Quarterlytics / Financial Services / REIT - Retail / Retail Properties of America, Inc.

Retail Properties of America, Inc.

rpai · NYSE Financial Services
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Ticker rpai
Exchange NYSE
Sector Financial Services
Industry REIT - Retail
Employees 201-500
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FY2016 Annual Report · Retail Properties of America, Inc.
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2016 ANNUAL REPORT

 
 
TO OUR SHAREHOLDERS

2016 was another tremendous year for RPAI. While it is tempting to just rattle off a list of the year’s results and 

accomplishments, it would deny a deeper appreciation of our organization and our strategy. To that end, our 

time is better spent highlighting some of the underlying principles that enabled RPAI to, once again, outperform.

OUR TRANSPARENCY IS AN OUTGROWTH OF 
OUR CONVICTION 

OUR CONVICTION RELIES ON OUR PROVEN 
ABILITY TO EXECUTE ON ALL FRONTS

At  our  inaugural  Investor  Day  in  2013,  RPAI 
announced  a  ten-year  plan  to  migrate  the 
portfolio from more than 80 markets into ten of 
the most desirable markets in the United States. 
This past September, at our second Investor Day, 
we boldly announced our plans to cut the ten-year 
time frame in half by substantially completing our 
capital recycling activities by the end of 2018. We 
benchmarked  the  incredible  transformation  of 
our  portfolio  and  our  balance  sheet  to  date.  We 
gave a transactional roadmap through the end of 
2018 that detailed our intention to be a net seller 
of  assets  and  to  reduce  our  leverage  such  that 
RPAI  would  be  offensively  poised.  We  told  our 
investors  when  we  thought  our  earnings  would 
inflect  and  highlighted  our  impressive  and 
ever-growing redevelopment pipeline.

Many  of  our  investors  praised  us  for  what  they 
felt was an unprecedented level of transparency. 
A  handful  asked  us  why  we  felt  compelled  to 
provide so much detail. We didn’t set out to raise 
the  bar,  and  we  certainly  didn’t  feel  compelled. 
We  simply  wanted  to  ensure  that  no  question 
would go unanswered.

When  we  look  back  at  what  we  accomplished 
over  the  past  three-plus  years,  it  is  impossible 
not  to  have  an  enormous  amount  of  passion 
and conviction around our plans for the next two 
years.  We  materially  improved  every  single  retail 
operating  and  demographic  metric:  occupancy, 
annualized  base  rent  (ABR)  per  square  foot,  re-
increases, 
leasing  spreads,  contractual  rent 
recovery ratios, population and average household 
income.  We  sold  our  riskiest  assets,  acquired 
assets  with  embedded  growth,  exited  non-target 
markets,  entered  SuperZips,  and  recaptured  and 
redeployed big box space. We obtained investment 
grade  credit  ratings  from  S&P  and  Moody’s, 
reduced leverage, originated unsecured debt and 
unencumbered  a  significant  amount  of  our  net 
operating  income  (NOI).  The  transformation  is 
notable. Our peer group has been refined, and we 
are setting our sights on 2019 and beyond. 

It’s  worth  acknowledging  the  current  macro 
headwinds, especially as they relate to the retail 
industry.  What  we  view  as  a  necessary  purge  of 
retailers that have failed to properly embrace an 
omnichannel strategy is being viewed by others as 
a  game-changing  reconciliation  of  e-commerce 
and  physical  stores.  The  speculation  is  putting 
pressure on pricing for assets, especially power 
centers,  in  secondary  and  tertiary  markets.  While 

TOTAL STOCK PERFORMANCE

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$300

$270

$240

$210

$180

$150

$120

$90

4/12

6/12

9/12

12/12 3/13 6/13

9/13 12/13 3/14 6/14

9/14 12/14

3/15

6/15

9/15

12/15

3/16

6/16

9/16

12/16

                RPAI                Bloomberg REIT Shopping Center Index                MSCI US REIT Index (RMS)                Standard & Poor’s 500 Index

Cumulative Total Stockholder Returns for RPAI’s Class A Common Stock versus the Bloomberg REIT Shopping Center Index, MSCI US REIT Index (RMS) and the 
Standard & Poor’s 500 Index during the period beginning April 5, 2012, the date of the initial listing of RPAI’s Class A Common Stock on the New York Stock Exchange, 
through December 31, 2016. The graph assumes a $100 investment in each of the indices on April 5, 2012, and the reinvestment of all dividends. Source: Bloomberg

this  trend  validates  our  plans  to  be  a  net 
seller  over  the  next  two  years,  we  anticipate 
that it will be more difficult to meet our short-
term disposition goals. Despite the increased 
challenge,  our  resolve  is  intact  because  we 
have high-quality assets to sell and are armed 
with  a  world-class  team  of  high  performers 
that consistently deliver. The fact is, we have 
turned  over  nearly  30%  of  our  portfolio  over 
the  last  three-plus  years.  I  assure  you  that 
there  isn’t  a  team  that  has  more  talent  or 
passion than we do.             

OUR WORLD-CLASS TEAM IS KEENLY 
FOCUSED ON OUR STRATEGY

Our  strategy  to  concentrate  our  portfolio  in 
ten  of  the  most  desirable  markets  stems 
from  two  critical  acknowledgments.  The 
first  is  that  real  estate  is  a  local  business. 
By focusing on just ten markets, we are able 
to  build  strong  relationships  with  local  and 
regional  tenants,  property  owners  and  local 
governments  which  translates  into  pricing 
power, operational efficiencies and superior 
market optics. The second acknowledgment 
is that we are in the early stages of a shift in 
the retail paradigm. The most successful and 

durable retailers will leverage the synergies 
between their online platforms and physical 
store locations. These synergies undoubtedly 
favor the demographics associated with our 
target markets. 

The  rise  in  e-commerce  is  further  causing  a 
bifurcation in retail real estate where commodity-
like  properties  are  at  the  highest  risk  for 
obsolescence.  RPAI’s  “bookended”  investment 
thesis  discussed  at  our  recent  Investor  Day 
guides  us  on  how  to  best  position  ourselves  in 
each  of  our  target  markets.  At  one  end  of  the 
spectrum,  we  seek  out  assets  in  highly  dense, 
transit-oriented and in-fill locations characterized 
by  extreme  convenience  and  strong  barriers  to 
entry. At the other end of the spectrum, we seek 
out assets that appeal to customers’ desires to 
live, work, shop and play in proximity. Now more 
than  ever,  people,  especially  millennials,  crave 
real experiences and we want to own assets that 
can meet this growing demand. In all instances 
we prefer to invest in assets that have the ability to 
densify over time as evidenced by our investments 
in  Downtown  Crown,  Tysons  Corner,  Towson 
Square,  Merrifield  Town  Center,  One  Loudoun 
Downtown and Main Street Promenade.       

 
 
OUR HIGH QUALITY PORTFOLIO

$26.91

$20.21

$19.92

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$30

$25

$20

$15

$10

$5

$0

$19.21

$17.11

$17.93

$17.13

$15.46

$15.08

$12.99

FRT

REG

ROIC

RPAI

WRI

UE

DDR

KIM

BRX

Target Markets                       Retail Portfolio

Source: Company filings.

THE RESULTS OF OUR STRATEGY

Our 2016 results are proof positive that our strategy is working. At year end, our retail portfolio was 
95% leased and nearly 70% of our multi-tenant ABR was located in our target markets. Our target 
market ABR per square foot stood at $19.21 and we experienced 3.5% same store NOI growth, which 
was one of the strongest prints in our sector. Our Operating FFO per share of $1.09 was three cents 
more than the prior year, notwithstanding the fact that we were a net seller of assets and experienced 
the effects of The Sports Authority bankruptcy. We identified $142 million of air rights value within our 
portfolio, and we broke ground on one redevelopment and will soon do so on another.

At the onset of this letter, I promised to highlight our underlying principles and not just rattle off 
statistics, so I will leave you with this...Our strategy is working.

I would like to thank the Board of Directors and our team members for their continued support 
and unwavering efforts. 

We are the best in retail, from every angle.

Sincerely, 

Steven P. Grimes
President & Chief Executive Officer

 
 
 
 
 
 
Table of Contents

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

FORM 10-K

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

For the fiscal year ended December 31, 2016
or

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

For the transition period from                  to

Commission File Number: 001-35481

RETAIL PROPERTIES OF AMERICA, INC.
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of incorporation or organization)

42-1579325
(I.R.S. Employer Identification No.)

2021 Spring Road, Suite 200, Oak Brook, Illinois
(Address of principal executive offices)

60523
(Zip Code)

(630) 634-4200
(Registrant’s telephone number, including area code)

 Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Class A Common Stock, $.001 par value
7.00% Series A Cumulative Redeemable Preferred Stock, $.001 par value

Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange

 Securities registered pursuant to Section 12(g) of the Act:

Title of class
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 

 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. Yes 

 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 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject 
to such filing requirements for the past 90 days. Yes 

 No 

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

 No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained 
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference 
in Part III of this Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 
company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Non-accelerated filer 
(Do not check if a smaller reporting company)

Accelerated filer 

Smaller reporting company 

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

 No 

As of June 30, 2016, the aggregate market value of the Class A common stock held by non-affiliates was approximately $4.0 billion based upon 
the closing price as reported on the New York Stock Exchange on June 30, 2016 of $16.90 per share. (For this computation, the Registrant has 
excluded the market value of all shares of Class A common stock reported as beneficially owned by executive officers and directors of the 
Registrant. Such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the Registrant.)

Number of shares outstanding of the registrant’s classes of common stock as of February 10, 2017:
Class A common stock: 

236,847,007 shares

DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the Registrant’s Proxy Statement relating to its Annual Meeting of Stockholders to be held on May 25, 2017 is 
incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III. The Registrant intends to file such Proxy Statement with the Securities and 
Exchange Commission no later than 120 days after the end of its fiscal year ended December 31, 2016.

 
 
 
 
RETAIL PROPERTIES OF AMERICA, INC.

TABLE OF CONTENTS

PART I

Table of Contents

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

PART II

Item 6.

Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions and Director Independence

Item 14. Principal Accounting Fees and Services

Item 15. Exhibits and Financial Statement Schedules

SIGNATURES

PART IV

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All dollar amounts and share amounts in this Form 10-K in Items 1. through 7A. are stated in thousands with the exception of per 
share amounts. In this report, all references to “we”, “our” and “us” refer collectively to Retail Properties of America, Inc. and 
its subsidiaries.

PART I

ITEM 1. BUSINESS

General

Retail Properties of America, Inc. is a real estate investment trust (REIT) that owns and operates high quality, strategically located 
shopping centers in the United States. As of December 31, 2016, we owned 156 retail operating properties representing 25,832,000
square feet of gross leasable area (GLA). Our retail operating portfolio includes (i) neighborhood and community centers, (ii) 
power centers, and (iii) lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties.

The following table summarizes our operating portfolio as of December 31, 2016:

Property Type

Operating portfolio:
Multi-tenant retail

Neighborhood and community centers
Power centers
Lifestyle centers and mixed-use properties

Total multi-tenant retail

Single-user retail
Total retail operating portfolio
Office

Total operating portfolio (b)

(a)  Includes leases signed but not commenced.

Number of
Properties

GLA
(in thousands)

Occupancy

Percent Leased
Including Leases
Signed (a)

81
50
14
145
11
156
1
157

9,958
11,430
3,868
25,256
576
25,832
895
26,727

94.2%
95.8%
89.7%
94.2%
100.0%
94.3%
1.1%
91.2%

94.4%
96.9%
90.3%
94.9%
100.0%
95.0%
44.3%
93.3%

(b)  Excludes one multi-tenant retail operating property and one single-user retail operating property classified as held for sale as of December 31, 

2016.

In addition to our operating portfolio, as of December 31, 2016, we owned two properties where we have begun redevelopment 
activities.

Operating History

We are a Maryland corporation formed in March 2003 and have been publicly held and subject to U.S. Securities and Exchange 
Commission (SEC) reporting requirements since 2003. We were initially formed as Inland Western Retail Real Estate Trust, Inc. 
and on March 8, 2012, we changed our name to Retail Properties of America, Inc.

Business Objectives and Strategies

In 2012, management began a portfolio repositioning effort to focus the portfolio on high quality, multi-tenant retail properties. 
The core objective of this effort is to become a dominant owner of multi-tenant retail properties in 10 to 15 target markets, owning 
3,000,000 to 5,000,000 square feet in each market. We believe that concentrating our portfolio in multi-tenant retail properties in 
these target markets will allow us to optimize our local and regional operating platforms and enhance our operating performance. 
To date, we have identified 10 target markets: Dallas, Washington, D.C./Baltimore, New York, Atlanta, Seattle, Chicago, Houston, 
San Antonio, Phoenix and Austin, which generally feature one or more of the following characteristics:

•  well-diversified local economy;

• 

strong  demographic  profile  with  significant  long-term  population  growth  or  above-average  existing  density,  high 
disposable income and/or a highly educated employment base;

• 

fiscal and regulatory environment conducive to business activity and growth;

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• 

• 

strong barriers to entry, whether topographical, regulatory or density driven; and

ability to create critical mass and realize operational efficiencies.

Since the beginning of 2012, we have sold 159 properties, primarily in our non-target markets, for aggregate consideration of 
$2,296,955, including our pro rata share of unconsolidated joint ventures and three development properties, with a majority of the 
proceeds used for debt reduction and the acquisition of high quality, multi-tenant retail assets within our target markets. Since we 
began executing on our external growth initiatives in the fourth quarter of 2013, we have purchased 30 properties for aggregate 
consideration of $1,396,761, including our pro rata share of unconsolidated joint ventures, resulting in an increase in consolidated 
GLA in our target markets by 4.5 million square feet and an increase in concentration to over 66% of multi-tenant retail annualized 
base rent (ABR) from our target markets as of December 31, 2016. Depending on whether favorable market conditions exist, 
among other factors, we expect to substantially complete our portfolio repositioning efforts by the end of 2018.

Competition

In seeking new  investment opportunities, we  compete with other real estate investors, including other REITs,  pension  funds, 
insurance companies, foreign investors, real estate partnerships, private equity funds, private individuals and other real estate 
companies, some of which may have a lower cost of capital than ours.

From an operational perspective, we compete with other property owners on a variety of factors, including, but not limited to, 
location, visibility, quality and aesthetic value of construction, and strength and name recognition of tenants. These factors combine 
to determine the level of occupancy and rental rates that we are able to achieve at our properties. Because our revenue potential 
may be linked to the success of retailers, we indirectly share exposure to the same competitive factors that our retail tenants 
experience when trying to attract customers. These factors include other forms of retailing, including e-commerce and direct 
consumer sales, and general competition from other regional shopping centers. To remain competitive, we evaluate all of the factors 
affecting our centers and work to position them accordingly. We believe the principal factors that retailers consider in making their 
leasing decisions include:

• 

• 

• 

consumer demographics;

quality, design and location of properties;

diversity of retailers within individual shopping centers;

•  management and operational expertise of the landlord; and

• 

rental rates.

Based on these factors, we believe that the size and scope of our property portfolio and operating platform, as well as the overall 
quality and attractiveness of our individual properties, enable us to compete effectively for retail tenants. We believe that our 
strategy of focusing on 10 to 15 target markets enhances our ability to drive revenue growth by more thoroughly understanding 
the local market dynamics and by increasing our market relevancy.

Tax Status

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or the 
Code. To maintain our qualification as a REIT, we must meet a number of organizational and operational requirements, including 
a requirement that we annually distribute to our shareholders at least 90% of our REIT taxable income, determined without regard 
to the dividends paid deduction and excluding net capital gains. As a REIT, we generally are not subject to U.S. federal income 
tax on the taxable income we distribute to our shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject 
to U.S. federal income tax at regular corporate tax rates. Even if we qualify for taxation as a REIT, we may be subject to certain 
state and local taxes on our income, property or net worth and U.S. federal income and excise taxes on our undistributed income. 
We have one wholly-owned consolidated subsidiary that has jointly elected to be treated as a taxable REIT subsidiary, or TRS, 
for U.S. federal income tax purposes. A TRS is taxed on its net income at regular corporate tax rates. The income tax expense 
incurred through the TRS has not had a material impact on our consolidated financial statements.

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Regulation

General

The properties in our portfolio, including common areas, are subject to various laws, ordinances and regulations.

Americans with Disabilities Act (ADA)

Our properties must comply with Title III of the ADA to the extent that such properties are “public accommodations” as defined 
by the ADA. The ADA may require removal of structural barriers to allow access by persons with disabilities in certain public 
areas of our properties where such removal is readily achievable. We believe our existing properties are substantially in compliance 
with the ADA and that we will not be required to incur significant capital expenditures to address the requirements of the ADA. 
Refer to Item 1A. “Risk Factors” for more information regarding compliance with the ADA.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, as a current or former owner or operator of real property, 
we may be liable for costs and damages resulting from the presence or release of hazardous substances, waste, or petroleum 
products at, on, in, under or from such property, including costs for investigation, remediation, natural resource damages or third 
party liability for personal injury or property damage. These laws often impose liability without regard to whether the owner or 
operator knew of, or was responsible for, the presence or release of such materials, and the liability may be joint and several.

Independent environmental consultants conducted Phase I Environmental Site Assessments or similar environmental audits for 
all of our investment properties. A Phase I Environmental Site Assessment is a written report that identifies existing or potential 
environmental conditions associated with a particular property. These environmental site assessments generally involve a review 
of records and visual inspection of the property, but do not include soil sampling or ground water analysis. These environmental 
site assessments have not revealed, nor are we aware of, any environmental liability that we believe will have a material adverse 
effect on our operations. Refer to Item 1A. “Risk Factors” for more information regarding environmental matters.

Insurance

We carry comprehensive liability and property insurance coverage inclusive of fire, extended coverage, seismic activity, terrorism 
and loss of income insurance covering all of the properties in our portfolio under a blanket policy. We believe the policy specifications 
and insured limits are appropriate given the relative risk of loss, the cost of the coverage and industry practice. We believe that the 
properties in our portfolio are adequately insured. Terrorism insurance is carried on all properties in an amount and with deductibles 
that we believe are commercially reasonable. Refer to Item 1A. “Risk Factors” for more information. The terrorism insurance is 
subject to exclusions for loss or damage caused by nuclear substances, pollutants, contaminants and biological and chemical 
weapons. Insurance coverage is not provided for losses attributable to riots or certain acts of God.

Employees

As of December 31, 2016, we had 237 employees.

Access to Company Information

We make available, free of charge, through our website and by responding to requests addressed to our investor relations group, 
our Annual  Report  on  Form 10-K,  quarterly  reports  on  Form 10-Q,  current  reports  on  Form 8-K  including  exhibits  and  all 
amendments to those reports and proxy statements filed or furnished pursuant to 13(a) or 15(d) of the Securities Exchange Act of 
1934, as amended. These reports are available as soon as reasonably practical after such material is electronically filed or furnished 
to the SEC. Our website address is www.rpai.com. The information contained on our website, or other websites linked to our 
website, is not part of this document. Our reports may also be obtained by accessing the EDGAR database at the SEC’s website 
at www.sec.gov.

Shareholders wishing to communicate directly with our board of directors or any committee can do so by writing to the attention 
of the Board of Directors or applicable committee in care of Retail Properties of America, Inc. at 2021 Spring Road, Suite 200, 
Oak Brook, Illinois 60523.

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ITEM 1A. RISK FACTORS

In evaluating our company, careful consideration should be given to the following risk factors, in addition to the other information 
included in this annual report. Each of these risk factors could adversely affect our business operating results and/or financial 
condition, as well as adversely affect the value of our common stock, preferred stock or unsecured debt. In addition to the following 
disclosures,  please  refer  to  the  other  information  contained  in  this  report  including  the  accompanying  consolidated  financial 
statements and the related notes.

RISKS RELATED TO OUR BUSINESS AND OUR PROPERTIES

There are inherent risks associated with real estate investments and the real estate industry, each of which could have an 
adverse impact on our financial performance and the value of our properties.

Real estate investments are subject to various risks, many of which are beyond our control. Our operating and financial performance 
and the value of our properties can be affected by many of these risks, including, but not limited to, the following:

• 

• 

• 

• 

• 

• 

• 

• 

• 

national, regional and local economies, which may be negatively impacted by inflation, deflation, government deficits, 
high unemployment rates, severe weather or other natural disasters, decreased consumer confidence, industry slowdowns, 
reduced corporate profits, lack of liquidity and other adverse business conditions;

local real estate conditions, such as an oversupply of retail space or a reduction in demand for retail space, resulting in 
vacancies or compromising our ability to rent space on favorable terms;

the convenience and quality of competing retail properties and other retailing platforms such as the internet;

adverse changes in the financial condition of tenants at our properties, including financial difficulties, lease defaults or 
bankruptcies;

competition for investment opportunities from other real estate investors with significant capital, including other REITs, 
real estate operating companies and institutional investment funds;

the illiquid nature of real estate investments, which may limit our ability to sell properties at the terms desired or at terms 
favorable to us;

fluctuations in interest rates and the availability of financing, which could adversely affect our ability and the ability of 
potential buyers and tenants of our properties, to obtain financing on favorable terms or at all;

changes in, and changes in the enforcement of, laws, regulations and governmental policies, including, without limitation, 
health, safety, environmental, zoning and tax laws, government fiscal policies and the ADA; and

civil unrest, acts of war, terrorist attacks and natural disasters, including seismic activity and floods, which may result in 
uninsured and underinsured losses.

During a period of economic slowdown or recession, or the public perception that such a period may occur, declining demand for 
real estate could result in a general decline in rents or an increased incidence of defaults among our existing leases, and, consequently, 
our properties may fail to generate revenues sufficient to meet operating, debt service and other expenses. As a result, we may 
have to borrow funds to cover fixed costs, and our cash flow, financial condition and results of operations could be adversely 
affected. As such, the per share trading prices of our Class A common stock and Series A preferred stock, as well as the market 
price  of  our  debt  securities,  and  our  ability  to  satisfy  our  principal  and  interest  obligations  and  to  make  distributions  to  our 
shareholders may be adversely affected.

Our financial condition and results of operations could be adversely affected by poor economic or market conditions where 
our properties are located, especially in our target markets where we have a high concentration of properties.

We are in the process of repositioning our portfolio into 10 to 15 target markets. To date, we have announced 10 of these markets. 
The economic conditions in markets where our properties are concentrated greatly influence our financial condition and results 
of operations. We are particularly susceptible to adverse economic and other developments in such areas, including increased 
unemployment, industry slowdowns, corporate layoffs or downsizing, relocations of businesses, decreased consumer confidence, 
adverse  changes  in  demographics,  increases  in  real  estate  and  other  taxes,  increased  regulation  and  natural  disasters. As  of 

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Table of Contents

December 31, 2016, approximately 59.2% of our GLA and approximately 65.1% of our ABR in our retail operating portfolio was 
in our target markets, including amounts attributable to our redevelopments. Depending on whether favorable market conditions 
exist, among other factors, we expect to increase our concentration in our target markets over the next two years, with a goal of 
having 90% of our multi-tenant retail ABR in our target markets by the end of 2018. Notably, approximately 27.0% of our GLA 
and approximately 29.5% of our ABR in our retail operating portfolio is located in the state of Texas, where four of our target 
markets are located. Poor economic or market conditions in our target markets, including those that are in Texas, may adversely 
affect our cash flow, financial condition and results of operations.

A shift in retail shopping from brick and mortar stores to online shopping may have an adverse impact on our cash flow, 
financial condition and results of operations.

Many retailers operating brick and mortar stores have made online sales a vital piece of their business. Although many of the 
retailers operating in our properties sell groceries and other necessity-based soft goods or provide services, including entertainment 
and dining options, the shift to online shopping may cause declines in brick and mortar sales generated by certain of our tenants 
and/or may cause certain of our tenants to reduce the size or number of their retail locations in the future. As a result, our cash 
flow, financial condition and results of operations could be adversely affected.

We may choose to not renew leases or be unable to renew leases, lease vacant space or re-lease space as leases expire. In 
addition, rents associated with new or renewed leases may be less than expiring rents (lease roll-down) or, to facilitate leasing, 
we may choose to incur significant capital expenditures to improve our properties, which could adversely affect our cash flow, 
financial condition and results of operations.

Approximately 5.0% of the total GLA in our retail operating portfolio was vacant as of December 31, 2016, excluding leases 
signed but not commenced. In addition, leases accounting for approximately 35.6% of the ABR in our retail operating portfolio 
as of December 31, 2016 are scheduled to expire within the next three years. We may choose to not renew leases based on various 
strategic factors such as operating strength of the occupying tenant, the tenant’s retail category, merchandising composition of the 
property, other leasing opportunities available to us or redevelopment plans for the property. In our efforts to lease space, we 
compete with numerous developers, owners and operators of retail properties, many of whom own properties similar to, and in 
the same sub-markets as, our properties. As a result, we cannot assure you that leases will be renewed or that current or future 
vacancies will be re-leased at rental rates equal to or above the current average rental rates without significant down time, or that 
substantial rent abatements, tenant improvements, lease inducements, early termination and co-tenancy rights or below-market 
renewal options will not be offered to attract new tenants or retain existing tenants. Additionally, we may incur significant capital 
expenditures or accommodate requests for renovations and other improvements to make our properties more attractive to tenants. 
If we choose not to or are unable to renew existing leases, lease vacant space or re-lease space as leases expire, or if rents associated 
with new or renewed leases are less than expiring rents or we incur significant capital expenditures to improve our properties, our 
cash flow, financial condition and results of operations could be adversely affected.

Our inability to collect rents from tenants or collect balances due on our leases from any tenants in bankruptcy or experiencing 
other significant financial hardship may negatively impact our cash flow, financial condition and results of operations.

Substantially all of our income is derived from rentals of real property. If sales generated by stores operating in our properties 
decline sufficiently or if tenants encounter other significant financial hardships, tenants may be unable to pay their existing minimum 
rents or other charges, or tenants may decline to extend or renew a lease upon its expiration on terms favorable to us, or at all, or 
may even exercise early termination rights (to the extent available). If a significant number of our tenants are unable to make their 
rental payments to us or otherwise meet their lease obligations, our cash flow, financial condition and results of operations may 
be materially adversely affected. In addition, although minimum rent is generally supported by long-term lease contracts, tenants 
who file bankruptcy have the legal right to reject any or all of their leases and close related stores. In the event that a tenant with 
a significant number of leases in our properties files bankruptcy and rejects its leases, we could experience a significant reduction 
in our revenues and we may not be able to collect all pre-petition amounts owed by that party, which may adversely affect our 
cash flow, financial condition and results of operations.

If any of our anchor tenants experience a downturn in their business or terminate their leases, our cash flow, financial condition 
and results of operations could be adversely affected.

Anchor tenants occupy a significant amount of the square footage and pay a significant portion of the total rent in our retail operating 
portfolio. Specifically, our 20 largest tenants based on ABR represent 39.2% of occupied GLA and 31.7% of ABR as of December 31, 
2016. In addition, anchor tenants and “shadow” anchors, retailers in or adjacent to our properties that occupy space we do not 
own, contribute to the success of other tenants by drawing customers to a property. The bankruptcy, insolvency or downturn in 

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business of any of our anchor tenants could result in another tenant vacating its space, defaulting on its lease obligations, terminating 
its lease, exercising co-tenancy rights or renewing its lease at lower rental rates. As a result, our cash flow, financial condition and 
results of operations could be adversely affected.

If small shop tenants are not successful and, consequently, terminate their leases, our cash flow, financial condition and results 
of operations could be adversely affected.

Small shop tenants, those that occupy less than 10,000 square feet, in our retail operating portfolio represent 29.1% of occupied 
GLA, but 44.8% of ABR as of December 31, 2016. Such tenants may have more limited resources than larger tenants and, as a 
result, may be more vulnerable to negative economic conditions. If a significant number of our small shop tenants experience 
financial difficulties or are unable to remain open, our cash flow, financial condition and results of operations could be adversely 
affected.

Many of the leases at our retail properties contain provisions, which, if triggered, may allow tenants to pay reduced rent, cease 
operations or terminate their leases, any of which could adversely affect our cash flow, financial condition and results of 
operations.

Some anchor tenants have the right to vacate their space and continue to pay rent through the end of their lease term, which inhibits 
our ability to re-lease the space during that period. Additionally, many of the leases at our retail properties contain provisions that 
condition a tenant’s obligation to remain open, the amount of rent payable by the tenant or potentially the tenant’s obligation to 
remain in the lease, on certain factors, including: (i) the presence and continued operation of a certain anchor tenant or tenants, 
(ii) minimum occupancy levels at the applicable property or (iii) tenant sales amounts. If such a provision is triggered by a failure 
of any of these or other applicable conditions, a tenant could have the right to cease operations at the applicable property, have its 
rent reduced or terminate its lease early. A tenant ceasing operations as a result of these provisions could cause a decrease in 
customer traffic and related decreased sales for other tenants at that property. To the extent these provisions result in lower revenue, 
our cash flow, financial condition and results of operations could be adversely affected.

Our expenses may remain constant or increase, even if income from our properties decreases, causing our cash flow, financial 
condition and results of operations to be adversely affected.

Certain costs associated with our business, such as real estate taxes, state and local taxes, insurance, utilities, mortgage payments 
and corporate expenses, are relatively inflexible and generally do not decrease when a property’s occupancy decreases, rental rates 
decrease, a tenant fails to pay rent or other circumstances cause our revenues to decrease. If we are unable to reduce our operating 
costs in response to revenue declines, our cash flow, financial condition and results of operations may be adversely affected. In 
addition, inflationary or other price increases could result in increased operating costs, and increases in assessed valuations or 
changes in tax rates could result in increased real estate taxes for us and our tenants, and to the extent to which we are unable to 
fully recover such increases in operating expenses and real estate taxes from tenants, our cash flow, financial condition and results 
of operations could be adversely affected.

We depend on external sources of capital that are outside of our control, which may affect our ability to execute on strategic 
opportunities, satisfy our debt obligations and make distributions to our shareholders.

In order to maintain our qualification as a REIT, we are generally required under the Code to annually distribute to our shareholders 
at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital 
gains. In addition, as a REIT, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 
100% of our REIT taxable income, including any net capital gains. Because of these distribution requirements, we may not be 
able to fund future capital needs (including redevelopment and acquisition activities, payments of principal and interest on our 
existing debt, tenant improvements and leasing costs) from operating cash flow. Consequently, we may rely on third party sources 
to fund our capital needs. We may not be able to obtain the necessary capital on favorable terms, in the time period we desire, or 
at all. Additional debt we incur may increase our leverage, expose us to the risk of default and may impose operating restrictions 
on us, and any additional equity we raise could be dilutive to existing shareholders. Our access to third party sources of capital 
depends, in part, on general market conditions, the market’s view of the quality of our assets, operating platform and growth 
potential, our current debt levels, and our current and expected future earnings, cash flow and distributions to our shareholders. If 
we cannot obtain capital from third party sources, we may be unable to acquire or redevelop properties when strategic opportunities 
exist,  satisfy  our  principal  and  interest  obligations  or  make  cash  distributions  to  our  shareholders  necessary  to  maintain  our 
qualification as a REIT.

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We may be unable to sell a property at the time we desire and on favorable terms or at all, which could limit our ability to access 
capital through dispositions and could adversely affect our cash flow, financial condition and results of operations.

A key component of our strategic plan is to pursue targeted dispositions. However, real estate investments generally cannot be 
sold  quickly.  Our  ability  to  dispose  of  properties  on  advantageous  terms  depends  on  factors  beyond  our  control,  including 
competition from other sellers, increases in market capitalization rates and the availability of attractive financing for potential 
buyers of our properties, and we cannot predict the various market conditions affecting real estate investments that will exist at 
any particular time in the future. As a result of the uncertainty of market conditions, we cannot provide any assurance that we will 
be able to sell properties at a profit, or at all. In addition, and subject to certain safe harbor provisions, the Code generally imposes 
a 100% tax on gain recognized by REITs upon the disposition of assets if the assets are held primarily for sale in the ordinary 
course of business, rather than for investment, which may cause us to forego or defer sales of properties that otherwise would be 
attractive from a pre-tax perspective. Accordingly, our ability to access capital through dispositions may be limited, which could 
limit our ability to fund future capital needs.

We may be unable to complete acquisitions and even if acquisitions are completed, our operating results at acquired properties 
may not meet our financial expectations.

A key component of our strategic plan is to execute our investment strategy of acquiring high quality, multi-tenant retail assets 
within our target markets. We continue to evaluate the market of available properties and expect to continue to acquire properties 
when we believe strategic opportunities exist. Our ability to acquire properties on favorable terms and successfully operate or 
develop them is subject to the following risks:

•  we may be unable to acquire a desired property because of competition from other real estate investors with substantial 

capital, including other REITs, real estate operating companies and institutional investment funds;

• 

even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase 
the purchase price;

•  we may incur significant costs and divert management attention in connection with the evaluation and negotiation of 

potential acquisitions, including ones that are subsequently not completed;

•  we may be unable to finance acquisitions on favorable terms and in the time period we desire, or at all;

•  we  may  be  unable  to  quickly  and  efficiently  integrate  new  acquisitions,  particularly  the  acquisition  of  portfolios  of 

properties, into our existing operations;

•  we may acquire properties that are not initially accretive to our results upon acquisition, and we may not successfully 

manage and lease those properties to meet our expectations; and

•  we may acquire properties subject to liabilities and without any recourse, or with only limited recourse to former owners, 
with respect to unknown liabilities for clean-up of undisclosed environmental contamination, claims by tenants or other 
persons to former owners of the properties and claims for indemnification by general partners, directors, officers and 
others indemnified by the former owners of the properties.

If we are unable to acquire properties on favorable terms, obtain financing in a timely manner and on favorable terms, or operate 
acquired properties to meet our financial expectations, our cash flow, financial condition and results of operations could be adversely 
affected.

Future joint venture investments could be adversely affected by our lack of sole decision-making authority.

As of December 31, 2016, we had no properties held in joint ventures. Any joint venture arrangements in which we may engage 
in the future could be subject to various risks including, among others: (i) lack of exclusive control over the joint venture, which 
may prevent us from taking actions that are in our best interest, (ii) future capital constraints of our partners, which may force us 
to contribute more capital than we anticipated to cover the joint venture’s liabilities, (iii) actions by our partners that could jeopardize 
our REIT status or the tax status of the joint venture, requiring us to pay taxes or subject properties owned by the joint venture to 
liabilities greater than those contemplated by the terms of the joint venture agreements, and (iv) disputes between us and our 
partners, which may result in litigation or arbitration that would increase our expenses and require our officers and/or directors to 
focus a disproportionate amount of their time and effort on the joint venture. If any of the foregoing were to occur, our cash flow, 
financial condition and results of operations could be adversely affected.

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Development, redevelopment, expansions and pad development activities have inherent risks, which could adversely impact 
our cash flow, financial condition and results of operations.

As of December 31, 2016, we had two properties in redevelopment and three active expansions and pad developments. We have 
invested a total of approximately $12,357 in these projects, which are at various stages of completion, and based on our current 
plans and estimates, we anticipate that to complete these projects, it will require an additional $40,700 to $43,700, net of proceeds 
from land sales, reimbursement from third parties and contributions from project partners, as applicable. We anticipate engaging 
in additional redevelopment, expansions and pad development activities in the future. In addition to the risks associated with real 
estate investments in general as described elsewhere, the risks associated with future development, redevelopment, expansions 
and pad development activities include:

• 

• 

• 

• 

• 

• 

• 

• 

• 

expenditure of capital and time on projects that may never be completed;

failure or inability to obtain financing on favorable terms or at all;

inability to secure necessary zoning or regulatory approvals;

higher than estimated construction or operating costs, including labor and material costs;

inability to complete construction on schedule due to a number of factors, including inclement weather, labor disruptions, 
construction delays, delays or failure to receive zoning or other regulatory approvals, acts of terror or other acts of violence, 
or acts of God (such as fires, seismic activity or floods);

significant  time  lag  between  commencement  and  stabilization  resulting  in  delayed  returns  and  greater  risks  due  to 
fluctuations in the general economy, shifts in demographics and competition;

decrease in customer traffic during the redevelopment period causing a decrease in tenant sales;

inability to secure key anchor or other tenants at anticipated pace of lease-up or at all; and

occupancy and rental rates at a newly completed project that may not meet expectations.

If any of the above events were to occur, the development, redevelopment, expansion or pad development of the properties may 
hinder our growth and may have an adverse effect on our cash flow, financial condition and results of operations. In addition, new 
development  and  significant  redevelopment  activities,  regardless  of  whether  they  are  ultimately  successful,  typically  require 
substantial time and attention from management.

We are subject to litigation that may negatively impact our cash flow, financial condition and results of operations.

We are a defendant from time to time in lawsuits and regulatory proceedings relating to our business. Due to the inherent uncertainties 
of litigation and regulatory proceedings, we may not be able to accurately predict the ultimate outcome of any such litigation or 
proceedings. A significant unfavorable outcome could negatively impact our cash flow, financial condition and results of operations.

A number of properties in our portfolio are subject to ground leases; if we are found to be in breach of a ground lease or are 
unable to renew a ground lease, we could be materially and adversely affected.

We have 12 properties in our portfolio that are either completely or partially on land that is owned by third parties and leased to 
us pursuant to ground leases. Accordingly, we only own a long-term leasehold or similar interest in those properties. If we are 
found to be in breach of a ground lease and that breach cannot be cured, we could lose our interest in the improvements and the 
right to operate the property. In addition, unless we can purchase a fee interest in the underlying land or extend the terms of these 
leases before or at their expiration, as to which no assurance can be given, we will lose our interest in the improvements and the 
right to operate these properties. Assuming that we exercise all available options to extend the terms of our ground leases, all of 
our ground leases will expire between 2049 and 2115. However, in certain cases, our ability to exercise such options is subject to 
the condition that we are not in default under the terms of the ground lease at the time that we exercise such options, and we can 
provide no assurances that we will be able to exercise our options at such time. If we were to lose the right to operate a property 
due to a breach or non-renewal of the ground lease, we would be unable to derive income from such property, which could materially 
and adversely affect us.

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Uninsured  losses  or  losses  in  excess  of  insurance  coverage  could  materially  and  adversely  affect  our  cash  flow,  financial 
condition and results of operations.

Each tenant is responsible for insuring its goods and demised premises and, in most circumstances, is required to reimburse us for 
its share of the cost of acquiring comprehensive insurance for the property, including casualty, liability, fire and extended coverage 
customarily obtained for similar properties in amounts which have been determined as sufficient to cover reasonably foreseeable 
losses. Tenants with net leases typically are required to pay all insurance costs associated with their space. However, material 
losses may occur in excess of insurance proceeds with respect to any property and, specific to net leases, tenants may fail to obtain 
adequate insurance. Additionally, losses of a catastrophic nature including loss due to wars, acts of terrorism, seismic activity, 
floods,  hurricanes,  wind,  other  natural  disasters,  pollution  or  environmental  matters  may  be  considered  uninsurable  or  not 
economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. In the instance of a 
loss that is uninsured or that exceeds policy limits, a significant portion of the capital invested in the damaged property could be 
lost, as well as the anticipated future revenue of the property, which could materially and adversely affect our financial condition 
and results of operations. A variety of factors, including, among others, changes in building codes and ordinances and environmental 
considerations, might also make it impractical or undesirable to use insurance proceeds to replace a property after it has been 
damaged or destroyed. Furthermore, we may be unable to obtain adequate insurance coverage at reasonable costs in the future, as 
the costs associated with property and casualty renewals may be higher than anticipated.

A number of our properties are located in areas which are susceptible to, and could be significantly affected by, natural disasters 
that could cause significant damage. For example, many of our properties are located in coastal regions and would, therefore, be 
affected by any future increases in sea levels or in the frequency or severity of hurricanes and tropical storms to the extent they 
are located in impacted areas. In addition, some of our properties are located in California and other regions that are especially 
susceptible to seismic activity.

The occurrence of terrorist acts could sharply increase the premium paid for terrorism insurance coverage. Further, mortgage 
lenders, in some cases, insist that specific coverage against terrorism be purchased by commercial property owners as a condition 
for providing mortgage loans. It is uncertain whether such insurance policies will be available, or available at reasonable costs, 
which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other 
financial support, either through financial assurances or self-insurance, to cover potential losses. We cannot provide assurance that 
we will have adequate coverage for such losses and, to the extent we must pay unexpectedly large amounts for insurance, our cash 
flow, financial condition and results of operations could be materially and adversely affected.

We may incur significant costs complying with the ADA and similar laws, which could adversely affect our cash flow, financial 
condition and results of operations.

Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. Although 
we believe the properties in our portfolio substantially comply with the present requirements of the ADA, we have not conducted 
an audit or investigation of all of our properties to determine our compliance, nor can we be assured that requirements will not 
change. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties 
and make alterations as appropriate in this respect. If one or more of the properties in our portfolio is not in compliance with the 
ADA, we would be required to incur additional costs to bring the property into compliance, and it could result in the imposition 
of fines or an award of damages to private litigants. Additional federal, state and local laws may also require modifications to our 
properties, or restrict our ability to renovate our properties. We cannot predict the ultimate cost of compliance with the ADA or 
other legislation. If we incur substantial costs to comply with the ADA and any other legislation, our cash flow, financial condition 
and results of operations could be adversely affected.

We may become liable with respect to contaminated property or incur costs to comply with environmental laws, which may 
negatively impact our cash flow, financial condition and results of operations.

Under various federal, state and local laws, ordinances and regulations, as a current or former owner or operator of real property, 
we may be liable for costs and damages resulting from the presence or release of hazardous substances, waste, or petroleum 
products at, on, in, under or from such property, including costs for investigation, remediation, natural resource damages or third 
party liability for personal injury or property damage. These laws often impose liability without regard to whether the owner or 
operator knew of, or was responsible for, the presence or release of such materials, and the liability may be joint and several. In 
addition, the presence of contamination or the failure to remediate contamination at our properties may adversely affect our ability 
to sell, redevelop, or lease such property or to borrow funds using the property as collateral. Environmental laws may also create 
liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, 
if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which that property 

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may be used or how businesses may be operated on that property. Some of our properties have been or may be impacted by 
contamination arising from current or prior uses of the property or adjacent properties for commercial or industrial purposes. Such 
contamination may arise from spills of petroleum or hazardous substances or releases from tanks used to store such materials. We 
may also be liable for the costs of remediating contamination at off-site disposal or treatment facilities when we arrange for disposal 
or treatment of hazardous substances at such facilities. The environmental site assessments described in Item 1. “Business — 
Environmental  Matters”  have  a  limited  scope  and  may  not  reveal  all  potential  environmental  liabilities.  Further,  material 
environmental conditions may have arisen after the review was completed or may arise in the future, and future laws, ordinances 
or regulations may impose additional material environmental liability beyond what was known at the time the site assessment was 
conducted.

In addition, our properties are subject to various federal, state and local environmental, health and safety laws, including laws 
governing the management of waste and underground and aboveground storage tanks. Noncompliance with these environmental, 
health and safety laws could subject us or our tenants to liability, which could affect a tenant’s ability to make rental payments to 
us. Moreover, changes in laws could increase the potential costs of compliance with environmental, health and safety laws or 
increase liability for noncompliance. This may result in significant unanticipated expenditures or may otherwise materially and 
adversely affect our operations, or those of our tenants, which could in turn have a material adverse effect on us.

As the owner or operator of real property, we may also incur liability based on various building conditions. For example, buildings 
and other structures on properties that we currently own or operate or those we acquire or operate in the future contain, may contain, 
or may have contained, asbestos-containing material, or ACM. Environmental, health and safety laws require that ACM be properly 
managed and maintained and may impose fines or penalties on owners, operators or employers for non-compliance with these 
requirements. These requirements include special precautions, such as removal, abatement or air monitoring, if ACM would be 
disturbed during maintenance, renovation or demolition of a building, potentially resulting in substantial costs. In addition, we 
may be subject to liability for personal injury or property damage sustained as a result of exposure to ACM or releases of ACM 
into the environment.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur if not addressed over a period 
of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, 
chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. 
Indoor exposure to airborne toxins or irritants can be alleged to cause a variety of adverse health effects and symptoms, including 
allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties 
could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants or to 
increase ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from 
our tenants, employees of our tenants, or others if property damage or personal injury occurs.

To the extent we incur costs or liabilities as a result of environmental issues, our cash flow, financial condition and results of 
operations could be materially and adversely affected.

We may experience a decline in the fair value of our assets, which could materially and adversely impact our results of operations.

A decline in the fair value of our assets may require us to recognize an impairment charge on such assets under accounting principles 
generally accepted in the United States (GAAP) if we were to determine that we do not have the ability and intent to hold such 
assets for a period of time sufficient to allow for recovery to the asset’s carrying value. If such a determination were to be made, 
we would recognize an impairment charge through earnings and write down the carrying value of such assets to a new cost basis 
based on the fair value of such assets on the date they are considered to not be recoverable. For the years ended December 31, 
2016, 2015 and 2014, we recognized aggregate impairment charges related to investment properties of $20,376, $19,937 and 
$72,203, respectively. We may be required to recognize additional asset impairment charges in the future.

We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant 
disruptions of our information technology (IT) networks and related systems.

We face risks associated with security breaches, whether through (i) cyber attacks or cyber intrusions, (ii) malware or ransomware, 
(iii) computer viruses, (iv) people with access or who gain access to our systems, and (v) other significant disruptions of our 
IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, 
including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and 
sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are 
essential to the operation of our business and our ability to perform day-to-day operations. Although we make efforts to maintain 
the security and integrity of our IT networks and related systems, and we have implemented various measures to manage the risk 

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of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted 
security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving 
our IT networks and related systems could significantly disrupt the proper functioning of our networks and systems and, as a result, 
disrupt our operations, which could have a material adverse effect on our cash flow, financial condition and results of operations.

Our success depends on key personnel whose continued service is not guaranteed.

We depend on the efforts and expertise of our senior management team to manage our day-to-day operations and strategic business 
direction. While we have retention agreements with the members of our executive management team that provide for certain 
payments in the event of a change of control or termination without cause, we do not have employment agreements with the 
members of our executive management team. Therefore, we cannot guarantee their continued service. The loss of their services, 
and our inability to find suitable replacements, could have an adverse effect on our operations.

RISKS RELATED TO OUR DEBT FINANCING

We are generally subject to the risks associated with debt financing and our debt service obligations could adversely affect our 
financial health and operating flexibility.

Required principal and interest payments on our indebtedness reduce funds available for general business purposes and distributions 
to our shareholders. Our existing debt financing and debt service obligations also increase our vulnerability to general adverse 
economic and industry conditions, including increases in interest rates. In addition, as our existing debt comes due, we may be 
unable to refinance it on favorable terms, or at all, which could adversely affect our cash flow, financial condition and results of 
operations.

Credit ratings may not reflect all the risks of an investment in our debt or preferred shares.

Our  credit  ratings  are  an  assessment  by  rating  agencies  of  our  ability  to  pay  our  debts  and  preferred  dividends  when  due. 
Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our publicly-traded debt 
or preferred shares. Credit ratings may be revised or withdrawn at any time by the rating agency at its sole discretion. We do not 
undertake any obligation to maintain the ratings or advise holders of our debt or preferred shares of any change in our ratings. 
There can be no assurance that we will be able to maintain our current credit ratings. Adverse changes in our credit ratings could 
impact our ability to obtain additional debt and equity financing on favorable terms, if at all, and could significantly reduce the 
market prices of our publicly-traded debt or preferred shares.

Our cash flow, financial condition and results of operations could be adversely affected by financial and other covenants and 
provisions under the unsecured credit agreement governing our Unsecured Credit Facility or our other debt agreements.

Our Unsecured Credit Facility, which is comprised of our unsecured revolving line of credit and two unsecured term loans, is 
governed by our  unsecured credit agreement (the Unsecured Credit Agreement). Our other debt agreements include, but are not 
limited to, the Indenture, as supplemented, governing our Notes Due 2025 (the Indenture), the note purchase agreements governing 
our Notes Due 2021, 2024, 2026 and 2028 (the Note Purchase Agreements) and the credit agreement governing our Term Loan 
Due 2023, which closed during the year ended December 31, 2016 and funded on January 3, 2017 (the Term Loan Agreement). 
The Unsecured Credit Agreement, the Indenture, the Note Purchase Agreements, the Term Loan Agreement and any future debt 
agreements  require,  or  may  require,  compliance  with  certain  financial  and  operating  covenants,  including,  among  others,  the 
requirement to maintain maximum unencumbered, secured and consolidated leverage ratios, minimum interest, fixed charge, debt 
service and unencumbered interest coverage ratios, a minimum ratio of assets to unsecured debt and a minimum consolidated net 
worth. They also contain or may contain customary events of default, including defaults on any of our recourse indebtedness in 
excess of $50,000. The provisions of these agreements could limit our ability to obtain additional funds needed to address cash 
shortfalls or pursue growth opportunities or other accretive transactions.

In addition, our senior unsecured debt obligations, including our Unsecured Credit Facility, Notes Due 2021, 2024, 2025, 2026 
and 2028 and Term Loan Due 2023, are pari passu in priority of payment. Therefore, a breach of these covenants or other events 
of default would allow the lenders to require us to accelerate payment of amounts outstanding under one or all of these agreements. 
If payment is accelerated, our liquid assets may not be sufficient to repay such debt in full and, as a result, such an event may have 
a material adverse effect on our cash flow, financial condition and results of operations.

Given the restrictions in our debt covenants, we may be limited in our operating and financial flexibility and in our ability to 
respond to changes in our business or to pursue strategic opportunities in the future.

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Increases in interest rates would cause our borrowing costs to rise and may limit our ability to refinance debt.

Although a significant amount of our outstanding debt has fixed interest rates, we also borrow funds at variable interest rates. 
Increases in interest rates would increase our interest expense on any outstanding unhedged variable rate debt and would affect 
the terms under which we refinance our existing debt as it matures, which would adversely affect our cash flow, financial condition 
and results of operations.

We may choose to retire debt prior to its stated maturity date and may incur debt prepayment costs as a result, some of which 
may be significant.

At times, management has decided to retire debt prior to its stated maturity date, and in doing so, we have incurred prepayment 
or defeasance premiums in accordance with the relevant loan agreements. If we choose to retire debt prior to its stated maturity 
date in the future, we may incur significant debt prepayment costs or defeasance premiums, which could have an adverse effect 
on our cash flow and results of operations.

Defaults on secured indebtedness may result in foreclosure.

In the event that we default on mortgages in the future, either as a result of ceasing to make debt service payments or failing to 
meet applicable covenants, the lenders may accelerate the related debt obligations and foreclose and/or take control of the properties 
that secure their loans. In the event of a default under any of our recourse indebtedness, we may also remain liable for any deficiency 
between the value of the property securing such loan and the principal and accrued interest on the loan.

Further, for tax purposes, the foreclosure of a mortgage may result in the recognition of taxable income related to the extinguished 
debt without us having received any accompanying cash proceeds. As a result, since we are structured as a REIT, we may be 
required to identify and utilize sources for distributions to our shareholders related to such taxable income in order to avoid incurring 
corporate tax or to meet the REIT distribution requirements imposed by the Code.

RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

Our board of directors may change significant corporate policies without shareholder approval.

Our investment, financing and distribution policies are determined by our board of directors. These policies may be amended or 
revised at any time at the discretion of the board of directors without a vote of our shareholders. As a result, the ability of our 
shareholders to control our policies and practices is extremely limited. We could make investments and engage in business activities 
that are different from, and possibly riskier than, the investments and businesses described in this report. In addition, our board of 
directors may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable 
legal and regulatory requirements, including the listing standards of the New York Stock Exchange (NYSE). A change in these 
policies could have an adverse effect on our cash flow, financial condition and results of operations.

We could increase the number of authorized shares of stock and issue stock without shareholder approval.

Subject to applicable legal and regulatory requirements, our charter authorizes our board of directors, without shareholder approval, 
to increase the aggregate number of authorized shares of stock or the number of authorized shares of stock of any class or series, 
to issue authorized but unissued shares of our common stock or preferred stock, classify or reclassify any unissued shares of our 
common stock or preferred stock and to set the preferences, rights and other terms of such classified or unclassified shares. As a 
result, we may issue series or classes of common stock or preferred stock with preferences, dividends, powers and rights, voting 
or otherwise, that are senior to, or otherwise conflict with, the rights of holders of our common stock. The Company has also 
established an at-the-market equity program under which it may sell shares of its Class A common stock having an aggregate 
offering price of up to $250,000 from time to time. In addition, our board of directors could establish a series of preferred stock 
that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a 
premium price for our common stock or that our shareholders may believe is in their best interests.

Certain provisions of our charter may limit the ability of a third party to acquire control of our company.

Our  charter  provides  that  no  person  may  beneficially  own  more  than  9.8%  in  value  or  number  of  shares,  whichever  is  more 
restrictive, of our outstanding common stock or 9.8% in value of the aggregate outstanding shares of our capital stock. While these 
charter provisions help us to ensure we maintain our REIT status, these ownership limitations may prevent an acquisition of control 
of our company by a third party without our board of directors’ approval, even if our shareholders believe the change of control 
is in their best interests.

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Certain provisions of Maryland law could inhibit changes of control, which could lower the values of our Class A common 
stock and Series A preferred stock.

Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting or deterring a third 
party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide 
our common stockholders with the opportunity to realize a premium over the then prevailing market price of such shares, including:

• 

• 

“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an 
“interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our 
shares or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was 
the beneficial owner of 10% or more of our then outstanding voting shares) or an affiliate of an interested shareholder 
for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter, may 
impose special shareholder voting requirements unless certain minimum price conditions are satisfied; and

“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated 
with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting 
power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of 
ownership  or  control  of  outstanding  “control  shares”)  have  no  voting  rights  except  to  the  extent  approved  by  our 
shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all 
interested shares.

As permitted by the MGCL, our board of directors has adopted a resolution exempting any business combinations between us and 
any other person or entity from the business combination provisions of the MGCL. Our bylaws provide that such resolution or 
any other resolution of our board of directors exempting any business combination from the business combination provisions of 
the MGCL may only be revoked, altered or amended, and our board of directors may only adopt a resolution that is inconsistent 
with any such prior resolution (including any amendment to that bylaw provision), which we refer to as an opt in to the business 
combination provisions, with the approval of stockholders entitled to cast a majority of all votes cast by the holders of the issued 
and outstanding shares of our common stock. In addition, as permitted by the MGCL, our bylaws contain a provision exempting 
from the control share acquisition provisions of the MGCL any acquisition by any person of shares of our stock. This bylaw 
provision may be amended, which we refer to as an opt in to the control share acquisition provisions, only with the affirmative 
vote of a majority of the votes cast on such matter by holders of the issued and outstanding shares of our common stock.

Title 3, Subtitle 8 of the MGCL permits our board of directors, without shareholder approval and regardless of what is currently 
provided in our charter or bylaws, to implement certain takeover defenses, including adopting a classified board. Such takeover 
defenses may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or 
preventing a change of control of us under the circumstances that otherwise could provide our common shareholders with the 
opportunity to realize a premium over the then prevailing market price.

In addition, the provisions of our charter on removal of directors and the advance notice provisions of our bylaws, among others, 
could delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders 
of our common stock or that our shareholders may believe to be in their best interests. Likewise, if our company’s board of directors 
were to opt in to the provisions of Title 3, Subtitle 8 of the MGCL, or if our board of directors were to opt in to the business 
combination provisions or the control share acquisition provisions of the MGCL, with shareholder approval, these provisions could 
have similar anti-takeover effects.

Our rights and the rights of our shareholders to take action against our directors and officers are limited, which could limit 
shareholder recourse in the event of actions that our shareholders do not believe are in their best interests.

Maryland law provides that a director or officer has no liability in that capacity if he or she satisfies his or her duties to us and our 
shareholders. As permitted by the MGCL, our charter limits the liability of our directors and officers to us and our shareholders 
for monetary damages, except for liability resulting from:

•  actual receipt of an improper benefit or profit in money, property or services; or

•  a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to 

the cause of action adjudicated.

In addition, our charter and bylaws and indemnification agreements that we have entered into with our directors and certain of our 
officers require us to indemnify our directors and officers, among others, for actions taken by them in those capacities to the 
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maximum extent permitted by Maryland law. As a result, we and our shareholders may have more limited rights against our 
directors and officers than might otherwise exist. Accordingly, in the event that actions taken in good faith by any of our directors 
or officers impede the performance of our company, your ability to recover damages from such director or officer will be limited. 
In addition, we will be obligated to advance the defense costs incurred by our directors and officers with indemnification agreements, 
and may, at the discretion of our board of directors, advance the defense costs incurred by our employees and other agents, in 
connection with legal proceedings.

Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our shareholders 
to effect changes to our management.

Our charter provides that a director may only be removed for cause upon the affirmative vote of holders of a majority of the votes 
entitled to be cast in the election of directors. Vacancies may be filled only by a majority vote of the remaining directors in office, 
even if less than a quorum. These requirements make it more difficult to change our management by removing and replacing 
directors and may prevent a change of control that is in the best interests of our shareholders.

RISKS RELATED TO OUR REIT STATUS

Failure to qualify as a REIT would cause us to be taxed as a regular corporation and, even if we qualify as a REIT, we may 
face other tax liabilities which could substantially reduce funds available for distribution to our shareholders and materially 
and adversely affect our cash flow, financial condition and results of operations.

We believe that we have been organized, owned and operated in conformity with the requirements for qualification and taxation 
as a REIT under the Code beginning with our taxable year ended December 31, 2003, and that our intended manner of ownership 
and operation will enable us to continue to meet the requirements for qualification and taxation as a REIT for U.S. federal income 
tax purposes. However, we cannot assure you that we have qualified or will qualify as such.

Qualification as a REIT involves the application of highly technical and complex provisions of the Code as to which there are only 
limited judicial and administrative interpretations and involves the determination of facts and circumstances not entirely within 
our control. For example, to qualify as a REIT, we generally are required to annually distribute to our shareholders at least 90% 
of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains. To the 
extent that we satisfy this distribution requirement, but distribute less than 100% of our taxable income, we will be subject to U.S. 
federal corporate income tax on our undistributed taxable income.

If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds 
available for distributions to our shareholders because:

•  we would not be allowed a deduction for dividends paid to shareholders in computing our taxable income and would be 

subject to U.S. federal income tax at regular corporate rates;

•  we could be subject to the U.S. federal alternative minimum tax;

•  we could be subject to increased state and local taxes; and

• 

unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the 
fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, it could result in default under certain of our indebtedness agreements. As a result of 
all these factors, our failure to qualify as a REIT could adversely affect our cash flow, financial condition and results of operations.

We may be subject to adverse legislative or regulatory tax changes that could negatively impact our cash flow, financial condition 
and results of operations.

At any time, the U.S. federal income tax laws governing REITs or the administrative interpretation of those laws (or other laws 
affecting our business) may be amended. We cannot predict if or when any new or amended U.S. federal income tax law, regulation 
or administrative interpretation (or any repeal thereof) will become effective, and any such law, regulation, interpretation or repeal 
may take effect retroactively. Any such changes could adversely affect our cash flow, financial condition and results of operations.

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We may be required to borrow funds or sell assets to satisfy our REIT distribution requirements.

Our cash flows may be insufficient to fund distributions required to maintain our qualification as a REIT as a result of differences 
in timing between the actual receipt of income and the recognition of income for U.S. federal income tax purposes, or the effect 
of non-deductible expenditures, such as capital expenditures, payments of compensation for which Section 162(m) of the Code 
denies a deduction, the creation of reserves or required amortization payments. If we do not have other funds available in these 
situations, we may need to borrow funds on a short-term basis or sell assets, even if the then-prevailing market conditions are not 
favorable for these borrowings or sales, in order to satisfy our REIT distribution requirements. Such actions could adversely affect 
our cash flow and results of operations.

Dividends payable by REITs generally do not qualify for reduced tax rates.

Certain qualified dividends paid by corporations to individuals, trusts and estates that are U.S. shareholders are taxed at capital 
gain rates, which are lower than ordinary income rates. Dividends of current and accumulated earnings and profits payable by 
REITs, however, are taxed at ordinary income rates as opposed to the capital gain rates. Dividends payable by REITs in excess of 
these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent 
thereof and thereafter as taxable gain. The more favorable rates applicable to regular corporate dividends could cause investors 
who are individuals, trusts and estates to perceive investments in REITs, including us, to be relatively less attractive than investments 
in the stock of non-REIT corporations that pay dividends, which may negatively impact the trading prices of our Class A common 
stock and Series A preferred stock.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive 
investments.

To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and 
diversification of our assets, the amounts we distribute to our shareholders and the ownership of our capital stock. In order to meet 
these tests, we may be required to forego investments we might otherwise make and refrain from engaging in certain activities. 
Thus, compliance with the REIT requirements may hinder our performance.

In addition, if we fail to comply with certain asset ownership tests at the end of any calendar quarter, we must correct the failure 
within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT 
qualification. As a result, we may be required to liquidate otherwise attractive investments.

If a transaction intended to qualify as an Internal Revenue Code Section 1031 tax-deferred exchange (1031 Exchange) is later 
determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or 
repealed, we may be unable to dispose of properties on a tax-deferred basis.

From time to time we may dispose of properties in transactions that are intended to qualify as 1031 Exchanges. It is possible that 
the qualification of a transaction as a 1031 Exchange could be successfully challenged and determined to be currently taxable. In 
such case, our taxable income and earnings and profits would increase, which could increase the ordinary dividend income to our 
stockholders. In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, 
possibly including interest and penalties. As a result, we may be required to borrow funds in order to pay additional dividends or 
taxes, and the payment of such taxes could cause us to have less cash available to distribute to our stockholders. In addition, if a 
1031 Exchange were later determined to be taxable, we may be required to amend our tax returns for the applicable year in question, 
including any information reports we sent our stockholders. Moreover, it is possible that legislation could be enacted that could 
modify or repeal the laws with respect to 1031 Exchanges, which could make it more difficult or impossible for us to dispose of 
properties on a tax-deferred basis.

Shareholders may be restricted from acquiring or transferring certain amounts of our stock.

In order to maintain our REIT qualification, among other requirements, no more than 50% in value of our outstanding stock may 
be owned, directly or indirectly, by five or fewer individuals, as defined in the Code to include certain kinds of entities, during the 
last half of any taxable year, other than the first year for which we made a REIT election. To assist us in qualifying as a REIT, our 
charter contains an aggregate stock ownership limit of 9.8%, a common stock ownership limit of 9.8% and a preferred stock 
ownership limit of 9.8%. Generally, shareholders must include stock of affiliates for purposes of determining whether they own 
stock in excess of any of these ownership limits.

If anyone attempts to transfer or own shares of our stock in a way that would violate the aggregate stock ownership limit, the 
common stock ownership limit or the preferred stock ownership limit, unless such ownership limits have been waived by our 
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board of directors, or in a way that would prevent us from continuing to qualify as a REIT, those shares instead will be transferred 
to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the 
shares will not violate the aggregate stock ownership limit, the common stock ownership limit or the preferred stock ownership 
limit. Purported transferees generally bear any decline in the market price of such stock held in such trust, but do not benefit from 
any increase. If this transfer to a trust fails to prevent such a violation or our disqualification as a REIT, then the initial intended 
transfer or ownership will be null and void from the outset.

The  ability  of  our  board  of  directors  to  revoke  our  REIT  qualification  without  shareholder  approval  may  cause  adverse 
consequences to our shareholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our 
shareholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to be a REIT, we 
will not be allowed a deduction for dividends paid to shareholders in computing our taxable income and will be subject to U.S. 
federal income tax at regular corporate rates and state and local taxes, which may have adverse consequences on our total return 
to our shareholders.

GENERAL INVESTMENT RISKS

The market prices and trading volume of our debt and equity securities may be volatile.

The market prices of our debt and equity securities depend on various factors which may be unrelated to our operating performance 
or prospects. We cannot assure you that the market prices of our debt and equity securities, including our Class A common stock, 
will not fluctuate or decline significantly in the future.

A number of factors could negatively affect, or result in fluctuations in, the prices or trading volume of our debt and equity securities, 
including:

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

actual or anticipated changes in our operating results and changes in expectations of future financial performance;

our operating performance and the performance of other similar companies;

our strategic decisions, such as acquisitions, dispositions, spin-offs, joint ventures, strategic investments or changes in 
business strategy;

adverse market reaction to any indebtedness we incur in the future;

equity issuances or buybacks by us or the perception that such issuances or buybacks may occur;

increases in market interest rates or decreases in our distributions to shareholders that lead purchasers of our shares to 
demand a higher yield;

changes in market valuations of similar companies;

changes in real estate valuations;

additions or departures of key management personnel;

changes in the real estate industry, including increased competition due to shopping center supply growth, and in the retail 
industry, including growth in e-commerce, catalog companies and direct consumer sales;

publication of research reports about us or our industry by securities analysts;

speculation in the press or investment community;

the passage of legislation or other regulatory developments that adversely affect us, our tax status, or our industry;

changes in accounting principles;

our failure to satisfy the listing requirements of the NYSE;

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• 

• 

• 

our failure to comply with the requirements of the 

Act;

our failure to qualify as a REIT; and

general market conditions, including factors unrelated to our performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price 
of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, 
which could have a material adverse effect on our cash flow, financial condition and results of operations.

Increases in market interest rates may result in a decrease in the value of our publicly-traded debt and equity securities.

One of the factors that may influence the prices of our publicly-traded debt and equity securities is the interest rate on our publicly-
traded debt and the dividend yield on our common and preferred stock relative to market interest rates. If market interest rates, 
which are currently at low levels relative to historical rates, rise, our borrowing costs could rise and result in less funds being 
available for distribution. Therefore, we may not be able to, or we may choose not to, provide a higher distribution rate on our 
common stock. In addition, fluctuations in interest rates could adversely affect the market value of our properties. These factors 
could result in a decline in the market prices of our publicly-traded debt and equity securities.

Future offerings of debt securities, which would be senior to our common and preferred stock, or equity securities, which would 
dilute the interests of our existing shareholders and may be senior to our existing common stock, may adversely affect the 
market prices of our common and preferred stock.

We have issued one series of preferred stock, $700,000 of unsecured notes and have established an at-the-market (ATM) equity 
program under which we may sell shares of our Class A common stock. In the future, we may attempt to increase our capital 
resources by making additional offerings of debt or equity securities, including senior or subordinated notes and classes of preferred 
or common stock. Holders of debt securities or shares of preferred stock will generally be entitled to receive interest payments or 
distributions, both current and in connection with any liquidation or sale, prior to the holders of our common stock. Furthermore, 
offerings of common stock or other equity securities may dilute the holdings of our existing shareholders. We are not required to 
offer any such equity securities to existing shareholders on a preemptive basis, and future offerings of debt or equity securities, or 
perceptions that such offerings may occur, may reduce the market prices of our common and preferred stock or the distributions 
that we pay with respect to our common stock. Because we may generally issue any such debt or equity securities in the future 
without obtaining the consent of our shareholders, our shareholders bear the risk of our future offerings reducing the market prices 
of our common and preferred stock and diluting their proportionate ownership.

The change of control conversion feature of our Series A preferred stock may make it more difficult for a party to take over 
our company or discourage a party from taking over our company.

Upon the occurrence of a change of control (as defined in our Articles Supplementary for our Series A preferred stock), holders 
of our Series A preferred stock will have the right to convert some or all of their Series A preferred stock into shares of our common 
stock, or equivalent value of alternative consideration, unless we have provided notice of our election to redeem our Series A 
preferred stock. Upon such a conversion, the preferred holders will be limited to a maximum number of shares of our common 
stock equal to 4.1736, subject to certain adjustments, multiplied by the number of shares of Series A preferred stock converted. 
The change of control conversion feature of our Series A preferred stock may have the effect of discouraging a third party from 
making an acquisition proposal for our company or of delaying, deferring or preventing certain change of control transactions of 
our company under circumstances that our shareholders may otherwise believe are in their best interests.

Our ability to pay dividends is limited by the requirements of Maryland law.

Our ability to pay dividends on our common stock and Series A preferred stock is limited by the laws of the State of Maryland. 
Under  applicable  Maryland  law,  a  Maryland  corporation  generally  may  not  make  a  distribution  if,  after  giving  effect  to  the 
distribution, the corporation would not be able to pay its debts as they become due in the usual course of business, or the corporation’s 
total assets would be less than the sum of its total liabilities plus, unless the corporation’s charter provides otherwise, the amount 
that would be needed, if the corporation were dissolved at the time of  the distribution, to satisfy the preferential rights upon 
dissolution of shareholders whose preferential rights are superior to those receiving the distribution. Accordingly, we generally 
may not make a distribution on our common stock or Series A preferred stock if, after giving effect to the distribution, we would 
not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of 
our total liabilities plus, unless the terms of such class or series provide otherwise, the amount that would be needed to satisfy the 

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preferential rights upon dissolution of the holders of shares of any class or series of preferred stock then outstanding, if any, with 
preferences senior to those of our common stock or Series A preferred stock, respectively.

Changes in accounting standards may adversely impact our financial results.

The Financial Accounting Standards Board (FASB) recently issued new guidance on a variety of topics, including, among others, 
lease accounting and revenue recognition, that may impact how we account for certain transactions. Specifically, the new lease 
accounting guidance will require the recognition of a lease liability and a right-of-use asset for operating leases where we are the 
lessee, such as ground leases and office and equipment leases. We are continuing to assess the impact of adoption of the new 
standards at this time and, as such, are unable to predict the full impact these new standards, or other new accounting standards 
that we have not yet adopted, could have on the presentation of our consolidated financial statements, results of operations and 
financial ratios required by our debt covenants.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The following table sets forth summary information regarding our operating portfolio as of December 31, 2016. Dollars (other 
than per square foot information) and square feet of GLA are presented in thousands. This information is grouped into divisions 
based on the manner in which we have structured our asset management, property management and leasing operations. For additional 
property details on our operating portfolio, see “Real Estate and Accumulated Depreciation (Schedule III)” herein.

Division

Eastern Division

Alabama, Connecticut, Florida, Georgia, Indiana,
Maryland, Massachusetts, Michigan, Missouri,
New Jersey, New York, North Carolina, Ohio,
Pennsylvania, Rhode Island, South Carolina,
Tennessee, Virginia

Western Division

Arizona, California, Colorado, Illinois, Louisiana,
New Mexico, Oklahoma, Texas, Washington

Number of
Properties

ABR

% of Total
Retail
ABR (a)

ABR per
Occupied
Sq. Ft.

% of Total
Retail
GLA (a)

Occupancy
(b)

GLA

89

$

213,990

51.3% $

16.22

13,903

53.8%

94.9%

67

202,917

48.7%

18.15

11,929

46.2%

93.7%

Total retail operating portfolio

Office

Total operating portfolio (c)

156

1

416,907

100.0%

69

157

$

416,976

$

17.11

7.01

17.11

25,832

895

26,727

100.0%

94.3%

1.1%

91.2%

(a)  Percentages are only provided for our retail operating portfolio.

(b)  Calculated as the percentage of economically occupied GLA as of December 31, 2016. Including leases signed but not commenced, our 

retail operating portfolio and our consolidated operating portfolio were 95.0% and 93.3% leased, respectively, as of December 31, 2016.

(c)  Excludes one multi-tenant retail operating property and one single-user retail operating property classified as held for sale as of December 31, 

2016, as well as two properties where we have begun redevelopment activities.

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The following table sets forth information regarding the 20 largest tenants in our retail operating portfolio based on ABR as of 
December 31, 2016. Dollars (other than per square foot information) and square feet of GLA are presented in thousands.

Tenant

Best Buy Co., Inc.

Ahold U.S.A. Inc.

Ross Stores, Inc.

Primary DBA

Best Buy, Pacific Sales

Giant Foods, Stop & Shop, Martin's

Ross Dress for Less

The TJX Companies, Inc.

HomeGoods, Marshalls, T.J. Maxx

Bed Bath & Beyond Inc.

Bed Bath & Beyond, Buy Buy
Baby, The Christmas Tree Shops,
Cost Plus World Market

PetSmart, Inc.

Regal Entertainment Group

Edwards Cinema

AB Acquisition LLC

Michaels Stores, Inc.

The Gap, Inc.

Dick's Sporting Goods, Inc.

The Kroger Co.

Ascena Retail Group Inc.

Pier 1 Imports, Inc.

Publix Super Markets Inc.

Safeway, Jewel-Osco, Shaw’s
Supermarket, Tom Thumb

Michaels, Aaron Brothers Art &
Frame

Old Navy, Banana Republic, The
Gap, Gap Factory Store, Athleta

Dick's Sporting Goods, Golf
Galaxy, Field & Stream

Kroger, Harris Teeter, King
Soopers, QFC

Dress Barn, Lane Bryant, Justice,
Catherine’s, Ann Taylor, Maurices,
LOFT

Office Depot, Inc.

Office Depot, OfficeMax

Lowe’s Companies, Inc.

BJ’s Wholesale Club, Inc.

Party City Holdings Inc.

Mattress Firm Holding Corp.
Total Top Retail Tenants

Mattress Firm, Sleepy’s

Number
of Stores

ABR

% of
Total ABR

ABR per
Occupied
Sq. Ft.

Occupied
GLA

% of
Occupied
GLA

20

9

30

33

24

26

2

8

23

26

9

10

47

24

11

17

6

2

23

30

$

12,219

2.9% $

11,006

9,752

9,406

8,434

7,993

6,911

6,134

6,108

5,396

5,325

5,289

5,182

4,970

4,964

4,953

4,790

4,609

4,496

4,257

2.6%

2.3%

2.3%

2.0%

1.9%

1.7%

1.5%

1.5%

1.3%

1.3%

1.3%

1.2%

1.2%

1.2%

1.2%

1.1%

1.1%

1.1%

1.0%

380

$ 132,194

31.7% $

15.53

19.87

11.04

9.95

13.43

14.91

31.56

13.19

11.86

16.35

13.55

10.02

20.32

20.45

10.65

14.19

6.44

18.81

14.50

28.57

13.85

787

554

883

945

628

536

219

465

515

330

393

528

255

243

466

349

744

245

310

149

3.2%

2.3%

3.6%

3.9%

2.6%

2.2%

0.9%

1.9%

2.1%

1.4%

1.6%

2.2%

1.0%

1.0%

1.9%

1.4%

3.1%

1.0%

1.3%

0.6%

9,544

39.2%

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The following table sets forth a summary, as of December 31, 2016, of lease expirations scheduled to occur during 2017 and each 
of the nine calendar years from 2018 to 2026 and thereafter, assuming no exercise of renewal options or early termination rights 
for all leases in our retail operating portfolio. The following table is based on leases commenced as of December 31, 2016. Dollars 
(other than per square foot information) and square feet of GLA are presented in thousands.

Lease Expiration Year

Lease
Count

ABR

% of Total
ABR

ABR per
Occupied
Sq. Ft.

GLA

% of
Occupied
GLA

2017 (a)
2018
2019
2020
2021
2022
2023
2024
2025
2026
Thereafter
Month-to-month

Total

356
472
533
379
339
199
117
161
105
89
80
22
2,852

$

$

25,470
52,328
69,138
47,443
50,077
40,206
25,364
30,299
23,282
16,640
35,265
1,395
416,907

6.2% $
12.5%
16.6%
11.4%
12.0%
9.6%
6.0%
7.3%
5.6%
4.0%
8.5%
0.3%

100.0% $

18.51
19.17
18.76
15.97
18.05
14.34
15.36
16.14
16.51
18.74
16.51
20.82
17.11

1,376
2,729
3,685
2,971
2,775
2,804
1,651
1,877
1,410
888
2,136
67
24,369

5.6%
11.2%
15.1%
12.2%
11.4%
11.6%
6.7%
7.7%
5.8%
3.7%
8.7%
0.3%
100.0%

(a)  Excludes month-to-month leases.

The single-user lease at our one remaining office property expired on November 30, 2016. We continue to focus on leasing the 
vacant space at this property and have leased 397,000 square feet of the available 895,000 square feet as of December 31, 2016. 

ITEM 3. LEGAL PROCEEDINGS

We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the 
resolution of such matters may not be predicted with certainty, we believe, based on currently available information, that the final 
outcome of such matters will not have a material effect on our consolidated financial statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER 
PURCHASES OF EQUITY SECURITIES

Market Information

The following table sets forth, for the quarterly periods indicated, the high and low sales prices of our Class A common stock, 
which trades on the NYSE under the trading symbol “RPAI”, and the quarterly dividend distributions per share of common stock 
for the years ended December 31, 2016 and 2015:

2016
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2015
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

Sales Price

High

Low

Dividends
per Share

$
$
$
$

$
$
$
$

16.97
17.78
17.00
16.09

15.60
15.39
16.18
18.24

$
$
$
$

$
$
$
$

14.42
16.29
15.55
14.02

13.79
13.10
13.83
15.42

$
$
$
$

$
$
$
$

0.165625
0.165625
0.165625
0.165625

0.165625
0.165625
0.165625
0.165625

The closing share price for our Class A common stock on February 10, 2017, as reported on the NYSE, was $15.23.

We have determined that the dividends paid during 2016 and 2015 on our Class A common stock qualify for the following tax 
treatment:

Ordinary dividends

Non-dividend distributions

Total distribution per common share

2016
0.449528

0.212972

0.662500

$

$

2015
0.499116

0.163384

0.662500

$

$

As of February 10, 2017, there were approximately 14,900 record holders of our Class A common stock. The number of holders 
does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing 
agency.

We intend to continue to qualify as a REIT for U.S. federal income tax purposes. The Code generally requires that a REIT annually 
distributes to its shareholders at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction 
and excluding net capital gains. The Code imposes tax on any undistributed REIT taxable income.

To satisfy the requirements for qualification as a REIT and generally not be subject to U.S. federal income and excise tax, we 
intend to make regular quarterly distributions of all, or substantially all, of our REIT taxable income to shareholders. Our future 
distributions will be at the sole discretion of our board of directors. When determining the amount of future distributions, we expect 
to consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future cash 
flow, (iii) our determination of near-term cash needs for debt repayments and potential future share repurchases, (iv) the market 
of available acquisitions of new properties and redevelopment, expansions and pad development opportunities, (v) the timing of 
significant re-leasing activities and the establishment of additional cash reserves for anticipated tenant allowances and general 
property capital improvements, (vi) our ability to continue to access additional sources of capital, (vii) the amount required to be 
distributed to maintain our status as a REIT, which is a requirement of our unsecured credit agreement, and to reduce any income 
and excise taxes that we otherwise would be required to pay and (viii) the amount required to declare and pay in cash, or set aside 
for the payment of, the dividends on our Series A preferred stock for all past dividend periods. Under certain circumstances, we 
may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements.

If our operations do not generate sufficient cash flow to allow us to satisfy the REIT distribution requirements, we may be required 
to fund distributions from working capital or by borrowing funds, issuing equity or selling assets. Our actual results of operations 
will be affected by a number of factors, including the revenues we receive from tenants at our properties, our operating and corporate 

21

Table of Contents

expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures. For more information 
regarding risk factors that could materially adversely affect our actual results of operations, please see Item 1A. “Risk Factors”.

Sales of Unregistered Equity Securities

There were no unregistered sales of equity securities during the quarter ended December 31, 2016.

Issuer Purchases of Equity Securities

The following table summarizes our common stock repurchases, including shares of common stock surrendered to the Company 
by employees to satisfy their tax withholding obligations in connection with the vesting of restricted shares, during the quarter 
ended December 31, 2016:

Period

October 1, 2016 to October 31, 2016

November 1, 2016 to November 30, 2016

December 1, 2016 to December 31, 2016

Total

Total number
of shares of
Class A common
stock purchased

Average price
paid per share
of Class A
common stock

Total number of
shares purchased
as part of publicly
announced plans
or programs

Maximum number
(or approximate dollar
value) of shares that
may yet be purchased
under the plans
or programs (a)

1

505

105

611

$

$

$

$

15.99

14.92

15.06 (b)

14.94

— $

505

86

591

$

$

$

250,000

242,454

241,159

241,159

(a)  As disclosed on the Form 8-K dated December 15, 2015, represents the amount outstanding under our $250,000 common stock repurchase 

program, which has no scheduled expiration date.

(b)  Under the repurchase program, the average repurchase price per share was $14.99 for the period from December 1, 2016 to December 31, 

2016.

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Table of Contents

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the accompanying consolidated financial statements and 
related notes appearing elsewhere in this annual report.

RETAIL PROPERTIES OF AMERICA, INC.
As of and for the years ended December 31, 2016, 2015, 2014, 2013 and 2012
(Amounts in thousands, except per share amounts)

Net investment properties

Total assets

Total debt

Total shareholders’ equity

Total revenues

Expenses:

Depreciation and amortization

Other

Total expenses

Operating income

Gain on extinguishment of debt

Gain on extinguishment of other liabilities

Equity in loss of unconsolidated joint ventures, net

Gain on sale of joint venture interest

Gain on change in control of investment properties

Interest expense

Other non-operating income, net

Income (loss) from continuing operations

Income from discontinued operations, net

Gain on sales of investment properties, net

Net income (loss)

Net income attributable to noncontrolling interest

Net income (loss) attributable to the Company

Preferred stock dividends

Net income (loss) attributable to common shareholders

Earnings (loss) per common share – basic and diluted:

Continuing operations

Discontinued operations

Net income per common share attributable to

common shareholders

Distributions declared – preferred

Distributions declared per preferred share

Distributions declared – common

Distributions declared per common share

Cash flows provided by operating activities

Cash flows provided by investing activities

Cash flows used in financing activities

Weighted average number of common shares outstanding – basic

Weighted average number of common shares outstanding – diluted

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

2016

4,056,173

4,452,973

1,997,925

2,152,086

583,143

224,430

232,567

456,997

126,146

13,653

6,978

—

—

—

$

$

$

$

$

2015

4,254,647

4,621,251

2,166,238

2,155,337

603,960

214,706

248,184

462,890

141,070

—

—

—

—

—

(109,730)

(138,938)

63

37,110

—

129,707

166,817

—

166,817

(9,450)

157,367

0.66

—

0.66

9,450

1.75

157,168

0.66

263,748

17,537

(279,590)

236,651

236,951

$

$

$

$

$

$

$

$

$

$

1,700

3,832

—

121,792

125,624

(528)

125,096

(9,450)

115,646

0.49

—

0.49

9,450

1.75

157,173

0.66

265,813

25,288

(351,969)

236,380

236,382

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

2014

4,314,905

4,787,989

2,318,735

2,187,881

600,614

215,966

282,003

497,969

102,645

—

4,258

(2,088)

—

24,158

(133,835)

5,459

597

507

42,196

43,300

—

43,300

(9,450)

33,850

0.14

—

0.14

9,450

1.75

156,742

0.66

254,014

77,900

(277,812)

236,184

236,187

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

2013

4,474,044

4,858,518

2,280,587

2,307,340

551,508

222,710

251,277

473,987

77,521

—

—

(1,246)

17,499

5,435

(146,805)

4,741

(42,855)

50,675

5,806

13,626

—

13,626

(9,450)

4,176

(0.20)

0.22

0.02

9,713

1.80

155,616

0.66

239,632

103,212

(422,723)

234,134

234,134

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

2012

4,687,091

5,212,544

2,567,206

2,374,259

531,171

208,658

187,949

396,607

134,564

3,879

—

(6,307)

—

—

(171,295)

24,791

(14,368)

6,078

7,843

(447)

—

(447)

(263)

(710)

(0.03)

0.03

—

—

—

146,769

0.66

167,085

471,829

(636,854)

220,464

220,464

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Table of Contents

ITEM  7.  MANAGEMENT’S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND  RESULTS  OF 
OPERATIONS

Certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Risk Factors”, 
“Business” and elsewhere in this Annual Report on Form 10-K may constitute “forward-looking statements” within the meaning 
of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set 
forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange 
Act of 1934, as amended, or the Exchange Act). Forward-looking statements involve numerous risks and uncertainties and you 
should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods 
which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events 
described will happen as described (or that they will happen at all). You can identify forward-looking statements by the use of 
forward-looking  terminology  such  as  “believes”,  “expects”,  “may”,  “should”,  “intends”,  “plans”,  “estimates”,  “continue”  or 
“anticipates” and variations of such words or similar expressions or the negative of such words. You can also identify forward-
looking statements by discussions of strategies, plans or intentions. Risks, uncertainties and changes in the following factors, 
among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-
looking statements:

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

economic, business and financial conditions, and changes in our industry and changes in the real estate markets in particular;

economic and other developments in our target markets where we have a high concentration of properties;

our business strategy;

our projected operating results;

rental rates and/or vacancy rates;

frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants;

bankruptcy or insolvency of a major tenant or a significant number of smaller tenants;

interest rates or operating costs;

real estate and zoning laws and changes in real property tax rates;

real estate valuations;

our leverage;

our  ability  to  generate  sufficient  cash  flows  to  service  our  outstanding  indebtedness  and  make  distributions  to  our 
shareholders;

our ability to obtain necessary outside financing;

the availability, terms and deployment of capital;

general volatility of the capital and credit markets and the market price of our Class A common stock;

risks  generally  associated  with  real  estate  acquisitions  and  dispositions,  including  our  ability  to  identify  and  pursue 
acquisition and disposition opportunities;

risks generally associated with redevelopment, including the impact of construction delays and cost overruns, our ability 
to lease redeveloped space and our ability to identify and pursue redevelopment opportunities;

composition of members of our senior management team;

our ability to attract and retain qualified personnel;

our ability to continue to qualify as a REIT;

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Table of Contents

• 

• 

• 

• 

• 

governmental regulations, tax laws and rates and similar matters;

our compliance with laws, rules and regulations;

environmental uncertainties and exposure to natural disasters;

insurance coverage; and

the likelihood or actual occurrence of terrorist attacks in the U.S.

For a further discussion of these and other factors that could impact our future results, performance or transactions, see Item 1A. 
“Risk Factors”. Readers should not place undue reliance on any forward-looking statements, which are based only on information 
currently available to us (or to third parties making the forward-looking statements). We undertake no obligation to publicly release 
any revisions to such forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form  
10-K, except as required by applicable law.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related 
notes included in this report.

Executive Summary

Retail Properties of America, Inc. is a REIT that owns and operates high quality, strategically located shopping centers in the 
United States. As of December 31, 2016, we owned 156 retail operating properties representing 25,832,000 square feet of GLA. 
Our retail operating portfolio includes (i) neighborhood and community centers, (ii) power centers, and (iii) lifestyle centers and 
multi-tenant retail-focused mixed-use properties, as well as single-user retail properties.

The following table summarizes our operating portfolio as of December 31, 2016:

Property Type

Operating portfolio:
Multi-tenant retail

Neighborhood and community centers
Power centers
Lifestyle centers and mixed-use properties

Total multi-tenant retail

Single-user retail
Total retail operating portfolio
Office

Total operating portfolio (b)

(a)  Includes leases signed but not commenced.

Number of
Properties

GLA
(in thousands)

Occupancy

Percent Leased
Including Leases
Signed (a)

81
50
14
145
11
156
1
157

9,958
11,430
3,868
25,256
576
25,832
895
26,727

94.2%
95.8%
89.7%
94.2%
100.0%
94.3%
1.1%
91.2%

94.4%
96.9%
90.3%
94.9%
100.0%
95.0%
44.3%
93.3%

(b)  Excludes one multi-tenant retail operating property and one single-user retail operating property classified as held for sale as of December 31, 

2016.

In addition to our operating portfolio, as of December 31, 2016, we owned two properties where we have begun redevelopment 
activities.

We are in the midst of a portfolio repositioning effort, the core objective of which is to become a dominant owner of multi-tenant 
retail properties in 10 to 15 target markets, owning 3,000,000 to 5,000,000 square feet in each market. To date, we have identified 
10 target markets: Dallas, Washington, D.C./Baltimore, New York, Atlanta, Seattle, Chicago, Houston, San Antonio, Phoenix and 
Austin. Depending on whether favorable market conditions exist, among other factors, we expect to substantially complete our 
portfolio repositioning efforts by the end of 2018.

25

 
 
 
 
Table of Contents

2016 Company Highlights

Acquisitions

During the year ended December 31, 2016, we continued to execute our investment strategy by acquiring seven multi-tenant retail 
operating properties, the fee interest in an existing wholly-owned multi-tenant retail operating property and the anchor space 
improvements at an existing wholly-owned multi-tenant retail operating property for a total purchase price of $408,308.

The following table summarizes our 2016 acquisitions:

Date

Property Name

January 15, 2016

Shoppes at Hagerstown (a)

January 15, 2016

Merrifield Town Center II (a)

March 29, 2016

Oak Brook Promenade

April 1, 2016

April 29, 2016

May 5, 2016

June 15, 2016

The Shoppes at Union Hill (b)

Ashland & Roosevelt – Fee Interest (c)

Tacoma South

Eastside

August 30, 2016

Woodinville Plaza – Anchor Space

Improvements (d)

Metropolitan
Statistical Area (MSA)

Hagerstown

Washington, D.C.

Chicago

New York

Chicago

Seattle

Dallas

Seattle

November 22, 2016

One Loudoun Downtown – Phase I (e)

Washington, D.C.

Property Type

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Ground lease interest (c)

Multi-tenant retail

Multi-tenant retail

Anchor space
improvements (d)

Multi-tenant retail

Square
Footage

Acquisition
Price

113,000

$

76,000

183,200

91,700

—

230,700

67,100

—

340,600

1,102,300

$

27,055

45,676

65,954

63,060

13,850

39,400

23,842

4,500

124,971

408,308

(a)  These properties were acquired as a two-property portfolio. Merrifield Town Center II also contains 62,000 square feet of storage space for 

a total of 138,000 square feet.

(b)  In conjunction with this acquisition, we assumed mortgage debt with a principal balance of $15,971 and an interest rate of 3.75% that 

matures in 2031.

(c)  We acquired the fee interest in an existing wholly-owned multi-tenant retail operating property located in Chicago, Illinois, which was 
previously subject to a ground lease with a third party. In conjunction with this transaction, we reversed the straight-line ground rent liability 
of $6,978, which is reflected as “Gain on extinguishment of other liabilities” in the accompanying consolidated statements of operations 
and other comprehensive income.

(d)  We acquired the anchor space improvements, which were previously subject to a ground lease with us, at an existing wholly-owned multi-

tenant retail operating property located in Woodinville, Washington.

(e)  The remaining phases at One Loudoun Downtown, representing an aggregate gross purchase price of up to $35,500, are expected to close 

throughout the first three quarters of 2017 as the seller completes construction on stand-alone buildings at the property.

During the year ended December 31, 2016, we also completed a non-monetary transaction in which we received the fee interest 
in less than an acre of adjacent land and terminated the ground lease on certain undeveloped parcels at an existing wholly-owned 
multi-tenant retail operating property located in Southlake, Texas in exchange for the fee interest in approximately 2.5 acres of 
undeveloped parcels. As a result of this transaction, our fee interest in certain undeveloped parcels at the property are no longer 
encumbered by the ground lease. We capitalized $113 of costs related to this transaction.

Subsequent to December 31, 2016, we acquired Main Street Promenade, a 181,600 square foot multi-tenant retail property located 
in the Chicago MSA, for a gross purchase price of $88,000 through a consolidated variable interest entity (VIE) to facilitate a 
potential 1031 Exchange. In total for 2017, we expect to acquire approximately $375,000 to $475,000 of strategic acquisitions in 
our target markets, some of which may be structured as 1031 Exchanges.

Dispositions

During  the  year  ended  December 31,  2016,  we  continued  to  pursue  targeted  dispositions  of  select  non-target  and  single-user 
properties. Consideration from dispositions totaled $540,362 and included the sales of 10 multi-tenant retail operating properties 
aggregating 2,388,000 square feet for total consideration of $386,625, 35 single-user retail properties aggregating 625,900 square 
feet for total consideration of $151,487 and one development property, which was not under active development, for consideration 
of $2,250.

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Table of Contents

The following table summarizes our 2016 dispositions:

Date

February 1, 2016
February 10, 2016
March 30, 2016
April 20, 2016

June 2, 2016

June 15, 2016
June 23, 2016
July 8, 2016
July 21, 2016
July 27, 2016
July 29, 2016
August 4, 2016
August 5, 2016
August 12, 2016
August 12, 2016
August 18, 2016
August 22, 2016
September 9, 2016
September 9, 2016
November 9, 2016
November 23, 2016
December 8, 2016
December 15, 2016
December 16, 2016
December 22, 2016
December 29, 2016

December 30, 2016

Property Name

The Gateway (a)
Stateline Station
Six Property Portfolio (b)
CVS Pharmacy – Oklahoma City
Rite Aid Store (Eckerd) – Canandaigua

& Tim Horton Donut Shop (c)

Academy Sports – Midland
Four Rite Aid Portfolio (d)
Broadway Shopping Center
Mid-Hudson Center
Rite Aid Store (Eckerd), Main St. – Buffalo
Rite Aid Store (Eckerd) – Lancaster
Alison’s Corner
Rite Aid Store (Eckerd) – Lake Ave.
Maple Tree Place
CVS Pharmacy – Burleson
Mitchell Ranch Plaza
Rite Aid Store (Eckerd), E. Main St. – Batavia
Rite Aid Store (Eckerd) – Lockport
Rite Aid Store (Eckerd), Ferry St. – Buffalo
Walgreens – Northwoods
Ten Rite Aid Portfolio (e)
Vail Ranch Plaza
Pacheco Pass Phase I & II
South Billings Center (f)
Rite Aid Store (Eckerd) – Colesville
Commons at Royal Palm
CVS Pharmacy (Eckerd) – Edmond &

CVS Pharmacy (Eckerd) – Norman (g)

Property Type
Multi-tenant retail
Multi-tenant retail
Single-user retail
Single-user retail

Single-user retail

Single-user retail
Single-user retail
Multi-tenant retail
Multi-tenant retail
Single-user retail
Single-user retail
Multi-tenant retail
Single-user retail
Multi-tenant retail
Single-user retail
Multi-tenant retail
Single-user retail
Single-user retail
Single-user retail
Single-user retail
Single-user retail
Multi-tenant retail
Multi-tenant retail
Development (f)
Single-user retail
Multi-tenant retail

Single-user retail

Square
Footage

623,200
142,600
230,400
10,900

16,600

61,200
45,400
190,300
235,600
10,900
10,900
55,100
13,200
489,000
10,900
199,600
13,800
13,800
10,900
16,300
119,700
101,800
194,300
—
13,400
156,500

27,600

Consideration
75,000
$
17,500
35,413
4,676

5,400

5,541
15,934
20,500
27,500
3,388
3,425
7,850
5,400
90,000
4,190
55,625
5,050
4,690
3,600
6,450
30,000
27,450
41,500
2,250
7,700
23,700

10,630

540,362

3,013,900

$

(a)  The property was disposed of through a lender-directed sale in full satisfaction of our $94,353 mortgage obligation. Immediately prior to 
the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along 
with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable 
and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653.

(b)  Portfolio consists of the following properties: (i) Academy Sports – Houma, (ii) Academy Sports – Port Arthur, (iii) Academy Sports – San 

Antonio, (iv) CVS Pharmacy – Moore, (v) CVS Pharmacy – Saginaw and (vi) Rite Aid Store (Eckerd) – Olean.

(c)  The terms of the disposition of Rite Aid Store (Eckerd) – Canandaigua and Tim Horton Donut Shop were negotiated as a single transaction.

(d)  Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Cheektowaga, (ii) Rite Aid Store (Eckerd), W. Main St. – Batavia, 

(iii) Rite Aid Store (Eckerd), Union Rd. – West Seneca and (iv) Rite Aid Store (Eckerd) – Greece.

(e)  Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Chattanooga, (ii) Rite Aid Store (Eckerd) – Yorkshire, (iii) Rite 
Aid Store (Eckerd), Sheridan Dr. – Amherst, (iv) Rite Aid Store (Eckerd) – Grand Island, (v) Rite Aid Store (Eckerd) – North Chili, (vi) 
Rite Aid Store (Eckerd) – Tonawanda, (vii) Rite Aid Store (Eckerd) – Irondequoit, (viii) Rite Aid Store (Eckerd) – Hudson, (ix) Rite Aid 
Store (Eckerd), Transit Rd. – Amherst and (x) Rite Aid Store (Eckerd), Harlem Rd. – West Seneca.

(f)  South Billings Center was classified as a development property but was not under active development.

(g)  The terms of the disposition of CVS Pharmacy (Eckerd) – Edmond and CVS Pharmacy (Eckerd) – Norman were negotiated as a single 

transaction.

During the year ended December 31, 2016, we also disposed of a single-user outparcel for consideration of $2,639.

Subsequent to December 31, 2016, we sold Rite Aid Store (Eckerd), Culver Rd., a 10,900 square foot single-user retail operating 
property, for consideration of $500. During 2017, we expect targeted dispositions to be approximately $800,000 to $900,000, some 
of which may be structured as 1031 Exchanges.

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Table of Contents

Market Summary

As a result of our capital recycling efforts over the past several years, we increased the amount of ABR in our target markets to 
66.9% of our total multi-tenant retail ABR, including amounts attributable to our redevelopments. The following table summarizes 
our operating portfolio by market as of December 31, 2016:

Property Type/Market

Multi-Tenant Retail:
Target Markets
Dallas, Texas
Washington, D.C. /

Baltimore, Maryland

New York, New York
Chicago, Illinois
Seattle, Washington
Atlanta, Georgia
Houston, Texas
San Antonio, Texas
Phoenix, Arizona
Austin, Texas
Subtotal

Non-Target – Top 50 MSAs

Subtotal Target Markets
and Top 50 MSAs

Non-Target – Other

Total Multi-Tenant Retail

Single-User Retail

Total Retail

Office

Number of
Properties

ABR (a)

% of Total
Multi-Tenant
Retail ABR 
(a)

ABR per
Occupied
Sq. Ft.

% of Total
Multi-Tenant
Retail GLA 
(a)

Occupancy

% Leased
Including
Signed

GLA (a)

20

13

8
6
8
9
9
3
3
4
83

25

108

37

145

11

156

1

$

82,265

20.4% $

21.56

4,098

49,935

34,091
20,117
19,514
19,385
15,423
11,630
10,015
5,199
267,574

51,626

12.4%

8.4%
5.0%
4.8%
4.8%
3.8%
2.8%
2.5%
1.3%
66.2%

12.8%

21.83

27.69
19.72
14.32
12.97
14.08
16.29
17.17
15.99
19.21

15.36

2,611

1,260
1,076
1,473
1,513
1,141
724
632
350
14,878

3,587

16.2%

10.3%

5.0%
4.3%
5.8%
6.0%
4.5%
2.9%
2.5%
1.4%
58.9%

14.2%

93.1%

93.4%

87.6%

97.7%
94.8%
92.5%
98.8%
96.0%
98.6%
92.3%
92.9%
93.6%

88.5%

98.0%
95.0%
94.6%
98.8%
96.2%
98.6%
92.3%
92.9%
94.1%

93.7%

96.0%

319,200

79.0%

18.47

18,465

73.1%

93.6%

94.5%

84,884

21.0%

404,084

100.0%

12,823

416,907

69

13.06

16.98

22.26

17.11

7.01

6,791

25,256

576

25,832

895

26.9%

95.7%

95.9%

100.0%

94.2%

94.9%

100.0%

100.0%

94.3%

95.0%

1.1%

44.3%

Total Operating Portfolio (b)

157

$ 416,976

$

17.11

26,727

91.2%

93.3%

(a)  Excludes $7,857 of multi-tenant retail ABR and 816 square feet of multi-tenant retail GLA attributable to our two active redevelopments, 
which are located in the Washington, D.C./Baltimore MSA. Including these amounts, 66.9% of our multi-tenant retail ABR and 60.2% of 
our multi-tenant retail GLA is located in our target markets.

(b)  Excludes one multi-tenant retail operating property and one single-user retail operating property classified as held for sale as of December 31, 

2016.

Leasing Activity

The following table summarizes the leasing activity in our retail operating portfolio during the year ended December 31, 2016. 
Leases with terms of less than 12 months have been excluded from the table.

Number of
Leases
Signed

GLA Signed
(in thousands)

New
Contractual
Rent per Square
Foot (PSF) (a)

Prior
Contractual
Rent PSF (a)

% Change
over Prior
ABR (a) (b)

Weighted
Average
Lease Term

Tenant
Allowances
PSF

Comparable Renewal Leases

Comparable New Leases

Non-Comparable New and
Renewal Leases (c)

Total

372

54

114

540

2,321

$

335

676

3,332

$

19.65

18.20

14.04

19.47

$

$

18.43

16.00

N/A

18.12

6.62%

13.75%

N/A

7.45%

4.75

9.53

7.67

5.68

$

$

1.29

31.50

18.07

7.73

(a)  Total excludes the impact of Non-Comparable New and Renewal Leases.

28

Table of Contents

(b)  Excluding the impact from eight Rite Aid leases executed in the first quarter that were extended to effectuate the planned 2016 disposition 
of these single-user assets, all of which were sold during the second and third quarters, combined comparable re-leasing spreads were 
approximately 7.8% and comparable renewal re-leasing spreads were approximately 7.0% over previous rental rates for the year ended 
December 31, 2016.

(c)  Includes (i) leases signed on units that were vacant for over 12 months, (ii) leases signed without fixed rental payments and (iii) leases 

signed where the previous and the current lease do not have a consistent lease structure.

We anticipate our leasing efforts in 2017 will focus on (i) natural lease expirations, (ii) anchor spaces previously occupied by 
bankrupt tenants and (iii) vacant small shop space. In each case, we look to capitalize on the opportunity to mark rents to market, 
upgrade our tenancy and ensure the right mix of operators and unique retailers at our properties. Additionally, we continue to 
expect new small shop leases to generally be non-comparable in nature as the leased space is likely to have been vacant for longer 
than 12 months.

The single-user lease at our one remaining office property expired on November 30, 2016. We continue to focus on leasing the 
vacant space at this property and have leased 397,000 square feet of the available 895,000 square feet as of December 31, 2016.

Capital Markets

During the year ended December 31, 2016, we:

• 

• 

• 

• 

• 

• 

• 

• 

• 

issued $100,000 of 10-year 4.08% senior unsecured notes and $100,000 of 12-year 4.24% senior unsecured notes in 
private placement transactions pursuant to a note purchase agreement we entered into with certain institutional investors;

closed on a seven-year $200,000 unsecured term loan, which funded on January 3, 2017;

entered into our fourth amended and restated unsecured credit agreement with a syndicate of financial institutions to 
provide for an unsecured credit facility aggregating $1,200,000, consisting of a $750,000 unsecured revolving line of 
credit and two unsecured term loans totaling $450,000 (Unsecured Credit Facility);

repaid $14,000, net of borrowings, on our unsecured revolving line of credit;

repurchased 591 shares of our common stock at an average price per share of $14.93 for a total of $8,841, resulting in 
$241,159 remaining available under our $250,000 common stock repurchase program;

entered into the following interest rate swaps that terminate on December 31, 2017: (i) $100,000 interest rate swap that 
effectively converts one-month floating rate London Interbank Offered Rate (LIBOR) to a fixed rate of 0.6591% and (ii) 
$150,000 interest rate swap that effectively converts one-month floating rate LIBOR to a fixed rate of 0.6735%. We 
previously had a $300,000 interest rate swap that matured on February 24, 2016;

repaid or defeased mortgages payable totaling $263,548 and made scheduled principal payments of $13,180 related to 
amortizing loans. One of the mortgages repaid, with a principal balance of $7,750 at maturity, had been swapped to a 
fixed rate and we had guaranteed a portion of the outstanding balance. Upon repayment of the mortgage on its scheduled 
maturity date, the interest rate swap expired and our guarantee was extinguished;

disposed of The Gateway through a lender-directed sale in full satisfaction of our $94,353 mortgage obligation; and

assumed a mortgage payable with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031 in 
conjunction with the acquisition of The Shoppes at Union Hill.

Distributions

We declared quarterly distributions totaling $1.75 per share of preferred stock and quarterly distributions totaling $0.6625 per 
share of common stock during 2016.

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Table of Contents

Results of Operations

Comparison of Results for the Years Ended December 31, 2016 and 2015

Revenues

Rental income
Tenant recovery income
Other property income

Total revenues

Expenses

Operating expenses
Real estate taxes
Depreciation and amortization
Provision for impairment of investment properties
General and administrative expenses

Total expenses

Operating income

Gain on extinguishment of debt
Gain on extinguishment of other liabilities
Interest expense
Other income, net
Income from continuing operations
Gain on sales of investment properties
Net income
Net income attributable to noncontrolling interest
Net income attributable to the Company
Preferred stock dividends
Net income attributable to common shareholders

Year Ended December 31,
2016

2015

Change

$

$

455,658
118,569
8,916
583,143

85,895
81,774
224,430
20,376
44,522
456,997

126,146

13,653
6,978
(109,730)
63
37,110
129,707
166,817
—
166,817
(9,450)
157,367

$

$

472,344
119,536
12,080
603,960

94,780
82,810
214,706
19,937
50,657
462,890

141,070

—
—
(138,938)
1,700
3,832
121,792
125,624
(528)
125,096
(9,450)
115,646

$

$

(16,686)
(967)
(3,164)
(20,817)

(8,885)
(1,036)
9,724
439
(6,135)
(5,893)

(14,924)

13,653
6,978
29,208
(1,637)
33,278
7,915
41,193
528
41,721
—
41,721

Net income attributable to common shareholders increased $41,721 from $115,646 for the year ended December 31, 2015 to 
$157,367 for the year ended December 31, 2016 primarily as a result of the following:

• 

a $29,208 decrease in interest expense primarily consisting of:

• 

• 

• 

• 

• 

a $21,387 decrease in interest on mortgages payable due to a reduction in mortgage debt; and

a $12,582 decrease in prepayment penalties and defeasance premiums;

partially offset by

a  $2,184  increase  in  interest  on  our  Unsecured  Credit  Facility  primarily  due  to  higher  average  balances  on  our 
unsecured revolving line of credit and higher LIBOR interest rates;

a $1,944 increase in interest due to a full year of interest expense from our 4.00% senior unsecured notes due 2025 
(Notes Due 2025), which were issued in March 2015; and

a $1,020 increase in interest from our 4.08% senior unsecured notes due 2026 (Notes Due 2026), which were issued 
in September 2016;

• 

a $13,653 gain on extinguishment of debt recognized during the year ended December 31, 2016 associated with the 
disposition of The Gateway through a lender-directed sale in full satisfaction of our mortgage obligation. No such gain 
was recorded during the year ended December 31, 2015;

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Table of Contents

• 

• 

• 

• 

• 

• 

• 

an $8,954 decrease in operating expenses and real estate taxes, net of tenant recovery income, primarily as a result of the 
operating properties sold during 2015 and 2016 or classified as held for sale as of December 31, 2016 and the impact 
from our same store portfolio, partially offset by an increase from our one remaining office property;

a $7,915 increase in gain on sales of investment properties related to the sales of 46 investment properties and one single-
user outparcel, representing approximately 3,013,900 square feet of GLA, during the year ended December 31, 2016 
compared to the sales of 26 investment properties, representing approximately 3,917,200 square feet of GLA, during the 
year ended December 31, 2015;

a $6,978 gain on extinguishment of other liabilities recognized during the year ended December 31, 2016 related to the 
acquisition of the fee interest in one of our existing investment properties that was previously subject to a ground lease 
with a third party. The amount recognized represents the reversal of the straight-line ground rent liability associated with 
the ground lease; and

a $6,135 decrease in general and administrative expenses primarily consisting of executive and realignment separation 
charges of $4,730 incurred during the year ended December 31, 2015, which were not present in 2016, and a $1,521 
decrease in executive and employee bonus expense. During 2017, we expect to incur approximately $42,000 to $44,000 
of general and administrative expenses;

partially offset by

a $16,686 decrease in rental income primarily consisting of a $16,324 decrease in base rent resulting from the operating 
properties sold during 2015 and 2016 or classified as held for sale as of December 31, 2016, along with our redevelopment 
properties and our one remaining office property, partially offset by an increase from the operating properties acquired 
during 2015 and 2016 and growth from our same store portfolio;

a $9,724 increase in depreciation and amortization primarily attributable to the write-off of assets taken out of service at 
two redevelopment properties during the year ended December 31, 2016; and

a $3,164 decrease in other property income primarily as a result of the operating properties sold during 2015 and 2016 
or classified as held for sale as of December 31, 2016, along with our same store portfolio and our redevelopment properties, 
partially offset by an increase from the operating properties acquired during 2015 and 2016.

Net operating income (NOI)

We define NOI as all revenues other than (i) straight-line rental income, (ii) amortization of lease inducements, (iii) amortization 
of acquired above and below market lease intangibles and (iv) lease termination fee income, less real estate taxes and all operating 
expenses other than straight-line ground rent expense and amortization of acquired ground lease intangibles, which are non-cash 
items. NOI consists of same store NOI (Same Store NOI) and NOI from other investment properties (NOI from Other Investment 
Properties). We believe that NOI, Same Store NOI and NOI from Other Investment Properties, which are supplemental non-GAAP 
financial measures, provide an additional and useful operating perspective not immediately apparent from “Operating income” or 
“Net income attributable to common shareholders” in accordance with accounting principles generally accepted in the United 
States (GAAP). We use these measures to evaluate our performance on a property-by-property basis because they allow management 
to evaluate the impact that factors such as lease structure, lease rates and tenant base have on our operating results. NOI, Same 
Store NOI and NOI from Other Investment Properties do not represent alternatives to “Net income” or “Net income attributable 
to common shareholders” in accordance with GAAP as indicators of our financial performance. Comparison of our presentation 
of NOI, Same Store NOI and NOI from Other Investment Properties to similarly titled measures for other REITs may not necessarily 
be meaningful due to possible differences in definition and application by such REITs. For reference and as an aid in understanding 
our computation of NOI, a reconciliation of net income attributable to common shareholders as computed in accordance with 
GAAP to Same Store NOI has been presented for each comparable period presented.

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Table of Contents

Same store portfolio – 2016 and 2015

For the year ended December 31, 2016, our same store portfolio consisted of 140 retail operating properties acquired or placed in 
service  and  stabilized  prior  to  January 1,  2015. The  number  of  properties  in  our  same  store  portfolio  decreased  to  140  as  of 
December 31, 2016 from 180 as of December 31, 2015 as a result of the following:

• 

• 

• 

the removal of 44 same store investment properties sold during the year ended December 31, 2016;

the removal of two same store investment properties classified as held for sale as of December 31, 2016;

the removal of one investment property where we have begun activities in anticipation of a redevelopment, which we 
expected to have a significant impact to property NOI during 2016; and

• 

the removal of our one remaining office property;

partially offset by

• 

the addition of eight investment properties acquired during the year ended December 31, 2014.

The sale of South Billings Center on December 16, 2016 did not impact the number of same store properties as it was a development 
property and consequently did not meet the criteria to be included in our same store portfolio.

The properties and financial results reported in “Other investment properties” primarily include the following:

• 

• 

• 

• 

• 

• 

properties acquired during 2015 and 2016;

our one remaining office property;

three properties where we have begun redevelopment and/or activities in anticipation of future redevelopment;

properties that were sold or held for sale in 2015 and 2016;

the net income from our wholly-owned captive insurance company; and

the historical ground rent expense related to an existing same store investment property that was subject to a ground lease 
with a third party prior to our acquisition of the fee interest on April 29, 2016.

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Table of Contents

The following tables present a reconciliation of net income attributable to common shareholders to Same Store NOI and details 
of the components of Same Store NOI for the years ended December 31, 2016 and 2015:

Net income attributable to common shareholders
Adjustments to reconcile to Same Store NOI:

Preferred stock dividends
Net income attributable to noncontrolling interest
Gain on sales of investment properties
Depreciation and amortization
Provision for impairment of investment properties
General and administrative expenses
Gain on extinguishment of debt
Gain on extinguishment of other liabilities
Interest expense
Straight-line rental income, net
Amortization of acquired above and below market lease intangibles, net
Amortization of lease inducements
Lease termination fees
Straight-line ground rent expense
Amortization of acquired ground lease intangibles
Other income, net
NOI
NOI from Other Investment Properties

Same Store NOI

Same Store NOI:

Base rent
Percentage and specialty rent
Tenant recovery income
Other property operating income

Property operating expenses
Bad debt expense
Real estate taxes

Year Ended December 31,
2016

2015

Change

$

157,367

$

115,646

$

41,721

9,450
—
(129,707)
224,430
20,376
44,522
(13,653)
(6,978)
109,730
(4,601)
(2,991)
1,033
(3,339)
3,253
(560)
(63)
408,269
(81,483)
326,786

$

9,450
528
(121,792)
214,706
19,937
50,657
—
—
138,938
(3,498)
(3,621)
847
(3,757)
3,722
(560)
(1,700)
419,503
(103,832)
315,671

Year Ended December 31,
2016

2015

$

355,077
3,626
96,208
3,405
458,316

64,355
31
67,144
131,530

347,806
3,095
94,354
3,527
448,782

65,722
1,179
66,210
133,111

—
(528)
(7,915)
9,724
439
(6,135)
(13,653)
(6,978)
(29,208)
(1,103)
630
186
418
(469)
—
1,637
(11,234)
22,349
11,115

Change

7,271
531
1,854
(122)
9,534

(1,367)
(1,148)
934
(1,581)

$

$

$

$

Same Store NOI

$

326,786

$

315,671

$

11,115

Same Store NOI increased $11,115, or 3.5%, primarily due to the following:

• 

• 

base rent and percentage and specialty rent increased $7,802 primarily due to an increase of $2,983 from contractual rent 
changes, $2,574 from occupancy growth, $2,353 from re-leasing spreads and $531 from percentage and specialty rent, 
partially offset by a decrease of $718 from rent abatements; and

property operating expenses, bad debt expense and real estate taxes, net of tenant recovery income, decreased $3,435 
primarily as a result of decreases in certain non-recoverable property operating expenses and bad debt expense combined 
with lower net recoverable property operating expenses and net real estate taxes resulting from lower than anticipated 
expenses and the receipt of real estate tax refunds.

33

 
 
Table of Contents

Comparison of Results for the Years Ended December 31, 2015 to 2014

Revenues

Rental income
Tenant recovery income
Other property income

Total revenues

Expenses

Operating expenses
Real estate taxes
Depreciation and amortization
Provision for impairment of investment properties
General and administrative expenses

Total expenses

Operating income

Gain on extinguishment of other liabilities
Equity in loss of unconsolidated joint ventures, net
Gain on change in control of investment properties
Interest expense
Other income, net
Income from continuing operations

Discontinued operations:

Loss, net
Gain on sales of investment properties

Income from discontinued operations
Gain on sales of investment properties
Net income
Net income attributable to noncontrolling interest
Net income attributable to the Company
Preferred stock dividends
Net income attributable to common shareholders

Year Ended December 31,
2015

2014

Change

$

$

472,344
119,536
12,080
603,960

94,780
82,810
214,706
19,937
50,657
462,890

141,070

—
—
—
(138,938)
1,700
3,832

—
—
—
121,792
125,624
(528)
125,096
(9,450)
115,646

$

$

474,684
115,719
10,211
600,614

96,798
78,773
215,966
72,203
34,229
497,969

102,645

4,258
(2,088)
24,158
(133,835)
5,459
597

(148)
655
507
42,196
43,300
—
43,300
(9,450)
33,850

$

$

(2,340)
3,817
1,869
3,346

(2,018)
4,037
(1,260)
(52,266)
16,428
(35,079)

38,425

(4,258)
2,088
(24,158)
(5,103)
(3,759)
3,235

148
(655)
(507)
79,596
82,324
(528)
81,796
—
81,796

Net income attributable to common shareholders increased $81,796 from $33,850 for the year ended December 31, 2014 to $115,646
for the year ended December 31, 2015 primarily as a result of the following:

• 

• 

• 

a $79,596 increase in gain on sales of investment properties related to the sales of 26 investment properties, representing 
approximately 3,917,200 square feet of GLA, during the year ended December 31, 2015 compared to the sales of 23 
investment properties and one single-user outparcel, representing approximately 2,459,700 square feet of GLA, during 
the year ended December 31, 2014; and

a $52,266 decrease in provision for impairment of investment properties. Based on the results of our evaluations for 
impairment (see Notes 15 and 16 to the accompanying consolidated financial statements), we recognized impairment 
charges of $19,937 and $72,203 for the years ended December 31, 2015 and 2014, respectively;

partially offset by

a  $24,158  gain  on  change  in  control  of  investment  properties  recognized  during  the  year  ended  December 31,  2014 
associated with the dissolution of our MS Inland Fund, LLC (MS Inland) unconsolidated joint venture (see Note 11 to 
the accompanying consolidated financial statements). No such gain was recorded during the year ended December 31, 
2015;

34

Table of Contents

• 

a $16,428 increase in general and administrative expenses primarily consisting of an increase in compensation expense, 
including bonuses and amortization of unvested restricted shares and performance restricted stock units, of $13,140 and 
executive and realignment separation charges of $4,730;

• 

a $5,103 increase in interest expense primarily consisting of:

• 

• 

a $13,551 increase in interest on our unsecured notes payable, which were issued in June 2014 and March 2015; and

an $8,162 increase in prepayment penalties and defeasance premiums;

partially offset by

• 

a $16,619 decrease in interest on mortgages payable due to the repayment of mortgage debt.

• 

a $4,258 gain on extinguishment of other liabilities recognized during the year ended December 31, 2014 related to the 
acquisition of the fee interest in one of our existing investment properties that was previously subject to a ground lease 
with a third party. The amount recognized represents the reversal of a straight-line ground rent liability associated with 
the ground lease.

Same store portfolio – 2015 and 2014

For the year ended December 31, 2015, our same store portfolio consisted of 180 retail operating properties acquired or placed in 
service and stabilized prior to January 1, 2014.

The following tables present a reconciliation of net income attributable to common shareholders to Same Store NOI and details 
of the components of Same Store NOI for the years ended December 31, 2015 and 2014:

Year Ended December 31,
2015

2014

Change

$

115,646

$

33,850

$

81,796

9,450
528
—
(121,792)
214,706
19,937
50,657
—
—
—
138,938
(3,498)
(3,621)
847
(3,757)
3,722
(560)
(1,700)
419,503
(73,003)
346,500

$

9,450
—
(507)
(42,196)
215,966
72,203
34,229
(4,258)
2,088
(24,158)
133,835
(4,781)
(2,076)
707
(2,667)
3,889
(560)
(5,459)
419,555
(82,921)
336,634

$

—
528
507
(79,596)
(1,260)
(52,266)
16,428
4,258
(2,088)
24,158
5,103
1,283
(1,545)
140
(1,090)
(167)
—
3,759
(52)
9,918
9,866

Net income attributable to common shareholders
Adjustments to reconcile to Same Store NOI:

Preferred stock dividends
Net income attributable to noncontrolling interest
Income from discontinued operations
Gain on sales of investment properties
Depreciation and amortization
Provision for impairment of investment properties
General and administrative expenses
Gain on extinguishment of other liabilities
Equity in loss of unconsolidated joint ventures, net
Gain on change in control of investment properties
Interest expense
Straight-line rental income, net
Amortization of acquired above and below market lease intangibles, net
Amortization of lease inducements
Lease termination fees
Straight-line ground rent expense
Amortization of acquired ground lease intangibles
Other income, net
NOI
NOI from Other Investment Properties

Same Store NOI

$

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Table of Contents

Same Store NOI:

Base rent
Percentage and specialty rent
Tenant recovery income
Other property operating income

Property operating expenses
Bad debt expense
Real estate taxes

Year Ended December 31,
2015

2014

Change

$

$

382,171
3,331
95,574
4,051
485,127

70,646
1,158
66,823
138,627

$

374,758
3,443
94,054
3,475
475,730

74,229
534
64,333
139,096

7,413
(112)
1,520
576
9,397

(3,583)
624
2,490
(469)

Same Store NOI

$

346,500

$

336,634

$

9,866

Same store NOI increased $9,866, or 2.9%, primarily due to the following:

• 

• 

base rent and percentage and specialty rent increased $7,301 primarily due to an increase of $3,385 from contractual rent 
changes, $2,280 from re-leasing spreads and a net increase of $2,168 as a result of an increase in our small shop occupancy 
and a decrease in our anchor occupancy, partially offset by a decrease of $373 from rent abatements; and

total operating expenses, net of tenant recovery income, decreased $1,989 primarily as a result of a decrease in certain 
non-recoverable property operating expenses, partially offset by an increase in real estate taxes, bad debt expense and 
certain recoverable property operating expenses.

Funds From Operations Attributable to Common Shareholders

The National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a financial 
measure known as FFO. As defined by NAREIT, FFO means net income (loss) computed in accordance with GAAP, excluding 
gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable 
real estate. We have adopted the NAREIT definition in our computation of FFO attributable to common shareholders. Management 
believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing our 
performance and operations to those of other REITs.

We define Operating FFO attributable to common shareholders as FFO attributable to common shareholders excluding the impact 
of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results 
of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating transactions 
and  other  events  include,  but  are  not  limited  to,  the  financial  statement  impact  of  gains  or  losses  associated  with  the  early 
extinguishment of debt or other liabilities, impairment charges to write down the carrying value of assets other than depreciable 
real estate, actual or anticipated settlement of litigation involving the Company and executive and realignment separation charges, 
which are otherwise excluded from our calculation of FFO attributable to common shareholders.

We believe that FFO attributable to common shareholders and Operating FFO attributable to common shareholders, which are 
supplemental non-GAAP financial measures, provide additional and useful means to assess the operating performance of REITs. 
FFO attributable to common shareholders and Operating FFO attributable to common shareholders do not represent alternatives 
to (i) “Net income” or “Net income attributable to common shareholders” as indicators of our financial performance, or (ii) “Cash 
flows from operating activities” in accordance with GAAP as measures of our capacity to fund cash needs, including the payment 
of dividends. Comparison of our presentation of Operating FFO attributable to common shareholders to similarly titled measures 
for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

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Table of Contents

The following table presents a reconciliation of net income attributable to common shareholders to FFO attributable to common 
shareholders and Operating FFO attributable to common shareholders:

Net income attributable to common shareholders
Depreciation and amortization of depreciable real estate
Provision for impairment of investment properties
Gain on sales of depreciable investment properties, net of noncontrolling interest (a)

FFO attributable to common shareholders

FFO attributable to common shareholders per common share outstanding

FFO attributable to common shareholders
Impact on earnings from the early extinguishment of debt, net
Provision for hedge ineffectiveness
Provision for impairment of non-depreciable investment property
Reversal of excise tax accrual
Gain on extinguishment of other liabilities
Executive and realignment separation charges (b)
Other (c)

Operating FFO attributable to common shareholders

Operating FFO attributable to common shareholders per common share outstanding

Year Ended December 31,
2015

2014

2016

$

$

$

$

$

$

157,367
223,018
17,369
(129,707)
268,047

1.13

268,047
(7,028)
(21)
3,007
—
(6,978)
—
132
257,159

1.09

$

$

$

$

$

$

115,646
213,602
19,937
(121,264)
227,921

0.96

227,921
18,864
(25)
—
—
—
4,730
(224)
251,266

1.06

$

$

$

$

$

$

33,850
216,676
72,203
(67,009)
255,720

1.08

255,720
10,479
12
—
(4,594)
(4,258)
—
(199)
257,160

1.09

(a)  Results for the year ended December 31, 2014 include the gain on change in control of investment properties of $24,158 recognized pursuant 
to the dissolution of our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture on June 5, 2014.

(b)  Included in “General and administrative expenses” in the accompanying consolidated statements of operations and other comprehensive 

income.

(c)  Consists  of  the  impact  on  earnings  from  net  settlements  and  easement  proceeds,  which  are  included  in  “Other  income,  net”  in  the 

accompanying consolidated statements of operations and other comprehensive income.

Liquidity and Capital Resources

We anticipate that cash flows from the below-listed sources will provide adequate capital for the next 12 months and beyond for 
all scheduled principal and interest payments on our outstanding indebtedness, including maturing debt, current and anticipated 
tenant allowances or other capital obligations, the shareholder distributions required to maintain our REIT status and compliance 
with the financial covenants of our unsecured debt agreements.

Our primary expected sources and uses of liquidity are as follows:

SOURCES

USES

Operating cash flow
Cash and cash equivalents
Available borrowings under our unsecured revolving
line of credit
Proceeds from capital markets transactions
Proceeds from asset dispositions

Tenant allowances and leasing costs
Improvements made to individual properties, certain of which are not
recoverable through common area maintenance charges to tenants
Acquisitions
Debt repayments and defeasances
Distribution payments
Redevelopment, renovation or expansion activities
New development
Repurchases of our common stock
Redemption of our preferred stock

We have made substantial progress over the last several years in strengthening our balance sheet, as demonstrated by our reduced 
leverage,  increased  liquidity  and  higher  unencumbered  asset  ratio.  Debt  maturities  have  been  funded  primarily  through  asset 
dispositions and capital markets transactions, including public offerings of our common stock and preferred stock and private and 
public offerings of senior unsecured notes. As of December 31, 2016, we had $35,023 of debt scheduled to mature through the 

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Table of Contents

end of 2017, comprised of $25,054 related to mortgages payable maturing in 2017 and $9,969 of principal amortization related to 
longer-dated maturities, which we plan on satisfying through a combination of proceeds from asset dispositions, capital markets 
transactions and our unsecured revolving line of credit.

The table below summarizes our consolidated indebtedness as of December 31, 2016:

Debt

Aggregate
Principal
Amount

Weighted
Average
Interest Rate

Fixed rate mortgages payable (a)

$

773,395

6.31%

Unsecured notes payable:

Senior notes – 4.12% due 2021
Senior notes – 4.58% due 2024
Senior notes – 4.00% due 2025
Senior notes – 4.08% due 2026
Senior notes – 4.24% due 2028
Total unsecured notes payable (a)

Unsecured credit facility:

Term loan – fixed rate (b)
Term loan – variable rate (c)
Revolving line of credit – variable rate (c)

Total unsecured credit facility (a)

100,000
150,000
250,000
100,000
100,000
700,000

250,000
200,000
86,000
536,000

Total consolidated indebtedness (d)

$

2,009,395

4.12%
4.58%
4.00%
4.08%
4.24%
4.19%

1.97%
2.22%
2.12%
2.09%

4.44%

Maturity Date
Various

June 30, 2021
June 30, 2024
March 15, 2025
September 30, 2026
December 28, 2028

January 5, 2021
May 11, 2018 (c)
January 5, 2020 (c)

Weighted
Average Years
to Maturity

4.2 years

4.5 years
7.5 years
8.2 years
9.8 years
12.0 years
8.3 years

4.0 years
1.4 years
3.0 years
2.9 years

5.3 years

(a)  Fixed  rate  mortgages  payable  excludes  mortgage  premium  of  $1,437,  discount  of  $(622)  and  capitalized  loan  fees  of  $(5,026),  net  of 
accumulated amortization, as of December 31, 2016. Unsecured notes payable excludes discount of $(971) and capitalized loan fees of 
$(3,886), net of accumulated amortization, as of December 31, 2016. Term loans exclude capitalized loan fees of $(2,402), net of accumulated 
amortization, as of December 31, 2016. Capitalized loan fees related to the revolving line of credit are included in “Other assets, net” in 
the accompanying consolidated balance sheets.

(b)  Reflects $250,000 of LIBOR-based variable rate debt that has been swapped to a weighted average fixed rate of 0.6677% plus a credit 
spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of 
December 31, 2016.

(c)  We have two one year extension options on the term loan due 2018 and two six-month extension options on the revolving line of credit, 
which we may exercise as long as we are in compliance with the terms of the unsecured credit agreement and we pay an extension fee equal 
to 0.15% for the term loan and 0.075% of the commitment amount being extended for the revolving line of credit.

(d)  Excludes the $200,000 unsecured term loan due 2023 (Term Loan Due 2023), which closed during the year ended December 31, 2016 and 

funded on January 3, 2017. Refer below for further discussion of the terms of the Term Loan Due 2023.

Mortgages Payable

During the year ended December 31, 2016, we repaid or defeased mortgages payable in the total amount of $263,548 which had 
a weighted average fixed interest rate of 5.09% and made scheduled principal payments of $13,180 related to amortizing loans. 
One of the mortgages repaid, with a principal balance of $7,750 at maturity, had been swapped to a fixed rate and we had guaranteed 
a portion of the outstanding balance. Upon repayment of the mortgage on its scheduled maturity date, the interest rate swap expired 
and our guarantee was extinguished. In addition, during the year ended December 31, 2016, we disposed of The Gateway through 
a lender-directed sale in full satisfaction of our $94,353 mortgage obligation, which had a fixed interest rate of 6.57%. Immediately 
prior to the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the 
disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights 
to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653. We also 
assumed a mortgage payable with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031 in conjunction 
with the acquisition of The Shoppes at Union Hill.

Subsequent to December 31, 2016, we defeased a portfolio of 45 cross-collateralized mortgages payable (known as the IW JV 
portfolio of mortgages payable), which had an outstanding principal balance of $379,435, an interest rate of 7.50% and were 
scheduled to mature in 2019, and incurred a defeasance premium of $60,198. As a result, the 45 properties that secured the mortgages 
payable as of December 31, 2016 are no longer encumbered by mortgages.

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Table of Contents

Unsecured Notes Payable

Notes Due 2026 and 2028

On September 30, 2016, we issued $100,000 of 10-year 4.08% senior unsecured notes due 2026 in a private placement transaction 
pursuant to a note purchase agreement we entered into with certain institutional investors on September 30, 2016. Pursuant to the 
same note purchase agreement, on December 28, 2016, we also issued $100,000 of 12-year 4.24% senior unsecured notes (Notes 
Due 2026 and 2028). The proceeds were used to pay down our unsecured revolving line of credit, early repay certain longer-dated 
mortgages payable and for general corporate purposes.

The  note  purchase  agreement  governing  the  Notes  Due  2026  and  2028  contains  customary  representations,  warranties  and 
covenants, and events of default. Pursuant to the terms of the note purchase agreement, we are subject to various financial covenants, 
including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) 
a minimum interest coverage ratio; (iii) a fixed charge coverage ratio (as set forth in our unsecured credit facility); and (iv) an 
unencumbered interest coverage ratio (as set forth in our unsecured credit facility and the note purchase agreement governing the 
Notes Due 2021 and 2024).

Notes Due 2025

On March 12, 2015, we completed a public offering of $250,000 in aggregate principal amount of the Notes Due 2025. The Notes 
Due 2025 were priced at 99.526% of the principal amount to yield 4.058% to maturity. The proceeds were used to repay a portion 
of our unsecured revolving line of credit.

The indenture, as supplemented, governing the Notes Due 2025 (the Indenture) contains customary covenants and events of default. 
Pursuant to the terms of the Indenture, we are subject to various financial covenants, including the requirement to maintain the 
following: (i) maximum secured and total leverage ratios; (ii) a debt service coverage ratio; and (iii) maintenance of an unencumbered 
assets to unsecured debt ratio.

Notes Due 2021 and 2024

On June 30, 2014, we completed a private placement of $250,000 of unsecured notes, consisting of $100,000 of 4.12% senior 
unsecured notes due 2021 and $150,000 of 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024). The proceeds 
were used to repay a portion of our unsecured revolving line of credit.

The  note  purchase  agreement  governing  the  Notes  Due  2021  and  2024  contains  customary  representations,  warranties  and 
covenants, and events of default. Pursuant to the terms of the note purchase agreement, we are subject to various financial covenants, 
some of which are based upon the financial covenants in effect in our primary credit facility, including the requirement to maintain 
the  following:  (i)  maximum  unencumbered,  secured  and  consolidated  leverage  ratios;  (ii)  minimum  interest  coverage  and 
unencumbered interest coverage ratios; and (iii) a minimum consolidated net worth.

As of December 31, 2016, management believes we were in compliance with the financial covenants under the Indenture and the 
note purchase agreements.

Unsecured Term Loans and Revolving Line of Credit

Unsecured Credit Facility

On January 6, 2016, we entered into our fourth amended and restated unsecured credit agreement with a syndicate of financial 
institutions led by KeyBank National Association serving as administrative agent and Wells Fargo Bank, National Association 
serving as syndication agent to provide for an unsecured credit facility aggregating $1,200,000 (Unsecured Credit Facility). Our 
Unsecured Credit Facility consists of a $750,000 unsecured revolving line of credit, a $250,000 unsecured term loan and a $200,000 
unsecured term loan and is priced on a leverage grid at a rate of LIBOR plus a credit spread. We received investment grade credit 
ratings from two rating agencies in 2014. In accordance with the unsecured credit agreement, we may elect to convert to an 
investment grade pricing grid. As of December 31, 2016, making such an election would have resulted in a higher interest rate 
and, as such, we have not made the election to convert to an investment grade pricing grid.

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Table of Contents

The following table summarizes the key terms of our Unsecured Credit Facility:

Unsecured Credit Facility

$250,000 unsecured term loan

$200,000 unsecured term loan

Maturity
Date

1/5/2021

Extension
Option

Extension
Fee

Credit
Spread

Unused Fee

Credit
Spread

Facility Fee

Leverage-Based Pricing

Ratings-Based Pricing

N/A

N/A

1.30% - 2.20%

5/11/2018

2 one year

0.15%

1.45% - 2.20%

N/A

N/A

0.90% - 1.75%

1.05% - 2.05%

N/A

N/A

$750,000 unsecured revolving line of credit

1/5/2020

2 six month

0.075%

1.35% - 2.25% 0.15% - 0.25% 0.85% - 1.55% 0.125% - 0.30%

Our Unsecured Credit Facility has a $400,000 accordion option that allows us, at our election, to increase the total credit facility 
up to $1,600,000, subject to (i) customary fees and conditions including, but not limited to, the absence of an event of default as 
defined in the agreement and (ii) our ability to obtain additional lender commitments.

The fourth amended and restated unsecured credit agreement (Unsecured Credit Agreement) contains customary representations, 
warranties and covenants, and events of default. Pursuant to the terms of the Unsecured Credit Agreement, we are subject to various 
financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated 
leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of December 31, 2016, management 
believes we were in compliance with the financial covenants and default provisions under the Unsecured Credit Agreement.

As of December 31, 2016, we had letter(s) of credit outstanding totaling $12,296 which serve as collateral for certain capital 
improvements and performance obligations on certain redevelopment projects, which will be satisfied upon completion of the 
projects, and reduced the available borrowings on our unsecured revolving line of credit.

Term Loan Due 2023

On November 22, 2016, we closed on a seven-year $200,000 unsecured term loan with a group of financial institutions, which 
funded on January 3, 2017. The Term Loan Due 2023 is priced on a leverage grid at a rate of LIBOR plus a credit spread ranging 
from 1.70% to 2.55%. In accordance with the term loan agreement (Term Loan Agreement), we may elect to convert to an investment 
grade pricing grid. As of December 31, 2016, making such an election would have resulted in a higher interest rate and, as such, 
we have not made the election to convert to an investment grade pricing grid. The Term Loan Due 2023 matures on November 
22, 2023 and has a $100,000 accordion option that allows us, at our election, to increase the total unsecured term loan up to 
$300,000, subject to customary fees and conditions, including the absence of an event of default as defined in the Term Loan 
Agreement.

The Term Loan Agreement contains customary representations, warranties and covenants, and events of default, including financial 
covenants that require us to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; and 
(ii) minimum fixed charge and unencumbered interest coverage ratios. As of December 31, 2016, management believes we were 
in compliance with the financial covenants and default provisions under the Term Loan Agreement.

In addition, subsequent to December 31, 2016, we entered into two agreements to swap a total of $200,000 of LIBOR-based 
variable rate debt to a fixed rate of 1.2628% plus the relevant credit spread through November 22, 2018.

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Debt Maturities

The following table shows the scheduled maturities and principal amortization of our indebtedness as of December 31, 2016 for 
each of the next five years and thereafter and the weighted average interest rates by year, as well as the fair value of our indebtedness 
as of December 31, 2016. The table does not reflect the impact of any 2017 debt activity, such as the defeasance of the IW JV 
portfolio of mortgages payable or the funding of the Term Loan Due 2023 on January 3, 2017.

2017

2018

2019

2020

2021

Thereafter

Total

Fair Value

Debt:

Fixed rate debt:

Mortgages payable (a)

Fixed rate term loan (b)

Unsecured notes payable (c)

Total fixed rate debt

35,023

11,463

433,982

4,334

$ 35,023

$ 11,463

$ 433,982

$

4,334

$ 23,249

$ 265,344

$ 773,395

$

833,210

—

—

—

—

—

—

—

—

250,000

100,000

373,249

—

600,000

865,344

250,000

700,000

250,000

679,212

1,723,395

1,762,422

Variable rate debt:

Variable rate term loan and
revolving line of credit

—

200,000

—

86,000

—

—

286,000

286,551

Total debt (d)

$ 35,023

$ 211,463

$ 433,982

$ 90,334

$ 373,249

$ 865,344

$2,009,395

$ 2,048,973

Weighted average interest rate on debt:

Fixed rate debt

Variable rate debt (e)

Total

4.83%

—

4.83%

6.51%

2.22%

2.45%

7.49%

—

7.49%

4.58%

2.12%

2.24%

2.73%

—

2.73%

4.36%

—

4.36%

4.82%

2.19%

4.44%

(a)  Excludes mortgage premium of $1,437 and discount of $(622), net of accumulated amortization, as of December 31, 2016.

(b)  $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert 

one-month floating rate LIBOR to a weighted average fixed rate of 0.6677% through December 31, 2017.

(c)  Excludes discount of $(971), net of accumulated amortization, as of December 31, 2016.

(d)  The weighted average years to maturity of consolidated indebtedness was 5.3 years as of December 31, 2016. Total debt excludes capitalized 
loan fees of $(11,314), net of accumulated amortization, as of December 31, 2016, which are included as a reduction to the respective debt 
balances, and the Term Loan Due 2023, which funded on January 3, 2017. The $39,578 difference between total debt outstanding and its 
fair value is primarily attributable to a $45,120 difference related to the IW JV portfolio of mortgages payable. These mortgages were 
scheduled to mature in 2019 and had an interest rate of 7.50% and an outstanding principal balance of $379,435 as of December 31, 2016. 
Subsequent to December 31, 2016, we defeased the IW JV portfolio of mortgages payable. As a result, the 45 properties that secured the 
mortgages payable as of December 31, 2016 are no longer encumbered by mortgages.

(e)  Represents interest rates as of December 31, 2016.

We plan on addressing our debt maturities through a combination of proceeds from asset dispositions, capital markets transactions 
and our unsecured revolving line of credit.

Distributions and Equity Transactions

Our distributions of current and accumulated earnings and profits for U.S. federal income tax purposes are taxable to shareholders, 
generally, as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction 
of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. We intend 
to continue to qualify as a REIT for U.S. federal income tax purposes. The Code generally requires that a REIT annually distributes 
to its shareholders at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding 
net capital gains. The Code imposes tax on any undistributed REIT taxable income.

To satisfy the requirements for qualification as a REIT and generally not be subject to U.S. federal income and excise tax, we 
intend  to  make  regular  quarterly  distributions  of  all,  or  substantially  all,  of  our  taxable  income  to  shareholders.  Our  future 
distributions will be at the sole discretion of our board of directors. When determining the amount of future distributions, we expect 
to consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future cash 
flow, (iii) our determination of near-term cash needs for debt repayments and potential future share repurchases, (iv) the market 
of available acquisitions of new properties and redevelopment, expansions and pad development opportunities, (v) the timing of 
significant re-leasing activities and the establishment of additional cash reserves for anticipated tenant allowances and general 
property capital improvements, (vi) our ability to continue to access additional sources of capital, (vii) the amount required to be 

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distributed to maintain our status as a REIT, which is a requirement of our unsecured credit agreement, and to avoid or minimize 
any income and excise taxes that we otherwise would be required to pay and (viii) the amount required to declare and pay in cash, 
or  set  aside  for  the  payment  of,  the  dividends  on  our  Series A  preferred  stock  for  all  past  dividend  periods.  Under  certain 
circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet the REIT 
distribution requirements.

In March 2013, we established an at-the-market (ATM) equity program under which we sold 5,547 shares of our Class A common 
stock during the year ended December 31, 2013. No shares were issued during the years ended December 31, 2014 and 2015 and 
the 2013 ATM equity program expired in November 2015.

In December 2015, we entered into a new ATM equity program under which we may issue and sell shares of our Class A common 
stock, having an aggregate offering price of up to $250,000, from time to time. Actual sales may depend on a variety of factors, 
including, among others, market conditions and the trading price of our Class A common stock. Any net proceeds are expected to 
be  used  for  general  corporate  purposes,  which  may  include  the  funding  of  acquisitions  and  redevelopment  activities  and  the 
repayment of debt, including our Unsecured Credit Facility. We did not sell any shares under our ATM equity program during the 
years ended December 31, 2016 and 2015. As of December 31, 2016, we had Class A common shares having an aggregate offering 
price of up to $250,000 remaining available for sale under our ATM equity program.

In December 2015, our board of directors authorized a common stock repurchase program under which we may repurchase, from 
time to time, up to a maximum of $250,000 of shares of our Class A common stock. The shares may be repurchased in the open 
market or in privately negotiated transactions and are canceled upon repurchase. The timing and actual number of shares repurchased 
will depend on a variety of factors, including price in absolute terms and in relation to the value of our assets, corporate and 
regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase 
program may be suspended or terminated at any time without prior notice. We did not repurchase any shares during the year ended 
December 31, 2015. During the year ended December 31, 2016, we repurchased 591 shares at an average price per share of $14.93
for a total of $8,841. As of December 31, 2016, $241,159 remained available under the repurchase program.

Capital Expenditures and Redevelopment Activity

We  anticipate  that  obligations  related  to  capital  improvements,  including  expansions  and  pad  developments,  at  our  operating 
properties in 2017 can be met with cash flows from operations, asset dispositions and working capital.

We  began  redevelopment  at  Reisterstown  Road  Plaza  and Towson  Circle  in  2016  and  have  three  active  expansions  and  pad 
developments. We have invested a total of approximately $12,357 in these projects, which are at various stages of completion, 
and based on our current plans and estimates, we anticipate that to complete these projects, it will require an additional $40,700 
to $43,700, net of proceeds from land sales, reimbursement from third parties and contributions from project partners, as applicable. 
We anticipate funding the redevelopments, expansions and pad developments with cash flows from operations, asset dispositions, 
working capital and proceeds from our unsecured revolving line of credit.

Dispositions

We  continue  to  execute  our  portfolio  repositioning  strategy  of  disposing  of  select  non-target  and  single-user  properties. The 
following table highlights our property dispositions during 2016, 2015 and 2014:

2016 Dispositions
2015 Dispositions
2014 Dispositions

Number of
Properties Sold
46
26
24

Square
Footage

3,013,900
3,917,200
2,490,100

Consideration
540,362
$
516,444
$
322,989
$

Aggregate
Proceeds, Net (a)
448,216
$
505,524
$
314,377
$

Debt
Extinguished
$
$
$

94,353 (b) (c)
25,724 (c)
9,713 (c)

(a)  Represents total consideration net of transaction costs. 2016 dispositions include the disposition of one development property, which was 
not under active development. 2015 dispositions include the disposition of two development properties, one of which had been held in a 
consolidated joint venture.

(b)  Represents The Gateway’s outstanding mortgage payable prior to the lender-directed sale of the property. Immediately prior to the disposition, 
the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan 
reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave 
accrued interest, resulting in a net gain on extinguishment of debt of $13,653.

(c)  Excludes $10,695, $95,881 and $114,404 of mortgages payable repayments or defeasances completed prior to disposition of the respective 

property for the years ended December 31, 2016, 2015 and 2014, respectively.

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In addition to the transactions presented in the preceding table, we received net proceeds of $2,549, $300 and $1,023 from other 
transactions, including condemnation awards and the sale of parcels at certain of our properties during the years ended December 31, 
2016, 2015 and 2014, respectively.

Acquisitions

We continue to execute our investment strategy of acquiring high quality, multi-tenant retail assets within our target markets. The 
following table highlights our asset acquisitions during 2016, 2015 and 2014:

2016 Acquisitions (b)
2015 Acquisitions (c)
2014 Acquisitions (d)

Number of
Assets Acquired
9
11
11

Square
Footage

1,102,300
1,179,800
1,339,400

Acquisition
Price

Pro Rata
Acquisition
Price (a)

Mortgage
Debt

$
$
$

408,308
463,136
348,061

$
$
$

408,308
463,136
289,561

$
$
$

15,971

$
— $
$

141,698

Pro Rata
Mortgage
Debt (a)

15,971
—
113,358

(a)  Includes amounts associated with the 2014 acquisition of our partner’s 80% ownership interest in our MS Inland unconsolidated joint 

venture, as well as acquisitions from unaffiliated third parties.

(b)  2016 acquisitions include the purchase of the following: 1) the fee interest in our Ashland & Roosevelt multi-tenant retail operating property 
that was previously subject to a ground lease with a third party, and 2) the anchor space improvements at our Woodinville Plaza multi-tenant 
retail operating property that was previously subject to a ground lease with us. The total number of properties in our portfolio was not 
affected by these transactions.

(c)  2015 acquisitions include the purchase of the following: 1) a land parcel at our Lake Worth Towne Crossing multi-tenant retail operating 
property, 2) a single-user outparcel located at our Southlake Town Square multi-tenant retail operating property that was subject to a ground 
lease with us prior to the transaction, and 3) a single-user outparcel located at our Royal Oaks Village II multi-tenant retail operating property. 
The total number of properties in our portfolio was not affected by these transactions.

(d)  2014 acquisitions include the purchase of the following: 1) the fee interest in our Bed Bath & Beyond Plaza multi-tenant retail operating 
property that was previously subject to a ground lease with a third party, 2) a single-user outparcel located at our Southlake Town Square 
multi-tenant retail operating property that was subject to a ground lease with us prior to the transaction, and 3) a parcel located at our 
Lakewood Towne Center multi-tenant retail operating property. The total number of properties in our portfolio was not affected by these 
transactions.

Summary of Cash Flows

Cash provided by operating activities
Cash provided by investing activities
Cash used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, at beginning of year
Cash and cash equivalents, at end of year

Cash Flows from Operating Activities

Year Ended December 31,
2015

Change

2016

$

$

263,748
17,537
(279,590)
1,695
51,424
53,119

$

$

$

265,813
25,288
(351,969)
(60,868)
112,292
51,424

(2,065)
(7,751)
72,379
62,563

Cash flows from operating activities consist primarily of net income from property operations, adjusted for the following, among 
others: (i) depreciation and amortization, (ii) provision for impairment of investment properties, (iii) gains on sales of investment 
properties and change in control of investment properties, and (iv) gains on extinguishment of debt and other liabilities. Net cash 
provided by operating activities in 2016 decreased $2,065 primarily due to the following:

• 

• 

• 

an $11,234 decrease in NOI, consisting of a decrease in NOI from properties that were sold or held for sale in 2015 and 
2016 and other properties not included in our same store portfolio of $22,349, partially offset by an increase in Same 
Store NOI of $11,115;

a $5,427 increase in cash bonuses paid; and

a $1,456 increase in cash paid for leasing fees and inducements;

partially offset by

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• 

• 

a $13,460 reduction in cash paid for interest; and

ordinary course fluctuations in working capital accounts;

Cash Flows from Investing Activities

Cash flows from investing activities consist primarily of proceeds from the sales of investment properties, net of cash paid to 
purchase investment properties and fund capital expenditures, tenant improvements and developments in progress, in addition to 
changes in restricted escrows. Net cash provided by investing activities in 2016 decreased $7,751 primarily due to the following:

• 

• 

a $55,059 decrease in proceeds from the sales of investment properties; and

a $21,950 net change in restricted escrow activity, of which $16,950 relates to acquisition deposits;

partially offset by

• 

a $72,649 decrease in cash paid to purchase investment properties.

We will continue to execute our investment strategy by pursuing targeted dispositions. The majority of the proceeds from disposition 
activity  in  2017  is  expected  to  be  used  to  acquire  high  quality,  multi-tenant  retail  assets  within  our  target  markets,  fund 
redevelopment, expansion and pad development activities, repay debt, potentially repurchase our common stock or redeem our 
preferred stock. In addition, tenant improvement costs associated with re-leasing vacant space may continue to be significant.

Cash Flows from Financing Activities

Cash flows from financing activities primarily consist of proceeds from our Unsecured Credit Facility and the issuance of debt 
instruments,  partially  offset  by  distribution  payments,  repayments  of  our  Unsecured  Credit  Facility,  principal  payments  on 
mortgages payable and the purchase of U.S. Treasury Securities in connection with defeasance of mortgages payable. Net cash 
used in financing activities in 2016 decreased $72,379 primarily due to the following:

• 

• 

• 

• 

• 

• 

a $175,457 decrease in principal payments on mortgages payable; and

a $75,005 decrease in the purchase of U.S. Treasury securities in connection with defeasance of mortgages payable;

partially offset by

a $114,000 decrease in net proceeds from our Unsecured Credit Facility;

a $48,815 decrease in proceeds from the issuance of unsecured notes related to a $200,000 private placement transaction 
in 2016 and a $248,815 underwritten public offering in 2015;

$8,841 paid in 2016 to repurchase common shares through our share repurchase program; and

a $6,513 increase in the payment of loan fees and deposits.

We plan to continue to address our debt maturities through a combination of proceeds from asset dispositions, capital markets 
transactions and our unsecured revolving line of credit.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

The following table presents our obligations and commitments to make future payments under our debt obligations and lease 
agreements as of December 31, 2016 and excludes the following:

• 

the impact of any 2017 debt activity, such as the defeasance of the IW JV portfolio of mortgages payable and the Term 
Loan Due 2023, which closed during the year ended December 31, 2016 and funded on January 3, 2017;

• 

recorded debt premiums, discounts and capitalized loan fees, which are not obligations;

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• 

• 

obligations related to development, redevelopment, expansions and pad site developments, as payments are only due 
upon satisfactory performance under the contracts; and

letters of credit totaling $12,296 which serve as collateral for certain capital improvements and performance obligations 
on certain redevelopment projects, which will be satisfied upon completion of the projects.

Long-term debt (a):

Fixed rate
Variable rate
Interest (d)

Operating lease obligations (e)

Less than
1 year (b)

1-3
years

3-5
years (c)

More than
5 years

Total

Payment due by period

$

$

35,023
—
89,595
7,853
132,471

$

$

445,445
200,000
165,684
15,999
827,128

$

$

377,583
86,000
88,913
16,843
569,339

$

$

865,344
—
112,753
376,939
1,355,036

$

$

1,723,395
286,000
456,945
417,634
2,883,974

(a)  Fixed and variable rate amounts for each year include scheduled principal amortization payments. Interest payments related to variable rate 

debt were calculated using interest rates as of December 31, 2016.

(b)  We plan on addressing our 2017 mortgages payable maturities through a combination of proceeds from asset dispositions, capital markets 

transactions and our unsecured revolving line of credit.

(c)  Included in fixed rate debt is $250,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate through two interest rate 

swaps through December 2017.

(d)  Represents expected interest payments on our consolidated debt obligations as of December 31, 2016, including any capitalized interest.

(e)  We lease land under non-cancellable leases at certain of our properties expiring in various years from 2028 to 2087, not inclusive of any 
available option period. In addition, unless we can purchase a fee interest in the underlying land or extend the terms of these leases before 
or at their expiration, we will lose our interest in the improvements and the right to operate these properties. We lease office space under 
non-cancellable leases expiring in various years from 2017 to 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These 
estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities 
at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. 
For  example,  significant  estimates  and  assumptions  have  been  made  with  respect  to  useful  lives  of  assets;  capitalization  of 
development costs; fair value measurements; provision for impairment, including estimates of holding periods, capitalization rates 
and discount rates (where applicable); provision for income taxes; recoverable amounts of receivables; deferred taxes and initial 
valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. 
Actual results could differ from these estimates.

Summary of Significant Accounting Policies

Critical Accounting Policies and Estimates

The following disclosure pertains to accounting policies and estimates we believe are most “critical” to the portrayal of our financial 
condition and results of operations and require our most difficult, subjective or complex judgments. These judgments often result 
from the need to make estimates about the effect of matters that are inherently uncertain. GAAP requires information in financial 
statements about accounting principles, methods used and disclosures pertaining to significant estimates. This discussion addresses 
our judgment pertaining to known trends, events or uncertainties which were taken into consideration upon the application of those 
policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions 
and assumptions.

Acquisition of Investment Property

We allocate the purchase price of each acquired investment property accounted for as a business combination based upon the 
estimated acquisition date fair value of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) 
building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease intangibles, 
(v) any assumed financing that is determined to be above or below market, (vi) the value of customer relationships and (vii) 
goodwill, if any. Transaction costs related to acquisitions accounted for as business combinations are expensed as incurred and 

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included within “General and administrative expenses” in the accompanying consolidated statements of operations and other 
comprehensive income.

We elected to early adopt ASU 2017-01, Business Combinations, on a prospective basis as of October 1, 2016. This new guidance 
clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not 
considered a business and, thus, accounted for as an asset acquisition as opposed to a business combination. Refer to the “Recently 
Adopted Accounting Pronouncements” section within Item 7. “Management’s Discussion and Analysis of Financial Condition 
and Results of Operations”. Under this new guidance, we expect most acquisitions of investment property will meet this screen 
and, thus, be accounted for as asset acquisitions. We allocate the purchase price of each acquired investment property that is 
accounted for as an asset acquisition based upon the relative fair value of the individual assets acquired and liabilities assumed, 
which generally include (i) land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above 
and below market lease intangibles, (v) any assumed financing that is determined to be above or below market and (vi) the value 
of customer relationships. Asset acquisitions do not give rise to goodwill and the related transaction costs are capitalized and 
included with the allocated purchase price.

For tangible assets acquired, including land, building and other improvements, we consider available comparable market and 
industry information in estimating the acquisition date fair value. We allocate a portion of the purchase price to the estimated 
acquired in-place lease value intangibles based on estimated lease execution costs for similar leases as well as lost rental payments 
during an assumed lease-up period. We also evaluate each acquired lease as compared to current market rates. If an acquired lease 
is determined to be above or below market, we allocate a portion of the purchase price to such above or below market leases based 
upon the present value of the difference between the contractual lease payments and estimated market rent payments over the 
remaining lease term. Renewal periods are included within the lease term in the calculation of above and below market lease 
intangibles if, based upon factors known at the acquisition date, market participants would consider it reasonably assured that the 
lessee would exercise such options. Fair value estimates used in acquisition accounting, including the discount rate used, require 
us to consider various factors, including, but not limited to, market knowledge, demographics, age and physical condition of the 
property, geographic location, size and location of tenant spaces within the acquired investment property and tenant profile. For 
acquisitions accounted for as business combinations, if, up to one year from the acquisition date, information regarding fair value 
of the assets acquired and liabilities assumed is received and estimates are refined, appropriate adjustments are made to the purchase 
price allocation on a prospective basis.

Impairment of Long-Lived Assets and Unconsolidated Joint Ventures

Our investment properties, including developments in progress, are reviewed for potential impairment at the end of each reporting 
period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each 
reporting period, we separately determine whether impairment indicators exist for each property. Examples of situations considered 
to be impairment indicators for both operating properties and developments in progress include, but are not limited to:

• 

• 

• 

• 

• 

• 

• 

• 

a substantial decline in or continued low occupancy rate or cash flow;

expected significant declines in occupancy in the near future;

continued difficulty in leasing space;

a significant concentration of financially troubled tenants;

a change in anticipated holding period;

a cost accumulation or delay in project completion date significantly above and beyond the original development or 
redevelopment estimate;

a significant decrease in market price not in line with general market trends; and

any other quantitative or qualitative events or factors deemed significant by our management or board of directors.

If the presence of one or more impairment indicators as described above is identified at the end of a reporting period or at any 
point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the 
estimated  future  undiscounted  cash  flows. An  investment  property  is  considered  to  be  impaired  when  the  estimated  future 
undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair 

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value of an impaired investment property, we make certain complex or subjective assumptions which include, but are not limited 
to:

• 

• 

• 

• 

• 

• 

• 

projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, 
competitive positioning and property location;

estimated holding period or various potential holding periods when considering probability-weighted scenarios;

projected capital expenditures and lease origination costs;

estimated interest and internal costs expected to be capitalized, dates of construction completion and grand opening dates 
for developments in progress;

projected cash flows from the eventual disposition of an operating property or development in progress using a property-
specific capitalization rate;

comparable selling prices; and

a property-specific discount rate.

We  did  not  have  any  unconsolidated  joint  ventures  as  of  December 31,  2016  and  2015.  When  we  do  hold  investments  in 
unconsolidated joint ventures, they are reviewed for potential impairment, in addition to impairment evaluations of the individual 
assets  underlying  these  investments,  each  reporting  period  or  whenever  events  or  changes  in  circumstances  warrant  such  an 
evaluation.

To determine whether any identified impairment is other-than-temporary, we consider whether we have the ability and intent to 
hold the investment until the carrying value is fully recovered. To the extent impairment has occurred, we will record an impairment 
charge calculated as the excess of the carrying value of the asset over its estimated fair value.

Cost Capitalization, Depreciation and Amortization Policies

Our policy is to review all expenses paid and capitalize any items which are deemed to be an upgrade or a tenant improvement, 
including internal salaries and related benefits of personnel directly involved in the upgrade or improvement. These costs are 
included in the investment properties financial statement caption as an addition to building and other improvements. We capitalized 
$1,152, $0 and $0 of internal salaries and related benefits of personnel directly involved in capital upgrades and tenant improvements 
during the years ended December 31, 2016, 2015 and 2014, respectively. In addition, we capitalized $423, $474 and $0 of internal 
leasing incentives, all of which were incremental to signed leases, during the years ended December 31, 2016, 2015 and 2014, 
respectively.

Depreciation expense is computed using the straight-line method. Building and other improvements are depreciated based upon 
estimated useful lives of 30 years for building and associated improvements and 15 years for site improvements and most other 
capital improvements. Tenant improvements, leasing fees and acquired in-place lease value intangibles are amortized on a straight-
line basis over the life of the related lease as a component of depreciation and amortization expense. Acquired above and below 
market lease intangibles are amortized on a straight-line basis over the life of the related lease, inclusive of renewal periods if 
market participants would consider it reasonably assured that the lessee would exercise such options, as an adjustment to rental 
income when we are the lessor. For acquired leases in which we are the lessee, any value attributable to above and below market 
lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to property operating 
expenses.

Development and Redevelopment Projects

Development and redevelopment projects are classified as developments in progress on the accompanying consolidated balance 
sheets and include (i) land held for future development, (ii) ground-up developments and (iii) redevelopment properties undergoing 
significant renovations and improvements. During the development or redevelopment period, we capitalize direct project costs 
such as construction, insurance, architectural and legal, as well as certain indirect project costs such as interest, other financing 
costs, real estate taxes and internal salaries and related benefits of personnel directly involved in the project. Capitalization of the 
indirect project costs ceases and all project-related costs included in developments in progress are reclassified to land and building 
and other improvements at the time when development or redevelopment is considered substantially complete. Additionally, we 

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make estimates as to the probability of completion of development and redevelopment projects. If we determine that completion 
of the development or redevelopment project is no longer probable, we expense any capitalized costs that are not recoverable.

We capitalized $302 of indirect project costs, which includes $44 of internal salaries and related benefits of personnel directly 
involved in the redevelopment projects and $69 of interest, related to redevelopment projects during the year ended December 31, 
2016. No costs were capitalized during the years ended December 31, 2015 and 2014.

A  project’s  classification  changes  from  development  to  operating  when  it  is  substantially  completed  and  held  available  for 
occupancy, but no later than one year from the completion of major construction activity. A property is considered stabilized upon 
reaching 90% occupancy, but no later than one year from the date it was classified as operating, and is included in our same store 
portfolio when it is stabilized for the periods presented.

Investment Properties Held for Sale

In determining whether to classify an investment property as held for sale, we consider whether: (i) management has committed 
to a plan to sell the investment property; (ii) the investment property is available for immediate sale in its present condition, subject 
only to terms that are usual and customary; (iii) we have initiated a program to locate a buyer; (iv) we believe that the sale of the 
investment property is probable; (v) we are actively marketing the investment property for sale at a price that is reasonable in 
relation to its current value, and (vi) actions required for us to complete the plan indicate that it is unlikely that any significant 
changes will be made.

If all of the above criteria are met, we classify the investment property as held for sale. When these criteria are met, we suspend 
depreciation (including depreciation for building improvements and tenant improvements) and amortization of acquired in-place 
lease value intangibles and any above or below market lease intangibles and we record the investment property held for sale at 
the lower of cost or net realizable value. The assets and liabilities associated with those investment properties that are classified 
as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period. Prior to our 
adoption of the revised discontinued operations pronouncement in 2014, if the operations and cash flow of the property had been, 
or  were  upon  consummation  of  such  sale,  eliminated  from  ongoing  operations  and  we  did  not  have  significant  continuing 
involvement in the operations of the property, then the operations for the periods presented were classified in the consolidated 
statements of operations and other comprehensive income as discontinued operations for all periods presented. However, the 
revised  discontinued  operations  pronouncement,  which  we  early  adopted  effective  January  1,  2014,  limits  what  qualifies  for 
discontinued operations presentation. As a result, the investment properties that were sold or classified as held for sale during 2015 
and 2014, except for Riverpark Phase IIA, which was classified as held for sale as of December 31, 2013 and, therefore, qualified 
for discontinued operations treatment under the previous standard, did not qualify for discontinued operations presentation and, 
as such, are reflected in continuing operations on the accompanying consolidated statements of operations and other comprehensive 
income.

Partially-Owned Entities

We consolidate partially-owned entities if they are VIEs in accordance with the Consolidation Topic of the FASB Accounting 
Standards Codification (ASC) and we are considered the primary beneficiary, we have voting control, the limited partners (or non-
managing members) do not have substantive participatory rights, or other conditions exist that indicate that we have control. 
Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling financial interest in, 
an entity in which we have a variable interest, to determine whether we have the power to direct the activities that most significantly 
impact the entity’s economic performance and if we have significant economic exposure to the risk and rewards of ownership. We 
assess our interests in VIEs on an ongoing basis to determine if the entity should be consolidated.

We did not have any VIEs as of December 31, 2016 and 2015. During the year ended December 31, 2016, we acquired three 
properties through consolidated VIEs in connection with 1031 Exchanges. We loaned $65,419, $39,215 and $23,522 to the VIEs 
to acquire Oak Brook Promenade, Tacoma South and Eastside, respectively. Each 1031 Exchange was completed during the year 
ended December 31, 2016 and, accordingly, no agreements remained outstanding related to 1031 Exchanges as of December 31, 
2016. At the completion of the 1031 Exchanges, the sole membership interests of the VIEs were assigned to us and the respective 
outstanding loans were extinguished, resulting in the entities being wholly owned by us and no longer considered VIEs.

Revenue Recognition

We commence revenue recognition on our leases based on a number of factors. In most cases, revenue recognition under a lease 
begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, this occurs on the lease 

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commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the 
nature of the leased asset and when revenue recognition under a lease begins. If we are the owner, for accounting purposes, of the 
tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession 
of the finished space, typically when the improvements are substantially complete. If we conclude that the lessee is the owner, for 
accounting purposes, of the tenant improvements, then the leased asset is the unimproved space and any tenant improvement 
allowances funded under the lease are accounted for as lease inducements which are amortized as a reduction to the revenue 
recognized over the term of the lease. In these circumstances, we commence revenue recognition when the lessee takes possession 
of the unimproved space for the lessee to construct their own improvements. We consider a number of factors to evaluate whether 
we or the lessee are the owner of the tenant improvements for accounting purposes. These factors include:

•  whether the lease stipulates how and on what a tenant improvement allowance may be spent;

•  whether the tenant or landlord retains legal title to the improvements;

• 

• 

the uniqueness of the improvements;

the expected economic life of the tenant improvements relative to the length of the lease;

•  who constructs or directs the construction of the improvements, and

•  whether the tenant or landlord is obligated to fund cost overruns.

The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. In making 
that determination, we consider all of the above factors. No one factor, however, necessarily establishes its determination.

Rental income, for only those leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over 
the term of each lease. The difference between such rental income earned and the cash rent due under the provisions of a lease is 
recorded as deferred rent receivable and is included as a component of “Accounts and notes receivable” in the accompanying 
consolidated balance sheets.

Reimbursements from tenants for recoverable real estate taxes and operating expenses are accrued as revenue in the period the 
applicable expenditures are incurred. We make certain assumptions and judgments in estimating the reimbursements at the end of 
each reporting period.

We record lease termination income in “Other property income” upon: (i) execution of a termination letter agreement; (ii) when 
all of the conditions of such agreement have been fulfilled; (iii) the tenant is no longer occupying the property and (iv) collectibility 
is reasonably assured. Upon early lease termination, we may record losses related to recognized tenant specific intangibles and 
other assets or adjust the remaining useful life of the assets if determined to be appropriate.

Our policy for percentage rental income is to defer recognition of contingent rental income until the specified target (i.e. breakpoint) 
that triggers the contingent rental income is achieved.

Profits from sales of real estate are not recognized under the full accrual method unless: (i) a sale is consummated; (ii) the buyer’s 
initial  and  continuing  investments  are  adequate  to  demonstrate  a  commitment  to  pay  for  the  property;  (iii)  our  receivable,  if 
applicable, is not subject to future subordination; (iv) we have transferred to the buyer the usual risks and rewards of ownership, 
and (v) we do not have substantial continuing involvement with the property.

Accounts and Notes Receivable and Allowance for Doubtful Accounts

Accounts and notes receivable balances outstanding include base rents, tenant reimbursements and deferred rent receivables. An 
allowance for the uncollectible portion of accounts receivable is determined on a tenant-specific basis through an analysis of 
balances outstanding, historical bad debt levels, tenant creditworthiness and current economic trends. Additionally, estimates of 
the expected recovery of pre-petition and post-petition claims with respect to tenants in bankruptcy are considered in assessing 
the collectibility of the related receivables. As these factors change, the allowance is subject to revision and may impact our results 
of operations. Management’s estimate of the collectibility of accounts and notes receivable is based on the best information available 
to management at the time of evaluation.

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Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code. As a REIT, we generally will not be subject 
to U.S. federal income tax on the taxable income we currently distribute to our shareholders.

We record a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax position 
meets a “more likely than not” recognition threshold.

Impact of Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Effective  January  1,  2016,  we  adopted  Accounting  Standards  Update  (ASU)  2015-02,  Consolidation,  which  revised  the 
consolidation guidance for all entities. This new guidance modifies the evaluation of whether limited partnerships and similar legal 
entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership 
and affects the consolidation analysis of reporting entities that are involved with VIEs. The adoption of this pronouncement under 
the modified retrospective method did not have any effect on our consolidated financial statements as we did not have any VIEs 
at  adoption  on  January  1,  2016;  however,  during  the  year  ended  December  31,  2016,  we  acquired  three  properties  through 
consolidated VIEs in connection with 1031 Exchanges and, accordingly, applied the revised consolidation guidance. See Note 3 
to the consolidated financial statements for further details.

Effective January 1, 2016, we adopted ASU 2015-16, Business Combinations, which requires the acquirer in a business combination 
to recognize in the period any adjustments to provisional amounts that are identified during the measurement period rather than 
retrospectively accounting for those adjustments. The adoption of this pronouncement did not have any effect on our consolidated 
financial statements.

We elected to early adopt ASU 2014-15, Presentation of Financial Statements – Going Concern, on January 1, 2016. This new 
guidance requires a company’s management to assess the entity’s ability to continue as a going concern for a period of one year 
after the date the financial statements are issued (or available to be issued) and provide certain disclosures if conditions or events 
raise substantial doubt about the entity’s ability to continue as a going concern. The adoption of this pronouncement did not have 
any effect on our consolidated financial statements.

We elected to early adopt ASU 2016-09, Compensation – Stock Compensation, on January 1, 2016. This new guidance allowed 
us to make an accounting policy election to account for share-based payment award forfeitures when they occur, which required 
a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning of the period of 
adoption and resulted in an adjustment of $17 to additional paid-in capital and accumulated distributions in excess of earnings as 
of January 1, 2016.

We elected to early adopt ASU 2017-01, Business Combinations, on a prospective basis as of October 1, 2016. This new guidance 
clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not 
considered a business and, thus, accounted for as an asset acquisition as opposed to a business combination. The screen requires 
that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable 
asset or a group of similar identifiable assets, the set is not considered a business. Under this new guidance, we expect most 
acquisitions of investment property will meet the screen and, thus, be accounted for as asset acquisitions. Consistent with existing 
guidance,  transaction  costs  associated  with  asset  acquisitions  are  capitalized  while  transaction  costs  associated  with  business 
combinations are expensed as incurred. The adoption of this pronouncement resulted in our acquisition of investment properties 
subsequent to October 1, 2016 to qualify as asset acquisitions and as such, the related transactions costs of $725 were capitalized.

Other Recently Issued Accounting Pronouncements

In May 2014 with subsequent updates issued in August 2015 and March, April, May and December 2016, the Financial Accounting 
Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers. This new guidance is effective January 
1, 2018, with early adoption permitted beginning January 1, 2017, and will replace existing revenue recognition standards. The 
sale of investment property and any non-lease components contained within lease agreements will be required to follow the new 
guidance; however, lease components of lease contracts will be excluded from this guidance. This pronouncement allows either 
a  full  or  a  modified  retrospective  method  of  adoption.  Expanded  quantitative  and  qualitative  disclosures  regarding  revenue 
recognition will be required for contracts that are subject to this guidance. While we anticipate additional disclosure, we do not 
expect the adoption of this pronouncement will have a material effect on our consolidated financial statements; however, we will 
continue to evaluate this assessment until the guidance becomes effective.

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In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall. This new guidance is effective January 1, 2018 
and will require companies to disclose the fair value of financial assets and financial liabilities measured at amortized cost in 
accordance with the exit price notion and will no longer require disclosure of the methods and significant assumptions used, 
including any changes, to estimate fair value. In addition, companies will be required to disclose all financial assets and financial 
liabilities  grouped  by  1)  measurement  category  and  2)  form  of  financial  instrument.  We  do  not  expect  the  adoption  of  this 
pronouncement will have a material effect on our consolidated financial statements; however, we will continue to evaluate this 
assessment until the guidance becomes effective.

In February 2016, the FASB issued ASU 2016-02, Leases. This new guidance is effective January 1, 2019, with early adoption 
permitted, and will require lessees to recognize a liability to make lease payments and a right-of-use asset, initially measured at 
the present value of lease payments, for both operating and financing leases. For leases with a term of 12 months or less, lessees 
will be permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease 
assets. Under this new pronouncement, lessor accounting will be largely unchanged from existing GAAP. The pronouncement 
requires a modified retrospective method of adoption, with some optional practical expedients. Upon adoption, we will recognize 
a lease liability and a right-of-use asset for operating leases where we are the lessee, such as ground leases and office and equipment 
leases. We will continue to evaluate the impact of this guidance until it becomes effective.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. This new guidance is effective January 1, 
2020, with early adoption permitted beginning January 1, 2019, and replaces the current incurred loss impairment methodology 
with a methodology that reflects expected credit losses. Financial assets that are measured at amortized cost will be required to be 
presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. 
In  addition, an entity must  consider broader  information in  developing its  expected credit loss  estimate, including the use  of 
forecasted information. Generally, the pronouncement requires a modified retrospective method of adoption. We will continue to 
evaluate the impact of this guidance until it becomes effective.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows. This new guidance is effective January 1, 2018, with 
early adoption permitted, and adds or clarifies guidance on the classification of certain cash receipts and payments in the statement 
of cash flows. Of the eight types of cash flows discussed in the new guidance, the classification of debt prepayment costs as a 
financing outflow will impact our consolidated statements of cash flows as this item is currently reflected as an operating outflow. 
The pronouncement requires a retrospective transition method of adoption. We will continue to evaluate the impact of this guidance 
until it becomes effective.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows. This new guidance is effective January 1, 2018, 
with early adoption permitted, and requires amounts that are generally described as restricted cash and restricted cash equivalents 
to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown 
on the statement of cash flows. The pronouncement requires a retrospective transition method of adoption. Upon adoption, we 
will include amounts generally described as restricted cash within the beginning-of-period, change and end-of-period total amounts 
on the statement of cash flows rather than within an activity on the statement of cash flows.

Inflation

Certain of our leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses 
enabling us to receive payment of additional rent calculated as a percentage of tenants’ gross sales above predetermined thresholds, 
which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the 
leases. While most escalation clauses are fixed in nature, some may include increases based upon changes in the consumer price 
index or similar inflation indices. In addition, many of our leases are for terms of less than 10 years, which permits us to seek to 
increase rents to market rates upon renewal. Most of our leases require the tenant to pay an allocable share of operating expenses, 
including common area maintenance costs, real estate taxes and insurance, thereby reducing our exposure to increases in costs 
and operating expenses resulting from inflation.

Subsequent Events

Subsequent to December 31, 2016, we:

• 

defeased the IW JV portfolio of mortgages payable, which had an outstanding principal balance of $379,435 and an 
interest rate of 7.50%, and incurred a defeasance premium of $60,198. See Note 7 to the accompanying consolidated 
financial statements for further details;

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Table of Contents

• 

• 

• 

• 

• 

• 

• 

• 

received funding in the amount of $200,000 on the Term Loan Due 2023. See Note 9 to the accompanying consolidated 
financial statements for further details;

entered into two agreements to swap a total of $200,000 of LIBOR-based variable rate debt to a fixed interest rate of 
1.2628% through November 22, 2018;

closed on the acquisition of Main Street Promenade, a 181,600 square foot multi-tenant retail property located in Naperville, 
Illinois, for a gross purchase price of $88,000 through a consolidated VIE to facilitate a potential 1031 Exchange;

closed on the disposition of Rite Aid Store (Eckerd), Culver Rd., a 10,900 square foot single-user retail operating property 
located in Rochester, New York, for a sales price of $500 with no anticipated gain on sale or additional impairment due 
to previously recognized impairment charges;

granted 88 restricted shares at a grant date fair value of $15.34 per share and 253 RSUs at a grant date fair value of $15.52 
per RSU to our executives in conjunction with our long-term equity compensation plan. The restricted shares will vest 
over three years and the RSUs granted are subject to a three-year performance period. Refer to Note 5 to the accompanying 
consolidated financial statements for additional details regarding the terms of the RSUs;

closed on a transaction whereby we received the fee interest in approximately 50 acres of land at Boulevard at the Capital 
Centre, an existing wholly-owned multi-tenant retail operating property located in Largo, Maryland. The property was 
previously subject to a ground lease with a third party for approximately 70 acres. In conjunction with this transaction, 
we paid consideration of $1,939 and agreed to shorten the term of the ground lease related to the remaining land;

declared the cash dividend for the first quarter of 2017 for our 7.00% Series A cumulative redeemable preferred stock. 
The dividend of $0.4375 per preferred share will be paid on March 31, 2017 to preferred shareholders of record at the 
close of business on March 20, 2017; and

declared the cash dividend for the first quarter of 2017 of $0.165625 per share on our outstanding Class A common stock, 
which will be paid on April 10, 2017 to Class A common shareholders of record at the close of business on March 27, 
2017.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We may be exposed to interest rate changes primarily as a result of our long-term debt that is used to maintain liquidity and fund 
our operations. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash 
flows and to lower our overall borrowing costs. To achieve our objectives, we borrow primarily at fixed rates, and in some cases 
variable rates with the ability to convert to fixed rates.

With regard to variable rate financing, we assess interest rate cash flow risk by continually identifying and monitoring changes in 
interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We maintain 
risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding or forecasted debt 
obligations as well as our potential offsetting hedge positions. The risk management control systems involve the use of analytical 
techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates on our future cash 
flows.

As of December 31, 2016, we had $250,000 of variable rate debt based on LIBOR that has been swapped to fixed rate debt through 
interest rate swaps. Our interest rate swaps as of December 31, 2016 are summarized in the following table:

Fixed rate portion of unsecured credit facility

$

250,000

Notional
Amount

Termination Date

December 31, 2017

Fair Value of
Derivative Asset

$

743

A decrease of 1% in market interest rates would result in a hypothetical decrease in our derivative asset of approximately $2,205.

The combined carrying amount of our mortgages payable, unsecured notes payable and Unsecured Credit Facility is approximately 
$51,048 lower than the fair value as of December 31, 2016.

We may use additional derivative financial instruments to hedge exposures to changes in interest rates. To the extent we do, we 
are exposed to market and credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a 
change in interest rates. The market risk associated with interest rate contracts is managed by establishing and monitoring parameters 
that limit the types and degree of market risk that may be undertaken. Credit risk is the failure of the counterparty to perform under 
the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates 
credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, we generally 
are not exposed to the credit risk of the counterparty. We minimize credit risk in derivative instruments by entering into transactions 
with highly rated counterparties or with the same party providing the financing, with the right of offset.

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Table of Contents

Debt Maturities

Our interest rate risk is monitored using a variety of techniques. The following table shows the scheduled maturities and principal 
amortization of our indebtedness as of December 31, 2016, for each of the next five years and thereafter and the weighted average 
interest rates by year, as well as the fair value of our indebtedness as of December 31, 2016. The table does not reflect the impact 
of any 2017 debt activity, such as the defeasance of the IW JV portfolio of mortgages payable or the funding of the Term Loan 
Due 2023 on January 3, 2017.

2017

2018

2019

2020

2021

Thereafter

Total

Fair Value

Debt:

Fixed rate debt:

Mortgages payable (a)

Fixed rate term loan (b)

Unsecured notes payable (c)

Total fixed rate debt

35,023

11,463

433,982

4,334

$ 35,023

$ 11,463

$ 433,982

$

4,334

$ 23,249

$ 265,344

$ 773,395

$

833,210

—

—

—

—

—

—

—

—

250,000

100,000

373,249

—

600,000

865,344

250,000

700,000

250,000

679,212

1,723,395

1,762,422

Variable rate debt:

Variable rate term loan and
revolving line of credit

—

200,000

—

86,000

—

—

286,000

286,551

Total debt (d)

$ 35,023

$ 211,463

$ 433,982

$ 90,334

$ 373,249

$ 865,344

$2,009,395

$ 2,048,973

Weighted average interest rate on debt:

Fixed rate debt

Variable rate debt (e)

Total

4.83%

—

4.83%

6.51%

2.22%

2.45%

7.49%

—

7.49%

4.58%

2.12%

2.24%

2.73%

—

2.73%

4.36%

—

4.36%

4.82%

2.19%

4.44%

(a)  Excludes mortgage premium of $1,437 and discount of $(622), net of accumulated amortization, as of December 31, 2016.

(b)  $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert 

one-month floating rate LIBOR to a weighted average fixed rate of 0.6677% through December 31, 2017.

(c)  Excludes discount of $(971), net of accumulated amortization, as of December 31, 2016.

(d)  The weighted average years to maturity of consolidated indebtedness was 5.3 years as of December 31, 2016. Total debt excludes capitalized 
loan fees of $(11,314), net of accumulated amortization, as of December 31, 2016, which are included as a reduction to the respective debt 
balances, and the Term Loan Due 2023, which funded on January 3, 2017. The $39,578 difference between total debt outstanding and its 
fair value is primarily attributable to a $45,120 difference related to the IW JV portfolio of mortgages payable. These mortgages were 
scheduled to mature in 2019 and had an interest rate of 7.50% and an outstanding principal balance of $379,435 as of December 31, 2016. 
Subsequent to December 31, 2016, we defeased the IW JV portfolio of mortgages payable. As a result, the 45 properties that secured the 
mortgages payable as of December 31, 2016 are no longer encumbered by mortgages.

(e)  Represents interest rates as of December 31, 2016.

We had $286,000 of variable rate debt, excluding $250,000 of variable rate debt that has been swapped to fixed rate debt and debt 
issuance costs, with interest rates varying based upon LIBOR, with a weighted average interest rate of 2.19% as of December 31, 
2016. An increase in the variable interest rate on this debt constitutes a market risk. If interest rates increase by 1% based on debt 
outstanding as of December 31, 2016, interest expense would increase by approximately $2,860 on an annualized basis.

The table incorporates only those interest rate exposures that existed as of December 31, 2016 and does not consider those interest 
rate exposures or positions that could arise after that date. The information presented herein is merely an estimate and has limited 
predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on the interest 
rate exposures that arise during future periods, our hedging strategies at that time and future changes in interest rates.

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Table of Contents

On November 22, 2016, we closed on a seven-year $200,000 unsecured term loan with a group of financial institutions, which 
funded on January 3, 2017. The Term Loan Due 2023 is priced on a leverage grid at a rate of LIBOR plus a credit spread ranging 
from 1.70% to 2.55%. In accordance with the Term Loan Agreement, we may elect to convert to an investment grade pricing grid. 
As of December 31, 2016, making such an election would have resulted in a higher interest rate and, as such, we have not made 
the election to convert to an investment grade pricing grid. The Term Loan Due 2023 matures on November 22, 2023 and has a 
$100,000 accordion option that allows us, at our election, to increase the total unsecured term loan up to $300,000, subject to 
customary fees and conditions, including the absence of an event of default as defined in the Term Loan Agreement.

In addition, subsequent to December 31, 2016, we entered into two agreements to swap a total of $200,000 of LIBOR-based 
variable rate debt to a fixed interest rate of 1.2628% plus the relevant credit spread through November 22, 2018.

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Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index

RETAIL PROPERTIES OF AMERICA, INC.

Report of Independent Registered Public Accounting Firm

Financial Statements

Consolidated Balance Sheets as of December 31, 2016 and 2015

Consolidated Statements of Operations and Other Comprehensive Income for the Years Ended 
December 31, 2016, 2015 and 2014

Consolidated Statements of Equity for the Years Ended December 31, 2016, 2015 and 2014

Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014

Notes to Consolidated Financial Statements

Valuation and Qualifying Accounts (Schedule II)

Real Estate and Accumulated Depreciation (Schedule III)

Schedules not filed:

57

58

59

60

61

63

99

100

All schedules other than the two listed in the Index have been omitted as the required information is either not applicable or the 
information is already presented in the accompanying consolidated financial statements or related notes thereto.

56

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Retail Properties of America, Inc.
Oak Brook, Illinois

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Retail  Properties  of America,  Inc.  and  subsidiaries  (the 
“Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations and other comprehensive 
income, equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the 
financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the 
responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial 
statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures 
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable 
basis for our opinion.

In  our  opinion,  such  consolidated  financial  statements  present  fairly,  in  all  material  respects,  the  financial  position  of  Retail 
Properties of America, Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash 
flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally 
accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to 
the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for and disclosure 
of discontinued operations for the year ended December 31, 2014 due to the adoption of Accounting Standards Update 2014-08, 
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for acquisitions 
as of October 1, 2016 due to the adoption of Accounting Standards Update 2017-01, Business Combinations.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 
Company’s internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control 
– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report 
dated February 15, 2017 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 15, 2017

57

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.
Consolidated Balance Sheets
(in thousands, except par value amounts)

Assets
Investment properties:

Land
Building and other improvements
Developments in progress

Less accumulated depreciation

Net investment properties
Cash and cash equivalents
Accounts and notes receivable (net of allowances of $6,886 and $7,910, respectively)
Acquired lease intangible assets, net
Assets associated with investment properties held for sale
Other assets, net
Total assets

Liabilities and Equity
Liabilities:

Mortgages payable, net
Unsecured notes payable, net
Unsecured term loans, net
Unsecured revolving line of credit
Accounts payable and accrued expenses
Distributions payable
Acquired lease intangible liabilities, net
Liabilities associated with investment properties held for sale
Other liabilities

Total liabilities

Commitments and contingencies (Note 17)

Equity:

Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative

redeemable preferred stock, 5,400 shares issued and outstanding as of December 31, 2016
and 2015; liquidation preference $135,000

Class A common stock, $0.001 par value, 475,000 shares authorized, 236,770 and 237,267

shares issued and outstanding as of December 31, 2016 and 2015, respectively

Additional paid-in capital
Accumulated distributions in excess of earnings
Accumulated other comprehensive income (loss)

Total equity
Total liabilities and equity

See accompanying notes to consolidated financial statements

December 31,
2016

December 31,
2015

$

$

$

1,191,403
4,284,664
23,439
5,499,506
(1,443,333)
4,056,173
53,119
78,941
142,015
30,827
91,898
4,452,973

769,184
695,143
447,598
86,000
83,085
39,222
105,290
864
74,501
2,300,887

$

$

$

1,254,131
4,428,554
5,157
5,687,842
(1,433,195)
4,254,647
51,424
82,804
138,766
—
93,610
4,621,251

1,123,136
495,576
447,526
100,000
69,800
39,297
114,834
—
75,745
2,465,914

5

5

237
4,927,155
(2,776,033)
722
2,152,086
4,452,973

237
4,931,395
(2,776,215)
(85)
2,155,337
4,621,251

$

$

58

 
 
 
 
 
 
 
 
 
 
Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.
Consolidated Statements of Operations and Other Comprehensive Income
(in thousands, except per share amounts)

Revenues

Rental income
Tenant recovery income
Other property income

Total revenues

Expenses

Operating expenses
Real estate taxes
Depreciation and amortization
Provision for impairment of investment properties
General and administrative expenses

Total expenses

Operating income

Gain on extinguishment of debt
Gain on extinguishment of other liabilities
Equity in loss of unconsolidated joint ventures, net
Gain on change in control of investment properties
Interest expense
Other income, net
Income from continuing operations

Discontinued operations:

Loss, net
Gain on sales of investment properties

Income from discontinued operations
Gain on sales of investment properties
Net income
Net income attributable to noncontrolling interest
Net income attributable to the Company
Preferred stock dividends
Net income attributable to common shareholders

Earnings per common share – basic and diluted

Continuing operations
Discontinued operations

Net income per common share attributable to common shareholders

Net income
Other comprehensive income:

Net unrealized gain on derivative instruments (Note 10)

Comprehensive income
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to the Company

Year Ended December 31,
2015

2014

2016

455,658
118,569
8,916
583,143

85,895
81,774
224,430
20,376
44,522
456,997

126,146

13,653
6,978
—
—
(109,730)
63
37,110

—
—
—
129,707
166,817
—
166,817
(9,450)
157,367

0.66
—
0.66

166,817

807
167,624
—
167,624

$

$

$

$

$

$

472,344
119,536
12,080
603,960

94,780
82,810
214,706
19,937
50,657
462,890

141,070

—
—
—
—
(138,938)
1,700
3,832

—
—
—
121,792
125,624
(528)
125,096
(9,450)
115,646

0.49
—
0.49

125,624

452
126,076
(528)
125,548

$

$

$

$

$

$

474,684
115,719
10,211
600,614

96,798
78,773
215,966
72,203
34,229
497,969

102,645

—
4,258
(2,088)
24,158
(133,835)
5,459
597

(148)
655
507
42,196
43,300
—
43,300
(9,450)
33,850

0.14
—
0.14

43,300

201
43,501
—
43,501

$

$

$

$

$

$

Weighted average number of common shares outstanding – basic

236,651

236,380

236,184

Weighted average number of common shares outstanding – diluted

236,951

236,382

236,187

See accompanying notes to consolidated financial statements

59

 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock

Class A
Common Stock

Shares

Amount

Shares

Amount

Accumulated
Distributions
in Excess of
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Total
Shareholders’
Equity

Noncontrolling
Interest

Total
Equity

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.
Consolidated Statements of Equity
(in thousands, except per share amounts)

Balance as of January 1, 2014
Net income
Other comprehensive income
Distributions declared to preferred shareholders

($1.75 per share)

Distributions declared to common shareholders

($0.6625 per share)

Issuance of common stock, net of offering costs
Issuance of restricted shares
Exercise of stock options
Stock-based compensation expense, net of forfeitures
Shares withheld for employee taxes
Balance as of December 31, 2014

Net income
Other comprehensive income
Distribution upon dissolution of consolidated

joint venture

Distributions declared to preferred shareholders

($1.75 per share)

Distributions declared to common shareholders

($0.6625 per share)

Issuance of common stock, net of offering costs
Issuance of restricted shares
Stock-based compensation expense, net of forfeitures
Shares withheld for employee taxes
Balance as of December 31, 2015

Cumulative effect of accounting change
Net income
Other comprehensive income
Distributions declared to preferred shareholders

($1.75 per share)

Distributions declared to common shareholders

($0.6625 per share)

Issuance of common stock, net of offering costs
Shares repurchased through share repurchase program
Issuance of restricted shares
Exercise of stock options
Stock-based compensation expense, net of forfeitures
Shares withheld for employee taxes
Balance as of December 31, 2016

$

5,400
—
—

—

—

—
—
—
—
—
5,400

$

$

— $
—

—

—

—

—
—
—
—
5,400

$

— $
—
—

—

—

—
—
—
—
—
—
5,400

$

5
—
—

—

—

—
—
—
—
—
5

—
—

—

—

—

—
—
—
—
5

—
—
—

—

—

—
—
—
—
—
—
5

$

236,302
—
—

—

—

—
303
2
—
(5)
236,602

$

236
—
—

—

—

—
1
—
—
—
237

Additional
Paid-in
Capital

$ 4,919,633
—
—

—

—

(145)
—
23
3,420
(67)
$ 4,922,864

$

$

$

(2,611,796)
43,300
—

(9,450)

(156,742)

—
—
—
—
—
(2,734,688)

— $
—

— $
—

— $
—

125,096
—

—

—

—

—
801
(4)
(132)
237,267

$

— $
—
—

—

—

—
(591)
274
2
(10)
(172)
$ 236,770

$

—

—

—

—
—
—
—
237

—

—

—

(216)
—
10,755
(2,008)
$ 4,931,395

17
—
—

—

—

— $
—
—

—

—

—
—
—
—
—
—
237

(100)
(8,841)
—
23
7,209
(2,548)
$ 4,927,155

—

(9,450)

(157,173)

—
—
—
—
(2,776,215)

(17)
166,817
—

(9,450)

(157,168)

—
—
—
—
—
—
(2,776,033)

$

$

$

$

$

$

$

$

See accompanying notes to consolidated financial statements

60

$

2,308,834
43,300
201

(738)
—
201

—

—

—
—
—
—
—
(537)

$

$

2,307,340
43,300
201

(9,450)

(156,742)

(145)
1
23
3,420
(67)
2,187,881

— $
452

125,096
452

$

$

$

1,494
—
—

—

—

—
—
—
—
—
1,494

528
—

$

$

—

—

—

—
—
—
—
(85)

$

— $
—
807

—

—

—
—
—
—
—
—
722

$

—

(2,022)

(9,450)

(157,173)

(216)
—
10,755
(2,008)
2,155,337

$

— $

166,817
807

(9,450)

(157,168)

(100)
(8,841)
—
23
7,209
(2,548)
2,152,086

$

—

—

—
—
—
—
— $

— $
—
—

—

—

—
—
—
—
—
—
— $

(9,450)

(156,742)

(145)
1
23
3,420
(67)
2,189,375

125,624
452

(2,022)

(9,450)

(157,173)

(216)
—
10,755
(2,008)
2,155,337

—
166,817
807

(9,450)

(157,168)

(100)
(8,841)
—
23
7,209
(2,548)
2,152,086

 
 
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RETAIL PROPERTIES OF AMERICA, INC.
Consolidated Statements of Cash Flows
(in thousands)

Year Ended December 31,
2015

2014

2016

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities

$

166,817

$

125,624

$

43,300

(including discontinued operations):
Depreciation and amortization
Provision for impairment of investment properties
Gain on sales of investment properties
Gain on extinguishment of debt
Gain on extinguishment of other liabilities
Gain on change in control of investment properties
Amortization of loan fees and debt premium and discount, net
Amortization of stock-based compensation
Premium paid in connection with defeasance of mortgages payable
Equity in loss of unconsolidated joint ventures, net
Distributions on investments in unconsolidated joint ventures
Payment of leasing fees and inducements
Changes in accounts receivable, net
Changes in accounts payable and accrued expenses, net
Changes in other operating assets and liabilities, net
Other, net

Net cash provided by operating activities

Cash flows from investing activities:
Changes in restricted escrows, net
Purchase of investment properties
Capital expenditures and tenant improvements
Proceeds from sales of investment properties
Investment in developments in progress
Investment in unconsolidated joint ventures
Other, net

Net cash provided by investing activities

Cash flows from financing activities:
Proceeds from mortgages payable
Principal payments on mortgages payable
Proceeds from unsecured notes payable
Proceeds from unsecured credit facility
Repayments of unsecured credit facility
Payment of loan fees and deposits, net
Purchase of U.S. Treasury securities in connection with defeasance of mortgages payable
Distributions paid
Shares repurchased through share repurchase program
Other, net

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, at beginning of year
Cash and cash equivalents, at end of year

61

224,430
20,376
(129,707)
(13,653)
(6,978)
—
5,781
7,209
1,735
—
—
(9,640)
(1,918)
2,007
(1,776)
(935)
263,748

394
(381,436)
(51,768)
450,765
(1,362)
—
944
17,537

—
(266,033)
200,000
622,500
(636,500)
(8,756)
(12,430)
(166,693)
(8,841)
(2,837)
(279,590)

214,706
19,937
(121,792)
—
—
—
5,129
10,755
17,343
—
—
(8,184)
4,420
1,976
(469)
(3,632)
265,813

22,344
(454,085)
(45,649)
505,824
(2,371)
—
(775)
25,288

1,049
(441,490)
248,815
610,000
(510,000)
(2,243)
(87,435)
(166,513)
—
(4,152)
(351,969)

215,966
72,203
(42,851)
—
(4,258)
(24,158)
4,926
3,420
1,322
2,088
1,360
(8,523)
(5,762)
3,220
(7,499)
(740)
254,014

(16,757)
(172,989)
(44,442)
315,400
(2,992)
(25)
(295)
77,900

3,541
(192,244)
250,000
375,500
(540,500)
(1,615)
(6,152)
(166,143)
—
(199)
(277,812)

1,695
51,424
53,119

$

(60,868)
112,292
51,424

$

54,102
58,190
$
112,292
(continued)

 
 
 
 
 
 
 
 
 
Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.
Consolidated Statements of Cash Flows
(in thousands)

Year Ended December 31,
2015

2014

2016

Supplemental cash flow disclosure, including non-cash activities:

Cash paid for interest, net of interest capitalized

Distributions payable

Accrued capital expenditures and tenant improvements

Accrued leasing fees and inducements

Accrued redevelopment costs

Amounts reclassified to developments in progress

Developments in progress placed in service

U.S. Treasury securities transferred in connection with defeasance of mortgages payable

Defeasance of mortgages payable

Purchase of investment properties (after credits at closing and including acquisition

of our partners’ joint venture interests):
Land, building and other improvements, net
Accounts receivable, acquired lease intangibles and other assets
Accounts payable, acquired lease intangibles and other liabilities
Mortgages payable assumed, net
Gain on change in control of investment properties

$

$

$

$

$

$

$

$

$

101,789

39,222

9,286

952

4,816

17,261

$

$

$

$

$

$

115,249

39,297

6,079

$

$

$

127,645

39,187

6,731

— $

— $

— $

—

—

—

4,047

6,152

4,830

— $

2,288

12,430

10,695

$

$

87,435

70,092

$

$

$

$ (375,022) $ (442,763) $ (337,906)
(31,116)
25,390
146,485
24,158
$ (381,436) $ (454,085) $ (172,989)

(47,498)
36,176
—
—

(40,989)
19,259
15,316
—

Proceeds from sales of investment properties:

Net investment properties
Accounts receivable, acquired lease intangibles and other assets
Accounts payable, acquired lease intangibles and other liabilities
Deferred gains
Mortgage debt forgiven or assumed
Gain on extinguishment of debt
Gain on sales of investment properties

$

$

393,680
18,183
(11,605)
1,500
(94,353)
13,653
129,707
450,765

$

$

379,419
8,959
(4,378)
32
—
—
121,792
505,824

$

$

265,127
12,053
(4,631)
—
—
—
42,851
315,400

See accompanying notes to consolidated financial statements

62

 
 
 
 
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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

(1) ORGANIZATION AND BASIS OF PRESENTATION

Retail Properties of America, Inc. (the Company) was formed on March 5, 2003 and its primary purpose is to own and operate 
high quality, strategically located shopping centers in the United States.

The Company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended 
(the Code). The Company believes it qualifies for taxation as a REIT and, as such, the Company generally will not be subject to 
U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT in any 
taxable year, the Company will be subject to U.S. federal income tax on its taxable income. Even if the Company qualifies for 
taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and U.S. 
federal income and excise taxes on its undistributed income. The Company has one wholly-owned subsidiary that has jointly 
elected to be treated as a taxable REIT subsidiary (TRS) and is subject to U.S. federal, state and local income taxes at regular 
corporate tax rates. The income tax expense incurred by the TRS did not have a material impact on the Company’s accompanying 
consolidated financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) 
requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets 
and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the 
reported amounts of revenues and expenses during the reporting periods. For example, significant estimates and assumptions have 
been  made  with  respect  to  useful  lives  of  assets,  capitalization  of  development  costs,  fair  value  measurements,  provision  for 
impairment, including estimates of holding periods, capitalization rates and discount rates (where applicable), provision for income 
taxes, recoverable amounts of receivables, deferred taxes and initial valuations and related amortization periods of deferred costs 
and intangibles, particularly with respect to property acquisitions. Actual results could differ from these estimates.

All share amounts and dollar amounts in the consolidated financial statements and notes thereto are stated in thousands with the 
exception of per share amounts and per square foot amounts. Square foot and per square foot amounts are unaudited.

The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries 
and any consolidated variable interest entities (VIEs). Wholly-owned subsidiaries generally consist of limited liability companies 
(LLCs), limited partnerships (LPs) and statutory trusts.

The Company’s property ownership as of December 31, 2016 is summarized below:

Retail operating properties (a)
Office properties

Total operating properties

Redevelopment properties

Wholly-owned
156
1
157

2

(a)  Excludes two wholly-owned operating properties classified as held for sale as of December 31, 2016.

Intercompany balances and transactions have been eliminated in consolidation. Investments in real estate joint ventures in which 
the Company has the ability to exercise significant influence, but does not have a controlling financial interest, are accounted for 
pursuant to the equity method of accounting. Accordingly, the Company’s share of the loss of these unconsolidated joint ventures 
is included in “Equity in loss of unconsolidated joint ventures, net” in the accompanying consolidated statements of operations 
and other comprehensive income. Refer to Note 11 to the consolidated financial statements for further discussion.

Noncontrolling interest is the portion of equity in a consolidated subsidiary not attributable, directly or indirectly, to the Company. 
In the consolidated statements of operations and other comprehensive income, revenues, expenses and net income or loss from 
less-than-wholly-owned consolidated subsidiaries are reported at the consolidated amounts, including both the amounts attributable 
to  common  shareholders  and  noncontrolling  interests.  Consolidated  statements  of  equity  are  included  in  the  annual  financial 
statements, including beginning balances, activity for the period and ending balances for total shareholders’ equity, noncontrolling 
interests and total equity. Noncontrolling interests are adjusted for additional contributions from and distributions to noncontrolling 
interest holders, as well as the noncontrolling interest holders’ share of the net income or loss of each respective entity, as applicable. 

63

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The Company evaluates the classification and presentation of noncontrolling interests associated with consolidated joint venture 
investments, if any, on an ongoing basis as facts and circumstances necessitate.

On October 29, 2015, the Company dissolved its remaining less-than-wholly owned consolidated joint venture concurrent with 
the sale of Green Valley Crossing to an affiliate of the joint venture partner. The Company was entitled to a preferred return on its 
capital contributions to the entity. The noncontrolling interest holder was allocated $528 as its share of the gain on sale of the 
development property and received a distribution of $2,022 upon dissolution of the joint venture. No adjustments to the carrying 
value of the noncontrolling interest for contributions, distributions or allocation of net income or loss were made during the year 
ended December 31, 2014. As of December 31, 2016, the Company did not have any less-than-wholly-owned consolidated entities.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investment Properties:  Investment properties are recorded at cost less accumulated depreciation. Ordinary repairs and maintenance 
are expensed as incurred. Expenditures for significant improvements, including internal salaries and related benefits of personnel 
directly involved in the improvements, are capitalized.

The Company allocates the purchase price of each acquired investment property accounted for as a business combination based 
upon the estimated acquisition date fair value of the individual assets acquired and liabilities assumed, which generally include 
(i) land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease 
intangibles, (v) any assumed financing that is determined to be above or below market, (vi) the value of customer relationships 
and (vii) goodwill, if any. Transaction costs related to acquisitions accounted for as business combinations are expensed as incurred 
and included within “General and administrative expenses” in the accompanying consolidated statements of operations and other 
comprehensive income.

The Company elected to early adopt ASU 2017-01, Business Combinations, on a prospective basis as of October 1, 2016. This 
new guidance clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities 
is not considered a business and, thus, accounted for as an asset acquisition as opposed to a business combination. Refer to the 
“Recently Adopted Accounting Pronouncements” section within Note 2 to the consolidated financial statements. Under this new 
guidance, the Company expects most acquisitions of investment property will meet this screen and, thus, be accounted for as asset 
acquisitions. The Company allocates the purchase price of each acquired investment property that is accounted for as an asset 
acquisition based upon the relative fair value of the individual assets acquired and liabilities assumed, which generally include (i) 
land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease 
intangibles, (v) any assumed financing that is determined to be above or below market and (vi) the value of customer relationships. 
Asset acquisitions do not give rise to goodwill and the related transaction costs are capitalized and included with the allocated 
purchase price.

For  tangible  assets  acquired,  including  land,  building  and  other  improvements,  the  Company  considers  available  comparable 
market and industry information in estimating acquisition date fair value. The Company allocates a portion of the purchase price 
to the estimated acquired in-place lease value intangibles based on estimated lease execution costs for similar leases as well as 
lost rental payments during an assumed lease-up period. The Company also evaluates each acquired lease as compared to current 
market rates. If an acquired lease is determined to be above or below market, the Company allocates a portion of the purchase 
price to such above or below market leases based upon the present value of the difference between the contractual lease payments 
and estimated market rent payments over the remaining lease term. Renewal periods are included within the lease term in the 
calculation of above and below market lease values if, based upon factors known at the acquisition date, market participants would 
consider it reasonably assured that the lessee would exercise such options. Fair value estimates used in acquisition accounting, 
including the discount rate used, require the Company to consider various factors, including, but not limited to, market knowledge, 
demographics, age and physical condition of the property, geographic location, size and location of tenant spaces within the acquired 
investment  property  and  tenant  profile.  For  acquisitions  accounted  for  as  business  combinations,  if,  up  to  one  year  from  the 
acquisition date, information regarding fair value of the assets acquired and liabilities assumed is received and estimates are refined, 
appropriate adjustments are made to the purchase price allocation on a prospective basis.

The portion of the purchase price allocated to acquired in-place lease value intangibles is amortized on a straight-line basis over 
the life of the related lease as a component of depreciation and amortization expense. The Company incurred amortization expense 
pertaining to acquired in-place lease value intangibles of $27,443, $25,913 and $28,977 for the years ended December 31, 2016, 
2015 and 2014, respectively.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

With respect to acquired leases in which the Company is the lessor, the portion of the purchase price allocated to acquired above 
and below market lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to rental 
income. Amortization pertaining to above market lease intangibles of $4,406, $4,807 and $4,170 for the years ended December 31, 
2016, 2015 and 2014, respectively, was recorded as a reduction to rental income. Amortization pertaining to below market lease 
intangibles of $7,396, $8,428 and $6,246 for the years ended December 31, 2016, 2015 and 2014, respectively, was recorded as 
an increase to rental income.

With respect to acquired leases in which the Company is the lessee, the portion of the purchase price allocated to acquired above 
and below market ground lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment 
to property operating expenses. Amortization pertaining to above market ground lease intangibles of $560, $560 and $560 for the 
years ended December 31, 2016, 2015 and 2014, respectively, was recorded as a reduction to property operating expenses.

The following table presents the amortization during the next five years and thereafter related to the acquired lease intangible 
assets and liabilities for properties owned as of December 31, 2016:

Amortization of:

Acquired above market lease intangibles (a)

Acquired in-place lease value intangibles (a)

Acquired lease intangible assets, net (b)

Acquired below market lease intangibles (a)

Acquired ground lease intangibles (c)

Acquired lease intangible liabilities, net (b)

2017

2018

2019

2020

2021

Thereafter

Total

$

$

$

$

4,474

22,627

27,101

(6,124)

(560)

(6,684)

$

$

$

$

3,850

17,509

21,359

(5,849)

(560)

(6,409)

$

$

$

$

2,527

12,473

15,000

(5,545)

(560)

(6,105)

$

$

$

$

1,890

10,324

12,214

(5,369)

(560)

(5,929)

$

$

$

$

1,373

9,022

10,395

(5,177)

(560)

(5,737)

$

$

$

$

5,368

50,578

55,946

(64,208)

(10,218)

$

$

$

19,482

122,533

142,015

(92,272)

(13,018)

(74,426)

$ (105,290)

(a)  Represents the portion of the purchase price with respect to acquired leases in which the Company is the lessor. The amortization of acquired 
above and below market lease intangibles is recorded as an adjustment to rental income and the amortization of acquired in-place lease 
value intangibles is recorded to depreciation and amortization expense.

(b)  Acquired lease intangible assets, net and acquired lease intangible liabilities, net are presented net of $296,309 and $50,672 of accumulated 

amortization, respectively, as of December 31, 2016.

(c)  Represents the portion of the purchase price with respect to acquired leases in which the Company is the lessee. The amortization is recorded 

as an adjustment to property operating expenses.

Depreciation expense is computed using the straight-line method. Building and other improvements are depreciated based upon 
estimated useful lives of 30 years for building and associated improvements and 15 years for site improvements and most other 
capital improvements. Tenant improvements and leasing fees, including capitalized internal leasing incentives, are amortized on 
a straight-line basis over the life of the related lease as a component of depreciation and amortization expense. The Company 
capitalized $423, $474 and $0 of internal leasing incentives, all of which were incremental to signed leases, during the years ended 
December 31, 2016, 2015 and 2014, respectively.

Impairment  of  Long-Lived  Assets  and  Unconsolidated  Joint  Ventures:    The  Company’s  investment  properties,  including 
developments in progress, are reviewed for potential impairment at the end of each reporting period or whenever events or changes 
in  circumstances  indicate  that  the  carrying  value  may  not  be  recoverable. At  the  end  of  each  reporting  period,  the  Company 
separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment 
indicators for both operating properties and developments in progress include, but are not limited to:

• 

• 

• 

• 

• 

a substantial decline in or continued low occupancy rate or cash flow;

expected significant declines in occupancy in the near future;

continued difficulty in leasing space;

a significant concentration of financially troubled tenants;

a change in anticipated holding period;

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

• 

• 

• 

a cost accumulation or delay in project completion date significantly above and beyond the original development or 
redevelopment estimate;

a significant decrease in market price not in line with general market trends; and

any other quantitative or qualitative events or factors deemed significant by the Company’s management or board of 
directors.

If the presence of one or more impairment indicators as described above is identified at the end of a reporting period or at any 
point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the 
estimated  future  undiscounted  cash  flows. An  investment  property  is  considered  to  be  impaired  when  the  estimated  future 
undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair 
value of an impaired investment property, the Company makes certain complex or subjective assumptions which include, but are 
not limited to:

• 

• 

• 

• 

• 

• 

• 

projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, 
competitive positioning and property location;

estimated holding period or various potential holding periods when considering probability-weighted scenarios;

projected capital expenditures and lease origination costs;

estimated interest and internal costs expected to be capitalized, dates of construction completion and grand opening dates 
for developments in progress;

projected cash flows from the eventual disposition of an operating property or development in progress using a property-
specific capitalization rate;

comparable selling prices; and

a property-specific discount rate.

The Company did not have any unconsolidated joint ventures as of December 31, 2016 and 2015. When the Company does hold 
investments in unconsolidated joint ventures, they are reviewed for potential impairment, in addition to impairment evaluations 
of the individual assets underlying these investments, each reporting period or whenever events or changes in circumstances warrant 
such an evaluation.

To determine whether any identified impairment is other-than-temporary, the Company considers whether it has the ability and 
intent to hold the investment until the carrying value is fully recovered. To the extent impairment has occurred, the Company will 
record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value.

Below is a summary of impairment charges recorded during the years ended December 31, 2016, 2015 and 2014:

Year Ended December 31,
2015

2014

2016

Impairment of consolidated properties (a)

$

20,376

$

19,937

$

72,203

(a)  Included in “Provision for impairment of investment properties” in the accompanying consolidated statements of operations and other 

comprehensive income.

The Company’s assessment of impairment as of December 31, 2016 was based on the most current information available to the 
Company. If the operating conditions mentioned above deteriorate or if the Company’s expected holding period for assets change, 
subsequent tests for impairment could result in additional impairment charges in the future. The Company can provide no assurance 
that material impairment charges with respect to the Company’s investment properties will not occur in 2017 or future periods. 
Based upon current market conditions, certain of the Company’s properties may have fair values less than their carrying amounts. 
However, based on the Company’s plans with respect to those properties, the Company believes that their carrying amounts are 

66

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

recoverable and therefore, under applicable GAAP guidance, no additional impairment charges were recorded. Accordingly, the 
Company will continue to monitor circumstances and events in future periods to determine whether additional impairment charges 
are warranted. Refer to Note 15 to the consolidated financial statements for further discussion.

Development and Redevelopment Projects:  Development and redevelopment projects are classified as developments in progress 
on the accompanying consolidated balance sheets and include (i) land held for future development, (ii) ground-up developments 
and  (iii)  redevelopment  properties  undergoing  significant  renovations  and  improvements.  During  the  development  or 
redevelopment period, the Company capitalizes direct project costs such as construction, insurance, architectural and legal, as well 
as certain indirect project costs such as interest, other financing costs, real estate taxes and internal salaries and related benefits of 
personnel directly involved in the project. Capitalization of the indirect project costs ceases and all project-related costs included 
in  developments  in  progress  are  reclassified  to  land  and  building  and  other  improvements  at  the  time  when  development  or 
redevelopment is considered substantially complete. Additionally, the Company makes estimates as to the probability of completion 
of development and redevelopment projects. If the Company determines that completion of the development or redevelopment 
project is no longer probable, the Company expenses any capitalized costs that are not recoverable. The Company capitalized $302
of indirect project costs related to development and redevelopment projects and $1,152 related to expansions, pad developments 
and other significant improvements during the year ended December 31, 2016. The Company did not capitalize any indirect project 
costs during the years ended December 31, 2015 and 2014.

Investment Properties Held for Sale:  In determining whether to classify an investment property as held for sale, the Company 
considers whether: (i) management has committed to a plan to sell the investment property; (ii) the investment property is available 
for immediate sale in its present condition, subject only to terms that are usual and customary; (iii) the Company has initiated a 
program to locate a buyer; (iv) the Company believes that the sale of the investment property is probable; (v) the Company is 
actively marketing the investment property for sale at a price that is reasonable in relation to its current value, and (vi) actions 
required for the Company to complete the plan indicate that it is unlikely that any significant changes will be made.

If all of the above criteria are met, the Company classifies the investment property as held for sale. When these criteria are met, 
the Company suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization 
of acquired in-place lease value intangibles and any above or below market lease intangibles and the Company records the investment 
property  held  for  sale  at  the  lower  of  cost  or  net  realizable value. The  assets  and  liabilities  associated  with  those  investment 
properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting 
period. Two properties were classified as held for sale as of December 31, 2016 and no properties qualified for held for sale 
accounting treatment as of December 31, 2015.

Prior to the Company’s early adoption of the revised discontinued operations pronouncement in 2014, if the operations and cash 
flow of the property had been, or were upon consummation of such sale, eliminated from ongoing operations and the Company 
did not have significant continuing involvement in the operations of the property, then the operations for the periods presented 
were classified in the consolidated statements of operations and other comprehensive income as discontinued operations for all 
periods presented. However, the Company elected to early adopt the revised discontinued operations pronouncement effective 
January 1, 2014, which limits what qualifies for discontinued operations presentation. As a result, the investment properties that 
were sold or classified as held for sale during 2016, 2015 and 2014, except for Riverpark Phase IIA, which was classified as held 
for sale as of December 31, 2013 and, therefore, qualified for discontinued operations treatment under the previous standard, did 
not  qualify  for  discontinued  operations  presentation  and,  as  such,  are  reflected  in  continuing  operations  on  the  consolidated 
statements of operations and other comprehensive income.

Partially-Owned  Entities:    The  Company  consolidates  partially-owned  entities  if  they  are  VIEs  in  accordance  with  the 
Consolidation Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) and the 
Company is considered the primary beneficiary, the Company has voting control, the limited partners (or non-managing members) 
do not have substantive participatory rights, or other conditions exist that indicate that the Company has control. Management 
uses its judgment when determining if the Company is the primary beneficiary of, or has a controlling financial interest in, an 
entity  in  which  it  has  a  variable  interest,  to  determine  whether  the  Company  has  the  power  to  direct  the  activities  that  most 
significantly impact the entity’s economic performance and if it has significant economic exposure to the risk and rewards of 
ownership. The Company assesses its interests in VIEs on an ongoing basis to determine if the entity should be consolidated.

Cash and Cash Equivalents:  The Company considers all demand deposits, money market accounts and investments in certificates 
of deposit and repurchase agreements purchased with a maturity of three months or less at the date of purchase to be cash equivalents. 

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The Company maintains its cash and cash equivalents at major financial institutions. The cash and cash equivalents balance at one 
or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The 
Company periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is minimal.

Restricted Cash and Escrows:  Restricted cash and escrows consist of lenders’ escrows and funds restricted through lender or 
other agreements, including funds held in escrow for future acquisitions, and are included as a component of “Other assets, net” 
in the accompanying consolidated balance sheets. As of December 31, 2016 and 2015, the Company had $29,230 and $35,804, 
respectively, in restricted cash and escrows.

Derivative and Hedging Activities:  Derivatives are recorded in the accompanying consolidated balance sheets at fair value within 
“Other assets, net” and “Other liabilities”. The Company uses interest rate derivatives to manage differences in the amount, timing 
and duration of the Company’s known or expected cash payments principally related to certain of its borrowings. The Company 
does not use derivatives for trading or speculative purposes. On the date the Company enters into a derivative, it may designate 
the derivative as a hedge against the variability of cash flows that are to be paid in connection with a recognized liability. Subsequent
changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge that is determined to be highly effective
are recorded in “Accumulated other comprehensive income (loss)” and are reclassified to interest expense as interest payments 
are made on the Company’s variable rate debt. As of December 31, 2016, the balance in accumulated other comprehensive income 
(loss) relating to derivatives was $722. Any hedge ineffectiveness or changes in the fair value for any derivative not designated 
as a hedge is reported in “Other income, net” in the accompanying consolidated statements of operations and other comprehensive 
income.

Conditional Asset Retirement Obligations:  The Company evaluates the potential impact of conditional asset retirement obligations 
on its consolidated financial statements. The term conditional asset retirement obligation refers to a legal obligation to perform an 
asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be 
within the control of the entity. Thus, the timing and/or method of settlement may be conditional on a future event. Based upon 
the Company’s evaluation, no accrual of a liability for asset retirement obligations was warranted as of December 31, 2016 and 
2015.

Revenue Recognition:  The Company commences revenue recognition on its leases based on a number of factors. In most cases, 
revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. 
Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the 
tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If the Company 
is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition 
begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If the 
Company concludes that the lessee is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the 
unimproved space and any tenant improvement allowances funded under the lease are accounted for as lease inducements which 
are amortized as a reduction to the revenue recognized over the term of the lease. In these circumstances, the Company commences 
revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements.

The Company considers a number of factors to evaluate whether it or the lessee is the owner of the tenant improvements for 
accounting purposes. These factors include:

•  whether the lease stipulates how and on what a tenant improvement allowance may be spent;

•  whether the tenant or the Company retains legal title to the improvements;

• 

• 

the uniqueness of the improvements;

the expected economic life of the tenant improvements relative to the length of the lease;

•  who constructs or directs the construction of the improvements, and

•  whether the tenant or the Company is obligated to fund cost overruns.

The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. In making 
that determination, the Company considers all of the above factors. No one factor, however, necessarily establishes its determination.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

Rental income, for only those leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over 
the term of each lease. The difference between such rental income earned and the cash rent due under the provisions of a lease is 
recorded as deferred rent receivable and is included as a component of “Accounts and notes receivable” in the accompanying 
consolidated balance sheets.

Reimbursements from tenants for recoverable real estate taxes and operating expenses are accrued as revenue in the period the 
applicable expenditures are incurred. The Company makes certain assumptions and judgments in estimating the reimbursements 
at the end of each reporting period.

The Company records lease termination income as “Other property income” when (i) a termination letter agreement is signed, (ii) 
all of the conditions of such agreement have been fulfilled, (iii) the tenant is no longer occupying the property and (iv) collectibility 
is  reasonably  assured.  Upon  early  lease  termination,  the  Company  provides  for  losses  related  to  recognized  tenant  specific 
intangibles and other assets or adjusts the remaining useful life of the assets if determined to be appropriate. The Company recorded 
lease termination income of $3,339, $3,757 and $2,667 for the years ended December 31, 2016, 2015 and 2014, respectively.

The Company recorded contingent percentage rental income and percentage rental income in lieu of base rent of $4,082, $4,693
and $5,229 for the years ended December 31, 2016, 2015 and 2014, respectively. The Company’s policy is to defer recognition 
of contingent rental income until the specified target (i.e. breakpoint) that triggers the contingent rental income is achieved.

Profits from sales of real estate are not recognized under the full accrual method until the following criteria are met: a sale is 
consummated; the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property; 
the Company’s receivable, if applicable, is not subject to future subordination; the Company has transferred to the buyer the usual 
risks and rewards of ownership; and the Company does not have substantial continuing involvement with the property. The Company 
sold 46, 26 and 24 consolidated investment properties during the years ended December 31, 2016, 2015 and 2014, respectively. 
Refer to Note 4 to the consolidated financial statements for further discussion.

Accounts and Notes Receivable and Allowance for Doubtful Accounts:  Accounts and notes receivable balances outstanding 
include base rents, tenant reimbursements and deferred rent receivables. An allowance for the uncollectible portion of accounts 
and notes receivable is determined on a tenant-specific basis through an analysis of balances outstanding, historical bad debt levels, 
tenant creditworthiness and current economic trends. Additionally, estimates of the expected recovery of pre-petition and post-
petition  claims  with  respect  to  tenants  in  bankruptcy  are  considered  in  assessing  the  collectibility  of  the  related  receivables. 
Management’s  estimate  of  the  collectibility  of  accounts  and  notes  receivable  is  based  on  the  best  information  available  to 
management at the time of evaluation.

Rental Expense:  Rental expense associated with land and office space that the Company leases under non-cancellable operating 
leases, for only those leases that have fixed and measurable rent escalations, is recorded on a straight-line basis over the term of 
each lease. The difference between rental expense incurred on a straight-line basis and rental payments due under the provisions 
of a lease agreement is recorded as a deferred liability and is included as a component of “Other liabilities” in the accompanying 
consolidated balance sheets. See Note 6 to the consolidated financial statements for additional information pertaining to these 
leases.

Loan Fees:  Loan fees are generally amortized using the effective interest method (or other methods which approximate the 
effective interest method) over the life of the related loan as a component of interest expense. Debt prepayment penalties and 
certain fees associated with exchanges or modifications of debt are expensed as incurred as a component of interest expense.

The Company presents unamortized capitalized loan fees, excluding those related to its unsecured revolving line of credit, as direct 
reductions of the carrying amounts of the related debt liabilities in the accompanying consolidated balance sheets. Unamortized 
capitalized loan fees attributable to the Company’s unsecured revolving line of credit are recorded in “Other assets, net” in the 
accompanying consolidated balance sheets.

Income Taxes:  The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Code. As a REIT, the 
Company generally will not be subject to U.S. federal income tax on the taxable income the Company currently distributes to its 
shareholders.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The Company records a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax 
position meets a “more likely than not” recognition threshold. Tax returns for the calendar years 2013 through 2016 remain subject 
to examination by federal and various state tax jurisdictions.

Segment Reporting:  The Company’s chief operating decision maker, which is comprised of its Chief Executive Officer, Chief 
Operating Officer and Chief Financial Officer, assesses and measures the operating results of the Company’s portfolio of properties 
based on net operating income and does not differentiate properties by geography, market, size or type. Each of the Company’s 
investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, individual 
operating results are reviewed and discrete financial information is available. However, the Company’s properties are aggregated 
into one reportable segment as they have similar economic characteristics, the Company provides similar services to its tenants 
and the Company’s chief operating decision maker evaluates the collective performance of its properties.

Recently Adopted Accounting Pronouncements

Effective January 1, 2016, the Company adopted Accounting Standards Update (ASU) 2015-02, Consolidation, which revised the 
consolidation guidance for all entities. This new guidance modifies the evaluation of whether limited partnerships and similar legal 
entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership 
and affects the consolidation analysis of reporting entities that are involved with VIEs. The adoption of this pronouncement under 
the modified retrospective method did not have any effect on the Company’s consolidated financial statements as the Company 
did not have any VIEs at adoption on January 1, 2016; however, during the year ended December 31, 2016, the Company acquired 
three properties through consolidated VIEs in connection with Internal Revenue Code Section 1031 tax-deferred exchanges (1031 
Exchanges) and, accordingly, applied the revised consolidation guidance. See Note 3 to the consolidated financial statements for 
further details.

Effective January 1, 2016, the Company adopted ASU 2015-16, Business Combinations, which requires the acquirer in a business 
combination to recognize in the period any adjustments to provisional amounts that are identified during the measurement period 
rather than retrospectively accounting for those adjustments. The adoption of this pronouncement did not have any effect on the 
Company’s consolidated financial statements.

The Company elected to early adopt ASU 2014-15, Presentation of Financial Statements – Going Concern, on January 1, 2016. 
This new guidance requires a company’s management to assess the entity’s ability to continue as a going concern for a period of 
one year after the date the financial statements are issued (or available to be issued) and provide certain disclosures if conditions 
or events raise substantial doubt about the entity’s ability to continue as a going concern. The adoption of this pronouncement did 
not have any effect on the Company’s consolidated financial statements.

The Company elected to early adopt ASU 2016-09, Compensation – Stock Compensation, on January 1, 2016. This new guidance 
allowed the Company to make an accounting policy election to account for share-based payment award forfeitures when they 
occur, which required a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning 
of the period of adoption and resulted in an adjustment of $17 to additional paid-in capital and accumulated distributions in excess 
of earnings as of January 1, 2016.

The Company elected to early adopt ASU 2017-01, Business Combinations, on a prospective basis as of October 1, 2016. This 
new guidance clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities 
is not considered a business and, thus, accounted for as an asset acquisition as opposed to a business combination. The screen 
requires  that  when  substantially  all  of  the  fair  value  of  the  gross  assets  acquired  (or  disposed  of)  is  concentrated  in  a  single 
identifiable asset or a group of similar identifiable assets, the set is not considered a business. Under this new guidance, the Company 
expects most acquisitions of investment property will meet the screen and, thus, be accounted for as asset acquisitions. Consistent 
with existing guidance, transaction costs associated with asset acquisitions are capitalized while transaction costs associated with 
business combinations are expensed as incurred. The adoption of this pronouncement resulted in the Company’s acquisition of 
investment properties subsequent to October 1, 2016 to qualify as asset acquisitions and as such, the related transactions costs of 
$725 were capitalized.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

Other Recently Issued Accounting Pronouncements

In May 2014 with subsequent updates issued in August 2015 and March, April, May and December 2016, the FASB issued ASU 
2014-09, Revenue from Contracts with Customers. This new guidance is effective January 1, 2018, with early adoption permitted 
beginning January 1, 2017, and will replace existing revenue recognition standards. The sale of investment property and any non-
lease components contained within lease agreements will be required to follow the new guidance; however, lease components of 
lease contracts will be excluded from this guidance. This pronouncement allows either a full or a modified retrospective method 
of adoption. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that 
are  subject  to  this  guidance.  While  the  Company  anticipates  additional  disclosure,  it  does  not  expect  the  adoption  of  this 
pronouncement will have a material effect on its consolidated financial statements; however, it will continue to evaluate this 
assessment until the guidance becomes effective.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall. This new guidance is effective January 1, 2018 
and will require companies to disclose the fair value of financial assets and financial liabilities measured at amortized cost in 
accordance with the exit price notion and will no longer require disclosure of the methods and significant assumptions used, 
including any changes, to estimate fair value. In addition, companies will be required to disclose all financial assets and financial 
liabilities grouped by 1) measurement category and 2) form of financial instrument. The Company does not expect the adoption 
of this pronouncement will have a material effect on its consolidated financial statements; however, it will continue to evaluate 
this assessment until the guidance becomes effective.

In February 2016, the FASB issued ASU 2016-02, Leases. This new guidance is effective January 1, 2019, with early adoption 
permitted, and will require lessees to recognize a liability to make lease payments and a right-of-use asset, initially measured at 
the present value of lease payments, for both operating and financing leases. For leases with a term of 12 months or less, lessees 
will be permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease 
assets. Under this new pronouncement, lessor accounting will be largely unchanged from existing GAAP. The pronouncement 
requires a modified retrospective method of adoption, with some optional practical expedients. Upon adoption, the Company will 
recognize a lease liability and a right-of-use asset for operating leases where it is the lessee, such as ground leases and office and 
equipment leases. The Company will continue to evaluate the impact of this guidance until it becomes effective.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. This new guidance is effective January 1, 
2020, with early adoption permitted beginning January 1, 2019, and replaces the current incurred loss impairment methodology 
with a methodology that reflects expected credit losses. Financial assets that are measured at amortized cost will be required to be 
presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. 
In  addition, an entity must  consider broader  information in  developing its  expected credit loss  estimate, including the use  of 
forecasted information. Generally, the pronouncement requires a modified retrospective method of adoption. The Company will 
continue to evaluate the impact of this guidance until it becomes effective.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows. This new guidance is effective January 1, 2018, with 
early adoption permitted, and adds or clarifies guidance on the classification of certain cash receipts and payments in the statement 
of cash flows. Of the eight types of cash flows discussed in the new standard, the classification of debt prepayment costs as a 
financing outflow will impact the Company’s consolidated statements of cash flows as this item is currently reflected as an operating 
outflow. The pronouncement requires a retrospective transition method of adoption. The Company will continue to evaluate the 
impact of this guidance until it becomes effective.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows. This new guidance is effective January 1, 2018, 
with early adoption permitted, and requires amounts that are generally described as restricted cash and restricted cash equivalents 
to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown 
on the statement of cash flows. The pronouncement requires a retrospective transition method of adoption. Upon adoption, the 
Company will include amounts generally described as restricted cash within the beginning-of-period, change and end-of-period 
total amounts on the statement of cash flows rather than within an activity on the statement of cash flows.

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(3) ACQUISITIONS

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The Company closed on the following acquisitions during the year ended December 31, 2016:

Date

Property Name

January 15, 2016

Shoppes at Hagerstown (a)

January 15, 2016

Merrifield Town Center II (a)

March 29, 2016

Oak Brook Promenade

April 1, 2016

April 29, 2016

May 5, 2016

June 15, 2016

The Shoppes at Union Hill (b)

Ashland & Roosevelt – Fee Interest (c)

Tacoma South

Eastside

August 30, 2016

Woodinville Plaza – Anchor Space

Improvements (d)

Metropolitan
Statistical Area (MSA)

Hagerstown

Washington, D.C.

Chicago

New York

Chicago

Seattle

Dallas

Seattle

November 22, 2016

One Loudoun Downtown – Phase I (e)

Washington, D.C.

Property Type

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Ground lease interest (c)

Multi-tenant retail

Multi-tenant retail

Anchor space
improvements (d)

Multi-tenant retail

Square
Footage

Acquisition
Price

113,000

$

76,000

183,200

91,700

—

230,700

67,100

—

340,600

1,102,300

$

27,055

45,676

65,954

63,060

13,850

39,400

23,842

4,500

124,971

408,308

(a)  These properties were acquired as a two-property portfolio. Merrifield Town Center II also contains 62,000 square feet of storage space for 

a total of 138,000 square feet.

(b)  In conjunction with this acquisition, the Company assumed mortgage debt with a principal balance of $15,971 and an interest rate of 3.75%

that matures in 2031.

(c)  The Company acquired the fee interest in an existing wholly-owned multi-tenant retail operating property located in Chicago, Illinois, which 
was previously subject to a ground lease with a third party. In conjunction with this transaction, the Company reversed the straight-line 
ground rent liability of $6,978, which is reflected as “Gain on extinguishment of other liabilities” in the accompanying condensed consolidated 
statements of operations and other comprehensive income.

(d)  The Company acquired the anchor space improvements, which were previously subject to a ground lease with the Company, at an existing 

wholly-owned multi-tenant retail operating property located in Woodinville, Washington.

(e)  The remaining phases at One Loudoun Downtown, representing an aggregate gross purchase price of up to $35,500, are expected to close 

throughout the first three quarters of 2017 as the seller completes construction on stand-alone buildings at the property.

During the year ended December 31, 2016, the Company also completed a non-monetary transaction in which it received the fee 
interest in less than an acre of adjacent land and terminated the ground lease on certain undeveloped parcels at an existing wholly-
owned multi-tenant retail operating property located in Southlake, Texas in exchange for the fee interest in approximately 2.5 acres 
of undeveloped parcels. As a result of this transaction, the Company’s fee interest in certain undeveloped parcels at the property 
are no longer encumbered by the ground lease. The Company capitalized $113 of costs related to this transaction.

The Company closed on the following acquisitions during the year ended December 31, 2015:

Date

Property Name

January 8, 2015

Downtown Crown

January 23, 2015

Merrifield Town Center

January 23, 2015

Fort Evans Plaza II

February 19, 2015

Cedar Park Town Center

March 24, 2015

Lake Worth Towne Crossing – Parcel (a)

May 4, 2015

June 10, 2015

July 31, 2015
August 27, 2015

Tysons Corner

Woodinville Plaza

Southlake Town Square – Outparcel (b)
Coal Creek Marketplace

October 27, 2015

Royal Oaks Village II – Outparcel (a)

November 13, 2015

Towson Square

Property Type

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Land (a)

Multi-tenant retail

Multi-tenant retail

Single-user outparcel
Multi-tenant retail

Single-user outparcel

Multi-tenant retail

Square
Footage

Acquisition
Price

258,000

$

162,785

84,900

228,900

179,300

—

37,700

170,800

13,800
55,900

12,300

138,200

56,500

65,000

39,057

400

31,556

35,250

8,440
17,600

6,841

39,707

1,179,800

$

463,136

Metropolitan
Statistical Area
(MSA)

Washington, D.C.

Washington, D.C.

Washington, D.C.

Austin

Dallas

Washington, D.C.

Seattle

Dallas
Seattle

Houston

Baltimore

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

(a)  The Company acquired a parcel located at its Lake Worth Towne Crossing multi-tenant retail operating property and a single-user outparcel 

located at its Royal Oaks Village II multi-tenant retail operating property.

(b)  The Company acquired a single-user outparcel located at its Southlake Town Square multi-tenant retail operating property that was subject 

to a ground lease with the Company (as lessor) prior to the transaction.

The Company closed on the following acquisitions during the year ended December 31, 2014:

Date

Property Name

February 27, 2014

Heritage Square

February 27, 2014

June 5, 2014

June 23, 2014

Bed Bath & Beyond Plaza – Fee

Interest (a)

MS Inland Portfolio (b)

Southlake Town Square – Outparcel (c)

November 20, 2014 Avondale Plaza

December 30, 2014

Lakewood Towne Center – Parcel

MSA

Seattle

Miami

Various

Dallas

Seattle

Seattle

Property Type

Square
Footage

Acquisition
Price

Pro Rata
Acquisition
Price

Multi-tenant retail

53,100

$

18,022

$

18,022

Ground lease
interest (a)

—

Multi-tenant retail

1,194,800

Single-user outparcel

Multi-tenant retail

Multi-tenant parcel

8,500

39,000

44,000

10,350

292,500

6,369

15,070

5,750

10,350

234,000

6,369

15,070

5,750

1,339,400

$

348,061

$

289,561

(a)  The Company acquired the fee interest in an existing wholly-owned multi-tenant retail operating property located in Miami, Florida, which 
was previously subject to a ground lease with a third party. In conjunction with this transaction, the Company reversed a straight-line ground 
rent liability of $4,258, which is presented in “Gain on extinguishment of other liabilities” in the accompanying consolidated statements of 
operations and other comprehensive income.

(b)  As discussed in Note 11 to the consolidated financial statements, the Company dissolved its joint venture arrangement with its partner in 
MS Inland Fund, LLC (MS Inland) by acquiring its partner’s 80% ownership interest in the six multi-tenant retail properties owned by the 
joint venture (collectively, the MS Inland acquisitions). The Company paid total cash consideration of approximately $120,600 before 
transaction costs and prorations and after assumption of the joint venture’s in-place mortgage financing on those properties of $141,698. 
The Company accounted for this transaction as a business combination achieved in stages and recognized a gain on change in control of 
investment properties of $24,158 as a result of remeasuring the carrying value of its 20% interest in the six acquired properties to fair value. 
Such gain is presented as “Gain on change in control of investment properties” in the accompanying consolidated statements of operations 
and other comprehensive income.

(c)  The Company acquired a single-user outparcel located at its Southlake Town Square multi-tenant retail operating property that was subject 

to a ground lease with the Company (as lessor) prior to the transaction.

The following table summarizes the acquisition date fair values, before prorations, the Company recorded in conjunction with the 
acquisitions completed during the years ended December 31, 2016, 2015 and 2014 discussed above:

Land
Building and other improvements
Acquired lease intangible assets (a)
Acquired lease intangible liabilities (b)
Mortgages payable, net (c)
Net assets acquired (d)

2016

2015

2014

$

$

106,947
268,075
41,002
(8,258)
(15,316)
392,450

$

$

161,114
281,649
45,474
(25,101)
—
463,136

$

$

118,732
219,174
35,520
(20,578)
(146,485)
206,363

(a)  The weighted average amortization period for acquired lease intangible assets is nine years, 15 years and eight years for acquisitions 

completed during the years ended December 31, 2016, 2015 and 2014, respectively.

(b)  The weighted average amortization period for acquired lease intangible liabilities is 18 years, 21 years and 16 years for acquisitions 

completed during the years ended December 31, 2016, 2015 and 2014, respectively.

(c)  Includes mortgage discount of $(655) for acquisitions completed during the year ended December 31, 2016 and mortgage premium 

of $4,787 for acquisitions completed during the year ended December 31, 2014.

(d)  Net assets attributable to the MS Inland acquisition are presented at 100%.

The above acquisitions were funded using a combination of available cash on hand, proceeds from dispositions and proceeds from 
the Company’s unsecured revolving line of credit. Transaction costs related to acquisitions accounted for as business combinations 
totaling $913, $1,591 and $2,271 for the years ended December 31, 2016, 2015 and 2014, respectively, were expensed as incurred 

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

and included within “General and administrative expenses” in the accompanying consolidated statements of operations and other 
comprehensive income.

Included in the Company’s consolidated statements of operations and other comprehensive income from the properties acquired 
that were accounted for as business combinations are $87,161, $97,893 and $55,303 in total revenues and $22,283, $18,334 and 
$6,733 in net income attributable to common shareholders from the date of acquisition through December 31, 2016, 2015, and 
2014, respectively. These amounts do not include the total revenue and net income attributable to common shareholders from the 
2016 acquisitions of One Loudoun Downtown – Phase I, the anchor space improvements at Woodinville Plaza and the fee interest 
in Ashland & Roosevelt, the 2015 acquisition of a parcel at Lake Worth Towne Crossing and the 2014 acquisition of the fee interest 
in Bed Bath & Beyond Plaza as they have been accounted for as asset acquisitions.

Subsequent  to  December 31,  2016,  the  Company  acquired  Main  Street  Promenade,  a  181,600  square  foot  multi-tenant  retail 
property located in the Chicago MSA, for a gross purchase price of $88,000. The property was acquired on January 13, 2017 
through a consolidated VIE to facilitate a potential 1031 Exchange. The Company has not completed the allocation of the acquisition 
date fair value for Main Street Promenade; however, it expects that this acquisition will be accounted for as an asset acquisition 
and that the purchase price of this property will primarily be allocated to land, building and acquired lease intangibles.

Condensed Pro Forma Financial Information

The results of operations of the acquisitions accounted for as business combinations that were completed during the period, or 
after such period through the financial statement issuance date, for which financial information was available, are included in the 
following unaudited condensed pro forma financial information as if these acquisitions had been completed as of the beginning 
of the year prior to the acquisition date. The following unaudited condensed pro forma financial information is presented as if the 
2016 acquisitions were completed as of January 1, 2015, the 2015 acquisitions were completed as of January 1, 2014, and the 
2014 acquisitions were completed as of January 1, 2013. The results of operations associated with the 2017 acquisition of Main 
Street Promenade, the 2016 acquisitions of One Loudoun Downtown – Phase I, the anchor space improvements at Woodinville 
Plaza and the fee interest in Ashland & Roosevelt, the 2015 acquisition of a parcel at Lake Worth Towne Crossing and the 2014 
acquisition of the fee interest in Bed Bath & Beyond Plaza have not been adjusted in the pro forma presentation as they have been 
accounted for as asset acquisitions. The results of operations associated with the 2015 acquisitions of Towson Square on November 
13, 2015, single-user outparcels at Southlake Town Square on July 31, 2015 and Royal Oaks Village II on October 27, 2015 and 
the 2014 acquisition of a single-user outparcel at Southlake Town Square on June 23, 2014 have not been adjusted in the pro forma 
presentation due to a lack of historical financial information. These pro forma results are for comparative purposes only and are 
not necessarily indicative of what the Company’s actual results of operations would have been had the acquisitions occurred at 
the beginning of the periods presented, nor are they necessarily indicative of future operating results.

The unaudited condensed pro forma financial information is as follows:

Total revenues
Net income
Net income attributable to common shareholders
Earnings per common share – basic and diluted:

Net income per common share attributable to common shareholders
Weighted average number of common shares outstanding – basic

Variable Interest Entities

Year Ended December 31,
2015

2014

2016

$
$
$

$

587,374
165,696
156,246

0.66
236,651

$
$
$

$

627,300
121,406
111,428

0.47
236,380

$
$
$

$

635,240
18,313
8,863

0.04
236,184

During the year ended December 31, 2016, the Company entered into agreements with a qualified intermediary related to three
1031 Exchanges. The Company loaned $65,419, $39,215 and $23,522 to the VIEs to acquire Oak Brook Promenade, Tacoma 
South and Eastside, respectively. Each 1031 Exchange was completed during the year ended December 31, 2016 and, accordingly, 
no agreements remained outstanding related to 1031 Exchanges as of December 31, 2016. At the completion of the 1031 Exchanges, 
the sole membership interests of the VIEs were assigned to the Company and the respective outstanding loans were extinguished, 
resulting in the entities being wholly owned by the Company and no longer considered VIEs. 

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

Prior to the completion of the 1031 Exchanges, the Company was deemed to be the primary beneficiary of the VIEs as it had the 
ability to direct the activities of the VIEs that most significantly impacted their economic performance and had all of the risks and 
rewards of ownership. Accordingly, the Company consolidated the VIEs. No value or income was attributed to the noncontrolling 
interests. The assets of the VIEs consisted of the investment properties which were operated by the Company.

(4) DISPOSITIONS

The Company closed on the following dispositions during the year ended December 31, 2016:

Date

Property Name

Property Type

Square
Footage

Consideration

Aggregate
Proceeds, Net (a)

Gain

Multi-tenant retail

623,200

$

75,000

$

(795) $

February 1, 2016

The Gateway (b)

February 10, 2016

Stateline Station

March 30, 2016

Six Property Portfolio (c)

April 20, 2016

CVS Pharmacy – Oklahoma City

June 2, 2016

June 15, 2016

June 23, 2016

July 8, 2016

July 21, 2016

July 27, 2016

July 29, 2016

August 4, 2016

August 5, 2016

Rite Aid Store (Eckerd) – Canandaigua

& Tim Horton Donut Shop (d)

Academy Sports – Midland

Four Rite Aid Portfolio (e)

Broadway Shopping Center

Mid-Hudson Center

Rite Aid Store (Eckerd), Main St. –

Buffalo

Rite Aid Store (Eckerd) – Lancaster

Alison’s Corner

Multi-tenant retail

Single-user retail

Single-user retail

Single-user retail

Single-user retail

Single-user retail

Multi-tenant retail

Multi-tenant retail

Single-user retail

Single-user retail

Multi-tenant retail

Rite Aid Store (Eckerd) – Lake Ave.

Single-user retail

August 12, 2016

Maple Tree Place

August 12, 2016

CVS Pharmacy – Burleson

August 18, 2016

Mitchell Ranch Plaza

August 22, 2016

Rite Aid Store (Eckerd), E. Main St. –

Batavia

September 9, 2016

Rite Aid Store (Eckerd) – Lockport

September 9, 2016

Rite Aid Store (Eckerd), Ferry St. –

Buffalo

November 9, 2016 Walgreens – Northwoods

November 23, 2016

Ten Rite Aid Portfolio (f)

December 8, 2016

Vail Ranch Plaza

December 15, 2016

Pacheco Pass Phase I & II

December 16, 2016

South Billings Center (g)

December 22, 2016

Rite Aid Store (Eckerd) – Colesville

December 29, 2016

Commons at Royal Palm

Multi-tenant retail

Single-user retail

Multi-tenant retail

Single-user retail

Single-user retail

Single-user retail

Single-user retail

Single-user retail

Multi-tenant retail

Multi-tenant retail

Development (g)

Single-user retail

Multi-tenant retail

142,600

230,400

10,900

16,600

61,200

45,400

190,300

235,600

10,900

10,900

55,100

13,200

489,000

10,900

199,600

13,800

13,800

10,900

16,300

119,700

101,800

194,300

—

13,400

156,500

17,500

35,413

4,676

5,400

5,541

15,934

20,500

27,500

3,388

3,425

7,850

5,400

90,000

4,190

55,625

5,050

4,690

3,600

6,450

30,000

27,450

41,500

2,250

7,700

23,700

10,630

17,210

34,986

4,608

5,333

5,399

14,646

20,103

25,615

3,296

3,349

7,559

5,334

87,047

4,102

54,305

4,924

4,415

3,370

5,793

29,380

27,160

39,549

2,157

7,444

21,460

10,467

3,868

4,253

13,618

1,764

1,444

2,220

2,287

7,958

—

344

625

3,334

907

15,566

1,425

33,612

1,249

753

612

2,199

251

11,247

4,758

—

1,893

6,553

5,069

December 30, 2016

CVS Pharmacy (Eckerd) – Edmond &

CVS Pharmacy (Eckerd) – Norman (h)

Single-user retail

27,600

3,013,900

$

540,362

$

448,216

$

127,809

(a)  Aggregate proceeds are net of transaction costs.

(b)  The property was disposed of through a lender-directed sale in full satisfaction of the Company’s $94,353 mortgage obligation. Immediately 
prior to the disposition, the lender reduced the Company’s loan obligation to $75,000 which was assumed by the buyer in connection with 
the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to 
unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653.

(c)  Portfolio consists of the following properties: (i) Academy Sports – Houma, (ii) Academy Sports – Port Arthur, (iii) Academy Sports – San 

Antonio, (iv) CVS Pharmacy – Moore, (v) CVS Pharmacy – Saginaw and (vi) Rite Aid Store (Eckerd) – Olean.

(d)  The terms of the disposition of Rite Aid Store (Eckerd) – Canandaigua and Tim Horton Donut Shop were negotiated as a single transaction.

(e)  Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Cheektowaga, (ii) Rite Aid Store (Eckerd), W. Main St. – Batavia, 

(iii) Rite Aid Store (Eckerd), Union Rd. – West Seneca and (iv) Rite Aid Store (Eckerd) – Greece.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

(f)  Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Chattanooga, (ii) Rite Aid Store (Eckerd) – Yorkshire, (iii) Rite 
Aid Store (Eckerd), Sheridan Dr. – Amherst, (iv) Rite Aid Store (Eckerd) – Grand Island, (v) Rite Aid Store (Eckerd) – North Chili, (vi) 
Rite Aid Store (Eckerd) – Tonawanda, (vii) Rite Aid Store (Eckerd) – Irondequoit, (viii) Rite Aid Store (Eckerd) – Hudson, (ix) Rite Aid 
Store (Eckerd), Transit Rd. – Amherst and (x) Rite Aid Store (Eckerd), Harlem Rd. – West Seneca.

(g)  South Billings Center was classified as a development property but was not under active development.

(h)  The terms of the disposition of CVS Pharmacy (Eckerd) – Edmond and CVS Pharmacy (Eckerd) – Norman were negotiated as a single 

transaction.

During the year ended December 31, 2016, the Company also disposed of a single-user outparcel for consideration of $2,639, 
received net proceeds of $2,549 and recorded a gain of $1,898 from the transaction. The aggregate proceeds, net of closing costs, 
from the property dispositions and this additional transaction totaled $450,765 with aggregate gains of $129,707.

During the year ended December 31, 2016, the Company defeased $10,695 in mortgages payable prior to the 2016 dispositions.

As of December 31, 2016, the Company had entered into contracts to sell Century III Plaza, a 284,100 square foot multi-tenant 
retail operating property located in West Mifflin, Pennsylvania, and CVS Pharmacy – Sylacauga, a 10,100 square foot single-user 
retail operating property located in Sylacauga, Alabama. These properties qualified for held for sale accounting treatment upon 
meeting all applicable GAAP criteria during the quarter ended December 31, 2016, at which time depreciation and amortization 
were ceased. As such, the assets and liabilities associated with these properties are separately classified as held for sale in the 
accompanying consolidated balance sheet as of December 31, 2016. No properties qualified for held for sale accounting treatment 
as of December 31, 2015.

The following table presents the assets and liabilities associated with the investment properties classified as held for sale:

Assets

Land, building and other improvements
Accumulated depreciation
Net investment properties
Other assets

Assets associated with investment properties held for sale

Liabilities

Other liabilities

Liabilities associated with investment properties held for sale

December 31,
2016

$

$

$
$

45,395
(15,769)
29,626
1,201
30,827

864
864

There was no activity during the years ended December 31, 2016 and 2015 related to discontinued operations. The results of 
operations for the year ended December 31, 2014 for the investment property accounted for as discontinued operations, Riverpark 
Phase IIA which was sold on March 11, 2014 but was classified as held for sale as of December 31, 2013, were immaterial.

Subsequent to December 31, 2016, the Company closed on the sale of Rite Aid Store (Eckerd), Culver Rd., a 10,900 square foot 
single-user retail operating property, for consideration of $500.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The Company closed on the following dispositions during the year ended December 31, 2015:

Citizen's Property Insurance Building

Single-user office

Date

Property Name

January 20, 2015

Aon Hewitt East Campus

February 27, 2015

Promenade at Red Cliff

April 7, 2015

April 30, 2015

May 15, 2015

June 4, 2015

June 5, 2015

June 17, 2015

June 17, 2015

June 17, 2015

July 17, 2015

July 28, 2015

July 30, 2015

Hartford Insurance Building

Rasmussen College

Mountain View Plaza

Massillon Commons

Pine Ridge Plaza

Bison Hollow

The Village at Quail Springs

Greensburg Commons

Arvada Connection and
Arvada Marketplace

Traveler's Office Building

August 6, 2015

Shaw's Supermarket

August 24, 2015

Harvest Towne Center

August 31, 2015

Trenton Crossing &

McAllen Shopping Center (b)

September 15, 2015

The Shops at Boardwalk

September 29, 2015

Best on the Boulevard

September 29, 2015 Montecito Crossing

October 29, 2015

Green Valley Crossing (c)

November 12, 2015

Lake Mead Crossing

December 2, 2015

Golfsmith

December 9, 2015

Wal-Mart – Turlock

December 18, 2015

Southgate Plaza

December 31, 2015

Bellevue Mall

Property Type

Single-user office

Multi-tenant retail

Single-user office

Single-user office

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Single-user office

Single-user retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Multi-tenant retail

Development (c)

Multi-tenant retail

Single-user retail

Single-user retail

Multi-tenant retail

Development

Square
Footage

Consideration

Aggregate
Proceeds, Net (a)

Gain

343,000

$

17,233

$

16,495

$

94,500

97,400

26,700

162,000

245,900

59,800

236,500

134,800

100,400

272,500

367,500

50,800

65,700

39,700

265,900

122,400

204,400

179,700

96,400

219,900

14,900

61,000

86,100

369,300

19,050

6,015

4,800

28,500

12,520

3,650

33,200

18,800

11,350

18,400

54,900

4,841

3,000

7,800

39,295

27,400

42,500

52,200

35,000

42,565

4,475

6,200

7,000

15,750

18,848

5,663

4,449

27,949

12,145

3,368

31,858

18,657

11,267

18,283

53,159

4,643

2,769

7,381

38,410

26,634

41,542

51,415

34,200

41,930

4,298

5,996

6,665

17,500

—

4,572

860

1,334

10,184

—

440

12,938

4,061

3,824

2,810

20,208

—

—

1,217

13,760

3,146

15,932

17,928

3,904

507

1,010

3,157

—

—

3,917,200

$

516,444

$

505,524

$

121,792

(a)  Aggregate proceeds are net of transaction costs and exclude $300 of condemnation proceeds, which did not result in any additional gain 

recognition.

(b)  The terms of the disposition of Trenton Crossing and McAllen Shopping Center were negotiated as a single transaction.

(c)  The development property had been held in a consolidated joint venture and was sold to an affiliate of the joint venture partner. Concurrent 
with the sale, the joint venture was dissolved. Approximately $528 of the gain on sale was allocated to the noncontrolling interest holder 
as its share of the gain.

During the year ended December 31, 2015, the Company repaid or defeased $121,605 in mortgages payable prior to or in connection 
with the 2015 dispositions.

During the year ended December 31, 2014, the Company sold 24 properties. The dispositions and certain additional transactions, 
including a pad sale and condemnations, resulted in aggregate proceeds, net of transaction costs, of $315,400 with aggregate gains 
of $42,851. During the year ended December 31, 2014, the Company repaid or defeased $128,947 in mortgages payable prior to 
or in connection with the 2014 dispositions.

(5) EQUITY COMPENSATION PLANS

The Company’s 2014 Long-Term Equity Compensation Plan, subject to certain conditions, authorizes the issuance of incentive 
and non-qualified stock options, restricted stock and restricted stock units, stock appreciation rights and other similar awards as 
well as cash-based awards to the Company’s employees, non-employee directors, consultants and advisors in connection with 
compensation and incentive arrangements that may be established by the Company’s board of directors or executive management.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The following table summarizes the Company’s unvested restricted shares as of and for the years ended December 31, 2016, 2015
and 2014:

Balance as of January 1, 2014

Shares granted (a)
Shares vested
Shares forfeited

Balance as of December 31, 2014

Shares granted (a)
Shares vested
Shares forfeited

Balance as of December 31, 2015

Shares granted (a)
Shares vested
Shares forfeited (b)

Balance as of December 31, 2016 (c)

Unvested
Restricted
Shares

152
303
(58)
(1)
396
801
(405)
(4)
788
274
(510)
(10)
542

Weighted Average
Grant Date Fair
Value per
Restricted Share
$
$
$
$
$
$
$
$
$
$
$
$
$

15.11
13.89
14.50
15.61
14.26
15.82
14.89
16.01
15.52
14.76
15.38
14.70
15.28

(a)  Shares granted in 2014, 2015 and 2016 vest over periods ranging from one year to three years, 0.4 years to 3.4 years and 0.4 

years to 3.9 years, respectively, in accordance with the terms of applicable award agreements.

(b)  Effective January 1, 2016, the Company made an accounting policy election to account for forfeitures when they occur.

(c)  As of December 31, 2016, total unrecognized compensation expense related to unvested restricted shares was $2,674, which 

is expected to be amortized over a weighted average term of 1.3 years.

In addition, during the years ended December 31, 2016 and 2015, performance restricted stock units (RSUs) were granted to the 
Company’s executives. Following the three-year performance period, one-third of the RSUs will convert into shares of common 
stock and two-thirds will convert into restricted shares with a one year vesting term. As long as the minimum hurdle is achieved 
and the executive remains employed during the performance period, the RSUs will convert into shares of common stock and 
restricted shares at a conversion rate of between 50% and 200% based upon the Company’s Total Shareholder Return as compared 
to that of the peer companies within the National Association of Real Estate Investment Trusts (NAREIT) Shopping Center Index 
for  the  respective  performance  period.  If  an  executive  terminates  employment  during  the  performance  period  by  reason  of  a 
qualified termination, as defined in the agreement, only a prorated portion of his or her outstanding RSUs will be eligible for 
conversion based upon the period in which the executive was employed during the performance period. If an executive terminates 
for any reason other than a qualified termination during the performance period, he or she would forfeit his or her outstanding 
RSUs.  Following  the  performance  period,  additional  shares  of  common  stock  will  also  be  issued  in  an  amount  equal  to  the 
accumulated value of the dividends that would have been paid during the performance period on the shares of common stock and 
restricted shares issued at the end of the performance period divided by the then-current market price of the Company’s common 
stock. The Company calculated the grant date fair values per unit using Monte Carlo simulations based on the probabilities of 
satisfying the market performance hurdles over the remainder of the performance period.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The following table summarizes the Company’s unvested RSUs as of and for the years ended December 31, 2016 and 2015:

RSUs eligible for future conversion as of January 1, 2015

RSUs granted (a)
RSUs ineligible for conversion

RSUs eligible for future conversion as of December 31, 2015

RSUs granted (b)
RSUs ineligible for conversion

RSUs eligible for future conversion as of December 31, 2016 (c)

Unvested
RSUs

Weighted Average
Grant Date
Fair Value
per RSU

—
180
(6)
174
246
(29)
391

$
$
$
$
$
$
$

—
14.19
14.10
14.20
13.85
13.56
14.02

(a)  Assumptions as of the grant dates included a weighted average risk-free interest rate of 0.80%, the Company’s historical common 
stock performance relative to the peer companies within the NAREIT Shopping Center Index and the Company’s weighted average 
common stock dividend yield of 4.26%.

(b)  Assumptions as of the grant dates included a weighted average risk-free interest rate of 0.89%, the Company’s historical common 
stock performance relative to the peer companies within the NAREIT Shopping Center Index and the Company’s weighted average 
common stock dividend yield of 4.59%.

(c)  As of December 31, 2016, total unrecognized compensation expense related to unvested RSUs was $3,471, which is expected to 

be amortized over a weighted average term of 2.4 years.

During the years ended December 31, 2016, 2015 and 2014, the Company recorded compensation expense of $7,209, $10,755
and $3,417, respectively, related to unvested restricted shares and RSUs. Included within compensation expense recorded during 
the year ended December 31, 2015 is compensation expense of $2,159 related to the accelerated vesting of 194 restricted shares 
in conjunction with the departure of the Company’s former Chief Financial Officer and Treasurer and former Executive Vice 
President  and  President  of  Property  Management.  The  total  fair  value  of  restricted  shares  vested  during  the  years  ended 
December 31, 2016, 2015 and 2014 was $7,596, $6,188 and $840, respectively.

Prior  to  2013,  non-employee  directors  had  been  granted  options  to  acquire  shares  under  the  Company’s Third Amended  and 
Restated Independent Director Stock Option and Incentive Plan. Options to purchase a total of 84 shares of common stock had 
been granted under the plan. During the year ended December 31, 2015, options to purchase one share expired and options to 
purchase 10 shares were forfeited. During the year ended December 31, 2016, options to purchase two shares were exercised, 
options to purchase one share expired and options to purchase 10 shares were forfeited. As of December 31, 2016, options to 
purchase 41 shares of common stock remained outstanding and exercisable. The Company did not grant any options in 2014, 2015
or 2016. Compensation expense of $0, $0 and $3 related to stock options was recorded during the years ended December 31, 2016, 
2015 and 2014, respectively.

(6) LEASES

The majority of revenues from the Company’s properties consist of rents received under long-term operating leases. In addition 
to base rent paid monthly in advance, some leases provide for the reimbursement of the tenant’s pro rata share of certain operating 
expenses incurred by the landlord including real estate taxes, special assessments, insurance, utilities, common area maintenance, 
management fees and certain capital repairs, subject to the terms of the respective lease. Certain other tenants are subject to net 
leases which provide that the tenant is responsible for fixed base rent, as well as all costs and expenses associated with occupancy. 
Under net leases, where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the 
accompanying consolidated statements of operations and other comprehensive income. Under leases where all expenses are paid 
by the landlord, subject to reimbursement by the tenant, the expenses are included in “Operating expenses” or “Real estate taxes” 
and reimbursements are included in “Tenant recovery income” in the accompanying consolidated statements of operations and 
other comprehensive income.

In certain municipalities, the Company is required to remit sales taxes to governmental authorities based upon the rental income 
received from properties in those regions. These taxes are reimbursed by the tenant to the Company depending upon the terms of 
the applicable tenant lease. The presentation of the remittance and reimbursement of these taxes is on a gross basis with sales tax 
expenses included in “Operating expenses” and sales tax reimbursements included in “Other property income” in the accompanying 

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

consolidated statements of operations and other comprehensive income. Such taxes remitted to governmental authorities, which 
are reimbursed by tenants, exclusive of amounts attributable to discontinued operations, were $1,986, $2,071 and $1,985 for the 
years ended December 31, 2016, 2015 and 2014, respectively.

Minimum lease payments to be received under operating leases, excluding payments under master lease agreements, additional 
percentage rent based on tenants’ sales volume and tenant reimbursements of certain operating expenses and assuming no exercise 
of renewal options or early termination rights, are as follows:

2017
2018
2019
2020
2021
Thereafter
Total

Minimum Lease
Payments

$

$

423,207
382,938
321,179
262,571
213,514
720,075
2,323,484

The remaining lease terms range from less than one year to more than 66 years.

Many of the leases at the Company’s retail properties contain provisions that condition a tenant’s obligation to remain open, the 
amount of rent payable by the tenant or potentially the tenant’s obligation to remain in the lease, upon certain factors, including: 
(i) the presence and continued operation of a certain anchor tenant or tenants, (ii) minimum occupancy levels at the applicable 
property or (iii) tenant sales amounts. If such a provision is triggered by a failure of any of these or other applicable conditions, a 
tenant could have the right to cease operations at the applicable property, have its rent reduced or terminate its lease early. The 
Company does not expect that such provisions will have a material impact on its future operating results.

The Company leases land under non-cancellable operating leases at certain of its properties expiring in various years from 2028
to 2087, exclusive of any available option periods. In addition, the Company leases office space for certain management offices 
and its corporate offices, which were expanded during the year ended December 31, 2016 to include a regional office in Tysons 
Corner, Virginia. The following table summarizes rent expense included in the accompanying consolidated statements of operations 
and other comprehensive income, including straight-line rent expense.

Ground lease rent expense (a)

Office rent expense (b)

Year Ended December 31,
2015

2014

2016

$

$

10,464

1,317

$

$

11,461

1,246

$

$

11,676

1,210

(a)  Included in “Operating expenses” in the accompanying consolidated statements of operations and other comprehensive income. 
Includes straight-line ground rent expense of $3,253, $3,722 and $3,889 for the years ended December 31, 2016, 2015 and 
2014, respectively.

(b)  Office rent expense related to property management operations is included in “Operating expenses” and office rent expense 
related to corporate office operations is included in “General and administrative expenses” in the accompanying consolidated 
statements of operations and other comprehensive income.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

Minimum future rental obligations to be paid under the ground and office leases, including fixed rental increases, are as follows:

2017
2018
2019
2020
2021
Thereafter
Total

Minimum Lease
Obligations

$

$

7,853
7,842
8,157
8,318
8,525
376,939
417,634

(7) MORTGAGES PAYABLE

The following table summarizes the Company’s mortgages payable:

Fixed rate mortgages payable (a)

$

773,395

6.31%

4.2

$

1,128,505 (b)

6.08%

3.9

December 31, 2016

December 31, 2015

Aggregate
Principal
Balance

Weighted
Average
Interest Rate

Weighted
Average Years
to Maturity

Aggregate
Principal
Balance

Weighted
Average
Interest Rate

Weighted
Average Years
to Maturity

Premium, net of accumulated amortization

Discount, net of accumulated amortization

Capitalized loan fees, net of accumulated

amortization

Mortgages payable, net

1,437

(622)

(5,026)

1,865

(1)

(7,233)

$

769,184

$

1,123,136

(a)  The fixed rate mortgages had interest rates ranging from 3.75% to 8.00% and 3.35% to 8.00% as of December 31, 2016 and 2015, respectively.

(b)  Includes $7,910 of variable rate mortgage debt that was swapped to a fixed rate as of December 31, 2015.

During the year ended December 31, 2016, the Company repaid or defeased mortgages payable in the total amount of $263,548
which had a weighted average fixed interest rate of 5.09% and made scheduled principal payments of $13,180 related to amortizing 
loans. One of the mortgages repaid, with a principal balance of $7,750 at maturity, had been swapped to a fixed rate and the 
Company had guaranteed a portion of the outstanding balance. Upon repayment of the mortgage on its scheduled maturity date, 
the interest rate swap expired and the Company’s guarantee was extinguished. In addition, during the year ended December 31, 
2016, the Company disposed of The Gateway through a lender-directed sale in full satisfaction of its $94,353 mortgage obligation, 
which had a fixed interest rate of 6.57%. Immediately prior to the disposition, the lender reduced the Company’s loan obligation 
to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received 
the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, 
resulting in a net gain on extinguishment of debt of $13,653. The Company also assumed a mortgage payable with a principal 
balance of $15,971 and an interest rate of 3.75% that matures in 2031 in conjunction with the acquisition of The Shoppes at Union 
Hill.

The majority of the Company’s mortgages payable require monthly payments of principal and interest, and some of the mortgages 
require reserves for real estate taxes and certain other costs. The Company’s properties and the related tenant leases are pledged 
as collateral for its mortgages payable. At times, the Company has borrowed funds financed as part of a cross-collateralized package, 
with cross-default provisions. In those circumstances, one or more of the Company’s properties may secure the debt of another of 
the Company’s properties. As of December 31, 2016, the Company had a portfolio of mortgages payable with a principal balance 
of $379,435 that was cross-collateralized by 45 properties and scheduled to mature in 2019 (known as the IW JV portfolio of 
mortgages payable). Subsequent to December 31, 2016, the Company defeased the IW JV portfolio of mortgages payable. As a 
result, the 45 properties that secured the mortgages payable as of December 31, 2016 are no longer encumbered by mortgages.

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Debt Maturities

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The following table shows the scheduled maturities and principal amortization of the Company’s indebtedness as of December 31, 
2016, for each of the next five years and thereafter and the weighted average interest rates by year. The table does not reflect the 
impact of any 2017 debt activity, such as the defeasance of the IW JV portfolio of mortgages payable or the funding of the $200,000 
unsecured term loan due 2023 (Term Loan Due 2023), which closed during the year ended December 31, 2016 and funded on 
January 3, 2017.

2017

2018

2019

2020

2021

Thereafter

Total

Debt:

Fixed rate debt:

Mortgages payable (a)

Fixed rate term loan (b)

Unsecured notes payable (c)

Total fixed rate debt

35,023

11,463

433,982

4,334

$

35,023

$

11,463

$ 433,982

$

4,334

$

23,249

$

265,344

$

773,395

—

—

—

—

—

—

—

—

250,000

100,000

373,249

—

600,000

865,344

250,000

700,000

1,723,395

Variable rate debt:

Variable rate term loan and
revolving line of credit

—

200,000

—

86,000

—

—

286,000

Total debt (d)

$

35,023

$ 211,463

$ 433,982

$

90,334

$ 373,249

$

865,344

$ 2,009,395

Weighted average interest rate on debt:

Fixed rate debt

Variable rate debt (e)

Total

4.83%

—

4.83%

6.51%

2.22%

2.45%

7.49%

—

7.49%

4.58%

2.12%

2.24%

2.73%

—

2.73%

4.36%

—

4.36%

4.82%

2.19%

4.44%

(a)  Excludes mortgage premium of $1,437 and discount of $(622), net of accumulated amortization, as of December 31, 2016.

(b)  $250,000 of London Interbank Offered Rate (LIBOR)-based variable rate debt has been swapped to a fixed rate through two interest rate 
swaps. The swaps effectively convert one-month floating rate LIBOR to a weighted average fixed rate of 0.6677% through December 31, 
2017.

(c)  Excludes discount of $(971), net of accumulated amortization, as of December 31, 2016.

(d)  The weighted average years to maturity of consolidated indebtedness was 5.3 years as of December 31, 2016. Total debt excludes capitalized 
loan fees of $(11,314), net of accumulated amortization, as of December 31, 2016, which are included as a reduction to the respective debt 
balances, and the Term Loan Due 2023, which funded on January 3, 2017. Refer to Note 9 to the consolidated financial statements for 
further details on the Term Loan Due 2023.

(e)  Represents interest rates as of December 31, 2016.

The Company plans on addressing its debt maturities through a combination of proceeds from asset dispositions, capital markets 
transactions and its unsecured revolving line of credit.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

(8) UNSECURED NOTES PAYABLE

The following table summarizes the Company’s unsecured notes payable:

Unsecured Notes Payable

Maturity Date

December 31, 2016

December 31, 2015

Principal
Balance

Interest Rate/
Weighted Average
Interest Rate

Principal
Balance

Interest Rate/
Weighted Average
Interest Rate

Senior notes – 4.12% due 2021

Senior notes – 4.58% due 2024

Senior notes – 4.00% due 2025

Senior notes – 4.08% due 2026

Senior notes – 4.24% due 2028

Discount, net of accumulated amortization

Capitalized loan fees, net of accumulated amortization

Notes Due 2026 and 2028

June 30, 2021

$

June 30, 2024

March 15, 2025

September 30, 2026

December 28, 2028

100,000

150,000

250,000

100,000

100,000

700,000

(971)

(3,886)

4.12% $

4.58%

4.00%

4.08%

4.24%

4.19%

100,000

150,000

250,000

—

—

500,000

(1,090)

(3,334)

Total

$

695,143

$

495,576

4.12%

4.58%

4.00%

—%

—%

4.20%

On September 30, 2016, the Company issued $100,000 of 10-year 4.08% senior unsecured notes due 2026 in a private placement 
transaction pursuant to a note purchase agreement it entered into with certain institutional investors on September 30, 2016. Pursuant 
to the same note purchase agreement, on December 28, 2016, the Company also issued $100,000 of 12-year 4.24% senior unsecured 
notes due 2028 (Notes Due 2026 and 2028). The proceeds were used to pay down the Company’s unsecured revolving line of 
credit, early repay certain longer-dated mortgages payable and for general corporate purposes.

The  note  purchase  agreement  governing  the  Notes  Due  2026  and  2028  contains  customary  representations,  warranties  and 
covenants, and events of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial 
covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage 
ratios; (ii) a minimum interest coverage ratio; (iii) a fixed charge coverage ratio (as set forth in the Company’s unsecured credit 
facility); and (iv) an unencumbered interest coverage ratio (as set forth in the Company’s unsecured credit facility and the note 
purchase agreement governing the Notes Due 2021 and 2024).

Notes Due 2025

On March 12, 2015, the Company completed a public offering of $250,000 in aggregate principal amount of 4.00% senior unsecured 
notes due 2025 (Notes Due 2025). The Notes Due 2025 were priced at 99.526% of the principal amount to yield 4.058% to maturity. 
The proceeds were used to repay a portion of the Company’s unsecured revolving line of credit.

The indenture, as supplemented, governing the Notes Due 2025 (the Indenture) contains customary covenants and events of default. 
Pursuant to the terms of the Indenture, the Company is subject to various financial covenants, including the requirement to maintain 
the  following:  (i)  maximum  secured  and  total  leverage  ratios;  (ii)  a  debt  service  coverage  ratio;  and  (iii)  maintenance  of  an 
unencumbered assets to unsecured debt ratio.

Notes Due 2021 and 2024

On June 30, 2014, the Company completed a private placement of $250,000 of unsecured notes, consisting of $100,000 of 4.12%
senior unsecured notes due 2021 and $150,000 of 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024). The proceeds 
were used to repay a portion of the Company’s unsecured revolving line of credit.

The  note  purchase  agreement  governing  the  Notes  Due  2021  and  2024  contains  customary  representations,  warranties  and 
covenants, and events of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial 
covenants, some of which are based upon the financial covenants in effect in the Company’s primary credit facility, including the 
requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest 
coverage and unencumbered interest coverage ratios; and (iii) a minimum consolidated net worth.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

As of December 31, 2016, management believes the Company was in compliance with the financial covenants under the Indenture 
and the note purchase agreements.

(9) UNSECURED TERM LOANS AND REVOLVING LINE OF CREDIT

Unsecured Credit Facility

On January 6, 2016, the Company entered into its fourth amended and restated unsecured credit agreement with a syndicate of 
financial  institutions  led  by  KeyBank  National Association  serving  as  administrative  agent  and  Wells  Fargo  Bank,  National 
Association serving as syndication agent to provide for an unsecured credit facility aggregating $1,200,000 (Unsecured Credit 
Facility). The Company’s Unsecured Credit Facility consists of a $750,000 unsecured revolving line of credit, a $250,000 unsecured 
term loan and a $200,000 unsecured term loan and is priced on a leverage grid at a rate of LIBOR plus a credit spread. The Company 
received investment grade credit ratings from two rating agencies in 2014. In accordance with the unsecured credit agreement, the 
Company may elect to convert to an investment grade pricing grid. As of December 31, 2016, making such an election would have 
resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing 
grid.

The following table summarizes the key terms of the Company’s Unsecured Credit Facility:

Unsecured Credit Facility

$250,000 unsecured term loan

$200,000 unsecured term loan

Maturity
Date

1/5/2021

Extension
Option

Extension
Fee

Credit
Spread

Unused Fee

Credit
Spread

Facility Fee

Leverage-Based Pricing

Ratings-Based Pricing

N/A

N/A

1.30% - 2.20%

5/11/2018

2 one year

0.15%

1.45% - 2.20%

N/A

N/A

0.90% - 1.75%

1.05% - 2.05%

N/A

N/A

$750,000 unsecured revolving line of credit

1/5/2020

2 six month

0.075%

1.35% - 2.25% 0.15% - 0.25% 0.85% - 1.55% 0.125% - 0.30%

The Company’s Unsecured Credit Facility has a $400,000 accordion option that allows the Company, at its election, to increase 
the total credit facility up to $1,600,000, subject to (i) customary fees and conditions including, but not limited to, the absence of 
an event of default as defined in the agreement and (ii) the Company’s ability to obtain additional lender commitments.

The following table summarizes the Company’s Unsecured Credit Facility:

December 31, 2016

December 31, 2015

Unsecured Credit Facility

Balance

$250,000 unsecured term loan – fixed rate (a)

$200,000 unsecured term loan – variable rate

$450,000 unsecured term loan – fixed rate portion (b)

$450,000 unsecured term loan – variable rate portion

Subtotal

Capitalized loan fees, net of accumulated amortization

Term loans, net

Revolving line of credit – variable rate (c)

Total unsecured credit facility, net

$

$

250,000

200,000

—

—

450,000

(2,402)

447,598

86,000

533,598

Interest Rate/
Weighted Average
Interest Rate

1.97%

2.22%

—%

—%

Balance

$

—

—

300,000

150,000

450,000

(2,474)

447,526

100,000

547,526

Interest Rate/
Weighted Average
Interest Rate

—%

—%

1.99%

1.88%

1.93%

1.95%

2.12%

2.09%

$

(a)  As of December 31, 2016, $250,000 of LIBOR-based variable rate debt has been swapped to a weighted average fixed rate of 0.6677% 
plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 
1.30% as of December 31, 2016.

(b)  As of December 31, 2015, $300,000 of LIBOR-based variable rate debt had been swapped to a fixed rate of 0.53875% plus a credit spread 
based on a leverage grid ranging from 1.45% to 2.00% through February 2016. The applicable credit spread was 1.45% as of December 31, 
2015.

(c)  Excludes capitalized loan fees, which are included in “Other assets, net” in the accompanying consolidated balance sheets.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The fourth amended and restated unsecured credit agreement (Unsecured Credit Agreement) contains customary representations, 
warranties and covenants, and events of default. Pursuant to the terms of the Unsecured Credit Agreement, the Company is subject 
to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and 
consolidated leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of December 31, 2016, 
management believes the Company was in compliance with the financial covenants and default provisions under the Unsecured 
Credit Agreement.

The Company previously had a $1,000,000 unsecured credit facility that consisted of a $550,000 unsecured revolving line of credit 
and a $450,000 unsecured term loan that bore interest at a rate of LIBOR plus a credit spread ranging from 1.45% to 2.05% and 
was scheduled to mature on May 12, 2017 for the unsecured revolving line of credit and May 11, 2018 for the unsecured term 
loan.

Term Loan Due 2023

On November 22, 2016, the Company closed on a seven-year $200,000 unsecured term loan with a group of financial institutions, 
which funded on January 3, 2017. The Term Loan Due 2023 is priced on a leverage grid at a rate of LIBOR plus a credit spread 
ranging from 1.70% to 2.55%. In accordance with the term loan agreement (Term Loan Agreement), the Company may elect to 
convert to an investment grade pricing grid. As of December 31, 2016, making such an election would have resulted in a higher 
interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid. The Term Loan 
Due 2023 matures on November 22, 2023 and has a $100,000 accordion option that allows the Company, at its election, to increase 
the total unsecured term loan up to $300,000, subject to customary fees and conditions, including the absence of an event of default 
as defined in the Term Loan Agreement.

The Term Loan Agreement contains customary representations, warranties and covenants, and events of default, including financial 
covenants that require the Company to maintain the following: (i) maximum unencumbered, secured and consolidated leverage 
ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of December 31, 2016, management believes 
the Company was in compliance with the financial covenants and default provisions under the Term Loan Agreement.

(10) DERIVATIVES

The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability 
to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management 
strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in 
exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional 
amount.

The Company utilizes two interest rate swaps to hedge the variable cash flows associated with variable rate debt. The effective 
portion of changes in the fair value of derivatives that are designated and that qualify as cash flow hedges is recorded in “Accumulated 
other comprehensive income (loss)” and is reclassified to interest expense as interest payments are made on the Company’s variable 
rate debt. Over the next 12 months, the Company estimates that an additional $722 will be reclassified as a decrease to interest 
expense. The ineffective portion of the change in fair value of derivatives is recognized directly in earnings.

During the year ended December 31, 2016, the Company entered into the following two interest rate swaps which effectively 
convert one-month floating rate LIBOR to a fixed rate:

Effective Date

March 1, 2016

May 16, 2016

Notional

$

$

100,000

150,000

Fixed
Interest Rate

0.6591%

0.6735%

Termination Date

December 31, 2017

December 31, 2017

The Company previously had a $300,000 interest rate swap that matured on February 24, 2016. In addition, during the year ended 
December 31, 2016, the Company repaid a $7,750 variable rate mortgage payable that had been swapped to a fixed rate. Upon 
repayment of the mortgage on its scheduled maturity date, the interest rate swap expired. As of December 31, 2015, the outstanding 
principal balance of this variable rate mortgage was $7,910.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivatives

Interest rate swaps

Number of Instruments

Notional

December 31,
2016

December 31,
2015

December 31,
2016

December 31,
2015

2

2

$

250,000

$

307,910

The table below presents the estimated fair value of the Company’s derivative financial instruments as well as their classification 
in  the  consolidated  balance  sheets.  The  valuation  techniques  utilized  are  described  in  Note 16  to  the  consolidated  financial 
statements.

Derivatives designated as cash flow hedges:

Interest rate swaps

Interest rate swaps

December 31, 2016

December 31, 2015

Balance Sheet
Location

Fair Value

Balance Sheet
Location

Fair Value

Other assets, net

N/A

$

$

743

—

N/A

Other liabilities

$

$

—

85

The  following  table  presents  the  effect  of  the  Company’s  derivative  financial  instruments  on  the  accompanying consolidated 
statements of operations and other comprehensive income:

Derivatives in 
Cash Flow
Hedging
Relationships

Amount of (Gain) Loss
Recognized in Other
Comprehensive Income
on Derivative
(Effective Portion)

2016

2015

Location of Loss
Reclassified from
Accumulated Other
Comprehensive
Income (AOCI)
into Income
(Effective Portion)

Amount of Loss
Reclassified from
AOCI into Income
(Effective Portion)

2016

2015

Location of Gain
Recognized In
Income on Derivative
(Ineffective Portion
and Amount
Excluded from
Effectiveness Testing)

Amount of Gain
Recognized in Income
on Derivative
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)

2016

2015

Interest rate swaps

$

(399) $

643

Interest expense

$

408

$

1,095

Other income, net

$

(21) $

(25)

Subsequent to December 31, 2016, the Company entered into two agreements to swap a total of $200,000 of LIBOR-based variable 
rate debt to a fixed interest rate of 1.2628% through November 22, 2018.

Credit-risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision whereby if the Company defaults 
on the related indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then 
the Company could also be declared in default on its corresponding derivative obligation.

The Company’s agreements with each of its derivative counterparties also contain a provision whereby if the Company consolidates 
with, merges with or into, or transfers all or substantially all of its assets to another entity and the creditworthiness of the resulting, 
surviving or transferee entity is materially weaker than the Company’s, the counterparty has the right to terminate the derivative 
obligations. As of December 31, 2016, the Company did not have any derivatives in a net liability position and has not posted any 
collateral related to these agreements.

(11) INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

The Company did not have any investments in unconsolidated joint ventures as of December 31, 2016 and 2015.

On June 5, 2014, the Company dissolved its joint venture arrangement with its partner in MS Inland, an unconsolidated joint 
venture formed with a large state pension fund, through the acquisition of the six properties owned by the joint venture. The 
Company was the managing member of the venture and earned fees for providing property management and leasing services. The 
Company had the ability to exercise significant influence, but did not have financial or operating control over the joint venture, 
and as a result, the Company accounted for its investment pursuant to the equity method of accounting. 

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

Through December 1, 2014, Oak Property & Casualty LLC (the Captive) was an insurance association owned by the Company 
and three other unaffiliated parties that was formed to insure/reimburse the members’ deductible obligations for property and 
general liability insurance claims subject to certain limitations. The Captive was determined to be a VIE, but because the Company 
did not hold the power to most significantly impact the Captive’s performance, the Company was not considered the primary 
beneficiary. Accordingly, the Company’s investment in the Captive was accounted for pursuant to the equity method of accounting. 
The Company’s risk of loss was limited to its investment and it was not required to fund additional capital to the Captive. Effective 
December 1, 2014, the Company terminated its participation in the Captive and established a new wholly-owned captive insurance 
company. See Note 17 to the consolidated financial statements for further details.

Under the equity method of accounting, the Company’s net equity investment in each unconsolidated joint venture was reflected 
in the accompanying consolidated balance sheets and its share of net income or loss from each unconsolidated joint venture was 
reflected in the accompanying consolidated statements of operations and other comprehensive income. Distributions that were 
related to income from operations were included as operating activities and distributions that were related to capital transactions 
were included as investing activities in the accompanying consolidated statements of cash flows.

Combined condensed financial information of the Company’s unconsolidated joint ventures (at 100%) for the year ended December 
31, 2014, the period attributable to the Company’s ownership, is summarized as follows:

Revenues
Property related income
Other income

Total revenues

Expenses
Operating expenses
Real estate taxes
Depreciation and amortization
General and administrative expenses
Interest expense
Other expense, net
Total expenses

Loss from continuing operations
Net loss

Other Joint
Ventures (a)
2014

$

11,853
6,679
18,532

1,660
2,339
3,948
268
3,028
11,921
23,164

(4,632)
(4,632)

$

(a)  On June 5, 2014, the Company dissolved its joint venture arrangement with its partner in MS Inland. In addition, effective 

December 1, 2014, the Company terminated its investment in the Captive.

Profits, Losses and Capital Activity

The following table summarizes the Company’s share of net income (loss) as well as net cash distributions from (contributions 
to) each unconsolidated joint venture for the year ended December 31, 2014:

Joint Venture

MS Inland (a)
Captive (b)

The Company’s
Share of
Net Income (Loss)
2014

Net Cash
Distributions from/
(Contributions to)
Joint Ventures
2014

Fees Earned by
the Company
2014

$

$

241
(2,444)
(2,203)

$

$

1,360
(25)
1,335

$

$

338
—
338

(a)  On June 5, 2014, the Company dissolved its joint venture arrangement with its partner in MS Inland.

(b)  Effective December 1, 2014, the Company terminated its participation in the Captive.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

In addition to the Company’s share of net income (loss) for each unconsolidated joint venture, amortization of basis differences 
is recorded within “Equity in loss of unconsolidated joint ventures, net” in the accompanying consolidated statements of operations 
and other comprehensive income. Such basis differences resulted from the differences between the Company’s net book values 
based on historical cost and the fair values of investment properties contributed to its unconsolidated joint ventures and are amortized 
over the depreciable lives of the joint ventures’ real estate assets and liabilities. The Company recorded amortization of $115, 
which was accretive to net income, related to these differences during the year ended December 31, 2014.

The Company did not have any unconsolidated joint ventures as of December 31, 2016 and 2015. When the Company holds 
investments in unconsolidated joint ventures, they are reviewed for potential impairment, in addition to impairment evaluations 
of the individual assets underlying the investments, each reporting period or whenever events or changes in circumstances warrant 
such an evaluation. To determine whether impairment, if any, is other-than-temporary, the Company considers whether it has the 
ability and intent to hold the investment until its carrying value is fully recovered. The Company did not record any impairment 
charges to its investments in unconsolidated joint ventures during the year ended December 31, 2014.

Acquisitions

On June 5, 2014, the Company dissolved its joint venture arrangement with its partner in MS Inland by acquiring its partner’s 
80% ownership interest in the six properties owned by the joint venture (see Note 3 to the consolidated financial statements). The 
six properties had, at acquisition, a combined fair value of $292,500, with the Company’s partner’s interest valued at $234,000. 
The Company paid total cash consideration of approximately $120,600 before transaction costs and prorations and after assumption 
of the joint venture’s in-place mortgage financing on those properties of $141,698 at a weighted average interest rate of 4.79%. 
The Company accounted for this transaction as a business combination achieved in stages and recognized a gain on change in 
control of investment properties of $24,158 as a result of remeasuring the carrying value of its 20% interest in the six acquired 
properties to fair value. The following table summarizes the calculation of the gain on change in control of investment properties 
recognized in conjunction with the transaction discussed above:

Fair value of the net assets acquired at 100%

Fair value of the net assets acquired at 20%
Less: Carrying value of the Company’s previous investment in the six properties

acquired on June 5, 2014

Gain on change in control of investment properties

$

$

$

150,802

30,160

6,002

24,158

(12) EQUITY

On March 7, 2013, the Company established an at-the-market (ATM) equity program under which it sold 5,547 shares of its Class 
A common stock during the year ended December 31, 2013. The shares were issued at a weighted average price per share of $15.29 
for proceeds of $83,527, net of commissions and offering costs. No shares were issued during the years ended December 31, 2014 
and 2015 and the 2013 ATM equity program expired in November 2015.

On December 21, 2015, the Company entered into a new ATM equity program under which it may issue and sell shares of its Class 
A common stock, having an aggregate offering price of up to $250,000, from time to time. Actual sales may depend on a variety 
of factors, including, among others, market conditions and the trading price of the Company’s Class A common stock. Any net 
proceeds are expected to be used for general corporate purposes, which may include the funding of acquisitions and redevelopment 
activities and the repayment of debt, including the Company’s Unsecured Credit Facility. The Company did not sell any shares 
under its ATM equity program during the years ended December 31, 2016 and 2015. As of December 31, 2016, the Company had 
Class A common shares having an aggregate offering price of up to $250,000 remaining available for sale under its ATM equity 
program.

On  December  15,  2015,  the  Company’s  board  of  directors  authorized  a  common  stock  repurchase  program  under  which  the 
Company may repurchase, from time to time, up to a maximum of $250,000 of shares of its Class A common stock. The shares 
may be repurchased in the open market or in privately negotiated transactions and are canceled upon repurchase. The timing and 
actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the 
value of the Company’s assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements 
and priorities. The common stock repurchase program may be suspended or terminated at any time without prior notice. The 

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

Company did not repurchase any shares during the year ended December 31, 2015. During the year ended December 31, 2016, 
the Company repurchased 591 shares at an average price per share of $14.93 for a total of $8,841. As of December 31, 2016, 
$241,159 remained available under the repurchase program.

(13) EARNINGS PER SHARE

The following table summarizes the components used in the calculation of basic and diluted earnings per share (EPS):

Numerator:
Income from continuing operations
Gain on sales of investment properties
Net income from continuing operations attributable to noncontrolling interest
Preferred stock dividends
Income from continuing operations attributable to common shareholders
Income from discontinued operations
Net income attributable to common shareholders
Distributions paid on unvested restricted shares
Net income attributable to common shareholders excluding amounts

attributable to unvested restricted shares

Denominator:
Denominator for earnings per common share – basic:

Year Ended December 31,
2015

2014

2016

$

$

37,110
129,707
—
(9,450)
157,367
—
157,367
(445)

$

3,832
121,792
(528)
(9,450)
115,646
—
115,646
(481)

597
42,196
—
(9,450)
33,343
507
33,850
(225)

$

156,922

$

115,165

$

33,625

Weighted average number of common shares outstanding

236,651 (a)

236,380 (b)

236,184 (c)

Effect of dilutive securities:

Stock options
RSUs

Denominator for earnings per common share – diluted:

Weighted average number of common and common equivalent

shares outstanding

2 (d)
298 (e)

2 (d)
— (f)

3 (d)
—

236,951  

236,382  

236,187

(a)  Excludes 542 shares of unvested restricted common stock, which equate to 637 shares on a weighted average basis for the year ended 
December 31, 2016. These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the 
shares are released.

(b)  Excludes 788 shares of unvested restricted common stock, which equate to 768 shares on a weighted average basis for the year ended 
December 31, 2015. These shares were excluded from the computation of basic EPS as the contingencies remained and the shares had not 
been released as of the end of the reporting period.

(c)  Excludes 396 shares of unvested restricted common stock, which equate to 364 shares on a weighted average basis for the year ended 
December 31, 2014. These shares were excluded from the computation of basic EPS as the contingencies remained and the shares had not 
been released as of the end of the reporting period.

(d)  There were outstanding options to purchase 41, 53 and 64 shares of common stock as of December 31, 2016, 2015 and 2014, respectively, 
at a weighted average exercise price of $19.25, $19.39 and $19.32, respectively. Of these totals, outstanding options to purchase 35, 45 and 
54 shares of common stock as of December 31, 2016, 2015 and 2014, respectively, at a weighted average exercise price of $20.55, $20.74 
and $20.72, respectively, have been excluded from the common shares used in calculating diluted earnings per share as including them 
would be anti-dilutive.

(e)  There were 391 RSUs eligible for future conversion following the performance period as of December 31, 2016 (see Note 5 to the consolidated 
financial statements), which equate to 367 RSUs on a weighted average basis for the year ended December 31, 2016. These contingently 
issuable shares are included in diluted EPS based on the weighted average number of shares that would be outstanding during the period, 
if any, assuming the end of the reporting period was the end of the contingency periods.

(f)  There were 174 RSUs eligible for future conversion following the performance period as of December 31, 2015, which equate to 101 RSUs 
on a weighted average basis for the year ended December 31, 2015. These contingently issuable shares are included in diluted EPS based 
on the weighted average number of shares that would be outstanding during the period, if any, assuming the end of the reporting period was 
the end of the contingency period. Assuming December 31, 2015 was the end of the contingency period, none of these contingently issuable 
shares would have been outstanding.

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(14) INCOME TAXES

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The Company has elected to be taxed as a REIT under the Code. To qualify as a REIT, the Company must meet a number of 
organizational and operational requirements, including a requirement to annually distribute to its shareholders at least 90% of its 
REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains. The Company 
intends to continue to adhere to these requirements and to maintain its REIT status. As a REIT, the Company is entitled to a 
deduction for some or all of the distributions it pays to shareholders. Accordingly, the Company is generally subject to U.S. federal 
income taxes on any taxable income that is not currently distributed to its shareholders. If the Company fails to qualify as a REIT 
in any taxable year, it will be subject to U.S. federal income taxes and may not be able to qualify as a REIT until the fifth subsequent 
taxable year.

Notwithstanding the Company’s qualification as a REIT, the Company may be subject to certain state and local taxes on its income 
or properties. In addition, the Company’s consolidated financial statements include the operations of one wholly-owned subsidiary 
that has jointly elected to be treated as a TRS and is subject to U.S. federal, state and local income taxes at regular corporate tax 
rates. The Company did not record any income tax expense related to the TRS for the years ended December 31, 2016, 2015 and 
2014. As a REIT, the Company may also be subject to certain U.S. federal excise taxes if it engages in certain types of transactions.

Deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized 
for the estimated future consequences attributable to differences between the financial statement carrying amounts of existing 
assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted rates in effect for 
the year in which these temporary differences are expected to reverse. Deferred tax assets are recognized only to the extent that it 
is more likely than not that they will be realized based on consideration of available evidence, including future reversal of existing 
taxable  temporary  differences,  the  magnitude  and  timing  of  future  projected  taxable  income  and  tax  planning  strategies. The 
Company believes that it is not more likely than not that a portion of its net deferred tax asset will be realized in future periods 
and therefore, has recorded a valuation allowance for a portion of the balance, resulting in no effect on the consolidated financial 
statements.

The Company’s deferred tax assets and liabilities as of December 31, 2016 and 2015 were as follows:

Deferred tax assets:
Basis difference in properties
Capital loss carryforward
Net operating loss carryforward
Other
Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Other

Net deferred tax assets

2016

2015

$

$

$

—
9,628
10,677
870
21,175
(21,175)
—

1,109
9,885
12,543
81
23,618
(23,618)
—

—
—

$

—
—

The Company’s deferred tax assets and liabilities result from the activities of the TRS. As of December 31, 2016, the TRS had a 
capital loss carryforward and a federal net operating loss carryforward of $27,510 and $30,507, respectively, which if not utilized, 
will begin to expire in 2019 and 2031, respectively.

Differences between net income from the consolidated statements of operations and other comprehensive income and the Company’s 
taxable income primarily relate to the recognition of sales of investment properties, impairment charges recorded on investment 
properties and the timing of both revenue recognition and investment property depreciation and amortization.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The following table reconciles the Company’s net income to REIT taxable income before the dividends paid deduction for the 
years ended December 31, 2016, 2015 and 2014:

Net income attributable to the Company
Book/tax differences

REIT taxable income subject to 90% dividend requirement

2016

2015

2014

$

$

166,817
(50,950)
115,867

$

$

125,096
2,344
127,440

$

$

43,300
71,910
115,210

The Company’s dividends paid deduction for the years ended December 31, 2016, 2015 and 2014 is summarized below:

Cash distributions paid
Less: non-dividend distributions
Total dividends paid deduction attributable to earnings and profits

2016

2015

2014

$

$

166,285
(50,418)
115,867

$

$

166,064
(38,624)
127,440

$

$

166,025
(50,815)
115,210

A summary of the tax characterization of the distributions paid per share to shareholders of the Company’s preferred stock and 
common stock for the years ended December 31, 2016, 2015 and 2014 follows:

Preferred stock
Ordinary dividends
Non-dividend distributions
Total distributions per share

Common stock
Ordinary dividends
Non-dividend distributions
Total distributions per share

2016

2015

2014

$

$

$

$

1.75
—
1.75

0.45
0.21
0.66

$

$

$

$

1.75
—
1.75

0.50
0.16
0.66

$

$

$

$

1.75
—
1.75

0.45
0.21
0.66

The Company records a benefit for uncertain income tax positions if the result of a tax position meets a “more likely than not” 
recognition threshold. No liabilities have been recorded as of December 31, 2016 or 2015 as a result of this provision. The Company 
expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of 
December 31, 2016. Returns for the calendar years 2013 through 2016 remain subject to examination by federal and various state 
tax jurisdictions.

(15) PROVISION FOR IMPAIRMENT OF INVESTMENT PROPERTIES

As of December 31, 2016, 2015 and 2014, the Company identified indicators of impairment at certain of its properties. Such 
indicators included a low occupancy rate, difficulty in leasing space and related cost of re-leasing, financially troubled tenants or 
reduced anticipated holding periods. The following table summarizes the results of these analyses as of December 31, 2016, 2015
and 2014:

Number of properties for which indicators of impairment were identified
Less: number of properties for which an impairment charge was recorded
Less: number of properties that were held for sale as of the date the analysis was performed

for which indicators of impairment were identified but no impairment charge was recorded

Remaining properties for which indicators of impairment were identified but

no impairment charge was considered necessary

7
2

2

3

3
—

—

3

2016

December 31,
2015

2014

(a)

(b)

8
3

1

4

Weighted average percentage by which the projected undiscounted cash flows exceeded

its respective carrying value for each of the remaining properties (c)

21%

42%

48%

(a)  Includes one property which has subsequently been sold as of December 31, 2016.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

(b)  Includes seven properties which have subsequently been sold as of December 31, 2016.

(c)  Based upon the estimated holding period for each asset where an undiscounted cash flow analysis was performed.

The Company recorded the following investment property impairment charges during the year ended December 31, 2016:

Provision for
Impairment of
Investment
Properties

3,007
4,142
4,742
5,985
2,500
20,376

40,850

Provision for
Impairment of
Investment
Properties

2,289
1,655
169
2,484
13,340
19,937

43,720

$

$

$

$

Property Name

South Billings Center (a)
Mid-Hudson Center (b)
Saucon Valley Square (c)
Crown Theater (d)
Rite Aid Store (Eckerd), Culver Rd. (e)

Property Type
Development
Multi-tenant retail
Multi-tenant retail
Single-user retail
Single-user retail

Impairment Date
Various (a)
June 30, 2016
September 30, 2016
December 31, 2016
December 31, 2016

Square
Footage

—
235,600
80,700
74,200
10,900

Estimated fair value of impaired properties as of impairment date $

(a)  An impairment charge was recorded on March 31, 2016 based upon the terms and conditions of an executed sales contract, which was 
subsequently terminated. The property, which was not under active development, was sold on December 16, 2016 and additional impairment 
was recognized pursuant to the terms and conditions of an executed sales contract.

(b)  The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was classified 

as held for sale as of June 30, 2016 and was sold on July 21, 2016.

(c)  The Company recorded an impairment charge driven by a change in the estimated holding period for the property.

(d)  The Company recorded an impairment charge upon re-evaluating the strategic alternatives for the property.

(e)  The Company recorded an impairment charge based upon the terms and conditions of a bona fide purchase offer. This property was sold 

on January 27, 2017.

The Company recorded the following investment property impairment charges during the year ended December 31, 2015:

Property Name

Massillon Commons (a)
Traveler’s Office Building (a)
Shaw’s Supermarket (a)
Southgate Plaza (a)
Bellevue Mall (a)

Property Type
Multi-tenant retail
Single-user office
Single-user retail
Multi-tenant retail
Development

Impairment Date
June 4, 2015
June 30, 2015
August 6, 2015
December 18, 2015
December 31, 2015

Square
Footage

245,900
50,800
65,700
86,100
369,300

Estimated fair value of impaired properties as of impairment date $

(a)  The Company recorded impairment charges based upon the terms and conditions of an executed sales contract for the respective properties, 

which were sold during 2015.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The Company recorded the following investment property impairment charges during the year ended December 31, 2014:

Property Name

Midtown Center (a)
Gloucester Town Center (b)
Boston Commons (a)
Four Peaks Plaza (a)
Shaw’s Supermarket (c)
The Gateway (d)
Newburgh Crossing (a)
Hartford Insurance Building (e)
Citizen’s Property Insurance Building (e)
Aon Hewitt East Campus (f)

Property Type
Multi-tenant retail
Multi-tenant retail
Multi-tenant retail
Multi-tenant retail
Single-user retail
Multi-tenant retail
Multi-tenant retail
Single-user office
Single-user office
Single-user office

Impairment Date
March 31, 2014
Various (b)
August 19, 2014
August 27, 2014
September 30, 2014
September 30, 2014
December 22, 2014
December 31, 2014
December 31, 2014
December 31, 2014

Square
Footage

Provision for
Impairment of
Investment
Properties

408,500
107,200
103,400
140,400
65,700
623,200
62,900
97,400
59,800
343,000
Total

$

$

394
6,148
453
4,154
6,230
42,999
1,139
5,782
4,341
563
72,203

Estimated fair value of impaired properties as of impairment date $

190,953

(a)  The Company recorded impairment charges based upon the terms and conditions of an executed sales contract for each of the respective 

properties, which were sold during 2014.

(b)  An impairment charge was recorded on June 30, 2014 based upon the terms of a bona fide purchase offer and additional impairment was 

recognized on September 30, 2014 pursuant to the terms and conditions of an executed sales contract.

(c)  The Company recorded an impairment charge upon re-evaluating the strategic alternatives for the property.

(d)  The Company recorded an impairment charge as a result of a combination of factors including the expected impact on future operating 
results stemming from a re-evaluation of the anticipated positioning of, and tenant population at, the property and a re-evaluation of other 
potential strategic alternatives for the property. This property was sold on February 1, 2016.

(e)  The Company recorded impairment charges driven by changes in the estimated holding periods for the properties.

(f)  The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was classified 

as held for sale as of December 31, 2014 and was sold on January 20, 2015.

The Company can provide no assurance that material impairment charges with respect to its investment properties will not occur 
in future periods.

(16) FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments:

Financial assets:
Derivative asset
Financial liabilities:

Mortgages payable, net
Unsecured notes payable, net
Unsecured term loans, net
Unsecured revolving line of credit
Derivative liability

December 31, 2016

December 31, 2015

Carrying
Value

Fair Value

Carrying
Value

Fair Value

$

$
$
$
$
$

743

$

743

769,184
695,143
447,598
86,000

$
$
$
$
— $

833,210
679,212
450,421
86,130
—

$

$
$
$
$
$

— $

—

1,123,136
495,576
447,526
100,000
85

$
$
$
$
$

1,213,620
486,701
450,000
100,000
85

The carrying value of the derivative asset is included in “Other assets, net” and the carrying value of the derivative liability is 
included in “Other liabilities” in the accompanying consolidated balance sheets.

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Fair Value Hierarchy

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an 
orderly transaction. The hierarchy for inputs used in measuring fair value are as follows:

•  Level 1 Inputs — Unadjusted quoted prices in active markets for identical assets or liabilities.

•  Level 2 Inputs — Observable inputs other than quoted prices in active markets for identical assets and liabilities.

•  Level 3 Inputs — Prices or valuation techniques that require inputs that are both significant to the fair value measurement 

and unobservable.

When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement 
is categorized is based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the 
level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value 
of these instruments are described after the table.

December 31, 2016
Derivative asset

December 31, 2015
Derivative liability

Level 1

Level 2

Level 3

Total

Fair Value

$

$

— $

743

— $

85

$

$

— $

743

— $

85

Derivatives:  The fair value of the derivative asset and derivative liability are determined using a discounted cash flow analysis 
on the expected future cash flows of each derivative. This analysis utilizes observable market data including forward yield curves 
and implied volatilities to determine the market’s expectation of the future cash flows of the variable component. The fixed and 
variable components of the derivative are then discounted using calculated discount factors developed based on the LIBOR swap 
rate and are aggregated to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments 
to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value 
measurements. Although the Company has determined that the majority of the inputs used to value its derivatives fall within 
Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as 
estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 
2016 and 2015, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation 
of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation. As 
a result, the Company has determined that its derivative valuations in their entirety are classified within Level 2 of the fair value 
hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered 
any applicable credit enhancements. The Company’s derivative instruments are further described in Note 10 to the consolidated 
financial statements.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

Nonrecurring Fair Value Measurements

The  following  table  presents  the  Company’s  assets  measured  at  fair  value  on  a  nonrecurring  basis  as  of  December 31,  2016
aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related 
to  properties  remeasured  to  fair  value  during  the  year  ended  December 31,  2016,  except  for  those  properties  sold  prior  to 
December 31, 2016. Methods and assumptions used to estimate the fair value of these assets are described after the table.

Fair Value

Level 1

Level 2

Level 3

Total

Provision for
Impairment (a)

December 31, 2016
Investment properties

$

—

$

500 (b) $

10,600 (c) $

11,100

$

13,227

(a)  Excludes impairment charges recorded on investment properties sold prior to December 31, 2016.

(b)  Represents the fair value of the Company’s Rite Aid Store (Eckerd), Culver Rd. investment property. The estimated fair value of Rite Aid 
Store (Eckerd), Culver Rd. was based upon the expected sales price from a bona fide purchase offer and determined to be a Level 2 input.

(c)  Represents the fair values of the Company’s Crown Theater and Saucon Valley Square investment properties. The estimated fair values of 
Crown Theater and Saucon Valley Square of $4,000 and $6,600, respectively, were determined using the income approach. The income 
approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding 
period to a present value at a risk-adjusted rate. Discount rates, growth assumptions and terminal capitalization rates utilized in this approach 
are derived from property-specific information, market transactions and other financial and industry data. The terminal capitalization rate 
and discount rate are significant inputs to this valuation. The following were the key Level 3 inputs used in estimating the fair values of 
Crown Theater as of December 31, 2016 and Saucon Valley Square as of September 30, 2016, the date the assets were measured at fair 
value:

Rental growth rates
Operating expense growth rates
Discount rates
Terminal capitalization rates

2016

Low
Varies (i)
3.10%
9.35%
8.35%

High
Varies (i)
18.02%
10.00%
9.50%

(i)  Since cash flow models are established at the tenant level, projected rental revenue growth rates fluctuate over the 
course of the estimated holding period based upon the timing of lease rollover, amount of available space and other 
property and space-specific factors.

The Company did not have any assets measured at fair value on a nonrecurring basis as of December 31, 2015.

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Fair Value Disclosures

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

The following table presents the Company’s financial liabilities, which are measured at fair value for disclosure purposes, by the 
level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value 
of these instruments are described after the table.

December 31, 2016
Mortgages payable, net
Unsecured notes payable, net
Unsecured term loans, net
Unsecured revolving line of credit

December 31, 2015
Mortgages payable, net
Unsecured notes payable, net
Unsecured term loan, net
Unsecured revolving line of credit

Level 1

Level 2

Level 3

Total

Fair Value

$
$
$
$

$
$
$
$

234,700

— $
$
— $
— $

239,482

— $
$
— $
— $

— $
— $
— $
— $

833,210
444,512
450,421
86,130

— $
— $
— $
— $

1,213,620
247,219
450,000
100,000

$
$
$
$

$
$
$
$

833,210
679,212
450,421
86,130

1,213,620
486,701
450,000
100,000

Mortgages payable, net:  The Company estimates the fair value of its mortgages payable by discounting the anticipated future 
cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable 
maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rate 
for each of the Company’s individual mortgages payable based upon the specific terms of the agreement, including the term to 
maturity, the quality and nature of the underlying property and its leverage ratio. The rates used range from 2.9% to 4.6% and 
2.2% to 6.0% as of December 31, 2016 and 2015, respectively.

Unsecured notes payable, net:  The quoted market price as of December 31, 2016 was used to value the Notes Due 2025. The 
Company estimates the fair value of its Notes Due 2021, 2024, 2026 and 2028 by discounting the future cash flows at rates currently 
offered  to  the  Company  by  its  lenders  for  similar  debt  instruments  of  comparable  maturities. The  rates  used  are  not  directly 
observable in the marketplace and judgment is used in determining the appropriate rates. The weighted average rates used were 
4.48% and 4.64% as of December 31, 2016 and 2015, respectively.

Unsecured term loans, net:  The Company estimates the fair value of its unsecured term loans, net by discounting the anticipated 
future cash flows related to the credit spreads at rates currently offered to the Company by its lenders for similar instruments of 
comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the 
appropriate rates. The weighted average rate used to discount the credit spreads was 1.30% as of December 31, 2016 and 2015.

Unsecured revolving line of credit:  The Company estimates the fair value of its unsecured revolving line of credit by discounting 
the anticipated future cash flows related to the credit spreads at rates currently offered to the Company by its lenders for similar 
facilities of comparable maturity. The rates used are not directly observable in the marketplace and judgment is used in determining 
the appropriate rates. The rates used to discount the credit spreads were 1.30% and 1.35% as of December 31, 2016 and 2015, 
respectively.

There were no transfers between the levels of the fair value hierarchy during the years ended December 31, 2016 and 2015.

(17) COMMITMENTS AND CONTINGENCIES

On December 1, 2014, the Company formed a wholly-owned captive insurance company, Birch Property and Casualty LLC (Birch), 
which  insures  the  Company’s  first  layer  of  property  and  general  liability  insurance  claims  subject  to  certain  limitations. The 
Company capitalized Birch in accordance with the applicable regulatory requirements and Birch established annual premiums 
based on projections derived from the past loss experience of the Company’s properties.

As of December 31, 2016, the Company had letter(s) of credit outstanding totaling $12,296 which serve as collateral for certain 
capital improvements and performance obligations on certain redevelopment projects, which will be satisfied upon completion of 
the projects, and reduced the available borrowings on its unsecured revolving line of credit.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

As of December 31, 2016, the Company had active redevelopments at Reisterstown Road Plaza located in Baltimore, Maryland 
and Towson Circle located in Towson, Maryland. The Company estimates that it will incur net costs of approximately $12,000 to 
$13,000 related to the Reisterstown Road Plaza redevelopment and approximately $33,000 to $35,000 related to the Towson Circle 
redevelopment, of which $1,417 and $10,053, respectively, has been incurred as of December 31, 2016.

(18) LITIGATION

The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. 
While  the  resolution  of  such  matters  cannot  be  predicted  with  certainty,  management  believes,  based  on  currently  available 
information, that the final outcome of such matters will not have a material effect on the consolidated financial statements of the 
Company.

(19) SUBSEQUENT EVENTS

Subsequent to December 31, 2016, the Company:

• 

• 

• 

• 

• 

• 

• 

• 

• 

defeased the IW JV portfolio of mortgages payable, which had an outstanding principal balance of $379,435 and an 
interest rate of 7.50%, and incurred a defeasance premium of $60,198. See Note 7 to the consolidated financial statements 
for further details;

received  funding  in  the  amount  of  $200,000  on  the Term  Loan  Due  2023.  See  Note  9  to  the  consolidated  financial 
statements for further details;

entered into two agreements to swap a total of $200,000 of LIBOR-based variable rate debt to a fixed interest rate of 
1.2628% through November 22, 2018;

closed on the acquisition of Main Street Promenade, a 181,600 square foot multi-tenant retail property located in Naperville, 
Illinois, for a gross purchase price of $88,000 through a consolidated VIE to facilitate a potential 1031 Exchange;

closed on the disposition of Rite Aid Store (Eckerd), Culver Rd., a 10,900 square foot single-user retail operating property 
located in Rochester, New York, for a sales price of $500 with no anticipated gain on sale or additional impairment due 
to previously recognized impairment charges;

granted 88 restricted shares at a grant date fair value of $15.34 per share and 253 RSUs at a grant date fair value of $15.52
per RSU to the Company’s executives in conjunction with its long-term equity compensation plan. The restricted shares 
will vest over three years and the RSUs granted are subject to a three-year performance period. Refer to Note 5 to the 
consolidated financial statements for additional details regarding the terms of the RSUs;

closed on a transaction whereby the Company received the fee interest in approximately 50 acres of land at Boulevard 
at the Capital Centre, an existing wholly-owned multi-tenant retail operating property located in Largo, Maryland. The 
property was previously subject to a ground lease with a third party for approximately 70 acres. In conjunction with this 
transaction, the Company paid consideration of $1,939 and agreed to shorten the term of the ground lease related to the 
remaining land;

declared the cash dividend for the first quarter of 2017 for its 7.00% Series A cumulative redeemable preferred stock. 
The dividend of $0.4375 per preferred share will be paid on March 31, 2017 to preferred shareholders of record at the 
close of business on March 20, 2017; and

declared the cash dividend for the first quarter of 2017 of $0.165625 per share on its outstanding Class A common stock, 
which will be paid on April 10, 2017 to Class A common shareholders of record at the close of business on March 27, 
2017.

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RETAIL PROPERTIES OF AMERICA, INC.

Notes to Consolidated Financial Statements

(20) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table sets forth selected quarterly financial data for the Company:

Total revenues

Net income

Net income attributable to common shareholders

Net income per common share attributable to common

shareholders – basic and diluted

Weighted average number of common shares outstanding – basic

Weighted average number of common shares outstanding – diluted

Total revenues

Net income

Net income attributable to common shareholders

Net income per common share attributable to common

shareholders – basic and diluted

2016

Dec 31

142,752

18,295

15,932

0.07

Sep 30

144,526

72,494

70,132

0.30

$

$

$

$

Jun 30

147,226

28,602

26,239

0.11

$

$

$

$

Mar 31

148,639

47,426

45,064

0.19

$

$

$

$

236,528

236,783

236,716

236,578

236,852

237,108

236,902

236,680

2015

Dec 31

Sep 30

Jun 30

Mar 31

148,920

3,535

644

$

$

$

150,955

78,329

75,967

— $

0.32

$

$

$

$

150,888

30,684

28,321

0.12

$

$

$

$

153,197

13,076

10,714

0.05

$

$

$

$

$

$

$

$

Weighted average number of common shares outstanding – basic

236,477

236,439

236,354

236,250

Weighted average number of common shares outstanding – diluted

236,479

236,553

236,356

236,253

98

RETAIL PROPERTIES OF AMERICA, INC.

Schedule II
Valuation and Qualifying Accounts
For the Years Ended December 31, 2016, 2015 and 2014 
(in thousands)

Year ended December 31, 2016

Allowance for doubtful accounts
Tax valuation allowance

Year ended December 31, 2015

Allowance for doubtful accounts
Tax valuation allowance

Year ended December 31, 2014

Allowance for doubtful accounts
Tax valuation allowance

Balance at
beginning
of year

Charged to
costs and
expenses

Write-offs

Balance at
end of year

$
$

$
$

$
$

7,910
23,618

7,497
20,355

8,197
18,631

2,466
(2,443)

(3,490)

$
— $

6,886
21,175

3,069
3,263

2,689
1,724

(2,656)

$
— $

7,910
23,618

(3,389)

$
— $

7,497
20,355

99

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

$

2,823

$

1,300

$

5,319

$

900

$

1,300

$

6,219

$

7,519

$

2,578

2003

Bed Bath & Beyond Plaza

8,355

10,350

4,530

4,530

12,214

16,744

4,979

2000-2002

07/05

—

114,703

(28,975)

—

85,728

85,728

28,916

2004

Property Name

23rd Street Plaza

Panama City, FL
Ashland & Roosevelt

Chicago, IL
Avondale Plaza
Redmond, WA
Azalea Square I

Summerville, SC

Azalea Square III

Summerville, SC

Miami, FL

Bed Bath & Beyond Plaza

Westbury, NY

Boulevard at the Capital Centre

Largo, MD
Boulevard Plaza
Pawtucket, RI

The Brickyard
Chicago, IL
Brown's Lane

Middletown, RI

Cedar Park Town Center

Cedar Park, TX

Central Texas Marketplace

Waco, TX
Centre at Laurel
Laurel, MD

Chantilly Crossing
Chantilly, VA

973

—

13,850

21,052

4,573

9,497

642

36

11,127

6,375

21,304

1,793

—

3,280

—

—

—

—

—

—

2,197

4,170

—

45,300

4,585

2,600

23,923

13,000

19,000

10,348

18,367

11,901

90

692

313

12,038

26,657

12,005

13,829

47,559

3,564

7,546

1,254

368

8,757

8,406

16,714

8,500

16,060

2,347

Cinemark Seven Bridges

4,585

3,450

11,728

15

Woodridge, IL
Clearlake Shores
Clear Lake, TX

—

1,775

7,026

1,182

100

13,850

21,694

35,544

9,110

2002

4,573

6,375

3,280

9,533

14,106

779

2005

23,097

29,472

10,703

2004

10,438

13,718

3,529

2007

10,350

19,059

29,409

8,561

2004

4,170

15,602

19,772

6,729

1994

45,300

34,203

79,503

13,589

1977/2004

04/05

2,600

13,259

15,859

5,632

1985

23,923

13,000

18,700

8,500

3,450

1,775

14,197

38,120

1,254

2013

56,316

69,316

19,721

2004

25,420

44,120

9,805

2005

18,407

26,907

7,633

2004

11,743

15,193

4,824

2000

8,208

9,983

3,467

2003-2004

04/05

Date
Acquired

12/04

05/05

11/14

10/04

10/07

10/04

09/04

04/05

04/05

02/15

12/06

02/06

05/05

03/05

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

5,023

12,458

17,481

672

1991

12,992

10,200

26,178

3,091

10,200

29,269

39,469

12,854

2004

—

—

5,023

16,700

11,479

5,830

—

—

12,000

2,919

12,382

22,775

19,439

35,887

13,281

76

3,564

415

3,344

59

13,985

6,900

9,980

3,000

23,851

19,158

2

474

10,239

3,000

18,736

1,398

—

7,318

954

(5,481)

—

—

—

750

4,962

1,850

1,958

9,976

5,681

581

—

77

1,181

25,322

6,000

43,434

12,889

19,906

17,025

29,478

—

43,367

110,785

1,057

1,940

101

Date
Acquired

08/15

8/04 &
10/04
04/05

10/13

12/04

16,700

26,339

43,039

9,481

1997

05/06

5,830

19,854

25,684

8,858

2004

12,000

39,231

51,231

16,211

1999

2,919

13,340

16,259

1,744

1999

6,900

3,000

3,000

2,707

3,350

750

4,962

1,671

6,000

23,853

30,753

11,409

1999-2003

01/04

19,632

22,632

8,469

2004-2005

02/05

20,134

23,134

9,061

1996-1997

07/04

84

2,791

—

2000

11,664

15,014

5,006

1998

1,958

2,708

831

1999

10,053

15,015

1,452

2004

07/05

04/05

05/05

10/13

7,041

8,712

3,072

2003-2004

06/04

56,323

62,323

24,358

2003-2004

10/04

17,025

30,535

47,560

14,747

2003-2004

3/04 & 7/04

43,367

112,725

156,092

8,432

2014

01/15

Property Name

Coal Creek Marketplace

Newcastle, WA

Colony Square

Sugar Land, TX

The Columns
Jackson, TN

The Commons at Temecula

Temecula, CA

Coppell Town Center

Coppell, TX

Coram Plaza
Coram, NY
Corwest Plaza

New Britain, CT

Cottage Plaza

Pawtucket, RI
Cranberry Square

Cranberry Township, PA

Crown Theater
Hartford, CT

Cuyahoga Falls, OH

CVS Pharmacy
Lawton, OK

Cypress Mill Plaza

Cypress, TX

Davis Towne Crossing

North Richland Hills, TX

Denton Crossing
Denton, TX

Dorman Center I & II
Spartanburg, SC
Downtown Crown

Gaithersburg, MD

Cuyahoga Falls Market Center

3,387

3,350

11,083

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Property Name

East Stone Commons

Kingsport, TN

Eastside

Richardson, TX

Eastwood Towne Center

Lansing, MI

Edgemont Town Center

Homewood, AL
Edwards Multiplex

Fresno, CA

Edwards Multiplex

Ontario, CA

Evans Towne Centre

Evans, GA

Fairgrounds Plaza
Middletown, NY

Five Forks

Simpsonville, SC

Fordham Place
Bronx, NY

Forks Town Center

Easton, PA

Fort Evans Plaza II
Leesburg, VA
Fox Creek Village
Longmont, CO

Fullerton Metrocenter

Fullerton, CA

Galvez Shopping Center

Galveston, TX

Gardiner Manor Mall
Bay Shore, NY
Gateway Pavilions
Avondale, AZ

—

—

—

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

2,900

4,055

28,714

17,620

(727)

27

2,826

4,055

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

28,061

30,887

10,813

2005

Date
Acquired

06/06

17,647

21,702

455

2008

06/16

05/04

11/04

05/05

05/05

12/04

12,000

65,067

4,574

12,000

69,641

81,641

31,168

2002

6,040

3,500

8,830

—

12,765

11,800

3,965

1,700

—

—

—

4,800

2,540

17,209

7,805

2,430

—

16,118

8,386

3,755

10,956

35,421

33,098

6,425

13,490

6,393

96,547

14,836

44,880

15,563

449

—

—

1,030

4,626

493

(6)

818

174

3,500

11,405

14,905

5,067

2003

—

35,421

35,421

15,151

1988

11,800

33,098

44,898

14,157

1997

1,700

5,431

2,540

7,455

9,155

3,081

1995

17,485

22,916

7,329

2002-2004

01/05

6,886

9,426

3,008

1999/2004-
2005
Redev: 2009

12/04 &
3/05
11/13

17,209

96,541

113,750

11,057

2,430

15,654

18,084

7,077

2002

16,118

45,054

61,172

3,701

2008

07/04

01/15

(913)

3,755

14,650

18,405

6,641

2003-2004

11/04

26,078

—

47,403

3,087

—

50,490

50,490

22,646

1988

—

1,250

4,947

35,741

12,348

56,199

382

673

1,250

5,329

6,579

2,247

2004

12,348

56,872

69,220

5,454

2000

06/04

06/05

06/14

22,538

9,880

55,195

1,165

9,880

56,360

66,240

24,741

2003-2004

12/04

102

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

—

26,371

—

32,174

32,174

13,593

2000

—

—

—

1,050

3,280

34,766

8,550

—

—

—

5,370

—

4,100

4,937

3,200

14,050

7,000

—

—

—

10,650

6,377

3,065

17,939

6,860

4,585

3,075

7,233

2,200

—

—

5,803

1,043

(7)

5,397

9,282

3,309

241

741

4,646

6,971

1,441

1,533

613

(159)

(333)

—

3,911

11,557

39,298

12,968

30,377

16,938

8,663

35,147

46,814

11,385

10,729

33,323

9,148

11,609

16,758

1,050

3,280

8,550

5,370

4,954

6,004

2,169

2003-2004

12/04

11,550

14,830

3,791

2006-2007

05/07

44,695

53,245

19,745

1996

22,250

27,620

7,491

2006

—

33,686

33,686

15,267

2001

3,894

3,200

7,000

17,385

21,279

7,382

2001

9,404

12,604

3,952

1997

39,793

46,793

17,484

2000

10,650

53,785

64,435

22,097

2002

6,377

3,065

6,860

3,075

2,200

12,826

19,203

1,266

1985

12,262

15,327

5,720

2002

33,936

40,796

15,155

1999

8,989

12,064

3,897

2004

11,276

13,476

5,007

2003

—

16,758

16,758

7,065

1996

Date
Acquired

07/04

07/04

06/07

08/04

04/05

12/04

10/04

12/04

02/14

03/04

01/04

03/05

02/05

06/05

06/05

10,689

9,700

17,137

1,738

9,700

18,875

28,575

7,805

1992

103

Property Name

Gateway Plaza

Southlake, TX
Gateway Station

College Station, TX
Gateway Station II & III
College Station, TX

Gateway Village
Annapolis, MD

Gerry Centennial Plaza

Oswego, IL

Governor's Marketplace

Tallahassee, FL
Grapevine Crossing
Grapevine, TX

Green's Corner

Cumming, GA
Gurnee Town Center

Gurnee, IL

Henry Town Center
McDonough, GA

Heritage Square
Issaquah, WA

Heritage Towne Crossing

Euless, TX
Hickory Ridge
Hickory, NC

High Ridge Crossing
High Ridge, MO

Holliday Towne Center
Duncansville, PA
Home Depot Center
Pittsburgh, PA
Home Depot Plaza

Orange, CT

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

Date
Acquired

—

—

—

5,200

18,087

2,200

4,674

2,600

—

—

—

—

23,097

14,446

3,710

16,005

1,516

2,075

6,600

4,750

—

—

—

10,010

64,731

12,823

9,247

52,762

23,932

19,144

37,744

4,009

30,910

23,904

4,211

217

1,392

1,231

2,001

568

(150)

4,007

186

9,124

3,027

5,200

14,221

19,421

5,858

Redev: 2004

12/05

18,087

64,948

83,035

6,139

1996

06/14

2,200

2,579

23,097

14,446

14,215

16,415

5,406

Renov: 2005

11/05

10,499

13,078

4,529

1980 & 1985

12/04

54,763

77,860

17,720

2005

24,500

38,946

2,531

2004

3,710

18,994

22,704

7,779

2005

16,005

41,751

57,756

19,057

1996/1999

01/04

2,065

6,600

4,750

4,205

6,270

1,842

1999

40,034

46,634

13,839

2005

26,931

31,681

11,092

2004

02/08

06/14

11/05

10/04

06/06

05/05

06/04

06/14

12,555

74,612

(13,958)

12,555

60,654

73,209

27,077

18,129

56,458

1,821

1998/2002-
2003
1997

25,217

38,329

17,772

357

—

—

—

—

13,000

46,482

22,906

2,910

7,423

4,710

16,614

799

(277)

(8)

16,265

2,242

38,329

13,110

2,486

7,415

4,710

104

69,278

82,388

27,534

2001-2004

09/05

16,761

19,247

7,536

2004 & 2005

799

8,214

604

2005

06/04 &
09/05
08/05

18,507

23,217

8,609

1995-1996

02/04

Property Name

HQ Building

San Antonio, TX
Huebner Oaks Center
San Antonio, TX

Humblewood Shopping Center

Humble, TX

Irmo Station
Irmo, SC

Jefferson Commons

Newport News, VA
John's Creek Village
John's Creek, GA
King Philip's Crossing

Seekonk, MA
La Plaza Del Norte
San Antonio, TX
Lake Mary Pointe
Lake Mary, FL

Lake Worth Towne Crossing

Lake Worth, TX

Lakepointe Towne Center

Lewisville, TX

Lakewood Towne Center

Lakewood, WA

Lincoln Park
Dallas, TX
Lincoln Plaza

Worcester, MA

Low Country Village I & II

Bluffton, SC

Lowe's/Bed, Bath & Beyond

Butler, NJ

MacArthur Crossing
Los Colinas, TX

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

5,905

2,635

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

(654)

2,635

14,386

17,021

6,245

2004

15,100

33,987

6,579

15,100

40,566

55,666

18,063

3,478

3,350

6,927

7,468

10,818

3,110

1999 &
2004
1997

Property Name

Magnolia Square
Houma, LA

Manchester Meadows

Town and Country, MO
Mansfield Towne Crossing

Mansfield, TX

Merrifield Town Center

Falls Church, VA

Merrifield Town Center II

Falls Church, VA
New Forest Crossing

Houston, TX

Newnan Crossing I & II

Newnan, GA

Newton Crossroads
Covington, GA

15,040

39,738

12,195

36,496

14,698

11,313

14,700

3,300

18,678

28,797

4,390

—

—

—

—

—

—

North Rivers Towne Center

9,360

3,350

15,720

Charleston, SC
Northgate North
Seattle, WA
Northpointe Plaza
Spokane, WA

Northwood Crossing

Northport, AL
Northwoods Center

Wesley Chapel, FL
Oak Brook Promenade

Oak Brook, IL

One Loudoun Downtown

Ashburn, VA

Orange Plaza (Golfland Plaza)

Orange, CT
The Orchard

New Hartford, NY

26,186

7,540

49,078

(14,262)

21,651

13,800

—

3,770

7,914

3,415

—

—

—

—

10,343

22,113

4,350

3,200

37,707

13,658

9,475

50,057

91,138

4,834

17,151

4,463

1,210

6,668

1,245

1

2,366

250

105

Date
Acquired

02/05

01/15

01/16

10/13

12/03 &
02/04
12/04

6,048

3,625

497

22

66

541

570

18,678

28,797

3,350

3,350

7,540

14,700

45,786

60,486

18,780

1994-1995

08/04

3,300

15,820

19,120

7,013

2003-2004

11/04

36,993

55,671

2,716

2008

14,720

43,517

4,390

11,379

15,769

533

1,550

1972 Renov:
2006-2007
2003

16,290

19,640

7,444

2003-2004

04/04

34,816

42,356

16,401

1999-2003

06/04

13,800

42,170

55,970

19,119

1991-1993

05/04

3,770

3,415

10,343

22,113

4,350

3,200

14,868

18,638

5,966

1979/2004

01/06

16,143

19,558

7,007

2002-2004

12/04

51,302

61,645

1,611

2006

03/16

91,139

113,252

322

2013-2016

11/16

7,200

11,550

2,879

1995

05/05

17,401

20,601

7,170

2004-2005

07/05 &
9/05

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

Date
Acquired

6,454

16,469

22,923

1,931

2002-2004

06/14

Paradise Valley Marketplace

8,565

6,590

—

44,511

44,511

18,522

1999

6,590

6,142

21,181

27,771

9,931

2002

29,163

35,305

11,011

2010

10,274

12,392

12,243

10,274

24,635

34,909

—

67,932

67,932

9,357

8,615

2002-2003
& 2005
2008

—

—

6,454

—

—

—

—

6,142

—

24,082

6,995

3,875

2,600

10,334

11,200

8,565

6,600

—

—

12,773

4,200

—

—

2,400

1,790

16,004

43,355

20,425

20,423

465

1,156

756

8,740

67,870

32,816

6,776

11,751

13,728

28,588

29,085

9,246

6,178

62

3,909

343

2,413

866

3,389

7,091

43

336

05/05

04/04

08/06

12/03 &
06/06
11/13

03/04 &
05/05
12/04

8,495

2,600

35,225

43,720

16,227

7,119

9,719

3,165

2002-2003
& 2005
2004

11,200

14,164

25,364

5,921

1973/2000

12/04

6,600

14,594

21,194

6,520

1995

07/04

—

31,977

31,977

14,870

2000-2002

06/04

4,200

2,400

1,790

36,176

40,376

14,212

2004

12/04

9,289

11,689

3,853

2004-2005

09/05

6,514

8,304

2,722

2004

12/05

Property Name

Oswego Commons

Oswego, IL

Page Field Commons
Fort Myers, FL

Phoenix, AZ

Parkway Towne Crossing

Frisco, TX

Pavilion at Kings Grant I & II

Concord, NC

Pelham Manor Shopping Plaza

Pelham Manor, NY
Peoria Crossings I & II

Peoria, AZ
Phenix Crossing

Phenix City, AL

Placentia Town Center

Placentia, CA
Plaza at Marysville
Marysville, WA
Plaza Santa Fe II
Santa Fe, NM

Pleasant Run

Cedar Hill, TX

Quakertown

Quakertown, PA

Red Bug Village

Winter Springs, FL

Reisterstown Road Plaza (a)

Baltimore, MD

Rite Aid Store (Eckerd)

Columbia, SC

Rite Aid Store (Eckerd)

Crossville, TN

46,182

15,800

70,372

6,420

15,791

76,801

92,592

33,874

1986/2004

08/04

1,535

1,224

900

600

2,377

2,033

—

1

106

900

600

2,377

2,034

3,277

2,634

1,126

2003-2004

06/04

938

2003-2004

06/04

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Property Name

Rite Aid Store (Eckerd)

Greer, SC

Rite Aid Store (Eckerd)
Kill Devil Hills, NC

Rite Aid Store (Eckerd), Culver Rd.

Rochester, NY

Rivery Town Crossing
Georgetown, TX
Royal Oaks Village II

Houston, TX

Saucon Valley Square

Bethlehem, PA

Sawyer Heights Village

Houston, TX

Schaumburg Towers
Schaumburg, IL

Shoppes at Hagerstown
Hagerstown, MD
Shoppes at Park West
Mt. Pleasant, SC

Denville, NJ

Shoppes of New Hope

Dallas, GA

Shoppes of Prominence Point I & II

Canton, GA

Shops at Forest Commons

Round Rock, TX
The Shops at Legacy

Plano, TX

Shops at Park Place

Plano, TX

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

Date
Acquired

Encumbrance

Land

1,473

1,050

1,753

700

—

—

—

1,590

2,900

3,450

2,047

2,960

2,279

6,814

17,000

1

1

(3,380)

384

272

2,048

2,961

224

3,098

3,661

489

944

2003-2004

06/04

1,366

2003-2004

06/04

—

2001

7,198

10,098

2,762

2005

17,272

20,722

5,039

2004-2005

11/05

7,941

3,200

12,642

(9,645)

4,379

6,197

87

1999

18,824

24,214

15,797

24,214

16,502

40,716

2,165

2007

1,050

700

265

2,900

3,450

1,818

7,900

4,034

2,240

2,190

11/05

10/06

09/04

10/13

01/16

11/04

01/04

04/16

07/04

06/04 &
09/05
12/04

06/07

10/03

137,501

145,401

58,553

1986 & 1990

11/04

22,068

26,102

987

2008

9,435

11,675

4,201

2004

9,033

11,223

4,232

1999

12,666

45,265

57,931

1,482

2003

1,350

3,650

1,050

8,800

9,096

11,065

12,415

5,060

2004

12,855

16,505

5,901

2004 & 2005

6,427

7,477

2,807

2002

124,183

132,983

43,545

2002

14,257

23,353

6,969

2001

705

405

131

78

193

38

20

203

294

—

—

7,900

4,034

4,940

2,240

3,362

1,350

—

—

—

3,650

1,050

8,800

137,096

21,937

9,357

8,840

45,227

11,045

12,652

6,133

108,940

15,243

7,503

9,096

13,175

1,082

107

The Shoppes at Quarterfield

—

2,190

Severn, MD

The Shoppes at Union Hill

14,757

12,666

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Property Name

Southlake Corners
Southlake, TX

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

21,090

6,612

23,605

82

6,612

23,687

30,299

3,009

2004

Southlake Town Square I - VII

—

43,790

201,028

23,258

41,603

226,473

268,076

84,812

1998-2007

Southlake, TX
Stilesboro Oaks
Acworth, GA
Stonebridge Plaza
McKinney, TX

Stony Creek I

Noblesville, IN

Stony Creek II

Noblesville, IN
Streets of Yorktown

Houston, TX
Tacoma South
Tacoma, WA

Target South Center

Austin, TX

Tollgate Marketplace

Bel Air, MD

Town Square Plaza
Pottstown, PA
Towson Circle (a)
Towson, MD
Towson Square
Towson, MD
Tysons Corner
Vienna, VA

—

—

—

—

—

—

—

4,725

2,200

—

1,000

9,426

5,783

473

427

7,947

6,735

17,564

1,739

1,900

3,440

5,106

79

22,111

2,893

2,200

1,000

6,735

1,900

3,440

9,899

12,099

4,216

1997

6,210

7,210

2,593

1997

19,303

26,038

9,234

2003

5,185

7,085

2,112

2005

25,004

28,444

10,017

2005

10,976

22,898

10,976

22,903

33,879

617

1984-2015

05/16

2,300

34,933

8,700

16,760

9,700

8,760

61,247

18,264

9,487

11,787

3,951

1999

11/05

68,328

77,028

29,407

1979/1994

07/04

19,932

29,632

8,009

2004

5

727

7,081

1,668

15

337

2,300

8,700

9,700

—

—

4,450

2,200

9,050

17,840

(26,835)

55

55

13,757

22,525

21,958

(174)

13,757

21,784

35,541

7,184

22,525

7,199

29,724

—

959

426

1998

2014

1980
Renov:2004,
2012/2013
2002

9,894

9,894

4,337

38,567

43,017

15,727

2004

10,898

13,098

4,953

2004

University Town Center

Tuscaloosa, AL

4,140

—

9,557

Village Shoppes at Gainesville

19,325

4,450

36,592

1,975

Gainesville, GA

Village Shoppes at Simonton

Lawrenceville, GA

3,102

2,200

10,874

24

108

Date
Acquired

10/13

12/04, 5/07,
9/08 & 3/09
12/04

08/05

12/03

11/05

12/05

12/05

07/04

11/15

05/15

11/04

09/05

08/04

RETAIL PROPERTIES OF AMERICA, INC.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(in thousands)

Initial Cost (A)

Gross amount carried at end of period

Encumbrance

Land

Buildings and
Improvements

Adjustments
to Basis (C)

Land and
Improvements

Buildings and
Improvements
(D)

Total (B),
(D)

Accumulated
Depreciation 
(E)

Date
Constructed

14,500

17,458

31,958

6,837

2005

—

—

—

—

14,500

5,185

1,170

8,200

5,291

4,400

16,914

27,504

10,488

35,538

7,471

—

16,073

25,433

544

986

193

371

571

896

5,185

1,170

8,200

4,400

28,490

33,675

12,913

2003-2004

05/04

10,681

11,851

4,517

2004

35,909

44,109

14,949

2000

8,042

12,442

3,418

1999

16,073

26,329

42,402

1,378

1981

Date
Acquired

07/06

06/05

07/05

11/04

06/15 &
8/16

Property Name

Walter's Crossing

Tampa, FL

Watauga Pavilion
Watauga, TX
West Town Market
Fort Mill, SC
Wilton Square

Saratoga Springs, NY

Winchester Commons

Memphis, TN
Woodinville Plaza
Woodinville, WA
Total Operating Properties

769,184

1,208,948

4,039,199

227,920

1,191,403

4,284,664

5,476,067

1,443,333

Developments in Progress

—

15,541

7,898

—

15,541

7,898

23,439

—

Total Investment Properties

$

769,184

$1,224,489

$

4,047,097

$

227,920

$

1,206,944

$

4,292,562

$ 5,499,506

$

1,443,333

(a)  The cost basis associated with this property or a portion of this property was reclassified to Developments in Progress.

109

Notes:

RETAIL PROPERTIES OF AMERICA, INC.

(A)  The initial cost to the Company represents the original purchase price of the property, including amounts incurred subsequent to acquisition which were contemplated 

at the time the property was acquired.

(B)  The aggregate cost of real estate owned as of December 31, 2016 for U.S. federal income tax purposes was approximately $5,524,479.

(C)  Adjustments to basis include payments received under master lease agreements as well as additional tangible costs associated with the investment properties, including 

any earnout of tenant space.

(D)  Reconciliation of real estate owned:

Balance as of January 1,
Purchase of investment property
Sale of investment property
Property held for sale
Provision for asset impairment
Acquired lease intangible assets
Acquired lease intangible liabilities
Balance as of December 31,

(E)  Reconciliation of accumulated depreciation:

Balance as of January 1,
Depreciation expense
Sale of investment property
Property held for sale
Provision for asset impairment
Write-offs due to early lease termination
Other disposals
Balance as of December 31,

2016
5,687,842
435,989
(526,970)
(47,151)
(47,159)
4,586
(7,631)
5,499,506

2016
1,433,195
191,493
(118,925)
(15,769)
(18,500)
(3,947)
(24,214)
1,443,333

$

$

$

$

2015
5,680,376
508,924
(498,833)
—
(4,786)
(15,311)
17,472
5,687,842

2015
1,365,471
183,639
(111,346)
—
(2,497)
(2,072)
—
1,433,195

$

$

$

$

2014
5,804,518
397,993
(338,938)
(36,914)
(159,447)
5,579
7,585
5,680,376

2014
1,330,474
183,142
(63,460)
(5,358)
(77,390)
(1,937)
—
1,365,471

$

$

$

$

Depreciation is computed based upon the following estimated useful lives in the accompanying consolidated statements of operations and other comprehensive income:

Building and improvements
Site improvements
Tenant improvements

Years
30
15
Life of related lease

110

 
Table of Contents

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

We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated 
subsidiaries, is made known to the officers who certify our financial reports and to the members of senior management and the 
board of directors.

Based on management’s evaluation as of December 31, 2016, our president and chief executive officer and our executive vice 
president,  chief  financial  officer  and  treasurer  have  concluded  that  our  disclosure  controls  and  procedures  (as  defined  in 
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that the information required to be disclosed by 
us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time 
periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our president 
and chief executive officer and our executive vice president, chief financial officer and treasurer to allow timely decisions regarding 
required disclosure.

Changes in Internal Controls

There were no changes to our internal controls over financial reporting during the fiscal quarter ended December 31, 2016 that 
have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, 
as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, 
including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal 
control  over  financial  reporting  based  on  the  framework  in  Internal  Control  —  Integrated  Framework  (2013)  issued  by  the 
Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal 
Control — Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective 
as of December 31, 2016. The effectiveness of our internal control over financial reporting as of December 31, 2016 has been 
audited by Deloitte & Touche LLP, an Independent Registered Public Accounting Firm, as stated in their report which is included 
herein.

111

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Retail Properties of America, Inc.
Oak Brook, Illinois

We  have  audited  the  internal  control  over  financial  reporting  of  Retail  Properties  of America, Inc.  and  its  subsidiaries  (the 
“Company”) as of December 31, 2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued 
by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for 
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over 
financial  reporting,  included  in  the  accompanying  Management’s  Report  on  Internal  Control  Over  Financial  Reporting.  Our 
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 
Those standards require that we plan and perform the audit to obtain reasonable assurance 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  and  evaluating  the  design  and  operating 
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in 
the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal 
executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, 
management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation 
of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal 
control  over  financial  reporting  includes  those  policies  and  procedures  that  (1) pertain  to  the  maintenance  of  records  that,  in 
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable 
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally 
accepted  accounting  principles,  and  that  receipts  and  expenditures  of  the  company  are  being  made  only  in  accordance  with 
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely 
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial 
statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper 
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. 
Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject 
to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the 
policies or procedures may deteriorate.

In  our  opinion,  the  Company  maintained,  in  all  material  respects,  effective  internal  control  over  financial  reporting  as  of 
December 31, 2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee 
of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 
consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2016 of the Company 
and our report dated February 15, 2017 expressed an unqualified opinion on those consolidated financial statements and financial 
statement schedules and included an explanatory paragraph regarding the Company’s adoption of Accounting Standards Update 
2017-01, Business Combinations.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 15, 2017

112

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item 10 will be included in our definitive proxy statement for our 2017 Annual Meeting of Stockholders 
and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item 11 will be included in our definitive proxy statement for our 2017 Annual Meeting of Stockholders 
and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 
STOCKHOLDER MATTERS

Information required by this Item 12 will be included in our definitive proxy statement for our 2017 Annual Meeting of Stockholders 
and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information required by this Item 13 will be included in our definitive proxy statement for our 2017 Annual Meeting of Stockholders 
and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by this Item 14 will be included in our definitive proxy statement for our 2017 Annual Meeting of Stockholders 
and is incorporated herein by reference.

113

Table of Contents

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)  List of documents filed:

PART IV

(1)  The consolidated financial statements of the Company are set forth in this report in Item 8.

(2)  Financial Statement Schedules:

The following financial statement schedules for the year ended December 31, 2016 are submitted herewith:

Valuation and Qualifying Accounts (Schedule II)

Real Estate and Accumulated Depreciation (Schedule III)

Page

99

100

Schedules not filed:

All schedules other than those indicated in the index have been omitted as the required information is inapplicable or the information 
is presented in the consolidated financial statements or related notes.

Exhibit No.

Description

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

4.1

4.2

4.3

10.1

10.2

10.3

Sixth Articles of Amendment and Restatement of the Registrant, dated March 20, 2012 (Incorporated herein by reference to 
Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on March 22, 2012).

Articles  of  Amendment  to  the  Sixth  Articles  of  Amendment  and  Restatement  of  the  Registrant,  dated  March  20,  2012 
(Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on March 22, 2012).

Articles  of  Amendment  to  the  Sixth  Articles  of  Amendment  and  Restatement  of  the  Registrant,  dated  March  20,  2012 
(Incorporated herein by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed on March 22, 2012).

Articles Supplementary to the Sixth Articles of Amendment and Restatement of the Registrant, as amended, dated March 20, 
2012 (Incorporated herein by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K filed on March 22, 2012).

Articles Supplementary for the Series A Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Registrant’s 
Current Report on Form 8-K filed on December 17, 2012).

Certificate of Correction (Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report/Amended on Form 
8-K/A filed on December 20, 2012).

Sixth Amended and Restated Bylaws of the Registrant (Incorporated herein by reference to Exhibit 3.1 to the Registrant’s 
Current Report on Form 8-K filed on July 20, 2012).

Amendment No. 1 to the Sixth Amended and Restated Bylaws of the Registrant, dated February 11, 2014 (Incorporated herein 
by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 12, 2014).

Indenture, dated March 12, 2015, by and between the Registrant as Issuer and U.S. Bank National Association as Trustee 
(Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 12, 2015).

First Supplemental Indenture, dated March 12, 2015, by and between the Registrant as Issuer and U.S. Bank National Association 
as Trustee (Incorporated herein by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on March 12, 
2015).

Form  of  4.00%  Senior  Notes  due  2025  (attached  as  Exhibit A  to  the  First  Supplemental  Indenture  filed  as  Exhibit  4.2) 
(Incorporated herein by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on March 12, 2015).

2014  Long-Term  Equity  Compensation  Plan  of  the  Registrant  (Incorporated  herein  by  reference  to  Appendix A  to  the 
Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 31, 2014).

Third Amended and Restated Independent Director Stock Option and Incentive Plan of the Registrant (Incorporated herein by 
reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on August 2, 2013).

Indemnification Agreements by and between the Registrant and its directors and officers (Incorporated herein by reference to 
Exhibits 10.6 A-E and H to the Registrant’s Annual Report/Amended on Form 10-K/A for the year ended December 31, 2006 
and filed on April 27, 2007, Exhibits 10.560 - 10.561 and 10.568 - 10.570 to the Registrant’s Annual Report on Form 10-K 
for the year ended December 31, 2007 and filed on March 31, 2008, Exhibit 10.4 to the Registrant’s Annual Report on Form 
10-K for the year ended December 31, 2011 and filed on February 22, 2012, Exhibit 10.4 to the Registrant’s Quarterly Report 
on Form 10-Q for the quarter ended June 30, 2013 and filed on August 6, 2013, Exhibit 10.3 to the Registrant’s Quarterly 
Report on Form 10-Q for the quarter ended June 30, 2014 and filed on August 5, 2014, Exhibit 10.3 to the Registrant’s Quarterly 
Report on Form 10-Q for the quarter ended June 30, 2015 and filed on August 5, 2015, Exhibit 10.1 to the Registrant’s Quarterly 
Report on Form 10-Q for the quarter ended September 30, 2015 and filed on November 4, 2015, and Exhibit 10.2 to the 
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 and filed on November 2, 2016).

114

 
 
Table of Contents

Exhibit No.

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

Description

Third Amended and Restated Credit Agreement dated as of May 13, 2013 among the Registrant as Borrower and KeyBank 
National Association as Administrative Agent, Wells Fargo Securities LLC as Co-Lead Arranger and Joint Book Manager, 
and Wells Fargo Bank, National Association as Syndication Agent and KeyBanc Capital Markets Inc. as Co-Lead Arranger 
and Joint Book Manager, and Citibank, N.A. as Co-Documentation Agent, Deutsche Bank Securities Inc. as Co-Documentation 
Agent and Certain Lenders from time to time parties hereto, as Lenders (Incorporated herein by reference to Exhibit 10.1 to 
the Registrant’s Current Report on Form 8-K filed on May 16, 2013).

First Amendment to Third Amended and Restated Credit Agreement dated as of February 21, 2014 among the Registrant as 
Borrower and KeyBank National Association as Administrative Agent and Certain Lenders from time to time parties hereto, 
as Lenders (Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter 
ended March 31, 2014 and filed on May 6, 2014).

Note Purchase Agreement dated as of May 16, 2014 among the Registrant as Issuer and Certain Institutions as Purchasers 
(Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 22, 2014).

Loan Agreement dated as of December 1, 2009 by and among Colesville One, LLC, JPMorgan Chase Bank, N.A. and certain 
subsidiaries of the Registrant (Incorporated herein by reference to Exhibit 10.587 to the Registrant’s Annual Report on Form 
10-K/A for the year ended December 31, 2009 and filed on March 5, 2010).

Fourth Amended and Restated Credit Agreement dated as of January 6, 2016 among the Registrant as Borrower and KeyBank 
National Association as Administrative Agent, Wells Fargo Securities LLC as Co-Lead Arranger and Joint Book Manager, 
and  Wells  Fargo  Bank,  National Association  as  Syndication Agent,  KeyBanc  Capital  Markets  Inc.,  U.S.  Bank  National 
Association, PNC Capital Markets LLC, and Regions Capital Markets as Co-Lead Arrangers and Joint Book Managers, each 
of U.S. Bank National Association, PNC Capital Markets LLC, Regions Capital Markets, Bank of America, N.A., Citibank, 
N.A., The Bank of Nova Scotia, Capital One, N.A., Deutsche Bank Securities Inc., and Morgan Stanley Senior Funding, Inc. 
as Documentation Agents, and Certain Lenders from time to time parties hereto, as Lenders (Incorporated herein by reference 
to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 and filed on February 
17, 2016).

Note Purchase Agreement dated as of September 30, 2016, among the Registrant as Issuer and Certain Institutions as Purchasers 
(Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 5, 2016).

Term Loan Agreement, dated as of November 22, 2016, by and among the Registrant as Borrower and Capital One, National 
Association as Administrative Agent, Capital One, National Association, PNC Capital Markets LLC, TD Bank, N.A., and 
Regions Bank as Joint Lead Arrangers and Joint Book Managers, TD Bank, N.A. as Syndication Agent, PNC Capital Markets 
LLC  and  Regions  Bank  as  Co-Documentation Agent,  and  Certain  Lenders  from  time  to  time  parties  hereto,  as  Lenders 
(Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 29, 2016).

Retention Agreement dated February 19, 2013 by and between the Registrant and Steven P. Grimes (Incorporated herein by 
reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 and filed on 
February 20, 2013).

Amendment to Retention Agreement dated February 19, 2015 by and between Registrant and Steven P. Grimes (Incorporated 
herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 
and filed on May 5, 2015).

Amended and Restated Retention Agreement dated October 31, 2016 by and between the Registrant and Steven P. Grimes 
(Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended 
September 30, 2016 and filed on November 2, 2016).

Retention Agreement dated February 19, 2013 by and between the Registrant and Angela M. Aman (Incorporated herein by 
reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 and filed 
on February 20, 2013).

Amendment to Retention Agreement dated February 19, 2015 by and between Registrant and Angela M. Aman (Incorporated 
herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 
and filed on May 5, 2015).

Separation  Agreement  and  General  Release,  dated  May  7,  2015,  by  and  between  the  Registrant  and  Angela  M.  Aman 
(Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended 
June 30, 2015 and filed on August 5, 2015).

Retention Agreement dated February 19, 2013 by and between the Registrant and Niall J. Byrne (Incorporated herein by 
reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 and filed 
on February 20, 2013).

Amendment to Retention Agreement dated February 19, 2015 by and between Registrant and Niall J. Byrne (Incorporated 
herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 
and filed on May 5, 2015).

Separation  Agreement  and  General  Release,  dated  October  2,  2015,  by  and  between  the  Registrant  and  Niall  J.  Byrne 
(Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended 
September 30, 2015 and filed on November 4, 2015).

Retention Agreement dated February 19, 2013 by and between the Registrant and Shane C. Garrison (Incorporated herein by 
reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 and filed 
on February 20, 2013).

115

Table of Contents

Exhibit No.

Description

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

12.1

21.1

23.1

31.1

31.2

32.1

101

Amendment to Retention Agreement dated February 19, 2015 by and between Registrant and Shane C. Garrison (Incorporated 
herein by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 
and filed on May 5, 2015).

Amended and Restated Retention Agreement dated October 31, 2016 by and between the Registrant and Shane C. Garrison 
(Incorporated herein by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended 
September 30, 2016 and filed on November 2, 2016).

Retention Agreement dated February 19, 2013 by and between the Registrant and Dennis K. Holland (Incorporated herein by 
reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 and filed 
on February 20, 2013).

Amendment to Retention Agreement dated February 19, 2015 by and between Registrant and Dennis K. Holland (Incorporated 
herein by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 
and filed on May 5, 2015).

Offer Letter, dated July 13, 2015, by and between the Registrant and Heath R. Fear (Incorporated herein by reference to Exhibit 
10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and filed on August 5, 2015).

Retention Agreement dated October 31, 2016 by and between the Registrant and Heath R. Fear (Incorporated herein by reference 
to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 and filed on 
November 2, 2016).

Offer Letter, dated March 24, 2016, by and between the Registrant and Paula C. Maggio (filed herewith).

Indemnification Agreement, dated May 2, 2016, by and between the Registrant and Paula C. Maggio (filed herewith).

Retention Agreement dated October 31, 2016 by and between the Registrant and Paula C. Maggio (Incorporated herein by 
reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 and 
filed on November 2, 2016).

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (filed herewith).

List of Subsidiaries of Registrant (filed herewith).

Consent of Deloitte & Touche LLP (filed herewith).

Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 
(filed herewith).

Certification of Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) of the Securities 
Exchange Act of 1934 (filed herewith).

Certification of President and Chief Executive Officer and Executive Vice President, Chief Financial Officer and Treasurer 
pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C Section 1350 (furnished herewith).

Attached  as  Exhibit  101  to  this  report  are  the  following  formatted  in  XBRL  (Extensible  Business  Reporting  Language): 
(i) Consolidated Balance Sheets as of December 31, 2016 and 2015, (ii) Consolidated Statements of Operations and Other 
Comprehensive Income for the Years Ended December 31, 2016, 2015 and 2014, (iii) Consolidated Statements of Equity for 
the Years Ended December 31, 2016, 2015 and 2014, (iv) Consolidated Statements of Cash Flows for the Years Ended December 
31, 2016, 2015 and 2014, (v) Notes to Consolidated Financial Statements and (vi) Financial Statement Schedules.

116

Table of Contents

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this 
report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

RETAIL PROPERTIES OF AMERICA, INC.

/s/ STEVEN P. GRIMES

By:

Date:

Steven P. Grimes
President and Chief Executive Officer
February 15, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons 
on behalf of the registrant and in the capacities and on the dates indicated:

/s/ STEVEN P. GRIMES

/s/ BONNIE S. BIUMI

/s/ RICHARD P. IMPERIALE

By:

Steven P. Grimes
Director, President and
Chief Executive Officer

Date: February 15, 2017

By:

Bonnie S. Biumi
Director

By:

Richard P. Imperiale
Director

Date:

February 15, 2017

Date:

February 15, 2017

/s/ HEATH R. FEAR

/s/ FRANK A. CATALANO, JR.

/s/ PETER L. LYNCH

By:

Heath R. Fear
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)

By:

Frank A. Catalano, Jr.
Director

By:

Peter L. Lynch
Director

Date: February 15, 2017

Date:

February 15, 2017

Date:

February 15, 2017

/s/ JULIE M. SWINEHART

/s/ PAUL R. GAUVREAU

/s/ THOMAS J. SARGEANT

By:

Julie M. Swinehart
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)

By:

Paul R. Gauvreau
Director

By:

Thomas J. Sargeant
Director

Date: February 15, 2017

Date:

February 15, 2017

Date:

February 15, 2017

/s/ GERALD M. GORSKI

/s/ ROBERT G. GIFFORD

By:

Gerald M. Gorski
Chairman of the Board and Director

Date: February 15, 2017

By:

Date:

Robert G. Gifford
Director
February 15, 2017

117

Exhibit 10.27

March 24, 2016

Ms. Paula C. Maggio
715 Forest Avenue
Oak Park, IL  60302

Dear Paula,

Retail Properties of America, Inc. (“RPAI”) is pleased to make an offer of employment to you 
for the role of General Counsel.  It is expected you would be appointed as Executive Vice 
President, General Counsel & Secretary at the Shareholder’s Meeting in May 2016.  You will 
report to Steven Grimes, President and Chief Executive Officer.  This offer is contingent upon 
successful completion of your pre-employment screening, professional references and drug 
testing.  We anticipate that your first day of employment will be on or about May 2, 2016.

Your employment will be at-will, which, among other things, means that you may resign at 
any time and RPAI may terminate your employment with or without cause for any reason at 
any time.  This information is articulated in further detail in our Employee Handbook, which 
contains certain policies and procedures which apply to your employment and which are 
subject to change at any time with or without notice.

The agreed upon initial annual base salary will be $400,000, paid bi-weekly, at a rate of 
$15,384.62.  You will be considered a regular, full-time, exempt employee for the purposes 
of the Department of Labor’s regulations addressing overtime pay.  

In addition to your base salary, you will initially be eligible for an annual, cash, short-term 
incentive (“STI”) equal to $325,000 based 60% on the achievement of company goals and 
40% on the achievement of your personal goals.  Under RPAI’s current compensation 
program, the STI has a payout ratio ranging from 50% to 200% on an interpolated basis 
assuming at least a minimum level of performance is achieved relative to company goals.  
During your initial year, your STI potential will be in accordance with the STI plan and will 
not be pro-rated.  The STI payout is contingent on you remaining employed by RPAI at the 
time of payment, which is scheduled to be on or about February 24, 2017 and similar timing 
each year thereafter.

Retail Properties of America, Inc.

T: 855.247.RPAI

www.rpai.com  2021 Spring Road, Suite 200

Oak Brook, IL 60523

 
 
 
 
Page 2

In addition to your STI, you will also initially be eligible to participate in RPAI’s Long-Term 
Incentive Program (“LTIP”).  Your LTIP target will be $600,000.  LTIP is issued in the form of 
restricted stock and restricted stock units, 25% of which are time-based in the form of 
restricted stock which will vest over a 4-year period subject to active employment with RPAI.  
The remaining 75%, which is performance-based in the form of restricted stock units and 
determined by RPAI’s total return relative to its peer group as measured after a three year 
measurement period.  If earned, stock will be granted for one third of the earned amount, 
and the remaining two thirds will be granted in restricted stock that vest one year thereafter 
from the grant date; and is, of course, subject to active employment at the time of vesting.  
The performance-based LTIP has a payout ratio ranging from 50% to 200% assuming at least 
a minimum level of performance, as currently defined, is achieved of RPAI’s total return 
relative to its peer for the aforementioned period.  Please note, the restricted stock will be 
valued based on the closing price of RPAI’s common stock on the trading day immediately 
preceding the grant date.

Both pieces of the LTIP will be issued either the second day after your employment start 
date, or, the expiration of the blackout period, whichever is later.  Given your role within the 
organization, a review of your total compensation package will be conducted within the 
normal course by the Executive Compensation Committee annually, typically July of each 
year.  

Finally, you will also be entitled to a benefits package as part of your total compensation 
package.  RPAI benefits include: 

•  Medical, dental and vision insurance, effective the first of the month following 60 

days of employment;

•  Annual, comprehensive, executive physical at Northwestern Executive Health;
•  Company paid life insurance equal to one times your annual base salary up to 

$400,000.  Life, short-term and long-term disability benefits are effective the first of 
the month following 60 days of employment;

•  Auto enrollment in the RPAI 401(k) plan on the first of the month following date of 

hire and immediate participation in company matching under the plan;  

•  You will be eligible for six weeks paid time-off (“PTO”), which equates to 30 days 

each calendar year.  You will receive a prorated amount for calendar year 2016.  PTO 
days will accrue on a monthly basis at a rate of 20 hours/month.  

Upon employment, all new hire paperwork for the onboarding process will be completed 
electronically.  Please be prepared to provide documentation establishing your identity and 
authorization to work in the U.S within three days of joining RPAI.

 
Page 3

By signing and returning this offer of employment, you are confirming that you are not (and 
prior to the commencement of your employment with RPAI will not become) bound by the 
terms of any agreement with any current or previous employer or other party that, upon 
commencement of your employment with RPAI, restricts in any way your engagement in any 
business, employment with RPAI or the performance of your proposed duties for RPAI.  Your 
employment with RPAI will be contingent on the lack of any such restriction and RPAI’s 
satisfaction, in its sole discretion that no such restriction exists.

This offer of employment is valid until Wednesday, March 30, 2016 at 5:00 p.m. CST, upon 
which time it will become null and void.  We expect that we will announce your acceptance 
and appointment soon after offer acceptance and we will work with you on the contents of 
any press release issued.

Congratulations on your offer of employment!  On behalf of the entire RPAI Team, we look 
forward to having you on board and are confident you will be successful in your new role.  If 
you have any questions, please feel free to contact Steve Grimes at 630-634-4160 or me at 
630-634-4282 or via my email address at: whaley@rpai.com.

Sincerely yours,

Retail Properties of America, Inc.

/s/ Lauren E. Whaley

Lauren E. Whaley
Vice President, Director of Human Resources

Signature of Acceptance:  

/s/ Paula C. Maggio
Paula C. Maggio

3/25/16
Date

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 10.28

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is made and entered into this 2nd day of May, 
2016 ("Agreement"), by and between RETAIL PROPERTIES OF AMERICA, INC., a Maryland 
corporation (the "Company"), and PAULA C. MAGGIO ("Indemnitee").

WHEREAS, at the request of the Company, Indemnitee currently serves as an officer of the 
Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of her 
service; and

WHEREAS,  as  an  inducement  to  Indemnitee  to  continue  to  serve  as  such  officer,  the 
Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in 
connection with any such claims, suits or proceedings, to the maximum extent permitted by law; 
and

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding 

indemnification and advance of expenses;

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, 

the Company and Indemnitee do hereby covenant and agree as follows:

Section I. 

Definitions.  For purposes of this Agreement:

(a) 

 "Change in Control" means a change in control of the Company occurring after the 
Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 
14A  of  Regulation  14A  (or  in  response  to  any  similar  item  on  any  similar  schedule  or  form) 
promulgated under the Securities Exchange Act of 1934, as amended (the "Act"), whether or not 
the  Company  is  then  subject  to  such  reporting  requirement;  provided,  however,  that,  without 
limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date 
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the 
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of 
the  Company  representing  15%  or  more  of  the  combined  voting  power  of  the  Company's  then 
outstanding securities without the prior approval of at least two-thirds of the members of the Board 
of Directors in office immediately prior to such person attaining such percentage interest; (ii) there 
occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of 
liquidation or other reorganization not approved by at least two-thirds of the members of the Board 
of Directors then in office, as a consequence of which members of the Board of Directors in office 
immediately prior to such transaction or event constitute less than a majority of the Board of Directors 
thereafter; or (iii) during any period of two consecutive years, other than as a result of an event 
described  in  clause  (a)(ii)  of  this  Section  1,  individuals  who  at  the  beginning  of  such  period 
constituted the Board of Directors (including for this purpose any new director whose election or 
nomination for election by the Company's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the beginning of such period) cease 
for any reason to constitute at least a majority of the Board of Directors.

1

 
(b) 

"Corporate Status" means the status of a person who is or was a director, trustee, 
officer, employee or agent of the Company or of any other corporation, partnership, joint venture, 
trust, employee benefit plan or other enterprise for which such person is or was serving at the request 
of the Company.

(c) 

"Disinterested Director" means a director of the Company who is not and was not 

a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d) 

"Effective Date" means the date set forth in the first paragraph of this Agreement.

(e) 

"Expenses" shall include all reasonable and out-of-pocket attorneys' fees, retainers, 
court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing 
and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or 
expenses of the types customarily incurred in connection with prosecuting, defending, preparing 
to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

(f) 

"Independent  Counsel"  means  a  law  firm,  or  a  member  of  a  law  firm,  that  is 
experienced in matters of corporation law and neither is, nor in the past five years has been, retained 
to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any 
other party to or witness in the Proceeding giving rise to a claim for indemnification hereunder. 
Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, 
under the applicable standards of professional conduct then prevailing, would have a conflict of 
interest in representing either the Company or Indemnitee in an action to determine Indemnitee's 
rights under this Agreement. If a Change of Control has not occurred, Independent Counsel shall 
be selected by the Board of Directors, with the approval of Indemnitee, which approval will not be 
unreasonably withheld. If a Change of Control has occurred, Independent Counsel shall be selected 
by Indemnitee, with the approval of the Board of Directors, which approval will not be unreasonably 
withheld.

(g) 

"Proceeding" includes any threatened, pending or completed action, suit, arbitration, 
alternate  dispute  resolution  mechanism,  investigation,  administrative  hearing  or  any  other 
proceeding, whether civil, criminal, administrative or investigative (including on appeal), except 
one pending or completed on or before the Effective Date, unless otherwise specifically agreed in 
writing by the Company and Indemnitee.

Section 2. 

Services by Indemnitee.  Indemnitee will serve as an officer of the Company. 
However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue 
Indemnitee's service to the Company beyond any period otherwise required by law or by other 
agreements or commitments of the parties, if any.

Section 3. 

Indemnification  -  General.   The  Company  shall  indemnify,  and  advance 
Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent 
permitted by Maryland law in effect on the date hereof and as amended from time to time; provided, 
however, that no change in Maryland law shall have the effect of reducing the benefits available to 
Indemnitee hereunder based on Maryland law as in effect on the date hereof. The rights of Indemnitee 

2

provided in this Section 3 shall include, without limitation, the rights set forth in the other sections 
of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the 
Maryland General Corporation Law ("MGCL").

Section 4. 

Proceedings Other Than Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason 
of his/her Corporate Status, he/she is, or is threatened to be, made a party to or a witness in any 
threatened, pending, or completed Proceeding, other than a Proceeding by or in the right of the 
Company.  Pursuant  to  this  Section  4,  Indemnitee  shall  be  indemnified  against  all  judgments, 
penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred 
by him/her or on his/her behalf in connection with a Proceeding by reason of his/her Corporate 
Status unless it is established that (i) the act or omission of Indemnitee was material to the matter 
giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and 
deliberate  dishonesty,  (ii)  Indemnitee  actually  received  an  improper  personal  benefit  in  money, 
property or services, or (iii) in the case of any criminal Proceeding, Indemnitee had reasonable 
cause to believe that his/her conduct was unlawful.

Section 5. 

Proceedings by or in the Right of the Company.  Indemnitee shall be entitled 
to the rights of indemnification provided in this Section 5 if, by reason of his/her Corporate Status, 
he/she is, or is threatened to be, made a party to or a witness in any threatened, pending or completed 
Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant 
to this Section 5, Indemnitee shall be indemnified against all amounts paid in settlement and all 
Expenses actually and reasonably incurred by him/her or on his/her behalf in connection with such 
Proceeding unless it is established that (i) the act or omission of Indemnitee was material to the 
matter giving rise to such a Proceeding and (a) was committed in bad faith or (b) was the result of 
active and deliberate dishonesty or (ii) Indemnitee actually received an improper personal benefit 
in money, property or services.

Section 6. 

Court-Ordered Indemnification.  Notwithstanding any  other provision of 
this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice 
as the court shall require, may order indemnification in the following circumstances:

(a) 

if it determines Indemnitee is entitled to reimbursement under Section 2-418(d)(1) 
of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to 
recover the expenses of securing such reimbursement; or

(b) 

if it determines that Indemnitee is fairly and reasonably entitled to indemnification 
in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of 
conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of 
an  improper  personal  benefit  under  Section  2-418(c)  of  the  MGCL,  the  court  may  order  such 
indemnification  as  the  court  shall  deem  proper.  However,  indemnification  with  respect  to  any 
Proceeding by or in the right of the Company or in which liability shall have been adjudged in the 
circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses actually 
and reasonably incurred by him/her or on his/her behalf in connection with a Proceeding.

3

Section 7. 

Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, and without limiting any such provision, 
to  the  extent  that  Indemnitee  is,  by  reason  of  his/her  Corporate  Status,  made  a  party  to  and  is 
successful, on the merits or otherwise, in the defense of any Proceeding, he/she shall be indemnified 
for all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection 
therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits 
or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the 
Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably 
incurred by him/her or on his/her behalf in connection with each successfully resolved claim, issue 
or matter, allocated on a reasonable and proportionate basis. For purposes of this Section and without 
limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or 
without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 8. 

Advance of Expenses.  The Company shall advance all reasonable Expenses 
actually and reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding 
(other than a Proceeding brought to enforce indemnification under this Agreement, applicable law, 
the Charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled 
to vote generally in the election of directors or of the Board of Directors) to which Indemnitee is, 
or is threatened to be, made a party or a witness, within ten days after the receipt by the Company 
of a statement or statements from Indemnitee requesting such advance or advances from time to 
time, whether prior to or after final disposition of such Proceeding. Such statement or statements 
shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded 
or accompanied by a written affirmation by Indemnitee of Indemnitee's good faith belief that the 
standard of conduct necessary for indemnification by the Company as authorized by law and by 
this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially 
the form attached hereto as Exhibit A or in such form as may be required under applicable law as 
in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to 
Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall ultimately be 
established that the standard of conduct has not been met and which have not been successfully 
resolved as described in Section 7. To the extent that Expenses advanced to Indemnitee do not relate 
to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable 
and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general 
obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee's 
financial ability to repay such advanced Expenses and without any requirement to post security 
therefor.

Section 9. 

Procedure for Determination of Entitlement to Indemnification.

(a) 

To obtain indemnification under this Agreement, Indemnitee shall submit to the 
Company a written request, including therein or therewith such documentation and information as 
is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what 
extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly 
upon receipt of such a request for indemnification, advise the Board of Directors in writing that 
Indemnitee has requested indemnification.

4

(b) 

Upon  written  request  by  Indemnitee  for  indemnification  pursuant  to  the  first 
sentence  of  Section  9(a)  hereof,  a  determination,  if  required  by  applicable  law,  with  respect  to 
Indemnitee's entitlement thereto shall promptly be made in the specific case: (i) if a Change in 
Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, 
a copy of which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have 
occurred, (A) by the Board of Directors (or a duly authorized committee thereof) by a majority vote 
of a quorum consisting of Disinterested Directors (as herein defined), or (B) if a quorum of the 
Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, 
such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to 
the Board of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a 
majority of the members of the Board of Directors, by the stockholders of the Company. If it is so 
determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made 
within ten days after such determination. Indemnitee shall cooperate with the person, persons or 
entity  making  such  determination  with  respect  to  Indemnitee's  entitlement  to  indemnification, 
including  providing  to  such  person,  persons  or  entity  upon  reasonable  advance  request  any 
documentation or information which is not privileged or otherwise protected from disclosure and 
which is reasonably available to Indemnitee and reasonably necessary to such determination in the 
discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) 
of this Section 9. Any Expenses actually and reasonably incurred by Indemnitee in so cooperating 
with  the  person,  persons  or  entity  making  such  determination  shall  be  borne  by  the  Company 
(irrespective  of  the  determination  as  to  Indemnitee's  entitlement  to  indemnification)  and  the 
Company shall indemnify and hold Indemnitee harmless therefrom.

Section 10. 

Presumptions and Effect of Certain Proceedings.

(a) 

In making a determination with respect to entitlement to indemnification hereunder, 
the person or persons or entity making such determination shall presume that Indemnitee is entitled 
to indemnification under this Agreement if Indemnitee has submitted a request for indemnification 
in accordance with Section 9(a) of this Agreement, and the Company shall have the burden of proof 
to overcome that presumption in connection with the making of any determination contrary to that 
presumption.

(b) 

The termination of any Proceeding by judgment, order, settlement, conviction, a 
plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, 
does  not  create  a  presumption  that  Indemnitee  did  not  meet  the  requisite  standard  of  conduct 
described herein for indemnification.

5

Section 11. 

Remedies of Indemnitee.

(a) 

If (i) a determination is made pursuant to Section 9 of this Agreement that Indemnitee 
is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made 
pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification 
shall have been made pursuant to Section 9(b) of this Agreement within 60 days after receipt by 
the  Company  of  the  request  for  indemnification,  (iv)  payment  of  indemnification  is  not  made 
pursuant to Section 7 of this Agreement within ten days after receipt by the Company of a written 
request therefor, or (v) payment of indemnification is not made within ten days after a determination 
has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an 
adjudication  in  an  appropriate  court  located  in  the  State  of  Maryland,  or  in  any  other  court  of 
competent  jurisdiction,  of  his/her  entitlement  to  such  indemnification  or  advance  of  Expenses. 
Alternatively, Indemnitee, at his/her option, may seek an award in arbitration to be conducted by a 
single  arbitrator  pursuant  to  the  commercial  Arbitration  Rules  of  the  American  Arbitration 
Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in 
arbitration within 180 days following the date on which Indemnitee first has the right to commence 
such proceeding pursuant to this Section 11(a); provided, however, that the foregoing clause shall 
not apply to a proceeding brought by Indemnitee to enforce his/her rights under Section 7 of this 
Agreement.

(b) 

In any judicial proceeding or arbitration commenced pursuant to this Section 11 the 
Company shall have the burden of proving that Indemnitee is not entitled to indemnification or 
advance of Expenses, as the case may be.

(c) 

If a determination shall have been made pursuant to Section 9(b) of this Agreement 
that Indemnitee is entitled to indemnification, the Company shall be bound by such determination 
in  any  judicial  proceeding  or  arbitration  commenced  pursuant  to  this  Section  11,  absent  a 
misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make 
Indemnitee's  statement  not  materially  misleading,  in  connection  with  the  request  for 
indemnification.

(d) 

In the event that Indemnitee, pursuant to this Section 11, seeks a judicial adjudication 
of or an award in arbitration to enforce his/her rights under, or to recover damages for breach of, 
this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified 
by the Company for, any and all Expenses actually and reasonably incurred by him/her in such 
judicial  adjudication  or  arbitration.  If  it  shall  be  determined  in  such  judicial  adjudication  or 
arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance 
of  Expenses  sought,  the  Expenses  incurred  by  Indemnitee  in  connection  with  such  judicial 
adjudication or arbitration shall be appropriately prorated.

Section 12. 

Defense of the Underlying Proceeding.

(a) 

Indemnitee shall notify the Company promptly upon being served with or receiving 
any  summons,  citation,  subpoena,  complaint,  indictment,  information,  notice,  request  or  other 
document relating to any Proceeding which may result in the right to indemnification or the advance 

6

 
of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify 
Indemnitee  from  the  right,  or  otherwise  affect  in  any  manner  any  right  of  Indemnitee,  to 
indemnification or the advance of Expenses under this Agreement unless the Company's ability to 
defend  in  such  Proceeding  or  to  obtain  proceeds  under  any  insurance  policy  is  materially  and 
adversely  prejudiced  thereby,  and  then  only  to  the  extent  the  Company  is  thereby  actually  so 
prejudiced.

(b) 

Subject to the provisions of the last sentence of this Section 12(b) and of Section 
12(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may 
give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee 
of any such decision to defend within 15 calendar days following receipt of notice of any such 
Proceeding under Section 12(a) above. The Company shall not, without the prior written consent 
of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any 
judgment against Indemnitee or enter into any settlement or compromise which (i) includes an 
admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full 
release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form 
and  substance  reasonably  satisfactory  to  Indemnitee.  This  Section  12(b)  shall  not  apply  to  a 
Proceeding brought by Indemnitee under Section 11 above or Section 18 below.

(c) 

Notwithstanding the provisions of Section 12(b) above, if in a Proceeding to which 
Indemnitee  is  a  party  by  reason  of  Indemnitee's  Corporate  Status,  (i)  Indemnitee  reasonably 
concludes, based upon an opinion of counsel approved by the Company, which approval shall not 
be unreasonably withheld, that he/she may have separate defenses or counterclaims to assert with 
respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) 
Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, 
which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest 
or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company 
fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to 
be represented by separate legal counsel of Indemnitee's choice, subject to the prior approval of the 
Company, which shall not be unreasonably withheld, at the expense of the Company. In addition, 
if the Company fails to comply with any of its obligations under this Agreement or in the event that 
the Company or any other person takes any action to declare this Agreement void or unenforceable, 
or  institutes  any  Proceeding  to  deny  or  to  recover  from  Indemnitee  the  benefits  intended  to  be 
provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's 
choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at 
the expense of the Company (subject to Section 11(d)), to represent Indemnitee in connection with 
any such matter.

Section 13. 

Non-Exclusivity; Survival of Rights; Subrogation; Insurance.

(a) 

The  rights  of  indemnification  and  advance  of  Expenses  as  provided  by  this 
Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time 
be  entitled  under  applicable  law,  the  Charter  or  Bylaws  of  the  Company,  any  agreement  or  a 
resolution of the stockholders entitled to vote generally in the election of directors or of the Board 
of Directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision 

7

hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action 
taken or omitted by such Indemnitee in his/her Corporate Status prior to such amendment, alteration 
or repeal.

(b) 

In the event of any payment under this Agreement, the Company shall be subrogated 
to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all 
papers required and take all action necessary to secure such rights, including execution of such 
documents as are necessary to enable the Company to bring suit to enforce such rights.

(c) 

The Company shall not be liable under this Agreement to make any payment of 
amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the 
extent that Indemnitee has otherwise actually received such payment under any insurance policy, 
contract, agreement or otherwise.

Section 14. 

Insurance.  The  Company  will  use  its  reasonable  best  efforts  to  acquire 
directors and officers liability insurance, on terms and conditions deemed appropriate by the Board 
of Directors of the Company, with the advice of counsel, covering Indemnitee or any claim made 
against Indemnitee for service as a director or officer of the Company and covering the Company 
for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims 
made against Indemnitee for service as a director or officer of the Company. Without in any way 
limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for 
any payment by Indemnitee arising out of the amount of any deductible or retention and the amount 
of any excess of the aggregate of all judgments, penalties, fines, settlements and reasonable Expenses 
actually and reasonably incurred by Indemnitee in connection with a Proceeding over the coverage 
of any insurance referred to in the previous sentence.

Section 15. 

Indemnification  for  Expenses  of  a  Witness.  Notwithstanding  any  other 
provision of this Agreement, to the extent that Indemnitee is or may be, by reason of his/her Corporate 
Status, a witness in any Proceeding, whether instituted by the Company or any other party, and to 
which Indemnitee is not a party but in which the Indemnitee receives a subpoena to testify, he/she 
shall  be  advanced  all  reasonable  Expenses  and  indemnified  against  all  Expenses  actually  and 
reasonably incurred by him/her or on his/her behalf in connection therewith.

Section 16. 

Duration of Agreement; Binding Effect.

(a) 

This Agreement  shall  continue  until  and  terminate  ten  years  after  the  date  that 
Indemnitee's Corporate Status shall have ceased; provided, that the rights of Indemnitee hereunder 
shall  continue  until  the  final  termination  of  any  Proceeding  then  pending  in  respect  of  which 
Indemnitee  is  granted  rights  of  indemnification  or  advance  of  Expenses  hereunder  and  of  any 
proceeding commenced by Indemnitee pursuant to Section 11 of this Agreement relating thereto.

(b) 

The indemnification and advance of Expenses provided by, or granted pursuant to, 
this Agreement shall be binding upon and be enforceable by the parties hereto and their respective 
successors and assigns (including any direct or indirect successor by purchase, merger, consolidation 
or otherwise to all or substantially all of the business or assets of the Company), shall continue as 

8

to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent of the Company 
or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise 
which such person is or was serving at the written request of the Company, and shall inure to the 
benefit of Indemnitee and his/her spouse, assigns, heirs, devisees, executors and administrators and 
other legal representatives.

(c) 

The Company shall require and cause any successor (whether direct or indirect by 
purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the 
business and/or assets of the Company, by written agreement in form and substance satisfactory to 
Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to 
the same extent that the Company would be required to perform if no such succession had taken 
place.

Section 17. 

Severability. If any provision or provisions of this Agreement shall be held 
to  be  invalid,  illegal  or  unenforceable  for  any  reason  whatsoever:  (a)  the  validity,  legality  and 
enforceability of the remaining provisions of this Agreement (including, without limitation, each 
portion of any section of this Agreement containing any such provision held to be invalid, illegal 
or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected 
or  impaired  thereby;  and  (b)  to  the  fullest  extent  possible,  the  provisions  of  this Agreement 
(including, without limitation, each portion of any section of this Agreement containing any such 
provision  held  to  be  invalid,  illegal  or  unenforceable,  that  is  not  itself  invalid,  illegal  or 
unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 18. 

Exception  to  Right  of  Indemnification  or  Advance  of  Expenses. 
Notwithstanding  any  other  provision  of  this  Agreement,  Indemnitee  shall  not  be  entitled  to 
indemnification  or  advance  of  Expenses  under  this Agreement  with  respect  to  any  Proceeding 
brought by Indemnitee, unless (a) the Proceeding is brought to enforce indemnification under this 
Agreement, and then only to the extent in accordance with and as authorized by Sections 8 and 11 
of  this Agreement,  or  (b)  the  Company's  Bylaws,  as  amended,  the  Charter,  a  resolution  of  the 
stockholders entitled to vote generally in the election of directors or of the Board of Directors or 
an agreement approved by the Board of Directors to which the Company is a party expressly provide 
otherwise.

Section 19. 

Identical Counterparts. This Agreement may be executed in one or more 
counterparts, each of which shall for all purposes be deemed to be an original but all of which 
together shall constitute one and the same Agreement. One such counterpart signed by the party 
against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

Section 20. 

Headings. The headings of the paragraphs of this Agreement are inserted 
for convenience only and shall not be deemed to constitute part of this Agreement or to affect the 
construction thereof.

Section 21.  Modification and Waiver. No supplement, modification or amendment of 
this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver 

9

of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other 
provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 22. 

Notices.  All  notices,  requests,  demands  and  other  communications 
hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand 
and receipted for by the party to whom said notice or other communication shall have been directed, 
or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after 
the date on which it is so mailed:

(a) 

If to Indemnitee, to: The address set forth on the signature page hereto.

(b) 

If to the Company to:

Retail Properties of America, Inc.
2021 Spring Road, Suite 200
Oak Brook, Illinois  60523
Attn:  President and Chief Executive Officer

With a copy to:

Retail Properties of America, Inc.
2021 Spring Road, Suite 200
Oak Brook, Illinois  60523
Attn:  General Counsel

or  to  such  other  address  as  may  have  been  furnished  to  Indemnitee  by  the  Company  or  to  the 
Company by Indemnitee, as the case may be.

Section 23. 

Governing Law. The parties agree that this Agreement shall be governed by, 
and construed and enforced in accordance with, the laws of the State of Maryland, without regard 
to its conflicts of laws rules.

Section 24.  Miscellaneous. Use of the masculine pronoun shall be deemed to include 

usage of the feminine pronoun where appropriate.

[SIGNATURE PAGE FOLLOWS]

10

 
 
 
 
 
 
 
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day 

and year first above written.

ATTEST:

COMPANY

/s/ ANN M. SHARP
Ann M. Sharp
Assistant Secretary

RETAIL PROPERTIES OF AMERICA, INC., a
Maryland corporation

By: /s/ STEVEN P. GRIMES

Steven P. Grimes
President and Chief Executive Officer

INDEMNITEE

/s/ PAULA C. MAGGIO
Paula C. Maggio

Address: Retail Properties of America, Inc.

2021 Spring Road, Suite 200
Oak Brook, Illinois 60523

11

EXHIBIT A

FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED

The Board of Directors of Retail Properties of America, Inc.

Re: Undertaking to Repay Expenses Advanced

Ladies and Gentlemen:

This undertaking is being provided pursuant to that certain Indemnification Agreement dated 
the ____ day of  ___________________, 20___, by and between Retail Properties of America, Inc.
(the "Company") and the undersigned Indemnitee (the "Indemnification Agreement"), pursuant to 
which I am entitled to advance of expenses in connection with [description of proceeding] (the 
"Proceeding").

Terms  used  herein  and  not  otherwise  defined  shall  have  the  meanings  specified  in  the 

Indemnification Agreement.

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged 
actions  or  omissions  by  me  in  such  capacity.  I  hereby  affirm  that  at  all times,  insofar  as  I  was 
involved as a [director or officer] of the Company, in any of the facts or events giving rise to the 
Proceeding, I (1) acted in good faith and honestly, (2) did not receive any improper personal benefit 
in money, property or services and (3) in the case of any criminal proceeding, had no reasonable 
cause to believe that any act or omission by me was unlawful.

In consideration of the advance of Expenses by the Company for reasonable attorneys' fees 
and related expenses incurred by me in connection with the Proceeding (the "Advanced Expenses"), 
I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission 
by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith 
or  (b)  was  the  result  of  active  and  deliberate  dishonesty  or  (2)  I  actually  received  an  improper 
personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had 
reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse 
the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as 
to which the foregoing findings have been established and which have not been successfully resolved 
as described in Section 7 of the Indemnification Agreement. To the extent that Advanced Expenses 
do not relate to a specific claim, issue or matter in the Proceeding, I agree that such Expenses shall 
be allocated on a reasonable and proportionate basis.

 IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this day 

of __________________, _______ .

WITNESS:

________________________ (SEAL)

 
 
 
 
 
 
 
Retail Properties of America, Inc.
Computation of Ratio of Earnings to Fixed Charges
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends

Exhibit 12.1

2016

2015

2014

2013

2012

Year Ended December 31,

Earnings

Income (loss) from continuing operations

$

37,110

$

3,832

$

Equity in loss of unconsolidated joint ventures, net

Gain on sales of investment properties, net

Adjustments added:

Fixed charges (see below)

Distributions on investments in unconsolidated joint ventures

—

129,707

113,539

—

—

121,792

142,987

—

597

2,088

42,196

137,944

1,360

$

(42,855)

$

(14,368)

1,246

5,806

150,685

7,105

6,307

7,843

178,306

6,168

Adjustments subtracted:

Interest capitalized

Total earnings

Fixed charges:

Interest expense

Co-venture obligation expense (1)

Interest capitalized

Estimate of interest within rental expense

Total fixed charges

Preferred stock dividends

Total fixed charges and preferred stock dividends

Ratio of earnings to fixed charges

Ratio of earnings to combined fixed charges and preferred

stock dividends

(69)
280,287

$

—
268,611

$

—
184,185

$

—
121,987

$

—
184,256

$

$

109,730

$

138,938

$

133,835

$

146,805

$

171,295

—

69

3,740
113,539

9,450
122,989

$

$

2.47

2.28

—

—

4,049
142,987

9,450
152,437

$

$

1.88

1.76

—

—

4,109
137,944

9,450
147,394

$

$

1.34

1.25

—

—

3,880
150,685

9,450
160,135

$

$

3,300

—

3,711
178,306

263
178,569

$

$

— (2)

1.03

— (3)

1.03

(1)  Represents the preferred return and incentive and other compensation with respect to IW JV 2009, LLC. The Company redeemed the full 

amount of the noncontrolling interest on April 26, 2012.

(2)  The ratio was less than 1:1 for the year ended December 31, 2013 as earnings were inadequate to cover fixed charges by a deficiency of 

approximately $28.7 million.

(3)  The ratio was less than 1:1 for the year ended December 31, 2013 as earnings were inadequate to cover fixed charges by a deficiency of 

approximately $38.1 million.

RETAIL PROPERTIES OF AMERICA, INC.
Subsidiary List
As of December 31, 2016

Exhibit 21.1

Entity
Bel Air Square, LLC
Bellevue Development, LLC
Birch Property & Casualty, LLC
C&S Southlake Capital Partners I, L.P.
Capital Centre LLC
Centre at Laurel, LLC
Colesville One, LLC
Dallas Metro Maintenance, L.L.C.
Denville Union Hill, L.L.C.
Gateway Village LLC
Green Valley Crossing, LLC
Half Day LLC
Inland Bel Air SPE, L.L.C.
Inland Park Place Limited Partnership
Inland Plano Acquisitions, LLC
Inland Plano Investments, LLC
Inland Reisterstown SPE I, L.L.C.
Inland Reisterstown SPE II, L.L.C.
Inland Southeast New Britain, L.L.C.
Inland Southeast Stony Creek, L.L.C.
Inland Western Acworth Stilesboro, L.L.C.
Inland Western Avondale McDowell, L.L.C.
Inland Western Bay Shore Gardiner, L.L.C.
Inland Western Bethlehem Saucon Valley Beneficiary, L.L.C.
Inland Western Bethlehem Saucon Valley DST
Inland Western Birmingham Edgemont, L.L.C.
Inland Western Cedar Hill Pleasant Run GP, L.L.C.
Inland Western Cedar Hill Pleasant Run Limited Partnership
Inland Western Charleston North Rivers, L.L.C.
Inland Western Chicago Ashland, L.L.C.
Inland Western Chicago Ashland I, L.L.C.
Inland Western Cocoa Beach Cornerstone, L.L.C.
Inland Western Colesville New Hampshire SPE, L.L.C.
Inland Western Columbia Broad River, L.L.C.
Inland Western Coppell Town GP, L.L.C.
Inland Western Coppell Town Limited Partnership
Inland Western Coram Plaza, L.L.C.
Inland Western Covington Newton Crossroads, L.L.C.
Inland Western Cranberry Beneficiary, L.L.C.
Inland Western Cranberry DST
Inland Western Crossville Main, L.L.C.
Inland Western Cumming Green’s Corner, L.L.C.
Inland Western Cuyahoga Falls, L.L.C.
Inland Western Dallas Lincoln Park GP, L.L.C.
Inland Western Dallas Lincoln Park Limited Partnership
Inland Western Dallas Lincoln Park LP, L.L.C.
Inland Western Dallas Paradise, L.L.C.
Inland Western Danforth, L.L.C.
Inland Western Denton Crossing GP, L.L.C.
Inland Western Denton Crossing Limited Partnership
Inland Western Duncansville Holliday Beneficiary, L.L.C.
Inland Western Duncansville Holliday DST

Formation
Maryland
Delaware
Vermont
Texas
Maryland
Maryland
Maryland
Delaware
Delaware
Maryland
Nevada
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware

  
Entity
Inland Western Easton Forks Town DST
Inland Western El Paso MDS Limited Partnership
Inland Western El Paso MDS LP, L.L.C.
Inland Western Evans, L.L.C.
Inland Western Fresno Blackstone Avenue, L.L.C.
Inland Western Fullerton Metrocenter, L.L.C.
Inland Western Gainesville Village, L.L.C.
Inland Western Glendale, L.L.C.
Inland Western Glendale Outlot D, L.L.C.
Inland Western Glendale Peoria II, L.L.C.
Inland Western Greensburg Commons, L.L.C.
Inland Western Greer Wade Hampton, L.L.C.
Inland Western Gurnee, L.L.C.
Inland Western Hickory-Catawba, L.L.C.
Inland Western High Ridge, L.L.C.
Inland Western Houma Magnolia, L.L.C.
Inland Western Houston Sawyer Heights GP, L.L.C.
Inland Western Houston Sawyer Heights Limited Partnership
Inland Western Irmo Station, L.L.C.
Inland Western Jackson Columns, L.L.C.
Inland Western JV Henderson Green Valley, L.L.C.
Inland Western Kill Devil Hills Croatan, L.L.C.
Inland Western Lake Mary, L.L.C.
Inland Western Lansing Eastwood (Tenant), L.L.C.
Inland Western Lawrenceville Simonton, L.L.C.
Inland Western Longmont Fox Creek, L.L.C.
Inland Western Marysville, L.L.C.
Inland Western McAllen MDS Limited Partnership
Inland Western McAllen MDS LP, L.L.C.
Inland Western MDS Portfolio, L.L.C.
Inland Western Memphis Winchester, L.L.C.
Inland Western Miami 19th Street, L.L.C.
Inland Western Middletown Brown’s Lane, L.L.C.
Inland Western Milwaukee Midtown, L.L.C.
Inland Western Milwaukee Midtown II, L.L.C.
Inland Western Mt. Pleasant Park West, L.L.C.
Inland Western Norman, L.L.C.
Inland Western Ontario 4th Street, L.L.C.
Inland Western Orange 440 Boston, L.L.C.
Inland Western Panama City, L.L.C.
Inland Western Pawtucket Boulevard, L.L.C.
Inland Western Pawtucket Cottage, L.L.C.
Inland Western Phenix City, L.L.C.
Inland Western Phillipsburg Greenwich, L.L.C.
Inland Western Phillipsburg Greenwich II, L.L.C.
Inland Western Phoenix, L.L.C.
Inland Western Placentia, L.L.C.
Inland Western Pottstown GP, L.L.C.
Inland Western Pottstown Limited Partnership
Inland Western Pottstown LP DST
Inland Western Salt Lake City Gateway, L.L.C.
Inland Western Seattle Northgate North, L.L.C.
Inland Western Southlake Corners Kimball GP, L.L.C.
Inland Western Southlake Corners Kimball Limited Partnership
Inland Western Spartanburg, L.L.C.
Inland Western Spartanburg SPE, L.L.C.

Formation
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware

Entity
Inland Western Spokane Northpointe, L.L.C.
Inland Western Summerville Azalea Square, L.L.C.
Inland Western Temecula Commons, L.L.C.
Inland Western Traverse City Bison Hollow, L.L.C.
Inland Western Tuscaloosa University, L.L.C.
Inland Western Waco Central GP, L.L.C.
Inland Western Waco Central Limited Partnership
Inland Western Waco Central LP, L.L.C.
Inland Western Wesley Chapel Northwoods, L.L.C.
Inland Western West Allis Greenfield, L.L.C.
Inland Western Woodridge Seven Bridges, L.L.C.
IW JV 2009, LLC
IW Mezz 2009, LLC
IW Mezz 2 2009, LLC
IWR Gateway Central Plant, L.L.C.
IWR Protective Corporation
Lake Mead Crossing, LLC
MS Inland Fund, LLC
Reisterstown Plaza Associates, LLC
RPAI Acquisitions, Inc.
RPAI Altamonte Springs State Road, L.L.C.
RPAI Arvada, L.L.C.
RPAI Ashburn Loudoun, L.L.C.
RPAI Austin Mopac GP, L.L.C.
RPAI Austin Mopac Limited Partnership
RPAI Austin Mopac LP, L.L.C.
RPAI Bangor Broadway, L.L.C.
RPAI Bangor Parkade, L.L.C.
RPAI Baton Rouge, L.L.C.
RPAI Bluffton Low Country, L.L.C.
RPAI Bluffton Low Country II, L.L.C.
RPAI Bradenton Beachway, L.L.C.
RPAI Brooklyn Park 93rd Avenue, L.L.C.
RPAI Burleson Wilshire GP, L.L.C.
RPAI Burleson Wilshire Limited Partnership
RPAI Burleson Wilshire LP, L.L.C.
RPAI Butler Kinnelon, L.L.C.
RPAI Canton Paradise, L.L.C.
RPAI Canton Paradise Outlot, L.L.C.
RPAI Capital Centre II, L.L.C.
RPAI Cedar Park Town Center, L.L.C.
RPAI Chanilly Crossing, L.L.C.
RPAI Chattanooga Brainerd Road, L.L.C.
RPAI Chicago Ashland Land, L.L.C.
RPAI Chicago Brickyard, L.L.C.
RPAI Clear Lake Clear Shores GP, L.L.C.
RPAI Clear Lake Clear Shores Limited Partnership
RPAI Clear Lake Clear Shores LP, L.L.C.
RPAI College Station Gateway GP, L.L.C.
RPAI College Station Gateway Limited Partnership
RPAI College Station Gateway LP, L.L.C.
RPAI College Station Gateway II GP, L.L.C.
RPAI College Station Gateway II Limited Partnership
RPAI College Station Gateway II LP, L.L.C.
RPAI College Station Gateway III, L.L.C.
RPAI Continental Rave Houston, L.L.C.

Formation
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Nevada
Delaware
Maryland
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware

Entity
RPAI Coppell Town, L.L.C.
RPAI Cypress Mill, L.L.C.
RPAI Cypress Mill GP, L.L.C.
RPAI Cypress Mill Limited Partnership
RPAI Darien, L.L.C.
RPAI Darien SPE, L.L.C.
RPAI Duluth John’s Creek, L.L.C.
RPAI Duluth John’s Creek SPE, L.L.C.
RPAI Euless GP, L.L.C.
RPAI Euless Limited Partnership
RPAI Euless LP, L.L.C.
RPAI Falls Church Merrifield, L.L.C.
RPAI Falls Church Merrifield II, L.L.C.
RPAI Fordham Place Office, L.L.C.
RPAI Fordham Place Retail, L.L.C.
RPAI Fort Mill West Town, L.L.C.
RPAI Fort Myers Page Field, L.L.C.
RPAI Frisco Parkway GP, L.L.C.
RPAI Frisco Parkway Limited Partnership
RPAI Frisco Parkway LP, L.L.C.
RPAI Gaithersburg Downtown Crown, L.L.C.
RPAI Galveston Galvez GP, L.L.C.
RPAI Galveston Galvez Limited Partnership
RPAI Galveston Galvez LP, L.L.C.
RPAI Georgetown Rivery GP, L.L.C.
RPAI Georgetown Rivery Limited Partnership
RPAI Georgetown Rivery LP, L.L.C.
RPAI Gilroy I, L.L.C.
RPAI Gilroy II, L.L.C.
RPAI Grapevine GP, L.L.C.
RPAI Grapevine Limited Partnership
RPAI Grapevine LP, L.L.C.
RPAI Green Global Gateway, L.L.C.
RPAI Greenville Five Forks, L.L.C.
RPAI Greenville Five Forks Outlot, L.L.C.
RPAI Hagerstown, L.L.C.
RPAI Hartford New Park, L.L.C.
RPAI Hellertown Main Street DST
RPAI HOLDCO Management LLC
RPAI Houma Academy, L.L.C.
RPAI Houston Little York GP, L.L.C.
RPAI Houston Little York Limited Partnership
RPAI Houston New Forest GP, L.L.C.
RPAI Houston New Forest Limited Partnership
RPAI Houston New Forest, L.L.C.
RPAI Houston Royal Oaks Village II GP, L.L.C.
RPAI Houston Royal Oaks Village II Limited Partnership
RPAI Houston Royal Oaks Village II LP, L.L.C.
RPAI Houston Royal Oaks Village III, L.L.C.
RPAI Houston Sawyer Heights, L.L.C.
RPAI Humble Humblewood GP, L.L.C.
RPAI Humble Humblewood Limited Partnership
RPAI Humble Humblewood LP, L.L.C.
RPAI I DST
RPAI II DST
RPAI Irving GP, L.L.C.

Formation
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Texas
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware

Entity
RPAI Irving Limited Partnership
RPAI Irving LP, L.L.C.
RPAI Issaquah Heritage, L.L.C.
RPAI Jacksonville Southpoint, L.L.C.
RPAI JV Nashville Bellevue, L.L.C.
RPAI Kalamazoo WMU, L.L.C.
RPAI Kalispell Mountain View, L.L.C.
RPAI Kalispell Mountain View II, L.L.C.
RPAI Kansas City, L.L.C.
RPAI Kansas City Stateline, L.L.C.
RPAI King’s Grant GP, L.L.C.
RPAI King’s Grant II GP, L.L.C.
RPAI King’s Grant Limited Partnership
RPAI King’s Grant II Limited Partnership
RPAI Kingsport East Stone, L.L.C.
RPAI Knoxville Corridor Park, L.L.C.
RPAI Knoxville Corridor Park II, L.L.C.
RPAI Lake Worth Towne Crossing GP, L.L.C.
RPAI Lake Worth Towne Crossing Limited Partnership
RPAI Lake Worth Towne Crossing LP, L.L.C.
RPAI Lakewood, L.L.C.
RPAI Lakewood II, L.L.C.
RPAI Lansing Eastwood, L.L.C.
RPAI Las Vegas Montecito, L.L.C.
RPAI Las Vegas Montecito Outlot, L.L.C.
RPAI Lawrence, L.L.C.
RPAI Lawton Lee Blvd., L.L.C.
RPAI Lebanon 9th Street DST
RPAI Leesburg Fort Evans, L.L.C.
RPAI Lewisville Lakepointe GP, L.L.C.
RPAI Lewisville Lakepointe Limited Partnership
RPAI Lewisville Lakepointe LP, L.L.C.
RPAI Mansfield GP, L.L.C.
RPAI Mansfield Limited Partnership
RPAI Mansfield LP, L.L.C.
RPAI Maple Grove Wedgwood, L.L.C.
RPAI McAllen GP, L.L.C.
RPAI McAllen Limited Partnership
RPAI McAllen LP, L.L.C.
RPAI McDonough Henry Town, L.L.C.
RPAI McKinney Stonebridge GP, L.L.C.
RPAI McKinney Stonebridge Limited Partnership
RPAI McKinney Stonebridge LP, L.L.C.
RPAI Miami 19th Street II, L.L.C.
RPAI Middletown Fairgrounds Plaza, L.L.C.
RPAI Midland Academy GP, L.L.C.
RPAI Midland Academy Limited Partnership
RPAI Midland Academy LP, L.L.C.
RPAI Moore 19th Street, L.L.C.
RPAI New Britain Main, L.L.C.
RPAI New Hartford Orchard, L.L.C.
RPAI New Port Richey Mitchell, L.L.C.
RPAI New York Portfolio, L.L.C.
RPAI Newburgh Crossing, L.L.C.
RPAI Newcastle Coal Creek, L.L.C.
RPAI Newnan Crossing, L.L.C.

Formation
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware

Entity
RPAI Newnan Crossing II, L.L.C.
RPAI Newport News Jefferson, L.L.C.
RPAI North Attleboro Crossroads, L.L.C.
RPAI North Carolina Sales, Inc.
RPAI North Richland Hills Davis GP, L.L.C.
RPAI North Richland Hills Davis Limited Partnership
RPAI North Richland Hills Davis LP, L.L.C.
RPAI Northport Northwood, L.L.C.
RPAI Northwest Management Corp.
RPAI Northwoods Natural Bridge, L.L.C.
RPAI Oak Brook Promenade I, L.L.C.
RPAI Oklahoma City Western Avenue, L.L.C.
RPAI Orange 53 Boston, L.L.C.
RPAI Oswego Douglass, L.L.C.
RPAI Oswego Gerry Centennial, L.L.C.
RPAI Pacific Property Services LLC
RPAI Pelham Manor, L.L.C.
RPAI Pittsburgh William Penn GP, L.L.C.
RPAI Pittsburgh William Penn, L.P.
RPAI Pittsburgh William Penn Member II DST
RPAI Pittsburgh William Penn Partner, L.P.
RPAI Plymouth 5, L.L.C.
RPAI Port Arthur Academy GP, L.L.C.
RPAI Port Arthur Academy Limited Partnership
RPAI Port Arthur Academy LP, L.L.C.
RPAI Poughkeepsie Mid-Hudson, L.L.C.
RPAI Powder Springs Battle Ridge, L.L.C.
RPAI Punxsutawney Mahoning Street DST
RPAI Quakertown GP, L.L.C.
RPAI Quakertown Limited Partnership
RPAI Quakertown LP DST
RPAI Redmond Avondale, L.L.C.
RPAI Richardson Eastside, L.L.C.
RPAI Round Rock Forest Commons GP, L.L.C.
RPAI Round Rock Forest Commons Limited Partnership
RPAI Round Rock Forest Commons LP, L.L.C.
RPAI Royal Palm Beach Commons, L.L.C.
RPAI Saginaw GP, L.L.C.
RPAI Saginaw Limited Partnership
RPAI Saginaw LP, L.L.C.
RPAI San Antonio Academy GP, L.L.C.
RPAI San Antonio Academy Limited Partnership
RPAI San Antonio Academy LP, L.L.C.
RPAI San Antonio GP, L.L.C.
RPAI San Antonio HQ GP, L.L.C.
RPAI San Antonio HQ Limited Partnership
RPAI San Antonio HQ LP, L.L.C.
RPAI San Antonio Huebner Oaks GP, L.L.C.
RPAI San Antonio Huebner Oaks Limited Partnership
RPAI San Antonio Huebner Oaks LP, L.L.C.
RPAI San Antonio Limited Partnership
RPAI San Antonio LP, L.L.C.
RPAI San Antonio Military Drive GP, L.L.C.
RPAI San Antonio Military Drive Limited Partnership
RPAI San Antonio Military Drive LP, L.L.C.
RPAI San Antonio Mission GP, L.L.C.

Formation
Delaware
Delaware
Delaware
Illinois
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware

Entity
RPAI San Antonio Mission Limited Partnership
RPAI San Antonio Mission LP, L.L.C.
RPAI Santa Fe, L.L.C.
RPAI Saratoga Springs Wilton, L.L.C.
RPAI Schaumburg American Lane, L.L.C.
RPAI Seekonk Power Center, L.L.C.
RPAI Severn, L.L.C.
RPAI Southlake Corners Kimball, L.L.C.
RPAI Southlake GP, L.L.C.
RPAI Southlake Limited Partnership
RPAI Southlake LP, L.L.C.
RPAI Southwest Management Corp.
RPAI Southwest Management LLC
RPAI Springfield Boston, L.L.C.
RPAI Stony Creek II, L.L.C.
RPAI Stroud Commons DST
RPAI Sugar Land Colony GP, L.L.C.
RPAI Sugar Land Colony Limited Partnership
RPAI Sugar Land Colony LP, L.L.C.
RPAI Summerville Azalea Square III GP, L.L.C.
RPAI Summerville Azalea Square III Limited Partnership
RPAI Summerville Azalea Square III LP, L.L.C.
RPAI Sylacauga Broadway, L.L.C.
RPAI Tacoma South I, L.L.C.
RPAI Tallahassee Governor’s One, L.L.C.
RPAI Tampa Walters, L.L.C.
RPAI Temecula Vail, L.L.C.
RPAI Town and Country Manchester, L.L.C.
RPAI Towson Square, L.L.C.
RPAI Towson Square Parking, L.L.C.
RPAI US Management LLC
RPAI Vienna Tysons, L.L.C.
RPAI Viera Lake Andrew, L.L.C.
RPAI Watauga GP, L.L.C.
RPAI Watauga Limited Partnership
RPAI Watauga LP, L.L.C.
RPAI West Mifflin Century III GP, L.L.C.
RPAI West Mifflin Century III, L.P.
RPAI West Mifflin Century III Member II DST
RPAI West Mifflin Century III Partner, L.P.
RPAI Westbury Merchants Plaza, L.L.C.
RPAI Western Management Corp.
RPAI Williston Maple Tree, L.L.C.
RPAI Winter Springs Red Bug, L.L.C.
RPAI Woodinville Plaza, L.L.C.
RPAI Worcester Lincoln Plaza, L.L.C.
RRP Hecht, LLC
SLTS Grand Avenue II, L.P.
SLTS Grand Avenue II GP, L.L.C.
South Billings Center, LLC
The Shops At Legacy (RPAI) GP, L.L.C.
The Shops At Legacy (RPAI) L.P.
The Shops At Legacy (RPAI) Mezz, L.L.C.
Town Square Ventures, L.P.
Town Square Ventures II, L.P.
Town Square Ventures II GP, L.L.C.

Formation
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Tennessee
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Maryland
Texas
Delaware
Delaware
Delaware
Illinois
Delaware
Illinois
Texas
Texas

Entity
Town Square Ventures III, L.P.
Town Square Ventures III GP, L.L.C.
Town Square Ventures III LP, L.L.C.
Town Square Ventures IV, L.P.
Town Square Ventures IV GP, L.L.C.
Town Square Ventures IV LP, L.L.C.
Town Square Ventures V, L.P.
Town Square Ventures V GP, L.L.C.
Town Square Ventures V LP, L.L.C.
Towson Circle LLC
Western Town Square Ventures GP, L.L.C.
Western Town Square Ventures I GP, L.L.C.
Western Town Square Ventures LP, L.L.C.

Formation
Texas
Delaware
Delaware
Texas
Delaware
Delaware
Texas
Delaware
Delaware
Maryland
Delaware
Delaware
Delaware

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-196264 on Form S-8 and Registration 
Statement No. 333-207824 on Form S-3 of our reports dated February 15, 2017, relating to the consolidated financial 
statements and financial statement schedules of Retail Properties of America, Inc. and subsidiaries, (the “Company”) 
(which  report  expresses  an  unqualified  opinion  on  those  consolidated  financial  statements  and  financial  statement 
schedules  and  includes  explanatory  paragraphs  regarding  the  Company’s  adoption  of Accounting  Standards  Update 
2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, and Accounting 
Standards Update 2017-01, Business Combinations) and the effectiveness of the Company’s internal control over financial 
reporting,  appearing  in  this Annual  Report  on  Form  10-K  of  Retail  Properties  of America,  Inc.  for  the  year  ended 
December 31, 2016.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 15, 2017

CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.1 

I, Steven P. Grimes, certify that:

1. 

I have reviewed this Annual Report on Form 10-K of Retail Properties of America, Inc.; 

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 the statements made, in light of the circumstances under which such statements were made, not misleading 
with respect to the period covered by this report; 

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all 
material respects the financial 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 in Exchange 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 within those 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the 
preparation of financial statements for external 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 the effectiveness 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially 
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over 
financial  reporting,  to  the  registrant’s  auditors  and  the  audit  committee  of  the  registrant’s  board  of  directors  (or  persons 
performing the equivalent functions): 

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting 
which are reasonably 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 internal control over financial reporting.

By:

/s/ STEVEN P. GRIMES

Steven P. Grimes
President and Chief Executive Officer

Date: February 15, 2017

CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2 

I, Heath R. Fear, certify that:

1. 

I have reviewed this Annual Report on Form 10-K of Retail Properties of America, Inc.; 

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 the statements made, in light of the circumstances under which such statements were made, not misleading 
with respect to the period covered by this report; 

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all 
material respects the financial 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 in Exchange 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 within those 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the 
preparation of financial statements for external 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 the effectiveness 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially 
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over 
financial  reporting,  to  the  registrant’s  auditors  and  the  audit  committee  of  the  registrant’s  board  of  directors  (or  persons 
performing the equivalent functions): 

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting 
which are reasonably 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 internal control over financial reporting.

By:

/s/ HEATH R. FEAR

Heath R. Fear
Executive Vice President,
Chief Financial Officer and Treasurer

Date: February 15, 2017

Certification Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1

In connection with the Annual Report on Form 10-K of Retail Properties of America, Inc. (the “Company”) for the period ended 
December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Steven P. Grimes as 
President and Chief Executive Officer of the Company and Heath R. Fear as Executive Vice President, Chief Financial Officer 
and Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of 
the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of 

operations of the Company.

By:

/s/ STEVEN P. GRIMES

Steven P. Grimes
President and Chief Executive Officer

Date: February 15, 2017

By:

/s/ HEATH R. FEAR

Heath R. Fear
Executive Vice President,
Chief Financial Officer and Treasurer

Date: February 15, 2017

B O A R D   O F 
D I R E C T O R S

I N V E S T O R 
I N F O R M A T I O N

E X E C U T I V E
O F F I C E R S

Gerald M. Gorski, Chairman
Former Partner, Gorski & Good LLP

Bonnie S. Biumi
Former President and Chief 
Financial Officer of Kerzner 
International Resorts, Inc.

Current stockholder information, 
including the Annual Report, SEC 
filings and press releases, is 
available on our website at 
www.rpai.com, by e-mail request 
to ir@rpai.com or via telephone at 
800.541.7661.

Frank A. Catalano, Jr.
President of Catalano & Associates

L E G A L   C O U N S E L

Goodwin Procter LLP
Boston, MA

I N D E P E N D E N T 
A U D I T O R S

Deloitte & Touche LLP
Chicago, IL

T R A N S F E R 
A G E N T

Computershare
P.O. Box 30170
College Station, Texas 77842
800.368.5948
www.computershare.com

Paul R. Gauvreau
Former Chief Financial Officer,
Financial Vice President and 
Treasurer of Pittway Corporation

Robert G. Gifford
Former President and Chief 
Executive Officer of AIG Global 
Real Estate

Steven P. Grimes
President and Chief Executive Officer

Richard P. Imperiale
President and Founder of the
Uniplan Companies

Peter L. Lynch
Former President and Chief 
Executive Officer of Winn-Dixie 
Stores, Inc.

Thomas J. Sargeant
Former Chief Financial Officer of
AvalonBay Communities, Inc.

Steven P. Grimes
President and Chief Executive Officer

Heath R. Fear
Executive Vice President, 
Chief Financial Officer and Treasurer

Shane C. Garrison
Executive Vice President,
Chief Operating Officer and 
Chief Investment Officer

Paula C. Maggio
Executive Vice President, 
General Counsel and Secretary

Julie M. Swinehart
Senior Vice President, 
Chief Accounting Officer

C O R P O R A T E 
O F F I C E

Retail Properties of America, Inc.
2021 Spring Road, Suite 200
Oak Brook, Illinois 60523
855.247.RPAI
www.rpai.com

This Annual Report and the Letter to Stockholders contain “forward-looking statements”. Forward-looking statements are statements that are not historical, including statements 

regarding management’s intentions, beliefs, expectations, representations, plans or predictions of the future and are typically identified by such words as “believes”, “expects”, 

“may”, “should”, “intends”, “plans”, “estimates”, “continue”, or “anticipates” and variations of such words or similar expressions or the negative of such words. We intend that such 

forward-looking statements be subject to the safe harbor provisions set forth in Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act 

of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and we include this statement for the purpose of complying with such safe harbor provisions. Future 

events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements 

expressed or implied by the forward-looking statements. Important factors that could cause our actual results to be materially different from the forward-looking statements 

are discussed in our Annual Report on Form 10-K. We assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could 

differ from those projected in any forward-looking statements.

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2021 Spring Road, Suite 200 | Oak Brook, IL 60523 | 855.247.RPAI | www.rpai.com | NYSE: RPAI