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, 2019

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 1-10093

 RPT Realty

(Exact Name of Registrant as Specified in its Charter)

Maryland		13-6908486
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
19 W 44th Street,	Suite 1002
New York,	New York	10036
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 221-1261

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Shares of Beneficial Interest, ($0.01 Par Value Per Share)	RPT	New York Stock Exchange
7.25% Series D Cumulative Convertible Perpetual Preferred	RPT.PRD	New York Stock Exchange
Shares of Beneficial Interest ($0.01 Par Value Per Share)

Securities Registered Pursuant to Section 12(g) of the Act:  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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒  No ☐

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

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

The aggregate market value of the common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter (June 28, 2019) was $964,595,796 based upon the last reported sale price of $12.11 per share on the New York Stock Exchange on June 28, 2019. As of February 14, 2020 there were outstanding 80,374,748 Common Shares of Beneficial Interest.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the annual meeting of shareholders to be held in 2020 are incorporated by reference into Part III.

TABLE OF CONTENTS

Item	PART I	Page
1.	Business	1
1A.	Risk Factors	7
1B.	Unresolved Staff Comments	17
2.	Properties	18
3.	Legal Proceedings	25
4.	Mine Safety Disclosures	25
	PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
6.	Selected Financial Data	27
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
7A.	Quantitative and Qualitative Disclosures About Market Risk	43
8.	Financial Statements and Supplementary Data	44
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	44
9A.	Controls and Procedures	44
9B.	Other Information	44
	PART III
10.	Directors, Executive Officers and Corporate Governance	45
11.	Executive Compensation	45
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	45
13.	Certain Relationships and Related Transactions, and Director Independence	45
14.	Principal Accountant Fees and Services	45
	PART IV
15.	Exhibits and Financial Statement Schedules	46
	Consolidated Financial Statements and Notes	F-1

Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”).  These forward-looking statements represent our expectations, plans or beliefs concerning future events and may be identified by terminology such as “may,” “will,” “should,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” “predict,” or similar terms.  Although the forward-looking statements made in this document are based on our good-faith beliefs, reasonable assumptions and our best judgment based upon current information, certain factors could cause actual results to differ materially from those in the forward-looking statements, including, among others: our success or failure in implementing our business strategy; economic conditions generally and in the commercial real estate and finance markets specifically; the cost and availability of capital, which depends in part on our asset quality and our relationships with lenders and other capital providers; our business prospects and outlook; changes in governmental regulations, tax rates and similar matters; our continuing to qualify as a real estate investment trust (“REIT”); and other factors detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”) and in particular those set forth under “Risk Factors” in this Annual Report on Form 10-K.  Given these uncertainties, you should not place undue reliance on any forward-looking statements.  Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future.

PART I

Item 1. Business

The terms “Company,” “RPT,” “we,” “our,” or “us” refer to RPT Realty, RPT Realty, L.P., and/or their subsidiaries, as the context may require. The content of our website and the websites of third parties noted herein is not incorporated by reference in this Annual Report on Form 10-K.

General

RPT Realty owns and operates a national portfolio of open-air shopping destinations principally located in top U.S. markets. The Company's shopping centers offer diverse, locally-curated consumer experiences that reflect the lifestyles of their surrounding communities and meet the modern expectations of the Company's retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the New York Stock Exchange (the “NYSE”). The common shares of beneficial interest of the Company, par value $0.01 per share (the “common shares”), are listed and traded on the NYSE under the ticker symbol “RPT”. As of December 31, 2019, our property portfolio consisted of 49 shopping centers (including five shopping centers owned through a joint venture) (the "aggregate portfolio") representing 11.9 million square feet of gross leasable area (“GLA”).  As of December 31, 2019, the Company's pro-rata share of the aggregate portfolio was 94.7% leased.

The Company's principal executive offices are located at 19 West 44th Street, Suite 1002, New York, New York 10036 and its telephone number is (212) 221-1261. The Company’s website is rptrealty.com. As of December 31, 2019, the Company had 104 full-time employees. None of our employees are represented by a collective bargaining unit, and we believe that our relations with our employees are good.

We conduct substantially all of our business through our operating partnership, RPT Realty, L.P., a Delaware limited partnership (the “Operating Partnership” or “OP”).  The Operating Partnership, either directly or indirectly through partnerships or limited liability companies, holds fee title to all of our properties.  As the sole general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership.  As of December 31, 2019, we owned approximately 97.7% of the Operating Partnership.  The interests of the limited partners are reflected as noncontrolling interests in our financial statements and the limited partners are generally individuals or entities that contributed interests in certain assets or entities to the Operating Partnership in exchange for units of limited partnership interest (“OP Units”).  The holders of OP Units are entitled to exchange them for our common shares on a 1:1 basis or for cash.  The form of payment is at our election.

We operate in a manner intended to qualify as a REIT pursuant to the provisions of the Internal Revenue Code of 1986, as amended (the “Code”).  Certain of our operations, including property and asset management, as well as ownership of certain land parcels, are conducted through taxable REIT subsidiaries (“TRSs”), which are subject to federal and state income taxes.

1

Business Strategy

Our goal is to be a dominant shopping center owner, with a focus on the following:

•Own and manage high quality open-air shopping centers predominantly concentrated in the top U.S. metropolitan statistical areas (“MSA”);

•Curate our real estate to maximize its value while being aligned with the future of the shopping center industry by leveraging technology, optimizing distribution points for brick-and-mortar and e-commerce purchases, engaging in best-in-practice sustainability programs and developing a personalized appeal to attract and engage the next generation of shoppers;

•Maintain value creation redevelopment and expansion pipeline;

•Maximize balance sheet liquidity and flexibility; and

•Retain motivated, talented and high performing employees.

Key methods to achieve our strategy:

•Deliver above average relative shareholder return and generate outsized consistent and sustainable Consolidated Same Property Net Operating Income (“Same Property NOI”) and Operating Funds from Operations (“Operating FFO”) per share growth;

•Pursue selective redevelopment projects with significant pre-leasing for which we expect to achieve attractive returns on investment;

•Sell assets that no longer meet our long-term strategy and redeploy the proceeds to lease, redevelop and acquire assets in our core and target markets;

•Achieve lower leverage while maintaining low variable interest rate risk; and

•Retain access to diverse sources of capital, maintain liquidity through borrowing capacity under our unsecured line of credit and minimize the amount of debt maturities in a single year.

Our portfolio consists of community, lifestyle and power center properties tenanted by national and regional chain stores, market-leading supermarkets, as well as a strong lineup of smaller national, regional and local retailers that optimize the overall merchandise mix and reflect the community demographics of each center. Our centers also include entertainment components, including theaters, fitness centers and restaurants, which, in addition to supermarkets, are daily drivers of consumer traffic to our properties. National chain anchor tenants in our centers include, among others, TJ Maxx/Marshalls, Dick’s Sporting Goods, Ross Stores and ULTA Salon. Supermarket anchor tenants in our centers include, among others, Publix Super Market, Whole Foods, Kroger, Aldi, and Sprouts. Theater, fitness and restaurant tenants include, among others, Regal Cinema, LA Fitness, Starbucks and Panera. Our shopping centers are primarily located in key growth markets in the 40 largest MSAs in the United States such as Metro Detroit, Cincinnati, Miami, Jacksonville, Chicago, St. Louis, Minneapolis, Tampa/Lakeland and Nashville.

2

Operating Strategies and Significant Transactions

Our operating objective is to maximize the risk-adjusted return on invested capital at our shopping centers. We seek to do so by increasing the property operating income of our centers, controlling our capital expenditures, monitoring our tenants' credit risk and taking actions to mitigate our exposure to that tenant credit risk.

During 2019, our properties reported the following leasing activity, which is shown at pro-rata except for number of leasing transactions and square feet:

	Leasing Transactions	Square Footage	Base Rent/SF (1)	Prior Rent/SF (2)	Tenant Improvements/SF (3)	Leasing Commissions/SF
Renewals	131	766,892	$17.51	$16.12	$1.28	$0.12
New Leases - Comparable	34	88,197	$27.15	$21.94	$50.49	$11.08
New Leases - Non-Comparable (4)	45	303,757	$14.24	N/A	$36.76	$6.09
Total	210	1,158,846	$17.38	N/A	$14.35	$2.52

⁽¹⁾ Base rent represents contractual minimum rent under the new lease for the first 12 months of the term.

⁽²⁾ Prior rent represents minimum rent, if any, paid by the prior tenant in the final 12 months of the term.

⁽³⁾ Includes estimated tenant improvement cost, tenant allowances, and landlord costs. Excludes first generation space and leases related to development and redevelopment activity.

⁽⁴⁾ Non-comparable lease transactions include (i) leases for space vacant for greater than 12 months and (ii) leases signed where the previous and current lease do not have a consistent lease structure.

Investing Activities and Significant Transactions

Our investing objective is to generate an attractive risk-adjusted return on capital invested in acquisitions, developments, and redevelopments. In addition we seek to sell land or shopping centers that we deem to be fully valued or that no longer meet our investment criteria. We underwrite acquisitions based upon current cash flow, projections of future cash flow and scenario analyses that take into account the risks and opportunities of ownership. We underwrite development of new shopping centers on the same basis, but also take into account the unique risks of entitling land, constructing buildings and leasing newly built space.

In December 2019, we acquired a 76,000 square foot Target shadow-anchored shopping center in Austin, Texas for $33.9 million. We also sold two shopping centers and one land outparcel for aggregate gross proceeds of $69.4 million in the first half of 2019.

On December 10, 2019, we contributed five properties valued at $244.0 million to a newly formed joint venture with an affiliate of GIC Private Limited (“GIC”), Singapore's sovereign wealth fund, referred to as R2G Venture LLC (“R2G”), and received $118.3 million in gross proceeds for the 48.5% stake in R2G that was acquired by GIC. Additionally, GIC has committed up to $200.0 million of additional capital to R2G over the next three years to fund its 48.5% share of up to an aggregate of $412.4 million of potential future acquisitions by R2G of grocery-anchored shopping centers in target markets in the U.S. RPT retained a 51.5% stake in R2G and receives property management, construction management and leasing fees from R2G. The Company will also be responsible for the day-to-day management of the properties as well as sourcing future acquisitions for R2G. Both GIC and RPT will have consent rights for all future acquisitions, and GIC has approval rights in connection with annual budgets and other specified major decisions. During the investment period for R2G, RPT has agreed to present all opportunities above a specified size threshold to acquire grocery-anchored shopping centers in attractive-high growth markets in the United States to R2G and not to acquire, invest in or source any such opportunities that have not previously been presented to R2G and declined by GIC.

Unless specified events occur, neither RPT nor GIC will have the right to force a sale of R2G or its assets within the first five years following its formation. Thereafter, both RPT and GIC will have forced sale rights, subject to a right to participate in the purchase for the other member.

See Item 2. Properties, for information regarding the five properties contributed to R2G.

Refer to Note 4 of the notes to our consolidated financial statements in this report for additional information related to acquisitions and dispositions.

3

Financing Strategies and Significant Transactions

Our financing objective is to maintain a strong and flexible balance sheet to ensure access to capital at a competitive cost.  In general, we seek to increase our financial flexibility by increasing our pool of unencumbered properties, maintaining a well-laddered debt maturity profile and primarily borrowing on an unsecured basis.  In keeping with our objective, we routinely benchmark our balance sheet on a variety of measures to our peers in the shopping center sector and REITs in general.  

Specifically, we completed the following financing transactions during 2019:

Debt

On April 30, 2019, we redeemed all of our outstanding junior subordinated notes due 2038, which accrued interest at a variable rate of LIBOR plus 3.30% for an aggregate purchase price of $28.6 million, consisting of the outstanding principal amount and accrued and unpaid interest as of the redemption date. In conjunction with this redemption, we wrote off unamortized deferred financing costs of $0.6 million.

On November 6, 2019, the Operating Partnership entered into the Fifth Amended and Restated Credit Agreement (the “credit agreement”), which consists of an unsecured revolving credit facility of up to $350.0 million (the “revolving credit facility”) and term loan facilities of $310.0 million (the “term loan facilities” and, together with the revolving credit facility, the “unsecured revolving line of credit”). The revolving credit facility matures on November 6, 2023 and can be extended up to one year to 2024 through two six-month options, subject to continued compliance with the terms of the credit agreement and the payment of an extension fee of 0.075%. Borrowings on the revolving credit facility are priced on a leverage grid ranging from LIBOR plus 105 basis points to LIBOR plus 150 basis points.

The term loan facilities mature in five separate tranches ranging from March 2023 to February 2027 and are priced on a leverage grid ranging from LIBOR plus 120 basis points to LIBOR plus 220 basis points. The credit agreement allows for the right to request increases in the revolving and term loan commitments or the making of additional term loans by up to an additional $340.0 million to a maximum aggregated amount not to exceed $1.0 billion. A portion of the proceeds from the credit agreement were used to repay our $75.0 million term loan due 2020 and our $75.0 million term loan due 2021 for an aggregate amount of $150.0 million. In conjunction with this early repayment, we wrote off deferred financing costs of $0.3 million.

Also on November 6, 2019, we repaid $100.0 million which constituted repayment in full of the Operating Partnership's $50.0 million 4.16% senior unsecured notes due 2024 and its $50.0 million 4.30% senior unsecured notes due 2026, each issued pursuant to the note purchase agreement dated September 8, 2014, as amended. Accordingly, on November 6, 2019, all outstanding notes and other obligations of the Operating Partnership and guarantors under such note purchase agreement were paid and satisfied in full. In conjunction with this early repayment, we wrote off unamortized deferred financings costs of $0.1 million.

On December 27, 2019, we entered into a note purchase agreement with the institutional investors named therein and closed a private placement of the Operating Partnership’s $50.0 million aggregate principal amount of 4.15% Senior Guaranteed Notes due December 27, 2029 pursuant thereto. Such notes are unsecured and are guaranteed by the Company and certain subsidiaries of the Operating Partnership. The notes have an annual fixed interest rate of 4.15% and mature on December 27, 2029. A portion of the proceeds were used to repay $25.0 million aggregate principal amount of our 4.13% Series A Notes due 2022 for an aggregate amount of $26.4 million, which included a prepayment penalty of $1.4 million. In conjunction with this early repayment, we wrote off unamortized deferred financings costs of $0.1 million. A portion of the proceeds was also used to repay the 6.50% fixed rate mortgage loan encumbering West Oaks II and Spring Meadows Place, with an aggregate principal balance of $24.9 million.

At each of December 31, 2019 and 2018 we had $349.8 million available to draw under our unsecured revolving line of credit, subject to compliance with applicable covenants.

Equity

During the first half of 2019, we had an at-the-market equity program pursuant to which we could sell up to an aggregate of 8.0 million common shares from time to time, in our sole discretion. For the year ended December 31, 2019, we did not issue any common shares under the program. The sale of such shares issuable pursuant to the program was registered with the SEC on our registration statement on Form S-3, which expired in June 2019.

4

Sustainability

We continue to advance our commitment to sustainability, with a focus on achieving goals in each of the Environmental, Social and Governance (“ESG”) areas of sustainability. We believe that sustainability initiatives are a vital part of supporting our primary goal to maximize value for our shareholders.

Our commitment to ESG principles starts with our employees. We are establishing a culture that intentionally attracts and retains talented employees to work in an engaging and energetic team environment that shares a passion for innovation, transparency and excellence. Our employees are awarded competitive compensation packages, including healthcare benefits for employees and their families, participation in a 401(k) plan, paid time-off benefits and employee referral bonuses. In addition, we strive to provide our employees with a healthy work-life balance through RPT Remote, our flexible work initiative, and our newly enacted Parental Leave Policy. We are also focused on creating healthy workspaces and promoting health and wellness for our employees and their families. In 2019, we won Michigan’s Best and Brightest in Wellness for the seventh year in a row. The Best and Brightest in Wellness awards program honors organizations that are making their workplaces, their employees and the community a healthier place to live and work. We are also devoted to philanthropy initiatives and partner with organizations that are committed to improving the overall quality of life in our communities. Each month, we support a local community organization through charitable giving or volunteerism.

In 2019, we created an ESG taskforce and enacted ESG polices aimed at providing the necessary framework to commence comprehensive sustainability initiatives. We established long-term sustainability goals with regard to the reduction of electricity consumption, water usage and waste diversion, focusing on our objectives of safeguarding the environment while improving the energy efficiency of our portfolio and lowering operating costs. In 2020, we intend to file RPT’s first Global Real Estate Sustainability Benchmark assessment, providing more transparency regarding our sustainability polices, initiatives and performance.

Competition

We compete with many other entities for the acquisition of shopping centers and land suitable for new developments, including other REITs, private institutional investors and other owner-operators of shopping centers.  In particular, larger REITs may enjoy competitive advantages that result from, among other things, a lower cost of capital.  These competitors may increase the market prices we would have to pay in order to acquire properties.  If we are unable to acquire properties that meet our criteria at prices we deem reasonable, our ability to grow will be adversely affected.

Our tenants compete with alternate forms of retailing, including on-line shopping, home shopping networks and mail order catalogs.  Alternate forms of retailing may reduce the demand for space in our shopping centers. Because our ability to generate revenue may be connected to the success of our tenants, we indirectly share exposure to these same competitive factors.

Further, our shopping centers generally compete for tenants with similar properties located in the same neighborhood, community or region.  Although we believe we own high quality centers in desirable geographic locations, competing centers may be newer, better located or have a better tenant mix.  We also believe we compete with other centers on the basis of rental rates and management and operational expertise. In addition, new centers or retail stores may be developed, increasing the supply of retail space competing with our centers or taking retail sales from our tenants.  To remain competitive, we evaluate all of the factors affecting our centers and work to position them accordingly to enable us to compete effectively. 

5

Environmental Matters

Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances disposed, stored, released, generated, manufactured or discharged from, on, at, onto, under or in such property. Environmental laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence or release of such hazardous or toxic substance.

We are not aware of any contamination which may have been caused by us or any of our tenants that would have a material effect on our consolidated financial statements. As part of our risk management activities, we have applied and been accepted into state sponsored environmental programs, the purpose of which is to expedite and facilitate satisfactory compliance with environmental laws and regulations should contaminants need to be remediated. We also have an environmental insurance policy that covers us against third party liabilities and remediation costs. While we believe that we do not have any material exposure to environmental remediation costs, we cannot give assurance that changes in the law or new discoveries of contamination will not result in additional liabilities to us.

Available Information

All reports we electronically file with, or furnish to, the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to such reports, are available, free of charge, on our website at rptrealty.com, as soon as reasonably practicable after we electronically file such reports with, or furnish those reports to, the SEC. These filings are also available at the SEC's website at www.sec.gov. Our Corporate Governance Guidelines, Code of Business Conduct and Ethics and Board of Trustees’ committee charters also are available on our website.

6

Item 1A.  Risk Factors

You should carefully consider each of the risks and uncertainties described below and elsewhere in this Annual Report on Form 10-K, as well as any amendments or updates reflected in subsequent filings with the SEC.  We believe these risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations and financial condition.  This list should not be considered to be a complete statement of all potential risks and uncertainties, and additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our results and business operations. We may update our risk factors from time to time in our future periodic reports.

Operating Risks

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.

In recent periods, sales by online retailers such as Amazon have increased, and many retailers operating brick and mortar stores have made online sales a vital piece of their businesses. 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.

National economic conditions and retail sales trends may adversely affect the performance of our properties.

Demand to lease space in our shopping centers generally fluctuates with the overall economy.  Economic downturns often result in a lower rate of retail sales growth, or even declines in retail sales.  In response, retailers that lease space in shopping centers typically reduce their demand for retail space during such downturns.  As a result, economic downturns and unfavorable retail sales trends may diminish the income, cash flow, and value of our properties.  

Our concentration of properties in Florida and Michigan makes us more susceptible to adverse market conditions in these states.

Our performance depends on the economic conditions in the markets in which we operate.  As of December 31, 2019 and 2018, our wholly-owned properties located in Florida and Michigan accounted for approximately 19.5% and 20.2%, and 23.0% and 19.0%, respectively, of our annualized base rent. To the extent that market conditions in these or other states in which we operate deteriorate, the performance or value of our properties may be adversely affected.

Increasing sales through non-retail channels and changes in the supply and demand for the type of space we lease to our tenants could affect the income, cash flow and value of our properties.

Our tenants compete with alternate forms of retailing, including on-line shopping, home shopping networks and mail order catalogs.  Alternate forms of retailing may reduce the demand for space in our shopping centers. Our shopping centers generally compete for tenants with similar properties located in the same neighborhood, community or region.  Although we believe we own high quality centers, competing centers may be newer, better located or have a better tenant mix.  In addition, new centers or retail stores may be developed, increasing the supply of retail space competing with our centers or taking retail sales from our tenants.  

As a result, we may not be able to renew leases or attract replacement tenants as leases expire.  When we do renew tenants or attract replacement tenants, the terms of renewals or new leases may be less favorable to us than current lease terms.  In order to lease our vacancies, we often incur costs to reconfigure or modernize our properties to suit the needs of a particular tenant.  Under competitive circumstances, such costs may exceed our budgets.   If we are unable to lease vacant space promptly, if the rental rates upon a renewal or new lease are lower than expected, or if the costs incurred to lease space exceed our expectations, then the income and cash flow of our properties will decrease.

7

Our reliance on key tenants for significant portions of our revenues exposes us to increased risk of tenant bankruptcies that could adversely affect our income and cash flow.

As of December 31, 2019, we received 39.9% of our combined annualized base rents from our top 25 tenants, including our top five tenants:  TJX Companies (4.5%), Dick's Sporting Goods (3.3%), Regal Cinemas (3.0%), Bed Bath & Beyond (2.9%) and LA Fitness (2.7%). No other tenant represented more than 2.0% of our total annualized base rent.  The credit risk posed by our major tenants varies.

If any of our major tenants experiences financial difficulties, or if a significant number of our tenants experience financial difficulties, such that they are unable to make rental payments or file for bankruptcy protection, our operating results could be adversely affected.  Bankruptcy filings by our tenants or lease guarantors generally delay our efforts to collect pre-bankruptcy receivables and could ultimately preclude full collection of these sums.  If a tenant rejects a lease, we would have only a general unsecured claim for damages, which may be collectible only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims.  

Our properties generally rely on anchor tenants (tenants greater than or equal to 10,000 square feet) to attract customers.  The loss of anchor tenants may adversely impact the performance of our properties.

If any of our anchor tenants becomes insolvent, suffers a downturn in business, abandons occupancy or decides not to renew its lease, such event could adversely impact the performance of the affected center.  An abandonment or lease termination by an anchor tenant may give other tenants in the same shopping center the right to terminate their leases or pay less rent pursuant to the terms of their leases.  Our leases with anchor tenants may, in certain circumstances, permit them to transfer their leases to other retailers.  The transfer to a new anchor tenant could result in lower customer traffic to the center, which would affect our other tenants.  In addition, a transfer of a lease to a new anchor tenant could give other tenants the right to make reduced rental payments or to terminate their leases.

We may be restricted from leasing vacant space based on existing exclusivity lease provisions with some of our tenants.

In a number of cases, our leases give a tenant the exclusive right to sell clearly identified types of merchandise or provide specific types of services at a particular shopping center.  In other cases, leases with a tenant may limit the ability of other tenants to sell similar merchandise or provide similar services to that tenant. When leasing a vacant space, these restrictions may limit the number and types of prospective tenants suitable for that space.  If we are unable to lease space on satisfactory terms, our operating results would be adversely impacted.

Increases in operating expenses could adversely affect our operating results.

Our operating expenses include, among other items, property taxes, insurance, utilities, repairs and the maintenance of the common areas of our shopping centers.  We may experience increases in our operating expenses, some or all of which may be out of our control.  Most of our leases require that tenants pay for a share of property taxes, insurance and common area maintenance costs.  However, if any property is not fully occupied or if recovery income from tenants is not sufficient to cover operating expenses, then we could be required to expend our own funds for operating expenses.  In addition, we may be unable to renew leases or negotiate new leases with terms requiring our tenants to pay all the property tax, insurance and common area maintenance costs that tenants currently pay, which would adversely affect our operating results.

Our real estate assets may be subject to additional impairment provisions based on market and economic conditions.

On a periodic basis, we assess whether there are any indicators that the value of our real estate properties and other investments may be impaired. Under generally accepted accounting principles (“GAAP”) a property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. In our estimate of cash flows, we consider factors such as expected future operating income, trends and prospects, the effects of demand, competition and other factors. We are required to make subjective assessments as to whether there are impairments in the value of our real estate properties and other investments.

No assurance can be given that we will be able to recover the current carrying amount of all of our properties and those of our unconsolidated joint ventures.  There can be no assurance that we will not take charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken.  We recorded no impairment provisions in 2019 related to our real estate properties.  Refer to Note 1 of the notes to the consolidated financial statements for further information related to impairment provisions.

8

Our redevelopment projects may not yield anticipated returns, which would adversely affect our operating results.

Our redevelopment activities generally call for a capital commitment and project scope greater than that required to lease vacant space.  To the extent a significant amount of construction is required, we are susceptible to risks such as permitting, cost overruns and timing delays as a result of the lack of availability of materials and labor, the failure of tenants to commit or fulfill their commitments, weather conditions and other factors outside of our control.  Any substantial unanticipated delays or expenses would adversely affect the investment returns from these redevelopment projects and adversely impact our operating results.

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

We have in the past, are currently and may in the future acquire and own properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures. Our existing joint ventures are subject to various risks, and any additional joint venture arrangements in which we may engage in the future are likely to be subject to various risks, including the following:

•lack of exclusive control over the joint venture, which may prevent us from taking actions that are in our best interest;

•future capital constraints of our partners or failure of our partners to fund their share of required capital contributions, which may require us to contribute more capital than we anticipated to fund developments and/or cover the joint venture's liabilities;

•our partners may at any time have business or economic goals that are inconsistent with ours;

•actions by our partners that could jeopardize our REIT status, require us to pay taxes or subject the properties owned by the joint venture to liabilities greater than those contemplated by the terms of the joint venture agreements;

•disputes between us and our partners that may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business;

•changes in economic and market conditions for any adjacent non-retail use that may adversely impact the cash flow of our retail property;

•joint venture agreements that may require prior consent of our joint venture partners for a sale or transfer to a third party of our interest in the joint venture, which would restrict our ability to dispose of our interest in such a joint venture; and

•joint venture agreements may include the right to trigger a buy-sell, put right or forced sale arrangement, which could cause us to sell our interest, or acquire our partner’s interest, or to sell the underlying asset, at a time when we otherwise would not have initiated such a transaction, without our consent or on unfavorable terms.

If any of the foregoing were to occur, our cash flow, financial condition and results of operations could be adversely affected.

If we suffer losses that are uninsured or in excess of our insurance coverage limits, we could lose invested capital and anticipated profits.

Catastrophic losses, such as losses resulting from wars, acts of terrorism, earthquakes, floods, hurricanes and tornadoes or other natural disasters, and pollution or environmental matters, generally are either uninsurable or not economically insurable, or may be subject to insurance coverage limitations, such as large deductibles or co-payments. Although we currently maintain “all risk” replacement cost insurance for our buildings, rents and personal property, commercial general liability insurance and pollution and environmental liability insurance, our insurance coverage may be inadequate if any of the events described above occurs to, or causes the destruction of, one or more of our properties. Under that scenario, we could lose both our invested capital and anticipated profits from that property.

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Investing Risks

We face competition for the acquisition and development of real estate properties, which may impede our ability to grow our operations or may increase the cost of these activities.

We compete with many other entities for the acquisition of shopping centers and land suitable for new developments, including other REITs, private institutional investors and other owner-operators of shopping centers.  In particular, larger REITs may enjoy competitive advantages that result from, among other things, a lower cost of capital.  These competitors may increase the market prices we would have to pay in order to acquire properties.  If we are unable to acquire properties that meet our criteria at prices we deem reasonable, our ability to grow will be adversely affected.

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.

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 investors may significantly increase the purchase price;

•we may incur significant costs and divert management’s 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 newly acquired properties, particularly the acquisition of portfolios of properties, into our existing operations;

•we may acquire properties that are not initially accretive to our results and we may not successfully manage and lease those properties to meet our expectations; and

•we may acquire properties that are subject to liabilities 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.

Commercial real estate investments are relatively illiquid, which could hamper our ability to dispose of properties that no longer meet our investment criteria or respond to adverse changes in the performance of our properties.

Our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment conditions is limited because real estate investments are relatively illiquid.  The real estate market is affected by many factors, such as general economic conditions, supply and demand, availability of financing, interest rates and other factors that are beyond our control.  We cannot be certain that we will be able to sell any property for the price and other terms we seek, or that any price or other terms offered by a prospective purchaser would be acceptable to us.  We also cannot estimate with certainty the length of time needed to find a willing purchaser and to complete the sale of a property.  We may be required to expend funds to correct defects or to make improvements before a property can be sold.  Factors that impede our ability to dispose of properties could adversely affect our financial condition and operating results.

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We are seeking to develop new properties or redevelop existing properties, an activity that has inherent risks that could adversely impact our cash flow, financial condition and results of operations. These activities are subject to the following risks:

•We may not be able to complete construction on schedule due to labor disruptions, construction delays, and delays or failure to receive zoning or other regulatory approvals;

•We may abandon our development, redevelopment and expansion opportunities after expending resources to determine feasibility and we may incur an impairment loss on our investment;

•Construction and other project costs may exceed our original estimates because of increases in material and labor costs, interest rates, operating costs, and leasing costs;

•We may not be able to obtain financing on favorable terms for construction;

•We might not be able to secure key anchor or other tenants;

•We may experience a decrease in customer traffic during the redevelopment period causing a decrease in tenant sales;

•Occupancy rates and rents at a completed project may not meet our projections; and

•The time frame required for development, constructions and lease-up of these properties means that we may have to wait years for a significant cash return.

If any of these events occur, our development activities may have an adverse effect on our results of operations, including additional impairment provisions.  For a detailed discussion of development projects, refer to Notes 3 and 5 of the notes to the consolidated financial statements.

Financing Risks

Increases in interest rates may affect the cost of our variable-rate borrowings, our ability to refinance maturing debt and the cost of any such refinancings.

As of December 31, 2019, we had seven interest rate swap agreements in effect for an aggregate notional amount of $210.0 million converting our floating rate corporate debt to fixed rate debt. In addition, we have entered into five forward starting interest rate swap agreement for an aggregate notional amount of $150.0 million. After accounting for these interest rate swap agreements, we had $100.0 million of variable rate debt outstanding at December 31, 2019.  Increases in interest rates on our existing indebtedness would increase our interest expense, which would adversely affect our cash flow and our ability to distribute cash to our shareholders.  For example, if market rates of interest on our variable rate debt outstanding as of December 31, 2019 increased by 1.0%, the increase in interest expense on our existing variable rate debt would decrease future earnings and cash flows by approximately $1.0 million annually.  Interest rate increases could also constrain our ability to refinance maturing debt because lenders may reduce their advance rates in order to maintain debt service coverage ratios.

Our debt must be refinanced upon maturity, which makes us reliant on the capital markets on an ongoing basis.

We are not structured in a manner to generate and retain sufficient cash flow from operations to repay our debt at maturity.  Instead, we expect to refinance our debt by raising equity, debt or other capital prior to the time that it matures.  As of December 31, 2019, we had $931.7 million of outstanding indebtedness, net of deferred financing costs, including $0.9 million of finance lease obligations. The availability, price and duration of capital can vary significantly.  If we seek to refinance maturing debt when capital market conditions are restrictive, we may find capital scarce, costly or unavailable.  Refinancing debt at a higher cost would affect our operating results and cash available for distribution.  The failure to refinance our debt at maturity would result in default and the exercise by our lenders of the remedies available to them, including foreclosure and, in the case of recourse debt, liability for unpaid amounts.

We could increase our outstanding debt.

Our management and Board of Trustees (“Board”) generally have discretion to increase the amount of our outstanding debt at any time.  Subject to existing financial covenants, we could become more highly leveraged, resulting in an increase in debt service costs that could adversely affect our cash flow and the amount available for distribution to our shareholders.  If we increase our debt, we may also increase the risk of default on our debt.

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Our mortgage debt exposes us to the risk of loss of property, which could adversely affect our financial condition.

As of December 31, 2019, we had $89.6 million of mortgage debt, net of unamortized premiums and deferred financing costs, encumbering our properties.  A default on any of our mortgage debt may result in foreclosure actions by lenders and ultimately our loss of the mortgaged property.  For federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage.  If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure but would not receive any cash proceeds.

Financial covenants may restrict our operating, investing or financing activities, which may adversely impact our financial condition and operating results.

The financial covenants contained in our mortgages and debt agreements reduce our flexibility in conducting our operations and create a risk of default on our debt if we cannot continue to satisfy them.  The mortgages on our properties contain customary negative covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage.  In addition, if we breach covenants in our debt agreements, the lender can declare a default and require us to repay the debt immediately and, if the debt is secured, can ultimately take possession of the property securing the loan.

Our outstanding unsecured revolving line of credit contains customary restrictions, requirements and other limitations on our ability to incur indebtedness, including limitations on the maximum ratio of total liabilities to assets, the minimum fixed charge coverage and the minimum tangible net worth.  Our ability to borrow under our unsecured revolving line of credit is subject to compliance with these financial and other covenants.  We rely on our ability to borrow under our unsecured revolving line of credit to finance acquisition, development and redevelopment activities and for working capital.  If we are unable to borrow under our unsecured revolving line of credit, our financial condition and results of operations would be adversely impacted.

We must distribute a substantial portion of our income annually in order to maintain our REIT status, and as a result we may not retain sufficient cash from operations to fund our investing needs.

As a REIT, we are subject to annual distribution requirements under the Code.  In general, we must distribute at least 90% of our REIT taxable income annually, excluding net capital gains, to our shareholders to maintain our REIT status.  We intend to make distributions to our shareholders to comply with the requirements of the Code.

Differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement.  In addition, the distribution requirement reduces the amount of cash we retain for use in funding our capital requirements and our growth.  As a result, we have historically funded our acquisition, development and redevelopment activities by any of the following:  selling assets that no longer meet our investment criteria; selling common shares and preferred shares; borrowing from financial institutions; and entering into joint venture transactions with third parties.  Our failure to obtain funds from these sources could limit our ability to grow, which could have a material adverse effect on the value of our securities.

There may be future dilution to holders of our common shares.

Our Articles of Restatement of Declaration of Trust (the “Declaration of Trust”) authorizes our Board to, among other things, issue additional common or preferred shares, or securities convertible or exchangeable into equity securities, without shareholder approval.  We may issue such additional equity or convertible securities to raise additional capital.  The issuance of any additional common or preferred shares or convertible securities could be dilutive to holders of our common shares.  Moreover, to the extent that we issue restricted shares, options or warrants to purchase our common shares in the future and those options or warrants are exercised or the restricted shares vest, our shareholders will experience further dilution.  Holders of our common shares have no preemptive rights that entitle them to purchase a pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution to our shareholders.

We may issue debt and equity securities or securities convertible into equity securities, any of which may be senior to our common shares as to distributions and in liquidation, which could negatively affect the value of our common shares.

There were 449,643 shares of unvested restricted common shares outstanding at December 31, 2019.

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We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.

In July 2017, the Financial Conduct Authority, the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR, and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates or financing costs to borrowers. We have material contracts that are indexed to USD-LIBOR, and we are monitoring this activity and evaluating the related risks.

Corporate Risks

The price of our common shares may fluctuate significantly.

The market price of our common shares fluctuates based upon numerous factors, many of which are outside of our control.  A decline in our share price, whether related to our operating results or not, may constrain our ability to raise equity in pursuit of our business objectives.  In addition, a decline in price may affect the perceptions of lenders, tenants or others with whom we transact.  Such parties may withdraw from doing business with us as a result.  An inability to raise capital at a suitable cost or at any cost, or to do business with certain tenants or other parties, would affect our operations and financial condition.

Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our shareholders.

We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes.  Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, investment, organizational, distribution, shareholder ownership and other requirements on a continuing basis.  Our ability to satisfy the asset requirements depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination and for which we will not obtain independent appraisals.  In addition, our compliance with the REIT income and asset requirements depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis.  Moreover, the proper classification of an instrument as debt or equity for federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements.  Accordingly, there can be no assurance that the Internal Revenue Service (“IRS”) will not contend that our interests in subsidiaries or other issuers constitute a violation of the REIT requirements.  Moreover, future economic, market, legal, tax or other considerations may cause us to fail to qualify as a REIT.

If we were to fail to qualify as a REIT in any taxable year, we would be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates and distributions to shareholders would not be deductible by us in computing our taxable income.  Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our shareholders, which in turn could have an adverse impact on the value of and trading prices for, our common shares.  Unless entitled to relief under certain Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT.

If our subsidiary REITs failed to qualify as REITs, we could be subject to higher taxes and could fail to remain qualified as a REIT.

Our Operating Partnership indirectly owns 51.5% of the common shares of each of five subsidiary REITs that will elect to be taxed as REITs under the U.S. federal income tax law for their short taxable year ended December 31, 2019. Our subsidiary REITs are subject to the various REIT qualification requirements and other limitations described herein that are applicable to us. If any of our subsidiary REITs were to fail to qualify as a REIT, then (i) such subsidiary REITs would become subject to U.S. federal income tax and (ii) our ownership of shares in such subsidiary REITs would cease to be a qualifying asset for purposes of the asset tests applicable to REITs. If our subsidiary REITs were to fail to qualify as a REIT, it is possible that we would fail certain of the asset tests applicable to REITs, in which event we would fail to qualify as a REIT unless we could avail ourselves of certain relief provisions. We intend to implement certain protective arrangements intended to avoid such an outcome if our subsidiary REITs were not to qualify as a REIT, but there can be no assurance that such arrangements will be effective to avoid the resulting adverse consequences to us.

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Even as a REIT, we may be subject to various federal income and excise taxes, as well as state and local taxes.

Even as a REIT, we may be subject to federal income and excise taxes in various situations, such as if we fail to distribute all of our REIT taxable income. We also will be required to pay a 100% tax on non-arm’s length transactions between us and our TRSs and on any net income from sales of property that the IRS successfully asserts was property held for sale to customers in the ordinary course of business. Additionally, we may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business.  The state and local tax laws may not conform to the federal income tax treatment.  Any taxes imposed on us would reduce our operating cash flow and net income.

The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the United States Treasury Department.  Changes to tax laws, which may have retroactive application, could adversely affect our shareholders or us.  We cannot predict how changes in tax laws might affect our shareholders or us.

We are party to litigation in the ordinary course of business, and an unfavorable court ruling could have a negative effect on us.

We are the defendant in a number of claims brought by various parties against us.  Although we intend to exercise due care and consideration in all aspects of our business, it is possible additional claims could be made against us.  We maintain insurance coverage including general liability coverage to help protect us in the event a claim is awarded; however, some claims may be uninsured.  In the event that claims against us are successful and uninsured or underinsured, or we elect to settle claims that we determine are in our interest to settle, our operating results and cash flow could be adversely impacted.  In addition, an increase in claims and/or payments could result in higher insurance premiums, which could also adversely affect our operating results and cash flow.

We are subject to various environmental laws and regulations which govern our operations and which may result in potential liability.

Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances disposed, stored, released, generated, manufactured or discharged from, on, at, onto, under or in such property. Environmental laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence or release of such hazardous or toxic substance. The presence of such substances, or the failure to properly remediate such substances when present, released or discharged, may adversely affect the owner’s ability to sell or rent such property or to borrow using such property as collateral. The cost of any required remediation and the liability of the owner or operator therefore as to any property is generally not limited under such environmental laws and could exceed the value of the property and/or the aggregate assets of the owner or operator. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the cost of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such persons. In addition to any action required by federal, state or local authorities, the presence or release of hazardous or toxic substances on or from any property could result in private plaintiffs bringing claims for personal injury or other causes of action.

In connection with ownership (direct or indirect), operation, management and development of real properties, we have the potential to be liable for remediation, releases or injury. In addition, environmental laws impose on owners or operators the requirement of ongoing compliance with rules and regulations regarding business-related activities that may affect the environment. Such activities include, for example, the ownership or use of transformers or underground tanks, the treatment or discharge of waste waters or other materials, the removal or abatement of asbestos-containing materials (“ACMs”) or lead-containing paint during renovations or otherwise, or notification to various parties concerning the potential presence of regulated matters, including ACMs. Failure to comply with such requirements could result in difficulty in the lease or sale of any affected property and/or the imposition of monetary penalties, fines or other sanctions in addition to the costs required to attain compliance.  Several of our properties have or may contain ACMs or underground storage tanks; however, we are not aware of any potential environmental liability which could reasonably be expected to have a material impact on our financial position or results of operations. No assurance can be given that future laws, ordinances or regulations will not impose any material environmental requirement or liability, or that a material adverse environmental condition does not otherwise exist.

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 and severance agreements with certain 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

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employment agreements with all of 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.

Our business and operations would suffer in the event of system failures, security breaches, cyber security intrusions, cyber-attacks or other disruptions of our information technology systems.

We rely extensively upon information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage and support a variety of business processes and activities. Although we employ a number of security measures to prevent, detect and mitigate these risks, including a disaster recovery plan for our internal information technology systems, a dedicated IT team, employee training and background checks and password protection, along with purchasing cyber liability insurance coverage, there can be no assurance that these measures will be effective and our systems, networks and services remain vulnerable to damages from any number of sources, including system failures due to energy blackouts, natural disasters, terrorism, war or telecommunication failures, security breaches, cyber intrusions and cyber security attacks, such as computer viruses, malware or e-mail attachments or any unauthorized access to our data and/or computer systems. In recent years, there has been an increased number of significant cyber security attacks that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. A system failure, security breach, cyber intrusion, cyber-attack or other disruption of our information technology systems may cause interruptions in our operations and other negative consequences, which may include but are not limited to the following, any of which could have a material adverse effect on our cash flow, financial condition and results of operations:

•Compromising of confidential information;

•Manipulation and destruction of data;

•System downtime and operational disruptions;

•Remediation cost that may include liability for stolen assets or information, expenses related to repairing system damage, costs associated with damage to business relationships or due to legal requirements imposed;

•Loss of revenues resulting from unauthorized use of proprietary information;

•Cost to deploy additional protection strategies, training employees and engaging third party experts and consultants;

•Reputational damage adversely affecting investor confidence;

•Damage to tenant relationships;

•Violation of applicable privacy and other laws;

•Litigation; and

•Loss of trade secrets.

Restrictions on the ownership of our common shares are in place to preserve our REIT status.

Our Declaration of Trust restricts ownership by any one shareholder to no more than 9.8% of our outstanding common shares, subject to certain exceptions granted by our Board.  The ownership limit is intended to ensure that we maintain our REIT status given that the Code imposes certain limitations on the ownership of the stock of a REIT.  Not more than 50% in value of our outstanding shares of beneficial interest may be owned, directly or indirectly by five or fewer individuals (as defined in the Code) during the last half of any taxable year.  If an individual or entity were found to own constructively more than 9.8% in value of our outstanding shares, then any excess shares would be transferred by operation of our Declaration of Trust to a charitable trust, which would sell such shares for the benefit of the shareholder in accordance with procedures specified in our Declaration of Trust.

The ownership limit may discourage a change in control, may discourage tender offers for our common shares and may limit the opportunities for our shareholders to receive a premium for their shares.  Upon due consideration, our Board previously has granted limited exceptions to this restriction for certain shareholders who requested an increase in their ownership limit.  However, the Board has no obligation to grant such limited exceptions in the future.

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Certain anti-takeover provisions of our Declaration of Trust and Bylaws may inhibit a change of our control.

Certain provisions contained in our Declaration of Trust and Amended and Restated Bylaws (the “Bylaws”) and the Maryland General Corporation Law, as applicable to Maryland REITs, may discourage a third party from making a tender offer or acquisition proposal to us. These provisions and actions may delay, deter or prevent a change in control or the removal of existing management. These provisions and actions also may delay or prevent the shareholders from receiving a premium for their common shares of beneficial interest over then-prevailing market prices.

These provisions and actions include:

•the REIT ownership limit described above;

•authorization of the issuance of our preferred shares of beneficial interest with powers, preferences or rights to be determined by our Board;

•special meetings of our shareholders may be called only by the chairman of our Board, the president, one-third of the Trustees, or the secretary upon the written request of the holders of shares entitled to cast not less than a majority of all the votes entitled to be cast at such meeting;

•a two-thirds shareholder vote is required to approve some amendments to our Declaration of Trust;

•our Bylaws contain advance-notice requirements for proposals to be presented at shareholder meetings; and

•our Board, without the approval of our shareholders, may from time to time (i) amend our Declaration of Trust to increase or decrease the aggregate number of shares of beneficial interest, or the number of shares of beneficial interest of any class, that we have authority to issue, and (ii) reclassify any unissued shares of beneficial interest into one or more classes or series of shares of beneficial interest.

In addition, the Trust, by Board action, may elect to be subject to certain provisions of the Maryland General Corporation Law that inhibit takeovers such as the provision that permits the Board by way of resolution to classify itself, notwithstanding any provision our Declaration of Trust or Bylaws.

Changes in accounting standards may adversely impact our financial results.

The Financial Accounting Standards Board, in conjunction with the SEC, has several projects on its agenda, as well as recently issued updates that could impact how we currently account for material transactions. At this time, we are unable to predict with certainty which, if any, proposals may be passed or what level of impact that new standards may have on the presentation of our consolidated financial statements, results of operations and financial ratios required by our debt covenants. Refer to Note 2 of the notes to the consolidated financial statements in this report for further information related to the impact of the new leasing standard (ASC Topic 842).

U.S. federal tax reform legislation could affect REITs generally, the geographic markets in which we operate, our stock and our results of operations, both positively and negatively in ways that are difficult to anticipate. 

Changes to the federal income tax laws are proposed regularly. Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Department of the Treasury, which may result in revisions to regulations and interpretations in addition to statutory changes. If enacted, certain such changes could have an adverse impact on our business and financial results. In particular, H.R. 1, which generally took effect for taxable years that began on or after January 1, 2018 (subject to certain exceptions), made many significant changes to the federal income tax laws that profoundly impacted the taxation of individuals, corporations (both regular C corporations as well as corporations that have elected to be taxed as REITs), and the taxation of taxpayers with overseas assets and operations. A number of changes that affect non-corporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. These changes will impact us and our shareholders in various ways, some of which are adverse or potentially adverse compared to prior law. To date, the IRS has issued guidance with respect to many of the new provisions but there are several interpretive issues that still require further guidance. It is likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent. There can be no assurance, however, that technical clarifications or further changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future. In addition, while certain elements of tax reform legislation do not impact us directly as a REIT, they could impact the geographic markets in which we operate, the tenants that populate our shopping centers and the customers who frequent our properties in ways, both positive and negative, that are difficult to anticipate.

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Other legislative proposals could be enacted in the future that could affect REITs and their shareholders. Prospective investors are urged to consult their tax advisors regarding the effect of H.R. 1 and any other potential tax law changes on an investment in our common stock.

We may have to borrow funds or sell assets to meet our distribution requirements.  

Subject to some adjustments that are unique to REITs, a REIT generally must distribute 90% of its taxable income. For the purpose of determining taxable income, we may be required to accrue interest, rent and other items treated as earned for tax purposes but that we have not yet received. In addition, we may be required not to accrue as expenses for tax purposes some that which actually have been paid, including, for example, payments of principal on our debt, or some of our deductions might be disallowed by the Internal Revenue Service. As a result, we could have taxable income in excess of cash available for distribution. If this occurs, we may have to borrow funds or liquidate some of our assets in order to meet the distribution requirement applicable to a REIT.

Liquidation of our assets may jeopardize our REIT qualification.

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any gain if we sell assets in transactions that are considered to be “prohibited transactions,” which are explained in the risk factor “Even as a REIT, we may be subject to various federal income and excise taxes, as well as state and local taxes”.

Dividends payable by REITs do not qualify for the reduced tax rates on dividend income from regular corporations.

The maximum federal income tax rate applicable to “qualified dividend income” payable by non-REIT corporations to certain non-corporate U.S. stockholders is generally 20%, and a 3.8% Medicare tax may also apply. Dividends paid by REITs, however, generally are not eligible for the reduced rates applicable to qualified dividend income. Commencing with taxable years beginning on or after January 1, 2018 and continuing through 2025, H.R. 1 temporarily reduces the effective tax rate on ordinary REIT dividends (i.e., dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us) for U.S. holders of our common stock that are individuals, estates or trusts by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive. Taking into account H.R. 1’s reduction in the maximum individual federal income tax rate from 39.6% to 37%, this results in a maximum effective rate of regular income tax on ordinary REIT dividends of 29.6% through 2025 (as compared to the 20% maximum federal income tax rate applicable to qualified dividend income received from a non-REIT corporation). The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay distributions. This could materially and adversely affect the value of the stock of REITs, including our common stock.

Item 1B.  Unresolved Staff Comments.

None.

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Item 2.  Properties

As of December 31, 2019, we owned and managed a portfolio of 49 shopping centers (including five shopping centers owned through R2G) with approximately 11.9 million square feet (“SF”) of GLA.  Our wholly-owned properties consist of 44 shopping centers comprising approximately 11.1 million square feet of GLA. 

Property Name	Location City	State	Ownership %	Year Built / Acquired / Redeveloped	Total GLA	% Leased		Average base rent per leased SF (1)		Anchor Tenants (2)
Atlanta [MSA Rank 9]
Holcomb Center	Alpharetta	GA	100%	1986/1996/2010	106,143	89.6	%	$	12.83	Studio Movie Grill, Zoo Health Club
Peachtree Hill	Duluth	GA	100%	1986/2015/NA	154,700	98.3	%	14.19		Kroger, LA Fitness
Promenade at Pleasant Hill	Duluth	GA	100%	1993/2004/NA	265,398	98.1	%	10.87		K1 Speed, LA Fitness, Publix
Austin [MSA Rank 30]
Lake Hills Plaza	Austin	TX	100%	1980/2019/2019	75,926	96.3	%	25.69		TruFusion, (Target)
Baltimore [MSA Rank 21]
Crofton Centre	Crofton	MD	100%	1974/2015/NA	252,230	96.3	%	9.38		At Home, Gold's Gym, Shoppers Food Warehouse
Chicago [MSA Rank 3]
Deer Grove Centre	Palatine	IL	100%	1997/2013/2013	237,644	85.4	%	10.60		Aldi, Hobby Lobby, Ross Dress for Less, T.J. Maxx, (Target)
Market Plaza	Glen Ellyn	IL	100%	1965/2015/2009	166,572	90.0	%	15.49		Jewel-Osco, Ross Dress for Less
Mount Prospect Plaza	Mount Prospect	IL	100%	1958/2013/2013	227,690	94.2	%	14.10		Aldi, Burlington Coat Factory, LA Fitness, Marshalls, Ross Dress for Less, (Walgreens)
Webster Place	Lincoln Park	IL	100%	1987/2017/NA	134,918	95.0	%	25.83		Barnes & Noble, Regal Cinema
Cincinnati [MSA Rank 28]
Bridgewater Falls	Hamilton	OH	100%	2005/2014/NA	503,340	94.4	%	14.60		Bed Bath & Beyond, Best Buy, Dick's Sporting Goods, Five Below, J.C. Penney, Michaels, PetSmart, T.J. Maxx, (Target)
Buttermilk Towne Center	Crescent Springs	KY	100%	2005/2014/NA	290,033	100.0	%	10.22		Field & Stream, Home Depot, LA Fitness, Petco, Remke Market
Deerfield Towne Center	Mason	OH	100%	2004/2013/2018	469,209	90.7	%	21.80		Ashley Furniture HomeStore, Bed Bath & Beyond, buybuy Baby, CoHatch(3), Crunch Fitness Dick's Sporting Goods, Five Below, Regal Cinemas, Whole Foods Market
Columbus [MSA Rank 33]
Olentangy Plaza	Columbus	OH	100%	1981/2015/1997	252,739	88.2	%	12.45		Aveda Institute Columbus, Eurolife Furniture, Marshalls, Micro Center, Tuesday Morning
The Shops on Lane Avenue	Upper Arlington	OH	100%	1952/2015/2004	183,130	93.4	%	25.14		Bed Bath & Beyond, CoHatch, Whole Foods Market
Denver [MSA Rank 19]
Front Range Village	Fort Collins	CO	100%	2008/2014/NA	504,008	89.3	%	19.83		2nd and Charles, Cost Plus World Market, DSW, Microsoft Corporation, Party City, Sprouts Farmers Market, Staples, TruFut Athletic Club, Ulta Beauty, Urban Air Adventure Park, (Fort Collins Library), (Lowes), (Target)

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Property Name	Location City	State	Ownership %	Year Built /Acquired / Redeveloped	Total GLA	% Leased		Average base rent per leased SF (1)	Anchor Tenants (2)
Detroit [MSA Rank 14]
Clinton Pointe	Clinton Township	MI	100%	1992/2003/NA	135,450	93.9	%	9.98	Gibralter Rug, OfficeMax, T.J. Maxx, (Target)
Hunter's Square	Farmington Hills	MI	100%	1988/2013/NA	352,772	99.1	%	17.14	Bed Bath & Beyond, buybuy Baby, DSW Shoe Warehouse , Old Navy, Marshalls, Saks Fifth Avenue Off 5th, T.J. Maxx
Southfield Plaza	Southfield	MI	100%	1969/1996/2003	190,099	97.9	%	9.54	Big Lots, Burlington Coat Factory, Forman Mills
Tel-Twelve	Southfield	MI	100%	1968/1996/2005	523,382	100.0	%	11.76	Best Buy, DSW Shoe Warehouse, Lowe's, Meijer, Michaels, Office Depot, PetSmart, Ulta
Troy Marketplace	Troy	MI	100%	2000/2013/2010	245,130	100.0	%	20.55	Airtime, Golf Galaxy, LA Fitness, Nordstrom Rack, PetSmart, (REI)
West Oaks I Shopping Center	Novi	MI	100%	1979/1996/2004	284,973	91.0	%	17.30	Gardner White Furniture, Home Goods, Michaels, Nordstrom Rack, Old Navy, Rally House, The Container Store
West Oaks II Shopping Center	Novi	MI	100%	1986/1996/2000	167,954	98.7	%	18.59	Jo-Ann, Marshalls, (Art Van), (ABC Warehouse), (Bed Bath & Beyond), (Bob's Discount Furniture), (Kohl's), (Value City Furniture)
Winchester Center	Rochester Hills	MI	100%	1980/2013/NA	320,134	100.0	%	12.69	Bed Bath & Beyond, Dick's Sporting Goods, Marshalls, Michaels, Party City, PetSmart, Stein Mart
Indianapolis [MSA Rank 34]
Merchants' Square	Carmel	IN	100%	1970/2010/2014	248,461	88.9	%	14.04	Flix Brewhouse, Planet Fitness
Jacksonville [MSA Rank 40]
Parkway Shops	Jacksonville	FL	100%	2013/2008/NA	144,114	100.0	%	11.79	Dick's Sporting Goods, Hobby Lobby, Marshalls, (Wal-Mart Supercenter)
River City Marketplace	Jacksonville	FL	100%	2005/2005/NA	585,918	91.1	%	18.89	Ashley Furniture HomeStore, Bed Bath & Beyond, Best Buy, Burlington Coat Factory, Duluth Trading, Hollywood Theaters, Michaels, PetSmart, Ross Dress for Less, (Lowe's), (Wal-Mart Supercenter)
Miami [MSA Rank 8]
Marketplace of Delray	Delray Beach	FL	100%	1981/2013/2010	241,715	93.3	%	15.76	Office Depot, Ross Dress for Less, Winn-Dixie
Rivertowne Square	Deerfield Beach	FL	100%	1980/1998/2010	146,666	92.6	%	11.00	Bealls, Winn-Dixie
West Broward Shopping Center	Plantation	FL	100%	1965/2013/NA	152,973	88.0	%	11.97	Badcock, DD's Discounts, Save-A-Lot
Milwaukee [MSA Rank 39]
Nagawaukee Center	Delafield	WI	100%	1994/2012-13/NA	220,083	100.0	%	15.07	HomeGoods, Kohl's, Marshalls, Sierra Trading Post, (Sentry Foods)
West Allis Towne Centre	West Allis	WI	100%	1987/1996/2011	326,223	86.2	%	10.08	Burlington Coat Factory, Five Below, Hobby Lobby, Ross Dress for Less, Xperience Fitness
Minneapolis [MSA Rank 16]
Centennial Shops	Edina	MN	100%	2008/2016/NA	85,206	97.3	%	41.53	Pinstripes, The Container Store, West Elm
Woodbury Lakes	Woodbury	MN	100%	2005/2014/NA	360,028	88.1	%	21.34	Alamo Drafthouse Cinema, Athleta, DSW, H&M, Michaels, (Trader Joe's)

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Property Name	Location City	State	Ownership %	Year Built /Acquired / Redeveloped	Total GLA	% Leased		Average base rent per leased SF (1)		Anchor Tenants (2)
Nashville [MSA Rank 36]
Providence Marketplace	Mt. Juliet	TN	100%	2006/2017/NA	632,552	98.5	%	13.42		Belk, Best Buy, Books A Million, Dick's Sporting Goods, J C Penney, JoAnn Fabrics, Old Navy, PetSmart, Regal Cinema, Ross Dress for Less, Staples, T.J. Maxx/HomeGoods, (Kroger), (Target)
St. Louis [MSA Rank 20]
Central Plaza	Ballwin	MO	100%	1970/2012/2012	163,625	91.6	%	12.77		buybuy Baby, Jo-Ann, Old Navy, Ross Dress for Less
Deer Creek Shopping Center	Maplewood	MO	100%	1975/2013/2013	208,122	96.9	%	10.55		buybuy Baby, Club Fitniess, GFS, Marshalls, Ross Dress for Less
Heritage Place	Creve Coeur	MO	100%	1989/2011/2005	269,127	98.9	%	14.80		Dierbergs Markets, Marshalls, Office Depot, T.J. Maxx
Tampa [MSA Rank 18]
Cypress Point	Clearwater	FL	100%	1983/2013/NA	168,736	98.9	%	12.76		At Home, The Fresh Market
Lakeland Park Center	Lakeland	FL	100%	2014/NA/NA	230,662	98.3	%	14.12		Dick's Sporting Goods, Floor & Décor, Northern Tool, Ross Dress for Less, (Target)
Shoppes of Lakeland	Lakeland	FL	100%	1985/1996/NA	183,702	100.0	%	13.45		Ashley Furniture HomeStore, Michaels, Staples, T.J. Maxx, (Target)
Village Lakes Shopping Center	Land O' Lakes	FL	100%	1987/1997/NA	167,735	99.4	%	9.99		Bealls Outlet, Marshalls, Ross Dress for Less
Properties Not in Top 40 MSA's
Spring Meadows Place	Holland	OH	100%	1987/1996/2005	314,514	90.3	%	11.16		Ashley Furniture HomeStore, Big Lots, DSW, Guitar Center, HomeGoods, Michaels, OfficeMax, PetSmart, T.J. Maxx, (Best Buy), (Dick's Sporting Goods), (Sam's Club), (Target), (Wal-Mart)
Treasure Coast Commons	Jensen Beach	FL	100%	1996/2013/NA	91,656	100.0	%	12.92		Barnes & Noble, Beall's Outlet Store, Dick's Sporting Goods
Vista Plaza	Jensen Beach	FL	100%	1998/2013/NA	109,761	100.0	%	14.83		Bed Bath & Beyond, Michaels, Total Wine & More
CONSOLIDATED SHOPPING CENTERS TOTAL/AVERAGE					11,095,153	94.6	%	$	15.03
JOINT VENTURE PORTFOLIO
Coral Creek Shops	Coconut Creek	FL	51.5%	1992/2002/NA	109,312	94.3	%	19.63		Publix
Mission Bay Plaza	Boca Raton	FL	51.5%	1989/2013/NA	262,701	98.4	%	25.23		Dick's Sporting Goods, Five Below, LA Fitness, OfficeMax, Tuesday Morning, The Fresh Market
The Crossroads	Royal Palm Beach	FL	51.5%	1988/2002/NA	121,509	100.0	%	17.72		Publix
The Shops at Old Orchard	West Bloomfield	MI	51.5%	1972/2013/2011	96,768	95.3	%	19.14		Plum Market
Town & Country Crossing	Town & Country	MO	51.5%	2008/2011/2011	186,557	97.0	%	24.98		HomeGoods, Starbucks, Stein Mart, Whole Foods Market, (Target)
AGGREGATE PORTFOLIO TOTAL/AVERAGE					11,872,000	94.7	%	$	15.29

⁽¹⁾ Average base rent per leased SF is calculated based on annual minimum contractual base rent pursuant to the tenant lease, excluding percentage rent and recovery income from tenants, and is net of tenant concessions. Percentage rent and recovery income from tenants is presented separately in our consolidated statements of operations and comprehensive income (loss) statement.

⁽²⁾ Anchor tenant is defined as any tenant leasing 10,000 square feet or more. Tenants in parenthesis represent non-company owned GLA.

⁽³⁾ Space delivered to tenant.

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Our leases for tenant space under 10,000 square feet generally have terms ranging from three to five years.  Tenant leases greater than or equal to 10,000 square feet generally have lease terms of five years or longer, and are considered anchor leases.  Many of the anchor leases provide tenants with the option of extending the lease term at expiration at contracted rental rates that often include fixed rent increases, consumer price index adjustments or other market rate adjustments from the prior base rent.  The majority of our leases provide for monthly payment of base rent in advance, reimbursement of the tenant’s allocable real estate taxes, insurance and common area maintenance expenses and reimbursement for utility costs if not directly metered.

Major Tenants

The following table sets forth as of December 31, 2019 the breakdown of GLA between anchor and small shop tenants, of our wholly owned properties portfolio comprised of 44 properties and the pro-rata share of the five shopping centers owned through R2G (the “R2G Portfolio”): 

Type of Tenant	Annualized Base Rent		% of Total Annualized Base Rent		GLA	% of Total GLA
Anchor (1)	$	95,217,318	57.4	%	8,085,365	70.3	%
Small Shop (2)	70,639,309		42.6	%	3,409,864	29.7	%
Total	$	165,856,627	100.0	%	11,495,229	100.0	%

⁽¹⁾ Anchor tenant is defined as any tenant leasing 10,000 square feet or more.

⁽²⁾ Small shop tenant is defined as any tenant leasing less than 10,000 square feet.

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The following table provides, as of December 31, 2019, information regarding leases with the 25 largest retail tenants (in terms of annualized base rent) for our wholly owned properties portfolio and the pro-rata share of the R2G Portfolio: 

Tenant Name	Credit Rating S&P/Moody's (1)	Number of Leases	Number of Leases in the R2G Portfolio	GLA	% of Total Company Owned GLA		Total Annualized Base Rent		Annualized Base Rent / SF		% of Annualized Base Rent
TJX Companies (2)	A+/A2	23	1	709,770	6.1	%	$	7,520,936	$	10.60	4.5	%
Dick's Sporting Goods (3)	--/--	10	1	451,967	3.9	%	5,462,121		12.09		3.3	%
Regal Cinemas	--/Ba1	4	—	219,160	1.9	%	4,968,395		22.67		3.0	%
Bed Bath & Beyond (4)	BB/Baa3	14	—	418,062	3.6	%	4,824,941		11.54		2.9	%
LA Fitness	B+/B2	6	1	233,419	2.0	%	4,407,080		18.88		2.7	%
PetSmart	B-/B3	8	—	178,250	1.5	%	2,832,681		15.89		1.7	%
Michaels Stores	B+/Ba2	9	—	217,456	1.9	%	2,820,064		12.97		1.7	%
Ross Stores (5)	A-/A2	12	—	307,212	2.7	%	2,722,432		8.86		1.6	%
Gap, Inc. (6)	BB/Baa2	13	1	155,336	1.3	%	2,682,821		17.27		1.6	%
DSW Designer Shoe Warehouse	--/--	6	—	119,656	1.0	%	2,295,617		19.19		1.4	%
Burlington Coat Factory	BB+/Bal	4	—	213,945	1.9	%	2,138,244		9.99		1.3	%
ULTA Salon	--/--	9	—	93,137	0.8	%	2,135,428		22.93		1.3	%
Office Depot (7)	B/Ba3	7	1	155,341	1.3	%	2,135,201		13.75		1.3	%
Best Buy	BBB/Baa1	4	—	134,129	1.2	%	2,089,147		15.58		1.3	%
Dollar Tree	BBB-/Baa3	19	1	191,356	1.7	%	1,988,961		10.39		1.2	%
Ascena Retail (8)	CCC/Caa2	18	—	95,236	0.8	%	1,912,223		20.08		1.2	%
Whole Foods	A+/A3	3	1	92,198	0.8	%	1,844,200		20.00		1.1	%
Jo-Ann Fabrics and Craft Stores	B-/B2	4	—	134,949	1.2	%	1,731,135		12.83		1.0	%
Meijer	--/--	1	—	189,635	1.7	%	1,530,650		8.07		0.9	%
Ashley Furniture HomeStore	--/--	4	—	147,778	1.3	%	1,463,243		9.90		0.9	%
Barnes & Noble	--/--	2	—	54,947	0.5	%	1,367,315		24.88		0.8	%
Pinstripes	--/--	1	—	32,414	0.3	%	1,365,926		42.14		0.8	%
At Home	--/--	2	—	177,946	1.6	%	1,362,504		7.66		0.8	%
Five Below		9	1	77,316	0.7	%	1,317,120		17.04		0.8	%
The Container Store	B/B2	2	—	45,011	0.4	%	1,251,856		27.81		0.8	%
Total top 25 tenants		194	8	4,845,626	42.1	%	$	66,170,241	$	13.66	39.9	%

⁽¹⁾Source: Latest Company filings, as of December 31, 2019, per CreditRiskMonitor. Data reflects credit rating of parent company.

⁽²⁾Marshalls (10) / TJ Maxx (8) / HomeGoods (4) / Sierra Trading Post (1)

⁽³⁾Dick's Sporting Goods (8) / Field & Stream (1) / Golf Galaxy (1)

⁽⁴⁾Bed Bath & Beyond (7) / Buy Buy Baby (5) / Cost Plus World Market (2)

⁽⁵⁾Ross Dress for Less (11) / DD's Discounts (1)

⁽⁶⁾Old Navy (7) / Gap (2) / Banana Republic (1) / Athleta (3)

⁽⁷⁾OfficeMax (4) / Office Depot (3)

⁽⁸⁾Ann Taylor (3) / Catherine's (3) / Dress Barn (2) / Justice (4) / Lane Bryant (6)

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Lease Expirations

The following tables set forth a schedule of lease expirations for our wholly owned portfolio and the pro-rata share of the R2G Portfolio, for each of the next ten years and thereafter, assuming that no renewal options are exercised:

ALL TENANTS 

Expiring Leases As of December 31, 2019
Year	Number of Leases	GLA	Average Annualized Base Rent		Total  Annualized  Base Rent (1)		% of Total Annualized Base Rent
			(per square foot)
2020	121	536,736	$	16.79	$	9,010,083	5.4	%
2021	208	1,493,756	16.58		24,761,122		14.9	%
2022	179	1,116,769	17.46		19,502,869		11.8	%
2023	192	1,695,308	15.12		25,625,898		15.5	%
2024	132	1,115,836	13.82		15,415,578		9.3	%
2025	80	1,096,799	13.90		15,246,718		9.2	%
2026	61	942,930	13.04		12,295,326		7.4	%
2027	58	485,283	16.85		8,178,038		4.9	%
2028	86	786,153	16.61		13,055,821		7.9	%
2029	91	777,376	13.52		10,506,914		6.3	%
2030+	48	713,621	15.05		10,742,647		6.5	%
Tenants month to month	21	83,402	18.17		1,515,613		0.9	%
Sub-Total	1,277	10,843,969	$	15.29	$	165,856,627	100.0	%
Leased (2)	14	43,035	N/A		N/A		N/A
Vacant	156	608,225	N/A		N/A		N/A
Total	1,447	11,495,229	N/A		$	165,856,627	100.0	%

⁽¹⁾ Annualized Base Rent is based upon rents currently in place.

⁽²⁾ Includes signed leases where rent has not yet commenced.

 ANCHOR TENANTS (greater than or equal to 10,000 square feet) 

Expiring Anchor Leases As of December 31, 2019
Year	Number of Leases	GLA	Average Annualized Base Rent		Total  Annualized  Base Rent (1)		% of Total Annualized Base Rent
			(per square foot)
2020	9	236,447	$	10.24	$	2,421,840	2.5	%
2021	45	1,060,497	13.88		14,716,389		15.5	%
2022	30	691,206	13.50		9,329,354		9.9	%
2023	38	1,270,436	11.79		14,980,287		15.7	%
2024	30	791,673	10.65		8,434,365		8.9	%
2025	30	896,980	12.13		10,878,360		11.4	%
2026	17	807,859	10.83		8,752,607		9.2	%
2027	16	334,605	13.36		4,469,277		4.7	%
2028	18	590,955	12.97		7,662,949		8.0	%
2029	17	580,045	10.03		5,817,525		6.1	%
2030+	17	582,122	13.08		7,612,556		8.0	%
Tenants month to month	1	22,585	6.28		141,809		0.1	%
Sub-Total	268	7,865,410	$	12.11	$	95,217,318	100.0	%
Leased (2)	1	13,318	N/A		N/A		N/A
Vacant	11	206,637	N/A		N/A		N/A
Total	280	8,085,365	N/A		$	95,217,318	100.0	%

⁽¹⁾ Annualized Base Rent is based upon rents currently in place.

⁽²⁾ Includes signed leases where rent has not yet commenced.

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SMALL SHOP TENANTS (less than 10,000 square feet)

Expiring Small Shop Leases As of December 31, 2019
Year	Number of Leases	GLA	Average Annualized Base Rent		Total  Annualized  Base Rent (1)		% of Total Annualized Base Rent
			(per square foot)
2020	112	300,289	$	21.94	$	6,588,243	9.3	%
2021	163	433,259	23.18		10,044,733		14.2	%
2022	149	425,563	23.91		10,173,515		14.4	%
2023	154	424,872	25.06		10,645,611		15.1	%
2024	102	324,163	21.54		6,981,213		9.9	%
2025	50	199,819	21.86		4,368,358		6.2	%
2026	44	135,071	26.23		3,542,719		5.0	%
2027	42	150,678	24.61		3,708,761		5.3	%
2028	68	195,198	27.63		5,392,872		7.7	%
2029	74	197,331	23.76		4,689,389		6.6	%
2030+	31	131,499	23.80		3,130,091		4.4	%
Tenants month to month	20	60,817	22.59		1,373,804		1.9	%
Sub-Total	1,009	2,978,559	$	23.72	$	70,639,309	100.0	%
Leased (2)	13	29,717	N/A		N/A		N/A
Vacant	145	401,588	N/A		N/A		N/A
Total	1,167	3,409,864	N/A		$	70,639,309	100.0	%

⁽¹⁾ Annualized Base Rent is based upon rents currently in place.

⁽²⁾ Includes signed leases where rent has not yet commenced.

Land Available for Development

At December 31, 2019, our three largest development sites, Parkway Shops, Lakeland Park Center and Hartland Towne Square, had environmental phase one assessments completed. It is our policy to start construction on new development projects only after the project has received entitlements, significant anchor commitments and construction financing, if appropriate. At December 31, 2019, we had received entitlements at our Parkway Shops site. We continue to evaluate the best use for land available for development, portions of which are adjacent to our existing shopping centers.

Our development and construction activities are subject to risks and uncertainties including, among others, our inability to obtain the necessary governmental approvals for a project, our determination that the expected return on a project is not sufficient to warrant continuation of the planned development, or our change in plan or scope for the development.  If any of these events occur, we may record an impairment provision. See Item 1A. Risk Factors, for further information regarding our risk factors.

The Company evaluates these assets each reporting period and records an impairment charge equal to the difference between the current carrying value and fair value, when the fair value is determined to be less than the asset's carrying value. During 2019, we did not record any impairment charges on our land parcels.  We recorded impairment provisions of $0.2 million and $1.0 million in 2018 and 2017, respectively, related to developable land that we decided to market for sale. Refer to Note 1 of the notes to the consolidated financial statements in this report for further information related to impairment provisions.

Insurance

Our tenants are generally responsible under their leases for providing adequate insurance on the spaces they lease. In addition, we believe our properties are adequately covered by commercial general liability, fire, flood, terrorism, environmental, and where necessary, hurricane and windstorm insurance coverages, which are all provided by reputable companies, with commercially reasonable exclusions, deductibles and limits.

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Item 3. Legal Proceedings

From time to time, we are involved in certain litigation arising in the ordinary course of business. We do not believe that any of this litigation will have a material effect on our consolidated financial statements. There are no material pending governmental proceedings.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

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

Market Information

Our common shares are currently listed and traded on the NYSE under the symbol “RPT”.  On February 14, 2020, the closing price of our common shares on the NYSE was $14.70.

Shareholder Return Performance Graph

The following line graph sets forth the cumulative total return on a $100 investment (assuming the reinvestment of dividends) in each of our common shares, the NAREIT Equity Index and the S&P 500 Index for the period December 31, 2014 through December 31, 2019.  The stock price performance shown is not necessarily indicative of future price performance. The data shown is based on the share prices or index values, as applicable, at the end of each month shown.

Holders

The number of holders of record of our common shares was 1,035 at February 14, 2020.  A substantially greater number of holders are beneficial owners whose shares of record are held by banks, brokers and other financial institutions.

Dividends

Under the Code, a REIT must meet requirements, including a requirement that it distribute to its shareholders at least 90% of its REIT taxable income annually, excluding net capital gain.  Distributions paid by us are at the discretion of our Board and depend on our actual net income available to common shareholders, cash flow, financial condition, capital requirements, the annual distribution requirements under REIT provisions of the Code, and such other factors as the Board deems relevant. We do not believe that the preferential rights available to the holders of our preferred shares or the financial covenants contained in our debt agreements had or will have an adverse effect on our ability to pay dividends in the normal course of business to our common shareholders or to distribute amounts necessary to maintain our qualification as a REIT. See “Dividends and Equity” under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this report.

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For information on our equity compensation plans as of December 31, 2019, refer to Item 12 of Part III of this report and Note 15 of the notes to the consolidated financial statements included in this report for further information regarding our share-based compensation and other benefit plans.

Item 6. Selected Financial Data

The following table sets forth our selected consolidated financial data and should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report.

	Year Ended December 31,
	2019		2018		2017		2016		2015
	(In thousands, except per share)
OPERATING DATA:
Total revenue	$	234,088	$	260,622	$	265,082	$	260,930	$	251,790
Operating income	54,022		52,260		63,399		70,908		65,497
Gain on sale of depreciable real estate	81,485		3,699		51,977		34,108		13,529
Gain on sale of land	371		295		787		1,673		4,041
Net income	93,686		18,036		70,719		61,112		66,895
Net (income) attributable to noncontrolling partner interest	(2,175)		(417)		(1,659)		(1,448)		(1,786)
Preferred share dividends	(6,701)		(6,701)		(6,701)		(6,701)		(6,838)
Net income available to common shareholders	84,810		10,918		62,359		52,963		57,771
Earnings per common share:
Basic	$	1.06	$	0.13	$	0.78	$	0.66	$	0.73
Diluted	1.04		0.13		0.78		0.66		0.73
Weighted average shares outstanding:
Basic	79,802		79,592		79,344		79,236		78,848
Diluted	87,722		80,088		79,530		79,435		79,035
Cash dividends declared per RPT preferred share	$	3.625	$	3.625	$	3.625	$	3.625	$	3.625
Cash dividends declared per RPT common share	$	0.880	$	0.880	$	0.880	$	0.860	$	0.820
Cash distributions to RPT preferred shareholders	$	6,701	$	6,701	$	6,701	$	6,701	$	6,977
Cash distributions to RPT common shareholders	$	70,652	$	70,458	$	70,225	$	67,710	$	63,972
BALANCE SHEET DATA (at December 31):
Investment in real estate (before accumulated depreciation)	$	1,818,103	$	2,025,773	$	2,130,779	$	2,132,670	$	2,184,481
Total assets	1,918,559		1,928,440		2,030,394		2,061,498		2,136,082
Total notes payable, net	930,808		963,149		999,215		1,021,223		1,083,711
Total liabilities	1,070,304		1,096,897		1,145,225		1,172,900		1,234,709
Total RPT shareholders' equity	828,240		811,962		864,322		867,701		879,391
Noncontrolling interest	20,015		19,581		20,847		20,897		21,982
Total shareholders' equity	848,255		831,543		885,169		888,598		904,466
OTHER DATA:
Net cash provided by operating activities	90,593		106,322		117,925		116,601		105,630
Net cash provided by (used in) investing activities	95,095		42,262		(16,675)		11,250		(154,333)
Net cash (used in) provided by financing activities	(115,858)		(116,753)		(103,085)		(128,477)		46,012

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

The following discussion should be read in conjunction with the consolidated financial statements, the notes thereto, and the comparative summary of selected financial data included in this report.  

Overview

RPT Realty owns and operates a national portfolio of open-air shopping destinations principally located in top U.S. markets. The Company's shopping centers offer diverse, locally-curated consumer experiences that reflect the lifestyles of their surrounding communities and meet the modern expectations of the Company's retail partners. As of December 31, 2019, our property portfolio consisted of 49 shopping centers (including five shopping centers owned through R2G) representing 11.9 million square feet of GLA.  As of December 31, 2019, the Company's pro-rata share of the aggregate portfolio was 94.7% leased.

Our goal is to be a dominant shopping center owner, with a focus on the following:

•Own and manage high quality open-air shopping centers predominantly concentrated in the top U.S. MSAs;

•Curate our real estate to maximize its value while being aligned with the future of the shopping center industry by leveraging technology, optimizing distribution points for brick-and-mortar and e-commerce purchases, engaging in best-in-practice sustainability programs and developing a personalized appeal to attract and engage the next generation of shoppers;

•Maintain value creation redevelopment and expansion pipeline;

•Maximize balance sheet liquidity and flexibility; and

•Retain motivated, talented and high performing employees.

Key methods to achieve our strategy:

•Deliver above average relative shareholder return and generate outsized consistent and sustainable Same Property NOI and Operating FFO per share growth;

•Pursue selective redevelopment projects with significant pre-leasing for which we expect to achieve attractive returns on investment;

•Sell assets that no longer meet our long-term strategy and redeploy the proceeds to lease, redevelop and acquire assets in our core and target markets;

•Achieve lower leverage while maintaining low variable interest rate risk; and

•Retain access to diverse sources of capital, maintain liquidity through borrowing capacity under our unsecured line of credit and minimize the amount of debt maturities in a single year.

The following highlights the Company's significant transactions, events and results that occurred during the year ended December 31, 2019:

Financial Results:

•Net income available to common shareholders was $84.8 million, or $1.04 per diluted share, for the year ended December 31, 2019, as compared to $10.9 million, or $0.13 per diluted share, for the same period in 2018.

•FFO was $88.0 million, or $1.00 per diluted share, for the year ended December 31, 2019, as compared to $109.4 million, or $1.23 per diluted share, for the same period in 2018.

•Operating FFO was $94.5 million, or $1.08 per diluted share, for the year ended December 31, 2019, as compared to $120.1 million, or $1.35 per diluted share, for the same period in 2018.

•Same property net operating income increased 4.1% for the year ended December 31, 2019, as compared to the same period in 2018.

•Executed 210 new leases and renewals, totaling approximately 1.2 million square feet in the aggregate portfolio.

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•As of December 31, 2019, the Company's aggregate portfolio leased rate was 94.7%, as compared to 94.3% at December 31, 2018.

Acquisition Activity (See Note 4 of the notes to consolidated financial statements in this report):

•Acquired one operating property for a purchase price of $33.9 million.

Disposition Activity (See Note 4 of the notes to consolidated financial statements in this report):

•Disposed of two operating properties and one land outparcel for aggregate gross proceeds of $69.4 million. These transactions resulted in an aggregate gain on sale of real estate of $6.1 million.

•Contributed five properties valued at $244.0 million to a newly formed joint venture with GIC referred to herein as R2G Venture LLC (“R2G”), and received $118.3 million in gross proceeds for the 48.5% stake in R2G that was acquired by GIC. This transaction resulted in a gain on sale of real estate of $75.8 million.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.  The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies require our most subjective judgment and use of estimates in the preparation of our consolidated financial statements.

Revenue Recognition and Accounts Receivable

Most of our leases contain non-contingent rent escalations for which we recognize income on a straight-line basis over the non-cancelable lease term.  This method results in rental income in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the “Other Assets” line item in our consolidated balance sheets.  We review our unbilled straight-line rent receivable balance to determine the future collectability of revenue that will not be billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other factors. Our evaluation is based on our assessment of tenant credit risk changes indicating that expected future straight-line rent may not be realized.  Depending on circumstances, we may provide a reserve against the previously recognized straight-line rent receivable asset for a portion, up to its full value, that we estimate may not be received.

Additionally, we monitor the collectability of our accounts receivable from specific tenants on an ongoing basis, analyze historical experience, customer creditworthiness, current economic trends and changes in tenant payment terms when evaluating the likelihood of tenant payment.  For operating leases in which collectibility of rental income is not considered probable, rental income is recognized on a cash basis and allowances are taken for those balances that we have reason to believe may be uncollectible in the period it is determined not to be probable of collection.

For more information refer to Note 1 of the notes to the consolidated financial statements in this report.

Acquisitions

Acquisitions of properties are accounted for utilizing the acquisition method (which requires all assets acquired and liabilities assumed be measured at acquisition date fair value) and, accordingly, the results of operations of an acquired property are included in our results of operations from the date of acquisition.  Estimates of fair values are based upon future cash flows and other valuation techniques in accordance with our fair value measurements policy, which are used to allocate the purchase price of acquired property among land, buildings on an “as if vacant” basis, tenant improvements, identifiable intangibles and any gain on purchase.  Identifiable intangible assets and liabilities include the effect of above-and below-market leases, the value of having leases in place (“as-is” versus “as if vacant” and absorption costs), other intangible assets such as assumed tax increment revenue bonds and out-of-market assumed mortgages.  Depreciation and amortization are computed using the straight-line method over the estimated useful lives of 40 years for buildings, and over the remaining terms of any intangible asset contracts and the respective tenant leases, which may include bargain renewal options. The impact of these estimates, including

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estimates in connection with acquisition values and estimated useful lives, could result in significant differences related to the purchased assets, liabilities and subsequent depreciation or amortization expense. For more information, refer to Note 1 of the notes to the consolidated financial statements in this report.

Impairment

We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable.  These changes in circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income, geographic location, real estate values and expected holding period.  The viability of all projects under construction or development, including those owned by unconsolidated joint ventures, is regularly evaluated under applicable accounting requirements, including requirements relating to abandonment of assets or changes in use.  To the extent a project or an individual component of the project, is no longer considered to have value, the related capitalized costs are charged against operations.

Impairment provisions resulting from any event or change in circumstances, including changes in our intentions or our analysis of varying scenarios, could be material to our consolidated financial statements.

We recognize an impairment of an investment in real estate when the estimated undiscounted cash flow are less than the net carrying value of the property.  If it is determined that an investment in real estate is impaired, then the carrying value is reduced to the estimated fair value as determined by cash flow models and discount rates or comparable sales in accordance with our fair value measurement policy. Refer to Note 1 of the notes to the consolidated financial statements in this report.

Results of Operations

Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018

The following summarizes certain line items from our audited statements of operations which we believe are important in understanding our operations and/or those items that have significantly changed during the year ended December 31, 2019 as compared to 2018: 

	Year Ended December 31,
	2019		2018		Dollar Change		Percent Change
	(In thousands)
Total revenue	$	234,088	$	260,622	$	(26,534)	(10.2)	%
Real estate taxes	35,961		42,306		(6,345)		(15.0)	%
Recoverable operating expenses	25,256		26,177		(921)		(3.5)	%
Non-recoverable operating expense	10,292		7,286		3,006		41.3	%
Depreciation and amortization	78,647		87,327		(8,680)		(9.9)	%
Acquisition costs	—		233		(233)		NM
General and administrative expense	27,634		31,383		(3,749)		(11.9)	%
Provision for impairment	—		13,650		(13,650)		NM
Insured expenses, net	2,276		—		2,276		NM
Gain on sale of real estate	81,856		3,994		77,862		NM
Earnings from unconsolidated joint ventures	581		589		(8)		(1.4)	%
Interest expense	40,057		43,439		(3,382)		(7.8)	%
Other gain on unconsolidated joint ventures	237		5,208		(4,971)		(95.4)	%
Loss on extinguishment of debt	(2,571)		(134)		(2,437)		NM
NM - Not meaningful

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Total revenue in 2019 decreased $26.5 million, or (10.2)%, from 2018.  The decrease is primarily due to the following:

•$28.6 million decrease related to properties sold in 2019 and 2018;

•$5.2 million decrease from acceleration of a below market lease in the prior period attributable to a specific tenant who vacated prior to the original lease termination date; primarily offset by a

•$3.3 million increase from acceleration of below market leases in the current period attributable to tenants who vacated prior to the original estimated lease termination date; and a

•$3.8 million increase related to our existing centers largely attributable to higher minimum rent primarily from occupancy gains, contractual rent increases and lease renewals and higher recovery income mainly as a result of an increase in recoverable expenses at existing centers.

Real estate tax expense in 2019 decreased by $6.3 million, or (15.0)%, from 2018 primarily due to properties sold during 2019 and 2018.

Recoverable operating expense in 2019 decreased by $0.9 million, or (3.5)%, from 2018 primarily due to properties sold during 2019 and 2018, partially offset by higher common area maintenance expenses at existing properties.

Non-recoverable operating expense in 2019 increased by $3.0 million, or 41.3%, from 2018 primarily due to higher internal leasing costs as a result of the adoption of ASC 842 which eliminated the capitalization of these costs in the current year as well as higher legal fees associated with a tenant dispute, partially offset by properties sold during 2019 and 2018.

Depreciation and amortization expense in 2019 decreased by $8.7 million, or (9.9)%, from 2018.  The decrease is primarily a result of properties sold during 2019 and 2018.

During 2018 we recorded acquisition costs of $0.2 million related to legal and professional fees associated with a potential shopping center acquisition that was not ultimately pursued during the prior year.

General and administrative expense in 2019 decreased by $3.7 million, or (11.9)%, from 2018.  The net decrease is primarily a result of lower severance and management reorganization expense, which includes severance costs associated with former executives as well as sign-on bonuses and recruiting fees attributable to the new executive team, partially offset by an increase in bonus expense and higher share-based compensation expense.

During 2018 we recorded an impairment provision totaling $13.7 million, of which $13.5 million was on shopping centers classified as income producing and $0.2 million on land held for development. The adjustments related to shopping centers were triggered by changes in associated market prices and expected hold period assumptions, as well as a purchase price reduction at one property. The provision related to land held for development was triggered by changes in the expected use of the land and higher costs. Refer to Note 1 of the notes to the consolidated financial statements in this report for further information related to impairment provisions. We did not record any impairments in 2019.

During 2019 the Company wrote off real estate assets that were damaged by a hail storm at one property, which resulted in a charge of $2.3 million, net of $3.5 million of insurance proceeds received as of December 31, 2019. The damage incurred will be fully covered by insurance.

Gain on sale of real estate was $81.9 million in 2019. In the comparable period in 2018 we had a gain on sale of real estate of $4.0 million. The increase is primarily a result of properties sold during 2019. Refer to Note 4 of the notes to the consolidated financial statements in this report for further detail on dispositions.

Earnings from unconsolidated joint ventures in 2019 remained flat from 2018.

Interest expense in 2019 decreased by $3.4 million, or (7.8)%, from 2018. The decrease is primarily a result of a 9.2% decrease in our average outstanding debt, partially offset by lower capitalized interest. The decline in our average outstanding debt is the result of using proceeds from asset sales in the fourth quarter of 2018 and first quarter of 2019 to paydown our revolving credit line and redeem our junior subordinated notes.

Other gain on unconsolidated joint ventures in 2019 decreased by $5.0 million primarily due to the sale of the Martin Square property by our joint venture, Ramco/Lion Venture LP, in the prior period. The gain represents the difference between our share of the distributed proceeds and the carrying value of our equity investment in such joint venture.

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During 2019 we recorded loss on extinguishment of debt of $2.6 million, which represented the write-off of unamortized deferred financing costs associated with the junior subordinated notes that were redeemed in full in April 2019 and term loans that were repaid in November 2019, as well as deferred financing costs and a prepayment penalty associated with our senior unsecured notes that were repaid in December 2019.

Comparison of the Year Ended December 31, 2018 to the Year Ended December 31, 2017

The following summarizes certain line items from our audited statements of operations which we believe are important in understanding our operations and/or those items which have significantly changed during the year ended December 31, 2018 as compared to 2017:

	Year Ended December 31,
	2018		2017		Dollar Change		Percent Change
	(In thousands)
Total revenue	$	260,622	$	265,082	$	(4,460)	(1.7)	%
Real estate taxes	42,306		42,683		(377)		(0.9)	%
Recoverable operating expenses	26,177		27,653		(1,476)		(5.3)	%
Non-recoverable operating expenses	7,286		8,044		(758)		(9.4)	%
Depreciation and amortization	87,327		91,335		(4,008)		(4.4)	%
Acquisition costs	233		—		233		NM
General and administrative expense	31,383		22,564		8,819		39.1	%
Provision for impairment	13,650		9,404		4,246		45.2	%
Gain on sale of real estate	3,994		52,764		(48,770)		(92.4)	%
Earnings from unconsolidated joint ventures	589		273		316		115.8	%
Interest expense	43,439		44,866		(1,427)		(3.2)	%
Other gain on unconsolidated joint ventures	5,208		—		5,208		NM
NM - Not meaningful

Total revenue in 2018 decreased by $4.5 million, or (1.7)%, from 2017.  The decrease is primarily due to the following:

•$20.1 million increase related to acquisitions completed in 2018 and 2017; offset by

•$7.7 million increase related to our existing centers largely attributable to changes in estimates associated with recoveries of common areas maintenance and real estate taxes, and higher minimum rent;

•$5.2 million increase from acceleration of a below market lease attributable to a specific tenant who vacated prior to the original estimated lease termination date; and

•$2.7 million increase related to properties acquired in 2017 and a leasehold interest acquired in 2018.

Real estate tax expense in 2018 decreased by $0.4 million, or (0.9)%, from 2017 primarily due to properties sold during 2018 and 2017, partially offset by properties acquired in 2017 and higher net expense; specifically at two properties as a result of a change in estimates.

Recoverable operating expense in 2018 decreased by $1.5 million, or (5.3)%, from 2017 primarily due to properties sold during 2018 and 2017, partially offset by additional expense from properties acquired in 2017.

Non-recoverable operating expense in 2018 decreased by $0.8 million, or (9.4)%, from 2017 primarily due to a decrease in certain property related compensation, benefits, and travel expenses.

Depreciation and amortization expense in 2018 decreased by $4.0 million, or (4.4)%, from 2017.  The decrease is primarily a result of properties sold during 2018 and 2017, partially offset by higher asset write offs in 2018 for tenant lease terminations prior to their original estimated term, and higher depreciation expense from acquisitions completed in 2017.

During 2018 we recorded acquisition costs of $0.2 million related to legal and professional fees associated with a potential shopping center acquisition that was not ultimately pursued during the year.

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General and administrative expense in 2018 increased $8.8 million, or 39.1%, from 2017.  The increase was primarily due to the following:

•$9.7 million of executive management reorganization expenses, which included severance costs associated with former executives as well as executive recruiting fees, sign-on bonuses and relocation fees associated with our new executive team;

•$0.8 million of severance costs resulting from the reduction-in-force associated with the reorganization of the Company's operating structure; offset by

•$0.8 million decrease in service-based and performance-based stock compensation expense; and

•$0.5 million decrease in other severance costs.

During 2018 we recorded an impairment provision totaling $13.7 million, of which $13.5 million was on shopping centers classified as income producing and $0.2 million on land held for development. The adjustments related to shopping centers were triggered by changes in associated market prices and expected hold period assumptions, as well as a purchase price reduction at one property. The provision related to land held for development was triggered by changes in the expected use of the land and higher costs. During 2017 we recorded an impairment provision totaling $9.4 million, of which $8.4 million was on shopping centers classified as income producing and $1.0 million on land held for development. The adjustments were triggered by changes in associated sales price assumptions, a purchase price reduction at one property and changes in the expected use of land. Refer to Note 1 of the notes to the consolidated financial statements included in this report for further information related to impairment provisions.

Gain on sale of real estate was $4.0 million in 2018. In the comparable period in 2017 we had a gain of $52.8 million. The increase is primarily a result of properties sold during 2018. Refer to Note 4 of the notes to the consolidated financial statements in this report for further detail on dispositions.

Earnings from unconsolidated joint ventures in 2018 increased $0.3 million from 2017.  The increase was primarily due to our portion of the gain on sale of the Martin Square property which was disposed of by our joint venture, Ramco/Lion Venture LP, during the year compared to no dispositions by any of our unconsolidated joint ventures in the comparable period.

Interest expense in 2018 decreased by $1.4 million, or (3.2)%, from 2017. The decrease is primarily a result of an 8.0% decrease in our average outstanding debt, offset partially by a 45 basis point increase in our weighted average interest rate. The decline in our average outstanding debt is primarily a result of using proceeds from asset sales in the second half of 2017 to paydown our revolving credit line.

Other gain on unconsolidated joint ventures increased $5.2 million primarily due to the sale of the Martin Square property by our joint venture, Ramco/Lion Venture LP, during the year. The gain represents the difference between our share of the distributed proceeds and the carrying value of our equity investment in such joint venture.

Liquidity and Capital Resources

Our primary uses of capital include principal and interest payments on our outstanding indebtedness, ongoing capital expenditures such as leasing capital expenditures and building improvements, shareholder distributions, operating expenses of our business, debt maturities, acquisitions and discretionary capital expenditures such as targeted remerchandising, expansions, redevelopment and development. We generally strive to cover our principal and interest payments, operating expenses, shareholder distributions, and ongoing capital expenditures from cash flow from operations, although from time to time we have borrowed or sold assets to finance a portion of those uses. We believe the combination of cash flow from operations, cash balances, available borrowings under our unsecured revolving line of credit, issuance of long-term debt, property dispositions, and issuance of equity securities will provide adequate capital resources to fund all of our expected uses over at least the next 12 months. Although we believe that the combination of factors discussed above will provide sufficient liquidity, no such assurance can be given.

We believe our current capital structure provides us with the financial flexibility to fund our current capital needs. We intend to continue to enhance our financial and operational flexibility by extending the duration of our debt, laddering our debt maturities, expanding our unencumbered asset base and improving our leverage profile. In addition, we believe we have access to multiple forms of capital which includes unsecured corporate debt, secured mortgage debt, and preferred and common equity.

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At December 31, 2019 and 2018, we had $114.6 million and $44.7 million, respectively, in cash and cash equivalents and restricted cash.  Restricted cash generally consists of funds held in escrow by lenders to pay real estate taxes, insurance premiums and certain capital expenditures. As of December 31, 2019, we had no debt maturing in 2020 and we had $349.8 million available to be drawn on our $350.0 million unsecured revolving credit facility, subject to our compliance with certain covenants.

Our long-term liquidity needs consist primarily of funds necessary to pay indebtedness at maturity, potential acquisitions of properties, redevelopment of existing properties, the development of land and discretionary capital expenditures. We continually search for investment opportunities that may require additional capital and/or liquidity. We will continue to pursue the strategy of selling non-core properties or land that no longer meet our investment criteria or advance our business strategy. Our ability to obtain acceptable selling prices and satisfactory terms and financing will impact the timing of any future sales. We anticipate using net proceeds from the sale of properties or land to reduce outstanding debt and support current and future growth oriented initiatives. To the extent that asset sales are not sufficient to meet our long-term liquidity needs, we expect to meet such needs by raising debt or issuing equity.

We have on file with the SEC an automatic shelf registration statement relating to the offer and sale of an indeterminable amount of debt securities, preferred shares, common shares, depository shares, warrant and rights. From time to time, we may issue securities under this registration statement for working capital and other general corporate purposes.

The following is a summary of our cash flow activities:

	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Cash provided by operating activities	$	90,593	$	106,322	$	117,925
Cash provided by (used in) investing activities	95,095		42,262		(16,675)
Cash used in financing activities	(115,858)		(116,753)		(103,085)

Operating Activities

Net cash flow provided by operating activities decreased by $15.7 million in 2019 compared to 2018 primarily due to the following:

•Impact of shopping centers sold in 2018 and 2019; partially offset by

•Higher operating income at existing centers;

•Lower executive management and reorganization costs; and

•Reduction in interest expense.

Investing Activities

Net cash provided by investing activities was $95.1 million in 2019 compared to net cash provided by investing activities of $42.3 million in 2018. The $52.8 million change in net cash provided by investing activities was primarily due to:

•Net proceeds from the sale of real estate, including those completed by our joint ventures, increased $64.4 million; and

•Development and capital improvements decreased $21.3 million; partially offset by

•Acquisitions of real estate increased $27.6 million.

During 2019, we sold two shopping centers and one land parcel for aggregate net proceeds of $67.9 million. In addition, on December 10, 2019, we announced the formation of R2G. We contributed five properties valued at $244.0 million to R2G and received $118.3 million in gross proceeds ($117.3 million net) for the 48.5% stake in R2G that was acquired by GIC. In 2018 we sold six properties and three outparcels with aggregate net proceeds of $116.5 million. Refer to Note 4 of the notes to the consolidated financial statements in this report for additional information related to dispositions.

In 2019 we acquired one property, Lakehills Plaza in Austin, Texas for approximately $33.9 million. In 2018, we acquired the leasehold interest in a ground lease at our existing West Oaks shopping center for approximately $6.4 million.

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Our development and capital improvements spend in 2019 decreased by $21.3 million compared to 2018. The decrease was primarily a result of lower discretionary capital expenditures such as targeted remerchandising, outlot and GLA expansion and redevelopments.

Financing Activities

Net cash used in financing activities decreased by $0.9 million compared to 2018 primarily because of:

•Redemption of all of our outstanding junior subordinated notes due 2038 for an aggregate purchase price of $28.6 million; and

•Payment in 2019 of deferred financing costs of $4.0 million related to the amendment and restatement of the credit agreement and a $50 million private placement of senior unsecured notes; partially offset by

•Net repayments in 2018 of $30.0 million on our unsecured revolving line of credit.

On November 6, 2019, the Operating Partnership entered into the credit agreement, which consists of an unsecured revolving credit facility of up to $350.0 million and term loan facilities of $310.0 million. A portion of the proceeds from the credit agreement were used to repay our $75.0 million term loan due 2020 and our $75.0 million term loan due 2021 for an aggregate amount of $150.0 million. Also on November 6, 2019, we repaid $100.0 million which constituted repayment in full of the Operating Partnership's $50.0 million 4.16% senior unsecured notes due 2024 and its $50.0 million 4.30% senior unsecured notes due 2026, each issued pursuant to the note purchase agreement dated September 8, 2014, as amended.

On December 27, 2019, we entered into a note purchase agreement with the institutional investors named therein and closed a private placement of the Operating Partnership’s $50.0 million aggregate principal amount of 4.15% Senior Guaranteed Notes due December 27, 2029 pursuant thereto. Such notes are unsecured and are guaranteed by the Company and certain subsidiaries of the Operating Partnership. A portion of the proceeds were used to repay $25.0 million aggregate principal amount of our 4.13% Series A Notes due 2022 for an aggregate amount of $26.4 million, which included a prepayment penalty of $1.4 million. A portion of the proceeds were also used to repay the 6.50% fixed rate mortgage loan encumbering West Oaks II and Spring Meadows Place, with an aggregate principal balance of $24.9 million.

As of December 31, 2019, $349.8 million was available to be drawn on our $350.0 million unsecured revolving credit facility, subject to our compliance with certain covenants. It is anticipated that additional funds borrowed under our unsecured revolving line of credit will be used for general corporate purposes, including working capital, capital expenditures, the repayment of indebtedness or other corporate activities.  For further information on the unsecured revolving line of credit and other debt, refer to Note 8 of notes to the consolidated financial statements in this report.

Dividends and Equity

We currently qualify, and intend to continue to qualify in the future, as a REIT under the Code. As a REIT, we must distribute to our shareholders at least 90% of our REIT taxable income annually, excluding net capital gains. Distributions paid are at the discretion of our Board and depend on our actual net income available to common shareholders, cash flow, financial condition, capital requirements, restrictions in financing arrangements, the annual distribution requirements under REIT provisions of the Code and such other factors as our Board deems relevant.

We paid cash dividends of $0.88 per common share to shareholders in 2019 and 2018.  Additionally, we paid cash dividends of $3.625 per share of our 7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest to preferred shareholders in 2019 and 2018. Our dividend policy is to make distributions to shareholders of at least 90% of our REIT taxable income, excluding net capital gains, in order to maintain qualification as a REIT. On an annualized basis, our current dividend is above our estimated minimum required distribution.  Distributions paid by us are generally expected to be funded from cash flows from operating activities.  To the extent that cash flows from operating activities are insufficient to pay total distributions for any period, alternative funding sources are used.  Examples of alternative funding sources include proceeds from sales of real estate and bank borrowings.  During 2019, the sum of our principal and interest payments, operating expenses, shareholder distributions and recurring capital expenditures exceeded our cash flow from operations by $16.7 million, and we used other sources of liquidity, including a portion of the proceeds from assets sales, to meet our cash requirements. The $16.7 million shortfall was primarily a result of selling non-core properties and using proceeds to strengthen the balance sheet and fund organic growth opportunities in the Company's core portfolio. At December 31, 2019, the Company's occupancy rate was 94.3%, up 260 basis points from 91.7% at December 31, 2018. We expect these investments to result in a continued increase in our cash flows from operating activities relative to our dividends, and by the end of 2021, we expect our cash flows from operating activities to exceed our dividends based on our current dividend rate.

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We had an at-the-market equity program pursuant to which we could sell up to 8.0 million common shares from time to time, in our sole discretion. For the year ended December 31, 2019, we did not issue any common shares through the program. The sale of such common shares issuable pursuant to the program was registered with the SEC on our registration statement on Form S-3, which expired in June 2019.

Debt

At December 31, 2019, we had $932.6 million of debt outstanding consisting of $535.0 million in senior unsecured notes, $310.0 million of unsecured term loan facilities, and $87.6 million of fixed rate mortgage loans encumbering certain properties. We had no outstanding borrowings on our revolving credit facility as of December 31, 2019.

Our $845.0 million of senior unsecured notes and unsecured term loans have interest rates ranging from 2.66% to 4.74% and are due at various maturity dates from June 2021 through December 2029.

Our $87.6 million of fixed rate mortgages have interest rates ranging from 3.76% to 5.80% and are due at various maturity dates from February 2022 through June 2026. The fixed rate mortgage notes are secured by mortgages on properties that have an approximate net book value of $151.4 million as of December 31, 2019.

In addition, we had interest rate swap derivative instruments in effect for an aggregate notional amount of $360.0 million converting a portion of our floating rate corporate debt to fixed rate debt, including forward starting swaps totaling $150.0 million. After taking into account the impact of converting our variable rate debt to fixed rate debt by use of the interest rate swap agreements, at December 31, 2019, we had $100.0 million of variable rate debt outstanding.

Off Balance Sheet Arrangements

Real Estate Joint Ventures

We consolidate entities in which we own less than 100% equity interest if we have a controlling interest or are the primary beneficiary in a variable interest entity, as defined in the Consolidation Topic of FASB ASC 810.  From time to time, we enter into joint venture arrangements from which we believe we can benefit by owning a partial interest in one or more properties.

As of December 31, 2019, our investments in unconsolidated joint ventures were approximately $130.3 million representing our ownership interest in four joint ventures. We accounted for these entities under the equity method. Refer to Note 6 of the notes to the consolidated financial statements in this report for further information regarding our equity investments in unconsolidated joint ventures.

We are engaged by certain of our joint ventures to provide asset management, property management, construction management, leasing and investing services for such ventures' respective properties.  We receive fees for our services, including a property management fee calculated as a percentage of gross revenues received.

Guarantee

A redevelopment agreement was entered into between the City of Jacksonville, the Jacksonville Economic Development Commission and the Company, to construct and develop River City Marketplace in 2005. As part of the agreement, the city agreed to finance up to $12.2 million of bonds. Repayment of the bonds is to be made in accordance with a level-payment amortization schedule over 20 years, and repayments are made out of tax revenues generated by the redevelopment. The remaining debt service payments due over the life of the bonds, including principal and interest, are $9.1 million. As part of the redevelopment, the Company executed a guaranty agreement whereby the Company would fund debt service payments if incremental revenues were not sufficient to fund repayment. There have been no payments made by the Company under this guaranty agreement to date.

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Contractual Obligations

The following are our contractual cash obligations as of December 31, 2019:

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(In thousands)
Mortgages and notes payable:
Scheduled amortization	$	9,573	$	2,326	$	4,785	$	1,811	$	651
Payments due at maturity	923,008		—		216,508		306,500		400,000
Total mortgages and notes payable (1)	932,581		2,326		221,293		308,311		400,651
Interest expense (2)	209,405		36,839		97,671		44,831		30,064
Finance lease (3)	1,300		100		300		200		700
Operating leases	100,592		1,456		4,447		1,974		92,715
Construction commitments	6,494		6,494		—		—		—
Development obligations (4)	2,842		431		611		382		1,418
Total contractual obligations	$	1,253,214	$	47,646	$	324,322	$	355,698	$	525,548

⁽¹⁾Excludes $2.0 million of unamortized mortgage debt premium and $3.8 million in deferred financing costs.

⁽²⁾Variable rate debt interest is calculated using rates at December 31, 2019.

⁽³⁾Includes interest payments associated with the finance lease obligation of $0.4 million.

⁽⁴⁾Includes interest payments associated with the development obligations of $0.6 million.

At December 31, 2019, we did not have any contractual obligations that required or allowed settlement, in whole or in part, with consideration other than cash.

Mortgages and Notes Payable

See the analysis of our debt included in “Liquidity and Capital Resources” above.

Operating and Finance Leases

We have an operating ground lease at Centennial Shops located in Edina, Minnesota. The lease includes rent escalations throughout the lease period and expires in April 2105.

We have an operating lease for our 5,629 square foot corporate office in New York, New York, and an operating lease for our 12,572 square foot office in Southfield, Michigan. These leases are set to expire in January 2024 and December 2024, respectively. Our New York, New York corporate office lease includes an additional five year renewal to extend the lease through January 2029 and our Southfield, Michigan office lease includes two additional five year renewal options to extend the lease through December 2034.

We also have a ground finance lease at our Buttermilk Towne Center with the City of Crescent Springs, Kentucky. The lease provides for fixed annual payments of $0.1 million through maturity in December 2032, at which time we can acquire the land for one dollar.

Construction Costs

In connection with the development and expansion of various shopping centers as of December 31, 2019, we have entered into agreements for construction activities with an aggregate cost of approximately $6.5 million.

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Planned Capital Spending

We are focused on enhancing the value of our existing portfolio of shopping centers through successful leasing efforts, including the reconfiguration of anchor-space and small shop lease-up, and the completion of our redevelopment projects currently in process.  

For 2020, we anticipate spending between $40.0 million and $50.0 million for capital expenditures, of which $6.5 million is reflected in the construction commitments in the above contractual obligations table. The total anticipated spending relates to leasing costs, building improvements, targeted remerchandising, outlots/expansion, and development/redevelopment. Estimates for future spending will change as new projects are approved.

Capitalization

At December 31, 2019 and 2018, our total market capitalization was $2.2 billion and $2.0 billion, respectively, and is detailed below:

	December 31,
	2019			2018
	(In thousands)
Notes payable, net	$	930,808		$	963,149
Unamortized premiums and deferred financing costs	1,773			110
Finance lease obligation	926			975
Cash, cash equivalents and restricted cash	(114,552)			(44,722)
Pro-rata share of unconsolidated entities cash, cash equivalents and restricted cash	(1,120)			—
Net debt	$	817,835		$	919,512
Common shares outstanding	79,850			79,734
OP Units outstanding	1,909			1,909
Restricted share awards (treasury method)	995			763
Total common shares and equivalents	82,754			82,406
Market price per common share	$	15.04		$	11.95
Equity market capitalization	$	1,244,620		$	984,752
7.25% Series D Cumulative Convertible Perpetual Preferred Shares	1,849			1,849
Market price per convertible preferred share	$	59.86		$	49.45
Convertible perpetual preferred shares (at market)	$	110,681		$	91,433
Total market capitalization	$	2,173,136		$	1,995,697
Net debt to total market capitalization	37.6		%	46.1		%

At December 31, 2019, noncontrolling interests represented a 2.3% ownership in the Operating Partnership.  The OP Units may, under certain circumstances, be exchanged for our common shares on a one-for-one basis.  We, as sole general partner of the Operating Partnership, have the option, but not the obligation, to settle exchanged OP Units held by others in cash. Assuming the exchange of all OP Units, there would have been approximately 81.8 million of our common shares outstanding at December 31, 2019, with a market value of approximately $1.2 billion.

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Non-GAAP Financial Measures

Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operations results. We believe these additional measures provide additional and useful means to assess our performance. However, these measures do not represent alternatives to GAAP measures as indicators of performance and a comparison of the Company's presentations to similarly titled measures of other REITs may not necessarily be meaningful due to possible differences in definitions and application by such REITs.

Funds From Operations

We consider funds from operations, also known as “FFO,” to be an appropriate supplemental measure of the financial performance of an equity REIT.  The National Association of Real Estate Investment Trusts (“NAREIT”) is an industry body public REITs participate in and provides guidance to its members. Under the NAREIT definition, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable property and impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We have adopted the NAREIT definition in our computation of FFO.

In addition to FFO, we include Operating FFO as an additional measure of our financial and operating performance. Operating FFO excludes acquisition costs and periodic items such as gains (or losses) from sales of land and impairment provisions on land, bargain purchase gains, severance expense, executive management reorganization costs, net, accelerated amortization of debt premiums, gains or losses on extinguishment of debt, and insured expenses, net and R2G Venture LLC related costs that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity.

While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable.

We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common shareholders.  FFO and Operating FFO do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties.  In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends.   The following table illustrates the calculations of FFO and Operating FFO:

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	Years Ended December 31,
	2019		2018		2017
	(In thousands, except per share data)
Net income	$	93,686	$	18,036	$	70,719
Net (income) attributable to noncontrolling partner interest	(2,175)		(417)		(1,659)
Preferred share dividends	(6,701)		(6,701)		(6,701)
Net income available to common shareholders	84,810		10,918		62,359
Adjustments:
Rental property depreciation and amortization expense	78,095		86,970		91,097
Pro-rata share of real estate depreciation from unconsolidated joint ventures	459		191		302
Gain on sale of depreciable real estate	(81,485)		(3,699)		(51,977)
Gain on sale of joint venture depreciable real estate	(385)		(307)		—
Provision for impairment on income-producing properties	—		13,434		8,422
Other gain on unconsolidated joint ventures	(237)		(5,208)		—
FFO available to common shareholders	81,257		102,299		110,203
Noncontrolling interest in Operating Partnership (1)	—		417		1,659
Preferred share dividends (assuming conversion) (2)	6,701		6,701		6,701
FFO available to common shareholders and dilutive securities	$	87,958	$	109,417	$	118,563
Gain on sale of land	(371)		(295)		(787)
Provision for impairment on land	—		216		982
Loss on extinguishment of debt	2,571		134		—
Insured expenses, net	2,276		—		—
Accelerated amortization of debt premium	—		—		110
Severance expense (3)	130		1,117		715
Executive management reorganization, net (3)(4)	1,402		9,673		—
R2G Venture LLC related costs (3)(5)	499		—		—
Acquisition costs	—		233		—
Other gain	—		(398)		—
Operating FFO available to common shareholders and dilutive securities	$	94,465	$	120,097	$	119,583
Weighted average common shares	79,802		79,592		79,344
Shares issuable upon conversion of OP Units (1)	—		1,912		1,917
Dilutive effect of restricted stock	939		496		186
Shares issuable upon conversion of preferred shares (2)	6,981		6,858		6,740
Weighted average equivalent shares outstanding, diluted	87,722		88,858		88,187
Diluted earnings per share	$	1.04	$	0.13	$	0.78
Per share adjustments for FFO available to common shareholders and dilutive securities	(0.04)		1.10		0.56
FFO available to common shareholders and dilutive securities per share, diluted	$	1.00	$	1.23	$	1.34
Per share adjustments for Operating FFO available to common shareholders and dilutive securities	0.08		0.12		0.02
Operating FFO available to common shareholders and dilutive securities per share, diluted	$	1.08	$	1.35	$	1.36

⁽¹⁾The total noncontrolling interest reflects OP Units convertible on a one-for-one basis into common shares. The Company's net income for the year ended December 31, 2019 (largely driven by gain on sale of real estate), resulted in an income allocation to OP Units which drove an OP Unit ratio of $1.14 (based on 1,909 weighted average OP Units outstanding) as of December 31, 2019. In instances when the OP Unit ratio exceeds basic FFO, the OP Units are considered anti-dilutive, and as a result are not included in the calculation of fully diluted FFO and Operating FFO for the year ended December 31, 2019.

⁽²⁾7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest, $0.01 par value per share paid annual dividends of $6.7 million and are currently convertible into approximately 7.0 million common shares. They are dilutive only when earnings or FFO exceed approximately $0.96 per diluted share per year. The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earnings per share in future periods.

⁽³⁾Amounts noted are included in General and administrative expense.

⁽⁴⁾For 2019, largely comprised of severance to a former executive officer and performance award expense related to the Company's former Chief Executive Officer. For 2018, includes severance, accelerated vesting of restricted stock and performance award charges and the benefit from the forfeiture of unvested restricted stock and performance awards associated with our former executives, in addition to recruiting fees, relocation expenses and cash inducement bonuses related to the Company's current executive team.

⁽⁵⁾For 2019, comprised of special incentive expense related to the execution of the R2G Venture LLC joint venture agreement.

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NOI, Same Property NOI and NOI from Other Investments

NOI consists of (i) rental income and other property income, before straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fees less (ii) real estate taxes and all recoverable and non-recoverable operating expenses other than straight-line ground rent expense, in each case, including our share of these items from our R2G Venture LLC unconsolidated joint venture.

NOI, Same Property NOI and NOI from Other Investments are supplemental non-GAAP financial measures of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable operating properties for the reporting period. Same Property NOI for the three and twelve months ended December 31, 2019 and 2018 represents NOI from the Company's same property portfolio consisting of 41 consolidated operating properties acquired or placed in service and stabilized prior to January 1, 2018 and five previously consolidated properties contributed to the newly formed joint venture, R2G Venture LLC, in December 2019. Same property NOI from these five properties includes 51.5% of their NOI as a consolidated property for the period January 1, 2018 through December 9, 2019 and 51.5% of their NOI as an unconsolidated property accounted for under the equity method for the period December 10, 2019 through December 31, 2019. Same Property NOI excludes properties under redevelopment or where activities have started in preparation for redevelopment. A property is designated as a redevelopment when planned improvements significantly impact the property. NOI from Other Investments for the three and twelve months ended December 31, 2019 and 2018 represents NOI primarily from (i) properties disposed of and acquired during 2018 and 2019, (ii) 48.5% of the NOI prior to December 10, 2019 from the five previously consolidated properties contributed to the R2G Venture LLC unconsolidated joint venture, (iii) Webster Place and Rivertowne Square where the Company has begun activities in anticipation of future redevelopment, (iv) certain property related employee compensation, benefits, and travel expense and (v) non-comparable operating income and expense adjustments.

Same Property NOI and NOI from Other Investments should not be considered alternatives to net income in accordance with GAAP or as measures of liquidity. Our method of calculating these measures may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

The following is a summary of our owned properties for the periods noted with consistent classification in the prior period for presentation of Same Property NOI:

	Three Months Ended December 31,		Twelve Months Ended December 31,
Property Designation	2019	2018	2019	2018
Same-property	46	46	46	46
Acquisitions (1)	1	—	1	—
Redevelopment (2)	2	2	2	2
Total properties	49	48	49	48

⁽¹⁾Includes the following property for the three and twelve months ended December 31, 2019: Lakehills Plaza.

⁽²⁾Includes the following properties for the three months and twelve months ended December 31, 2019 and 2018: Rivertowne Square and Webster Place. The entire property indicated for each period is completely excluded from the Same Property NOI.

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The following is a reconciliation of our Operating Income to Same Property NOI at Pro-Rata:

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2019		2018		2019		2018
	(in thousands)
Net income (loss) available to common shareholders	$	71,055	$	(5,769)	$	84,810	$	10,918
Preferred share dividends	1,675		1,675		6,701		6,701
Net income (loss) attributable to noncontrolling partner interest	1,727		(97)		2,175		417
Income tax provision	97		51		179		198
Interest expense	9,707		11,085		40,057		43,439
Costs associated with early extinguishment of debt	1,949		134		2,571		134
Earnings from unconsolidated joint ventures	(128)		(19)		(581)		(589)
Gain on sale of real estate	(75,783)		(3,813)		(81,856)		(3,994)
Gain on remeasurement of unconsolidated joint venture	—		—		(237)		(5,208)
Insured expenses, net	2,276		—		2,276		—
Other (income) expense, net	(24)		189		203		244
Management and other fee income	(52)		(32)		(230)		(254)
Depreciation and amortization	18,782		21,608		78,647		87,327
Acquisition costs	—		—		—		233
General and administrative expenses	8,789		5,851		27,634		31,383
Provision for impairment	—		13,434		—		13,650
Pro-rata share of NOI from unconsolidated joint venture (1)	521		—		521		—
Lease termination fees	(409)		(53)		(743)		(161)
Amortization of lease inducements	160		43		519		173
Amortization of acquired above and below market lease intangibles, net	(1,218)		(1,147)		(6,762)		(9,880)
Straight-line ground rent expense	76		76		306		306
Straight-line rental income	(459)		(602)		(2,408)		(2,892)
NOI at Pro-Rata (2)	38,741		42,614		153,782		172,145
NOI from Other Investments	(1,049)		(6,338)		(5,284)		(29,505)
Same Property NOI at Pro-Rata (3)	$	37,692	$	36,276	$	148,498	$	142,640

⁽¹⁾ Represents 51.5% of the NOI from the five properties contributed to R2G Venture LLC after December 9, 2019.

⁽²⁾ Includes 100.0% of the NOI from the five properties contributed to R2G Venture LLC prior to December 10, 2019 and 51.5% of the NOI from the same five properties after December 9, 2019.

⁽³⁾ Includes 51.5% of the NOI from the five properties contributed to R2G Venture LLC for all periods presented.

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Inflation

Inflation has been relatively low in recent years and has not had a significant impact on the results of our operations.  Should inflation rates increase in the future, substantially all of our tenant leases contain provisions designed to partially mitigate the negative impact of inflation in the near term.  Such lease provisions include clauses that require our tenants to reimburse us for real estate taxes and many of the operating expenses we incur.  Also, many of our leases provide for periodic increases in base rent which are either of a fixed amount or based on changes in the consumer price index and/or percentage rents (where the tenant pays us rent based on a percentage of its sales).  Significant inflation rate increases over a prolonged period of time may have a material adverse impact on our business.

Recent Accounting Pronouncements

Refer to Note 2 of the notes to the consolidated financial statements in this report for a discussion of Recent Accounting Pronouncements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We have exposure to interest rate risk on our variable rate debt obligations.  Based on market conditions, we may manage our exposure to interest rate risk by entering into interest rate swap agreements to hedge our variable rate debt.  We are not subject to any foreign currency exchange rate risk or commodity price risk, or other material rate or price risks.  Based on our debt and interest rates and interest rate swap agreements in effect at December 31, 2019, a 100 basis point change in interest rates would impact our future earnings and cash flows by approximately $1.0 million annually.  We believe that a 100 basis point increase in interest rates would decrease the fair value of our total outstanding debt by approximately $31.6 million at December 31, 2019.

We had interest rate swap agreements with an aggregate notional amount of $360.0 million as of December 31, 2019. The agreements provided for fixed rates ranging from 1.31% to 2.15% and had expirations ranging from 2020 to 2027.  The following table sets forth information as of December 31, 2019 concerning our long-term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates of maturing amounts and fair market value. Net debt premium and unamortized deferred financing costs of approximately $1.8 million are excluded:

	2020			2021			2022			2023			2024			Thereafter			Total			Fair Market Value
(dollars in thousands)
Fixed-rate debt	$	2,326		$	39,508		$	52,397		$	129,388		$	75,879		$	533,083		$	832,581		$	848,170
Weighted average interest rate	5.3		%	3.8		%	5.7		%	3.5		%	4.5		%	3.9		%	4.0		%	3.6		%
Variable-rate debt	$	—		$	—		$	—		$	—		$	50,000		$	50,000		$	100,000		$	100,000
Weighted average interest rate	—		%	—		%	—		%	—		%	2.9		%	3.3		%	3.1		%	3.1		%

We estimated the fair market value of our fixed rate mortgages using a discounted cash flow analysis, based on borrowing rates for similar types of borrowing arrangements with the same remaining maturity.  Considerable judgment is required to develop estimated fair values of financial instruments.  The table incorporates only those exposures that exist at December 31, 2019 and does not consider those exposures or positions which could arise after that date or firm commitments as of such date.  Therefore, the information presented therein has limited predictive value.  Our actual interest rate fluctuations will depend on the exposures that arise during the period and on market interest rates at that time.

In July 2017, the Financial Conduct Authority, the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates, or financing costs to borrowers. We have material contracts that are indexed to USD-LIBOR, and we are monitoring this activity and evaluating the related risks.

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Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements and supplementary data are included as a separate section in this Annual Report on Form 10-K commencing on page F-1 and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports under the Exchange Act, such as this report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the design control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We carried out an assessment as of December 31, 2019 of the effectiveness of the design and operation of our disclosure controls and procedures. This assessment was done under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on such evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that such disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2019.

Statement of Our Management

Our management has issued a report on its assessment of the Company’s internal control over financial reporting, which appears on page F-2 of this Annual Report on Form 10-K.

Statement of Our Independent Registered Public Accounting Firm

Grant Thornton LLP, our independent registered public accounting firm that audited the financial statements in this Annual Report on Form 10-K, has issued an attestation report on the Company’s internal control over financial reporting, which appears on page F-3 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

44

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year covered by this Form 10-K.

Item 11. Executive Compensation

Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year covered by this Form 10-K.

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

Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year covered by this Form 10-K.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year covered by this Form 10-K.

Item 14. Principal Accountant Fees and Services

Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year covered by this Form 10-K.

45

PART IV

Item 15. Exhibits and Financial Statement Schedules

(1) Consolidated financial statements. See “Item 8 – Financial Statements and Supplementary Data.”

(2) Financial statement schedule.  See “Item 8 – Financial Statements and Supplementary Data.”

(3) Exhibits

3.1 Articles of Restatement of Declaration of Trust of the Company, effective June 8, 2010, incorporated by reference to Appendix A to the Company's 2010 Proxy dated April 30, 2010.

3.2 Amended and Restated Bylaws of the Company, effective November 13, 2018, incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K dated November 13, 2018.

3.3 Articles of Amendment, as filed with the State Department of Assessments and Taxation of Maryland on April 5, 2011, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 6, 2011.

3.4 Articles Supplementary, as filed with the State Department of Assessments and Taxation of Maryland on April 5, 2011, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated April 6, 2011.

3.5 Articles Supplementary, as filed with the State Department of Assessments and Taxation of Maryland on April 28, 2011, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 28, 2011.

3.6 Articles of Amendment, as filed with the State Department of Assessments and Taxation of Maryland on September 21, 2012, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 21, 2012.

3.7 Articles of Amendment, as filed with the State Department of Assessments and Taxation of Maryland on July 31, 2013, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated July 31, 2013.

3.8 Articles of Amendment, as filed with the State Department of Assessments and Taxation of Maryland on November 9, 2018, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated November 13, 2018.

3.9 Amendment No. 1 to the Amended and Restated Bylaws of the Company, effective February 13, 2020, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated February 20, 2020.

4.1* Description of the Company's Securities Registered Pursuant to Section 12 of the Securities Exchange Act, as amended.

10.1 Registration Rights Agreement, dated May 10, 1996, among the Company, Dennis Gershenson, Joel Gershenson, Bruce Gershenson, Richard Gershenson, Michael A. Ward U/T/A dated 2/22/77, as amended, and each of the Persons set forth on Exhibit A attached thereto, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1996.

10.2 Exchange Rights Agreement, dated May 10, 1996, among the Company and each of the Persons whose names are set forth on Exhibit A attached thereto, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1996.

10.3 Amended and Restated Limited Partnership Agreement of Ramco/Lion Venture LP, dated as of December 29, 2004, by Ramco-Gershenson Properties, L.P., as a limited partner, Ramco Lion LLC, as a general partner, CLPF-Ramco, L.P., as a limited partner, and CLPF-Ramco GP, LLC as a general partner, incorporated by reference to Exhibit 10.62 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

10.4* Summary of Trustee Compensation Program.**

10.5 Ramco-Gershenson Properties Trust 2012 Omnibus Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated June 12, 2012.**

46

10.6 Change in Control Policy, dated May 14, 2013, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated May 16, 2013.

10.7 2019 Executive Incentive Plan, dated April 29, 2019, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 30, 2019.**

10.8 $110 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated July 2, 2013.

10.9 $100 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. dated May 28, 2014, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2014.

10.10 $100 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. dated September 30, 2015, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2015.

10.11 $75 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. dated August 19, 2016, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 7, 2016.

10.12 $75 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. dated December 21, 2017 incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 27, 2017.

10.13 Employment Agreement, dated April 4, 2018 between the Company and Brian Harper, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 12, 2018.**

10.14 Ramco-Gershenson Properties Trust Inducement Incentive Plan, incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated April 12, 2018.**

10.15 Employment Agreement, dated June 2, 2018 between the Company and Michael Fitzmaurice, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated June 15, 2018.**

10.16 Agreement Regarding Severance, dated April 27, 2018 between the Company and Catherine Clark, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2018.**

10.17 RPT Realty 2019 Omnibus Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated April 30, 2019.**

10.18 Employment Offer, dated June 25, 2018, between the Company and Timothy Collier, incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2019.**

10.19 Transition Agreement, dated June 26, 2019 between the Company and Catherine Clark, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2019.**

10.20 Employment Offer with Raymond Merk, dated July 9, 2019, incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2019.**

10.21 Fifth Amended and Restated Credit Agreement dated November 6, 2019 among RPT Realty, L.P., as Borrower, KeyBank National Association, as Administrative Agent, KeyBanc Capital Markets Inc., BMO Capital Markets, and Capital One, National Association, as Joint-Lead Arrangers, BMO Capital Markets, N.A., and Capital One, National Association, as Syndication Agents, certain lenders from time to time parties thereto, as Lenders, and RPT Realty and certain subsidiaries of RPT Realty, L.P., as a Guarantors, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 8, 2019.

21.1* Subsidiaries.

23.1* Consent of Grant Thornton LLP.

31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

47

32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(furnished herewith)

32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)

101.SCH* Inline XBRL Taxonomy Extension Schema Document.

101.CAL* Inline XBRL Extension Calculation Linkbase Document

101.DEF* Inline XBRL Extension Definition Linkbase Document.

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE * Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*  Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

* Filed herewith

** Management contract or compensatory plan or arrangement

15(b)  The exhibits listed at Item 15(a)(3) that are noted ‘filed herewith’ are hereby filed with this report.

15(c) The financial statement schedules listed at Item 15(a)(2) are hereby filed with this report.

Item 16. Form 10-K Summary.

Not Applicable.

48

SIGNATURES

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.

		RPT Realty
Dated:	February 20, 2020	By: /s/ BRIAN L. HARPER
		Brian L. Harper
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of registrant and in the capacities and on the dates indicated.

Dated:	February 20, 2020	By: /s/ RICHARD L. FEDERICO
		Richard L. Federico
		Trustee
Dated:	February 20, 2020	By: /s/ ARTHUR H. GOLDBERG
		Arthur H. Goldberg
		Trustee
Dated:	February 20, 2020	By: /s/ BRIAN L. HARPER
		Brian L. Harper
		Trustee, President and Chief Executive Officer
		(Principal Executive Officer)
Dated:	February 20, 2020	By: /s/ JOANNA T. LAU
		Joanna T. Lau
		Trustee
Dated:	February 20, 2020	By: /s/ DAVID J. NETTINA
		David J. Nettina
		Trustee
Dated:	February 20, 2020	By: /s/ LAURIE M. SHAHON
		Laurie M. Shahon
		Trustee
Dated:	February 20, 2020	By: /s/ ANDREA M. WEISS
		Andrea M. Weiss
		Trustee
Dated:	February 20, 2020	By: /s/ MICHAEL P. FITZMAURICE
		Michael P. Fitzmaurice
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)
Dated:	February 20, 2020	By: /s/ RAYMOND J. MERK
		Raymond J. Merk
		Senior Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

49

RPT REALTY

Index to Consolidated Financial Statements  

	Page
Consolidated Financial Statements:
Management's Assessment Report on Internal Control over Financial Reporting	F-2
Report of Independent Registered Public Accounting Firm	F-3
Report of Independent Registered Public Accounting Firm	F-4
Consolidated Balance Sheets - December 31, 2019 and 2018	F-6
Consolidated Statements of Operations and Comprehensive Income - Years Ended December 31, 2019, 2018, and 2017	F-7
Consolidated Statements of Shareholders’ Equity - Years Ended December 31, 2019, 2018, and 2017	F-8
Consolidated Statements of Cash Flows – Years Ended December 31, 2019, 2018, and 2017	F-9
Notes to Consolidated Financial Statements	F-11
Schedules to Consolidated Financial Statements	F-42

F-1

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining effective internal control over financial reporting as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that pertain to our ability to record, process, summarize and report reliable financial data.  Management recognizes that there are inherent limitations in the effectiveness of any internal control and effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation.  Additionally, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an assessment of our internal controls over financial reporting as of December 31, 2019 using the framework established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework.  Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2019.

Our independent registered public accounting firm, Grant Thornton LLP, has issued an attestation report on our internal control over financial reporting.  Their report appears on page F-3 of this Annual Report on Form 10-K.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders

RPT Realty

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of RPT Realty (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2019, and our report dated February 20, 2020, expressed an unqualified opinion on those financial statements.

Basis for opinion

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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain 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.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Chicago, Illinois

February 20, 2020

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders

RPT Realty

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of RPT Realty (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 20, 2020 expressed an unqualified opinion.

Change in accounting principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of income producing properties

As described in Note 1 to the consolidated financial statements, the Company reviews its income producing properties for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable. These changes in circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income, real estate values, and expected holding periods.

The principal consideration for our determination that the evaluation of impairment of income producing properties is a critical audit matter is that it involves a high degree of subjectivity in evaluating management's judgments regarding impairment indicators. Based on the subjectivity in identifying events and changes in circumstances indicating that the carrying amounts of properties may not be recoverable, the related audit procedures involve a high degree of auditor judgment.

F-4

Our audit procedures related to the evaluation of impairment of income producing properties included the following, among others. We tested the design and operating effectiveness of management’s internal controls over the identification of potential impairments of income producing properties, such as controls over the Company’s quarterly analysis of occupancy and financial and operating performance trends, as well management review controls to identify potential events which could indicate impairment. We examined the Company’s evaluation of impairment indicators and evaluated whether all properties were included in the analysis and whether the information regarding financial and operating performance included in the analyses was complete and accurate. Additionally, we evaluated management’s process for identifying impairment indicators to determine if the events and changes in circumstances that management deems representative of impairment indicators were reasonable and appropriate in the context of the applicable authoritative guidance for long-lived asset impairment, industry practice for similar entities, and relevant metrics of financial and operating performance of an income producing shopping center. Finally, we evaluated the more subjective components of the impairment indicator analyses, such as holding periods and re-leasing absorption periods, in comparison with historical transactions and performance. Our evaluation also considered whether such components were consistent with evidence obtained in other areas of the audit.

Joint venture equity method investment

As described in Note 6 to the consolidated financial statements, in December 2019, the Company entered into a joint venture agreement, R2G Venture LLC (“R2G”), which owns and operates five shopping centers, with an unrelated third party whereby the Company owns 51.5% of the equity in the joint venture. The Company is responsible for the day-to-day management of the properties as well as sourcing future acquisitions for the joint venture, and the Company receives property management, construction management and leasing fees from R2G as consideration for these management services. The Company and the joint venture partner have joint approval rights for major decisions, including those regarding property operations, and the Company cannot make significant decisions without the joint venture partner’s approval. Accordingly, the Company accounts for its interest in R2G using the equity method. We identified the investment in R2G as a critical audit matter.

The principal consideration for our determination that the investment in R2G is a critical audit matter is that it involves a high degree of subjectivity in evaluating management's conclusions that the Company does not have a controlling financial interest, as defined in ASC Topic 810 Consolidation, in R2G, and thus does not consolidate R2G in its consolidated financial statements.

Our audit procedures related to the evaluation of the R2G joint venture equity method investment included the following, among others. We tested the design and operating effectiveness of management’s internal controls over the accounting for investments in affiliates, including controls over the evaluation and application of the appropriate accounting principles. We examined the joint venture operating agreements and evaluated the relevant provisions to assess the appropriateness of the Company’s conclusion that the Company and the unrelated third party exercise joint control of R2G through their equity investments, and that both parties have substantive participating rights in significant financial and operating decisions of R2G that are made in the ordinary course of business. We assessed management’s conclusions regarding which significant financial and operating decisions made in the ordinary course of business are important in determining that R2G is jointly controlled by the Company and the unrelated third party.

/s/ GRANT THORNTON LLP

We have served as the Company's auditor since 2005.

Chicago, Illinois

February 20, 2020

F-5

RPT REALTY
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
	December 31,
	2019		2018
ASSETS
Income producing properties, at cost:
Land	$	331,265	$	373,490
Buildings and improvements	1,486,838		1,652,283
Less accumulated depreciation and amortization	(352,006)		(358,195)
Income producing properties, net	1,466,097		1,667,578
Construction in progress and land available for development	42,279		53,222
Net real estate	1,508,376		1,720,800
Equity investments in unconsolidated joint ventures	130,321		1,572
Cash and cash equivalents	110,259		41,064
Restricted cash	4,293		3,658
Accounts receivable, net	24,974		23,802
Acquired lease intangibles, net	34,278		44,432
Operating lease right-of-use assets	19,222		—
Other assets, net	86,836		93,112
TOTAL ASSETS	$	1,918,559	$	1,928,440
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable, net	$	930,808	$	963,149
Finance lease obligation	926		975
Accounts payable and accrued expenses	55,360		56,355
Distributions payable	19,792		19,728
Acquired lease intangibles, net	38,898		48,647
Operating lease liabilities	18,181		—
Other liabilities	6,339		8,043
TOTAL LIABILITIES	1,070,304		1,096,897
Commitments and Contingencies
RPT Realty ("RPT") Shareholders' Equity:
Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 1,849 shares issued and outstanding as of December 31, 2019 and 2018, respectively	92,427		92,427
Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,850 and 79,734 shares issued and outstanding as of December 31, 2019 and 2018, respectively	798		797
Additional paid-in capital	1,169,557		1,164,848
Accumulated distributions in excess of net income	(436,361)		(450,130)
Accumulated other comprehensive income	1,819		4,020
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT	828,240		811,962
Noncontrolling interest	20,015		19,581
TOTAL SHAREHOLDERS' EQUITY	848,255		831,543
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,918,559	$	1,928,440

The accompanying notes are an integral part of these consolidated financial statements.

F-6

RPT REALTY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
	Year Ended December 31,
	2019		2018		2017
REVENUE
Rental income	$	229,588	$	256,531	$	260,324
Other property income	4,270		3,837		4,303
Management and other fee income	230		254		455
TOTAL REVENUE	234,088		260,622		265,082
EXPENSES
Real estate taxes	35,961		42,306		42,683
Recoverable operating expense	25,256		26,177		27,653
Other non-recoverable operating expense	10,292		7,286		8,044
Depreciation and amortization	78,647		87,327		91,335
Acquisitions costs	—		233		—
General and administrative expense	27,634		31,383		22,564
Provision for impairment	—		13,650		9,404
Insured expenses, net	2,276		—		—
TOTAL EXPENSES	180,066		208,362		201,683
OPERATING INCOME	54,022		52,260		63,399
OTHER INCOME AND EXPENSES
Other expense, net	(203)		(244)		(708)
Gain on sale of real estate	81,856		3,994		52,764
Earnings from unconsolidated joint ventures	581		589		273
Interest expense	(40,057)		(43,439)		(44,866)
Other gain on unconsolidated joint ventures	237		5,208		—
Loss on extinguishment of debt	(2,571)		(134)		—
NET INCOME BEFORE TAX	93,865		18,234		70,862
Income tax provision	(179)		(198)		(143)
NET INCOME	93,686		18,036		70,719
Net (income) attributable to noncontrolling interest	(2,175)		(417)		(1,659)
NET INCOME ATTRIBUTABLE TO RPT	91,511		17,619		69,060
Preferred share dividends	(6,701)		(6,701)		(6,701)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	84,810	$	10,918	$	62,359
EARNINGS PER COMMON SHARE
Basic	$	1.06	$	0.13	$	0.78
Diluted	$	1.04	$	0.13	$	0.78
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	79,802		79,592		79,344
Diluted	87,722		80,088		79,530
OTHER COMPREHENSIVE INCOME
Net income	$	93,686	$	18,036	$	70,719
Other comprehensive income:
Change in fair value of interest rate swaps	(2,253)		1,190		2,082
Comprehensive income	91,433		19,226		72,801
Comprehensive income attributable to noncontrolling interest	(2,123)		(445)		(1,708)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RPT	$	89,310	$	18,781	$	71,093

The accompanying notes are an integral part of these consolidated financial statements.

F-7

RPT REALTY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
	Shareholders' Equity of RPT Realty
	Preferred Shares		Common Shares		Additional Paid-in Capital		Accumulated Distributions in Excess of Net Income		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interest		Total Shareholders’ Equity
Balance, December 31, 2016	$	92,427	$	793	$	1,158,430	$	(384,934)	$	985	$	20,897	$	888,598
Adoption of ASU 2017-12	—		—		—		221		(160)		(61)		—
Issuance of common shares, net of costs	—		—		(24)		—		—		—		(24)
Redemption of OP Unit holders	—		—		—		(1)		—		(10)		(11)
Share-based compensation, net of shares withheld for employee taxes	—		1		2,456		—		—		—		2,457
Dividends declared to common shareholders	—		—		—		(69,845)		—		—		(69,845)
Dividends declared to preferred shareholders	—		—		—		(6,701)		—		—		(6,701)
Distributions declared to noncontrolling interests	—		—		—		—		—		(1,687)		(1,687)
Dividends declared to deferred shares	—		—		—		(419)		—		—		(419)
Other comprehensive income adjustment	—		—		—		—		2,033		49		2,082
Net income	—		—		—		69,060		—		1,659		70,719
Balance, December 31, 2017	92,427		794		1,160,862		(392,619)		2,858		20,847		885,169
Adoption of ASU 2017-05	—		—		—		2,109		—		51		2,160
Issuance of common shares, net of costs	—		—		(39)		—		—		—		(39)
Redemption of OP Unit holders	—		—		—		(18)		—		(79)		(97)
Share-based compensation, net of shares withheld for employee taxes	—		3		4,025		—		—		—		4,028
Dividends declared to common shareholders	—		—		—		(70,060)		—		—		(70,060)
Dividends declared to preferred shareholders	—		—		—		(6,701)		—		—		(6,701)
Distributions declared to noncontrolling interests	—		—		—		—		—		(1,683)		(1,683)
Dividends declared to deferred shares	—		—		—		(460)		—		—		(460)
Other comprehensive income adjustment	—		—		—		—		1,162		28		1,190
Net income	—		—		—		17,619		—		417		18,036
Balance, December 31, 2018	92,427		797		1,164,848		(450,130)		4,020		19,581		831,543
Adoption of ASU 2016-02	—		—		—		(325)		—		(8)		(333)
Issuance of common shares, net of costs	—		—		(96)		—		—		—		(96)
Share-based compensation, net of shares withheld for employee taxes	—		1		4,805		—		—		—		4,806
Dividends declared to common shareholders	—		—		—		(70,237)		—		—		(70,237)
Dividends declared to preferred shareholders	—		—		—		(6,701)		—		—		(6,701)
Distributions declared to noncontrolling interests	—		—		—		—		—		(1,681)		(1,681)
Dividends declared to deferred shares	—		—		—		(479)		—		—		(479)
Other comprehensive income adjustment	—		—		—		—		(2,201)		(52)		(2,253)
Net income	—		—		—		91,511		—		2,175		93,686
Balance, December 31, 2019	$	92,427	$	798	$	1,169,557	$	(436,361)	$	1,819	$	20,015	$	848,255

The accompanying notes are an integral part of these consolidated financial statements.

F-8

RPT REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
	Year Ended December 31,
	2019		2018		2017
OPERATING ACTIVITIES
Net income	$	93,686	$	18,036	$	70,719
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	78,647		87,327		91,335
Amortization of deferred financing fees	1,419		1,503		1,418
Income tax provision	179		198		143
Earnings from unconsolidated joint ventures	(581)		(589)		(273)
Distributions received from operations of unconsolidated joint ventures	231		546		738
Provision for impairment	—		13,650		9,404
Loss on extinguishment of debt	2,571		134		—
Other gain on unconsolidated joint ventures	(237)		(5,208)		—
Gain on sale of real estate	(81,856)		(3,994)		(52,764)
Insured expenses, net	2,276		—		—
Amortization of acquired above and below market lease intangibles, net	(6,762)		(9,880)		(4,397)
Amortization of premium on mortgages and notes payable, net	(953)		(1,019)		(1,153)
Service-based restricted share expense	3,493		4,673		2,710
Long-term incentive cash and equity compensation expense	3,045		2,003		1,695
Changes in assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable, net	(637)		2,390		(1,974)
Other assets, net	(1,756)		(2,979)		(2,183)
Accounts payable and other liabilities	(2,172)		(469)		2,507
Net cash provided by operating activities	90,593		106,322		117,925
INVESTING ACTIVITIES
Acquisitions of real estate	(33,922)		(6,365)		(169,882)
Development and capital improvements	(55,842)		(77,173)		(63,256)
Capital improvements covered by insurance	(759)		—		—
Net proceeds from sales of real estate	185,221		116,492		216,463
Insurance proceeds from insured expenses	3,150		—		—
Distributions from sale of joint venture property	1,985		6,308		—
(Investment in) proceeds from equity interests in unconsolidated joint ventures	(4,738)		3,000		—
Net cash provided by (used in) investing activities	95,095		42,262		(16,675)
FINANCING ACTIVITIES
Proceeds on notes payable	300,000		—		75,000
Repayment of mortgages and notes payable	(330,678)		(5,810)		(39,775)
Proceeds on revolving credit facility	19,400		90,000		258,000
Repayments on revolving credit facility	(19,400)		(120,000)		(314,000)
Payment of debt extinguishment costs	(1,401)		(134)		—
Payment of deferred financing costs	(3,992)		—		(3,120)
Proceeds from issuance of common shares, net of costs	(96)		(39)		(24)
Repayment of finance lease obligation	(49)		(47)		(44)
Redemption of operating partnership units for cash	—		(97)		(11)
Shares used for employee taxes upon vesting of awards	(608)		(1,784)		(498)
Dividends paid to preferred shareholders	(6,701)		(6,701)		(6,701)
Dividends paid to common shareholders	(70,652)		(70,458)		(70,225)
Distributions paid to operating partnership unit holders	(1,681)		(1,683)		(1,687)
Net cash used in financing activities	(115,858)		(116,753)		(103,085)
Net change in cash, cash equivalents and restricted cash	69,830		31,831		(1,835)
Cash, cash equivalents and restricted cash at beginning of period	44,722		12,891		14,726
Cash, cash equivalents and restricted cash at end of period	$	114,552	$	44,722	$	12,891

The accompanying notes are an integral part of these consolidated financial statements.

F-9

RPT REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
	Year Ended December 31,
	2019		2018		2017
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Equity investment in unconsolidated joint venture	$	—	$	—	$	3,000
Deferred gain on real estate sold to unconsolidated joint venture	—		2,160		(2,167)
Contribution of real estate exchanged for an equity investment in unconsolidated joint venture	125,660		—		—
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest (net of capitalized interest of $134, $782 and $345, respectively)	$	40,800	$	43,943	$	43,744
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	2,191		—		—

	As of December 31,
	2019		2018		2017
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	110,259	$	41,064	$	8,081
Restricted cash and escrows	4,293		3,658		4,810
	$	114,552	$	44,722	$	12,891

The accompanying notes are an integral part of these consolidated financial statements.

F-10

RPT REALTY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2019, 2018 and 2017

1. Organization and Summary of Significant Accounting Policies

RPT Realty, together with our subsidiaries (the “Company” or “RPT”), is a real estate investment trust (“REIT”) engaged in the business of owning and operating a national portfolio of open-air shopping destinations principally located in the top U.S. markets. The Company's shopping centers offer diverse, locally-curated consumer experiences that reflect the lifestyles of their surrounding communities and meet the modern expectations of the Company's retail partners. As of December 31, 2019, the Company's portfolio consisted of 49 shopping centers (including five shopping center owned through a joint venture) representing 11.9 million square feet of gross leaseable area (“GLA”). We also have ownership interests of 7%, 20%, 30%, and 51.5%, respectively, in four joint ventures, one of which owns five shopping centers and three of which have no significant activity. Our joint ventures are reported using equity method accounting.  We earn fees from certain joint ventures for managing, construction management, leasing and redeveloping the shopping centers they own.  We also own interests in several land parcels that are available for development. Most of our properties are anchored by supermarkets and/or national chain stores. The Company's credit risk, therefore, is concentrated in the retail industry. As of December 31, 2019, our wholly-owned properties located in Florida and Michigan each accounted for approximately 19.5% and 20.2%, respectively, of our annualized base rent.

We made an election to qualify as a REIT for federal income tax purposes.  Accordingly, we generally will not be subject to federal income tax, provided that we annually distribute at least 90% of our taxable income to our shareholders and meet other conditions.

Principles of Consolidation

The consolidated financial statements include the accounts of us and our majority owned subsidiary, RPT Realty, L.P., a Delaware limited partnership (the “Operating Partnership” which was 97.7% owned by us at December 31, 2019, 2018 and 2017), and all wholly-owned subsidiaries, including entities in which we have a controlling interest or have been determined to be the primary beneficiary of a variable interest entity (“VIE”).  The presentation of consolidated financial statements does not itself imply that assets of any consolidated entity (including any special-purpose entity formed for a particular project) are available to pay the liabilities of any other consolidated entity, or that the liabilities of any other consolidated entity (including any special-purpose entity formed for a particular project) are obligations of any other consolidated entity.  Investments in real estate joint ventures over which we have the ability to exercise significant influence, but for which we do not have financial or operating control, are accounted for using the equity method of accounting.  Accordingly, our share of the earnings (loss) of these joint ventures is included in consolidated net income (loss).  All intercompany transactions and balances are eliminated in consolidation.

We own 100% of the non-voting and voting common stock of RPT Realty, Inc., and therefore it is included in the consolidated financial statements.  RPT Realty, Inc. has elected to be a taxable REIT subsidiary for federal income tax purposes. RPT Realty, Inc. provides property management services to us and to other entities, including certain real estate joint venture partners.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and reported amounts that are not readily apparent from other sources.  Actual results could differ from those estimates.

Reclassifications

Certain amounts in the prior period have been reclassified in order to conform with the current period’s presentation. The Company reclassified $2.5 million and $3.4 million of expense associated with property-related employee compensation and benefits from general and administrative expense to non-recoverable operating expense for the years ended December 31, 2018 and 2017, respectively.

F-11

Revenue Recognition and Accounts Receivable

Our shopping center space is generally leased to retail tenants under leases that are classified as operating leases. We recognize minimum rents using the straight-line method over the terms of the leases commencing when the tenant takes possession of the space or when construction of landlord funded improvements is substantially complete. Certain of the leases also provide for contingent percentage rental income which is recorded on an accrual basis once the specified target that triggers this type of income is achieved. The leases also provide for reimbursement from tenants for common area maintenance, insurance, real estate taxes and other operating expenses (“recovery income”). The majority of our Recovery Income is estimated and recognized as revenue in the period the recoverable costs are incurred or accrued.  Revenues from management, leasing, and other fees are recognized in the period in which the services have been provided and the earnings process is complete. Lease termination income is recognized when a lease termination agreement is executed by the parties and the tenant vacates the space.  When a lease is terminated early but the tenant continues to control the space under a modified lease agreement, the lease termination fee is generally recognized evenly over the remaining term of the modified lease agreement.

Current accounts receivable from tenants primarily relate to contractual minimum rent, percentage rent and recovery income.

In accordance with ASC 842, income for operating leases is recognized on a straight-line basis over the expected term of the lease for all leases for which collectibility is considered probable at the commencement date. We monitor the collectability of our accounts receivable from specific tenants on an ongoing basis, analyze historical experience, customer creditworthiness, current economic trends and changes in tenant payment terms when evaluating the likelihood of tenant payment.  For operating leases in which collectibility of rental income is not considered probable, rental income is recognized on a cash basis and allowances are taken for those balances that we have reason to believe may be uncollectible in the period it is determined not to be probable of collection.  When tenants are in bankruptcy, we make estimates of the expected recovery of pre-petition and post-petition claims.  The period to resolve these claims can exceed one year.  Management believes the allowance for doubtful accounts is adequate to absorb currently estimated rental income not probable of collection.  However, if we experience estimates in excess of the allowance we have established, our operating income would be reduced.  At December 31, 2019 and 2018, our accounts receivable were $25.0 million and $23.8 million, respectively, net of allowances for doubtful accounts of $1.0 million and $0.9 million, respectively.

In addition, many of our leases contain non-contingent rent escalations for which we recognize income on a straight-line basis over the non-cancelable lease term.  This method results in rental income in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the “Other assets, net” line item in our consolidated balance sheets.  We review our unbilled straight-line rent receivable balance to determine the future collectability of revenue that will not be billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other factors.  Our evaluation is based on our assessment of tenant credit risk changes indicating that expected future straight-line rent may not be realized.  Depending on circumstances, we may provide a reserve against the previously recognized straight-line rent receivable asset for a portion, up to its full value, that we estimate may not be received.  The balance of straight-line rent receivable at December 31, 2019 and 2018, net of allowances of $1.8 million and $2.3 million, respectively, was $19.6 million and $21.2 million, respectively.  To the extent any of the tenants under these leases become unable to pay its contractual cash rents, we may be required to write down the straight-line rent receivable from that tenant, which would reduce our operating income.

Real Estate

Real estate assets that we own directly are stated at cost less accumulated depreciation.  Depreciation is computed using the straight-line method.  The estimated useful lives for computing depreciation are generally 10 – 40 years for buildings and improvements and 5 – 30 years for parking lot surfacing and equipment.  We capitalize all capital improvement expenditures associated with replacements and improvements to real property that extend the property's useful life and depreciate them over their estimated useful lives ranging from 15 – 25 years.  In addition, we capitalize qualifying tenant leasehold improvements and depreciate them over the lesser of the useful life of the improvements or the term of the related tenant lease.  We also capitalize direct internal and external costs of procuring leases and amortize them over the base term of the lease.  If a tenant vacates before the expiration of its lease, we charge unamortized leasing costs and undepreciated tenant leasehold improvements of no future value to expense.  We charge maintenance and repair costs that do not extend an asset’s life to expense as incurred.

Sale of a real estate asset is recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. We will classify properties as held for sale when executed purchase and sales agreement contingencies have been satisfied thereby signifying that the sale is legally binding.

F-12

Acquisitions of properties are accounted for utilizing the acquisition method and, accordingly, the results of operations of an acquired property are included in our results of operations from the date of acquisition.  Estimates of fair values are based upon future cash flows and other valuation techniques in accordance with our fair value measurements policy, which are used to allocate the purchase price of acquired property among land, buildings on an “as if vacant” basis, tenant improvements, identifiable intangibles and any gain on purchase.  Identifiable intangible assets and liabilities include the effect of above-and below-market leases, the value of having leases in place (“as-is” versus “as if vacant” and absorption costs), other intangible assets such as assumed tax increment revenue bonds and out-of-market assumed mortgages.  Depreciation and amortization are computed using the straight-line method over the estimated useful lives of 40 years for buildings, and over the remaining terms of any intangible asset contracts and the respective tenant leases, which may include bargain renewal options. The impact of these estimates, including estimates in connection with acquisition values and estimated useful lives, could result in significant differences related to the purchased assets, liabilities and subsequent depreciation or amortization expense.

Real estate also includes costs incurred in the development of new operating properties and the redevelopment of existing operating properties.  These properties are carried at cost and no depreciation is recorded on these assets until the commencement of rental revenue or no later than one year from the completion of major construction.  These costs include pre-development costs directly identifiable with the specific project, development and construction costs, interest, real estate taxes and insurance.  Interest is capitalized on land under development and buildings under construction based on the weighted average rate applicable to our borrowings outstanding during the period and the weighted average balance of qualified assets under development/redevelopment during the period.  Indirect project costs associated with development or construction of a real estate project are capitalized until the earlier of one year following substantial completion of construction or when the property becomes available for occupancy.

The capitalized costs associated with development and redevelopment projects are depreciated over the useful life of the improvements.  If we determine a development or redevelopment project is no longer probable, we expense all capitalized costs which are not recoverable.

It is our policy to start vertical construction on new development projects only after the project has received entitlements, significant anchor leasing commitments, construction financing and joint venture partner commitments, if appropriate.  We are in the entitlement and pre-leasing phases at our development projects.

Accounting for the Impairment of Long-Lived Assets

We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable.  These changes in circumstances include, but are not limited to, changes in occupancy, rental rates, net operating income, real estate values and expected holding period.  The viability of all projects under construction or development, including those owned by unconsolidated joint ventures, is regularly evaluated under applicable accounting requirements, including requirements relating to abandonment of assets or changes in use.  To the extent a project, or individual components of the project, is no longer considered to have value, the related capitalized costs are charged against operations.

Impairment provisions resulting from any event or change in circumstances, including changes in management’s intentions or management’s analysis of varying scenarios, could be material to our consolidated financial statements.

We recognize an impairment of an investment in real estate when the estimated undiscounted cash flow is less than the net carrying value of the property.  If it is determined that an investment in real estate is impaired, then the carrying value is reduced to the estimated fair value as determined by cash flow models and discount rates or comparable sales in accordance with our fair value measurement policy.

In 2019, we recorded no impairment provision related to developable land or shopping centers classified as income producing.

Investments in Real Estate Joint Ventures

We have four equity investments in unconsolidated joint venture entities in which we own 51.5% or less of the total ownership interest, one of which owns five shopping centers and three of which have no significant activity.  Under all of our joint ventures, because we can influence but not make significant decisions without our partners' approval, these investments are accounted for under the equity method of accounting. We provide leasing, construction, development, asset and property management services to these joint ventures for which we are paid fees.

F-13

We review our equity investments in unconsolidated entities for impairment on a venture-by-venture basis whenever events or changes in circumstances indicate that the carrying value of the equity investment may not be recoverable. In testing for impairment of these equity investments, we primarily use cash flow models, discount rates, and capitalization rates to estimate the fair value of properties held in joint ventures, and mark the debt of the joint ventures to market.  Considerable judgment by management is applied when determining whether an equity investment in an unconsolidated entity is impaired and, if so, the amount of the impairment. Changes to assumptions regarding cash flows, discount rates or capitalization rates could be material to our consolidated financial statements.

There were no impairment provisions on our equity investments in joint ventures recorded in 2019, 2018 or 2017.

Deferred Financing Costs

Debt issuance costs related to a recognized debt liability is presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Unamortized debt issuance costs of $3.8 million and $3.1 million are included in Notes payable, net as of December 31, 2019 and 2018, respectively.

Debt issuance costs associated with a line of credit arrangement is classified as an asset and subsequently amortized ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. Unamortized debt issuance costs related to our unsecured revolving credit facility of $2.7 million and $2.0 million are included in Other assets, net as of December 31, 2019 and 2018, respectively.

Other Assets, net

Other assets consist primarily of acquired development agreement intangibles, an acquired ground lease intangible, straight-line rent receivable, deferred leasing costs, deferred financing costs related to our unsecured revolving credit facility and prepaid expenses. Deferred financing costs related to our unsecured revolving credit facility and leasing costs are amortized using the straight-line method over the terms of the respective agreements, which approximates the effective interest method. Should a tenant terminate its lease, the unamortized portion of the leasing cost is expensed.  Unamortized deferred financing costs are expensed when the related agreements are terminated before their scheduled maturity dates.  Lastly, the acquired development agreement and acquired ground lease intangible assets are amortized over the terms of the respective agreements as well.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.  Cash balances in individual banks may exceed the federally insured limit by the Federal Deposit Insurance Corporation (the “FDIC”).  As of December 31, 2019, we had $111.4 million in excess of the FDIC insured limit.

Recognition of Share-based Compensation Expense

We grant share-based compensation awards to employees and trustees in the form of restricted common shares and cash and equity settled awards, and in the past we have granted stock options to employees and trustees.  Our share-based award costs are equal to each grant date fair value and are recognized over the service periods of the awards using the graded vesting method.  We recognize forfeitures related to stock awards and stock options as they occur. See Note 15 of these notes to the consolidated financial statements for further information regarding our share based compensation.

Income Tax Status

We made an election, and believe our operating activities permit us, to qualify as a REIT for federal income tax purposes.  Accordingly, we generally will not be subject to federal income tax, provided that we distribute at least 90% of our taxable income annually to our shareholders and meet other conditions.  We are obligated to pay state taxes, generally consisting of franchise or gross receipts taxes in certain states which are not material to our consolidated financial statements.

Certain of our operations, including property and asset management, as well as ownership of certain land parcels, are conducted through taxable REIT subsidiaries, (“TRSs”) which are subject to federal and state income taxes.  During the years ended December 31, 2019, 2018, and 2017, we sold various properties and land parcels at a gain, resulting in both a federal and state tax liability.  See Note 16 of the notes to the consolidated financial statements in this report for further information regarding income taxes.

F-14

Variable Interest Entities (“VIE”)

Certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest qualify as VIEs.  VIEs are required to be consolidated by their primary beneficiary.  The primary beneficiary of a VIE has both (i) the power to direct the activities that most significantly impact economic performance of the VIE, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We have evaluated our investments in joint ventures and determined that our joint ventures do not meet the requirements of a VIE and, therefore, consolidation of these ventures is not required. 

Noncontrolling Interest in Subsidiaries

There are third parties who have certain noncontrolling interests in the Operating Partnership that are exchangeable for our common shares on a 1:1 basis or cash, at our election.   Noncontrolling interest is classified as a separate component of equity outside of the permanent equity section of our consolidated balance sheets.  Consolidated net income and comprehensive income includes the noncontrolling interest’s share.  The calculation of earnings per share is based on income available to common shareholders.

Segment Information

Our primary business is the ownership, management, redevelopment, development and operation of retail shopping centers.  We do not distinguish our primary business or group our operations on a geographical basis for purposes of measuring performance.  We review operating and financial data for each property on an individual basis and define an operating segment as an individual property.  The individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the centers, tenants and operational processes, as well as long-term financial performance.  No one individual property constitutes more than 10% of our revenue or property operating income and none of our shopping centers is located outside the United States.  Accordingly, we have a single reportable segment for disclosure purposes.

2.  Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which expanded the scope of Topic 718, Compensation-Stock Compensation (which previously only included share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees is now substantially aligned. This standard became effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

In February 2016, the FASB issued ASC Topic 842 “Leases” (“ASU 2016-02”). ASU 2016-02 requires lessees to record operating and financing leases as assets and liabilities on the balance sheet and lessors to expense costs that are not incremental direct leasing costs. In addition, the following ASUs were subsequently issued related to ASC Topic 842, all of which were effective with ASU 2016-02:

•In January 2018, the FASB issued ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842”. The standard provides an optional transition practical expedient for the adoption of ASU 2016-02 that, if elected, does not require an organization to reconsider its accounting for existing land easements that are not currently accounted for under the old leases standard.

•In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases,” which affects narrow aspects of the guidance issued in the amendments in ASU 2016-02.

•In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and certain criteria are met. The guidance also provides an optional transition method which would allow entities to initially apply the new guidance in the period of adoption, recognizing a cumulative-effect adjustment to the opening balance of retained earnings, if necessary.

F-15

•In December 2018, the FASB issued ASU 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors,” which addresses specific issues in the leasing guidance, including sales taxes and other similar taxes collected from lessees, certain lessor costs paid directly by lessees, and recognition of variable payments for contracts with lease and non-lease components.

This standard became effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company has elected the practical expedients allowable under ASU 2018-01 and ASU 2018-11, which included the optional transition method permitting January 1, 2019 to be its initial application date. On January 1, 2019, the Company elected the single component practical expedient, which requires a lessor, by class of underlying asset, not to allocate the total consideration to the lease and non-lease components based on their relative stand-alone selling prices. This single component practical expedient requires the Company to account for the lease component and non-lease component(s) associated with that lease as a single component if (i) the timing and pattern of transfer of the lease component and the non-lease component(s) associated with it are the same and (ii) the lease component would be classified as an operating lease if it were accounted for separately. If these criteria are met, and the lease component is predominant, the lease is accounted for under ASC 842. As a result of this assessment, minimum rent and recovery income from the lease of real estate assets that qualify for this expedient are accounted for as a single component under ASC 842, with recovery income primarily as variable consideration. The Company’s operating leases commencing or modified after January 1, 2019, for which the Company is the lessor, qualify for the single component practical expedient accounting under ASC 842. Based on the Company’s election of available practical expedients, the Company’s existing operating leases whereby it is the lessor continue to be accounted for as operating leases under ASC 842. However, ASC 842 changed certain requirements regarding lease classification for lessors that could result in the Company classifying certain future leases transacted or modified subsequent to adoption of the standard, particularly long-term ground leases, as sales-type or direct financing leases as opposed to operating leases.

Prior to the adoption of ASC 842, the Company recognized tenant recovery income regardless of whether the third party was paid by the lessor or lessee. Effective January 1, 2019, such tenant recoveries are only recognized to the extent that the Company pays the third party directly and are classified as rental income on the Company’s condensed consolidated income statement. Under ASC 842, lessors are required to continually assess collectibility of lessee payments and, if operating lease payments are not probable of collection, to only recognize into income the lesser of (i) straight-line rental income or (ii) lease payments received to date. Additionally, only incremental direct leasing costs are now capitalized under this new guidance, and the Company recognized a cumulative effect adjustment of approximately $0.3 million to shareholders' equity, primarily related to certain costs associated with unexecuted leases that were deferred as of the adoption date.

For leases where the Company is a lessee, primarily the Company’s ground lease and administrative office leases, the Company recorded an operating lease liability of $16.6 million and a operating lease right-of-use asset of $18.0 million upon adoption, which were initially measured at the present value of future lease payments with consideration given to the probability of lease option exercise to determine the initial term. The right-of-use asset was recorded net of our existing straight-line rent liability and ground lease intangible asset. The present value of future lease payments was discounted using our incremental borrowing rate on a collateralized basis over a similar term in a similar environment. For leases with a term of 12 months or less, the Company has made a policy election to not recognize lease liabilities and lease assets. For our existing ground and office operating leases, we have continued to recognize straight-line rent expense within non-recoverable operating expenses and general and administrative expenses, respectively, within our condensed consolidated statement of operations and comprehensive income.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” which amends ASC 820, Fair Value Measurement. ASU 2018-13 modified the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. This standard is effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. The Company has adopted this new guidance effective on January 1, 2020, which did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04 “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. ASU 2017-04 is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. The Company has adopted this new guidance effective on January 1, 2020, which did not have a material impact on our consolidated financial statements.

F-16

In June 2016, the FASB updated Accounting Standards Codification (“ASC”) Topic 326 “Financial Instruments - Credit Losses” with ASU 2016-13 “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better inform credit loss estimates. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within that fiscal year. In addition, in November 2018 the FASB issued ASU 2018-19, which clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Company has adopted this new guidance effective on January 1, 2020, which did not have a material impact on our consolidated financial statements.

3. Real Estate

Included in our net real estate are income producing shopping center properties that are recorded at cost less accumulated depreciation and amortization, construction in process and land available for development.

Following is the detail of the construction in progress and land available for development as of December 31, 2019 and 2018:

	December 31,
	2019		2018
	(In thousands)
Construction in progress	$	13,777	$	23,747
Land available for development	28,502		29,475
Total	$	42,279	$	53,222

Construction in progress represents existing development, redevelopment and tenant build-out projects.  When projects are substantially complete and ready for their intended use, balances are transferred to land or building and improvements as appropriate.

Land available for development includes real estate projects where vertical construction has yet to commence, but which have been identified by us and are available for future development when market conditions dictate the demand for a new shopping center. The viability of all projects under construction or development, including those owned by unconsolidated joint ventures, is regularly evaluated under applicable accounting requirements, including requirements relating to abandonment of assets or changes in use. 

4. Property Acquisitions and Dispositions

Acquisitions

The following table provides a summary of our acquisitions during 2019 and 2018:

					Gross
Property Name	Location	GLA	Acreage	Date Acquired	Purchase Price		Assumed Debt
		(In thousands)			(In thousands)
2019
Lakehills Plaza	Austin, TX	76	N/A	12/06/19	$	33,922	$	—
Total acquisitions		76	—		$	33,922	$	—
2018
Leasehold Interest (West Oaks)	Novi, MI	60	N/A	01/15/18	$	6,365	$	—
Total acquisitions		60	—		$	6,365	$	—

F-17

The total aggregate fair value of the acquisitions was allocated and is reflected in the following table in accordance with accounting guidance for business combinations.  At the time of acquisition, these assets and liabilities were considered Level 3 fair value measurements:

	December 31,
	2019		2018
	(In thousands)
Land	$	17,987	$	—
Buildings and improvements	12,828		6,427
Above market leases	223		237
Lease origination costs	3,235		633
Other liabilities	—		(353)
Below market leases	(351)		(579)
Net assets acquired	$	33,922	$	6,365

Total revenue and net income for the 2019 acquisition included in our consolidated statement of operations for the year ended December 31, 2019 were $0.2 million and $0.0 million, respectively.

Unaudited Proforma Information

If the 2019 and 2018 acquisitions had occurred on January 1, 2018, our consolidated revenues and net income for the years ended December 31, 2019 and 2018 would have been as follows:

		Year Ended December 31,
		2019		2018
	(in thousands)
Consolidated revenue		$	236,533	$	263,254
Consolidated net income available to common shareholders		$	85,377	$	11,529

F-18

Dispositions

The following table provides a summary of our disposition activity during 2019 and 2018:

					Gross
Property Name	Location	GLA	Acreage	Date Sold	Sales Price		Gain (loss) on Sale
		(In thousands)			(In thousands)
2019
East Town Plaza	Madison, WI	217	N/A	02/20/19	$	13,500	$	1,169
The Shoppes at Fox River	Waukesha, WI	332	N/A	03/06/19	55,000		4,533
R2G Venture LLC - 5 Income Producing Properties (1)	FL, MI & MO	777	N/A	12/10/19	244,000		75,783
Total income producing dispositions		1,326	—		$	312,500	$	81,485
Hartland - Outparcel	Hartland, MI	N/A	1.1	06/28/19	$	875	$	371
Total outparcel dispositions		—	1.1		$	875	$	371
Total dispositions		1,326	1.1		$	313,375	$	81,856
2018
Harvest Junction North	Longmont, CO	191	N/A	12/28/18	$	33,629	$	—
Harvest Junction South	Longmont, CO	177	N/A	12/28/18	26,097		58
Jackson West	Jackson, MI	210	N/A	12/20/18	12,750		3,641
Crossroads Centre	Rossford, OH	344	N/A	12/14/18	19,931		—
Rossford Pointe	Rossford, OH	47	N/A	12/14/18	4,169		—
Jackson Crossing	Jackson, MI	420	N/A	11/14/18	25,000		—
Total income producing dispositions		1,389	—		$	121,576	$	3,699
Harvest Junction North - Outparcel	Longmont, CO	N/A	3.2	12/28/18	$	1,424	$	114
Peachtree Hills - Outparcel	Duluth, GA	N/A	1.7	05/25/18	650		—
Theatre Parcel - Hartland Town Square	Hartland, MI	N/A	7.5	04/02/18	1,450		181
Total outparcel dispositions		—	12.4		$	3,524	$	295
Total dispositions		1,389	12.4		$	125,100	$	3,994

⁽¹⁾ We contributed five previously wholly-owned properties to the newly formed joint venture, R2G Venture LLC. Refer to Note 6 of these notes to the consolidated financial statements for additional information.

5. Impairment Provisions

We established provisions for impairment for the following consolidated assets:

	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Land available for development	$	—	$	216	$	982
Income producing properties marketed for sale	—		13,434		8,422
Total	$	—	$	13,650	$	9,404

F-19

During 2018, the Company's decision to market for potential sale certain wholly-owned income producing properties resulted in an impairment provision of $13.4 million. The adjustment was triggered by changes in the associated market prices and expected hold period assumptions related to these shopping centers. During 2018, we recorded an impairment provision totaling $0.2 million on a land parcel due to higher costs related to this parcel.

During 2017, the Company's decision to market for potential sale certain wholly-owned income producing properties resulted in an impairment provision of $8.4 million. The adjustment was triggered by changes in the associated market prices and expected hold period assumptions related to these shopping centers. During 2017, changes in the expected use and changes in associated sales price assumptions related to land held for development resulted in an impairment provision of $1.0 million.

6. Equity Investments in Unconsolidated Joint Ventures

As of December 31, 2019, we had three joint venture agreements: 1) Ramco/Lion Venture LP; 2) Ramco 450 Venture LLC; and 3) Ramco HHF NP LLC, whereby we own 30%, 20%, and 7%, respectively, of the equity in each joint venture.  As of December 31, 2019, these joint ventures do not own any income producing properties. We and the joint venture partners have joint approval rights for major decisions, including those regarding property operations.  We cannot make significant decisions without our partner’s approval.  Accordingly, we account for our interest in the joint ventures using the equity method.

On December 10, 2019, we entered into a fourth joint venture agreement, R2G Venture LLC (“R2G”), with an affiliate of GIC Private Limited (“GIC”) whereby we own 51.5% of the equity in the joint venture. The Company contributed five properties valued at $244.0 million to R2G, and received $118.3 million in gross proceeds for the 48.5% stake in R2G that was acquired by GIC. Additionally, GIC has committed up to $200.0 million of additional capital to R2G over the next three years to fund its 48.5% share of up to an aggregate of $412.4 million of potential future acquisitions by R2G of grocery-anchored shopping centers in target markets in the U.S. The Company receives property management, construction management and leasing fees from R2G. The Company is also responsible for the day-to-day management of the properties as well as sourcing future acquisitions for R2G. Both GIC and RPT will have consent rights for all future acquisitions, and GIC has approval rights in connection with annual budgets and other specified major decisions. During the investment period for R2G, RPT has agreed to present all opportunities above a specified size threshold to acquire grocery-anchored shopping centers in attractive-high growth markets in the United States to R2G and not to acquire, invest in or source any such opportunities that have not previously been presented to R2G and declined by GIC. Unless specified events occur, neither the Company nor GIC will have the right to force a sale of R2G or its assets within the first five years following its formation. Thereafter, both the Company and GIC will have forced sale rights, subject to a right to participate in the purchase for the other member

Combined financial information of our unconsolidated joint ventures is summarized as follows:

	December 31,
Balance Sheets	2019		2018
	(In thousands)
ASSETS
Investment in real estate, net	$	233,531	$	22,591
Other assets	27,463		2,099
Total Assets	$	260,994	$	24,690
LIABILITIES AND OWNERS' EQUITY
Other liabilities	$	15,943	$	525
Owners' equity	245,051		24,165
Total Liabilities and Owners' Equity	$	260,994	$	24,690
RPT's equity investments in unconsolidated joint ventures	$	130,321	$	1,572

F-20

	Year Ended December 31,
Statements of Operations	2019		2018		2017
	(In thousands)
Total revenue	$	3,146	$	3,868	$	4,620
Total expenses	(2,238)		(2,671)		(3,067)
Income before other income and expense	908		1,197		1,553
Gain on sale of real estate	5,494		1,024		—
Net income	$	6,402	$	2,221	$	1,553
RPT's share of earnings from unconsolidated joint ventures	$	581	$	589	$	273

Acquisitions

The following table provides a summary of our unconsolidated joint venture property acquisitions during 2019 and 2018:

					Gross
Property Name	Location	GLA	Acreage	Date Acquired	Purchase Price		Assumed Debt
		(In thousands)			(In thousands)
2019
RPT Realty - 5 Income Producing Properties (1)	FL, MI & MO	777	N/A	12/10/19	$	244,000	$	—
Total acquisitions		777	—		$	244,000	$	—
2018
None

⁽¹⁾ The income producing properties acquired were: (1) Coral Creek Shops located in Coconut Creek, FL, (2) Mission Bay Plaza located in Boca Raton, FL, (3) The Crossroads located in Royal Palm Beach, FL, (3) The Shops at Old Orchard located in West Bloomfield, MI, and (5) Town & Country Crossing located in Town & Country, MO.

The total aggregate fair value of the acquisitions was allocated and is reflected in the following table in accordance with accounting guidance for business combinations.  At the time of acquisition, these assets and liabilities were considered Level 3 fair value measurements:

	Acquisition Date
	(In thousands)
Land	$	78,019
Buildings and improvements	155,924
Above market leases	2,326
Lease origination costs	22,776
Below market leases	(15,045)
Net assets acquired	$	244,000

F-21

Dispositions

The following table provides a summary of our unconsolidated joint venture property disposition activity during 2019 and 2018:

						Gross
Property Name	Location	GLA	Ownership %		Date Sold	Gross Sales Price		Gain on Sale (at 100%)
		(In thousands)				(In thousands)
2019
Nora Plaza	Indianapolis, IN	140	7	%	8/16/19	$	29,000	$	5,494
		140				$	29,000	$	5,494
RPT's proportionate share of gross sales price and gain on sale of joint venture property						$	2,030	$	385
2018
Martin Square	Stuart, FL	330	30	%	7/18/18	$	22,000	$	1,024
		330				$	22,000	$	1,024
RPT's proportionate share of gross sales price and gain on sale of joint venture property						$	6,600	$	307

The Company recorded an other gain on unconsolidated joint ventures for the year ended December 31, 2019 of $0.2 million which represents the excess of the net cash distributed to it from the Nora Plaza disposition and its proportionate share of the remaining equity in the unconsolidated joint venture.

Joint Venture Management and Other Fee Income

We are engaged by certain of our joint ventures, which we consider to be related parties, to provide asset management, property management, leasing and investing services for such ventures' respective properties.  We receive fees for our services, including property management fees calculated as a percentage of gross revenues received and recognize these fees as the services are rendered.

The following table provides information for our fees earned which are reported in our consolidated statements of operations:

	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Management fees	$	137	$	159	$	276
Leasing fees	2		40		146
Acquisition/disposition fees	67		55		33
Construction fees	24		—		—
Total	$	230	$	254	$	455

F-22

7. Other Assets, Net and Acquired Lease Intangible Assets, Net

Other assets, net consisted of the following:

	December 31,
	2019		2018
	(In thousands)
Deferred leasing costs, net	$	30,442	$	36,385
Deferred financing costs on unsecured revolving credit facility, net	2,659		1,966
Acquired development agreements (1)	18,017		19,061
Ground leasehold intangible	—		2,148
Other, net	9,031		3,249
Total amortizable other assets	60,149		62,809
Straight-line rent receivable, net	19,605		21,225
Goodwill	2,089		2,089
Cash flow hedge mark-to-market asset	2,331		4,115
Prepaid and other deferred expenses, net	2,662		2,874
Other assets, net	$	86,836	$	93,112

⁽¹⁾Represents in-place public improvement agreement of approximately $13.7 million and real estate tax exemption agreement of approximately $4.3 million associated with two properties acquired in 2014.

Straight-line rent receivables are recorded net of allowances of $1.8 million and $2.3 million at December 31, 2019 and 2018, respectively.

Acquired lease intangible assets, net consisted of the following:

	December 31,
	2019		2018
	(In thousands)
Lease originations costs	$	66,557	$	79,890
Above market leases	4,840		6,982
	71,397		86,872
Accumulated amortization	(37,119)		(42,440)
Acquired lease intangibles, net	$	34,278	$	44,432

Acquired lease intangible assets have a remaining weighted-average amortization period of 10.6 years as of December 31, 2019.  These intangible assets are being amortized over the terms of the applicable lease.  Amortization of lease origination costs is an increase to amortization expense and amortization of above-market leases is a reduction to rental income over the applicable terms of the respective leases. Amortization of the above market lease asset resulted in a reduction of revenue of approximately $0.8 million, $1.6 million, and $2.0 million for the years ended December 31, 2019, 2018, and 2017, respectively.

F-23

Combined, amortizable other assets, net and acquired lease intangibles, net totaled $94.4 million. The following table represents estimated aggregate amortization expense related to those assets as of December 31, 2019:

Year Ending December 31,
	(In thousands)
2020	$	14,983
2021	12,975
2022	10,562
2023	9,722
2024	6,822
Thereafter	39,363
Total	$	94,427

8. Debt

The following table summarizes our mortgages, notes payable and finance lease obligation as of December 31, 2019 and 2018:

	December 31,
	2019		2018
	(In thousands)
Senior unsecured notes	$	535,000	$	610,000
Unsecured term loan facilities	310,000		210,000
Fixed rate mortgages	87,581		115,134
Unsecured revolving credit facility	—		—
Junior subordinated notes	—		28,125
	932,581		963,259
Unamortized premium	1,995		2,948
Unamortized deferred financing costs	(3,768)		(3,058)
	$	930,808	$	963,149
Finance lease obligation	$	926	$	975

Senior Unsecured Notes

On November 6, 2019, we repaid $100.0 million which constituted repayment in full of the Operating Partnership's $50.0 million 4.16% senior unsecured notes due 2024 and its $50.0 million 4.30% senior unsecured notes due 2026, each issued pursuant to the note purchase agreement dated September 8, 2014, as amended. Accordingly, on November 6, 2019, all outstanding notes and other obligations of the Operating Partnership and guarantors under such note purchase agreement were paid and satisfied. In conjunction with this early repayment, we wrote off unamortized deferred financings costs of $0.1 million, which is included as loss on extinguishment of debt in the consolidated statement of operations and comprehensive income.

On December 27, 2019, we entered into a note purchase agreement with the institutional investors named therein and closed a private placement of the Operating Partnership’s $50.0 million aggregate principal amount of 4.15% Senior Guaranteed Notes due December 27, 2029 pursuant thereto. Such notes are unsecured and are guaranteed by the Company and certain subsidiaries of the Operating Partnership. The notes have an annual fixed interest rate of 4.15% and mature on December 27, 2029. A portion of the proceeds were used to repay the Operating Partnership's $25.0 million aggregate principal amount of 4.13% Series A Notes due 2022 for an aggregate amount of $26.4 million, which included a prepayment penalty of $1.4 million. In conjunction with this early repayment, we wrote off unamortized deferred financings costs of $0.1 million, which is included as loss on extinguishment of debt in the consolidated statement of operations. A portion of the proceeds were also used to repay the 6.50% fixed rate mortgage loan encumbering West Oaks II and Spring Meadows Place, with an aggregate principal balance of $24.9 million.

F-24

The following table summarizes the Company's senior unsecured notes:

		December 31, 2019				December 31, 2018
Senior Unsecured Notes	Maturity Date	Principal Balance		Interest Rate/Weighted Average Interest Rate		Principal Balance		Interest Rate/Weighted Average Interest Rate
		(in thousands)				(in thousands)
Senior unsecured notes - 3.75% due 2021	6/27/2021	$	37,000	3.75	%	$	37,000	3.75	%
Senior unsecured notes - 4.13% due 2022	12/21/2022	—		—	%	25,000		4.13	%
Senior unsecured notes - 4.12% due 2023	6/27/2023	41,500		4.12	%	41,500		4.12	%
Senior unsecured notes - 4.65% due 2024	5/28/2024	50,000		4.65	%	50,000		4.65	%
Senior unsecrued notes - 4.16% due 2024	11/4/2024	—		—	%	50,000		4.16	%
Senior unsecured notes - 4.05% due 2024	11/18/2024	25,000		4.05	%	25,000		4.05	%
Senior unsecured notes - 4.27% due 2025	6/27/2025	31,500		4.27	%	31,500		4.27	%
Senior unsecured notes - 4.20% due 2025	7/6/2025	50,000		4.20	%	50,000		4.20	%
Senior unsecured notes - 4.09% due 2025	9/30/2025	50,000		4.09	%	50,000		4.09	%
Senior unsecured notes - 4.74% due 2026	5/28/2026	50,000		4.74	%	50,000		4.74	%
Senior unsecured notes - 4.30% due 2026	11/4/2026	—		—	%	50,000		4.30	%
Senior unsecured notes - 4.28% due 2026	11/18/2026	25,000		4.28	%	25,000		4.28	%
Senior unsecured notes - 4.57% due 2027	12/21/2027	30,000		4.57	%	30,000		4.57	%
Senior unsecured notes - 3.64% due 2028	11/30/2028	75,000		3.64	%	75,000		3.64	%
Senior unsecured notes - 4.72% due 2029	12/21/2029	20,000		4.72	%	20,000		4.72	%
Senior unsecured notes - 4.15% due 2029	12/27/2029	50,000		4.15	%	—		—	%
		$	535,000	4.20	%	$	610,000	4.21	%
Unamortized deferred financing costs		(1,460)				(1,546)
	Total	$	533,540			$	608,454

Unsecured Term Loan Facilities and Revolving Credit Facility

On November 6, 2019, the Operating Partnership entered into a Fifth Amended and Restated Credit Agreement (the “credit agreement”) which consists of an unsecured revolving credit facility (the “revolving credit facility”) of up to $350.0 million and term loan facilities of $310.0 million (the “term loan facilities” and, together with the revolving credit facility, the “unsecured revolving line of credit”). The revolving credit facility matures on November 6, 2023 and can be extended for up to one year to 2024 through two six-month options, subject to continued compliance with the terms of the credit agreement and the payment of an extension fee of 0.075%. Borrowings on the revolving credit facility are priced on a leverage grid ranging from LIBOR plus 105 basis points to LIBOR plus 150 basis points.

The term loan facilities mature in five separate tranches ranging from March 3, 2023 to February 5, 2027 and are priced on a leverage grid ranging from LIBOR plus 120 basis points to LIBOR plus 220 basis points. The credit agreement allows for the right to request increases in the revolving and term loan commitments or the making of additional term loans by up to an additional $340.0 million to a maximum aggregate amount not to exceed $1.0 billion. A portion of the proceeds from the restated credit agreement were used to repay our $75.0 million term loan due 2020 and our $75.0 million term loan due 2021 for an aggregate amount of $150.0 million. In conjunction with this early repayment, we wrote off deferred financing costs of $0.3 million, which is included as loss on extinguishment of debt in the consolidated statement of operations and comprehensive income.

F-25

The following table summarizes the Company's unsecured term loan facilities and revolving credit facility:

		December 31, 2019				December 31, 2018
Unsecured Credit Facilities	Maturity Date	Principal Balance		Interest Rate/Weighted Average Interest Rate		Principal Balance		Interest Rate/Weighted Average Interest Rate
		(in thousands)				(in thousands)
Unsecured term loan due 2020	5/16/2020	$	—	—	%	$	75,000	2.99	%
Unsecured term loan due 2021	5/29/2021	—		—	%	75,000		2.84	%
Unsecured term loan due 2023 - fixed rate (1)	3/3/2023	60,000		2.97	%	60,000		3.42	%
Unsecured term loan due 2024	11/6/2024	50,000		2.91	%	—		—	%
Unsecured term loan due 2025 - fixed rate (2)	2/6/2025	50,000		2.66	%	—		—	%
Unsecured term loan due 2026	11/6/2026	50,000		3.31	%	—		—	%
Unsecured term loan due 2027 - fixed rate (3)	2/5/2027	100,000		3.25	%	—		—	%
		$	310,000	3.06	%	$	210,000	3.06	%
Unamortized deferred financing costs		(2,308)				(808)
Term loans, net		$	307,692			$	209,192
Revolving credit facility - variable rate	11/6/2023	$	—	2.80	%	$	—	3.81	%

⁽¹⁾Swapped to a weighted average fixed rate of 1.77%, plus a credit spread of 1.20%, based on a leverage grid at December 31, 2019.

⁽²⁾Swapped to a weighted average fixed rate of 1.46%, plus a credit spread of 1.20%, based on a leverage grid at December 31, 2019.

⁽³⁾Swapped to a weighted average fixed rate of 1.65%, plus a credit spread of 1.60%, based on a leverage grid at December 31, 2019.

As of December 31, 2019, we had no balance outstanding under our revolving credit facility.  Borrowings on the revolving credit facility are priced on a leverage grid ranging from LIBOR plus 105 basis points to LIBOR plus 150 basis points. At December 31, 2019 borrowings were priced at LIBOR plus 110 basis points. After adjusting for outstanding letters of credit issued under our revolving credit facility, not reflected in the accompanying consolidated balance sheets, totaling $0.2 million, we had $349.8 million of availability under our revolving credit facility as of December 31, 2019, subject to compliance with applicable covenants. The interest rate as of December 31, 2019 was 2.80%.

Mortgages

On December 31, 2019, the Company repaid a mortgage note secured by West Oaks II and Spring Meadows Place totaling $24.2 million with an interest rate of 6.50%.

The following table summarizes the Company's fixed rate mortgages:

		December 31, 2019				December 31, 2018
Mortgage Debt	Maturity Date	Principal Balance		Interest Rate/Weighted Average Interest Rate		Principal Balance		Interest Rate/Weighted Average Interest Rate
		(in thousands)				(in thousands)
West Oaks II and Spring Meadows Place	4/1/2020	$	—	—	%	$	25,804	6.50	%
Bridgewater Falls Shopping Center	2/6/2022	53,423		5.70	%	54,514		5.70	%
The Shops on Lane Avenue	1/10/2023	28,650		3.76	%	28,650		3.76	%
Nagawaukee II	6/1/2026	5,508		5.80	%	6,166		5.80	%
		$	87,581	5.07	%	$	115,134	5.40	%
Unamortized premium		1,995				2,948
Unamortized deferred financing costs		—				(73)
Total		$	89,576			$	118,009

The fixed rate mortgages are secured by properties that have an approximate net book value of $151.4 million as of December 31, 2019.

F-26

The mortgage loans encumbering our properties are generally nonrecourse, subject to certain exceptions for which we would be liable for any resulting losses incurred by the lender.  These exceptions vary from loan to loan but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly and certain environmental liabilities.  In addition, upon the occurrence of certain events, such as fraud or filing of a bankruptcy petition by the borrower, we or our joint ventures would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses.

Junior Subordinated Notes

On April 30, 2019, we redeemed all of our outstanding junior subordinated notes due 2038, which accrued interest at a variable rate of LIBOR plus 3.30% for an aggregate purchase price of $28.6 million, consisting of the outstanding principal amount and accrued and unpaid interest as of the redemption date. In conjunction with this redemption, we wrote off unamortized deferred financing costs of $0.6 million, which is included as loss on extinguishment of debt in the consolidated statement of operations and comprehensive income.

Finance lease

At December 31, 2019 we had a finance ground lease at our Buttermilk Towne Center with the City of Crescent Springs, Kentucky with a gross carrying value of $13.2 million classified as land. Total amounts expensed as interest relating to this lease were $0.1 million for each of the years ended December 31, 2019, 2018, and 2017.

Covenants

Our revolving credit facility, senior unsecured notes and term loan facilities contain financial covenants relating to total leverage, fixed charge coverage ratio, interest coverage, tangible net worth, levels of secured debt to total asset value and various other calculations.  As of December 31, 2019, management believes we were in compliance with these covenants.

The following table presents scheduled principal payments on mortgages and notes payable and capital lease payments as of December 31, 2019:

Year Ending December 31,	Principal Payments		Finance Lease Payments
	(In thousands)
2020	$	2,326	$	100
2021	39,508		100
2021	52,397		100
2023	129,388		100
2024	125,879		100
Thereafter	583,083		800
Subtotal debt	932,581		1,300
Unamortized mortgage premium	1,995		—
Unamortized deferred financing costs	(3,768)		—
Amounts representing interest	—		(374)
Total	$	930,808	$	926

F-27

9. Acquired Lease Intangible Liabilities, Net

Acquired lease intangible liabilities, net were $38.9 million and $48.6 million as of December 31, 2019 and 2018, respectively. The lease intangible liabilities relate to below-market leases and are being accreted over the applicable terms of the acquired leases, which resulted in an increase in revenue of $7.6 million, $11.4 million, and $6.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

We completed one acquisition in 2019 and the purchase price allocation included $0.4 million of acquired lease intangible liabilities.

10.  Fair Value

We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.  Derivative instruments (interest rate swaps) are recorded at fair value on a recurring basis. Additionally, we, from time to time, may be required to record other assets at fair value on a nonrecurring basis.  As a basis for considering market participant assumptions in fair value measurements, GAAP establishes three fair value levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.  The assessed inputs used in determining any fair value measurement could result in incorrect valuations that could be material to our consolidated financial statements. These levels are:

Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.

The following is a description of valuation methodologies used for our assets and liabilities recorded at fair value.

Derivative Assets and Liabilities

All of our derivative instruments are interest rate swaps for which quoted market prices are not readily available.  For those derivatives, we measure fair value on a recurring basis using valuation models that use primarily market observable inputs, such as yield curves.  We classify derivative instruments as Level 2.  Refer to Note 11 of notes to the consolidated financial statements for additional information on our derivative financial instruments.

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018:

	Balance Sheet Location	Total Fair Value		Level 1		Level 2		Level 3
2019		(In thousands)
Derivative assets - interest rate swaps	Other assets	$	2,331	$	—	$	2,331	$	—
Derivative liabilities - interest rate swaps	Other liabilities	$	(469)	$	—	$	(469)	$	—
2018
Derivative assets - interest rate swaps	Other assets	$	4,115	$	—	$	4,115	$	—
Derivative liabilities - interest rate swaps	Other liabilities	$	—	$	—	$	—	$	—

Other Assets and Liabilities

The carrying values of cash and cash equivalents, restricted cash, receivables and accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments.

F-28

Debt

We estimated the fair value of our debt based on our incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt.  The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assumes the debt is outstanding through maturity and considers the debt’s collateral (if applicable).  Since such amounts are estimates that are based on limited available market information for similar transactions, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument.  Fixed rate debt (including variable rate debt swapped to fixed through derivatives) with carrying values of $832.6 million and $935.1 million as of December 31, 2019 and 2018, respectively, have fair values of approximately $848.2 million and $928.2 million, respectively.  Variable rate debt’s fair value is estimated to be the carrying values of $100.0 million and $28.1 million as of December 31, 2019 and 2018, respectively. We classify our debt as Level 2.

Net Real Estate

Our net real estate, including any identifiable intangible assets, are regularly subject to impairment testing but marked to fair value on a nonrecurring basis.  To estimate fair value, we use discounted cash flow models that include assumptions of the discount rates that market participants would use in pricing the asset. To the extent impairment has occurred, we charge to expense the excess of the carrying value of the property over its estimated fair value.  We classify impaired real estate assets as nonrecurring Level 3.

The table below presents the recorded amount of assets at the time they were marked to fair value during the years ended December 31, 2019 and 2018 on a nonrecurring basis. We did not have any material liabilities that were required to be measured at fair value on a nonrecurring basis during the years ended December 31, 2019 and 2018:

Assets	Total Fair Value		Level 1		Level 2		Level 3		Total Impairment
	(In thousands)
2019
None
2018
Income producing properties	$	85,185	$	—	$	—	$	85,185	$	(13,434)
Land available for sale	610		—		—		610		(216)
Total	$	85,795	$	—	$	—	$	85,795	$	(13,650)

Equity Investments in Unconsolidated Entities

Our equity investments in unconsolidated joint venture entities are subject to impairment testing on a nonrecurring basis if a decline in the fair value of the investment below the carrying amount is determined to be a decline that is other-than-temporary.  To estimate the fair value of properties held by unconsolidated entities, we use cash flow models, discount rates, and capitalization rates based upon assumptions of the rates that market participants would use in pricing the asset.  To the extent other-than-temporary impairment has occurred, we charge to expense the excess of the carrying value of the equity investment over its estimated fair value.  We classify other-than-temporarily impaired equity investments in unconsolidated entities as nonrecurring Level 3.

F-29

11.  Derivative Financial Instruments

We utilize interest rate swap agreements for risk management purposes to reduce the impact of changes in interest rates on our variable rate debt. We may also enter into forward starting swaps to set the effective interest rate on planned variable rate financing.  On the date we enter into an interest rate swap, the derivative is designated 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 designated as a cash flow hedge that is determined to be highly effective are recorded in other comprehensive income (“OCI”) until earnings are affected by the variability of cash flows of the hedged transaction. The differential between fixed and variable rates to be paid or received is accrued, as interest rates change, and recognized currently as interest expense in our consolidated statements of operations.  We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis.  Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. At December 31, 2019, all of our hedges were effective.

In July 2017, the Financial Conduct Authority, the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates, or financing costs to borrowers. We have material contracts that are indexed to USD-LIBOR, and we are monitoring this activity and evaluating the related risks.

As of December 31, 2019, we had seven interest rate swap agreements in effect for an aggregate notional amount of $210.0 million converting our floating rate corporate debt to fixed rate debt. Additionally, in August 2019, we entered into five forward starting interest rate swap agreements for an aggregate notional amount of $150.0 million.

The following table summarizes the notional values and fair values of our derivative financial instruments as of December 31, 2019:

Underlying Debt	Hedge Type	Notional Value		Fixed Rate		Fair Value		Expiration Date
		(In thousands)				(In thousands)
Derivative Assets
Unsecured term loan	Cash Flow	$	50,000	1.460	%	$	42	05/2020
Unsecured term loan	Cash Flow	20,000		1.498	%	21		05/2021
Unsecured term loan	Cash Flow	15,000		1.490	%	18		05/2021
Unsecured term loan	Cash Flow	40,000		1.480	%	52		05/2021
		$	125,000			$	133
Derivative Assets - Forward Swaps
Unsecured term loan	Cash Flow	$	25,000	1.310	%	$	311	01/2025
Unsecured term loan	Cash Flow	25,000		1.324	%	297		01/2025
Unsecured term loan	Cash Flow	50,000		1.382	%	797		01/2027
Unsecured term loan	Cash Flow	25,000		1.398	%	381		01/2027
Unsecured term loan	Cash Flow	25,000		1.402	%	412		01/2027
Total Derivative Assets		$	275,000			$	2,331
Derivative Liabilities
Unsecured term loan	Cash Flow	$	15,000	2.150	%	$	(26)	05/2020
Unsecured term loan	Cash Flow	10,000		2.150	%	(17)		05/2020
Unsecured term loan	Cash Flow	60,000		1.770	%	(426)		03/2023
Total Derivative Liabilities		$	85,000			$	(469)

F-30

The following table summarizes the notional values and fair values of our derivative financial instruments as of December 31, 2018:

Underlying Debt	Hedge Type	Notional Value		Fixed Rate		Fair Value		Expiration Date
		(In thousands)				(In thousands)
Derivative Assets
Unsecured term loan	Cash Flow	$	15,000	2.150	%	$	77	05/2020
Unsecured term loan	Cash Flow	10,000		2.150	%	51		05/2020
Unsecured term loan	Cash Flow	50,000		1.460	%	726		05/2020
Unsecured term loan	Cash Flow	20,000		1.498	%	449		05/2021
Unsecured term loan	Cash Flow	15,000		1.490	%	340		05/2021
Unsecured term loan	Cash Flow	40,000		1.480	%	914		05/2021
Unsecured term loan	Cash Flow	60,000		1.770	%	1,558		03/2023
Total Derivative Assets		$	210,000			$	4,115

The effect of derivative financial instruments on our consolidated statements of operations and comprehensive income for the years ended December 31, 2019 and 2018 is summarized as follows:

	Amount of Gain (Loss) Recognized in OCI on Derivative				Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Derivatives in Cash Flow Hedging Relationship	Year Ended December 31,					Year Ended December 31,
	2019		2018			2019		2018
	(In thousands)					(In thousands)
Interest rate contracts - assets	$	(2,950)	$	360	Interest Expense	$	1,166	$	623
Interest rate contracts - liabilities	(620)		246		Interest Expense	151		(39)
Total	$	(3,570)	$	606	Total	$	1,317	$	584

12. Leases

Revenues

Approximate future minimum revenues from rentals under non-cancelable operating leases in effect at December 31, 2019, assuming no new or renegotiated leases or option extensions on lease agreements and no early lease terminations were as follows:

Year Ending December 31,
	(In thousands)
2020	$	156,247
2021	140,599
2022	118,922
2023	98,236
2024	79,631
Thereafter	261,228
Total	$	854,863

We recognized rental income related to variable lease payments of $51.3 million for the year ended December 31, 2019.

F-31

Substantially all of the assets included as income producing properties, net on the consolidated balance sheets, relate to our portfolio of wholly owned shopping centers, in which we are the lessor under operating leases with our tenants. As of December 31, 2019, the Company’s aggregate portfolio was 94.7% leased.

Approximate future minimum revenues from rentals under non-cancelable operating leases in effect at December 31, 2018, assuming no new or renegotiated leases or option extensions on lease agreements and no early lease terminations were as follows:

Year Ending December 31,
	(In thousands)
2019	$	165,132
2020	152,065
2021	132,928
2022	110,472
2023	89,124
Thereafter	286,226
Total	$	935,947

Expenses

We have operating leases for our corporate office in New York, New York and our Southfield, Michigan office, that expire in January 2024 and December 2024, respectively. Our operating lease in New York includes an additional five year renewal and our operating lease in Southfield includes two additional five year renewals which are all exercisable at our option. We also have an operating ground lease at Centennial Shops located in Edina, Minnesota which includes rent escalations throughout the lease period and expires in April 2105. In addition, we have a finance ground lease at our Buttermilk Towne Center with the City of Crescent Springs that expires in December 2032. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expenses for these leases on a straight-line basis over the lease term.

The components of lease expense were as follows:

		Year Ended December 31,
Statements of Operations	Classification	2019		2018		2017
		(In thousands)
Operating ground lease cost	Non-recoverable operating expense	$	1,162	$	1,162	$	1,162
Operating administrative lease cost	General and administrative expense	859		733		616
Finance lease cost	Interest Expense	51		53		55

F-32

Supplemental balance sheet information related to leases is as follows:

Balance Sheet	Classification	December 31, 2019
		(In thousands)
ASSETS
Operating lease assets	Operating lease right-of-use assets	$	19,222
Finance lease asset	Land	13,249
Total leased assets		$	32,471
LIABILITIES
Operating lease liabilities	Operating lease liabilities	$	18,181
Finance lease liability	Finance lease liability	926
Total lease liabilities		$	19,107
Weighted Average Remaining Lease Terms
Operating leases		70 years
Finance lease		13 years
Weighted Average Incremental Borrowing Rate
Operating leases		6.06		%
Finance lease		5.23		%

Supplemental cash flow information related to leases is as follows:

	Year Ended December 31, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,677
Operating cash flows from finance lease	51
Financing cash flows from finance lease	49

Maturities of lease liabilities as of December 31, 2019 were as follows:

Maturity of Lease Liabilities	Operating Leases		Finance Lease
	(In thousands)
2020	$	1,456	$	100
2021	1,469		100
2022	1,482		100
2023	1,495		100
2024	1,118		100
Thereafter	95,478		800
Total lease payments	$	102,498	$	1,300
Less imputed interest	(84,317)		(374)
Total	$	18,181	$	926

F-33

Approximate future rental payments at December 31, 2018, under our non-cancelable operating leases, assuming no option extensions are as follows:

Year Ending December 31,
	(In thousands)
2019	$	1,631
2020	1,243
2021	1,252
2022	1,262
2023	1,272
Thereafter	94,463
Total	$	101,123

13. Earnings per Common Share

The following table sets forth the computation of basic earnings per share (“EPS”):

	Year Ended December 31,
	2019		2018		2017
	(In thousands, except per share data)
Net income	$	93,686	$	18,036	$	70,719
Net (income) attributable to noncontrolling interest	(2,175)		(417)		(1,659)
Preferred share dividends and conversion costs	(6,701)		(6,701)		(6,701)
Allocation of income to restricted share awards	(533)		(460)		(429)
Net income available to common shareholders	$	84,277	$	10,458	$	61,930
Weighted average shares outstanding, Basic	79,802		79,592		79,344
Earnings per common share, Basic	$	1.06	$	0.13	$	0.78

The following table sets forth the computation of diluted EPS:

	Year Ended December 31,
	2019		2018		2017
	(In thousands, except per share data)
Net income	$	93,686	$	18,036	$	70,719
Net (income) attributable to noncontrolling interest	(2,175)		(417)		(1,659)
Preferred share dividends and conversion costs (1)	—		(6,701)		(6,701)
Allocation of income to restricted share awards	(533)		(460)		(429)
Net income available to common shareholders	$	90,978	$	10,458	$	61,930
Weighted average shares outstanding, Basic	79,802		79,592		79,344
Restricted share awards using the treasury method	939		496		186
Dilutive effect of securities (1)	6,981		—		—
Weighted average shares outstanding, Diluted	87,722		80,088		79,530
Earnings per common share, Diluted	$	1.04	$	0.13	$	0.78

⁽¹⁾ The assumed conversion of preferred shares is dilutive for the year ended December 31, 2019 and anti-dilutive for all other periods presented.

F-34

We exclude certain securities from the computation of diluted earnings per share. The following table presents the outstanding securities that were excluded from the computation of diluted earnings per share and the number of common shares each was convertible into (in thousands):

	Year Ended December 31,
	2019		2018		2017
	Issued	Converted	Issued	Converted	Issued	Converted
Operating Partnership Units	1,909	1,909	1,909	1,909	1,916	1,916
Series D Preferred Shares	—	—	1,849	6,858	1,849	6,740
Performance Share Units	—	—	—	—	98	—
	1,909	1,909	3,758	8,767	3,863	8,656

14. Shareholders’ Equity

Underwritten public offerings

We did not complete any underwritten public offerings in 2019, 2018 or 2017.

Controlled equity offerings

In June 2016, we commenced an at-the-market equity program pursuant to which we could sell up to 8.0 million common shares from time to time, in our sole discretion. The sale of such shares issuable pursuant to the distribution agreement was registered with the SEC on our registration statement on Form S-3, which expired in June 2019. We issued no shares under the program in either 2019 or 2018.

Non-Controlling Interests

As of December 31, 2019, 2018 and 2017 we had 1,909,018, 1,909,018 and 1,916,403 OP Units outstanding, respectively. OP Unit holders are entitled to exchange their units for our common shares on a 1:1 basis or for cash.  The form of payment is at our election. During 2018 and 2017, there were 7,385 and 926 OP Units converted for cash in the amount of $0.1 million and $0.0 million, respectively. During 2019 there were no units converted for cash.

Preferred Shares

As of December 31, 2019, 2018 and 2017 we had 1,848,539 shares of 7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest (“Preferred Shares”), outstanding that have a liquidation preference of $50 per share and a par value of $0.01 per share. The Preferred Shares were convertible at any time by the holders to our common shares at a conversion rate of $13.24, $13.48 and $13.71 per share as of December 31, 2019, 2018 and 2017, respectively. The conversion rate is adjusted quarterly. The Preferred Shares are also convertible under certain circumstances at our election. The holders of the Preferred Shares have no voting rights. At December 31, 2019, 2018, and 2017, the Preferred Shares were convertible into approximately 7.0 million, 6.9 million and 6.7 million shares of common stock, respectively.

The following table provides a summary of dividends declared and paid per share:

	Year Ended December 31,
	2019				2018				2017
	Declared		Paid		Declared		Paid		Declared		Paid
Common shares	$	0.880	$	0.880	$	0.880	$	0.880	$	0.880	$	0.880
Preferred shares	$	3.625	$	3.625	$	3.625	$	3.625	$	3.625	$	3.625

F-35

A summary of the income tax status of dividends per share paid is as follows:

	Year Ended December 31,
	2019		2018		2017
Common shares
Ordinary dividend (1)	$	0.250	$	0.214	$	0.686
Capital gain distribution	0.376		—		0.034
Non-dividend distribution	0.254		0.666		—
	$	0.880	$	0.880	$	0.720
Perpetual Preferred Shares
Ordinary dividend (1)	$	1.448	$	3.482	$	2.725
Capital gain distribution	2.177		—		0.137
	$	3.625	$	3.482	$	2.862

⁽¹⁾ Represents qualified REIT dividends that may be eligible for the 20% qualified business income deduction under Section 199A of the Internal Revenue Code if 1986, as amended, that is available for non-corporate taxpayers and is included in "Ordinary Dividends".

The fourth quarter common shares distribution for 2019, which was paid on January 2, 2020, has been treated as paid on January 2, 2020 for income tax purposes. The fourth quarter distribution for 2018 which was paid on January 2, 2019, has been treated as paid on January 2, 2019 for income tax purposes.

The fourth quarter Preferred Shares distribution for 2019, which was paid on January 2, 2020, has been treated as paid on January 2, 2020 for income tax purposes. The fourth quarter preferred shares distribution for 2018, which was paid on January 2, 2019 has been treated as paid on January 2, 2019 for income tax purposes.

Dividend reinvestment plan

We have a dividend reinvestment plan that allows for participating shareholders to have their dividend distributions automatically invested in additional common shares based on the average price of the shares acquired for the distribution.

15.  Share-Based Compensation and Other Benefit Plans

Incentive, Inducement and Stock Option Plans

As of December 31, 2019, we have two share-based compensation plans in effect: 1) the 2019 Omnibus Long-Term Incentive Plan (“2019 LTIP”) and 2) the Inducement Incentive Plan (“Inducement Plan”). On April 29, 2019, our shareholders approved the 2019 LTIP, which replaced the 2012 Omnibus Long-Term Incentive Plan (“2012 LTIP”). The 2019 LTIP is administered by the compensation committee of the Board (the “Compensation Committee”). The 2019 LTIP provides for the award to our trustees, officers, employees and other service providers of restricted shares, restricted share units, options to purchase shares, share appreciation rights, unrestricted shares, and other awards to acquire up to an aggregate of 3.5 million common shares of beneficial interest plus any shares that become available under the 2012 LTIP as a result of the forfeiture, expiration or cancellation of outstanding awards or any award settled in cash in lieu of shares under such plan. As of December 31, 2019, there were 3.4 million shares of beneficial interest available for issuance under the 2019 LTIP. The Inducement Plan was approved by the Board in April 2018 and under such plan the Compensation Committee may grant, subject to any Company performance conditions as specified by the Compensation Committee, restricted shares, restricted share units, options and other awards to individuals who were not previously employees or members of the Board as an inducement to the individual's entry into employment with the Company. The Inducement Plan allows us to issue up to 6.0 million common shares, of which 5.4 million common shares remained available for issuance as of December 31, 2019; however, we do not intend to make further awards under the Inducement Plan following adoption of the 2019 LTIP.

F-36

The following share-based compensation plans have been terminated, except with respect to awards currently outstanding under each plan:

•2012 LTIP which allowed for the grant of restricted shares, restricted share units, options and other awards to trustees, officers and other key employees;

•The 2009 Omnibus Long-Term Incentive Plan (“2009 LTIP”) which allowed for the grant of restricted shares, restricted share units, options and other awards to trustees, officers and other key employees; and

•The 2008 Restricted Share Plan for Non-Employee Trustees (the "Trustees' Plan") which allowed for the grant of restricted shares to non-employee trustees of the Company.

We recognized total share-based compensation expense of $6.5 million, $6.7 million, and $4.4 million for 2019, 2018, and 2017, respectively.

Restricted Stock Share-Based Compensation

Under the 2012 LTIP, Inducement Plan and 2019 LTIP, the Company has made grants of service-based restricted shares, performance-based cash awards and performance-based equity awards.

The service-based restricted share awards to employees vest over three years or five years and the compensation expense is recognized on a graded vesting basis. The service-based restricted share awards to trustees vest over one year.  We recognized expense related to service-based restricted share grants of $3.5 million for the year ended December 31, 2019, $4.7 million for year ended December 31, 2018 and $2.7 million for the year ended December 31, 2017.

A summary of the activity of service-based restricted shares under the 2012 LTIP, the Inducement Plan and the 2019 LTIP for the years ended December 31, 2019, 2018 and 2017 is presented below:

	2019			2018			2017
	Number of Shares	Weighted- Average Grant Date Fair Value		Number of Shares	Weighted- Average Grant Date Fair Value		Number of Shares	Weighted- Average Grant Date Fair Value
Outstanding, beginning of the year	354,029	$	13.05	412,195	$	15.58	327,543	$	17.02
Granted	272,711	12.10		492,871	12.99		210,895	14.22
Vested	(174,343)	13.04		(478,863)	13.57		(119,134)	16.66
Forfeited or expired	(2,754)	13.16		(72,174)	13.96		(7,109)	14.75
Outstanding, end of the year	449,643	$	12.40	354,029	$	13.05	412,195	$	15.58

As of December 31, 2019, we had 65,481 unvested service-based share awards outstanding under the 2019 LTIP, 145,952 unvested service-based share awards outstanding under the Inducement Plan, and 238,210 unvested service-based share awards outstanding under the 2012 LTIP. These awards have various expiration dates through March 2023.

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The performance-based awards are earned subject to a future performance measurement based on a three-year shareholder return peer comparison (the “TSR Grants”). Pursuant to ASC 718 – Stock Compensation, we determine the grant date fair value of TSR Grants that will be settled in cash, and any subsequent re-measurements, based upon a Monte Carlo simulation model.  We will recognize the compensation expense ratably over the requisite service period.  We are required to re-value the cash awards at the end of each quarter using the same methodology as was used at the initial grant date and adjust the compensation expense accordingly.  If at the end of the three-year measurement period the performance criterion is not met, compensation expense related to the cash awards previously recognized would be reversed. We recognized compensation expense of $1.1 million, $0.9 million and $1.5 million related to these performance awards recorded during the years ended December 31, 2019, 2018 and 2017, respectively. The weighted average assumptions used in the Monte Carlo simulation models are summarized in the following table:

	December 31, 2019		December 31, 2018
Closing share price	$15.04		$11.95
Expected dividend rate	5.9	%	7.4	%
Expected stock price volatility	22.6	%	24.9	%
Risk-free interest rate	1.6	%	2.6	%
Expected life (years)	2.00		1.00

The Company also determines the grant date fair value of the TSR Grants that will be settled in equity based upon a Monte Carlo simulation model and recognizes the compensation expense ratably over the requisite service period. These equity awards are not re-valued at the end of each quarter. The compensation cost will be recognized regardless of whether the performance criterion are met, provided the requisite service has been provided. We recognized compensation expense of $1.9 million, $1.1 million, and $0.2 million related to these performance awards recorded during the years ended December 31, 2019 2018 and 2017, respectively. The fair value of each grant for the reported periods is estimated on the date of grant using the Monte Carlo simulation model using the weighted average assumptions noted in the following table:

	Year Ended December 31,
	2019		2018	2017
Closing share price	$12.05		$11.89 - $13.09	$14.72
Expected dividend rate	7.3	%	6.7% - 7.4%	6.0	%
Expected stock price volatility	22.9	%	21.5% - 21.8%	18.2	%
Risk-free interest rate	2.5	%	2.3% - 2.7%	1.6	%
Expected life (years)	2.85		2.40 - 2.85	2.82

As of December 31, 2019, we had $6.1 million of total unrecognized compensation expense related to unvested restricted shares and performance based equity and cash awards. This expense is expected to be recognized over a weighted-average period of 1.7 years.

Stock Option Share-Based Compensation

When we grant options, the fair value of each option granted, used in determining the share-based compensation expense, is estimated on the date of grant using the Black-Scholes option-pricing model.  This model incorporates certain assumptions for inputs including risk-free rates, expected dividend yield of the underlying common shares, expected option life and expected volatility.

No options were granted under any of our plans in the years ended December 31, 2019, 2018 and 2017.

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The following table reflects the stock option activity for all plans described above:

	2019			2018			2017
	Shares Under Option	Weighted-Average Exercise Price		Shares Under Option	Weighted-Average Exercise Price		Shares Under Option	Weighted-Average Exercise Price
Outstanding, beginning of the year	—	$	—	—	$	—	57,140	$	34.69
Granted	—	—		—	—		—	—
Exercised	—	—		—	—		—	—
Forfeited or expired	—	—		—	—		(57,140)	34.69
Outstanding, end of the year	—	$	—	—	$	—	—	$	—
Exercisable, end of the year	—	$	—	—	$	—	—	$	—

Other Benefit Plan

The Company has a defined contribution profit sharing plan and trust (the "Plan") with a qualified cash or deferred 401(k) arrangement covering all employees. Participation in the Plan is discretionary for all full-time employees who have attained the age of 21. The entry date eligibility is the first pay date of a quarter following the date of hire. Our expense for the years ended December 31, 2019, 2018 and 2017 was approximately $0.2 million, $0.2 million and $0.2 million, respectively.

16.  Taxes

Income Taxes

We conduct our operations with the intent of meeting the requirements applicable to a REIT under sections 856 through 860 of the Code.  In order to maintain our qualification as a REIT, we are required to distribute annually at least 90% of our REIT taxable income, excluding net capital gain, to our shareholders. As long as we qualify as a REIT, we will generally not be liable for federal corporate income taxes.

Certain of our operations, including property management and asset management, as well as ownership of certain land, are conducted through our TRSs which allows us to provide certain services and conduct certain activities that are not generally considered as qualifying REIT activities.

Deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence, including expected taxable earnings and potential tax planning strategies. Our temporary differences primarily relate to deferred compensation, depreciation, impairment charges and net operating loss carryforwards.

As of December 31, 2019, we had a federal and state deferred tax asset of $7.5 million and a valuation allowance of $7.5 million, which represents an increase of $0.1 million from December 31, 2018.  Our deferred tax assets, such as net operating losses and land basis differences, are reduced by an offsetting valuation allowance where there is uncertainty regarding their realizability. We believe that it is more likely than not that the results of future operations will not generate sufficient taxable income to recognize the deferred tax assets. These future operations are primarily dependent upon the profitability of our TRSs, the timing and amounts of gains on land sales, and other factors affecting the results of operations of the TRSs.  

If in the future we are able to conclude it is more likely than not that we will realize a future benefit from a deferred tax asset, we will reduce the related valuation allowance by the appropriate amount. If this occurs, it will result in a net deferred tax asset on our balance sheet and an income tax benefit of equal magnitude in our statement of operations in the period we made the determination.

During the years ended December 31, 2019, 2018 and 2017, we recorded an income tax provision of approximately $0.2 million, $0.2 million, and $0.1 million, respectively.

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We had no unrecognized tax benefits as of or during the three year period ended December 31, 2019.  We expect no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2019.  No material interest or penalties relating to income taxes were recognized in the statement of operations for the years ended December 31, 2019, 2018, and 2017 or in the consolidated balance sheets as of December 31, 2019, 2018, and 2017.  It is our accounting policy to classify interest and penalties relating to unrecognized tax benefits as tax expense.  As of December 31, 2019, returns for the calendar years 2016 through 2019 remain subject to examination by the Internal Revenue Service (“IRS”) and various state and local tax jurisdictions.  As of December 31, 2019, certain returns for calendar year 2015 also remain subject to examination by various state and local tax jurisdictions.

Sales Tax

We collect various taxes from tenants and remit these amounts, on a net basis, to the applicable taxing authorities.

17.  Commitments and Contingencies

Construction Costs

In connection with the development and expansion of various shopping centers as of December 31, 2019, we had entered into agreements for construction costs of approximately $6.5 million.

Litigation

We are currently involved in certain litigation arising in the ordinary course of business. We are not aware of any matters that would have a material effect on our consolidated financial statements.

Development Obligations

As of December 31, 2019, the Company has $2.2 million of development related obligations that require annual payments through December 2043.

Guarantee

A redevelopment agreement was entered into between the City of Jacksonville, the Jacksonville Economic Development Commission and the Company, to construct and develop River City Marketplace in 2005. As part of the agreement, the city agreed to finance up to $12.2 million of bonds. Repayment of the bonds is to be made in accordance with a level-payment amortization schedule over 20 years, and repayments are made out of tax revenues generated by the redevelopment. The remaining debt service payments due over the life of the bonds, including principal and interest, are $9.1 million. As part of the redevelopment, the Company executed a guaranty agreement whereby the Company would fund debt service payments if incremental revenues were not sufficient to fund repayment. There have been no payments made by the Company under this guaranty agreement to date.

Environmental Matters

We are subject to numerous federal, state and local environmental laws, ordinances and regulations in the areas where we own or operate properties. We are not aware of any contamination which may have been caused by us or any of our tenants that would have a material effect on our consolidated financial statements.

As part of our risk management activities, we have applied and been accepted into state sponsored environmental programs which will expedite and assure satisfactory compliance with environmental laws and regulations should contaminants need to be remediated. We also have an environmental insurance policy that covers us against third party liabilities and remediation costs.

While we believe that we do not have any material exposure to environmental remediation costs, we cannot give absolute assurance that changes in the law or new discoveries of contamination will not result in additional liabilities to us.

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18. Reorganization

In connection with the reorganization of the executive management team, we recorded one-time employee termination benefits of $0.6 million and $7.5 million for the years ended December 31, 2019 and December 31, 2018, respectively. In connection with the reduction-in-force resulting from the reorganization of the Company's operating structure, we recorded one-time employee termination benefits of $0.8 million for the year ended December 31, 2018. Such charges are reflected in the consolidated statements of operations in general and administrative expense.

19.  Subsequent Events

On February 3, 2020 we entered into four interest swap agreements for an aggregate notional amount of $100.0 million.

20.  Selected Quarterly Financial Data (Unaudited)

The following table sets forth summarized quarterly financial data for the year ended December 31, 2019:

	Quarters Ended 2019
	March 31 (1)		June 30 (1)		September 30 (1)		December 31 (1)
	(In thousands, except per share amounts)
Total revenue	$	59,708	$	57,361	$	58,921	$	58,098
Operating income	$	15,430	$	13,429	$	14,888	$	10,275
Net income attributable to RPT	$	10,443	$	2,893	$	5,445	$	72,730
Net income available to common shareholders	$	8,768	$	1,218	$	3,769	$	71,055
Earnings per common share, basic: (1)	$	0.11	$	0.01	$	0.05	$	0.89
Earnings per common share, diluted:(1)	$	0.11	$	0.01	$	0.05	$	0.83

⁽¹⁾EPS amounts are based on weighted average common shares outstanding during the quarter and, therefore, may not agree with the EPS calculated for the year ended December 31, 2019.

The following table sets forth summarized quarterly financial data for the year ended December 31, 2018:

	Quarters Ended 2018
	March 31 (1)		June 30 (1)		September 30 (1)		December 31 (1)
	(In thousands, except per share amounts)
Total revenue	$	62,718	$	69,967	$	64,217	$	63,720
Operating income	$	17,755	$	14,829	$	16,240	$	3,436
Net income attributable to RPT	$	7,286	$	4,302	$	10,125	$	(4,094)
Net income available to common shareholders	$	5,611	$	2,627	$	8,449	$	(5,769)
Earnings per common share, basic: (1)	$	0.07	$	0.03	$	0.10	$	(0.07)
Earnings per common share, diluted:(1)	$	0.07	$	0.03	$	0.10	$	(0.07)

⁽¹⁾EPS amounts are based on weighted average common shares outstanding during the quarter and, therefore, may not agree with the EPS calculated for the year ended December 31, 2018.

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RPT REALTY

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

December 31, 2019

(in thousands of dollars)

	Balance at Beginning of Year		Charged to Costs  and Expenses	Charged to Other Accounts	Deductions	Balance at End  of Year
For the Year Ended December 31, 2019
Allowance for Doubtful Accounts	$	858	625	(446)	—	$	1,037
Straight Line Rent Reserve	$	2,323	(492)	(6)	—	$	1,825
For the Year Ended December 31, 2018
Allowance for Doubtful Accounts	$	1,374	57	(573)	—	$	858
Straight Line Rent Reserve	$	2,667	(337)	(7)	—	$	2,323
For the Year Ended December 31, 2017
Allowance for Doubtful Accounts	$	1,861	298	(929)	144	$	1,374
Straight Line Rent Reserve	$	3,245	(500)	(67)	(11)	$	2,667

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RPT REALTY

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2019

(in thousands of dollars)

				INITIAL COST TO COMPANY				Capitalized Subsequent to Acquisition or Improvements, Net of Impairments		GROSS AMOUNTS AT WHICH CARRIED AT CLOSE OF PERIOD
Property	Location	Encumbrances		Land		Building & Improvements				Land		Building & Improvements		Total		Accumulated Depreciation		Date Constructed	Date Acquired
Bridgewater Falls	OH	$	53,423	$	9,831	$	76,446	$	681	$	9,831	$	77,127	$	86,958	$	12,900	2005/2007	2014
Buttermilk Towne Center	KY	—		13,249		21,103		2,603		13,249		23,706		36,955		4,381		2005	2014
Centennial Shops	MN	—		—		29,639		624		—		30,263		30,263		3,472		2008	2016
Central Plaza	MO	—		10,250		10,909		2,519		10,250		13,428		23,678		2,891		1970	2012
Clinton Pointe	MI	—		1,175		10,499		2,581		1,176		13,079		14,255		4,782		1992	2003
Crofton Centre	MD	—		8,012		22,774		1,002		8,012		23,776		31,788		3,271		1974	2015
Cypress Point	FL	—		2,968		17,637		2,282		2,968		19,919		22,887		3,724		1983	2013
Deer Creek Shopping Center	MO	—		6,070		18,105		1,825		6,070		19,930		26,000		3,833		1970's/2013	2013
Deer Grove Centre	IL	—		8,408		8,197		6,572		8,408		14,769		23,177		4,145		1997	2013
Deerfield Towne Center	OH	—		6,868		78,551		11,739		6,868		90,290		97,158		18,696		2004/2007	2013
Front Range Village	CO	—		19,413		80,600		10,799		19,414		91,398		110,812		13,130		2008	2014
Heritage Place	MO	—		13,899		22,506		3,774		13,899		26,280		40,179		7,466		1989	2011
Holcomb Center	GA	—		658		5,953		11,143		658		17,096		17,754		8,925		1986	1996
Hunters Square	MI	—		7,673		52,774		6,511		7,652		59,306		66,958		11,957		1988	2013
Lakehills Plaza	TX	—		17,987		12,828				17,987		12,828		30,815		37		1980/2019	2019
Lakeland Park Center	FL	—		15,365		—		41,102		16,864		39,603		56,467		7,048		2014	2008
Marketplace of Delray	FL	—		7,922		18,910		3,840		7,922		22,750		30,672		2,955		1981/2010	2013
Market Plaza	IL	—		9,391		22,682		(975)		9,391		21,707		31,098		4,529		1965/2009	2015
Merchants' Square	IN	—		4,997		18,346		5,033		4,997		23,379		28,376		6,938		1970	2010
Mount Prospect Plaza	IL	—		11,633		21,767		2,259		9,601		26,058		35,659		4,782		1958/1987/2012	2013
Nagawaukee Shopping Center	WI	5,508		7,549		30,898		4,454		7,517		35,384		42,901		7,037		1994/2004/2008	2012/2013
Olentangy Plaza	OH	—		4,283		20,774		2,488		4,283		23,262		27,545		3,414		1981	2015
Parkway Shops	FL	—		3,145		—		21,521		5,902		18,764		24,666		3,629		2013	2008
Peachtree Hill	GA	—		7,517		17,062		(866)		6,926		16,787		23,713		2,232		1986	2015
Promenade at Pleasant Hill	GA	—		3,891		22,520		6,682		3,440		29,653		33,093		11,209		1993	2004
Providence Marketplace	TN	—		22,171		85,657		1,060		22,171		86,717		108,888		8,736		2006	2017
River City Marketplace	FL	—		19,768		73,859		12,025		11,194		94,458		105,652		31,661		2005	2005
Rivertowne Square	FL	—		954		8,587		2,575		954		11,162		12,116		4,885		1980	1998
Shoppes of Lakeland	FL	—		5,503		20,236		1,029		5,503		21,265		26,768		4,384		1985	1996
Southfield Plaza	MI	—		1,121		10,777		1,384		1,121		12,161		13,282		7,644		1969	1996
Spring Meadows Place	OH	—		2,646		16,758		17,734		5,041		32,097		37,138		13,271		1987	1996
Tel-Twelve	MI	—		3,819		43,181		31,372		3,819		74,553		78,372		37,732		1968	1996
The Shops on Lane Avenue	OH	28,650		4,848		51,273		6,343		4,848		57,616		62,464		7,704		1952/2004	2015
Treasure Coast Commons	FL	—		2,924		10,644		716		2,924		11,360		14,284		2,323		1996	2013
Troy Marketplace	MI	—		4,581		19,041		11,556		6,176		29,002		35,178		4,274		2000/2010	2013

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				INITIAL COST TO COMPANY				Capitalized Subsequent to Acquisition or Improvements, Net of Impairments		GROSS AMOUNTS AT WHICH CARRIED AT CLOSE OF PERIOD
Property	Location	Encumbrances		Land		Building & Improvements				Land		Building & Improvements		Total		Accumulated Depreciation		Date Constructed	Date Acquired
Troy Marketplace II	MI	—		3,790		10,292		590		3,790		10,882		14,672		3,382		2000/2010	2013
Village Lakes Shopping Center	FL	—		862		7,768		7,526		862		15,294		16,156		7,223		1987	1997
Vista Plaza	FL	—		3,667		16,769		469		3,667		17,238		20,905		3,505		1998	2013
Webster Place	IL	—		28,410		21,752		193		28,410		21,945		50,355		2,061		1987	2017
West Broward	FL	—		5,339		11,521		1,263		5,339		12,784		18,123		2,335		1965	2013
West Allis Towne Centre	WI	—		1,866		16,789		17,309		1,866		34,098		35,964		14,696		1987	1996
West Oaks I	MI	—		1,058		17,173		20,891		2,826		36,296		39,122		10,461		1979	1996/2018
West Oaks II	MI	—		1,391		12,519		8,313		1,391		20,832		22,223		10,882		1986	1996
Winchester Center	MI	—		5,667		18,559		8,927		5,667		27,486		33,153		5,394		1980	2013
Woodbury Lakes	MN	—		10,411		55,635		26,874		10,411		82,509		92,920		12,058		2005	2014
Land Held for Future Development (1)	Various	—		28,266		14,026		(13,472)		21,962		6,858		28,820		12		N/A	N/A
TOTALS		$	87,581	$	361,216	$	1,184,296	$	314,870	$	353,227	$	1,507,155	$	1,860,382	$	352,006

⁽¹⁾ Primarily in Hartland, MI, Lakeland, FL and Jacksonville, FL.

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SCHEDULE III

REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION

December 31, 2019

	Year ended December 31,
	2019		2018		2017
	(In thousands)
Reconciliation of total real estate carrying value:
Balance at beginning of year	$	2,078,995	$	2,189,022	$	2,202,670
Additions during period:
Acquisition	30,814		6,427		159,332
Improvements	42,824		68,914		56,384
Deductions during period:
Cost of real estate sold/written off	(292,251)		(171,718)		(219,960)
Impairment	—		(13,650)		(9,404)
Reclassification to held for sale	—		—		—
Balance at end of year	$	1,860,382	$	2,078,995	$	2,189,022
Reconciliation of accumulated depreciation:
Balance at beginning of year	$	358,195	$	351,632	$	345,204
Depreciation Expense	58,662		63,524		65,720
Cost of real estate sold/written off	(64,851)		(56,961)		(59,292)
Reclassification to held for sale	—		-		—
Balance at end of year	$	352,006	$	358,195	$	351,632
Aggregate cost for federal income tax purposes	$	1,905,041	$	2,128,169	$	2,243,928