Retail Opportunity Investments
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018or [ ] 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: 333-189057-01Maryland (Retail Opportunity Investments Corp.)Delaware (Retail Opportunity Investments Partnership, LP)(State or other jurisdiction ofincorporation or organization) 26-0500600 (Retail Opportunity Investments Corp.)94-2969738 (Retail Opportunity Investments Partnership, LP)(I.R.S. EmployerIdentification No.) 11250 El Camino Real, Suite 200San Diego, California(Address of principal executiveoffices)92130(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 of 1934during 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 ☐ Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 bestof registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, oremerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”in Rule 12b-2 of the Exchange Act. (Check one): Retail Opportunity Investments Corp. Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of theExchange Act. ☐ Retail Opportunity Investments Partnership, LP Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☒Smaller reporting company ☐Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of theExchange Act. ☐ 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, 2018, the last business day ofits most recently completed second fiscal quarter, was $2.1 billion (based on the closing sale price of $19.16 per share of Retail Opportunity InvestmentsCorp. 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 aggregate marketvalue 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: 113,996,474 shares of commonstock, par value $0.0001 per share, of Retail Opportunity Investments Corp. outstanding as of February 15, 2019. DOCUMENTS INCORPORATED BY REFERENCE Portions of Retail Opportunity Investments Corp.’s definitive proxy statement for its 2019 Annual Meeting, to be filed within 120 days after its fiscal year,are incorporated by reference into Part III of this Annual Report on Form 10-K.1EXPLANATORY PARAGRAPH This report combines the annual reports on Form 10-K for the year ended December 31, 2018 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 and as of December 31, 2018, ROIC owned an approximate 90.8% partnership interest in the OperatingPartnership. Retail Opportunity Investments GP, LLC, ROIC’s wholly-owned subsidiary, is the sole general partner of the Operating Partnership. Through thissubsidiary, ROIC has full and complete authority and control over the Operating Partnership’s business. The Company believes that combining the annual reports on Form 10-K of ROIC and the Operating Partnership into a single report will result in thefollowing benefits: •facilitate a better understanding by the investors of ROIC and the Operating Partnership by enabling them to view the business as a whole in thesame manner as management views and operates the business;•remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosureapplies to 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 real estate investment trust, whose only material assets are its direct or indirect partnership interests in the OperatingPartnership and membership interest in Retail Opportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result,ROIC does not conduct business itself, other than acting as the parent company and through Retail Opportunity Investments Partnership GP, LLC as the solegeneral partner of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds theownership interests in the Company’s real estate ventures. The Company conducts its business through the Operating Partnership, which is structured as apartnership with no publicly traded equity. Except for net proceeds from equity issuances by ROIC, which are contributed to the Operating Partnership, theOperating 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 32.2RETAIL OPPORTUNITY INVESTMENTS CORP. TABLE OF CONTENTS PagePART I4Item 1.Business5Item 1A.Risk Factors9Item 1B.Unresolved Staff Comments22Item 2.Properties22Item 3.Legal Proceedings26Item 4.Mine Safety Disclosures27PART II27Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities27Item 6.Selected Financial Data29Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations31Item 7A.Quantitative and Qualitative Disclosures About Market Risk46Item 8.Financial Statements and Supplementary Data48Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure86Item 9A.Controls and Procedures86Item 9B.Other Information87PART III87Item 10.Directors, Executive Officers and Corporate Governance87Item 11.Executive Compensation87Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters87Item 13.Certain Relationships and Related Transactions, and Director Independence87Item 14.Principal Accounting Fees and Services87PART IV88Item 15. Exhibits and Financial Statement Schedule88SIGNATURES923Statements Regarding Forward-Looking InformationWhen 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 the Securities Act of1933, as amended (the “Securities Act”), and in Section 21F of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Actual resultsmay 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, the 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 economicand market conditions; •consumer spending and confidence trends;•the Company’s ability to enter into new leases or to renew leases with existing tenants at the properties it owns or acquires at 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 for U.S. federal income tax (a “REIT”);•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 seniorunsecured notes, its unsecured credit facilities or other debt facilities it currently has or subsequently obtains;•the Company’s level of operating expenses, including amounts it is required to pay to its management team;•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. 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.4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 REIT,and as of December 31, 2018, ROIC owned an approximate 90.8% partnership interest and other limited partners owned the remaining 9.2% partnershipinterest in the Operating Partnership. The Company specializes in the acquisition, ownership and management of necessity-based community andneighborhood shopping centers on the west coast of the United States, anchored by supermarkets and drugstores. The Company is organized in a traditionalumbrella partnership real estate investment trust (“UpREIT”) format pursuant to which Retail Opportunity Investments GP, LLC, its wholly-ownedsubsidiary, serves as the sole general partner of, and ROIC conducts substantially all of its business through, its operating partnership, Retail OpportunityInvestments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), together with its subsidiaries. As of December 31, 2018, theCompany’s portfolio consisted of 92 properties (91 retail and one office) totaling approximately 10.5 million square feet of gross leasable area (“GLA”). 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 equityissuances by ROIC, which are contributed to the Operating Partnership, the Operating Partnership generates the capital required by the Company’s businessthrough the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through theissuance 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 on the west coast 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 re-tenanting 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.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 and5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 in its portfolio. In order to capitalize on thechanging sets of investment opportunities that may be present in the various points of an economic cycle, the Company may expand or refocus its investmentstrategy. The Company’s investment strategy may be amended from time to time, if approved by its board of directors. The Company is not required to seekstockholder approval when amending its investment strategy. Transactions During 2018 Investing Activity Property Asset Acquisitions On February 23, 2018, the Company acquired the property known as Stadium Center located in Tacoma, Washington, within the Seattle metropolitan area,for an adjusted purchase price of approximately $19.3 million. Stadium Center is approximately 49,000 square feet and is anchored by ThriftwaySupermarket. The property was acquired with borrowings under the credit facility and restricted cash that was previously held by a qualified intermediary forthe acquisition of a replacement property in a tax-free exchange under Section 1031 of the Code.On May 18, 2018, the Company acquired the property known as King City Plaza located in King City, Oregon, within the Portland metropolitan area, for anadjusted purchase price of approximately $15.7 million. King City Plaza is approximately 63,000 square feet and is anchored by Grocery Outlet Supermarket.The property was acquired with borrowings under the credit facility.Property DispositionsOn September 27, 2018, the Company sold Round Hill Square, a non-core shopping center located in Zephyr Cove, Nevada. The sales price of $28.0 million,less costs to sell, resulted in net proceeds of approximately $26.9 million. The Company recorded a gain on sale of real estate of approximately $5.9 millionduring the year ended December 31, 2018 related to this property disposition. 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. Term Loan and Credit Facility On September 29, 2015, the Company entered into a term loan agreement under which the lenders agreed to provide a $300.0 million unsecured term loanfacility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term Loan Agreement”) pursuantto which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term LoanAgreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions setforth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. Borrowings under the Term Loan Agreement accrueinterest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) aLIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the relevant period (the “Eurodollar Rate”), or (ii) a base rate determinedby reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the Administrative Agent as its “prime rate,” and (c)the Eurodollar Rate plus 1.10%. The Operating Partnership has an unsecured revolving credit facility with several banks. Effective September 8, 2017, the Company entered into a SecondAmended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which the borrowing capacity was increased from $500.0 million to$600.0 million. The maturity date of the credit facility was extended from January 31, 2019 to September 8, 2021, with two six-month extension options,which may be exercised by the Operating Partnership upon6satisfaction of certain conditions including the payment of extension fees. Additionally, the credit facility contains an accordion feature, which allows theOperating Partnership to increase the borrowing capacity up to an aggregate of $1.2 billion, subject to lender consents and other conditions. Borrowingsunder the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of theCompany, plus, as applicable, (i) the Eurodollar Rate, 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 as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. 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 Company has investment grade credit ratings from Moody’s Investors Service(Baa2) and Standard & Poor’s Ratings Services (BBB-). Both the term loan and credit facility contain customary representations, financial and other covenants. The Operating Partnership’s ability to borrow underthe term loan and credit facility are subject to its compliance with financial covenants and other restrictions on an ongoing basis. The Operating Partnershipwas in compliance with such covenants at December 31, 2018. As of December 31, 2018, $300.0 million and $156.0 million were outstanding under the term loan and credit facility, respectively. The average interest rateson the term loan and the credit facility during the year ended December 31, 2018 were 3.1% and 3.0%, respectively. The Company had no availableborrowings under the term loan at December 31, 2018. The Company had $444.0 million available to borrow under the credit facility at December 31, 2018.Mortgage Notes PayableOn February 1, 2018, the Company repaid in full the Santa Teresa Village mortgage note related to Santa Teresa Village for a total of approximately $10.1million, without penalty, in accordance with the prepayment provisions of the note. Further, on September 28, 2018, the Company repaid in full theMagnolia Shopping Center mortgage note related to Magnolia Shopping Center for a total of approximately $8.8 million, without penalty, in accordancewith the repayment provisions of the note.ATM Equity Offering On May 1, 2018, ROIC entered into five separate Sales Agreements (the “Sales Agreements”) with each of Capital One Securities, Inc., Jefferies LLC,KeyBanc Capital Markets Inc., Raymond James & Associates, Inc., and Robert W. Baird & Co. Incorporated (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 offeringprice of up to $250.0 million through the Agents either as agents or principals. In addition, on April 30, 2018, the Company terminated sales agreements withJefferies, KeyBanc and Raymond James, dated as of September 19, 2014 and with Baird, dated as of May 23, 2016 (the “Prior Sales Agreements”), which theCompany entered into in connection with its prior “at the market” offering.During the year ended December 31, 2018, ROIC sold a total of 1,251,376 shares under the Sales Agreements, which resulted in gross proceeds ofapproximately $24.2 million and commissions of approximately $242,000 paid to the Agents. During the year ended December 31, 2018, ROIC sold a totalof 75,314 shares of common stock under the Prior Sales Agreements, which resulted in gross proceeds of approximately $1.5 million and commissions ofapproximately $19,000 paid to the Agents. During the year ended December 31, 2017, ROIC sold a total of 34,001 shares under the Prior Sales Agreements,which resulted in gross proceeds of approximately $681,000 and commissions of approximately $9,000 paid to the Agents. The Company plans to finance future acquisitions through a combination of operating cashflow, borrowings under the credit facility, the assumption ofexisting mortgage debt, the issuance of equity securities including OP Units, equity and debt offerings, and the potential sale of existing assets. 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. 7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, and Liability Act of 1980, as amended, increase the potential liability for environmentalconditions or circumstances existing or created by tenants or others on the properties. In addition, laws affecting development, construction, operation,upkeep, safety and taxation requirements may result in significant unanticipated expenditures, loss of real estate property sites or other impairments, whichwould adversely affect its cash flows from operating activities. Under the Americans with Disabilities Act of 1990 (the “Americans with Disabilities Act”) all places of public accommodation are required to meet certainU.S. federal requirements related to access and use by disabled persons. A number of additional U.S. federal, state and local laws also exist that may requiremodifications to properties, or restrict certain further renovations thereof, with respect to access thereto by disabled persons. Noncompliance with theAmericans with Disabilities Act could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correctany non-complying feature and in substantial capital expenditures. To the extent the Company’s properties are not in compliance, the Company may incuradditional costs to comply with the Americans with Disabilities Act. Property management activities are often subject to state real estate brokerage laws and regulations as determined by the particular real estate commission foreach state. Environmental Matters Pursuant to U.S. federal, state and local environmental laws and regulations, a current or previous owner or operator of real property may be required toinvestigate, remove and/or remediate a release of hazardous substances or other regulated materials at or emanating from such property. Further, under certaincircumstances, such owners or operators of real property may be held liable for property damage, personal injury and/or natural resource damage resultingfrom or arising in connection with such releases. Certain of these laws have been interpreted to be joint and several unless the harm is divisible and there is areasonable basis for allocation of responsibility. The failure to properly remediate the property may also adversely affect the owner’s ability to lease, sell orrent the property or to borrow funds using the property as collateral. In connection with the ownership, operation and management of the Company’s current properties and any properties that it may acquire and/or manage inthe future, the Company could be legally responsible for environmental liabilities or costs relating to a release of hazardous substances or other regulatedmaterials at or emanating from such property. In order to assess the potential for such liability, the Company conducts an environmental assessment of eachproperty prior to acquisition and manages its properties in accordance with environmental laws while it owns or operates them. All of its leases contain acomprehensive environmental provision that requires tenants to conduct all activities in compliance with environmental laws and to indemnify the owner forany harm caused by the failure to do so. In addition, the Company has engaged qualified, reputable and adequately insured environmental consulting firmsto perform environmental site assessments of its properties and is not aware of any environmental issues that are expected to materially impact the financialcondition of the Company. 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, competition8from these entities may reduce the number of suitable investment opportunities offered to the Company or increase the bargaining power of property ownersseeking to sell. Further, as a result of their greater resources, such entities may have more flexibility than the Company does in their ability to offer rentalconcessions to attract tenants. If the Company’s competitors offer space at rental rates below current market rates, or below the rental rates the Companycurrently charges its tenants, the Company may lose potential tenants and it may be pressured to reduce its rental rates below those it currently charges inorder to retain tenants when its tenants’ leases expire. Employees As of December 31, 2018, the Company had 71 employees, including three executive officers, one of whom is also a member of its board of directors and 19maintenance employees at the shopping centers. 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”). The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, andother information regarding issuers that file electronically with the SEC. The Company’s website is www.roireit.net. The Company’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 reasonably practicable after the reports andamendments are electronically filed with or furnished to the SEC. The contents of the Company’s website are not incorporated 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, adverse weather conditions, natural disasters, terrorist activities and other factors in the areas in which the properties are located. Shoppingcenters, in particular, may be affected by changing perceptions of retailers or shoppers regarding the safety, convenience and attractiveness of the shoppingcenter, increasing consumer purchases through online retail websites and catalogs, the ongoing consolidation in the retail sector and by the overall climatefor the retail industry generally. Real estate values are also affected by such factors as government regulations, interest rate levels, the availability offinancing and potential liability under, and changes in, environmental, zoning, tax and other laws. A significant portion of the Company’s income is derivedfrom rental income from real property. The Company’s income, cash flow, results of operations, financial condition, liquidity and ability to service its debtobligations could be materially and adversely affected if a significant number of its tenants were unable to meet their obligations, or if it were unable to leaseon economically favorable terms a significant amount of space in its properties. In the event of default by a tenant, the Company may experience delays inenforcing, and incur substantial costs to enforce, its rights as a landlord. In addition, certain significant expenditures associated with each equity investment(such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced when circumstances cause a reduction in income from theinvestment. 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-commercewebsites. The presence of competitive alternatives affects the Company’s ability to lease space and the level of rents it can obtain. New construction,renovations and expansions at competing sites could also negatively affect the Company’s properties. 9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 stockholders. The Company’s directors are subject to potential conflicts of interest. The Company’s executive officers and directors may face conflicts of interest. Except for Messrs. Tanz, Haines and Schoebel, none of the Company’sexecutive officers or directors are required to commit substantially all of their business time to the Company. Also, in the course of their other businessactivities, the Company’s directors may become aware of investment and business opportunities that may be appropriate for presentation to the Company aswell as the other entities with which they are affiliated. They may have conflicts of interest in determining to which entity a particular business opportunityshould 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. Although there has beenimprovement in the credit and real estate markets, any reduction in available financing may materially and adversely affect the Company’s ability to achieveits financial objectives. Concern about the stability of the markets generally may limit the Company’s ability and the ability of its tenants to timelyrefinance maturing liabilities and access the capital markets to meet liquidity needs. Although the Company will factor in these conditions in acquiring itsassets, its long term success depends in part on general economic conditions and the stability and dependability of the financing market for retail realestate. If the national economy or the local economies in which the Company operates were to experience uncertainty, or if general economic conditionswere to worsen, 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 stockholders could be materially and adversely affected. Bankruptcy or insolvency of tenants may decrease the Company’s revenues and available cash. In the case of many retail properties, the bankruptcy or insolvency of a major tenant could cause the Company to suffer lower revenues and operationaldifficulties, and could allow other tenants to exercise so-called “kick-out” clauses in their leases and terminate their lease or reduce their rents prior to thenormal expiration of their lease terms. As a result, the bankruptcy or insolvency of major tenants could materially and adversely affect the Company’sincome, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its common stock and itsability to pay dividends and other distributions to its stockholders. 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 stockholders. 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.10 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 stockholders. 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.In the event we seek to redevelop existing properties, these projects could be subject to delays or other risks and might not yield the returns we anticipate,which would harm our financial condition and operating results.We may selectively engage in redevelopment projects at certain of our properties. To the extent we enter into redevelopment projects, they will be subject toa number of risks that could negatively affect our return on investment, financial condition, results of operations and our ability to make distributions tostockholders, including, among others:•higher than anticipated construction costs, including labor and material costs;•delayed ability or inability to reach projected occupancy, rental rates, profitability, and investment return;•timing delays due to weather, labor disruptions, zoning or other regulatory approvals, tenant decision delays, delays in anchor approvals ofredevelopment plans, where required, acts of God (such as fires, significant storms, earthquakes or floods) and other factors outside our control, whichmight make a project less profitable or unprofitable, or delay profitability; and•expenditure of money and time on projects that might be significantly delayed before stabilization.If a project is unsuccessful, either because it is not meeting our expectations when operational or was not completed according to the project planning, wecould lose our investment in the project or have to incur an impairment charge relating to the asset or development which could then adversely impact ourfinancial condition and operating results.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. In addition, the retail business is highly competitive and our tenants may fail to differentiate their shoppingexperiences, create an attractive value proposition or execute their business strategies. Furthermore, we believe that the increase in digital and mobiletechnology usage has increased the speed of the transition from shopping at physical locations to web-based purchases and that our tenants may benegatively affected by these changing consumer spending habits. These conditions could adversely affect the financial condition of the Company’s retailtenants and the willingness and ability of retailers to lease space, or renew existing leases, in the Company’s shopping centers and to honor their obligationsunder existing leases, 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 Code to annually distribute at least 90% of its REIT taxable income,determined without regard to the dividends paid deduction and excluding any net capital gain. After the Company invests its cash on hand, it expects todepend primarily on the credit facility and other external financing (including debt11and equity financings) to fund the growth of its business. The Company’s access to debt or equity financing depends on the willingness of third parties tolend or make equity investments and on conditions in the capital markets generally. As a result of changing economic conditions, the Company may belimited in its ability to obtain additional financing or to refinance existing debt maturities on favorable terms or at all and there can be no assurances as towhen financing conditions will improve. The Company does not have a formal policy limiting the amount of debt it may incur and its board of directors may change its leverage policy withoutstockholder consent, which could result in a different risk profile. Although the Company’s charter and bylaws do not limit the amount of indebtedness the Company can incur, the Company’s policy is to employ prudentamounts of leverage and use debt as a means of providing additional funds for the acquisition of its assets and the diversification of its portfolio. The amountof leverage the Company will deploy for particular investments 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 agreements. 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 stockholders. In addition, some of the Company’s major expenses, includingmortgage 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 stockholders, 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 itsstockholders could be materially and adversely affected if a significant number of its tenants cannot pay their rent or if the Company is not able to maintainoccupancy 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 delays and mayincur substantial legal costs.12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. Any periods of significant vacancies for the Company’s properties could materially and adversely impactthe 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 stockholders. 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 stockholders. The Company derives significant revenues from anchor tenants such as Albertson’s/Safeway Supermarkets, Kroger Supermarkets and Rite Aid Pharmacy. Asof December 31, 2018, these tenants are the Company’s three largest tenants and accounted for 5.6%, 3.5% and 1.6%, respectively, of its annualized base renton a pro-rata basis. 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 stockholders could be materially and adversely affected by theloss of revenues in the event a major tenant becomes bankrupt or insolvent, experiences a downturn in its business, materially defaults on its leases, does notrenew its leases as they expire, or renews at lower rental rates. The Company’s inability to receive reimbursements of Common Area Maintenance (“CAM”) costs from tenants could adversely affect the Company’s cashflow. 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 reimbursements for CAM costs that the Company is entitled to receive from its tenants pursuant to the termsof the respective lease agreements may be less than the actual CAM costs at the Company’s properties. The Company’s inability to recover or pass on CAMcosts to its tenants, whether due to the terms of the Company’s leases or vacancies at the Company’s properties could adversely affect the Company’s cashflow. 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. Moreover, compliance with new laws or regulations such as those related to climate change, including compliance with“green” building codes, or more stringent laws or regulations or stricter interpretations of existing laws may require material expenditures by the Company. 13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). There can be no assurance that the Company’s efforts to maintain the securityand integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful ordamaging. A security breach or other significant disruption involving the Company’s IT networks and related systems could materially and adversely impactthe 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 stockholders. Our business and operations would suffer in the event of system failures. Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technologysystems, our systems are vulnerable to damage from any number of sources, including computer viruses, unauthorized access, energy blackouts, naturaldisasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a materialdisruption to our business. We may also incur additional costs to remedy damages caused by such disruptions.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 stockholders. 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 theCompany operates experience uncertainty, or if general economic conditions were to worsen, the value of the Company’s properties could decline, and theCompany’s income, cash flow, results of operations, financial condition, liquidity, the ability to service its debt obligations, the market price of its commonstock and its ability to pay dividends and other distributions to its stockholders, 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 stockholders. 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 and14conditions of the respective agreement). In addition, the vesting of all his outstanding unvested equity-based incentives and awards would accelerate. Theseprovisions make it costly to terminate their employment and could delay or prevent a transaction or a change in control of the Company that might involve apremium paid for shares of its common stock 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. There are certain types of losses, such as losses resultingfrom wars or acts of God that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a lossin excess of insured limits occur, the Company could lose capital invested in a property, as well as the anticipated future revenues from a property, whileremaining obligated for any mortgage indebtedness, or other financial obligations or liabilities related to the property. Any loss of these types couldmaterially and adversely affect the Company’s income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service its debtobligations, the market price of its common stock and its ability to pay dividends and other distributions to its stockholders.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 31,2018, the Company’s properties in California, Washington and Oregon accounted for 62%, 23% and 15%, 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 stockholders 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, Washington and Oregon. Moreover, due to the geographic concentration of its properties, the Company may be disproportionately affected bygeneral risks such as natural disasters, including major fires, floods and earthquakes, severe or inclement weather, and acts of terrorism should suchdevelopments occur in or near the markets in California, Washington and Oregon in which the Company’s properties are located. 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, Washington and Oregon. 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 the15Company’s income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service its debt obligations, the market price of itscommon stock and its ability to pay dividends and other distributions to its stockholders.Risks Related to Financing The Company’s term loan, credit facility and unsecured senior notes contain restrictive covenants relating to its operations, which could limit theCompany’s ability to respond to changing market conditions and its ability to pay dividends and other distributions to its stockholders. The Company’s term loan, credit facility and unsecured senior notes contain restrictive covenants. These or other limitations, including those that may applyto future Company borrowings, may materially and adversely affect the Company’s flexibility and its ability to achieve its operating plans and could resultin the Company being limited in the amount of dividends and distributions it would be permitted to pay to its stockholders. 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. As of December 31, 2018, the Company’s outstanding principal mortgage indebtedness was approximately$86.7 million, and the Company may incur significant additional debt to finance future acquisition and development activities. The credit facility consistsof a $600.0 million unsecured revolving credit facility and the Company has a $300.0 million term loan, of which $156.0 million and $300.0 million,respectively, were outstanding as of December 31, 2018. In addition, the Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2017 (the “Senior Notes Due2027”), $200.0 million aggregate principal amount of unsecured senior notes in September 2016 (the “Senior Notes Due 2026”), $250.0 million aggregateprincipal amount of unsecured senior notes in December 2014 (the “Senior Notes Due 2024”) and $250.0 million aggregate principal amount of unsecuredsenior notes in December 2013 (the “Senior Notes Due 2023” and collectively with the Senior Notes Due 2024, the Senior Notes Due 2026 and the SeniorNotes Due 2027, the “unsecured senior notes”), 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. 16Although the credit markets and real estate have recovered from the great recession, any reduction in available financing may materially and adversely affectthe Company’s ability to achieve its financial objectives. Concern about the stability of the markets generally could adversely affect one or more privatelenders and could cause one or more private lenders to be unwilling or unable to provide the Company with financing or to increase the costs of thatfinancing. In addition, if regulatory capital requirements imposed on the Company’s private lenders change, they may be required to limit, or increase thecost of, financing they provide to the Company. In general, this could potentially increase the Company’s financing costs and reduce its liquidity or requireit to sell assets at an inopportune time or price. During times when interest rates on mortgage loans are high or financing is otherwise unavailable on a timely basis, the Company may purchase certainproperties for cash or equity securities, including OP Units, or a combination thereof. Consequently, depending on market conditions at the relevant time,the Company may have to rely more heavily on additional equity issuances, which may be dilutive to its stockholders, or on less efficient forms of debtfinancing that require a larger portion of its cash flow from operations, thereby reducing funds available for its operations, future business opportunities, cashdistributions to its stockholders and other purposes. The Company cannot assure you that it will have access to such equity or debt capital on favorableterms (including, without limitation, cost and term) at the desired times, or at all, which may cause it to curtail its asset acquisition activities and/or dispose ofassets, which could materially and adversely affect its 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 stockholders. 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, 2018, the Company had approximately $156.0 million and$300.0 million outstanding under the Company’s $600.0 million unsecured revolving credit facility and $300.0 million term loan, respectively, that bearinterest at a variable rate. In addition, the Company may incur variable rate debt in the future, including mortgage debt, borrowings under the credit facilityor new credit facilities. An increase in interest rates would increase the Company’s interest costs, which could adversely affect the Company’s cash flow,results of operations, ability to pay principal and interest on debt and pay dividends and other distributions to its stockholders, and reduce the Company’saccess to capital markets. In addition, if the Company needs to repay existing debt during periods of rising interest rates, it may be required to incuradditional indebtedness at higher rates. From time to time, the Company may enter into interest rate swap agreements and other interest rate hedgingcontracts with the intention of lessening the impact of rising interest rates. However, increased interest rates may increase the risk that the counterparties tosuch agreements may not be able to fulfill their obligations under these agreements, and there can be no assurance that these arrangements will be effective inreducing the Company’s exposure to interest rate changes. These risks could materially and adversely affect the Company’s 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 stockholders.Changes to, or the elimination of, LIBOR may adversely affect our financing costs.In July 2017, the U.K. Financial Conduct Authority (the “FCA”) announced that it intends to stop persuading or compelling banks to submit the LondonInterbank Offered Rate (“LIBOR”) after 2021. As of December 31, 2018, we had outstanding approximately $456.0 million of variable rate debt that wasindexed LIBOR. It is not possible to predict the further effect of the rules of the FCA, any changes in the methods by which LIBOR is determined, or anyother reforms to LIBOR that may be enacted in the United Kingdom, the European Union or elsewhere. Any such developments may cause LIBOR to performdifferently than in the past, or cease to exist or may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in thepublication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or toparticipate in LIBOR’s determination, and, in certain situations, could result in LIBOR no longer being determined and published. If a published LIBOR rateis unavailable after 2021, the interest rates on our debt which is indexed to LIBOR will be determined using various alternative methods, any of which mayresult in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on such debtif LIBOR was available in its current form. Further, the same costs and risks that may lead to the discontinuation or unavailability of LIBOR may make one ormore of the alternative methods impossible or impracticable to determine. Any of these proposals or consequences could have a material adverse effect on ourfinancing costs. 17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 stockholders. 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. 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 stockholders. 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 (the “MGCL”) may have the effect of delaying, deferring or preventing a transaction or achange in control of the Company that might involve a premium price for holders of the Company’s common stock or otherwise be in their best interests,including: 18•“business combination” provisions that, subject to certain limitations, prohibit certain business combinations between the Company and an“interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of the Company’s shares or anaffiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose specialminimum price provisions and special stockholder voting requirements on these combinations; and•“control share” provisions that provide that “control shares” of the Company (defined as shares which, when aggregated with other shares controlledby the 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 extentapproved by 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 allinterested shares.However, the provisions of the MGCL relating to business combinations do not apply to business combinations that are approved or exempted by theCompany’s board of directors prior to the time that the interested stockholder becomes an interested stockholder. In addition, the Company’s bylaws containa provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of the Company’s common stock. There canbe no assurance that such exemption will not be amended or eliminated at any time in the future. Additionally, Title 3, Subtitle 8 of the MGCL permits the Company’s board of directors, without stockholder approval and regardless of what is currentlyprovided in the Company’s charter or bylaws, to take certain actions that may have the effect of delaying, deferring or preventing a transaction or a change incontrol of the Company that might involve a premium to the market price of its common stock or otherwise be in the stockholders’ best interests. Theseprovisions of the MGCL permit the Company, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contraryprovision in the charter or bylaws, to adopt: •a classified board;•a two-thirds vote requirement for removing a director;•a requirement that the number of directors be fixed only by vote of the board of directors;•a requirement that a vacancy on the board be filled only by the remaining directors in office and (if the board is classified) for 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 Company’s charter authorizes the Company to issue authorized but unissued shares of preferred stock. In addition, the Company’s charter provides thatthe Company’s board of directors has the power, without stockholder approval, to authorize the Company to issue any authorized but unissued shares ofstock, to classify any unissued shares of preferred stock and to reclassify any unissued shares of common stock or previously-classified shares of preferredstock into other classes or series of stock. As a result, the Company’s board of directors may establish a series of shares of preferred stock or use such preferredstock to create a stockholder’s rights plan or so-called “poison pill” that could delay or prevent a transaction or a change in control that might involve apremium price for shares of the Company’s common stock or otherwise be in the best interests of the Company’s stockholders. In addition, the Company’s charter contains restrictions limiting the ownership and transfer of shares of the Company’s common stock and other outstandingshares of capital stock. The relevant sections of the Company’s charter provide that, subject to certain exceptions, ownership of shares of the Company’scommon stock by any person is limited to 9.8% by value or by number of shares, whichever is more restrictive, of the outstanding shares of common stock(the common share ownership limit), and no more than 9.8% by value or number of shares, whichever is more restrictive, of the outstanding capital stock (theaggregate share ownership limit). The common share ownership limit and the aggregate share ownership limit are collectively referred to herein as the“ownership limits.” These provisions will restrict the ability of persons to purchase shares in excess of the relevant ownership limits. The Company’s boardof directors has established exemptions from this ownership limit which permit certain institutional investors to hold additional shares of the Company’scommon stock. The Company’s board of directors may in the future, in its sole discretion, establish additional exemptions from this ownership limit. 19The Company’s failure to qualify as a REIT would subject it to U.S. federal income tax and potentially increased state and local taxes, which wouldreduce the amount of cash available for distribution to its stockholders. The Company intends to operate in a manner that will enable it to continue to qualify as a REIT for U.S. federal income tax purposes. The Company has notrequested and does not intend to request a ruling from the U.S. Internal Revenue Service that it will continue to qualify as a REIT. The U.S. federal incometax laws governing REITs are complex. The complexity of these provisions and of the applicable U.S. Treasury Department regulations that have beenpromulgated under the Code (“Treasury Regulations”) is greater in the case of a REIT that holds assets through a partnership, such as the Company, andjudicial and administrative interpretations of the U.S. federal income tax laws governing REIT qualification are limited. To qualify as a REIT, the Companymust meet, on an ongoing basis, various tests regarding the nature of its assets and its income, the ownership of its outstanding shares, and the amount of itsdistributions. Moreover, new legislation, court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficultor impossible for the Company to qualify as a REIT. Thus, while the Company believes that it has operated and intends to continue to operate so that it willqualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility offuture changes in the Company’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. 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 generally be required to include such original issue discount in income based on a constant yieldto maturity method. As a result of the foregoing, the Company may generate less cash flow than taxable income in a particular year. To the extent that theCompany generates such non-cash taxable income in a taxable year, it may incur corporate income tax and the 4% non-deductible excise tax on that incomeif it does not distribute such income to stockholders in that year. In that event, the Company may be required to use cash reserves, incur debt or liquidateassets at rates or times that it regards as unfavorable or make a taxable distribution of its shares in order to satisfy the REIT 90% distribution requirement andto avoid U.S. federal corporate income tax and the 4% non-deductible excise tax in that year.In order to qualify as a REIT, prior to the end of each taxable year, the Company is required to distribute any earnings and profits of any corporation acquiredby the Company in certain tax-deferred transactions to the extent that such earnings accrued at a time when such corporation did not qualify as a REIT. TheCompany has entered into certain transactions involving the tax-deferred acquisition of target corporations. The Company believes that it did not inherit anyearnings and profits of such target corporations attributable to any period that such corporations did not qualify as a REIT. However, no assurance can beprovided in this regard, and if the Company were determined to have inherited and retained any such earnings and profits, the Company’s qualification as aREIT could be adversely impacted. 20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, taxes 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. Furthermore, the Company has entered into certain transactions in which the Company has acquired target entities in tax-deferred transactions. To theextent that such entities had outstanding U.S. federal income tax or other tax liabilities, the Company would succeed to such liabilities.Payment of these taxes generally would decrease the cash available for distribution to the Company’s stockholders. 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 U.S. stockholders that are individuals, trusts and estates is 20%.Dividends payable by REITs, however, are generally not eligible for these reduced qualified dividend rates. However, for taxable years beginning afterDecember 31, 2017 and before January 1, 2026, under the recently enacted Tax Cuts and Jobs Act (H.R. 1, the “TCJA”), noncorporate taxpayers may deductup to 20% of certain qualified business income, including “qualified REIT dividends” (generally, REIT dividends received by a shareholder that are notdesignated as capital gain dividends or qualified dividend income), subject to certain limitations, resulting in an effective maximum U.S. federal income taxrate of 29.6% on such income. Although the reduced U.S. federal income tax rate applicable to qualified dividends from C corporations does not adverselyaffect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends, together with the recentlyreduced corporate tax rate (currently, 21%), could cause investors who are individuals, trusts and estates to perceive investments in REITs to be less attractivethan investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including theCompany’s common stock. Legislative, regulatory or administrative changes could adversely affect the Company.The U.S. federal income tax laws and regulations governing REITs and their stockholders, as well as the administrative interpretations of those laws andregulations, are constantly under review and may be changed at any time, possibly with retroactive effect. No assurance can be given as to whether, when, orin what form, the U.S. federal income tax laws applicable to the Company and its stockholders may be enacted. Changes to the U.S. federal income tax lawsand interpretations of U.S. federal tax laws could adversely affect an investment in the Company’s common stock.The recently enacted TCJA, which was signed into law on December 22, 2017, significantly changes U.S. federal income tax laws applicable to businessesand their owners, including REITs and their stockholders, and may lessen the relative competitive advantage of operating as a REIT rather than as a Ccorporation. For additional discussion, see “Recent U.S. Federal Income Tax Legislation”. 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 2027. The Companymay enter into additional tax protection agreements in the future, which could extend the period of time during which the Company may be liable for taxobligations of certain limited partners. During the period of these obligations, the Company’s flexibility to dispose of the related assets will be limited. Inaddition, the amount of any indemnification obligations may be significant. 21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 stockholders: •the profitability of the assets acquired;•the Company’s ability to make profitable acquisitions;•unforeseen 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 CommentsNone.Item 2. Properties The Company maintains its executive office at 11250 El Camino Real, Suite 200, San Diego, CA 92130. As of December 31, 2018, the Company’s portfolio consisted of 92 properties (91 retail and one office) totaling approximately 10.5 million square feet ofgross leasable area. As of December 31, 2018, the Company’s retail portfolio was approximately 96.9% leased. During the year ended December 31, 2018,the Company leased or renewed a total of approximately 1.5 million square feet in its portfolio. The Company has committed approximately $20.9 million,or $47.29 per square foot, in tenant improvements, including building and site improvements, for new leases that occurred during the year endedDecember 31, 2018. The Company has committed approximately $1.1 million, or $2.39 per square foot, in leasing commissions, for the new leases thatoccurred during the year ended December 31, 2018. Additionally, the Company has committed approximately $958,000, or $0.88 per square foot, in tenantimprovements for renewed leases that occurred during the year ended December 31, 2018. Leasing commission commitments for renewed leases were notmaterial for the year ended December 31, 2018. The following table provides information regarding the Company’s retail properties as of December 31, 2018. Property YearCompleted/Renovated YearAcquired GrossLeasableSq. Feet NumberofTenants % Leased Principal TenantsSouthern California Los Angeles metro area Paramount Plaza 1966/2010 2009 95,062 14 98.0% Grocery Outlet Supermarket, 99¢ Only Stores,Rite Aid PharmacyClaremont Promenade 1982/2011 2010 92,297 26 98.8% Super King SupermarketGateway Village 2003/2005 2010 96,959 28 96.9% Sprouts MarketSeabridge Marketplace 2006 2012 98,348 22 97.4% Safeway (Vons) SupermarketGlendora Shopping Center 1992/2012 2012 106,535 19 94.8% Albertson’s SupermarketRedondo Beach Plaza 1993/2004 2012 110,509 16 100.0% Safeway (Vons) Supermarket, Petco22Diamond Bar Town Center 1981 2013 100,342 21 95.5% Walmart Neighborhood Market, Crunch FitnessDiamond Hills Plaza 1973/2008 2013 139,505 37 97.4% H-Mart Supermarket, Rite Aid PharmacyPlaza de la Canada 1968/2010 2013 101,031 13 100.0% Gelson’s Supermarket, TJ Maxx, Rite AidPharmacyFallbrook Shopping Center 1966/1986/2003/2015 2014 755,299 47 99.2% Sprouts Market, Trader Joe’s, Kroger (Ralph’s)Supermarket (1), TJ MaxxMoorpark Town Center 1984/2014 2014 133,547 23 95.5% Kroger (Ralph’s) Supermarket, CVS PharmacyOntario Plaza 1997-1999 2015 150,149 26 99.1% El Super Supermarket, Rite Aid PharmacyPark Oaks Shopping Center 1959/2005 2015 110,092 25 89.8% Safeway (Vons) Supermarket, Dollar TreeWarner Plaza 1973-1974/2016-2017 2015 110,918 67 98.6% Sprouts Market, Kroger (Ralph’s) Supermarket (1),Rite Aid Pharmacy (1)Magnolia Shopping Center 1962/1972/1987/2016 2016 116,360 23 88.2% Kroger (Ralph’s) SupermarketCasitas Plaza Shopping Center 1972/1982 2016 105,098 27 97.4% Albertson’s Supermarket, CVS PharmacyBouquet Center 1985 2016 148,903 26 94.1% Safeway (Vons) Supermarket, CVS Pharmacy,Ross Dress For LessNorth Ranch Shopping Center 1977-1990 2016 146,625 31 88.1% Kroger (Ralph’s) Supermarket, Trader Joe’s, RiteAid Pharmacy, PetcoThe Knolls 2000/2016 2016 52,021 7 100.0% Trader Joe’s, Pet Food ExpressThe Terraces 1958/1970/ 1989 2017 172,922 28 94.5% Trader Joe’s, Marshall’s, LA FitnessOrange County metro area Santa Ana Downtown Plaza 1987/2010 2010 105,536 27 95.0% Kroger (Food 4 Less) Supermarket, Marshall’sSycamore Creek 2008 2010 74,198 18 100.0% Safeway (Vons) Supermarket, CVS Pharmacy (1)Desert Springs Marketplace 1993-94 / 2013 2011 113,718 19 96.3% Kroger (Ralph’s) Supermarket, Rite Aid PharmacyCypress Center West 1970/1978 /2014 2012 107,246 33 100.0% Kroger (Ralph’s) Supermarket, Rite Aid PharmacyHarbor Place Center 1994 2012 119,821 9 97.4% AA Supermarket, Ross Dress For Less5 Points Plaza 1961-62 / 2012 /2015 2013 160,536 35 95.0% Trader Joe’s, Pier 1Peninsula Marketplace 2000 2013 95,416 15 100.0% Kroger (Ralph’s) Supermarket, Planet FitnessMission Foothill Marketplace 1996 2014 110,678 10 15.9% Fullerton Crossroads 1977/1997/2010-2011 2017 219,785 24 98.2% Kroger (Ralph’s) Supermarket, Kohl’s, Jo-AnnFabrics and CraftsThe Village at Nellie Gail Ranch 1897 / 2014-2015 2017 88,486 24 99.4% Smart & Final Extra SupermarketSan Diego metro area Marketplace Del Rio 1990/ 2004 2011 177,203 43 89.1% Stater Brothers Supermarket, WalgreensRenaissance Towne Centre 1991/2011 2011 52,998 30 98.5% CVS PharmacyEuclid Plaza 1982/2012 2012 77,044 8 95.4% Vallarta Supermarket, WalgreensBay Plaza 1986/2013 2012 73,324 29 100.0% Seafood City SupermarketBernardo Heights Plaza 1983/2006 2013 37,729 4 96.3% Sprouts MarketHawthorne Crossings 1993/1999 2013 141,288 18 100.0% Mitsuwa Supermarket, Ross Dress For Less,StaplesCreekside Plaza 1993/2005 2014 128,852 24 97.1% Stater Brothers Supermarket, AMC TheatresNorthern California San Francisco metro area Pleasant Hill Marketplace 1980 2010 69,715 3 100.0% Total Wine and More, Buy Buy Baby, BassetFurniturePinole Vista Shopping Center 1981/2012 2011/2018 223,369 28 98.7% SaveMart (Lucky) Supermarket, Planet Fitness,KmartCountry Club Gate Center 1974/2012 2011 109,331 32 98.7% SaveMart (Lucky) Supermarket, Rite AidPharmacyMarlin Cove Shopping Center 1972/2001 2012 73,943 26 100.0% 99 Ranch MarketThe Village at Novato 2006 2012 20,081 4 100.0% Trader Joe’s, Pharmaca Pharmacy23Santa Teresa Village 1974-79 / 2013 2012 124,306 36 98.9% Grocery Outlet Supermarket, Dollar TreeGranada Shopping Center 1962/1994 2013 69,325 15 100.0% SaveMart (Lucky) SupermarketCountry Club Village 1995 2013 111,093 24 100.0% Walmart Neighborhood Market, CVS PharmacyNorth Park Plaza 1997 2014 76,697 15 100.0% H-Mart SupermarketWinston Manor 1977/1988/2011/2015 2015 49,852 14 100.0% Grocery Outlet SupermarketJackson Square 1972/1997 2015 114,220 16 100.0% Safeway Supermarket, CVS Pharmacy, 24 HourFitnessGateway Centre 1996 2015 112,553 25 98.9% SaveMart (Lucky) Supermarket, WalgreensIron Horse Plaza 1998-1999 2015 61,860 10 98.1% Lunardi’s MarketMonterey Center 2007 2016 25,798 7 87.3% Trader Joe’s, Pharmaca PharmacySanta Rosa Southside Shopping Center 1983-1984 2017 88,535 11 100.0% REI, Cost Plus World MarketMonta Loma Plaza 1973/ 2009-2010 2017 48,078 11 100.0% Safeway SupermarketSacramento metro area Norwood Shopping Center 1993/1999 2010 85,693 16 92.1% Viva Supermarket, Rite Aid Pharmacy, Citi TrendsMills Shopping Center 1959/1996 2011 235,314 30 87.0% Viva Supermarket, Ross Dress For Less (dd’sDiscounts), Dollar TreeMorada Ranch 2006 2011 101,842 19 97.5% Raleys SupermarketGreen Valley Station 2006/2007 2012 52,245 17 82.3% CVS PharmacyPacific Northwest Seattle Metropolitan Meridian Valley Plaza 1978/2011 2010 51,597 16 100.0% Kroger (QFC) SupermarketThe Market at Lake Stevens 2000 2010 74,130 9 100.0% Albertson’s (Haggen) SupermarketCanyon Park Shopping Center 1980/2012 2011 123,592 24 100.0% PCC Community Markets, Rite Aid Pharmacy,PetcoHawks Prairie Shopping Center 1988/2012 2011 157,529 24 100.0% Safeway Supermarket, Dollar Tree, Big LotsThe Kress Building 1924/2005 2011 74,616 8 100.0% IGA Supermarket, TJMaxxGateway Shopping Center 2007 2012 104,298 18 90.4% WinCo Foods (1), Rite Aid Pharmacy, Ross DressFor LessAurora Square 1980/1987 2012/2014 108,558 15 98.2% Central Supermarket, Marshall’s, Pier 1 ImportsCanyon Crossing 2008-2009 2013 120,398 28 100.0% Safeway SupermarketCrossroads Shopping Center 1962/2004/ 2015 2010/2013 463,813 96 100.0% Kroger (QFC) Supermarket, Bed Bath & Beyond,Dick’s Sporting GoodsBellevue Marketplace 1971/1982/ 2017 2015 113,758 20 100.0% Asian Family MarketFour Corner Square 1983/2015 2015 119,560 30 100.0% Grocery Outlet Supermarket, Walgreens, JohnsonsHome & GardenBridle Trails Shopping Center 1980/1984/ 1987 2016 108,377 31 100.0% Grocery Outlet Supermarket, Bartell Drugs, DollarTreePCC Community Markets Plaza 1981/2007 2017 34,459 1 100.0% PCC Community MarketsHighland Hill Shopping Center 1956/1989/ 2006 2017 163,926 20 100.0% Safeway Supermarket, LA Fitness, Dollar Tree,PetcoNorth Lynnwood Shopping Center 1963/1965/ 2003 2017 63,606 9 95.8% Kroger (QFC) SupermarketStadium Center 1926/2016 2018 48,888 7 100.0% Thriftway SupermarketPortland metro area Vancouver Market Center 1996/2012 2010 118,385 19 98.8% SkyzoneHappy Valley Town Center 2007 2010 138,662 37 100.0% New Seasons SupermarketWilsonville Old Town Square 2011 2010/2012 49,937 19 100.0% Kroger (Fred Meyer) Supermarket (1)Cascade Summit Town Square 2000 2010 94,934 31 100.0% Safeway SupermarketHeritage Market Center 2000 2010 107,468 17 97.3% Safeway Supermarket, Dollar TreeDivision Crossing 1992 2010 103,561 20 100.0% Rite Aid Pharmacy, Ross Dress For Less, AceHardware24Halsey Crossing 1992 2010 99,428 19 100.0% 24 Hour Fitness, Dollar TreeHillsboro Market Center 2001-2002 2011 156,021 23 100.0% Albertson’s Supermarket, Dollar Tree, AceHardwareRobinwood Shopping Center 1980/2012 2013 70,831 16 100.0% Walmart Neighborhood MarketTigard Marketplace 1988/2005 2014 136,889 18 99.3% H-Mart Supermarket, Bi-Mart PharmacyWilsonville Town Center 1991/1996 2014 167,829 41 100.0% Safeway Supermarket, Rite Aid Pharmacy, DollarTreeTigard Promenade 1996 2015 88,043 16 100.0% Safeway SupermarketSunnyside Village Square 1996-1997 2015 92,278 15 100.0% Grocery Outlet Supermarket, 24 Hour Fitness, AceHardwareJohnson Creek Center 2003/2009 2015 108,588 15 100.0% Trader Joe’s, Walgreens, Sportsman’s WarehouseRose City Center 1993/2012 2016 60,680 3 100.0% Safeway SupermarketDivision Center 1986-1987/2013-2014 2017 121,904 23 100.0% Grocery Outlet Supermarket, Rite Aid Pharmacy,PetcoRiverstone Marketplace 2002-2004 2017 95,774 23 98.5% Kroger (QFC) SupermarketKing City Plaza 1970/1980/ 1990 2018 62,676 20 100.0% Grocery Outlet SupermarketTotal Properties 10,485,223 1,986 96.9% _______________ (1)Retailer is not a tenant of the Company.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, 2018, no single tenant comprised more than 5.6% 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, 2018. Tenant Number of Leases % of Total AnnualBase Rent (1)Albertson’s / Safeway Supermarkets 19 5.6%Kroger Supermarkets 12 3.5%Rite Aid Pharmacy 14 1.6%JP Morgan Chase 22 1.5%Marshall’s / TJMaxx 6 1.3%SaveMart Supermarkets 4 1.3%Sprouts Markets 4 1.3%Ross Dress For Less / dd’s Discounts 7 1.2%Trader Joe’s 8 1.2%H-Mart Supermarkets 3 1.1% 99 19.6%___________________ (1)Annual base rent is equal to the annualized cash rent for all leases in place as of December 31, 2018 (including initial cash rent for new leases).25The following table sets forth a summary schedule of the annual lease expirations for leases in place across the Company’s total retail portfolio atDecember 31, 2018 (Annual Base Rent in thousands). Year of Expiration Number ofLeasesExpiring (1) Leased SquareFootage Annual BaseRent (2) Annual BaseRent %2019 238 697,859 $14,747 7.0%2020 288 1,095,037 22,686 10.7%2021 317 1,064,462 23,755 11.2%2022 299 1,188,809 26,611 12.6%2023 296 1,472,780 32,617 15.4%2024 168 1,035,679 20,591 9.8%2025 72 578,480 10,937 5.2%2026 75 591,794 11,408 5.4%2027 67 407,670 8,963 4.3%2028 77 689,795 15,452 7.3%Thereafter 89 1,327,542 23,417 11.1%Total 1,986 10,149,907 $211,184 100%___________________ (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, 2018 (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 retail anchor tenants atDecember 31, 2018 (Annual Base Rent in thousands). Anchor tenants are tenants with leases occupying at least 15,000 square feet or more. Year of Expiration Number ofLeasesExpiring (1) Leased SquareFootage Annual BaseRent (2) Annual BaseRent %2019 7 286,462 $2,811 1.3%2020 15 491,570 5,768 2.7%2021 14 425,104 5,107 2.4%2022 18 530,799 7,043 3.3%2023 26 836,758 13,312 6.3%2024 16 580,199 8,731 4.2%2025 11 367,230 5,301 2.5%2026 11 389,933 5,302 2.5%2027 8 212,350 3,336 1.6%2028 14 493,876 8,634 4.1%Thereafter 25 1,023,248 15,315 7.3%Total 165 5,637,529 $80,660 38.2%____________________ (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, 2018 (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 from26such legal actions are not expected to have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company. Item 4. Mine Safety Disclosures Not applicable.PART IIItem 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”. Holders As of February 15, 2019, ROIC had 61 registered holders. Such information was obtained through the registrar and transfer agent. Operating Partnership As of December 31, 2018, the Operating Partnership had 51 registered holders, including Retail Opportunity Investments GP, LLC. 27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, 2013 through December 31,2018. 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. Period EndingIndex 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018Retail Opportunity Investments Corp. $100.00 $118.83 $131.98 $161.32 $158.13 $131.34S&P500 $100.00 $113.69 $115.26 $129.05 $157.22 $150.33FTSE NAREIT Equity REITs $100.00 $128.03 $131.65 $143.01 $155.41 $149.12 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. 28Securities Authorized For Issuance Under Equity Compensation Plans During 2009, ROIC adopted the 2009 Equity Incentive Plan. Following stockholder approval at the 2018 Annual Meeting, on April 25, 2018, ROIC adoptedthe Amended and Restated 2009 Equity Incentive Plan (the “Equity Incentive Plan”). For a description of the 2009 Equity Incentive Plan and the EquityIncentive Plan, see Note 8 to the consolidated financial statements in this Annual Report on Form 10-K. The following table presents certain information about the Company’s equity compensation plan as of December 31, 2018: Plan Category Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining available forfuture issuanceunder equitycompensation plan(excluding securitiesreflected in the firstcolumn of this table)Equity compensation plan approved by stockholders 254,500 $10.75 4,207,442Equity compensation plan not approved by stockholders — — —Total 254,500 $10.75 4,207,44229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(in thousands, except share data) Year Ended December 31,Retail Opportunity Investments Corp.2018 2017 2016 2015 2014Statement of Operations Data: Total revenues$295,798 $273,260 $237,189 $192,699 $155,864Operating expenses192,434 179,595 160,018 133,364 112,090Gain on sale of real estate5,890 — — — 4,869Operating income109,254 93,665 77,171 59,335 48,643Interest expense and other finance expenses62,113 50,977 40,741 34,243 27,593Net income47,141 42,688 36,430 25,092 21,050Net Income Attributable to Retail OpportunityInvestments Corp.42,736 38,477 32,754 23,864 20,301Weighted average shares outstanding – Basic:112,645,490 109,400,123 104,072,222 95,651,780 83,411,230Weighted average shares outstanding – Diluted:124,558,893 121,743,831 116,039,940 100,017,781 87,453,409Income per share – Basic and Diluted Net Income Attributable to Retail OpportunityInvestments Corp.$0.38 $0.35 $0.31 $0.25 $0.24Dividends per common share$0.78 $0.75 $0.72 $0.68 $0.64Balance Sheet Data: Real Estate Investments, net$2,831,265 $2,849,282 $2,493,997 $2,162,306 $1,697,725Cash and cash equivalents6,076 11,553 13,125 8,844 10,773Total assets3,003,071 3,039,198 2,662,969 2,301,448 1,861,028Total liabilities1,694,643 1,709,557 1,347,404 1,136,432 898,246Non-controlling interests – redeemable OP Units— — — 33,674 —Total equity1,308,428 1,329,641 1,315,565 1,131,342 962,782 30RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPCONSOLIDATED HISTORICAL FINANCIAL INFORMATION(in thousands, except share data) Year Ended December 31,Retail Opportunity Investments Partnership, LP2018 2017 2016 2015 2014Statement of Operations Data: Total revenues$295,798 $273,260 $237,189 $192,699 $155,864Operating expenses192,434 179,595 160,018 133,364 112,090Gain on sale of real estate5,890 — — — 4,869Operating income109,254 93,665 77,171 59,335 48,643Interest expense and other finance expenses62,113 50,977 40,741 34,243 27,593Net Income Attributable to Retail OpportunityInvestments Partnership, LP47,141 42,688 36,430 25,092 21,050Weighted average units outstanding – Basic:124,271,802 121,460,958 115,819,731 99,738,504 86,573,888Weighted average units outstanding – Diluted:124,558,893 121,743,831 116,039,940 100,017,781 87,453,409Income per unit – Basic and Diluted Net Income Attributable to Retail OpportunityInvestments Partnership, LP$0.38 $0.35 $0.31 $0.25 $0.24Distributions per unit$0.78 $0.75 $0.72 $0.68 $0.64Balance Sheet Data: Real Estate Investments, net$2,831,265 $2,849,282 $2,493,997 $2,162,306 $1,697,725Cash and cash equivalents6,076 11,553 13,125 8,844 10,773Total assets3,003,071 3,039,198 2,662,969 2,301,448 1,861,028Total liabilities1,694,643 1,709,557 1,347,404 1,136,432 898,246Redeemable limited partners— — — 33,674 —Total capital1,308,428 1,329,641 1,315,565 1,131,342 962,782 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 The Company is organized in an UpREIT format pursuant to which Retail Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as thegeneral partner of, and ROIC conducts substantially all of its business through, its Operating Partnership, Retail Opportunity Investments Partnership, LP, aDelaware limited partnership, together with its subsidiaries. ROIC commenced operations in October 2009 as a fully integrated and self-managed REIT, and as of December 31, 2018, ROIC owned an approximate90.8% partnership interest and other limited partners owned the remaining 9.2% partnership interest in the Operating Partnership. ROIC specializes in theacquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States, anchoredby supermarkets and drugstores. As of December 31, 2018, the Company’s portfolio consisted of 92 properties (91 retail and one office) totaling approximately 10.5 million square feet ofGLA. As of December 31, 2018, the Company’s retail portfolio was approximately 96.9% leased.31During the year ended December 31, 2018, the Company leased and renewed approximately 441,000 and 1.1 million square feet, respectively, in itsportfolio. The table below provides a reconciliation of beginning of year vacant space to end of year vacant space for its retail portfolio as of December 31, 2018. Vacant Space SquareFootageVacant space at December 31, 2017303,098Square footage vacated196,264Vacant space in sold properties(3,668)Square footage leased(219,043)Vacant space at December 31, 2018276,651 The Company has committed approximately $20.9 million, or $47.29 per square foot, in tenant improvements, including building and site improvements, fornew leases that occurred during the year ended December 31, 2018. The Company has committed approximately $1.1 million, or $2.39 per square foot, inleasing commissions for the new leases that occurred during the year ended December 31, 2018. Additionally, the Company has committed approximately$958,000, or $0.88 per square foot, in tenant improvements for renewed leases that occurred during the year ended December 31, 2018. Leasing commissioncommitments for renewed leases were not material for the year ended December 31, 2018.Results of Operations At December 31, 2018, the Company had 92 properties (91 retail and one office), all of which are consolidated in the accompanying financial statements. TheCompany believes, because of the location of the properties in densely populated areas, the nature of its investments provides for relatively stable revenueflows even during difficult economic times. The Company has a strong capital structure with manageable debt as of December 31, 2018. The Companyexpects 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,and amortization of 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. Results of Operations for the year ended December 31, 2018 compared to the year ended December 31, 2017. 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, 2018 and 2017 (in thousands). 32 Year Ended December 31, 2018 2017Operating income per GAAP$109,254 $93,665Plus:Depreciation and amortization100,838 96,256 General and administrative expenses14,918 14,103 Acquisition transaction costs— 4 Other expenses478 418Less:Gain on sale of real estate(5,890) —Property operating income$219,598 $204,446 The following comparison for the year ended December 31, 2018 compared to the year ended December 31, 2017, makes reference to the effect of the same-center properties. Same-center properties, which totaled 78 of the Company’s 92 properties as of December 31, 2018, 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, except for oneshopping center that is currently under contract to be sold and is slated for new multi-family development and is no longer being managed as a retail assetand the Company’s corporate office headquarters. The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year endedDecember 31, 2018 related to the 78 same-center properties owned by the Company during the entirety of both the years ended December 31, 2018 and 2017and consolidated into the Company’s financial statements during such periods (in thousands). Year Ended December 31, 2018 Same-Center Non Same-Center TotalOperating income per GAAP$101,121 $8,133 $109,254Plus:Depreciation and amortization86,317 14,521 100,838 General and administrative expenses (1)— 14,918 14,918 Other expenses (1)— 478 478Less:Gain on sale of real estate— (5,890) (5,890)Property operating income$187,438 $32,160 $219,598______________________ (1)For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does notallocate these types of expenses between same-center and non same-center properties.33The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year endedDecember 31, 2017 related to the 78 same-center properties owned by the Company during the entirety of both the years ended December 31, 2018 and 2017and consolidated into the Company’s financial statements during such periods (in thousands). Year Ended December 31, 2017 Same-Center Non Same-Center TotalOperating income (loss) per GAAP$101,072 $(7,407) $93,665Plus:Depreciation and amortization87,978 8,278 96,256 General and administrative expenses (1)— 14,103 14,103 Acquisition transaction costs— 4 4 Other expenses (1)— 418 418Property operating income$189,050 $15,396 $204,446______________________ (1)For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does notallocate these types of expenses between same-center and non same-center properties.During the year ended December 31, 2018, the Company generated property operating income of approximately $219.6 million compared to propertyoperating income of $204.4 million generated during the year ended December 31, 2017. Property operating income increased by approximately $15.2million during the year ended December 31, 2018 primarily as a result of an increase in the number of properties owned by the Company in 2018 comparedto 2017 as well as $2.2 million of lease settlement income received in connection with a property that is currently under contract to be sold and is slated fornew multi-family development. As of December 31, 2018, the Company owned 92 properties as compared to 91 properties at December 31, 2017. Theproperties acquired during 2018 and 2017 increased property operating income in the year ended December 31, 2018 by approximately $16.8 millioncompared to the year ended December 31, 2017. The property operating income for the 78 same-center properties decreased approximately $1.6 millionprimarily due to a $2.7 million accelerated recognition of a below-market lease intangible liability resulting from a lease termination during the year endedDecember 31, 2017, offset by an increase in rental revenue during the year ended December 31, 2018.Depreciation and amortization The Company incurred depreciation and amortization expenses during the year ended December 31, 2018 of approximately $100.8 million compared to$96.3 million incurred during the year ended December 31, 2017. Depreciation and amortization expenses were higher in 2018 as a result of an increase inthe number of properties owned by the Company in 2018 compared to 2017. General and administrative expenses The Company incurred general and administrative expenses during the year ended December 31, 2018 of approximately $14.9 million compared to $14.1million incurred during the year ended December 31, 2017. General and administrative expenses increased approximately $815,000 primarily as a result ofan increase in compensation-related expenses. Gain on sale of real estateOn September 27, 2018, the Company sold Round Hill Square, a non-core shopping center located in Zephyr Cove, Nevada. The sales price of $28.0 million,less costs to sell, resulted in net proceeds of approximately $26.9 million. The Company recorded a gain on sale of real estate of approximately $5.9million for the year ended December 31, 2018. There were no property sales in the year ended December 31, 2017.Interest expense and other finance expenses During the year ended December 31, 2018, the Company incurred approximately $62.1 million of interest expense compared to approximately $51.0 millionduring the year ended December 31, 2017. Interest expense increased approximately $11.1 million primarily due to the incremental increase in interestexpense recognized on the Senior Notes Due 2027 issued in December 2017 and increased interest rates payable on the credit facility.34Results of Operations for the year ended December 31, 2017 compared to the year ended December 31, 2016. 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, 2017 and 2016 (in thousands). Year Ended December 31, 2017 2016Operating income per GAAP$93,665 $77,171Plus:Depreciation and amortization96,256 88,359 General and administrative expenses14,103 13,120 Acquisition transaction costs4 824 Other expenses418 456Property operating income$204,446 $179,930 The following comparison for the year ended December 31, 2017 compared to the year ended December 31, 2016, makes reference to the effect of the same-center properties. Same-center properties, which totaled 71 of the Company’s 91 properties as of December 31, 2017, 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, 2017 related to the 71 same-center properties owned by the Company during the entirety of both the years ended December 31, 2017 and 2016and consolidated into the Company’s financial statements during such periods (in thousands). Year Ended December 31, 2017 Same-Center Non Same-Center TotalOperating income per GAAP$92,114 $1,551 $93,665Plus:Depreciation and amortization76,147 20,109 96,256 General and administrative expenses (1)— 14,103 14,103 Acquisition transaction costs— 4 4 Other expenses (1)— 418 418Property operating income$168,261 $36,185 $204,446______________________(1)For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does notallocate these types of expenses between same-center and non same-center properties.The table below provides a reconciliation of consolidated operating income in accordance with GAAP to property operating income for the year endedDecember 31, 2016 related to the 71 same-center properties owned by the Company during the entirety of both the years ended December 31, 2017 and 2016and consolidated into the Company’s financial statements during such periods (in thousands). 35 Year Ended December 31, 2016 Same-Center Non Same-Center TotalOperating income per GAAP$85,378 $(8,207) $77,171Plus:Depreciation and amortization79,909 8,450 88,359 General and administrative expenses (1)— 13,120 13,120 Acquisition transaction costs201 623 824 Other expenses (1)— 456 456Property operating income$165,488 $14,442 $179,930______________________ (1)For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does notallocate these types of expenses between same-center and non same-center properties.During the year ended December 31, 2017, the Company generated property operating income of approximately $204.4 million compared to propertyoperating income of $179.9 million generated during the year ended December 31, 2016. Property operating income increased by $24.5 million during theyear ended December 31, 2017 primarily as a result of an increase in the number of properties owned by the Company in 2017 compared to 2016 and anincrease in same-center properties’ operating income. As of December 31, 2017, the Company owned 91 properties as compared to 81 properties atDecember 31, 2016. The properties acquired during 2017 and 2016 increased property operating income in 2017 by approximately $21.7 million. The 71same-center properties increased property operating income by approximately $2.8 million. This increase is primarily due to an increase in base rents. Depreciation and amortization The Company incurred depreciation and amortization expenses during the year ended December 31, 2017 of approximately $96.3 million compared to $88.4million incurred during the year ended December 31, 2016. Depreciation and amortization expenses were higher in 2017 as a result of an increase in thenumber of properties owned by the Company in 2017 compared to 2016. General and administrative expenses The Company incurred general and administrative expenses during the year ended December 31, 2017 of approximately $14.1 million compared to $13.1million incurred during the year ended December 31, 2016. General and administrative expenses increased approximately $983,000 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, 2017 of approximately $4,000 compared to $824,000 incurred duringthe year ended December 31, 2016. Acquisition costs decreased approximately $820,000 as a result of the Company’s prospective adoption of AccountingStandards Update No. 2017-1, “Business Combinations: Clarifying the Definition of a Business” on October 1, 2016. The standard issued by the FASBredefined the definition of a business, whereby an acquisition in which substantially all of the fair value of the assets acquired are concentrated in a singleidentifiable asset is accounted for as an asset acquisition. As a result, transaction costs related to such an acquisition are capitalized. During the year endedDecember 31, 2017 and the three months ended December 31, 2016, the Company concluded that its acquisitions did not meet the definition of a businessand accounted for such acquisitions as asset acquisitions and capitalized all transactions costs related to completed and in-process acquisitions. Interest expense and other finance expenses During the year ended December 31, 2017, the Company incurred approximately $51.0 million of interest expense compared to approximately $40.7 millionduring the year ended December 31, 2016. Interest expense increased approximately $10.2 million primarily due to a higher debt level as a result ofacquisitions and interest incurred related to the Senior Notes Due 2026 issued in September 2016 and the Senior Notes Due 2027 issued in December 2017. 36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. As previously discussed, effective October 1, 2016, the Company prospectively adopted ASU No. 2017-1. Accordingly, during the years ended December 31,2018 and 2017 and the three months ended December 31, 2016, the Company concluded that its acquisitions did not meet the definition of a business andaccounted for such acquisitions as asset acquisitions and capitalized all transaction costs related to completed and in-process acquisitions. Acquisition coststhat are expensed will reduce our FFO. For the years ended December 31, 2017 and 2016, the Company expensed $4,000 and $824,000, respectively, relatingto real estate acquisitions. The Company did not expense any acquisition costs during the year ended December 31, 2018. The table below provides a reconciliation of net income applicable to stockholders in accordance with GAAP to FFO for the years ended December 31, 2018,2017 and 2016 (in thousands). Year Ended December 31, 2018 2017 2016Net income attributable to ROIC$42,736 $38,477 $32,754Plus: Depreciation and amortization100,838 96,256 88,359Less: Gain on sale of real estate(5,890) — —Funds from operations – basic137,684 134,733 121,113Net income attributable to non-controlling interests4,405 4,211 3,676Funds from operations – diluted$142,089 $138,944 $124,789 Cash Net Operating Income (“NOI”) Cash NOI is a non-GAAP financial measure of the Company’s performance. The most directly comparable GAAP financial measure is operating income. TheCompany defines cash NOI as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses andproperty taxes), adjusted for non-cash revenue and operating expense items such as straight-line rent and amortization of lease intangibles, debt-relatedexpenses, and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, acquisition transaction costs,other expense, interest expense, gains and losses from property acquisitions and dispositions, extraordinary items, tenant improvements and leasingcommissions. Other REITs may use different methodologies for calculating cash NOI, and accordingly, the Company’s cash NOI may not be comparable toother REITs. Cash NOI is used by management internally to evaluate and compare the operating performance of the Company’s properties. The Company believes cashNOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those cashincome and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of theCompany’s properties as this measure is not affected37by non-cash revenue and expense recognition items, the cost of the Company’s funding, the impact of depreciation and amortization expenses, gains orlosses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to the Company’sownership of properties. The Company believes the exclusion of these items from operating income is useful because the resulting measure captures theactual revenue generated and actual expenses incurred in operating the Company’s properties as well as trends in occupancy rates, rental rates and operatingcosts.Cash NOI is a measure of the operating performance of the Company’s properties but does not measure the Company’s performance as a whole and istherefore not a substitute for net income or operating income as computed in accordance with GAAP.Same-Center Cash NOI The table below provides a reconciliation of same-center cash NOI to consolidated operating income in accordance with GAAP for the years endedDecember 31, 2018 and 2017. The table makes reference to the effect of the same-center properties. Same-center properties, which totaled 78 of theCompany’s 92 properties as of December 31, 2018, represent all operating properties owned by the Company during the entirety of both periods presentedand consolidated into the Company’s financial statements during such periods, except for one shopping center that is currently under contract to be sold andis slated for new multi-family development and is no longer being managed as a retail asset and the Company’s corporate office headquarters (in thousands). Year Ended December 31, 2018 2017GAAP operating income$109,254 $93,665Depreciation and amortization100,838 96,256General and administrative expenses14,918 14,103Acquisition transaction costs— 4Other expense478 418Gain on sale of real estate(5,890) —Property revenues and other expenses (1)(18,907) (22,492)Total Company cash NOI200,691 181,954Non same-center cash NOI(28,163) (13,642)Same-center cash NOI$172,528 $168,312______________________ (1)Includes straight-line rents, amortization of above-market and below-market lease intangibles, anchor lease termination fees, net of contractualamounts, and expense and recovery adjustments related to prior periods. During the year ended December 31, 2018, the Company generated same-center cash NOI of approximately $172.5 million compared to same-center cashNOI of approximately $168.3 million generated during the year ended December 31, 2017, representing a 2.5% increase. This increase is primarily due to anincrease in base rents and recoveries. The table below provides a reconciliation of same-center cash NOI to consolidated operating income in accordance with GAAP for the years endedDecember 31, 2017 and 2016. The table makes reference to the effect of the same-center properties. Same-center properties, which totaled 71 of theCompany’s 91 properties as of December 31, 2017, represent all operating properties owned by the Company during the entirety of both periods presentedand consolidated into the Company’s financial statements during such periods (in thousands). 38 Year Ended December 31, 2017 2016GAAP operating income$93,665 $77,171Depreciation and amortization96,256 88,359General and administrative expenses14,103 13,120Acquisition transaction costs4 824Other expense418 456Property revenues and other expenses (1)(22,404) (17,636)Total Company cash NOI182,042 162,294Non same-center cash NOI(27,337) (12,171)Same-center cash NOI$154,705 $150,123______________________ (1)Includes straight-line rents, amortization of above-market and below-market lease intangibles, anchor lease termination fees, net of contractualamounts, and expense and recovery adjustments related to prior periods. During the year ended December 31, 2017, the Company generated same-center cash NOI of approximately $154.7 million compared to same-center cashNOI of approximately $150.1 million generated during the year ended December 31, 2016, representing a 3.1% increase. This increase is primarily due to anincrease in base rents, recoveries and other income.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. 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.39 The Company recognizes the acquisition of real estate properties, including acquired tangible (consisting of land, buildings and improvements), andacquired intangible assets and liabilities (consisting of above-market and below-market leases and acquired in-place leases) at their fair value (foracquisitions meeting the definition of a business) and relative fair value (for acquisitions not meeting the definition of a business). Acquired lease intangibleassets include above-market leases and acquired in-place leases, and acquired lease intangible liabilities represent below-market leases, in the accompanyingconsolidated balance sheets. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, whichvalue is then allocated to land, buildings and improvements based on management’s determination of the relative fair values of these assets. In valuing anacquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, and estimatesof lost rental revenue during the expected lease-up periods based on its evaluation of current market demand. Management also estimates costs to executesimilar 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 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 yearsProperty Improvements10-20 yearsFurniture/Fixtures3-10 yearsTenant 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. REIT Qualification Requirements The Company elected to be taxed as a REIT under the Code, and believes that it has been organized and has operated in a manner that will allow it tocontinue to qualify for taxation as a REIT under the Code. The Company is subject to a number of operational and organizational requirements to qualify and then maintain qualification as a REIT. If the Companydoes not qualify as a REIT, its income would become subject to U.S. federal, state and local income taxes at regular corporate rates that would be substantialand the Company may not be permitted to re-elect to qualify as a REIT for four taxable years following the year that it failed to qualify as a REIT. TheCompany’s results of operations, liquidity and amounts distributable to stockholders would be significantly reduced. 40Recent U.S. Federal Income Tax LegislationOn December 22, 2017, Congress enacted H.R. 1, also known as the Tax Cuts and Jobs Act of 2017 (“TCJA”). The TCJA made major changes to the InternalRevenue Code, including the reduction of the tax rates applicable to individuals and subchapter C corporations, a reduction or elimination of certaindeductions (including new limitations on the deductibility of interest expense), permitting immediate expensing of capital expenditures and significantchanges in the taxation of earnings from non-U.S. sources. The effect of the significant changes made by the TCJA is highly uncertain, and additionaladministrative guidance is still required in order to fully evaluate the effect of many provisions. Technical corrections or other amendments to the new rules,and additional administrative guidance interpreting these new rules, may be forthcoming at any time but may also be significantly delayed. While we do notcurrently expect this reform to have a significant impact to the Company's consolidated financial statements, stockholders are urged to consult with their taxadvisors regarding the effects of the TCJA or other legislative, regulatory or administrative developments on an investment in the Company's common stock.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 May 2016 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, 2018, the Company’s primary sources of cash were distributions from the Operating Partnership and proceeds from theissuance of common stock. As of December 31, 2018, the Company has determined that it has adequate working capital to meet its dividend fundingobligations for the next twelve months.On May 1, 2018, ROIC entered into five separate Sales Agreements (the “Sales Agreements”) with each of Capital One Securities, Inc., Jefferies LLC,KeyBanc Capital Markets Inc., Raymond James & Associates, Inc., and Robert W. Baird & Co. Incorporated (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 offeringprice of up to $250.0 million through the Agents41either as agents or principals. In addition, on April 30, 2018, the Company terminated sales agreements with Jefferies, KeyBanc and Raymond James, dated asof September 19, 2014 and with Baird, dated as of May 23, 2016 (the “Prior Sales Agreements”), which the Company entered into in connection with its prior“at the market” offering.During the year ended December 31, 2018, ROIC sold a total of 1,251,376 shares under the Sales Agreements, which resulted in gross proceeds ofapproximately $24.2 million and commissions of approximately $242,000 paid to the Agents. During the year ended December 31, 2018, ROIC sold a totalof 75,314 shares of common stock under the Prior Sales Agreements, which resulted in gross proceeds of approximately $1.5 million and commissions ofapproximately $19,000 paid to the Agents. During the year ended December 31, 2017, ROIC sold a total of 34,001 shares under the Prior Sales Agreements,which resulted in gross proceeds of approximately $681,000 and commissions of approximately $9,000 paid to the Agents. For the year ended December 31, 2018, dividends paid to stockholders totaled approximately $88.5 million. Additionally, for the year ended December 31,2018, the Operating Partnership made distributions of approximately $9.1 million to the non-controlling interest OP Unitholders. On a consolidated basis,cash flows from operations for the same period totaled approximately $130.9 million. For the year ended December 31, 2017, dividends paid to stockholderstotaled approximately $82.9 million. Additionally, for the year ended December 31, 2017, the Operating Partnership made distributions of approximately$8.7 million to the non-controlling interest OP Unitholders. On a consolidated basis, cash flows from operations for the same period totaled approximately$128.9 million. Potential future sources of capital include 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, 2018, the Operating Partnership’s primary sources of cash were (i) cash flow from operations, (ii) proceeds from bankborrowings under the credit facility, and (iii) cash contributed by ROIC from the issuance of common stock. As of December 31, 2018, the OperatingPartnership has determined that it has adequate working capital to meet its debt obligations and operating expenses for the next twelve months. On September 29, 2015, the Company entered into a term loan agreement under which the lenders agreed to provide a $300.0 million unsecured term loanfacility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term Loan Agreement”) pursuantto which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term LoanAgreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions setforth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. Borrowings under the Term Loan Agreement accrueinterest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) aLIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the relevant period (the “Eurodollar Rate”), or (ii) a base rate determinedby reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the Administrative Agent as its “prime rate,” and (c)the Eurodollar Rate plus 1.10%. The Operating Partnership has an unsecured revolving credit facility with several banks. Effective September 8, 2017, the Company entered into a SecondAmended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which the borrowing capacity was increased from $500.0 million to$600.0 million. The maturity date of the credit facility was extended from January 31, 2019 to September 8, 2021, with two six-month extension options,which may be exercised by the Operating Partnership upon satisfaction of certain conditions including the payment of extension fees. Additionally, thecredit facility contains an accordion feature, which allows the Operating Partnership to increase the borrowing capacity up to an aggregate of $1.2 billion,subject to lender consents and other conditions. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to anapplicable rate based on the credit rating level of the Company, plus, as applicable, (i) the Eurodollar Rate, or (ii) a base rate determined by reference to thehighest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank, National Association as its “prime rate,” and (c) the EurodollarRate plus 1.00%. Additionally, the Operating Partnership is obligated to pay a facility fee at a rate based on the credit rating level of the Company, currently0.20%, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the credit facility. Both the term loan and credit facility contain customary representations, financial and other covenants. The Operating Partnership’s ability to borrow underthe credit facility and term loan is subject to its compliance with financial covenants and other restrictions on an ongoing basis. The Operating Partnershipwas in compliance with such covenants at December 31, 2018.42 As of December 31, 2018, $300.0 million and $156.0 million were outstanding under the term loan and credit facility, respectively. The average interest rateson the term loan and the credit facility during the year ended December 31, 2018 were 3.1% and 3.0%, respectively. The Company had no availableborrowings under the term loan at December 31, 2018. The Company had $444.0 million available to borrow under the credit facility at December 31, 2018. Further, the Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2017, $200.0 million aggregateprincipal amount of unsecured senior notes in September 2016, $250.0 million aggregate principal amount of unsecured senior notes in December 2014 and$250.0 million aggregate principal amount of unsecured senior notes in December 2013, each of which were fully and unconditionally guaranteed by ROIC. 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 (in thousands): Year Ended December 31, 2018 2017 2016Net Cash Provided by (Used in): Operating activities$130,918 $128,938 $114,615Investing activities$(56,055) $(317,963) $(325,125)Financing activities$(84,379) $192,740 $214,689 Net Cash Flows from: Operating Activities Increase in cash flows provided by operating activities from 2017 to 2018: Net cash flows provided by operating activities amounted to $130.9 million during the year ended December 31, 2018, compared to $128.9 million duringthe year ended December 31, 2017. During the year ended December 31, 2018, cash flows provided by operating activities increased by approximately $2.0million primarily due to an increase in property operating income of approximately $15.2 million, offset by an increase in interest expense of approximately$11.1 million due to interest incurred related to the Senior Notes Due 2027 issued in December 2017 and increased interest rates payable on the credit facilityand term loan and the timing of collections and payments of working capital accounts. Increase in cash flows provided by operating activities from 2016 to 2017: Net cash flows provided by operating activities amounted to $128.9 million during the year ended December 31, 2017, compared to $114.6 million duringthe year ended December 31, 2016. During the year ended December 31, 2017, cash flows provided by operating activities increased by approximately $14.3million primarily due to an increase in property operating income of approximately $24.5 million, offset by an increase in interest expense of approximately$10.2 million due to higher borrowing amounts in 2017 as compared to 2016.Investing Activities Decrease in cash flows used in investing activities from 2017 to 2018: Net cash flows used by investing activities amounted to $56.1 million during the year ended December 31, 2018, compared to $318.0 million during the yearended December 31, 2017. During the year ended December 31, 2018, cash flows used in investing activities decreased approximately $261.9 million,primarily due to the decrease in investments in real estate of approximately $219.2 million, an increase in proceeds from the sale of real estate ofapproximately $26.9 million and a decrease in improvements to properties of approximately $14.9 million.43 Decrease in cash flows used in investing activities from 2016 to 2017: Net cash flows used by investing activities amounted to $318.0 million during the year ended December 31, 2017, compared to $325.1 million during theyear ended December 31, 2016. During the year ended December 31, 2017, cash flows used in investing activities decreased approximately $7.2 million,primarily due to the decrease in investments in real estate of approximately $21.5 million, offset by an increase in improvements to properties ofapproximately $13.3 million. Financing Activities Decrease in cash flows provided by financing activities from 2017 to 2018: Net cash flows used in financing activities amounted to $84.4 million during the year ended December 31, 2018, compared to net cash flows provided byfinancing activities of $192.7 million during the year ended December 31, 2017. This decrease of approximately $277.1 million for the year endedDecember 31, 2018 is primarily due to proceeds received during the year ended December 31, 2017 of $250.0 million related to the issuance of the SeniorNotes Due 2027, the net decrease in proceeds from draws on the credit facility of $33.0 million, the increase in repayments on mortgages of approximately$10.8 million and the increase in dividend and distribution payments of approximately $5.9 million. These decreases were offset by the increase in proceedsfrom the sale of common stock of approximately $21.2 million.Decrease in cash flows provided by financing activities from 2016 to 2017: Net cash flows provided by financing activities amounted to $192.7 million during the year ended December 31, 2017, compared to $214.7 million duringthe year ended December 31, 2016. During the year ended December 31, 2017, cash flows provided by financing activities decreased approximately $21.9million, primarily due to a decrease of $180.4 million in proceeds from the sale of common stock, and an increase in dividends paid to common shareholdersof approximately $7.2 million, offset by an increase of $50.0 million in proceeds received from the issuance of senior notes, a decrease of approximately$83.0 million in net payments on the credit facility, and a $38.7 million decrease in cash redemption of OP Units. 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, 2018 (in thousands): 2019 2020 2021 2022 2023 Thereafter TotalContractual obligations: Mortgage Notes Payable Principal (1)$551 $577 $717 $24,132 $686 $60,045 $86,708Mortgage Notes Payable Interest3,796 3,774 3,737 3,170 2,482 2,618 19,577Term loan (2)— — — 300,000 — — 300,000Credit facility (3)— — 156,000 — — — 156,000Senior Notes Due 2027 (4)10,475 10,475 10,475 10,475 10,475 291,900 344,275Senior Notes Due 2026 (4)7,900 7,900 7,900 7,900 7,900 223,700 263,200Senior Notes Due 2024 (4)10,000 10,000 10,000 10,000 10,000 260,000 310,000Senior Notes Due 2023 (4)12,500 12,500 12,500 12,500 262,500 — 312,500Operating lease obligations1,280 1,287 1,283 1,304 1,330 33,939 40,423Total$46,502 $46,513 $202,612 $369,481 $295,373 $872,202 $1,832,683__________________ (1)Does not include unamortized mortgage premium of approximately $2.1 million as of December 31, 2018.(2)For the purpose of the above table, the Company has assumed that borrowings under the term loan accrue interest at the interest rate on the term loanas of December 31, 2018 which was 3.6%. Borrowings under the term loan accrue interest at a rate equal to an applicable rate based on the credit ratinglevel of the Company, plus, as applicable (i) the Eurodollar Rate,44or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by theAdministrative Agent as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%.(3)For the purpose of the above table, the Company has assumed that borrowings under the credit facility accrue interest at the interest rate on the creditfacility as of December 31, 2018 which was 3.5%. Borrowings under the credit facility accrue interest at a rate equal to an applicable rate based on thecredit rating level of the Company, plus, as applicable (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federalfunds rate plus 0.50%, (b) the rate of interest announced by KeyBank, National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%.(4)Represents payments of interest only in years 2019 through 2022 and payments of both principal and interest thereafter.The Company has committed approximately $21.8 million and $1.1 million in tenant improvements (including building and site improvements) and leasingcommissions, respectively, for the new leases and renewals that occurred during the year ended December 31, 2018. As of December 31, 2018, the Companydid 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, 2018, 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. On September 29, 2015, the Company entered into a term loan agreement under which the lenders agreed to provide a $300.0 million unsecured term loanfacility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term Loan Agreement”) pursuantto which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term LoanAgreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions setforth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. The Operating Partnership has an unsecuredrevolving credit facility with several banks. Effective September 8, 2017, the Company entered into a Second Amended and Restated Credit Agreement (the“Credit Facility Agreement”) pursuant to which the borrowing capacity was increased from $500.0 million to $600.0 million. The maturity date of the creditfacility was extended from January 31, 2019 to September 8, 2021, with two six-month extension options, which may be exercised by the OperatingPartnership upon satisfaction of certain conditions including the payment of extension fees. Additionally, the credit facility contains an accordion feature,which allows the Operating Partnership to increase the borrowing capacity up to an aggregate of $1.2 billion, subject to lender consents and other conditions. Further, the Operating Partnership issued $250.0 million aggregate principal amount of unsecured senior notes in December 2017, $200.0 million aggregateprincipal amount of unsecured senior notes in September 2016, $250.0 million aggregate principal amount of unsecured senior notes in December 2014 and$250.0 million aggregate principal amount of unsecured senior notes in December 2013, all of which were fully and unconditionally guaranteed by ROIC.45 The Company may borrow on a non-recourse basis at the corporate level or Operating Partnership level. Non-recourse indebtedness means the indebtednessof 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 representations and warrantiessuch as those relating to the absence of fraud, misappropriation, misapplication of funds, environmental conditions and material misrepresentations. Becausenon-recourse financing generally restricts the lender’s claim on the assets of the borrower, the lender generally may only proceed against the asset securingthe 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 operating cashflow, borrowings under the credit facility, the assumption ofexisting mortgage debt, the issuance of OP Units, equity and debt offerings, and the potential sale of existing assets. In addition, the Company may acquireretail properties indirectly through joint ventures with third 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, 2018, the Company had $456.0 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 11, “Derivative and Hedging Activities,” to the accompanyingconsolidated financial statements for certain quantitative details related to the interest rate swaps. The Company entered into interest rate swaps in order to economically hedge against the risk of rising interest rates that would affect the Company’s interestexpense related to its future anticipated debt issuances as part of its overall borrowing program. The sensitivity analysis table presented below shows theestimated instantaneous parallel shift in the yield curve up and down by 50 and 100 basis points, respectively, on the clean market value of its interest ratederivatives as of December 31, 2018, exclusive of non-performance risk (in thousands).46Swap Notional Less 100 basispoints Less 50 basispoints December 31, 2018Value Increase 50 basispoints Increase 100 basispoints$50,000 $67 $67 $67 $67 $67$50,000 $71 $71 $71 $71 $71$100,000 $(1,010) $715 $2,404 $4,060 $5,683$100,000 $(1,010) $715 $2,404 $4,060 $5,683$50,000 $(2,026) $(1,149) $(291) $551 $1,376$50,000 $(2,032) $(1,155) $(297) $545 $1,370See Note 11 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 IHS Markit ratings in order to derive a curve thatconsiders 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 uses interest rate swaps to manage its interest raterisk. See Note 11 of the accompanying consolidated financial statements.47Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements and Financial Statement Schedule PageReports of Independent Registered Public Accounting Firm49 Consolidated Financial Statements of Retail Opportunity Investments Corp.: Consolidated Balance Sheets52Consolidated Statements of Operations and Comprehensive Income53Consolidated Statements of Equity54Consolidated Statements of Cash Flows55 Consolidated Financial Statements of Retail Opportunity Investments Partnership, LP: Consolidated Balance Sheets56Consolidated Statements of Operations and Comprehensive Income57Consolidated Statements of Partners’ Capital58Consolidated Statements of Cash Flows59 Notes to Consolidated Financial Statements60 Schedule III Real Estate and Accumulated Depreciation82 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.48REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Retail Opportunity Investments Corp. Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Retail Opportunity Investments Corp. (the “Company”) as of December 31, 2018 and2017, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the three years in the period endedDecember 31, 2018 and the related notes and financial statement schedule listed in the Index at Item 8 (collectively referred to as the “consolidated financialstatements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of theCompany at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31,2018, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 20, 2019 expressed an unqualifiedopinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLPWe have served as the Company’s auditor since 2010San Diego, CaliforniaFebruary 20, 2019 49REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Retail Opportunity Investments Corp. Opinion on Internal Control over Financial ReportingWe have audited Retail Opportunity Investments Corp.’s (the “Company”) internal control over financial reporting as of December 31, 2018, based oncriteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013Framework) (the COSO criteria). In our opinion, Retail Opportunity Investments Corp. maintained, in all material respects, effective internal control overfinancial reporting as of December 31, 2018, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of Retail Opportunity Investments Corp. as of December 31, 2018 and 2017, and the related consolidated statements of operations andcomprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2018 and the related notes and financialstatement schedule listed in the index at Item 8 and our report dated February 20, 2019 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting (RetailOpportunity Investments Corp). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating 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. Definition and Limitations of Internal Control Over Financial ReportingA 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. /s/ Ernst & Young LLPSan Diego, CaliforniaFebruary 20, 2019 50REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Partners of Retail Opportunity Investments Partnership, LP Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Retail Opportunity Investments Partnership, LP (the “Operating Partnership”) as ofDecember 31, 2018 and 2017, the related consolidated statements of operations and comprehensive income, Partners’ capital, and cash flows for each of thethree years in the period ended December 31, 2018 and the related notes and financial statement schedule listed in the Index at Item 8 (collectively referred toas the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of the Operating Partnership at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three yearsin the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.Basis for OpinionThese financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the OperatingPartnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities andExchange Commission and the PCAOB. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal controlover financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose ofexpressing an opinion on the effectiveness of the Operating Parntership’s internal control over financial reporting. Accordingly, we express no such opinion. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLPWe have served as the Operating Partnership’s auditor since 2013San Diego, CaliforniaFebruary 20, 201951RETAIL OPPORTUNITY INVESTMENTS CORP.Consolidated Balance Sheets(In thousands, except share data) December 31, 2018 2017ASSETS Real Estate Investments: Land$894,240 $878,797Building and improvements2,266,232 2,230,600 3,160,472 3,109,397Less: accumulated depreciation329,207 260,115Real Estate Investments, net2,831,265 2,849,282Cash and cash equivalents6,076 11,553Restricted cash1,373 5,412Tenant and other receivables, net46,832 43,257Deposits— 500Acquired lease intangible assets, net72,109 82,778Prepaid expenses4,194 2,853Deferred charges, net33,857 37,167Other7,365 6,396Total assets$3,003,071 $3,039,198 LIABILITIES AND EQUITY Liabilities: Term loan$299,076 $298,816Credit facility153,689 140,329Senior Notes941,449 940,086Mortgage notes payable88,511 107,915Acquired lease intangible liabilities, net166,146 178,984Accounts payable and accrued expenses15,488 18,638Tenants’ security deposits7,065 6,771Other liabilities23,219 18,018Total liabilities1,694,643 1,709,557 Commitments and contingencies Equity: Preferred stock, $0.0001 par value 50,000,000 shares authorized; none issued and outstanding— —Common stock, $0.0001 par value, 500,000,000 shares authorized; 113,992,837 and 112,347,451 sharesissued and outstanding at December 31, 2018 and December 31, 2017, respectively11 11Additional paid-in capital1,441,080 1,412,590Dividends in excess of earnings(256,438) (210,490)Accumulated other comprehensive income3,561 1,856Total Retail Opportunity Investments Corp. stockholders’ equity1,188,214 1,203,967Non-controlling interests120,214 125,674Total equity1,308,428 1,329,641Total liabilities and equity$3,003,071 $3,039,198 See accompanying notes to consolidated financial statements.52RETAIL OPPORTUNITY INVESTMENTS CORP.Consolidated Statements of Operations and Comprehensive Income(In thousands, except per share data) Year Ended December 31, 2018 2017 2016Revenues Base rents$223,797 $210,564 $183,330Recoveries from tenants65,804 58,818 51,454Other income6,197 3,878 2,405Total revenues295,798 273,260 237,189 Operating expenses Property operating43,851 39,151 32,201Property taxes32,349 29,663 25,058Depreciation and amortization100,838 96,256 88,359General and administrative expenses14,918 14,103 13,120Acquisition transaction costs— 4 824Other expense478 418 456Total operating expenses192,434 179,595 160,018 Gain on sale of real estate5,890 — — Operating income109,254 93,665 77,171 Non-operating expenses Interest expense and other finance expenses(62,113) (50,977) (40,741)Net income47,141 42,688 36,430Net income attributable to non-controlling interests(4,405) (4,211) (3,676)Net Income Attributable to Retail Opportunity Investments Corp.$42,736 $38,477 $32,754 Earnings per share – basic and diluted$0.38 $0.35 $0.31 Dividends per common share$0.78 $0.75 $0.72 Comprehensive income: Net income$47,141 $42,688 $36,430Other comprehensive income: Unrealized swap derivative gain arising during the period1,648 3,665 541Reclassification adjustment for amortization of interest expense included in net income57 1,920 2,473Other comprehensive income1,705 5,585 3,014Comprehensive income48,846 48,273 39,444Comprehensive income attributable to non-controlling interests(4,405) (4,211) (3,676)Comprehensive income attributable to Retail Opportunity Investments Corp.$44,441 $44,062 $35,768 See accompanying notes to consolidated financial statements. 53RETAIL OPPORTUNITY INVESTMENTS CORP.Consolidated Statements of Equity(In thousands, except share data) Common Stock Additionalpaid-in capital Accumulateddividends inexcess ofearnings Accumulatedothercomprehensive(loss) income Non-controllinginterests Equity Shares Amount Balance at December 31, 201599,531,034 $10 $1,166,395 $(122,991) $(6,743) $94,671 $1,131,342Shares issued under the 2009 Equity IncentivePlan341,306 — — — — — —Shares withheld for employee taxes(76,262) — (1,368) — — — (1,368)Cancellation of restricted stock(7,332) — — — — — —Stock based compensation expense— — 4,916 — — — 4,916Issuance of OP Units to non-controlling interests— — — — — 48,175 48,175Redemption of OP Units755,762 — 15,990 — — (15,990) —Cash redemption for non-controlling interests— — — — — (7,182) (7,182)Adjustment to non-controlling interests ownershipin Operating Partnership— — (5,627) — — 5,627 —Proceeds from the issuance of common stock8,757,254 1 184,880 — — — 184,881Registration expenditures— — (7,276) — — — (7,276)Cash dividends ($0.72 per share)— — — (75,537) — (8,363) (83,900)Dividends payable to officers— — — (177) — — (177)Net income attributable to Retail OpportunityInvestments Corp.— — — 32,754 — — 32,754Net income attributable to non-controlling interests— — — — — 3,676 3,676Other comprehensive income— — — — 3,014 — 3,014Total109,301,762 11 1,357,910 (165,951) (3,729) 120,614 1,308,855Proceeds from repayment of promissory notereceivable secured by equity— — — — — 6,710 6,710Balance at December 31, 2016109,301,762 11 1,357,910 (165,951) (3,729) 127,324 1,315,565Shares issued under the 2009 Equity IncentivePlan353,261 — 44 — — — 44Shares withheld for employee taxes(74,331) — (1,571) — — — (1,571)Cancellation of restricted stock(1,999) — — — — — —Stock based compensation expense— — 6,190 — — — 6,190Issuance of OP Units to non-controlling interests— — — — — 49,599 49,599Redemption / Exchange of OP Units2,555,933 — 50,155 — — (50,155) —Cash redemption for non-controlling interests— — — — — (150) (150)Adjustment to non-controlling interests ownershipin Operating Partnership— — (3,574) — — 3,574 —Proceeds from the issuance of common stock212,825 — 4,481 — — — 4,481Registration expenditures— — (1,045) — — — (1,045)Cash dividends ($0.75 per share)— — — (82,781) — (8,729) (91,510)Dividends payable to officers— — — (235) — — (235)Net income attributable to Retail OpportunityInvestments Corp.— — — 38,477 — — 38,477Net income attributable to non-controlling interests— — — — — 4,211 4,211Other comprehensive income— — — — 5,585 — 5,585Balance at December 31, 2017112,347,451 11 1,412,590 (210,490) 1,856 125,674 1,329,641Shares issued under the 2009 Equity IncentivePlan397,861 — 269 — — — 269Shares withheld for employee taxes(70,168) — (1,400) — — — (1,400)Cancellation of restricted stock(8,997) — — — — — —Stock based compensation expense— — 7,392 — — — 7,392Cash redemption for non-controlling interests— — — — — (3,713) (3,713)Adjustment to non-controlling interests ownershipin Operating Partnership— — (2,904) — — 2,904 —Proceeds from the issuance of common stock1,326,690 — 25,703 — — — 25,703Registration expenditures— — (570) — — — (570)Cash dividends ($0.78 per share)— — — (88,417) — (9,056) (97,473)Dividends payable to officers— — — (267) — — (267)Net income attributable to Retail OpportunityInvestments Corp.— — — 42,736 — — 42,736Net income attributable to non-controlling interests— — — — — 4,405 4,405Other comprehensive income— — — — 1,705 — 1,705Balance at December 31, 2018113,992,837 $11 $1,441,080 $(256,438) $3,561 $120,214 $1,308,428 See accompanying notes to consolidated financial statements.54RETAIL OPPORTUNITY INVESTMENTS CORP.Consolidated Statements of Cash Flows(In thousands) Year Ended December 31, 2018 2017 2016CASH FLOWS FROM OPERATING ACTIVITIES Net income$47,141 $42,688 $36,430Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization100,838 96,256 88,359Amortization of deferred financing costs and mortgage premiums, net1,899 2,026 2,088Straight-line rent adjustment(5,380) (6,176) (4,560)Amortization of above and below market rent(13,965) (17,078) (13,847)Amortization relating to stock based compensation7,392 6,190 4,916Provisions for tenant credit losses1,729 1,191 1,805Other noncash interest expense1,674 2,139 2,139Gain on sale of real estate(5,890) — —Change in operating assets and liabilities: Tenant and other receivables(57) (2,452) (4,412)Prepaid expenses(1,344) 464 (1,363)Accounts payable and accrued expenses(1,622) 456 4,417Other assets and liabilities, net(1,497) 3,234 (1,357)Net cash provided by operating activities130,918 128,938 114,615 CASH FLOWS FROM INVESTING ACTIVITIES Investments in real estate(44,195) (263,366) (284,867)Proceeds from sale of real estate26,880 — —Improvements to properties(39,240) (54,097) (40,758)Deposits on real estate acquisitions, net500 (500) 500Net cash used in investing activities(56,055) (317,963) (325,125) CASH FLOWS FROM FINANCING ACTIVITIES Principal repayments on mortgages(19,612) (8,848) (7,816)Proceeds from draws on credit facility177,000 327,500 332,500Payments on credit facility(164,500) (282,000) (370,000)Proceeds from issuance of Senior Notes— 250,000 200,000Proceeds on repayment of promissory note receivable— — 6,710Redemption of OP Units(3,713) (150) (38,820)Distributions to OP Unitholders(9,056) (8,729) (8,363)Deferred financing and other costs— (3,845) (266)Proceeds from the sale of common stock25,703 4,481 184,881Registration expenditures(570) (1,225) (7,097)Dividends paid to common shareholders(88,500) (82,917) (75,672)Common shares issued under the 2009 Equity Incentive Plan269 44 —Shares withheld for employee taxes(1,400) (1,571) (1,368)Net cash (used in) provided by financing activities(84,379) 192,740 214,689Net (decrease) increase in cash, cash equivalents and restricted cash(9,516) 3,715 4,179Cash, cash equivalents and restricted cash at beginning of period16,965 13,250 9,071Cash, cash equivalents and restricted cash at end of period$7,449 $16,965 $13,250The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to thetotal of the same amounts shown in the consolidated statement of cash flows: Year Ended December 31, 2018 2017 2016Cash and cash equivalents$6,076 $11,553 $13,125Restricted cash1,373 5,412 125Total cash, cash equivalents and restricted cash shown in Statements of Cash Flows$7,449 $16,965 $13,250 See accompanying notes to consolidated financial statements. 55RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPConsolidated Balance Sheets(In thousands) December 31, 2018 2017ASSETS Real Estate Investments: Land$894,240 $878,797Building and improvements2,266,232 2,230,600 3,160,472 3,109,397Less: accumulated depreciation329,207 260,115Real Estate Investments, net2,831,265 2,849,282Cash and cash equivalents6,076 11,553Restricted cash1,373 5,412Tenant and other receivables, net46,832 43,257Deposits— 500Acquired lease intangible assets, net72,109 82,778Prepaid expenses4,194 2,853Deferred charges, net33,857 37,167Other7,365 6,396Total assets$3,003,071 $3,039,198 LIABILITIES AND CAPITAL Liabilities: Term loan$299,076 $298,816Credit facility153,689 140,329Senior Notes941,449 940,086Mortgage notes payable88,511 107,915Acquired lease intangible liabilities, net166,146 178,984Accounts payable and accrued expenses15,488 18,638Tenants’ security deposits7,065 6,771Other liabilities23,219 18,018Total liabilities1,694,643 1,709,557 Commitments and contingencies Capital: Partners’ capital, unlimited partnership units authorized: ROIC capital1,184,653 1,202,111Limited partners’ capital120,214 125,674Accumulated other comprehensive income3,561 1,856Total capital1,308,428 1,329,641Total liabilities and capital$3,003,071 $3,039,198 See accompanying notes to consolidated financial statements.56RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPConsolidated Statements of Operations and Comprehensive Income(In thousands) Year Ended December 31, 2018 2017 2016Revenues Base rents$223,797 $210,564 $183,330Recoveries from tenants65,804 58,818 51,454Other income6,197 3,878 2,405Total revenues295,798 273,260 237,189 Operating expenses Property operating43,851 39,151 32,201Property taxes32,349 29,663 25,058Depreciation and amortization100,838 96,256 88,359General and administrative expenses14,918 14,103 13,120Acquisition transaction costs— 4 824Other expense478 418 456Total operating expenses192,434 179,595 160,018 Gain on sale of real estate5,890 — — Operating income109,254 93,665 77,171Non-operating expenses Interest expense and other finance expenses(62,113) (50,977) (40,741)Net Income Attributable to Retail Opportunity Investments Partnership, LP$47,141 $42,688 $36,430 Earnings per unit - basic and diluted$0.38 $0.35 $0.31 Distributions per unit$0.78 $0.75 $0.72 Comprehensive income: Net income attributable to Retail Opportunity Investments Partnership, LP$47,141 $42,688 $36,430Other comprehensive income: Unrealized swap derivative gain arising during the period1,648 3,665 541Reclassification adjustment for amortization of interest expense included in net income57 1,920 2,473Other comprehensive income1,705 5,585 3,014Comprehensive income attributable to Retail Opportunity Investments Partnership, LP$48,846 $48,273 $39,444 See accompanying notes to consolidated financial statements.57RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPConsolidated Statements of Partners’ Capital(In thousands, except unit data) Limited Partner’s Capital (1) ROIC Capital (2) Units Amount Units Amount Accumulatedothercomprehensive (loss)income CapitalBalance at December 31, 201512,195,603 $94,671 99,531,034 $1,043,414 $(6,743) $1,131,342OP Units issued under the 2009 Equity Incentive Plan— — 341,306 — — —OP Units withheld for employee taxes— — (76,262) (1,368) — (1,368)Cancellation of OP Units— — (7,332) — — —Stock based compensation expense— — — 4,916 — 4,916Issuance of OP Units in connection with acquisitions2,434,833 48,175 — — 48,175Equity redemption of OP Units(755,762) (15,990) 755,762 15,990 — —Cash redemption of OP Units(2,206,613) (7,182) — — (7,182)Adjustment to non-controlling interests ownership inOperating Partnership— 5,627 — (5,627) — —Issuance of OP Units in connection with sale ofcommon stock— — 8,757,254 184,881 — 184,881Registration expenditures— — — (7,276) — (7,276)Cash distributions ($0.72 per unit)— (8,363) — (75,537) — (83,900)Distributions payable to officers— — — (177) — (177)Net income attributable to Retail OpportunityInvestments Partnership, LP— 3,676 — 32,754 — 36,430Other comprehensive income— — — — 3,014 3,014Total11,668,061 120,614 109,301,762 1,191,970 (3,729) 1,308,855Proceeds from repayment of promissory notereceivable secured by capital— 6,710 — — — 6,710Balance at December 31, 201611,668,061 127,324 109,301,762 1,191,970 (3,729) 1,315,565OP units issued under the 2009 Equity Incentive Plan— — 353,261 44 — 44OP Units withheld for employee taxes— — (74,331) (1,571) — (1,571)Cancellation of OP Units— — (1,999) — — —Stock based compensation expense— — — 6,190 — 6,190Issuance of OP Units in connection with acquisitions2,573,927 49,599 — — — 49,599Equity redemption of OP Units(2,555,933) (50,155) 2,555,933 50,155 — —Cash redemption of OP Units(7,064) (150) — — — (150)Adjustment to non-controlling interests ownership inOperating Partnership— 3,574 — (3,574) — —Issuance of OP Units in connection with sale ofcommon stock— — 212,825 4,481 — 4,481Registration expenditures— — — (1,045) — (1,045)Cash distributions ($0.75 per unit)— (8,729) — (82,781) — (91,510)Distributions payable to officers— — — (235) — (235)Net income attributable to Retail OpportunityInvestments Partnership, LP— 4,211 — 38,477 — 42,688Other comprehensive income— — — — 5,585 5,585Balance at December 31, 201711,678,991 125,674 112,347,451 1,202,111 1,856 1,329,641OP units issued under the 2009 Equity Incentive Plan— — 397,861 269 — 269OP Units withheld for employee taxes— — (70,168) (1,400) — (1,400)Cancellation of OP Units— — (8,997) — — —Stock based compensation expense— — — 7,392 — 7,392Cash redemption of OP Units(201,950) (3,713) — — — (3,713)Adjustment to non-controlling interests ownership inOperating Partnership— 2,904 — (2,904) — —Issuance of OP Units in connection with sale ofcommon stock— — 1,326,690 25,703 — 25,703Registration expenditures— — — (570) — (570)Cash distributions ($0.78 per unit)— (9,056) — (88,417) — (97,473)Distributions payable to officers— — — (267) — (267)Net income attributable to Retail OpportunityInvestments Partnership, LP— 4,405 — 42,736 — 47,141Other comprehensive income— — — — 1,705 1,705Balance at December 31, 201811,477,041 $120,214 113,992,837 $1,184,653 $3,561 $1,308,428 (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. 58RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LPConsolidated Statements of Cash Flows(In thousands) Year Ended December 31, 2018 2017 2016CASH FLOWS FROM OPERATING ACTIVITIES Net income$47,141 $42,688 $36,430Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization100,838 96,256 88,359Amortization of deferred financing costs and mortgage premiums, net1,899 2,026 2,088Straight-line rent adjustment(5,380) (6,176) (4,560)Amortization of above and below market rent(13,965) (17,078) (13,847)Amortization relating to stock based compensation7,392 6,190 4,916Provisions for tenant credit losses1,729 1,191 1,805Other noncash interest expense1,674 2,139 2,139Gain on sale of real estate(5,890) — —Change in operating assets and liabilities: Tenant and other receivables(57) (2,452) (4,412)Prepaid expenses(1,344) 464 (1,363)Accounts payable and accrued expenses(1,622) 456 4,417Other assets and liabilities, net(1,497) 3,234 (1,357)Net cash provided by operating activities130,918 128,938 114,615 CASH FLOWS FROM INVESTING ACTIVITIES Investments in real estate(44,195) (263,366) (284,867)Proceeds from sale of real estate26,880 — —Improvements to properties(39,240) (54,097) (40,758)Deposits on real estate acquisitions, net500 (500) 500Net cash used in investing activities(56,055) (317,963) (325,125) CASH FLOWS FROM FINANCING ACTIVITIES Principal repayments on mortgages(19,612) (8,848) (7,816)Proceeds from draws on credit facility177,000 327,500 332,500Payments on credit facility(164,500) (282,000) (370,000)Proceeds from issuance of Senior Notes— 250,000 200,000Proceeds on repayment of promissory note receivable— — 6,710Redemption of OP Units(3,713) (150) (38,820)Deferred financing and other costs— (3,845) (266)Proceeds from the issuance of OP Units in connection with issuance of common stock25,703 4,481 184,881Registration expenditures(570) (1,225) (7,097)Distributions to OP Unitholders(97,556) (91,646) (84,035)Issuance of OP Units under the 2009 Equity Incentive Plan269 44 —OP Units withheld for employee taxes(1,400) (1,571) (1,368)Net cash (used in) provided by financing activities(84,379) 192,740 214,689Net (decrease) increase in cash, cash equivalents and restricted cash(9,516) 3,715 4,179Cash, cash equivalents and restricted cash at beginning of period16,965 13,250 9,071Cash, cash equivalents and restricted cash at end of period$7,449 $16,965 $13,250 The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to thetotal of the same amounts shown in the consolidated statement of cash flows: Year Ended December 31, 2018 2017 2016Cash and cash equivalents$6,076 $11,553 $13,125Restricted cash1,373 5,412 125Total cash, cash equivalents and restricted cash shown in Statements of Cash Flows$7,449 $16,965 $13,250See accompanying notes to consolidated financial statements.59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, set 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 equity issuances by ROIC, which arecontributed to the Operating Partnership, the Operating Partnership generates the capital required by the Company’s business through the OperatingPartnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance of operatingpartnership units (“OP Units”) of the Operating Partnership. Recent Accounting Pronouncements In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-18, Restricted Cash. ASUNo. 2016-18 requires companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Additionally, ASU No. 2016-18 requires a disclosure of a reconciliationbetween the statement of financial position and the statement of cash flows when the balance sheet includes more than one line item for cash, cashequivalents, restricted cash, and restricted cash equivalents. ASU No. 2016-18 is effective for reporting periods beginning after December 15, 2017, with earlyadoption permitted, and will be applied retrospectively to all periods presented. The Company adopted ASU No. 2016-18 effective January 1, 2018. Theadoption of ASU No. 2016-18 impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods.In January 2017, the FASB issued ASU No. 2017-1, “Business Combinations: Clarifying the Definition of a Business.” The pronouncement changes thedefinition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The pronouncement requires an entity toevaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; ifso, the set of transferred assets and activities is not a business. The pronouncement is effective for fiscal years, and for interim periods within those fiscalyears, beginning after December 15, 2018, with early adoption permitted. The Company adopted the provisions of ASU No. 2017-1 effective October 1,2016. For the period from October 1, 2016 through December 31, 2018, for the Company’s acquisitions it was concluded substantially all of the fair value ofthe assets acquired with each property acquisition was concentrated in a single identifiable asset and did not meet the definition of a business under ASU No.2017-1. Acquisition transaction costs associated with these property acquisitions were capitalized to real estate investments.60In February 2016, the FASB issued ASU No. 2016-2, “Leases.” ASU No. 2016-2 is expected to result in the recognition of a right-to-use asset and relatedliability to account for future obligations under ground lease agreements for which the Company is the lessee. In addition, this ASU will require that lesseesand lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Allocated payroll costs and other costs that areincurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred.As a lessor, under current accounting standards, the Company recognizes rental revenue from its operating leases on a straight-line basis over the respectivelease terms. The Company commences recognition of rental revenue at the date the property is ready for its intended use and the tenant takes possession of orcontrols the physical use of the property. Under current accounting standards, tenant recoveries related to payments of real estate taxes, insurance, utilities,repairs and maintenance, common area expenses, and other operating expenses are considered lease components. The Company recognizes these tenantrecoveries as revenue when services are rendered in an amount equal to the related operating expenses incurred that are recoverable under the terms of theapplicable lease.Under ASU No. 2016-2, each lease agreement will be evaluated to identify the lease components and nonlease components at lease inception. The totalconsideration in the lease agreement will be allocated to the lease and nonlease components based on their relative standalone selling prices. Lessors willcontinue to recognize the lease revenue component using an approach that is substantially equivalent to existing guidance for operating leases (straight-linebasis). In July 2018, the FASB issued an amendment to ASU No. 2016-2 that allows lessors to elect, as a practical expedient, not to allocate the totalconsideration to lease and nonlease components based on their relative standalone selling prices. This practical expedient allows lessors to elect a combinedsingle lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) therelated lease component and, the combined single lease component would be classified as an operating lease.The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoptionpermitted. The Company plans to adopt the provisions of ASU No. 2016-2 effective January 1, 2019 using the modified retrospective approach and expectsto elect certain practical expedients permitted under the transition guidance. The Company currently estimates total assets and liabilities will increaseapproximately $18.0 million upon adoption. Further upon adoption, payroll-related costs that are incurred regardless of whether the lease is obtained will nolonger be capitalized as initial direct costs and instead will be expensed as incurred. These costs amounted to approximately $1.3 million during the yearended December 31, 2018. In May 2014, the FASB issued ASU No. 2014-9, “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, 2017. The Company adopted the provisions of ASU No. 2014-9 effectiveJanuary 1, 2018 using the modified retrospective approach. The Company evaluated the revenue recognition for all contracts within this scope underexisting accounting standards and under ASU No. 2014-9 and confirmed that there were no differences in the amounts recognized or the pattern ofrecognition. Therefore, the adoption of ASU No. 2014-9 did not result in an adjustment to the Company’s retained earnings on January 1, 2018. Principles of Consolidation The accompanying consolidated financial statements are prepared on the accrual basis in accordance with GAAP. In the opinion of management, theconsolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’sfinancial position and the results of operations and cash flows for the periods presented.The consolidated financial statements include the accounts of the Company and those of its subsidiaries, which are wholly-owned or controlled by theCompany. Entities which the Company does not control through its voting interest and entities which are variable interest entities (“VIEs”), but where it isnot the primary beneficiary, are accounted for under the equity 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. Effective January 1, 2016, the Company adopted the provisions of ASU No. 2015-2, and as a result,concluded that the Operating61Partnership is a VIE. The Company has concluded that because they have both the power and the rights to control the Operating Partnership, they are theprimary beneficiary and are required to continue to consolidate the Operating Partnership. 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. 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, 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 hadbeen an entity disregarded from its sole owner, ROIC, for U.S. federal income tax purposes and as such had not been subject to U.S. federal income taxes.Effective September 27, 2013, the Operating Partnership issued OP Units in connection with the acquisitions of two shopping centers. Accordingly, theOperating Partnership ceased being a disregarded entity and instead is being treated as a partnership for U.S. 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, 2018, the statute of limitations for tax years 2015 through and including 2017 remain open for examination by theInternal Revenue Service (“IRS”) and state taxing authorities. 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. During the years ended December 31, 2018 and 2017, capitalized costs related to theimprovements or replacement of real estate properties were approximately $40.3 million and $54.5 million, respectively.62The Company expenses transaction costs associated with business combinations and unsuccessful property asset acquisitions in the period incurred andcapitalizes transaction costs associated with successful property asset acquisitions. In conjunction with the Company’s pursuit and acquisition of real estateinvestments, the Company expensed acquisition transaction costs during the years ended December 31, 2017 and 2016 of approximately $4,000 and$824,000, respectively. The Company did not expense any acquisition transaction costs during the year ended December 31, 2018.The Company evaluates each acquisition of real estate to determine if the acquired property meets the definition of a business and needs to be accounted foras a business combination. Under ASU No. 2017-1, the Company first determines whether substantially all of the fair value of the gross assets acquired isconcentrated in a single identifiable asset or group of similar identifiable assets. If this threshold is met, the acquired property does not meet the definition ofa business and is accounted for as an asset acquisition. The Company expects that acquisitions of real estate properties will not meet the revised definition ofa business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings,and related intangible assets). The Company recognizes the acquisition of real estate properties, including acquired tangible (consisting of land, buildings and improvements), andacquired intangible assets and liabilities (consisting of above-market and below-market leases and acquired in-place leases) at their fair value (foracquisitions meeting the definition of a business) and relative fair value (acquisitions not meeting the definition of a business). The relative fair values usedto allocate the cost of an asset acquisition are determined using the same methodologies and assumptions the Company utilizes to determine fair value in abusiness combination.Acquired lease intangible assets include above-market leases and acquired in-place leases, and acquired lease intangible liabilities represent below-marketleases, in the accompanying consolidated balance sheets. The fair value of the tangible assets of an acquired property is determined by valuing the propertyas if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the relative fair values ofthese assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, and estimates of lost rental revenue during the expected lease-up periods based on management’s evaluation of current market demand.Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs. Leasingcommissions, legal and other related costs (“lease origination costs”) are classified as deferred charges in the accompanying consolidated balance sheets.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. 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, 2018 or December 31, 2017. 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. 63Restricted Cash The terms of the Company’s mortgage loans payable may require the Company to deposit certain replacement and other reserves with its lenders. Such“restricted cash” is generally available only for property-level requirements for which the reserves have been established and is not available to fund otherproperty level or Company level obligations. Revenue Recognition Management has determined that all of the Company’s leases with its various tenants are operating leases. Rental income is generally recognized based onthe terms of leases entered into with tenants. In those instances in which the Company funds tenant improvements and the improvements are deemed to beowned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space isturned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition andlease incentive amortization when possession or control of the space is turned over to the tenant for tenant work to begin. Minimum rental income fromleases with scheduled rent increases is recognized on a straight-line basis over the lease term. Percentage rent is recognized when a specific tenant’s salesbreakpoint is achieved. Property operating expense recoveries from tenants of common area maintenance, real estate taxes and other recoverable costs arerecognized in the period the related expenses are incurred. Lease incentives are amortized as a reduction of rental revenue over the respective tenant leaseterms.Termination fees (included in other income) 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 when the following conditions are met: (a) the terminationagreement is executed; (b) the termination fee is determinable; (c) all landlord services pursuant to the terminated lease have been rendered; and(d) collectability of the termination fee is assured. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded whenthe criteria for recognizing such gains or losses under GAAP 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 by considering tenant creditworthiness, current economic trends, and changes in tenants’ paymentpatterns when evaluating the adequacy of the allowance for doubtful accounts receivable. The Company also provides an allowance for future credit lossesof the deferred straight-line rents receivable. The provision for doubtful accounts at December 31, 2018 and December 31, 2017 was approximately $6.9million and $6.4 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 Leasing and Financing Costs Costs incurred in obtaining tenant leases (principally leasing commissions and acquired lease origination costs) are amortized ratably over the life of thetenant leases. Costs incurred in obtaining long-term financing are amortized ratably over the related debt agreement. The amortization of deferred leasing andfinancing costs is included in Depreciation and amortization and Interest expense and other finance expenses, respectively, in the Consolidated Statements ofOperations. 64The unamortized balances of deferred leasing costs included in deferred charges in the Consolidated Balance Sheets as of December 31, 2018 that will becharged to future operations are as follows (in thousands): Lease Origination Costs2019$7,04120205,80220214,86720224,02920233,098Thereafter9,020 $33,857 Internal Capitalized Leasing Costs Through December 31, 2018, the Company capitalized a portion of payroll-related costs related to its leasing personnel associated with new leases and leaserenewals. These costs are amortized over the life of the respective leases. During the years ended December 31, 2018, 2017 and 2016, the Companycapitalized approximately $1.3 million, $1.2 million and $1.2 million, respectively, of such payroll-related costs. Beginning January 1, 2019, in accordancewith the adoption of ASU No. 2016-2, the Company will begin expensing these costs as incurred. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenantreceivables. The Company places its cash and cash equivalents in excess of insured amounts with high quality financial institutions. The Company performsongoing credit evaluations of its tenants and requires tenants to provide security deposits.Earnings Per Share Basic earnings per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income by the weighted average number of shares ofcommon stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue shares ofcommon stock were exercised or converted into shares of common stock and then shared in the earnings of the Company. For the years ended December 31, 2018, 2017 and 2016, 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 Equity Incentive Plan described in Note 8 are excluded from the basic EPS calculation, as these units are not participating securitiesuntil they vest. 65The following table sets forth the reconciliation between basic and diluted EPS for ROIC (in thousands, except share data): Year Ended December 31, 2018 2017 2016Numerator: Net income$47,141 $42,688 $36,430Less income attributable to non-controlling interests(4,405) (4,211) (3,676)Less earnings allocated to unvested shares(401) (319) (270)Net income available for common stockholders, basic$42,335 $38,158 $32,484Numerator: Net income$47,141 $42,688 $36,430Less earnings allocated to unvested shares(401) (319) (270)Net income available for common stockholders, diluted$46,740 $42,369 $36,160Denominator: Denominator for basic EPS – weighted average common equivalent shares112,645,490 109,400,123 104,072,222OP units11,626,312 12,060,835 11,747,509Restricted stock awards – performance-based183,683 153,807 86,996Stock options103,408 129,066 133,213Denominator for diluted EPS – weighted average common equivalent shares124,558,893 121,743,831 116,039,940Earnings Per Unit The following table sets forth the reconciliation between basic and diluted earnings per unit for the Operating Partnership (in thousands, except unit data): Year Ended December 31, 2018 2017 2016Numerator: Net income$47,141 $42,688 $36,430Less earnings allocated to unvested shares(401) (319) (270)Net income available to unitholders, basic and diluted$46,740 $42,369 $36,160Denominator: Denominator for basic earnings per unit – weighted average common equivalent units124,271,802 121,460,958 115,819,731Restricted stock awards – performance-based183,683 153,807 86,996Stock options103,408 129,066 133,213Denominator for diluted earnings per unit – weighted average common equivalent units124,558,893 121,743,831 116,039,940 Stock-Based Compensation The Company has a stock-based employee compensation plan, which is more fully described in Note 8. The Company accounts for its stock-based compensation plan 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 market specific financial performance criteria (“performance based grants”). Time based grants arevalued according to the market price for the Company’s common stock at the date of grant. For performance based grants, a Monte Carlo valuation model isused, taking into account the underlying contingency risks associated with the performance criteria. It is the Company’s policy to grant options with anexercise price 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 grants66are expensed as compensation under the accelerated attribution method and are recognized in income regardless of the results of the performance criteria. Derivatives The Company records all derivatives on the balance sheets 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 forecastedtransactions in a cash flow hedge. When the Company terminates a derivative for which cash flow hedging was being applied, the balance which wasrecorded in Other Comprehensive Income is amortized to interest expense over the remaining contractual term of the derivative as long as the hedgedforecasted transactions continue to be probable of occurring. The Company includes cash payments made to terminate interest rate derivatives as anoperating activity on the statement of cash flows, given the 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 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.Consolidated Statements of Cash Flows - Supplemental DisclosuresThe following tables provides supplemental disclosures related to the Consolidated Statements of Cash Flows (in thousands): Year Ended December 31, 2018 2017 2016Supplemental disclosure of cash activities: Cash paid on gross receipts and income for federal and state purposes$291 $253 $206Interest paid$60,494 $46,271 $34,275Other non-cash investing and financing activities: Issuance of OP Units in connection with acquisitions$— $49,599 $46,140Fair value of assumed mortgages upon acquisition$— $46,801 $17,618Intangible lease liabilities$1,680 $48,684 $32,615Interest rate swap asset$610 $3,446 $875Interest rate swap liabilities$580 $— $—Accrued real estate improvement costs$(1,367) $383 $601Redemption / exchange of OP Units$— $50,155 $15,990ReclassificationsCertain reclassifications have been made to the prior period consolidated financial statements and notes to conform to the current year presentation. 672. Real Estate Investments The following real estate investment transactions occurred during the years ended December 31, 2018 and 2017. Property Asset Acquisitions in 2018The Company evaluated each of the following acquisitions and determined that substantially all of the fair value related to each acquisition wasconcentrated in a single identifiable asset. In each of these acquisitions, the Company allocated the total consideration for each acquisition to the individualassets and liabilities acquired on a relative fair value basis. All transaction costs incurred in these acquisitions were capitalized.On February 23, 2018, the Company acquired the property known as Stadium Center located in Tacoma, Washington, within the Seattle metropolitan area,for an adjusted purchase price of approximately $19.3 million. Stadium Center is approximately 49,000 square feet and is anchored by ThriftwaySupermarket. The property was acquired with borrowings under the credit facility and restricted cash that was previously held by a qualified intermediary forthe acquisition of a replacement property in a tax-free exchange under Section 1031 of the Code.On May 18, 2018, the Company acquired the property known as King City Plaza located in King City, Oregon, within the Portland metropolitan area, for anadjusted purchase price of approximately $15.7 million. King City Plaza is approximately 63,000 square feet and is anchored by Grocery Outlet Supermarket.The property was acquired with borrowings under the credit facility.Property Asset Acquisitions in 2017 During the year ended December 31, 2017, the Company acquired ten properties throughout the west coast with a total of approximately 1.1 million squarefeet for a net adjusted purchase price of approximately $313.0 million. The Company evaluated each of the following acquisitions and determined thatsubstantially all of the fair value related to each acquisition was concentrated in a single identifiable asset. In each of these acquisitions, the Companyallocated the total consideration for each acquisition to the individual assets and liabilities acquired on a relative fair value basis. 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.The financial information set forth below summarizes the Company’s purchase price allocation for the properties acquired during the years endedDecember 31, 2018 and 2017 (in thousands). December 31, 2018 December 31, 2017Assets Land$7,666 $123,203Building and improvements35,629 251,277Acquired lease intangible asset1,763 24,766Deferred charges818 9,196Assets acquired$45,876 $408,442Liabilities Mortgage notes assumed$— $46,801Acquired lease intangible liability1,680 48,684Liabilities assumed$1,680 $95,485 68The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the year endedDecember 31, 2018 for the properties acquired during the year ended December 31, 2018 (in thousands). Year Ended December 31,2018Statement of operations: Revenues$2,343Net income attributable to Retail Opportunity Investments Corp.$753 The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the year endedDecember 31, 2017 for the properties acquired during the year ended December 31, 2017 (in thousands). Year Ended December 31,2017Statement of operations: Revenues$13,500Net income attributable to Retail Opportunity Investments Corp.$2,948 Property DispositionsOn September 27, 2018, the Company sold Round Hill Square, a non-core shopping center located in Zephyr Cove, Nevada. The sales price of $28.0 million,less costs to sell, resulted in net proceeds of approximately $26.9 million. The Company recorded a gain on sale of real estate of approximately $5.9 millionduring the year ended December 31, 2018 related to this property disposition. 3. Acquired Lease Intangibles Intangible assets and liabilities as of December 31, 2018 and 2017 consisted of the following (in thousands): December 31, 2018 December 31, 2017Assets: In-place leases$92,354 $99,924Accumulated amortization(36,835) (36,971)Above-market leases30,093 33,176Accumulated amortization(13,503) (13,351)Acquired lease intangible assets, net$72,109 $82,778Liabilities: Below-market leases$217,212 $222,929Accumulated amortization(51,066) (43,945)Acquired lease intangible liabilities, net$166,146 $178,984 For the years ended December 31, 2018, 2017 and 2016, the net amortization of acquired lease intangible assets and acquired lease intangible liabilities forabove and below market leases was $14.0 million, $17.1 million and $13.8 million, respectively, which amounts are included in base rents in theaccompanying consolidated statements of operations and comprehensive income. For the years ended December 31, 2018, 2017 and 2016, the netamortization of in-place leases was $11.4 million, $14.4 million and $15.6 million, respectively, which amounts are included in depreciation andamortization in the accompanying consolidated statements of operations and comprehensive income.69The scheduled future amortization of acquired lease intangible assets as of December 31, 2018 is as follows (in thousands):Year Ending December 31: 2019$10,57320208,56620216,89820225,70520235,092Thereafter35,275Total future amortization of acquired lease intangible assets$72,109 The scheduled future amortization of acquired lease intangible liabilities as of December 31, 2018 is as follows (in thousands):Year Ending December 31: 2019$14,675202013,347202112,075202211,00520239,999Thereafter105,045Total future amortization of acquired lease intangible liabilities$166,1464. 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, 2018 are summarized as follows (in thousands):Year Ending December 31: 2019$198,9982020181,2342021160,0822022134,3682023105,657Thereafter429,172Total minimum lease payments$1,209,5115. Mortgage Notes Payable, Credit Facilities and Senior Notes ROIC does not hold any indebtedness. All debt is held directly or indirectly by the Operating Partnership; however, ROIC has guaranteed the OperatingPartnership’s term loan, unsecured revolving credit facility, carve-out guarantees on property-level debt, the Senior Notes Due 2027, the Senior Notes Due2026, the Senior Notes Due 2024 and the Senior Notes Due 2023.Mortgage Notes PayableOn February 1, 2018, the Company repaid in full the Santa Teresa Village mortgage note related to Santa Teresa Village for a total of approximately $10.1million, without penalty, in accordance with the prepayment provisions of the note. On September 28, 2018, the Company repaid in full the MagnoliaShopping Center mortgage note related to Magnolia Shopping Center for a total of approximately $8.8 million, without penalty, in accordance with therepayment provisions of the note. 70The mortgage notes payable collateralized by respective properties and assignment of leases at December 31, 2018 and December 31, 2017, respectively,were as follows (in thousands, except interest rates):Property Maturity Date Interest Rate December 31, 2018 December 31, 2017Santa Teresa Village February 2018 6.200% $— $10,138Magnolia Shopping Center October 2018 5.500% — 8,951Casitas Plaza Shopping Center June 2022 5.320% 7,158 7,307Riverstone Marketplace July 2022 4.960% 18,050 18,424Fullerton Crossroads April 2024 4.728% 26,000 26,000Diamond Hills Plaza October 2025 3.550% 35,500 35,500 $86,708 $106,320Mortgage premiums 2,074 1,921Net unamortized deferred financing costs (271) (326)Total mortgage notes payable $88,511 $107,915 The combined aggregate principal maturities of mortgage notes payable during the next five years and thereafter are as follows (in thousands): PrincipalRepayments ScheduledAmortization MortgagePremium Total2019$— $551 $481 $1,0322020— 577 481 1,0582021— 717 481 1,198202223,129 1,003 344 24,4762023— 686 216 902Thereafter58,787 1,258 71 60,116Total$81,916 $4,792 $2,074 $88,782 Term Loan and Credit Facility The carrying values of the Company’s unsecured term loan (the “term loan”) were as follows (in thousands): December 31, 2018 December 31, 2017Term loan$300,000 $300,000Net unamortized deferred financing costs(924) (1,184)Term loan$299,076 $298,816On September 29, 2015, the Company entered into an unsecured term loan agreement under which the lenders agreed to provide a $300.0 million unsecuredterm loan facility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term LoanAgreement”) pursuant to which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options forextension. The Term Loan Agreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 millionunder certain conditions set forth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. Borrowings under theTerm Loan Agreement accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of theCompany, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the relevant period (the “EurodollarRate”), or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by theAdministrative Agent as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%.71The carrying values of the Company’s unsecured revolving credit facility were as follows (in thousands): December 31, 2018 December 31, 2017Credit facility$156,000 $143,500Net unamortized deferred financing costs(2,311) (3,171)Credit facility$153,689 $140,329The Operating Partnership has an unsecured revolving credit facility with several banks. Effective September 8, 2017, the Company entered into a SecondAmended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which the borrowing capacity under the credit facility was increasedfrom $500.0 million to $600.0 million. The maturity date of the credit facility was extended from January 31, 2019 to September 8, 2021, with two six-monthextension options, which may be exercised by the Operating Partnership upon satisfaction of certain conditions including the payment of extension fees.Additionally, the credit facility contains an accordion feature, which allows the Operating Partnership to increase the borrowing capacity under the creditfacility up to an aggregate of $1.2 billion, subject to lender consents and other conditions. Borrowings under the credit facility accrue interest on theoutstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) the Eurodollar Rate,or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank, NationalAssociation as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. Additionally, the Operating Partnership is obligated to pay a facility fee at a ratebased 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 issuedunder the credit facility. The Company has investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services(BBB-).Both the term loan and credit facility contain customary representations, financial and other covenants. The Operating Partnership’s ability to borrow underthe term loan and credit facility are subject to its compliance with financial covenants and other restrictions on an ongoing basis. The Operating Partnershipwas in compliance with such covenants at December 31, 2018.As of December 31, 2018, $300.0 million and $156.0 million were outstanding under the term loan and credit facility, respectively. The average interest rateson the term loan and the credit facility during the year ended December 31, 2018 were 3.1% and 3.0%, respectively. The Company had no availableborrowings under the term loan at December 31, 2018. The Company had $444.0 million available to borrow under the credit facility at December 31, 2018.Senior Notes Due 2027The carrying value of the Company’s unsecured Senior Notes Due 2027 is as follows (in thousands): December 31, 2018 December 31, 2017Principal amount$250,000 $250,000Net unamortized deferred financing costs(1,123) (1,249)Senior Notes Due 2027$248,877 $248,751On November 10, 2017, the Operating Partnership entered into a Note Purchase Agreement which provided for the issuance of $250.0 million principalamount of 4.19% Senior Notes Due 2027 (the “Senior Notes Due 2027”) in a private placement effective December 15, 2017. The Senior Notes Due 2027 payinterest on June 15 and December 15 of each year, commencing on June 15, 2018, and mature on December 15, 2027, unless prepaid earlier by the OperatingPartnership. The Operating Partnership’s performance of the obligations under the Note Purchase Agreement, including the payment of any outstandingindebtedness thereunder, are guaranteed, jointly and severally, by ROIC. The net proceeds were used to reduce borrowings under the credit facility.72Senior Notes Due 2026The carrying value of the Company’s unsecured Senior Notes Due 2026 is as follows (in thousands): December 31, 2018 December 31, 2017Principal amount$200,000 $200,000Net unamortized deferred financing costs(219) (248)Senior Notes Due 2026$199,781 $199,752On July 26, 2016, the Operating Partnership entered into a Note Purchase Agreement, as amended, which provided for the issuance of $200.0 millionprincipal amount of 3.95% Senior Notes Due 2026 (the “Senior Notes Due 2026”) in a private placement effective September 22, 2016. The Senior Notes Due2026 pay interest on March 22 and September 22 of each year, commencing on March 22, 2017, and mature on September 22, 2026, unless prepaid earlier bythe Operating Partnership. The Operating Partnership’s performance of the obligations under the Note Purchase Agreement, including the payment of anyoutstanding indebtedness thereunder, are guaranteed, jointly and severally, by ROIC. The net proceeds were used to reduce borrowings under the creditfacility.Senior Notes Due 2024The carrying value of the Company’s unsecured Senior Notes Due 2024 is as follows (in thousands): December 31, 2018 December 31, 2017Principal amount$250,000 $250,000Unamortized debt discount(2,252) (2,578)Net unamortized deferred financing costs(1,314) (1,535)Senior Notes Due 2024$246,434 $245,887 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). Senior Notes Due 2023 The carrying value of the Company’s unsecured Senior Notes Due 2023 is as follows (in thousands): December 31, 2018 December 31, 2017Principal amount$250,000 $250,000Unamortized debt discount(2,339) (2,737)Net unamortized deferred financing costs(1,304) (1,567)Senior Notes Due 2023$246,357 $245,696 On December 9, 2013, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of5.000% Senior Notes due 2023 (the “Senior Notes Due 2023”), fully and unconditionally guaranteed by ROIC.73The Senior Notes Due 2023 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2014, and mature on December 15, 2023,unless redeemed earlier by the Operating Partnership. The Senior Notes Due 2023 are the Operating Partnership’s senior unsecured obligations that rankequally in right of payment with the Operating Partnership’s other unsecured indebtedness, and effectively junior to (i) all of the indebtedness and otherliabilities, whether secured or unsecured, and any preferred equity of the Operating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’sindebtedness that is secured by its assets, to the extent of the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionallyguaranteed the Operating Partnership’s obligations under the Senior Notes Due 2023 on a senior unsecured basis, including the due and punctual payment ofprincipal of, and premium, if any, and interest on, the notes, whether at stated maturity, upon acceleration, notice of redemption or otherwise. The guarantee isa senior unsecured obligation of ROIC and will rank equally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee ofthe Senior Notes Due 2023 is effectively subordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of itssubsidiaries (including the Operating Partnership and any entity ROIC accounts for under the equity method of accounting).The combined aggregate principal maturities of the Company’s unsecured senior notes payable during the next five years and thereafter are as follows (inthousands): Principal Repayments2019$—2020—2021—2022—2023250,000Thereafter700,000Total$950,000Deferred Financing CostsThe unamortized balances of deferred financing costs associated with the Company’s term loan, unsecured revolving credit facility, Senior Notes Due 2027,Senior Notes Due 2026, Senior Notes Due 2024, Senior Notes Due 2023, and mortgage notes payable included as a direct reduction from the carrying amountof the related debt instrument in the Consolidated Balance Sheets as of December 31, 2018 that will be charged to future operations during the next five yearsand thereafter are as follows (in thousands): Financing Costs2019$1,79120201,79120211,52220228482023663Thereafter851 $7,4666. 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, 2018 and 2017, there were no shares of preferred stock outstanding.7. Common Stock of ROIC Equity IssuanceIn connection with the acquisitions of two properties during the year ended December 31, 2017, a portion of the consideration for the properties was fundedthrough the issuance of 2,405,430 OP Units. On December 12, 2017, the Company issued 2,584,254 shares of common stock, at a price per share of $21.25, inexchange for the 2,405,430 OP Units previously issued and the rights74to approximately $3.8 million of cash to be used to acquire a third property to be identified by the Company. The proceeds of approximately $3.8 millionwere classified in Restricted Cash in the consolidated balance sheet as of December 31, 2017, as the proceeds were being held with an exchangeaccommodator under Section 1031 of the Code, and were used to purchase replacement assets during the year ended December 31, 2018. The shares ofcommon stock of the Company were issued in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and the rules andregulations promulgated thereunder.On July 12, 2016, ROIC issued 6,555,000 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 $133.0 million, after deducting the underwriters’ discounts andcommissions and offering expenses. The net proceeds were used to reduce borrowings under the Operating Partnership’s revolving credit facility. ATM On May 1, 2018, ROIC entered into five separate Sales Agreements (the “Sales Agreements”) with each of Capital One Securities, Inc., Jefferies LLC,KeyBanc Capital Markets Inc., Raymond James & Associates, Inc., and Robert W. Baird & Co. Incorporated (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 offeringprice of up to $250.0 million through the Agents either as agents or principals. In addition, on April 30, 2018, the Company terminated sales agreements withJefferies, KeyBanc and Raymond James, dated as of September 19, 2014 and with Baird, dated as of May 23, 2016 (the “Prior Sales Agreements”), which theCompany entered into in connection with its prior “at the market” offering.During the year ended December 31, 2018, ROIC sold a total of 1,251,376 shares under the Sales Agreements, which resulted in gross proceeds ofapproximately $24.2 million and commissions of approximately $242,000 paid to the Agents. During the year ended December 31, 2018, ROIC sold a totalof 75,314 shares of common stock under the Prior Sales Agreements, which resulted in gross proceeds of approximately $1.5 million and commissions ofapproximately $19,000 paid to the Agents. During the year ended December 31, 2017, ROIC sold a total of 34,001 shares under the Prior Sales Agreements,which resulted in gross proceeds of approximately $681,000 and commissions of approximately $9,000 paid to the Agents. 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. Through the year ended December 31, 2018, the Company has not repurchased any shares of common stock under this program.8. Stock Compensation and Other Benefit Plans for ROIC ROIC follows the FASB guidance related to stock compensation which establishes financial accounting and reporting standards for stock-based employeecompensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer, or the employerincurs liabilities to employees in amounts based on the price of the employer’s stock. The guidance also defines a fair value-based method of accounting foran employee stock option or similar equity instrument. In 2009, the Company adopted the 2009 Equity Incentive Plan. The 2009 Equity Incentive Plan provided for grants of restricted common stock and stockoption awards up to an aggregate of 7.5% of the issued and outstanding shares of ROIC’s common stock at the time of the award, subject to a ceiling of4,000,000 shares. The Company’s Annual Meeting of Stockholders was held on April 25, 2018 at which time the stockholders of the Company approved theCompany’s Amended and Restated 2009 Equity Incentive Plan (the “Equity Incentive Plan”). The types of awards that may be granted under the EquityIncentive Plan include stock options, restricted shares, share appreciation rights, phantom shares, dividend equivalent rights and other equity-based awards.The Equity Incentive Plan has a fungible unit system that counts the number of shares of the Company’s common stock used in the issuance of full-valueawards, such as restricted shares, differently than the number of shares of common stock used in the issuance of stock options. A total of 22,500,000 FungibleUnits (as defined in the Equity Incentive Plan) are reserved for grant under the Equity Incentive Plan and the Fungible Unit-to-full-value award conversionratio is 6.25 to 1.0. The Equity Incentive Plan will expire on April 25, 2028. Any available shares that had not been granted under the 2009 Equity IncentivePlan were rolled over and made available for issuance under the Equity Incentive Plan.Restricted Stock During the year ended December 31, 2018, ROIC awarded 514,972 shares of restricted common stock under the 2009 Equity Incentive Plan, of which180,200 shares are performance-based grants and the remainder of the shares are time based grants. The performance-based grants vest based on pre-definedmarket-specific performance criteria with a vesting date on January 1, 2021.75 A summary of the status of the Company’s non-vested restricted stock awards as of December 31, 2018, and changes during the year ended December 31,2018 are presented below: Shares Weighted AverageGrant Date Fair ValueNon-vested as of December 31, 2017781,467 $18.14Granted514,972 $15.85Vested(274,608) $18.46Forfeited(18,996) $17.75Non-vested as of December 31, 20181,002,835 $16.88As of December 31, 2018, there remained a total of approximately $7.5 million of unrecognized restricted stock compensation related to outstanding non-vested restricted stock grants awarded under the 2009 Equity Incentive Plan. Restricted stock compensation is expected to be expensed over a remainingweighted average period of 1.7 years (irrespective of achievement of the performance conditions). The total fair value of restricted stock that vested duringthe years ended December 31, 2018, 2017 and 2016 was $5.5 million, $6.3 million and $5.6 million, respectively.Stock Based Compensation ExpenseFor the years ended December 31, 2018, 2017 and 2016, the amounts charged to expense for all stock based compensation totaled approximately $7.4million, $6.2 million and $4.9 million, respectively.Profit Sharing and Savings PlanDuring 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 $86,000, $70,000 and $76,000 for the years ended December 31, 2018, 2017 and 2016,respectively.9. Capital of the Operating Partnership As of December 31, 2018, the Operating Partnership had 125,469,878 OP Units outstanding. ROIC owned an approximate 90.8% interest in the OperatingPartnership at December 31, 2018, or 113,992,837 OP Units. The remaining 11,477,041 OP Units are owned by other limited partners. A share of ROIC’scommon stock and the OP Units have essentially the same economic characteristics as they share equally in the total net income or loss and distributions ofthe Operating Partnership. As of December 31, 2018, subject to certain exceptions, holders are able to redeem their OP Units, at the option of ROIC, for cash or for unregistered shares ofROIC 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 NASDAQStock Market for shares of ROIC’s common stock over the ten consecutive trading days immediately preceding the date a redemption notice is received byROIC.During the year ended December 31, 2018, ROIC received notices of redemption for a total of 201,950 OP Units. ROIC elected to redeem the 201,950 OPUnits in cash, and accordingly, a total of of ROIC common stock on a one-for-one basis, and accordingly, a total of approximately $3.7 million was paidduring the year ended December 31, 2018 to the holders of the respective OP Units. The redemption value of the OP Units owned by the limited partners as of December 31, 2018, not including ROIC, had such units been redeemedat December 31, 2018, was approximately $187.9 million, calculated based on the average closing price on the NASDAQ Stock Market of ROIC commonstock for the ten consecutive trading days immediately preceding December 31, 2018, which amounted to $16.37 per share. 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 the redemption of OP Units in either cash or common stock, in the sole discretion of ROIC, are further evaluated in accordance withapplicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Company76evaluated this guidance, including the ability, in its sole discretion, to settle in unregistered shares of common stock, and determined that the OP Units meetthe requirements to qualify for presentation as permanent equity.10. 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 values of the term loan andrevolving credit facility are deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR contracts. The fair value of theoutstanding Senior Notes Due 2027 and Senior Notes Due 2026 at December 31, 2018 was approximately $223.7 million and $178.4 million, respectively,calculated using significant inputs which are not observable in the market, or Level 3. The fair value of the outstanding Senior Notes Due 2024 and SeniorNotes Due 2023 at December 31, 2018 was approximately $236.9 million and $249.3 million, respectively, based on inputs not quoted on active markets,but corroborated by market data, or Level 2. Assumed mortgage notes payable were recorded at their fair value at the time they were assumed. The Company’soutstanding mortgage notes payable were estimated to have a fair value of approximately $86.3 million with an interest rate range of 4.2% to 4.4% and aweighted average interest rate of 4.3% as of December 31, 2018. These fair value measurements fall within Level 3 of the fair value hierarchy.11. Derivative and Hedging Activities The Company’s objectives in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. Toaccomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cashflow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of theagreements without exchange of the underlying notional amount. 77The following is a summary of the terms of the Company’s current interest rate swaps as of December 31, 2018 (in thousands):Swap CounterpartyNotional Amount Effective Date Maturity DateInterest Rate Swap Agreements: Bank of Montreal$50,000 1/29/2016 1/31/2019Regions Bank$50,000 2/29/2016 1/31/2019Bank of Montreal$100,000 12/29/2017 8/31/2022U.S. Bank$100,000 12/29/2017 8/31/2022Forward Starting Interest Rate Swap Agreements: Regions Bank$50,000 1/31/2019 8/31/2022Royal Bank of Canada$50,000 1/31/2019 8/31/2022The changes in the fair value of derivatives that are designated as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI”) andwill be subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cashflows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-basedinputs, including interest rate curves, and implied volatilities. The fair value of 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 counterparties 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 has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the creditvaluation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default bythe Company and its counterparties. However, as of December 31, 2018, the Company has assessed the significance of the impact of the credit valuationadjustments on the overall valuation of its derivative position and has determined that the credit valuation adjustments are not significant to the overallvaluation of its derivatives. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair valuehierarchy. 78The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchywithin which those measurements fall (in thousands). Quoted Prices inActive Markets forIdentical Assets andLiabilities (Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservable Inputs(Level 3) TotalDecember 31, 2018: Assets Derivative financial instruments$— $4,931 $— $4,931Liabilities Derivative financial instruments$— $(580) $— $(580) December 31, 2017 Assets Derivative financial instruments$— $4,321 $— $4,321Amounts paid, or received, to cash settle interest rate derivatives prior to their maturity date are recorded in AOCI at the cash settlement amount, and will bereclassified to interest expense as interest expense is recognized on the hedged debt. During the next twelve months, the Company estimates that $1.2 millionwill be reclassified as an increase to interest expense related to the Company’s four outstanding swap arrangements and it’s previously cash-settled swaparrangements. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as ofDecember 31, 2018 and 2017, respectively (in thousands):Derivatives designed as hedging instrumentsBalance sheet location December 31, 2018 FairValue December 31, 2017 FairValueInterest rate productsOther assets $4,931 $4,321Interest rate productsOther liabilities $(580) $—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, 2018, 2017, and 2016, respectively (in thousands). Amounts reclassified from other comprehensive income (“OCI”) due toineffectiveness are recognized as interest expense. Year Ended December 31, 2018 2017 2016Amount of gain recognized in OCI on derivatives$1,648 $3,665 $541Amount of loss reclassified from AOCI into interest$57 $1,920 $2,47312. 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 a79liability in the accompanying consolidated balance sheets. Rent expense, for both ground leases and corporate office storage space, was approximately $2.0million, $1.5 million, and $831,000 for the years ended December 31, 2018, 2017, and 2016, respectively.The following table represents the Company’s future minimum annual lease payments under operating leases as of December 31, 2018 (in thousands): Operating Leases2019$1,28020201,28720211,28320221,30420231,330Thereafter33,939Total minimum lease payments$40,423 Tax Protection Agreements In connection with certain acquisitions from September 2013 through March 2017, the Company entered into Tax Protection Agreements with certainlimited partners of the Operating Partnership. The Tax Protection Agreements require the Company, subject to certain exceptions, to indemnify the respectivesellers receiving OP Units against certain tax liabilities incurred by them, as calculated pursuant to the respective Tax Protection Agreements, for a period of12 years (with respect to Tax Protection Agreements entered into in September 2013), or 10 years (with respect to Tax Protection Agreements entered intofrom December 2014 through March 2017) from the date of the Tax Protection Agreements. If the Company were to trigger the tax protection provisionsunder these agreements, the Company would be required to pay damages in the amount of the taxes owed by these limited partners (plus additional damagesin the amount of the taxes incurred as a result of such payment).13. 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, 2018, 2017, and 2016, the Company incurred approximately $74,000, $52,000 and $46,000,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.14. Quarterly Results of Operations (Unaudited) The unaudited quarterly results of operations for the years ended December 31, 2018 and 2017 for ROIC are as follows (in thousands, except share data): Year Ended December 31, 2018 March 31 June 30 September 30 December 31Total revenues$74,395 $72,341 $73,904 $75,158Net income$11,824 $8,102 $15,647 $11,568Net income attributable to ROIC$10,702 $7,339 $14,194 $10,501Basic and diluted income per share$0.09 $0.06 $0.12 $0.09 Year Ended December 31, 2017 March 31 June 30 September 30 December 31Total revenues$65,900 $66,640 $67,966 $72,754Net income$11,251 $9,197 $10,127 $12,113Net income attributable to ROIC$10,170 $8,309 $9,149 $10,849Basic and diluted income per share$0.09 $0.08 $0.08 $0.1080The unaudited quarterly results of operations for the years ended December 31, 2018 and 2017 for the Operating Partnership are as follows (in thousands,except unit data): Year Ended December 31, 2018 March 31 June 30 September 30 December 31Total revenues$74,395 $72,341 $73,904 $75,158Net income attributable to the Operating Partnership$11,824 $8,102 $15,647 $11,568Basic and diluted income per unit$0.09 $0.06 $0.12 $0.09 Year Ended December 31, 2017 March 31 June 30 September 30 December 31Total revenues$65,900 $66,640 $67,966 $72,754Net income attributable to the Operating Partnership$11,251 $9,197 $10,127 $12,113Basic and diluted income per unit$0.09 $0.08 $0.08 $0.1015. Subsequent EventsOn February 15, 2019, the Company sold Vancouver Market Center, a non-core shopping center located in Vancouver, Washington for a sales price of $17.0million.On February 19, 2019, the Company’s board of directors declared a cash dividend on its common stock of $0.1970 per share, payable on March 28, 2019 toholders of record on March 14, 2019.81SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATIONDecember 31, 2018(in thousands) Initial Cost to Company Cost CapitalizedSubsequent to Acquisition Amount at Which Carriedat Close of Period Description andLocation Encumbrances Land Building &Improvements Land Building &Improvements Land Building &Improvements Total (a) AccumulatedDepreciation (b)(1) Date ofAcquisitionParamount Plaza, CA$— $6,347 $10,274 $447 $2,227 $6,794 $12,501 $19,295 $3,571 12/22/2009Santa Ana DowntownPlaza, CA— 7,895 9,890 — 3,856 7,895 13,746 21,641 3,281 1/26/2010Meridian Valley Plaza,WA— 1,881 4,795 — 1,724 1,881 6,519 8,400 1,696 2/1/2010The Market at LakeStevens, WA— 3,087 12,397 — 408 3,087 12,805 15,892 3,394 3/16/2010Norwood ShoppingCenter, CA— 3,031 11,534 122 1,253 3,153 12,787 15,940 3,419 4/5/2010Pleasant HillMarketplace, CA— 6,359 6,927 — 1,590 6,359 8,517 14,876 2,396 4/8/2010Vancouver MarketCenter, WA— 4,080 6,912 — 3,981 4,080 10,893 14,973 2,356 6/17/2010Happy Valley TownCenter, OR— 11,678 27,011 — 2,564 11,678 29,575 41,253 7,539 7/14/2010Cascade Summit TownSquare, OR— 8,853 7,732 — 421 8,853 8,153 17,006 2,595 8/20/2010Heritage MarketCenter, WA— 6,595 17,399 — 771 6,595 18,170 24,765 4,442 9/23/2010Claremont Promenade,CA— 5,975 1,019 183 4,402 6,158 5,421 11,579 2,383 9/23/2010Sycamore Creek, CA— 3,747 11,584 — 582 3,747 12,166 15,913 3,572 9/30/2010Gateway Village, CA— 5,917 27,298 — 989 5,917 28,287 34,204 6,624 12/16/2010Division Crossing, OR— 3,706 8,327 — 5,700 3,706 14,027 17,733 3,980 12/22/2010Halsey Crossing, OR (2)— — 7,773 — 7,690 — 15,463 15,463 2,914 12/22/2010Marketplace DelRio,CA— 13,420 22,251 9 2,462 13,429 24,713 38,142 6,357 1/3/2011Pinole Vista ShoppingCenter, CA— 12,894 35,689 — 4,247 12,894 39,936 52,830 6,424 1/6/2011 /8/27/2018Desert SpringsMarketplace, CA— 8,517 18,761 443 6,568 8,960 25,329 34,289 5,693 2/17/2011Mills Shopping Center,CA— 4,084 16,833 — 11,693 4,084 28,526 32,610 8,137 2/17/2011Morada Ranch, CA— 2,504 19,547 — 791 2,504 20,338 22,842 4,717 5/20/2011Renaissance TowneCentre, CA— 8,640 13,848 — 1,667 8,640 15,515 24,155 2,987 8/3/2011Country Club GateCenter, CA— 6,487 17,341 — 1,208 6,487 18,549 25,036 4,403 7/8/2011Canyon Park ShoppingCenter, WA— 9,352 15,916 — 8,757 9,352 24,673 34,025 5,284 7/29/2011Hawks PrairieShopping Center, WA— 5,334 20,694 — 2,224 5,334 22,918 28,252 4,657 9/8/2011The Kress Building,WA— 5,693 20,866 — 4,825 5,693 25,691 31,384 6,179 9/30/2011Hillsboro MarketCenter, OR (2)— — 17,553 — 3,493 — 21,046 21,046 4,295 11/23/2011Gateway ShoppingCenter, WA (2)— 6,242 23,462 — 8 6,242 23,470 29,712 4,582 2/16/2012Euclid Plaza, CA— 7,407 7,753 — 2,905 7,407 10,658 18,065 2,954 3/28/2012Green Valley Station,CA— 1,685 8,999 — 591 1,685 9,590 11,275 2,292 4/2/2012Aurora Square, WA— 10,325 13,336 — 1,906 10,325 15,242 25,567 2,220 5/3/2012 /5/22/2014Marlin Cove ShoppingCenter, CA— 8,815 6,797 — 2,084 8,815 8,881 17,696 2,212 5/4/201282Seabridge Marketplace,CA— 5,098 17,164 — 3,482 5,098 20,646 25,744 3,798 5/31/2012The Village at Novato,CA— 5,329 4,412 — 1,550 5,329 5,962 11,291 1,044 7/24/2012Glendora ShoppingCenter, CA— 5,847 8,758 — 211 5,847 8,969 14,816 2,062 8/1/2012Wilsonville Old TownSquare, OR— 4,181 15,394 — 509 4,181 15,903 20,084 3,122 8/1/2012Bay Plaza, CA— 5,454 14,857 — 1,096 5,454 15,953 21,407 3,161 10/5/2012Santa Teresa Village, CA— 14,965 17,162 — 5,539 14,965 22,701 37,666 4,819 11/8/2012Cypress Center West, CA— 15,480 11,819 121 2,065 15,601 13,884 29,485 3,129 12/7/2012Redondo Beach Plaza,CA— 16,242 13,625 55 217 16,297 13,842 30,139 2,659 12/28/2012Harbor Place Center, CA— 16,506 10,527 — 289 16,506 10,816 27,322 1,932 12/28/2012Diamond Bar TownCenter, CA— 9,540 16,795 — 3,542 9,540 20,337 29,877 4,662 2/1/2013Bernardo Heights Plaza,CA— 3,192 8,940 — 727 3,192 9,667 12,859 1,869 2/6/2013Canyon Crossing, WA— 7,941 24,659 — 2,946 7,941 27,605 35,546 5,808 4/15/2013Diamond Hills Plaza, CA35,500 15,458 29,353 — 357 15,458 29,710 45,168 5,310 4/22/2013Granada ShoppingCenter, CA— 3,673 13,459 — 491 3,673 13,950 17,623 2,536 6/27/2013Hawthorne Crossings,CA— 10,383 29,277 — 127 10,383 29,404 39,787 4,805 6/27/2013Robinwood ShoppingCenter, OR— 3,997 11,317 18 1,064 4,015 12,381 16,396 2,278 8/23/20135 Points Plaza, CA— 17,920 36,965 — 4,082 17,920 41,047 58,967 6,358 9/27/2013Crossroads ShoppingCenter, WA— 68,366 67,756 — 17,984 68,366 85,740 154,106 14,039 9/27/2013Peninsula Marketplace,CA— 14,730 19,214 — 1,958 14,730 21,172 35,902 3,572 11/1/2013Country Club Village,CA— 9,986 26,579 — 2,017 9,986 28,596 38,582 5,188 11/26/2013Plaza de la Canada, CA (2)— 10,351 24,819 — 519 10,351 25,338 35,689 3,777 12/13/2013Tigard Marketplace, OR— 13,587 9,603 — 565 13,587 10,168 23,755 2,128 2/18/2014Creekside Plaza, CA— 14,807 29,476 — 1,351 14,807 30,827 45,634 4,980 2/28/2014North Park Plaza, CA— 13,593 17,733 — 832 13,593 18,565 32,158 2,473 4/30/2014Fallbrook ShoppingCenter, CA (2)— 21,232 186,197 83 9,286 21,315 195,483 216,798 26,910 6/13/2014Moorpark Town Center,CA— 7,063 19,694 — 1,562 7,063 21,256 28,319 3,569 12/4/2014Mission FoothillMarketplace, CA— 11,415 17,783 — 107 11,415 17,890 29,305 1,334 12/4/2014Wilsonville Town Center,OR— 10,334 27,101 — 622 10,334 27,723 38,057 3,666 12/11/2014Park Oaks ShoppingCenter, CA— 8,527 38,064 — 629 8,527 38,693 47,220 4,803 1/6/2016Ontario Plaza, CA— 9,825 26,635 — 1,499 9,825 28,134 37,959 3,707 1/6/2015Winston Manor, CA— 10,018 9,762 — 1,854 10,018 11,616 21,634 1,626 1/7/2015Jackson Square, CA— 6,886 24,558 — 921 6,886 25,479 32,365 2,796 7/1/2015Tigard Promenade, OR— 9,844 10,843 — 101 9,844 10,944 20,788 1,173 7/28/2015Sunnyside VillageSquare, OR— 4,428 13,324 — 3,412 4,428 16,736 21,164 1,996 7/28/2015Gateway Centre, CA— 16,275 28,308 — 3,720 16,275 32,028 48,303 3,169 9/1/2015Johnson Creek Center,OR— 9,009 22,534 — 1,243 9,009 23,777 32,786 2,510 11/9/2015Iron Horse Plaza, CA— 8,187 39,654 — 1,571 8,187 41,225 49,412 3,400 12/4/2015Bellevue Marketplace,WA— 10,488 39,119 — 8,385 10,488 47,504 57,992 3,972 12/10/2015Four Corner Square, WA— 9,926 31,415 — 350 9,926 31,765 41,691 3,123 12/21/2015Warner Plaza, CA— 16,104 60,188 — 8,834 16,104 69,022 85,126 6,067 12/31/201583Magnolia Shopping Center,CA— 12,501 27,040 — 1,866 12,501 28,906 41,407 2,545 3/10/2016Casitas Plaza ShoppingCenter, CA7,158 10,734 22,040 — 961 10,734 23,001 33,735 1,825 3/10/2016Bouquet Center, CA— 10,040 48,362 — 479 10,040 48,841 58,881 3,891 4/28/2016North Ranch ShoppingCenter, CA— 31,522 95,916 — 1,061 31,522 96,977 128,499 6,884 6/1/2016Monterey Center, CA (2)— 1,073 10,609 — (36) 1,073 10,573 11,646 753 7/14/2016Rose City Center, OR (2)— 3,637 10,301 — (78) 3,637 10,223 13,860 690 9/15/2016The Knolls, CA— 9,726 18,299 — 20 9,726 18,319 28,045 1,265 10/3/2016Bridle Trails ShoppingCenter, WA— 11,534 20,700 — 3,633 11,534 24,333 35,867 1,551 10/17/2016Torrey Hills CorporateCenter, CA— 5,579 3,915 — 2,435 5,579 6,350 11,929 662 12/6/2016PCC Community MarketsPlaza, WA— 1,856 6,914 — 7 1,856 6,921 8,777 432 1/25/2017The Terraces, CA— 18,378 37,103 — 505 18,378 37,608 55,986 2,046 3/17/2017Santa Rosa SouthsideShopping Center, CA— 5,595 24,453 — 1,477 5,595 25,930 31,525 1,308 3/24/2017Division Center, OR— 6,917 26,098 — 1,421 6,917 27,519 34,436 1,433 4/5/2017Highland Hill ShoppingCenter, WA— 10,511 37,825 23 397 10,534 38,222 48,756 2,018 5/9/2017Monta Loma Plaza, CA— 18,226 11,113 — 57 18,226 11,170 29,396 426 9/19/2017Fullerton Crossroads, CA26,000 28,512 45,419 — 234 28,512 45,653 74,165 1,776 10/11/2017Riverstone Marketplace,WA18,050 5,113 27,594 — 117 5,113 27,711 32,824 1,046 10/11/2017North Lynnwood ShoppingCenter, WA— 4,955 10,335 — 117 4,955 10,452 15,407 401 10/19/2017The Village at Nellie GailRanch, CA— 22,730 22,578 — 953 22,730 23,531 46,261 764 11/30/2017Stadium Center, WA— 1,699 17,229 — 79 1,699 17,308 19,007 391 2/23/2018King City Plaza, OR— 5,161 10,072 — 49 5,161 10,121 15,282 215 5/18/2018 $86,708 $892,736 $2,059,275 $1,504 $206,957 $894,240 $2,266,232 $3,160,472 $329,207 (a)RECONCILIATION OF REAL ESTATE – OWNED SUBJECT TO OPERATING LEASES (in thousands) Year Ended December 31, 2018 2017 2016Balance at beginning of period:$3,109,397 $2,687,018 $2,296,617Property improvements during the year40,300 54,481 41,359Properties acquired during the year43,387 374,004 354,035Properties sold during the year(24,427) — —Assets written off during the year(8,185) (6,106) (4,993)Balance at end of period:$3,160,472 $3,109,397 $2,687,018 84(b)RECONCILIATION OF ACCUMULATED DEPRECIATION (in thousands) Year Ended December 31, 2018 2017 2016Balance at beginning of period:$260,115 $193,021 $134,311Depreciation expenses81,107 72,725 63,872Properties sold during the year(3,551) — —Property assets fully depreciated and written off(8,464) (5,631) (5,162)Balance at end of period:$329,207 $260,115 $193,021 (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, or a portion thereof, is subject to a ground lease.(3)The aggregate cost for Federal Income Tax Purposes for real estate was approximately $2.9 billion at December 31, 2018.85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, 2018, 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, 2018, 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, 2018 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, 2018. 86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, 2018, has been audited by Ernst & Young LLP, an independent registeredpublic accounting firm, as stated in its report which appears on page 51 of this Annual Report on Form 10-K. 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, 2018 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, 2018. 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 2019 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2018. 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 2019 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2018.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 2019 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2018.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 2019 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2018.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 2019 AnnualMeeting of Stockholders to be filed within 120 days after December 31, 2018.87PART IVItem 15. Exhibits and Financial Statement Schedule (a)(1) and (2) Financial Statements and Schedule Please refer to the Index to Consolidated Financial Statements included under Part II, Item 8. Financial Statements and Supplementary Data. (a)(3) Exhibits2.1 Articles 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 (2) 3.1 Articles of Amendment and Restatement (2) 3.2 Bylaws (2) 3.3 Second 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 as ofSeptember 27, 2013 (5) 3.4 Second Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership,LP, dated as of December 4, 2015 (10) 3.5 Third Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP,dated as of December 10, 2015 (10) 3.6 Fourth Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP,dated as of December 31, 2015 (10) 3.7 Fifth Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP,dated as of March 10, 2016 (11) 3.8 Sixth Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership, LP,dated as of March 24, 2017 (15) 3.9 Seventh Amendment to the Second Amended and Restated Limited Partnership Agreement of Retail Opportunity Investments Partnership,LP, dated as of October 11, 2017 (17) 4.1 Specimen Unit Certificate (1) 4.2 Specimen Common Stock Certificate (1) 4.3 Indenture, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and Wells Fargo Bank,National Association, dated as of December 9, 2013 (6) 4.4 First 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 (6) 4.5 5.000% Senior Notes due 2023 of Retail Opportunity Investments Partnership, LP, guaranteed by Retail Opportunity Investments Corp.,dated as of December 9, 2013 (7) 4.6 Second 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 (8) 10.1 2009 Equity Incentive Plan (1) 10.2 Amended and Restated 2009 Equity Incentive Plan (20) 10.3 Form of Restricted Stock Award Agreement under 2009 Equity Incentive Plan and Amended and Restated 2009 Equity Incentive Plan (1) 10.4 Form of Option Award Agreement under 2009 Equity Incentive Plan and Amended and Restated 2009 Equity Incentive Plan (1) 8810.5 Letter Agreement, by and between Retail Opportunity Investments Corp. and Richard A. Baker, dated as of April 2, 2012 (3) 10.6 Letter Agreement, by and between Retail Opportunity Investments Corp. and Laurie Sneve, dated as of October 24, 2012 (4) 10.7 Tax 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 (5) 10.8 Tax 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 (5) 10.9 Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of September27, 2013 (5) 10.10 Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of September27, 2013 (5) 10.11 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 (9) 10.12 Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holder named therein, dated as of December 11,2014 (9) 10.13 Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and theprotected partners identified therein, dated as of December 4, 2015 (10) 10.14 Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of December 4,2015 (10) 10.15 Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and theprotected partners identified therein, dated as of December 10, 2015 (10) 10.16 Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holders named therein, dated as of December10, 2015 (10) 10.17 Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and theprotected partner identified therein, dated as of December 31, 2015 (10) 10.18 Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holder named therein, dated as of December 31,2015 (10) 10.19 Tax Protection Agreement, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LP and theprotected partner identified therein, dated as of March 10, 2016 (11) 10.20 Registration Rights Agreement, by and among Retail Opportunity Investments Corp. and the holder named therein, dated as of March 10,2016 (11) 10.21 Amended and Restated Note Purchase Agreement, dated as of September 22, 2016, by and among Retail Opportunity InvestmentsPartnership, LP, Retail Opportunity Investments Corp and the purchasers named therein (13) 10.22 Employment Agreement, dated as of March 21, 2017, by and between the Company and Stuart A. Tanz (14) 10.23 Employment Agreement, dated as of March 21, 2017, by and between the Company and Richard K. Schoebel (14) 10.24 Employment Agreement, dated as of March 21, 2017, by and between the Company and Michael B. Haines (14) 10.25 Second Amended and Restated Credit Agreement, by and among Retail Opportunity Investments Corp., as the guarantor, and RetailOpportunity Investments Partnership, LP, as the borrower, KeyBank National Association, as Administrative Agent, Swing Line Lender andL/C Issuer, PNC Bank National Association and U.S. Bank National Association, as Co-Syndication Agents and the other lenders partythereto, dated as of September 8, 2017 (16) 10.26 First Amended and Restated Term Loan Agreement, by and among Retail Opportunity Investments Corp., as the Parent Guarantor, RetailOpportunity Investments Partnership, LP, as the Borrower, KeyBank National Association, as Administrative Agent, BMO Capital Marketsand Regions Bank, as Co-Syndication Agents, Capital One, National Association, as Documentation Agent, and the other lenders partythereto, dated as of September 8, 2017 (16) 8910.27 First Amendment, dated as of September 8, 2017 to the Amended and Restated Note Purchase Agreement, dated as of September 22, 2016, byand among Retail Opportunity Investments Partnership, LP, Retail Opportunity Investments Corp and the purchasers named therein (18) 10.28 Note Purchase Agreement, dated as of November 10, 2017, by and among Retail Opportunity Investments Partnership, LP, RetailOpportunity Investments Corp. and the purchasers named therein (19) 10.29 Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LPand Capital One Securities, Inc. (21) 10.30 Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LPand Jefferies LLC (21) 10.31 Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LPand KeyBanc Capital Markets Inc. (21) 10.32 Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LPand Raymond James & Associates, Inc. (21) 10.33 Sales Agreement, dated May 1, 2018, by and among Retail Opportunity Investments Corp., Retail Opportunity Investments Partnership, LPand Robert W. Baird & Co. Incorporated (21) 21.1* List of Subsidiaries of Retail Opportunity Investments Corp. 23.1* Consent of Ernst & Young LLP for Retail Opportunity Investments Corp. 23.2* Consent of Ernst & Young LLP for Retail Opportunity Investments Partnership, LP 31.1 Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 31.2 Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 32.1 Certifications pursuant to Section 1350 101 INS XBRL Instance Document 101 SCH XBRL Taxonomy Extension Schema 101 CAL XBRL Taxonomy Extension Calculation Database 101 DEF Taxonomy Extension Definition Linkbase 101 LAB XBRL Taxonomy Extension Label Linkbase 101 PRE XBRL Taxonomy Extension Presentation Linkbase________________________ (1)Incorporated by reference to the Company’s current report on Form 8-K filed on October 26, 2009(2)Incorporated by reference to the Company’s current report on Form 8-K filed on June 3, 2011(3)Incorporated by reference to the Company’s current report on Form 8-K filed on April 5, 2012(4)Incorporated by reference to the Company’s current report on Form 8-K filed on January 3, 2013(5)Incorporated by reference to the Company’s current report on Form 8-K filed on October 2, 2013(6)Incorporated by reference to the Company’s current report on Form 8-K filed on December 9, 2013(7)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(8)Incorporated by reference to the Company’s current report on Form 8-K filed on December 3, 2014(9)Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2014, filed on February 25, 2015(10)Incorporated by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2015, filed on February 24, 2016(11)Incorporated by reference to the Company’s current report on Form 8-K filed on March 16, 2016(12)Incorporated by reference to the Company’s current report on Form 8-K filed on May 23, 2016(13)Incorporated by reference to the Company’s annual report on Form 10-Q for the fiscal quarter ended September 30, 2016 filed on October 26, 201690(14)Incorporated by reference to the Company’s current report on Form 8-K filed on March 24, 2017(15)Incorporated by reference to the Company’s annual report on Form 10-Q for the fiscal quarter ended March 31, 2017 filed on April 27, 2017(16)Incorporated by reference to the Company’s current report on Form 8-K filed on September 13, 2017(17)Incorporated by reference to the Company’s current report on Form 8-K filed on October 17, 2017(18)Incorporated by reference to the Company’s annual report on Form 10-Q for the fiscal quarter ended September 30, 2017 filed on October 25, 2017(19)Incorporated by reference to the Company’s current report on Form 8-K filed on November 13, 2017(20)Incorporated by reference to the Company’s current report on Form 8-K filed on May 1, 2018(21)Incorporated by reference to the Company’s current report on Form 8-K filed on May 2, 2018*Filed herewith+Unless otherwise noted, all exhibits have File No. 001-33479Item 16. Form 10-K Summary None.91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.RegistrantDate: February 20, 2019By: /s/ Stuart A. Tanz Stuart A. Tanz President and Chief Executive Officer (Principal Executive Officer) 92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 schedule 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 20, 2019/s/ Richard A. Baker Richard A. Baker Non-Executive Chairman of the BoardDate: February 20, 2019/s/ Stuart A. Tanz Stuart A. Tanz President, Chief Executive Officer and Director (Principal Executive Officer)Date: February 20, 2019/s/ Michael B. Haines Michael B. Haines Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: February 20, 2019/s/ Laurie A. Sneve Laurie A. Sneve Chief Accounting OfficerDate: February 20, 2019/s/ Michael J. Indiveri Michael J. Indiveri DirectorDate: February 20, 2019/s/ Edward H. Meyer Edward H. Meyer Director Date: February 20, 2019/s/ Lee S. Neibart Lee S. Neibart Director 93Date: February 20, 2019/s/ Charles J. Persico Charles J. Persico Director Date: February 20, 2019/s/ Laura H. Pomerantz Laura H. Pomerantz Director Date: February 20, 2019/s/ Eric S. Zorn Eric S. Zorn Director 94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 20, 2019By: /s/ Stuart A. Tanz Stuart A. Tanz President and Chief Executive Officer (Principal Executive Officer) 95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 schedule 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 20, 2019/s/ Richard A. Baker Richard A. Baker Non-Executive Chairman of the Board Date: February 20, 2019/s/ Stuart A. Tanz Stuart A. Tanz President, Chief Executive Officer and Director (Principal Executive Officer) Date: February 20, 2019/s/ Michael B. Haines Michael B. Haines Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: February 20, 2019/s/ Laurie A. Sneve Laurie A. Sneve Chief Accounting OfficerDate: February 20, 2019/s/ Michael J. Indiveri Michael J. Indiveri DirectorDate: February 20, 2019/s/ Edward H. Meyer Edward H. Meyer DirectorDate: February 20, 2019/s/ Lee S. Neibart Lee S. Neibart Director 96Date: February 20, 2019/s/ Charles J. Persico Charles J. Persico Director Date: February 20, 2019/s/ Laura H. Pomerantz Laura H. Pomerantz Director Date: February 20, 2019/s/ Eric S. Zorn Eric S. Zorn Director97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 Crossroads GP, LLC DelawareROIC Crossroads LP, LLC DelawareROIC Pinole Vista, LLC DelawareROIC Zephyr Cove, LLC DelawareROIC Hillsboro, LLC DelawareROIC Cypress West, LLC DelawareROIC Redondo Beach Plaza, LLC DelawareROIC DBTC, LLC DelawareTerranomics Crossroads Associates, LP DelawareSARM Five Points Plaza, LLC DelawareROIC Robinwood, LLC DelawareROIC Creekside Plaza, LLC DelawareROIC Park Oaks, LLC DelawareROIC Diamond Hills Plaza, LLC DelawareROIC Warner Plaza, LLC DelawareROIC Four Corner Square, LLC DelawareROIC Casitas Plaza, LLC DelawareROIC Bouquet Center, LLC DelawareROIC Monterey, LLC DelawareROIC IGAP, LLC DelawareROIC TUO, LLC DelawareSunhill Properties, LLC CaliforniaUhlmann-Burbank, LLC CaliforniaROIC Riverstone Marketplace, LLC DelawareROIC Fullerton Crossroads, LLC Delaware EXHIBIT 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-8 No. 333-170692) pertaining to the 2009 Equity Incentive Plan of Retail OpportunityInvestments Corp.,(2)Post-Effective Amendment No. 1 to Form S-1/MEF on Registration Statement (Form S-3 No. 333-146777), and in therelated Prospectus, of Retail Opportunity Investments Corp,(3)Registration Statement (Form S-3 No. 333-198974), and the related Prospectus, of Retail Opportunity Investments Corp.,(4)Registration Statement (Form S-3 ASR No. 333-210413), and the related Prospectus, of Retail Opportunity InvestmentsCorp.,(5)Registration Statement (Form S-3 ASR No. 333-211521), and the related Prospectus, of Retail Opportunity InvestmentsCorp. and Retail Opportunity Investments Partnership, LP, and(6)Registration Statement (Form S-8 No. 333-229053) pertaining to the 2009 Equity Incentive Plan and Amended and Restated2009 Equity Incentive Planof our reports dated February 20, 2019, with respect to the consolidated financial statements and schedule of Retail OpportunityInvestments Corp. and the effectiveness of internal control over financial reporting of Retail Opportunity Investments Corp., included inthis Annual Report (Form 10-K) for the year ended December 31, 2018. /s/ Ernst & Young LLPSan Diego, CaliforniaFebruary 20, 2019 EXHIBIT 23.2Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statement (Form S-3 ASR No. 333-211521-01) of RetailOpportunity Investments Corp. and Retail Opportunity Investments Partnership, LP and in the related Prospectus of our reports datedFebruary 20, 2019, with respect to the consolidated financial statements and schedule of Retail Opportunity Investments Partnership,LP, included in this Annual Report (Form 10-K) for the year ended December 31, 2018. /s/ Ernst & Young LLPSan Diego, CaliforniaFebruary 20, 2019EXHIBIT 31.1RETAIL OPPORTUNITY INVESTMENTS CORP.CERTIFICATION OF CHIEF EXECUTIVE OFFICERI, 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; andd.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; and5.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; andb.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 20, 2019 By: /s/ Stuart A. Tanz Name: Stuart A. Tanz Title: 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; andd.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; and5.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; andb.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 20, 2019 By: /s/ Stuart A. Tanz Name: Stuart A. Tanz Title: 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; and5.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 20, 2019 By: /s/ Michael B. Haines Name: Michael B. Haines Title: 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; and5.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 20, 2019 By: /s/ Michael B. Haines Name: Michael B. Haines Title: 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 his knowledge on thedate hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K forthe year ended December 31, 2018 (the “Form 10-K”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-K fairly presents, in all material respects, thefinancial condition and results of operations of the Company.Date: February 20, 2019 By: /s/ Stuart A. Tanz Name: Stuart A. Tanz Title: Chief Executive Officer The undersigned, the Chief Financial Officer of Retail Opportunity Investments Corp. (the “Company”), hereby certifies to the best of his knowledge on thedate hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K forthe year ended December 31, 2018 (the “Form 10-K”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-K fairly presents, in all material respects, thefinancial condition and results of operations of the Company.Date: February 20, 2019 By: /s/ Michael B. Haines Name: Michael B. Haines Title: 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 be deemed filedby the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registration statement ofthe 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 and furnished tothe 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 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, 2018 (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 20, 2019 By: /s/ Stuart A. Tanz Name: Stuart A. Tanz Title: 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, 2018 (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 20, 2019 By: /s/ Michael B. Haines Name: Michael B. Haines Title: 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 be deemed filedby the Operating Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registrationstatement 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 the OperatingPartnership and furnished to the Securities and Exchange Commission or its staff upon request. 

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