securities that (i) upon receipt of any notice from the Company of the happening of any event ofthe kind described in Section 4(a)(v), the Holder will forthwith discontinue its disposition of Registrable Securities pursuant to the registration statementrelating to such Registrable Securities until the Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(a)(v);(ii) upon receipt of any notice from the Company of the happening of any event of the kind described in clause (A) of Section 4(a)(xiii), the Holder willdiscontinue its disposition of Registrable Securities pursuant to such registration statement until the Holder’s receipt of the notice described in clause (C) ofSection 4(a)(xiii); and (iii) upon receipt of any notice from the Company of the happening of any event of the kind described in clause (B) of Section 4(a)(xiii), the Holder will discontinue its disposition of Registrable Securities pursuant to such registration statement in the applicable state jurisdiction(s) untilthe Holder’s receipt of the notice described in clause (C) of Section 4(a)(xiii).Section 5. Indemnification.a. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Holder, its partners, officers, directors, employees,agents and representatives, and each Person (a “Controlling Person”), if any, who controls the Holder (within the meaning of the Section 15 of the SecuritiesAct or Section 20 of the Exchange Act), against any losses, claims, damages, and expenses (including, without limitation, reasonable attorneys’ fees), arisingout of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which suchRegistrable Securities were registered and sold under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus containedtherein, or any amendment or supplement thereto, or arising out of or based upon any omission or alleged omission to state therein a material fact required tobe stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Companywill reimburse the Holder for any reasonable legal or any other expenses reasonably incurred by it in connection with investigating or defending any suchloss, claim, liability, action or proceedings; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim,damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged statement or omission oralleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement inreliance upon and in conformity with written information furnished to the Company by the Holder specifically stating that it is for use in the preparationthereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holder or any such controlling Personand shall survive the transfer of such securities by the Holder.b. Indemnification by the Holder. The Holder agrees to indemnify and hold harmless (in the same manner and to the same extent as set forth inSection 5(a)) the Company, each member of the Board, each officer, employee, agent and representative of the Company and each of their respectiveControlling Persons, with respect to any untrue statement or alleged untrue statement of a material fact in or omission or alleged omission to state a materialfact from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment orsupplement thereto, if such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity withwritten information furnished to the Company by the Holder regarding the Holder giving such indemnification specifically stating that it is for use in thepreparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Such indemnity shallremain in full force and effect regardless of any investigation made by or on behalf of the Company or any such Board member, officer, employee, agent,representative or Controlling Person and shall survive the transfer of such securities by the Holder.  c. Notices of Claims, etc. Promptly as reasonably practicable after receipt by an indemnified party of notice of the commencement of any action orproceeding involving a claim referred to in the preceding paragraphs of this Section 5, such indemnified party will, if a claim in respect thereof is to be madeagainst an indemnifying party, give written notice to the latter of the commencement of such action; provided, however, that the failure of any indemnifiedparty to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 5, except tothe extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party,unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of suchclaim, the indemnifying party shall be entitled to assume the defense thereof, for itself, if applicable, together with any other indemnified party similarlynotified, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shallnot be liable to the indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof.d. Indemnification Payments. To the extent that the indemnifying party does not assume the defense of an action brought against the indemnifiedparty as provided in Section(c)(c), the indemnified party (or parties if there is more than one) shall be entitled to the reasonable legal expenses of commoncounsel for the indemnified party (or parties). In such event, however, the indemnifying party will not be liable for any settlement effected without the writtenconsent of such indemnifying party, which consent shall not be unreasonably withheld. The indemnification required by this Section 5 shall be made byperiodic payments of the amount thereof during the course of an investigation or defense, as and when bills are received or expense, loss, damage or liabilityis incurred. No indemnifying party shall, without the prior written consent of the indemnified party, consent to entry of judgment or effect any settlement ofany claim or pending or threatened proceeding in respect of which the indemnified Party is or could have been a party and indemnity could have been soughthereunder by such indemnified party, unless such judgment or settlement includes an unconditional release of such indemnified party from all liabilityarising out of such claim or proceeding.e. Contribution. If, for any reason, the foregoing indemnity is unavailable, or is insufficient to hold harmless an indemnified party, then theindemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of the expense, loss, damage or liability, (i) in suchproportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined byreference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by theindemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent suchuntrue statement or omission) or (ii) if the allocation provided by subclause (i) above is not permitted by applicable law or provides a lesser sum to theindemnified party than the amount hereinafter calculated, in the proportion as is appropriate to reflect not only the relative fault of the indemnifying partyand the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as wellas any other relevant equitable considerations.  No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled tocontribution from any indemnifying party who was not guilty of such fraudulent misrepresentation, and the liability for contribution of the Holder ofRegistrable Securities will be in proportion to and limited in all events to the net amount received by the Holder from the sale of Registrable Securitiespursuant to such registration statement.Section 6. Covenants Relating To Rule 144. At such times as the Company becomes obligated to file reports in compliance with either Section 13 or15(d) of the Exchange Act, the Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act andthat it will take such further action as the Holder may reasonably request, all to the extent required from time to time to enable Holder to sell RegistrableSecurities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rulemay be amended from time to time or (b) any similar rule or regulation hereafter adopted by the Commission.Section 7. Market Stand-Off Agreement. The Holder hereby agrees that it shall not, directly or indirectly sell, offer to sell (including withoutlimitation any short sale), pledge, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right orwarrant for the sale of or otherwise dispose of or transfer any Registrable Securities or other Common Stock or any securities convertible into or exchangeableor exercisable for Common Stock then owned by the Holder (other than to permitted transferees of the Holder who agree to be similarly bound) for up to 180days following the date of an underwriting agreement with respect to an underwritten public offering of the Company’s securities; provided, however, that allofficers and directors of the Company then holding Common Stock or securities convertible into or exchangeable or exercisable for Common Stock enterinto similar agreements for not less than the entire time period required of the Holder hereunder.In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing thesecurities subject to this Section 7 and to impose stop transfer instructions with respect to the Registrable Securities and such other securities of the Holder(and the securities of every other Person subject to the foregoing restriction) until the end of such period.Section 8. Miscellaneous.  a. Termination; Survival. The rights of the Holder under this Agreement shall terminate upon the date that all of the Registrable Securities held bythe Holder may be sold during any three-month period in a single transaction or series of transactions without volume limitations under Rule 144 (or anysuccessor provision) under the Securities Act. Notwithstanding the foregoing, the obligations of the parties under Section 5 and paragraphs (d), (e) and (g) ofthis Section 8 shall survive the termination of this Agreement.b. Expenses. All Registration Expenses incurred in connection with any Shelf Registration under Section 2 shall be borne by the Company, whetheror not any registration statement related thereto becomes effective.c. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, andshall become effective when one or more such counterparts have been signed by each of the parties and delivered to each of the other parties.d. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.e. Prior Agreement; Construction; Entire Agreement. This Agreement, including the exhibits and other documents referred to herein (which form apart hereof), constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandingsbetween the parties except the Purchase Agreement, and all such prior agreements and understandings are merged herein and shall not survive the executionand delivery hereof.f. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand orsent, postage prepaid, by registered, certified or express mail or reputable overnight courier service or by telecopier and shall be deemed given when sodelivered by hand or, if mailed, three (3) Business Days after mailing (one Business Day in the case of express mail or overnight courier service), addressed asfollows:If to the Holder:WS Harrison, LLC33855 Van Duyn RoadEugene, Oregon 97408 If to the Company:Retail Opportunity Investments Corp.8905 Towne Centre Drive, Suite 108San Diego, CA 92122Attn: Chief Financial Officer g. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of theparties and shall inure to the benefit of the Holder. The Company may assign its rights or obligations hereunder to any successor to the Company’s businessor with the prior written consent of the Holder. Notwithstanding the foregoing, no assignee of the Company shall have any of the rights granted under thisAgreement until such assignee shall acknowledge its rights and obligations hereunder by a signed written agreement pursuant to which such assignee acceptssuch rights and obligations.  h. Headings. Headings are included solely for convenience of reference and if there is any conflict between headings and the text of this Agreement,the text shall control.i. Amendments And Waivers. The provisions of this Agreement may be amended or waived at any time only by the written agreement of theCompany and the Holder. Any waiver, permit, consent or approval of any kind or character on the part of the Holder of any provision or condition of thisAgreement must be made in writing and shall be effective only to the extent specifically set forth in writing. Any amendment or waiver effected in accordancewith this paragraph shall be binding upon the Holder and the Company.j. Interpretation; Absence Of Presumption. For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa andwords of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof,” “herein,” and “herewith” and words of similarimport shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section,paragraph or other references are to the Sections, paragraphs, or other references to this Agreement unless otherwise specified, (iii) the word “including” andwords of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwisespecified, (iv) the word “or” shall not be exclusive and (v) provisions shall apply, when appropriate, to successive events and transactions.This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting orcausing any instruments to be drafted.k. Severability. If any provision of this Agreement shall be or shall be held or deemed by a final order by a competent authority to be invalid,inoperative or unenforceable, such circumstance shall not have the effect of rendering any other provision or provisions herein contained invalid, inoperativeor unenforceable, but this Agreement shall be construed as if such invalid, inoperative or unenforceable provision had never been contained herein so as togive full force and effect to the remaining such terms and provisions.l. Specific Performance; Other Rights. The parties recognize that various other rights rendered under this Agreement are unique and, accordingly, theparties shall, in addition to such other remedies as may be available to them at law or in equity, have the right to enforce the rights under this Agreement byactions for injunctive relief and specific performance.m. Further Assurances. In connection with this Agreement, as well as all transactions and covenants contemplated by this Agreement, each partyhereto agrees to execute and deliver or cause to be executed and delivered such additional documents and instruments and to perform or cause to beperformed such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of thisAgreement and all such transactions and covenants contemplated by this Agreement.  n. No Waiver. The waiver of any breach of any term or condition of this Agreement shall not operate as a waiver of any other breach of such term orcondition or of any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any otherprovision hereof.[SIGNATURE PAGE FOLLOWS]  IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above.COMPANY:RETAIL OPPORTUNITY INVESTMENTS CORP.,a Maryland corporationBy: /s/ Michael B. Haines Name: Michael B. HainesTitle: Chief Financial Officer HOLDER:WS HARRISON, LLC By: _/s/ Derek Harrison________________________Derek Harrison, Authorized Member 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 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 RTC, LLC DelawareROIC RTC Holding I, LLC DelawareROIC RTC Holding II, LLC DelawareROIC Zephyr Cove, LLC DelawareROIC Hillsboro, 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 Creekside Plaza, LLC DelawareROIC Park Oaks, LLC Delaware EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm We 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. 333-146777), and in the related Prospectus, ofRetail Opportunity Investments Corp; of our reports dated February 25, 2015, 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, 2014. /s/ Ernst & Young LLPSan Diego, CaliforniaFebruary 25, 2015 EXHIBIT 23.2 Consent of Independent Registered Public Accounting Firm We 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, 2015, 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, 2014. /s/ Ernst & Young LLPSan Diego, CaliforniaFebruary 25, 2015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 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, 2015By: /s/ Stuart A. Tanz Name: 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 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, 2015By: /s/ Stuart A. Tanz Name: 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, 2015 By: /s/ Michael B. Haines Name: 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, 2015 By: /s/ Michael B. Haines Name: 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, 2014 (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, 2015 By: /s/ Stuart A. Tanz Name: Stuart A. TanzTitle: Chief Executive Officer The 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 onForm 10-K for the year ended December 31, 2014 (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, 2015 By: /s/ Michael B. Haines Name: Michael B. HainesTitle: Chief Financial Officer Pursuant 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, 2014 (the“Form 10-K”), filed concurrently herewith by the Operating Partnership, fully complies with the requirements of Section 13(a) or 15(d) of the SecuritiesExchange Act of 1934, as amended, and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition andresults of operations of the Operating Partnership. Date: February 25, 2015 By: /s/ Stuart A. Tanz Name: Stuart A. TanzTitle: Chief Executive Officer The 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, 2014 (the “Form 10-K”),filed concurrently herewith by the Operating Partnership, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934, as amended, and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results ofoperations of the Operating Partnership. Date: February 25, 2015 By: /s/ Michael B. Haines Name: Michael B. HainesTitle: Chief Financial Officer Pursuant 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 Operating Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in anyregistration statement of the Operating Partnership 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 Operating Partnership and will be retained by theOperating Partnership and furnished to the Securities and Exchange Commission or its staff upon request. 

Continue reading text version or see original annual report in PDF format above