EX-99.2 3 ex-9929x30x15.htm EXHIBIT 99.2 Exhibit

Exhibit 99.2






RETAIL PROPERTIES OF AMERICA, INC. REPORTS
YEAR TO DATE SAME STORE NOI INCREASE OF 3.4%
AND INCREASES GUIDANCE
Oak Brook, IL – November 3, 2015 – Retail Properties of America, Inc. (NYSE: RPAI) (the “Company”) today reported financial and operating results for the quarter and nine months ended September 30, 2015.
FINANCIAL RESULTS
For the quarter ended September 30, 2015, the Company reported:
▪
Operating funds from operations (Operating FFO) attributable to common shareholders of $64.4 million, or $0.27 per share, compared to $65.7 million, or $0.28 per share, for the same period in 2014;
▪
Funds from operations (FFO) attributable to common shareholders of $53.7 million, or $0.23 per share, compared to $65.0 million, or $0.28 per share, for the same period in 2014, the decrease being primarily attributable to non-operating transactions; and
▪
Net income (loss) attributable to common shareholders of $76.0 million, or $0.32 per share, compared to $(29.1) million, or $(0.12) per share, for the same period in 2014.
For the nine months ended September 30, 2015, the Company reported:
▪
Operating FFO attributable to common shareholders of $188.7 million, or $0.80 per share, compared to $194.4 million, or $0.82 per share, for the same period in 2014;
▪
FFO attributable to common shareholders of $168.4 million, or $0.71 per share, compared to $194.5 million, or $0.82 per share, for the same period in 2014, the decrease being primarily attributable to non-operating transactions; and
▪
Net income attributable to common shareholders of $115.0 million, or $0.49 per share, compared to $10.3 million, or $0.04 per share, for the same period in 2014.
OPERATING RESULTS
For the quarter ended September 30, 2015, the Company’s portfolio results were as follows:
▪
2.0% increase in same store net operating income (NOI) over the comparable period in 2014;
▪
4.2% increase in same store NOI, excluding the impact of strategic remerchandising activities, over the comparable period in 2014;
▪
Total portfolio percent leased, including leases signed but not commenced: 94.8% at September 30, 2015, down 20 basis points from 95.0% at September 30, 2014 and up 30 basis points from 94.5% at June 30, 2015;
▪
Retail portfolio percent leased, including leases signed but not commenced: 94.6% at September 30, 2015, down 10 basis points from 94.7% at September 30, 2014 and up 20 basis points from 94.4% at June 30, 2015;
▪
Retail portfolio annualized base rent (ABR) per occupied square foot of $16.17 at September 30, 2015, up 5.4% from $15.34 ABR per occupied square foot at September 30, 2014;
▪
Target market multi-tenant retail portfolio ABR per occupied square foot of $18.06;

n Retail Properties of America, Inc.
T: 800.541.7661
www.rpai.com    2021 Spring Road, Suite 200
Oak Brook, IL 60523

▪
666,000 square feet of retail leasing transactions comprised of 131 new and renewal leases; and
▪
Positive comparable cash leasing spreads of 19.6% on new leases and 7.3% on renewal leases for a blended spread of 9.4%.
For the nine months ended September 30, 2015, the Company’s portfolio results were as follows:
▪
3.4% increase in same store NOI over the comparable period in 2014;
▪
4.9% increase in same store NOI, excluding the impact of strategic remerchandising activities, over the comparable period in 2014;
▪
2,213,000 square feet of retail leasing transactions comprised of 412 new and renewal leases; and
▪
Positive comparable cash leasing spreads of 21.8% on new leases and 6.5% on renewal leases for a blended spread of 8.4%.
“We are pleased to report another strong quarter of results, including stronger than expected same store NOI, record-setting blended re-leasing spreads, meaningful traction on our non-strategic dispositions and an increase in earnings guidance,” stated Steve Grimes, president and chief executive officer. “As we approach the end of the year, we are very confident in our ability to exceed all of our 2015 objectives.”
REMERCHANDISING UPDATE
The Company continues its efforts to remerchandise 15 anchor locations within its 2015 same store portfolio, representing approximately 537,000 square feet of gross leasable area. Year to date, tenants in 14 of these locations vacated, representing approximately 496,000 square feet, of which four tenants vacated during the quarter, representing 97,000 square feet. Year to date, the Company has re-leased 241,000 square feet with weighted average downtime of approximately five months, of which 119,000 square feet was comparable with a weighted average re-leasing spread of 26.0%. The Company now expects that the weighted average comparable re-leasing spread for the 15 anchor locations will be in the range of 10% to 15%, with weighted average downtime of approximately 12 months.
INVESTMENT ACTIVITY
Acquisitions
During the quarter, the Company closed on the previously announced acquisition of Coal Creek Marketplace (Coal Creek), located in the Seattle Metropolitan Statistical Area (MSA), for a gross purchase price of $17.6 million. Coal Creek is a 56,000 square foot grocery-anchored shopping center situated in a well-populated and affluent area within a high barrier-to-entry sub-market. The property is 94.6% occupied and is anchored by Quality Food Centers, a subsidiary of Kroger. The Company also closed on the previously announced acquisition of an outparcel at one of its lifestyle centers, Southlake Town Square located in the Dallas MSA, for a gross purchase price of $8.4 million. The recently constructed building is occupied by Trader Joe’s.
Subsequent to quarter end, the Company acquired an outparcel at one of its neighborhood centers, Royal Oaks Village II located in the Houston MSA, for a gross purchase price of $6.8 million. The building is currently under construction and leased to Trader Joe’s, which is expected to open in the first half of 2016.
Additionally, the Company is under contract to acquire Towson Square, a mixed-use shopping center located in the Washington, D.C./Baltimore corridor, for a gross purchase price of $40.5 million. The property is anchored by a state-of-the-art 15 screen Cinemark Theatre and supported by a variety of national and regional restaurant concepts such as BJ’s Restaurant and Brewhouse, World of Beer, Bobby’s Burger Palace, Bonefish Grill and Nando’s Peri-Peri. Towson Square is a

ii

new development that opened in 2014 and is currently 96.6% occupied. The property is located adjacent to the Company’s existing center, Towson Circle. The Company expects to integrate both of these properties into one property as part of the larger planned redevelopment. This transaction is expected to close during the fourth quarter of 2015, subject to satisfaction of customary closing conditions.
Year to date, the Company has completed or announced $463.9 million of unencumbered acquisitions, with a weighted average ABR per occupied square foot of $21.54. These acquisitions are comprised of high quality, multi-tenant retail assets located in the Washington, D.C./Baltimore corridor, in addition to the Seattle, Austin, Dallas and Houston MSAs, resulting in an expansion of the Company’s multi-tenant retail footprint in these target markets by 1.2 million square feet. These properties possess strong demographic profiles, with weighted average household income of $128,000 and weighted average population of 103,000 within a three-mile radius.
Dispositions
During the quarter, the Company completed $250.3 million of dispositions, including the sales of eight non-strategic multi-tenant retail assets for $242.5 million, one of which was classified as held for sale as of June 30, 2015, one office asset for $4.8 million, which was classified as held for sale as of June 30, 2015, and one single-user retail asset for $3.0 million.
Subsequent to quarter end, the Company sold one non-strategic development asset, which was held in a consolidated joint venture, for $35.0 million. In addition, the Company entered into agreements to dispose of one non-strategic multi-tenant retail asset and a development asset for total consideration of approximately $58.5 million. These transactions are expected to close during the fourth quarter of 2015, subject to satisfaction of customary closing conditions.
Year to date, the Company has completed or announced $499.0 million of dispositions of 16 non-strategic multi-tenant retail assets, five of its six remaining office assets, one single-user retail asset and a development asset. These assets have a weighted average ABR per occupied square foot of $12.76, which is 40.8% lower than that of the year-to-date acquisitions, with weighted average household income of $77,000 and weighted average population of 68,000 within a three-mile radius.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
During the quarter, the Company repaid $163.8 million of mortgage debt, excluding amortization, with a weighted average interest rate of 5.32% and defeased $40.7 million of mortgage debt with an interest rate of 7.50%. Subsequent to quarter end, the Company repaid $67.3 million of mortgage debt, excluding amortization, with a weighted average interest rate of 4.97% and a variable rate construction loan with a principal balance of $15.9 million and an interest rate of 2.50% as of the repayment date.
Year to date, the Company repaid $417.2 million of mortgage and construction debt, excluding amortization, with a weighted average interest rate of 5.56% and defeased $65.3 million of mortgage debt with an interest rate of 7.50% in connection with its 2015 disposition activity.
As of September 30, 2015, the Company had approximately $2.3 billion of consolidated indebtedness, which resulted in a net debt to adjusted EBITDA ratio of 5.7x, or a net debt and preferred stock to adjusted EBITDA ratio of 6.0x, as compared to 6.3x and 6.6x, respectively, as of June 30, 2015. Consolidated indebtedness had a weighted average contractual interest rate of 4.55% and a weighted average maturity of 4.5 years.

iii

GUIDANCE
The Company is increasing its 2015 Operating FFO guidance to a range of $1.04 to $1.06 per share from $1.02 to $1.04 per share. The Company is also increasing its 2015 same store NOI growth guidance to a range of 2.5% to 3.0% from 1.75% to 2.75% as a result of continued outperformance during the quarter, driven by higher rental income and lower bad debt expense. The increase in the Company’s Operating FFO guidance is primarily attributable to the increase in its same store NOI growth guidance, the receipt of unexpected bankruptcy proceeds from a former tenant and the timing of its investment activity.
DIVIDEND
On October 27, 2015, the Company’s Board of Directors declared the fourth quarter 2015 Series A preferred stock distribution of $0.4375 per preferred share, for the period beginning October 1, 2015, which will be paid on December 31, 2015 to preferred shareholders of record on December 21, 2015.
On October 27, 2015, the Company’s Board of Directors also declared the fourth quarter 2015 quarterly cash dividend of $0.165625 per share on the Company’s outstanding Class A common stock, which will be paid on January 8, 2016 to Class A common shareholders of record on December 23, 2015.
WEBCAST AND SUPPLEMENTAL INFORMATION
The Company’s management team will hold a webcast on Wednesday, November 4, 2015 at 11:00 AM EST, to discuss its quarterly financial results and operating performance, as well as business highlights and outlook. In addition, the Company may discuss business and financial developments and trends and other matters affecting the Company, some of which may not have been previously disclosed.
A live webcast will be available online on the Company’s website at www.rpai.com in the Investor Relations section. The conference call can be accessed by dialing (877) 705-6003 or (201) 493-6725 for international participants. Please dial in at least ten minutes prior to the start of the call to register.
A replay of the webcast will be available. To listen to the replay, please go to www.rpai.com in the Investor Relations section of the website and follow the instructions. A replay of the call will be available from 2:00 PM (EST) on November 4, 2015 until midnight (EST) on November 18, 2015. The replay can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers and entering pin number 13618232.
The Company has also posted supplemental financial and operating information and other data in the Investor Relations section of its website.
ABOUT RPAI
Retail Properties of America, Inc. is a REIT and is one of the largest owners and operators of high quality, strategically located shopping centers in the United States. As of September 30, 2015, the Company owned 201 retail operating properties representing 29.2 million square feet. The Company is publicly traded on the New York Stock Exchange under the ticker symbol RPAI. Additional information about the Company is available at www.rpai.com.

iv

SAFE HARBOR LANGUAGE
The statements and certain other information contained in this press release, which can be identified by the use of forward-looking terminology such as “may,” “expect,” “continue,” “remains,” “intend,” “aim,” “should,” “prospects,” “could,” “future,” “potential,” “believes,” “plans,” “likely,” “anticipate” and “probable,” or the negative thereof or other variations thereon or comparable terminology, constitute “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, and are subject to the safe harbors created thereby. These forward-looking statements reflect the Company’s current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the Company and on assumptions it has made. Although the Company believes that its plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, the Company can give no assurance that such plans, intentions, expectations or strategies will be attained or achieved. Furthermore, these forward-looking statements should be considered as subject to the many risks and uncertainties that exist in the Company’s operations and business environment. Such risks and uncertainties could cause actual results to differ materially from those projected. These uncertainties include, but are not limited to, economic, business and financial conditions, and changes in the Company’s industry and changes in the real estate markets in particular, market price of the Company’s common stock, general volatility of the capital and credit markets, competitive and cost factors, the ability of the Company to enter into new leases or renew leases on favorable terms, frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants, bankruptcy or insolvency of a major tenant or a significant number of smaller tenants, the effects of declining real estate valuations and impairment charges on the Company’s operating results, interest rates and operating costs, rental rates and/or vacancy rates, risks generally associated with real estate acquisitions, dispositions and redevelopment activity, satisfaction of closing conditions to the pending transactions described herein, the Company’s failure to successfully execute its non-core disposition program and capital recycling efforts, the Company’s ability to create long-term shareholder value, the Company’s ability to effectively manage growth, the availability, terms and deployment of capital, regulatory changes and other risk factors, including those detailed in the sections of the Company’s most recent Forms 10-K and 10-Q filed with the SEC titled “Risk Factors”. The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
NON-GAAP FINANCIAL MEASURES
As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, Funds From Operations (FFO) means net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate, including amounts from continuing and discontinued operations, as well as adjustments for unconsolidated joint ventures in which the reporting entity holds an interest. The Company has adopted the NAREIT definition in its computation of FFO attributable to common shareholders. The Company believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing its performance and operations to those of other real estate investment trusts (REITs). The Company believes that FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders does not represent an alternative to “Net Income” or “Net Income Attributable to Common Shareholders” as an indicator of the Company’s performance or “Cash Flows from Operating Activities” as determined by GAAP as a measure of the Company’s capacity to fund cash needs, including the payment of dividends.
The Company also reports Operating FFO attributable to common shareholders, which is defined as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which the Company does not consider representative of the comparable operating results of the Company’s core business platform, its real estate operating portfolio. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the financial statement impact of gains or losses associated with the early extinguishment of debt or other liabilities, actual or anticipated settlement of litigation involving the Company, executive separation charges and impairment charges to write down the carrying value of assets other than depreciable real estate, which are otherwise excluded from the Company's calculation of FFO attributable to common shareholders. The Company believes that Operating FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. Operating FFO attributable to common shareholders does not represent an alternative to “Net Income” or “Net Income Attributable to Common Shareholders” as an indicator of the Company’s performance or “Cash Flows from Operating Activities” as determined by GAAP as a measure of the Company’s capacity to fund cash needs, including the payment of dividends. Further, comparison of the Company’s presentation of Operating FFO attributable to common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
The Company also reports NOI, same store NOI and same store NOI, excluding the impact of strategic remerchandising activities. The Company defines NOI as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax

v

expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangibles and straight-line bad debt expense). Same Store NOI for the nine months ended September 30, 2015 represents NOI from the Company’s same store portfolio consisting of 184 operating properties acquired or placed in service and stabilized prior to January 1, 2014. NOI from Other Investment Properties for the nine months ended September 30, 2015 represents NOI primarily from properties acquired during 2014 and 2015, the Company’s development properties, two properties where the Company has begun activities in anticipation of future redevelopment, one property that was impaired below its debt balance during 2014, the investment properties that were sold or held for sale in 2014 and 2015 that did not qualify for discontinued operations treatment and the historical ground rent expense related to an existing same store investment property that was subject to a ground lease with a third party prior to the Company’s acquisition of the fee interest during the first quarter of 2014. In addition, the financial results reported in Other Investment Properties for the nine months ended September 30, 2015 include the net income from the Company's wholly-owned captive insurance company, which was formed on December 1, 2014, and the financial results reported in Other Investment Properties for the nine months ended September 30, 2014 include the historical intercompany expense elimination related to the Company's former insurance captive unconsolidated joint venture investment, in which the Company terminated its participation effective December 1, 2014. For the nine months ended September 30, 2014, the historical captive insurance expense related to the Company’s portfolio was recorded in equity in loss of unconsolidated joint ventures, net. For the three months ended September 30, 2015, the Company's same store portfolio consists of 191 operating properties inclusive of the same store portfolio for the nine months ended September 30, 2015 and seven additional operating properties acquired during the first half of 2014. The financial results reported in Other Investment Properties for the three months ended September 30, 2015 are inclusive of the topics described above for the nine months ended September 30, 2015 excluding the seven investment properties acquired during the first half of 2014. NOI consists of the sum of Same Store NOI and NOI from Other Investment Properties. Same Store NOI, excluding the impact of strategic remerchandising activities, represents Same Store NOI, less the operating revenues of the previously announced 15 anchor locations subject to strategic remerchandising that have vacated as of September 30, 2015, as well as the related revenue impact of such efforts due to co-tenancy provisions or otherwise. The Company believes that NOI, Same Store NOI, NOI from Other Investment Properties and Same Store NOI, excluding the impact of strategic remerchandising activities, are useful measures of the Company’s operating performance. Further, the Company believes Same Store NOI, excluding the impact of strategic remerchandising activities, is also useful as it provides a basis for evaluating the impact of the Company's previously announced remerchandising activity on its operating results. Other REITs may use different methodologies for calculating these metrics, and accordingly, the Company’s NOI metrics may not be comparable to other REITs. The Company believes that these metrics provide an operating perspective not immediately apparent from operating income or net income attributable to common shareholders as defined within GAAP. The Company uses these metrics to evaluate its performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company’s operating results. However, these measures should only be used as alternative measures of the Company’s financial performance.
Adjusted EBITDA represents net income attributable to common shareholders before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing performance. The Company believes that Adjusted EBITDA is useful because it allows investors and management to evaluate and compare its performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income attributable to common shareholders as an indicator of operating performance or any measure of performance derived in accordance with GAAP. The Company’s calculation of Adjusted EBITDA may be different from the calculation used by other companies and, accordingly, comparability may be limited.
Net Debt to Adjusted EBITDA represents (i) the Company’s total debt less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. The Company believes that this ratio is useful because it provides investors with information regarding total debt net of cash and cash equivalents, which could be used to repay debt, compared to the Company’s performance as measured using Adjusted EBITDA.
Net Debt and Preferred Stock to Adjusted EBITDA represents (i) the Company’s total debt, plus preferred stock, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. The Company believes that this ratio is useful because it provides investors with information regarding total debt and preferred stock, net of cash and cash equivalents, which could be used to repay debt, compared to the Company’s performance as measured using Adjusted EBITDA.
CONTACT INFORMATION
Michael Fitzmaurice, VP - Finance
Retail Properties of America, Inc.
(630) 634-4233

vi


Retail Properties of America, Inc.
FFO Attributable to Common Shareholders and
Operating FFO Attributable to Common Shareholders Guidance
 
 
 
 
Per Share Guidance Range
Full Year 2015
 
 
Low
 
High
 
 
 
 
 
Net income attributable to common shareholders
 
$
0.60

 
$
0.62

Depreciation and amortization
 
0.90

 
0.90

Provision for impairment of investment properties
 
0.02

 
0.02

Gain on sales of investment properties
 
(0.57
)
 
(0.57
)
FFO attributable to common shareholders
 
$
0.95

 
$
0.97

 
 
 
 
 
Impact on earnings from the early extinguishment of debt, net
 
0.07

 
0.07

Provision for hedge ineffectiveness
 
—

 
—

Executive and realignment separation charges
 
0.02

 
0.02

Other
 
—

 
—

Operating FFO attributable to common shareholders
 
$
1.04

 
$
1.06




vii


Retail Properties of America, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands, except par value amounts)
(unaudited)
 

 
 
September 30,
2015
 
December 31,
2014
Assets
 
 

 
 

Investment properties:
 
 

 
 

Land
 
$
1,265,170

 
$
1,195,369

Building and other improvements
 
4,449,686

 
4,442,446

Developments in progress
 
47,008

 
42,561

 
 
5,761,864

 
5,680,376

Less accumulated depreciation
 
(1,400,363
)
 
(1,365,471
)
Net investment properties
 
4,361,501

 
4,314,905

 
 
 
 
 
Cash and cash equivalents
 
116,538

 
112,292

Accounts and notes receivable (net of allowances of $8,160 and $7,497, respectively)
 
79,390

 
86,013

Acquired lease intangible assets, net
 
140,064

 
125,490

Assets associated with investment properties held for sale
 
—

 
33,640

Other assets, net
 
106,356

 
131,520

Total assets
 
$
4,803,849

 
$
4,803,860

 
 
 
 
 
Liabilities and Equity
 
 

 
 

Liabilities:
 
 

 
 

Mortgages payable, net (includes unamortized premium of $2,013 and $3,972,
respectively, and unamortized discount of $(2) and $(470), respectively)
 
$
1,230,590

 
$
1,634,465

Unsecured notes payable, net (includes unamortized discount of $(1,119)
and $0, respectively)
 
498,881

 
250,000

Unsecured term loan
 
450,000

 
450,000

Unsecured revolving line of credit
 
130,000

 
—

Accounts payable and accrued expenses
 
69,768

 
61,129

Distributions payable
 
39,301

 
39,187

Acquired lease intangible liabilities, net
 
117,085

 
100,641

Liabilities associated with investment properties held for sale
 
—

 
8,203

Other liabilities
 
75,175

 
70,860

Total liabilities
 
2,610,800

 
2,614,485

 
 
 
 
 
Commitments and contingencies
 
 

 
 

 
 
 
 
 
Equity:
 
 

 
 

Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative
redeemable preferred stock, 5,400 shares issued and outstanding as of September 30, 2015
and December 31, 2014; liquidation preference $135,000
 
5

 
5

Class A common stock, $0.001 par value, 475,000 shares authorized,
237,287 and 236,602 shares issued and outstanding as of September 30, 2015
and December 31, 2014, respectively
 
237

 
237

Additional paid-in capital
 
4,929,255

 
4,922,864

Accumulated distributions in excess of earnings
 
(2,737,562
)
 
(2,734,688
)
Accumulated other comprehensive loss
 
(380
)
 
(537
)
Total shareholders' equity
 
2,191,555

 
2,187,881

Noncontrolling interests
 
1,494

 
1,494

Total equity
 
2,193,049

 
2,189,375

Total liabilities and equity
 
$
4,803,849

 
$
4,803,860



3rd Quarter 2015 Supplemental Information
 
1


Retail Properties of America, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share amounts)
(unaudited)
 

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 

 
 

Rental income
 
$
116,715

 
$
120,143

 
$
355,525

 
$
355,093

Tenant recovery income
 
28,901

 
29,230

 
89,617

 
86,086

Other property income
 
5,339

 
2,074

 
9,898

 
5,905

Total revenues
 
150,955

 
151,447

 
455,040

 
447,084

 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 

 
 

Property operating expenses
 
22,741

 
23,638

 
71,589

 
72,306

Real estate taxes
 
20,961

 
20,574

 
61,957

 
58,055

Depreciation and amortization
 
52,871

 
54,691

 
163,345

 
163,582

Provision for impairment of investment properties
 
169

 
54,584

 
4,113

 
60,378

General and administrative expenses
 
10,939

 
6,982

 
35,949

 
22,794

Total expenses
 
107,681

 
160,469

 
336,953

 
377,115

 
 
 
 
 
 
 
 
 
Operating income (loss)
 
43,274

 
(9,022
)
 
118,087

 
69,969

 
 
 
 
 
 
 
 
 
Gain on extinguishment of other liabilities
 
—

 
—

 
—

 
4,258

Equity in loss of unconsolidated joint ventures, net
 
—

 
(232
)
 
—

 
(1,443
)
Gain on change in control of investment properties
 
—

 
—

 
—

 
24,158

Interest expense
 
(40,425
)
 
(37,356
)
 
(110,610
)
 
(101,092
)
Other income, net
 
479

 
4,706

 
1,398

 
5,383

Income (loss) from continuing operations
 
3,328

 
(41,904
)
 
8,875

 
1,233

 
 
 
 
 
 
 
 
 
Discontinued operations:
 
 
 
 
 
 

 
 

Loss, net
 
—

 
—

 
—

 
(148
)
Gain on sales of investment properties
 
—

 
—

 
—

 
655

Income from discontinued operations
 
—

 
—

 
—

 
507

Gain on sales of investment properties
 
75,001

 
15,168

 
113,214

 
15,695

Net income (loss)
 
78,329

 
(26,736
)
 
122,089

 
17,435

Net income (loss) attributable to the Company
 
78,329

 
(26,736
)
 
122,089

 
17,435

Preferred stock dividends
 
(2,362
)
 
(2,362
)
 
(7,087
)
 
(7,087
)
Net income (loss) attributable to common shareholders
 
$
75,967

 
$
(29,098
)
 
$
115,002

 
$
10,348

 
 
 
 
 
 
 
 
 
Earnings (loss) per common share - basic and diluted
 
 
 
 
 
 

 
 

Continuing operations
 
$
0.32

 
$
(0.12
)
 
$
0.49

 
$
0.04

Discontinued operations
 
—

 
—

 
—

 
—

Net income (loss) per common share attributable to common shareholders
 
$
0.32

 
$
(0.12
)
 
$
0.49

 
$
0.04

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding - basic
 
236,439

 
236,203

 
236,348

 
236,177

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding - diluted
 
236,553

 
236,203

 
236,400

 
236,180



3rd Quarter 2015 Supplemental Information
 
2



Retail Properties of America, Inc.
Funds From Operations (FFO) Attributable to Common Shareholders,
Operating FFO Attributable to Common Shareholders and Additional Information
(dollar amounts in thousands, except per share amounts)
(unaudited)
 
FFO attributable to common shareholders and Operating FFO attributable to common shareholders (a) (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders
 
$
75,967

 
$
(29,098
)
 
$
115,002

 
$
10,348

Depreciation and amortization
 
52,596

 
54,691

 
162,520

 
164,291

Provision for impairment of investment properties
 
169

 
54,584

 
4,113

 
60,378

Gain on sales of investment properties
 
(75,001
)
 
(15,168
)
 
(113,214
)
 
(40,508
)
FFO attributable to common shareholders
 
$
53,731

 
$
65,009

 
$
168,421

 
$
194,509

 
 
 
 
 
 
 
 
 
FFO attributable to common shareholders
per common share outstanding
 
$
0.23

 
$
0.28

 
$
0.71

 
$
0.82

 
 
 
 
 
 
 
 
 
FFO attributable to common shareholders
 
$
53,731

 
$
65,009

 
$
168,421

 
$
194,509

Impact on earnings from the early extinguishment of debt, net
 
10,618

 
5,354

 
17,635

 
8,985

Provision for hedge ineffectiveness
 
(4
)
 
—

 
(25
)
 
(13
)
Reversal of excise tax accrual
 
—

 
(4,594
)
 
—

 
(4,594
)
Gain on extinguishment of other liabilities
 
—

 
—

 
—

 
(4,258
)
Executive separation charges (c)
 
—

 
—

 
3,537

 
—

Other (d)
 
91

 
(73
)
 
(909
)
 
(199
)
Operating FFO attributable to common shareholders
 
$
64,436

 
$
65,696

 
$
188,659

 
$
194,430

 
 
 
 
 
 
 
 
 
Operating FFO attributable to common shareholders
per common share outstanding
 
$
0.27

 
$
0.28

 
$
0.80

 
$
0.82

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding - basic
 
236,439

 
236,203

 
236,348

 
236,177

Dividends declared per common share
 
$
0.165625

 
$
0.165625

 
$
0.496875

 
$
0.496875

 
 
 
 
 
 
 
 
 
Additional Information (e)
 
 
 
 
 
 

 
 

Lease-related expenditures (f)
 
 
 
 
 
 
 
 
Same store
 
$
5,579

 
$
7,280

 
$
18,871

 
$
20,799

Other investment properties
 
$
685

 
$
1,681

 
$
6,111

 
$
7,137

Pro rata share of unconsolidated joint ventures
 
$
—

 
$
—

 
$
—

 
$
34

 
 
 
 
 
 
 
 
 
Capital expenditures (g)
 
 
 
 
 
 
 
 
Same store
 
$
7,081

 
$
2,874

 
$
13,465

 
$
8,474

Other investment properties
 
$
1,315

 
$
637

 
$
3,269

 
$
1,656

Discontinued operations
 
$
—

 
$
—

 
$
—

 
$
6

Pro rata share of unconsolidated joint ventures
 
$
—

 
$
—

 
$
—

 
$
28

 
 
 
 
 
 
 
 
 
Straight-line rental income, net (b)
 
$
655

 
$
875

 
$
2,297

 
$
3,988

Amortization of above and below market lease intangibles
and lease inducements (b)
 
$
249

 
$
158

 
$
710

 
$
708

Non-cash ground rent expense (b) (h)
 
$
791

 
$
816

 
$
2,377

 
$
2,514


(a)
Refer to page 17 for definitions of FFO attributable to common shareholders and Operating FFO attributable to common shareholders.
(b)
Results for the nine months ended September 30, 2014 include amounts from discontinued operations and our pro rata share from our unconsolidated joint ventures. All of our unconsolidated joint venture arrangements were dissolved prior to December 31, 2014.
(c)
Included in "General and administrative expenses" in the condensed consolidated statements of operations.
(d)
Consists of settlement and easement proceeds, which are included in "Other income, net" in the condensed consolidated statements of operations.
(e)
The same store portfolio for the three months ended September 30, 2015 consists of 191 properties. The same store portfolio for the nine months ended September 30, 2015 consists of 184 properties. Refer to pages 17 - 20 for definitions and reconciliations of non-GAAP financial measures.
(f)
Consists of payments for tenant improvements, lease commissions and lease inducements and excludes developments in progress.
(g)
Consists of payments for building, site and other improvements and excludes developments in progress.
(h)
Includes amortization of acquired ground lease intangibles.

3rd Quarter 2015 Supplemental Information
 
3


Retail Properties of America, Inc.
Supplemental Financial Statement Detail
(amounts in thousands)
(unaudited)

 
Supplemental Balance Sheet Detail
 
September 30,
2015
 
December 31,
2014
Accounts and Notes Receivable
 
 

 
 

Accounts and notes receivable (net of allowances of $7,075 and $6,639, respectively)
 
$
27,389

 
$
33,349

Straight-line receivables (net of allowances of $1,085 and $858, respectively)
 
52,001

 
52,664

Total
 
$
79,390

 
$
86,013

 
 
 
 
 
Other Assets, net
 
 

 
 

Deferred costs, net
 
$
41,603

 
$
44,588

Restricted cash and escrows
 
37,233

 
58,469

Other assets, net
 
27,520

 
28,463

Total
 
$
106,356

 
$
131,520

 
 
 
 
 
Other Liabilities
 
 

 
 

Unearned income
 
$
21,540

 
$
21,823

Straight-line ground rent liability
 
34,317

 
31,519

Fair value of derivatives
 
380

 
562

Other liabilities
 
18,938

 
16,956

Total
 
$
75,175

 
$
70,860

 
 
 
 
 
Developments in Progress
 
 

 
 

Active developments
 
$
1,561

 
$
3,081

Property available for future development
 
45,447

 
39,480

Total
 
$
47,008

 
$
42,561

 
Supplemental Statements of Operations Detail
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Rental Income
 
 

 
 

 
 

 
 

Base rent
 
$
114,469

 
$
117,500

 
$
347,996

 
$
345,868

Percentage and specialty rent
 
1,342

 
1,610

 
4,522

 
4,563

Straight-line rent
 
655

 
875

 
2,297

 
3,979

Amortization of above and below market lease intangibles and lease inducements
 
249

 
158

 
710

 
683

Total
 
$
116,715

 
$
120,143

 
$
355,525

 
$
355,093

 
 
 
 
 
 
 
 
 
Other Property Income
 
 

 
 

 
 

 
 

Lease termination income
 
$
3,245

 
$
146

 
$
3,712

 
$
279

Other property income
 
2,094

 
1,928

 
6,186

 
5,626

Total
 
$
5,339

 
$
2,074

 
$
9,898

 
$
5,905

 
 
 
 
 
 
 
 
 
Property Operating Expense Supplemental Information
 
 
 
 
 
 
 
 
Bad Debt Expense
 
$
(116
)
 
$
693

 
$
1,105

 
$
1,550

Non-Cash Ground Rent Expense (a)
 
$
791

 
$
816

 
$
2,377

 
$
2,514

 
 
 
 
 
 
 
 
 
General and Administrative Expense Supplemental Information
 
 
 
 
 
 
 
 
Acquisition Costs
 
$
99

 
$
27

 
$
1,297

 
$
363

Non-Cash Amortization of Stock-based Compensation
 
$
2,076

 
$
845

 
$
8,116

 
$
2,296

 
 
 
 
 
 
 
 
 
Additional Supplemental Information
 
 
 
 
 
 
 
 
Capitalized Internal Leasing Incentives
 
$
85

 
$
—

 
$
340

 
$
—

Capitalized Interest
 
$
—

 
$
—

 
$
—

 
$
—

Management Fee Income from Joint Ventures (b)
 
$
—

 
$
—

 
$
—

 
$
338



(a)
Includes amortization of acquired ground lease intangibles.
(b)
Included in "Other income, net" in the condensed consolidated statements of operations.

3rd Quarter 2015 Supplemental Information
 
4


Retail Properties of America, Inc.
Net Operating Income (NOI)
(dollar amounts in thousands)
(unaudited)


Same store portfolio (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30 based on
Same store portfolio for the
Three Months Ended September 30, 2015
 
As of September 30 based on
Same store portfolio for the
Nine Months Ended September 30, 2015
 
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of properties in same store portfolio
 
191

 
191

 
—

 
184

 
184

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy
 
94.0
%
 
94.3
%
 
(0.3
)%
 
94.2
%
 
94.5
%
 
(0.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Percent leased (b)
 
95.6
%
 
95.8
%
 
(0.2
)%
 
95.6
%
 
95.8
%
 
(0.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 

Same store NOI (c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
102,935

 
$
101,312

 
 
 
$
292,184

 
$
285,411

 
 
Tenant recovery income
 
25,611

 
25,259

 
 
 
72,118

 
70,492

 
 
Other property income
 
1,081

 
914

 
 
 
3,069

 
2,535

 
 
 
 
129,627

 
127,485

 
 
 
367,371

 
358,438

 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses
 
18,237

 
18,859

 
 
 
53,382

 
55,902

 
 
Bad debt expense
 
101

 
56

 
 
 
911

 
424

 
 
Real estate taxes
 
18,718

 
17,853

 
 
 
50,328

 
48,001

 
 
 
 
37,056

 
36,768

 
 
 
104,621

 
104,327

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store NOI
 
$
92,571

 
$
90,717

 
2.0
 %
 
$
262,750

 
$
254,111

 
3.4
%
NOI from other investment properties
 
11,324

 
16,155

 
 
 
54,402

 
60,185

 
 
Total NOI from continuing operations
 
$
103,895

 
$
106,872

 
(2.8
)%
 
$
317,152

 
$
314,296

 
0.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store NOI, excluding the impact of
strategic remerchandising activities
 
$
91,918

 
$
88,251

 
4.2
 %
 
$
258,922

 
$
246,831

 
4.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 


(a)
For the nine months ended September 30, 2015, our same store portfolio consists of 184 operating properties and excludes properties acquired or placed in service and stabilized during 2014 and 2015, our development properties, two properties where we have begun activities in anticipation of future redevelopment, one property that was impaired below its debt balance during 2014 and investment properties sold or classified as held for sale during 2014 and 2015. For the three months ended September 30, 2015, our same store portfolio consists of 191 operating properties, inclusive of the same store portfolio for the nine months ended September 30, 2015 and seven additional operating properties acquired during the first half of 2014.
(b)
Includes leases signed but not commenced.
(c)
NOI is defined as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangibles and straight-line bad debt expense). Same store NOI excludes the historical ground rent expense related to an existing same store property that was subject to a ground lease with a third party prior to our acquisition of the fee interest during the first quarter of 2014. Same store NOI for the 2015 periods presented also excludes the net income from our wholly-owned captive insurance company, while same store NOI for the 2014 periods presented also excludes the historical intercompany expense elimination related to our former insurance captive unconsolidated joint venture investment, in which we terminated our participation effective December 1, 2014. Refer to pages 17 - 20 for definitions and reconciliations of non-GAAP financial measures.

3rd Quarter 2015 Supplemental Information
 
5


Retail Properties of America, Inc.
Capitalization
(dollar amounts in thousands, except share price and ratios)
 
Capitalization Data
 
 
 
 
 
 
September 30,
2015
 
December 31,
2014
Equity Capitalization
 
 

 
 

Common stock shares outstanding
 
237,287

 
236,602

Common share price
 
$
14.09

 
$
16.69

 
 
3,343,374

 
3,948,887

Series A preferred stock
 
135,000

 
135,000

Total equity capitalization
 
$
3,478,374

 
$
4,083,887

 
 
 
 
 
Debt Capitalization
 
 

 
 

Mortgages payable
 
$
1,228,579

 
$
1,630,963

Mortgages payable associated with investment properties held for sale
 
—

 
8,075

Premium, net of accumulated amortization
 
2,013

 
3,972

Discount, net of accumulated amortization
 
(2
)
 
(470
)
Total mortgage debt, net
 
1,230,590

 
1,642,540

 
 
 
 
 
Unsecured notes payable
 
500,000

 
250,000

Discount, net of accumulated amortization
 
(1,119
)
 
—

Total unsecured notes payable, net
 
498,881

 
250,000

 
 
 
 
 
Unsecured term loan
 
450,000

 
450,000

Unsecured revolving line of credit
 
130,000

 
—

Total unsecured credit facility
 
580,000

 
450,000

 
 
 
 
 
Total debt capitalization
 
$
2,309,471

 
$
2,342,540

 
 
 
 
 
Total capitalization at end of period
 
$
5,787,845

 
$
6,426,427

 

Reconciliation of Debt to Total Net Debt
 
 
 
 
 
 
 
September 30,
2015
 
December 31,
2014
 
 
 
 
 
Total consolidated debt
 
$
2,309,471

 
$
2,342,540

Less: consolidated cash and cash equivalents
 
(116,538
)
 
(112,292
)
Total net debt
 
$
2,192,933

 
$
2,230,248

Adjusted EBITDA (a) (b)
 
$
387,172

 
$
385,268

Net Debt to Adjusted EBITDA (b)
 
5.7x

 
5.8x

Net Debt and Preferred Stock to Adjusted EBITDA (b)
 
6.0x

 
6.1x



(a)
For purposes of these ratio calculations, annualized three months ended figures were used.
(b)
Refer to pages 17 - 20 for definitions and reconciliations of non-GAAP financial measures.

3rd Quarter 2015 Supplemental Information
 
6




Retail Properties of America, Inc.
Covenants

 
Unsecured Credit Facility and Series A and B Notes (a)
 
Covenant
 
September 30, 2015
 
 
 
 

Leverage ratio (b)
< 60.0%
(b)
39.0
%
 
 
 
 

Secured leverage ratio (b)
< 45.0%
(b)
20.8
%
 
 
 
 
Fixed charge coverage ratio (c)
> 1.50x
 
2.2x

 
 
 
 

Interest coverage ratio (d)
> 1.50x
 
2.6x

 
 
 
 
Unencumbered leverage ratio (b)
< 60.0%
(b)
32.8
%
 
 
 
 

Unencumbered interest coverage ratio
> 1.75x
 
6.6x



4.00% Notes (e)
 
Covenant
 
September 30, 2015
 
 
 
 

Leverage ratio (f)
< 60.0%
 
37.7
%
 
 
 
 

Secured leverage ratio (f)
< 40.0%
 
20.1
%
 
 
 
 
Debt service coverage ratio (g)
> 1.50x
 
3.2x

 
 
 
 
Unencumbered assets to unsecured debt ratio
> 150%
 
328
%


(a)
For a complete listing of all covenants related to our Unsecured Credit Facility (comprised of the unsecured term loan and unsecured revolving line of credit) as well as covenant definitions, refer to the Third Amended and Restated Credit Agreement filed as Exhibit 10.1 to our Current Report on Form 8-K, dated May 13, 2013. For a complete listing of all covenants related to our 4.12% Series A senior notes due 2021 and 4.58% Series B senior notes due 2024 (collectively, Series A and B notes) as well as covenant definitions, refer to the Note Purchase Agreement filed as Exhibit 10.1 to our Current Report on Form 8-K, dated May 22, 2014.
(b)
Based upon a capitalization rate of 7.25%.
(c)
Applies only to our Unsecured Credit Facility. This ratio is based upon consolidated debt service, including interest expense, principal amortization and preferred dividends declared.
(d)
Applies only to our Series A and B notes.
(e)
For a complete listing of all covenants related to our 4.00% senior notes due 2025 (4.00% notes) as well as covenant definitions, refer to the First Supplemental Indenture filed as Exhibit 4.2 to our Current Report on Form 8-K, dated March 12, 2015.
(f)
Based upon the book value of Total Assets as defined in the First Supplemental Indenture.
(g)
Based upon interest expense and excludes principal amortization and preferred dividends declared. This ratio is calculated on a pro forma basis with the assumption that debt and property transactions occurred on the first day of the preceding four-quarter period.

3rd Quarter 2015 Supplemental Information
 
7



Retail Properties of America, Inc.
Consolidated Debt Summary as of September 30, 2015
(dollar amounts in thousands)
 

 
 
Balance
 
Weighted Average (WA)
Interest Rate (a)
 
WA Years to
Maturity
 
 
 
 
 
 
 
Fixed rate mortgages payable (b)
 
$
1,212,712

 
6.01
%
 
3.9 years
Variable rate construction loan (c)
 
15,867

 
2.50
%
 
0.1 years
Total mortgages payable
 
1,228,579

 
5.97
%
 
3.9 years
 
 
 
 
 
 
 
Unsecured notes payable:
 
 
 
 
 
 
Senior notes - 4.12% Series A due 2021
 
100,000

 
4.12
%
 
5.8 years
Senior notes - 4.58% Series B due 2024
 
150,000

 
4.58
%
 
8.8 years
Senior notes - 4.00% due 2025
 
250,000

 
4.00
%
 
9.5 years
Total unsecured notes payable (b)
 
500,000

 
4.20
%
 
8.5 years
 
 
 
 
 
 
 
Unsecured credit facility:
 
 

 
 

 
 
Fixed rate portion of term loan (d)
 
300,000

 
1.99
%
 
2.6 years
Variable rate portion of term loan
 
150,000

 
1.65
%
 
2.6 years
Variable rate revolving line of credit
 
130,000

 
1.70
%
 
1.6 years
Total unsecured credit facility
 
580,000

 
1.84
%
 
2.4 years
 
 
 
 
 
 
 
Total consolidated indebtedness
 
$
2,308,579

 
4.55
%
 
4.5 years

 

Consolidated Debt Maturity Schedule as of September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year
 
Fixed Rate (b)
 
WA Rates on
Fixed Debt
 
Variable Rate
 
WA Rates on
Variable Debt (e)
 
Total
 
% of Total
 
WA Rates on
Total Debt (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
$
61,887

 
4.83
%
 
$
15,867

 
2.50
%
 
$
77,754

 
3.4
%
 
4.36
%
2016
 
66,435

 
5.01
%
 
—

 
—

 
66,435

 
2.9
%
 
5.01
%
2017
 
319,708

 
5.52
%
 
130,000

 
1.70
%
 
449,708

 
19.5
%
 
4.42
%
2018
 
310,882

 
2.16
%
 
150,000

 
1.65
%
 
460,882

 
20.0
%
 
1.99
%
2019
 
448,052

 
7.50
%
 
—

 
—

 
448,052

 
19.4
%
 
7.50
%
2020
 
3,424

 
4.80
%
 
—

 
—

 
3,424

 
0.1
%
 
4.80
%
2021
 
122,304

 
4.27
%
 
—

 
—

 
122,304

 
5.3
%
 
4.27
%
2022
 
216,171

 
4.87
%
 
—

 
—

 
216,171

 
9.4
%
 
4.87
%
2023
 
30,739

 
4.15
%
 
—

 
—

 
30,739

 
1.3
%
 
4.15
%
2024
 
150,680

 
4.58
%
 
—

 
—

 
150,680

 
6.5
%
 
4.58
%
Thereafter
 
282,430

 
4.07
%
 
—

 
—

 
282,430

 
12.2
%
 
4.07
%
Total
 
$
2,012,712

 
4.96
%
 
$
295,867

 
1.72
%
 
$
2,308,579

 
100.0
%
 
4.55
%


(a)
Interest rates presented exclude the impact of the premium, discount and capitalized loan fee amortization. As of September 30, 2015, our overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 4.75%.
(b)
Fixed rate mortgages payable amounts exclude mortgage premium of $2,013 and discount of $(2), net of accumulated amortization, that was outstanding as of September 30, 2015. Unsecured notes payable amounts exclude discount of $(1,119), net of accumulated amortization, that was outstanding as of September 30, 2015. In the consolidated debt maturity schedule, maturity amounts for each year include scheduled principal amortization payments.
(c)
Subsequent to September 30, 2015, the construction loan was repaid in conjunction with the disposition of Green Valley Crossing.
(d)
Reflects $300,000 of LIBOR-based variable rate debt that matures in May 2018 and is swapped to a fixed rate of 0.53875% plus a margin based on a leverage grid ranging from 1.45% to 2.00% through February 2016. The applicable margin was 1.45% as of September 30, 2015.
(e)
Represents interest rates as of September 30, 2015.

3rd Quarter 2015 Supplemental Information
 
8


Retail Properties of America, Inc.
Summary of Indebtedness as of September 30, 2015
(dollar amounts in thousands)
Description
 
Maturity
Date
 
Interest
Rate (a)
 
Interest
Rate Type
 
Secured or
Unsecured
 
Balance as of
9/30/2015
 
Consolidated Indebtedness
 
 
 
 
 
 
 
 
 
 
 
Green Valley Crossing (b)
 
11/02/15
 
2.50%
(c)
Variable
 
Secured
 
$
15,867

(b)
New York Life portfolio (3 properties) (b)
 
12/31/15
 
4.75%
 
Fixed
 
Secured
 
58,344

(b)
HQ Building (b)
 
01/01/16
 
6.39%
 
Fixed
 
Secured
 
8,975

(b)
Cypress Mill Plaza
 
02/01/16
 
4.26%
 
Fixed
 
Secured
 
8,184

 
MacArthur Crossing
 
07/01/16
 
7.30%
 
Fixed
 
Secured
 
6,678

 
Heritage Towne Crossing
 
09/30/16
 
4.52%
 
Fixed
 
Secured
 
7,963

 
Oswego Commons
 
12/01/16
 
3.35%
 
Fixed
 
Secured
 
21,000

 
The Gateway (d)
 
04/01/17
 
6.57%
 
Fixed
 
Secured
 
94,823

(d)
Southlake Grand Ave.
 
04/01/17
 
3.50%
 
Fixed
 
Secured
 
56,000

 
Southlake Town Square
 
04/01/17
 
6.25%
 
Fixed
 
Secured
 
83,533

 
Central Texas Marketplace
 
04/11/17
 
5.46%
 
Fixed
 
Secured
 
45,387

 
Coppell Town Center
 
05/01/17
 
3.53%
 
Fixed
 
Secured
 
10,663

 
Lincoln Park
 
12/01/17
 
4.05%
 
Fixed
 
Secured
 
25,678

 
Corwest Plaza
 
04/01/19
 
7.25%
 
Fixed
 
Secured
 
14,319

 
Dorman Center
 
04/01/19
 
7.70%
 
Fixed
 
Secured
 
20,352

 
Shops at Park Place
 
05/01/19
 
7.48%
 
Fixed
 
Secured
 
7,701

 
Shoppes of New Hope
 
06/01/19
 
7.75%
 
Fixed
 
Secured
 
3,490

 
Village Shoppes at Simonton
 
06/01/19
 
7.75%
 
Fixed
 
Secured
 
3,221

 
Plaza at Marysville
 
09/01/19
 
8.00%
 
Fixed
 
Secured
 
8,852

 
Forks Town Center
 
10/01/19
 
7.70%
 
Fixed
 
Secured
 
8,083

 
IW JV 2009 portfolio (49 properties)
 
12/01/19
 
7.50%
 
Fixed
 
Secured
 
401,922

 
Sawyer Heights Village
 
07/01/21
 
5.00%
 
Fixed
 
Secured
 
18,700

 
Ashland & Roosevelt (bank pad)
 
02/25/22
 
7.48%
 
Fixed
 
Secured
 
1,133

 
Commons at Temecula
 
03/01/22
 
4.74%
 
Fixed
 
Secured
 
25,665

 
Gardiner Manor Mall
 
03/01/22
 
4.95%
 
Fixed
 
Secured
 
35,479

 
Peoria Crossings
 
04/01/22
 
4.82%
 
Fixed
 
Secured
 
24,131

 
Southlake Corners
 
04/01/22
 
4.89%
 
Fixed
 
Secured
 
20,945

 
Tollgate Marketplace
 
04/01/22
 
4.84%
 
Fixed
 
Secured
 
35,000

 
Town Square Plaza
 
04/01/22
 
4.82%
 
Fixed
 
Secured
 
16,815

 
Village Shoppes at Gainesville
 
04/01/22
 
4.25%
 
Fixed
 
Secured
 
19,861

 
Reisterstown Road Plaza
 
06/01/22
 
5.25%
 
Fixed
 
Secured
 
46,250

 
Gateway Village
 
01/01/23
 
4.14%
 
Fixed
 
Secured
 
35,873

 
Home Depot Plaza
 
12/01/26
 
4.82%
 
Fixed
 
Secured
 
10,750

 
Northgate North
 
06/01/27
 
4.50%
 
Fixed
 
Secured
 
26,942

 
Subtotal
 
 
 
 
 
 
 
 
 
1,228,579

 
Mortgage premium
 
 
 
 
 
 
 
 
 
2,013

 
Mortgage discount
 
 
 
 
 
 
 
 
 
(2
)
 
Mortgages payable, net
 
 
 
 
 
 
 
 
 
1,230,590

 
 
 
 
 
 
 
 
 
 
 
 
 
Senior notes - 4.12% Series A due 2021
 
06/30/21
 
4.12%
 
Fixed
 
Unsecured
 
100,000

 
Senior notes - 4.58% Series B due 2024
 
06/30/24
 
4.58%
 
Fixed
 
Unsecured
 
150,000

 
Senior notes - 4.00% due 2025
 
03/15/25
 
4.00%
 
Fixed
 
Unsecured
 
250,000

 
Subtotal
 
 
 
 
 
 
 
 
 
500,000

 
Discount
 
 
 
 
 
 
 
 
 
(1,119
)
 
Unsecured notes payable, net
 
 
 
 
 
 
 
 
 
498,881

 
 
 
 
 
 
 
 
 
 
 
 
 
Term loan
 
05/11/18
 
1.99%
(e)
Fixed
 
Unsecured
 
300,000

 
Term loan
 
05/11/18
 
1.65%
 
Variable
 
Unsecured
 
150,000

 
Revolving line of credit
 
05/12/17
 
1.70%
 
Variable
 
Unsecured
 
130,000

 
Unsecured credit facility
 
 
 
 
 
 
 
 
 
580,000

 
 
 
 
 
 
 
 
 
 
 
 
 
Total consolidated indebtedness
 
03/28/20
 
4.55%
 
 
 
 
 
$
2,309,471

 
 
 
 
 
 
 
 
 
 
 
 
 

(a)
Interest rates presented exclude the impact of the premium, discount and capitalized loan fee amortization. As of September 30, 2015, our overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 4.75%.
(b)
These loans were repaid subsequent to September 30, 2015.
(c)
The construction loan bore interest at a floating rate of LIBOR + 2.25%.
(d)
During the three months ended September 30, 2015, the servicing of the Commercial Mortgage-Backed Security (CMBS) loan encumbering The Gateway was transferred to the special servicer at our request. This servicing transfer occurred notwithstanding the fact that the CMBS loan is currently performing. In 2014, this property was impaired below its debt balance. The loan is non-recourse to us, except for customary non-recourse carve-outs.
(e)
Reflects $300,000 of LIBOR-based variable rate debt that matures in May 2018 and is swapped to a fixed rate of 0.53875% plus a margin based on a leverage grid ranging from 1.45% to 2.00% through February 2016. The applicable margin was 1.45% as of September 30, 2015.

3rd Quarter 2015 Supplemental Information
 
9


Retail Properties of America, Inc.
Acquisitions for the Nine Months Ended September 30, 2015
(amounts in thousands, except square footage amounts)


Property Name
 
Acquisition Date
 
Metropolitan
Statistical Area
(MSA)
 
Property Type
 
Gross
Leasable
Area (GLA)
 
Purchase
Price
Acquisitions
 
 
 
 
 
 
 
 
 
 
Downtown Crown
 
January 8, 2015
 
Washington, D.C.
 
Multi-tenant retail
 
258,000

 
$
162,785

Merrifield Town Center
 
January 23, 2015
 
Washington, D.C.
 
Multi-tenant retail
 
84,900

 
56,500

Fort Evans Plaza II
 
January 23, 2015
 
Washington, D.C.
 
Multi-tenant retail
 
228,900

 
65,000

Cedar Park Town Center
 
February 19, 2015
 
Austin
 
Multi-tenant retail
 
179,300

 
39,057

Lake Worth Towne Crossing - Parcel (a)
 
March 24, 2015
 
Dallas
 
Land parcel
 
—

 
400

Tysons Corner
 
May 4, 2015
 
Washington, D.C.
 
Multi-tenant retail
 
37,700

 
31,556

Woodinville Plaza
 
June 10, 2015
 
Seattle
 
Multi-tenant retail
 
170,800

 
35,250

Southlake Town Square -
 Trader Joe's (a)
 
July 31, 2015
 
Dallas
 
Single-user outparcel
 
13,800

 
8,440

Coal Creek Marketplace
 
August 27, 2015
 
Seattle
 
Multi-tenant retail
 
55,900

 
17,600

 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2015 acquisitions (through September 30, 2015)
 
1,029,300

 
$
416,588

 
 
 
 
 
 
 
 
 
 
 


(a)
We acquired a parcel at Lake Worth Towne Crossing and an outparcel at Southlake Town Square, both of which are existing wholly-owned multi-tenant retail operating properties. As a result, the total number of properties in our portfolio was not affected.




Subsequent to September 30, 2015, we closed on the following acquisition:
Property Name
 
Acquisition Date
 
MSA
 
Property Type
 
GLA
 
Purchase
Price
Acquisitions
 
 
 
 
 
 
 
 
 
 
Royal Oaks Village II -
 Trader Joe's (b)
 
October 27, 2015
 
Houston
 
Single-user outparcel
 
12,300

 
$
6,841

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent acquisition
 
12,300

 
$
6,841

 
 
 
 
 
 
 
 
 
 
 


(b)
We acquired an outparcel at Royal Oaks Village II, an existing wholly-owned multi-tenant retail operating property. As a result, the total number of properties in our portfolio will not be affected.

3rd Quarter 2015 Supplemental Information
 
10



Retail Properties of America, Inc.
Dispositions for the Nine Months Ended September 30, 2015
(amounts in thousands, except square footage amounts)


Property Name
 
Disposition Date
 
Property Type
 
GLA
 
Consideration
 
Mortgage Debt
 
Dispositions
 
 
 
 
 
 
 
 
 
 
 
Aon Hewitt East Campus
 
January 20, 2015
 
Single-user office
 
343,000

 
$
17,233

 
$
—

 
Promenade at Red Cliff
 
February 27, 2015
 
Multi-tenant retail
 
94,500

 
19,050

 
9,775

(a)
Hartford Insurance Building
 
April 7, 2015
 
Single-user office
 
97,400

 
6,015

 
—

 
Rasmussen College
 
April 30, 2015
 
Single-user office
 
26,700

 
4,800

 
—

 
Mountain View Plaza
 
May 15, 2015
 
Multi-tenant retail
 
162,000

 
28,500

 
—

 
Massillon Commons
 
June 4, 2015
 
Multi-tenant retail
 
245,900

 
12,520

 
—

(b)
Citizen's Property Insurance Building
 
June 5, 2015
 
Single-user office
 
59,800

 
3,650

 
—

 
Pine Ridge Plaza
 
June 17, 2015
 
Multi-tenant retail
 
236,500

 
33,200

 
—

 
Bison Hollow
 
June 17, 2015
 
Multi-tenant retail
 
134,800

 
18,800

 
—

(c)
The Village at Quail Springs
 
June 17, 2015
 
Multi-tenant retail
 
100,400

 
11,350

 
—

(b)
Greensburg Commons
 
July 17, 2015
 
Multi-tenant retail
 
272,500

 
18,400

 
—

(d)
Arvada Connection and
Arvada Marketplace
 
July 28, 2015
 
Multi-tenant retail
 
367,500

 
54,900

 
—

 
Traveler's Office Building
 
July 30, 2015
 
Single-user office
 
50,800

 
4,841

 
—

 
Shaw's Supermarket
 
August 6, 2015
 
Single-user retail
 
65,700

 
3,000

 
—

 
Harvest Towne Center
 
August 24, 2015
 
Multi-tenant retail
 
39,700

 
7,800

 
—

 
Trenton Crossing &
McAllen Shopping Center
 
August 31, 2015
 
Multi-tenant retail
 
265,900

 
39,295

 
—

(b)
The Shops at Boardwalk
 
September 15, 2015
 
Multi-tenant retail
 
122,400

 
27,400

 
—

 
Best on the Boulevard
 
September 29, 2015
 
Multi-tenant retail
 
204,400

 
42,500

 
—

(b)
Montecito Crossing
 
September 29, 2015
 
Multi-tenant retail
 
179,700

 
52,200

 
—

(e)
 
 
 
 
 
 
 
 
 
 
 
 
Total 2015 dispositions (through September 30, 2015)
 
3,069,600

 
$
405,454

 
$
9,775

 
 
 
 
 
 
 
 
 
 
 
 
 


(a)
We defeased $9,775 of the IW JV 2009 portfolio of mortgages payable to unencumber Promenade at Red Cliff in conjunction with its disposition.
(b)
We defeased $8,452, $6,325, $19,665 and $21,045 of the IW JV 2009 portfolio of mortgages payable to unencumber Massillon Commons, Village at Quail Springs, Trenton Crossing and Best on the Boulevard, respectively, prior to the dispositions.
(c)
We repaid the $7,392 mortgage payable prior to the disposition of the property.
(d)
We repaid the $10,250 mortgage payable prior to the disposition of the property.
(e)
We repaid the $16,380 mortgage payable prior to the disposition of the property.



Subsequent to September 30, 2015, we closed on the following disposition:
Property Name
 
Disposition Date
 
Property Type
 
GLA
 
Consideration
 
Construction Loan
 
Dispositions
 
 
 
 
 
 
 
 
 
 
 
Green Valley Crossing (f)
 
October 29, 2015
 
Development
 
96,400

 
$
35,000

 
$
15,949

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent disposition
 
96,400

 
$
35,000

 
$
15,949

 
 
 
 
 
 
 
 
 
 
 
 
 


(f)
Prior to the disposition, the property had been held in a consolidated joint venture.

3rd Quarter 2015 Supplemental Information
 
11


Retail Properties of America, Inc.
Market Summary and Property Overview as of September 30, 2015
(dollar amounts and square footage in thousands)

Market Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property Type/Target Market
 
Number of
Properties
 
GLA
 
% of Total
Multi-Tenant
Retail
GLA (a)
 
Occupancy
 
% Leased
Including
Signed
 
Annualized
Base Rent
(ABR)
 
% of Total
Multi-Tenant
Retail
ABR (a)
 
ABR per
Occupied
Sq. Ft.
Multi-Tenant Retail:
Target Markets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dallas, TX
 
19

 
3,997

 
14.3
%
 
88.6
%
 
93.0
%
 
$
74,007

 
17.9
%
 
$
20.90

Baltimore, MD / Washington, D.C.
 
12

 
2,973

 
10.7
%
 
90.0
%
 
92.1
%
 
49,551

 
12.0
%
 
18.52

New York, NY
 
8

 
1,404

 
5.0
%
 
97.3
%
 
97.8
%
 
33,286

 
8.1
%
 
24.37

Atlanta, GA
 
9

 
1,513

 
5.4
%
 
96.0
%
 
96.6
%
 
18,619

 
4.5
%
 
12.82

Seattle, WA
 
7

 
1,242

 
4.5
%
 
91.9
%
 
92.4
%
 
16,073

 
3.9
%
 
14.08

Chicago, IL
 
5

 
893

 
3.2
%
 
90.8
%
 
92.9
%
 
14,595

 
3.6
%
 
18.00

Houston, TX
 
9

 
1,128

 
4.0
%
 
93.4
%
 
97.1
%
 
14,331

 
3.5
%
 
13.60

San Antonio, TX
 
4

 
779

 
2.8
%
 
97.6
%
 
97.6
%
 
12,407

 
3.0
%
 
16.32

Phoenix, AZ
 
3

 
632

 
2.3
%
 
96.5
%
 
97.5
%
 
10,095

 
2.4
%
 
16.55

Austin, TX
 
4

 
350

 
1.3
%
 
93.5
%
 
95.0
%
 
5,111

 
1.2
%
 
15.62

Subtotal
 
80

 
14,911

 
53.5
%
 
92.1
%
 
94.4
%
 
248,075

 
60.1
%
 
18.06

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Markets - Top 50 MSAs
 
34

 
5,600

 
20.1
%
 
89.1
%
 
91.5
%
 
72,876

 
17.7
%
 
14.61

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subtotal Target Markets
and Top 50 MSAs
 
114

 
20,511

 
73.6
%
 
91.3
%
 
93.6
%
 
320,951

 
77.8
%
 
17.14

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Markets
 
38

 
7,357

 
26.4
%
 
96.2
%
 
96.5
%
 
91,884

 
22.2
%
 
12.98

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Multi-Tenant Retail
 
152

 
27,868

 
100.0
%
 
92.6
%
 
94.4
%
 
412,835

 
100.0
%
 
16.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Single-User Retail
 
49

 
1,292

 
 
 
100.0
%
 
100.0
%
 
25,278

 
 
 
19.57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Retail
 
201

 
29,160

 


 
92.9
%
 
94.6
%
 
438,113

 


 
16.17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office
 
1

 
895

 
 
 
100.0
%
 
100.0
%
 
10,476

 
 
 
11.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Operating Portfolio
 
202

 
30,055

 
 
 
93.1
%
 
94.8
%
 
$
448,589

 
 

 
$
16.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property Overview
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property Type/Region
 
Number of
Properties
 
GLA
 
% of Total
GLA (a)
 
Occupancy
 
% Leased
Including
Signed
 
ABR
 
% of Total
ABR (a)
 
ABR per
Occupied
Sq. Ft.
Retail:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North
 
70

 
9,094

 
31.2
%
 
95.2
%
 
96.1
%
 
$
148,858

 
34.0
%
 
$
17.19

East
 
51

 
7,076

 
24.3
%
 
92.5
%
 
94.3
%
 
85,611

 
19.5
%
 
13.08

Total Eastern Division
 
121

 
16,170

 
55.5
%
 
94.0
%
 
95.3
%
 
234,469

 
53.5
%
 
15.43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
South
 
51

 
7,363

 
25.2
%
 
91.2
%
 
94.5
%
 
119,128

 
27.2
%
 
17.74

West
 
29

 
5,627

 
19.3
%
 
91.9
%
 
92.8
%
 
84,516

 
19.3
%
 
16.34

Total Western Division
 
80

 
12,990

 
44.5
%
 
91.5
%
 
93.8
%
 
203,644

 
46.5
%
 
17.13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total - Retail
 
201

 
29,160

 
100.0
%
 
92.9
%
 
94.6
%
 
438,113

 
100.0
%
 
16.17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office
 
1

 
895

 
 

 
100.0
%
 
100.0
%
 
10,476

 
 

 
11.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Operating Portfolio
 
202

 
30,055

 
 

 
93.1
%
 
94.8
%
 
$
448,589

 
 

 
$
16.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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

3rd Quarter 2015 Supplemental Information
 
12



Retail Properties of America, Inc.
Retail Operating Portfolio Occupancy Breakdown as of September 30, 2015
(square footage in thousands)


Total Retail Operating Portfolio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
25,000+ sq ft
 
10,000-24,999 sq ft
 
5,000-9,999 sq ft
 
0-4,999 sq ft
Property Type/Region
 
Number of
Properties
 
GLA
 
Occupancy
 
GLA
 
Occupancy
 
GLA
 
Occupancy
 
GLA
 
Occupancy
 
GLA
 
Occupancy
Retail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North
 
70

 
9,094

 
95.2
%
 
5,432

 
100.0
%
 
1,613

 
94.7
%
 
878

 
88.0
%
 
1,171

 
79.3
%
East
 
51

 
7,076

 
92.5
%
 
3,999

 
94.2
%
 
1,330

 
96.4
%
 
607

 
91.5
%
 
1,140

 
82.6
%
Total Eastern Division
 
121

 
16,170

 
94.0
%
 
9,431

 
97.5
%
 
2,943

 
95.5
%
 
1,485

 
89.4
%
 
2,311

 
80.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
South
 
51

 
7,363

 
91.2
%
 
3,038

 
94.6
%
 
1,458

 
88.1
%
 
1,092

 
92.2
%
 
1,775

 
87.5
%
West
 
29

 
5,627

 
91.9
%
 
2,863

 
97.4
%
 
1,054

 
94.6
%
 
662

 
81.8
%
 
1,048

 
80.5
%
Total Western Division
 
80

 
12,990

 
91.5
%
 
5,901

 
95.9
%
 
2,512

 
90.8
%
 
1,754

 
88.3
%
 
2,823

 
84.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
201

 
29,160

 
92.9
%
 
15,332

 
96.9
%
 
5,455

 
93.3
%
 
3,239

 
88.8
%
 
5,134

 
83.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total - % Leased including Signed
 
201

 
29,160

 
94.6
%
 
15,332

 
97.6
%
 
5,455

 
97.3
%
 
3,239

 
91.2
%
 
5,134

 
84.9
%


3rd Quarter 2015 Supplemental Information
 
13



Retail Properties of America, Inc.
Top Retail Tenants as of September 30, 2015
(dollar amounts and square footage in thousands)


The following table sets forth information regarding the 20 largest tenants in our retail operating portfolio based on ABR as of September 30, 2015. Dollars (other than per square foot information) and square feet of GLA are presented in thousands.
Tenant
 
Primary DBA
 
Number
of Stores
 
Occupied
GLA
 
% of
Occupied
GLA
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ahold U.S.A. Inc.
 
Giant Foods, Stop & Shop, Martin's
 
11

 
675

 
2.5
%
 
$
13,275

 
3.0
%
 
$
19.67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Best Buy Co., Inc.
 
Best Buy, Pacific Sales
 
21

 
830

 
3.1
%
 
12,682

 
2.9
%
 
15.28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The TJX Companies Inc.
 
HomeGoods, Marshalls, TJ Maxx
 
41

 
1,207

 
4.5
%
 
11,170

 
2.5
%
 
9.25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ross Stores, Inc.
 
 
 
33

 
973

 
3.6
%
 
10,884

 
2.5
%
 
11.19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rite Aid Corporation
 
 
 
32

 
409

 
1.5
%
 
9,388

 
2.1
%
 
22.95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PetSmart, Inc.
 
 
 
29

 
603

 
2.2
%
 
9,030

 
2.1
%
 
14.98

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bed Bath & Beyond Inc.
 
Bed Bath & Beyond, Buy Buy Baby, The Christmas Tree Shops, Cost Plus World Market
 
24

 
650

 
2.4
%
 
8,973

 
2.0
%
 
13.80

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Home Depot, Inc.
 
Home Depot, Home Decorators
 
8

 
870

 
3.2
%
 
7,303

 
1.7
%
 
8.39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AB Acquisition LLC
 
Safeway, Jewel-Osco, Shaw's Supermarket, Tom Thumb
 
10

 
526

 
1.9
%
 
7,117

 
1.6
%
 
13.53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regal Entertainment Group
 
Edwards Cinema
 
2

 
219

 
0.8
%
 
6,911

 
1.6
%
 
31.56

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Sports Authority, Inc.
 
 
 
11

 
480

 
1.8
%
 
6,109

 
1.4
%
 
12.73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michaels Stores, Inc.
 
Michaels, Aaron Brothers Art & Frame
 
24

 
542

 
2.0
%
 
6,019

 
1.4
%
 
11.11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pier 1 Imports, Inc.
 
 
 
27

 
277

 
1.0
%
 
5,564

 
1.3
%
 
20.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Depot, Inc.
 
Office Depot, OfficeMax
 
19

 
392

 
1.4
%
 
5,537

 
1.3
%
 
14.13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Publix Super Markets Inc.
 
 
 
12

 
511

 
1.9
%
 
5,405

 
1.2
%
 
10.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dick's Sporting Goods, Inc.
 
Dick's Sporting Goods, Golf Galaxy, Field & Stream
 
10

 
495

 
1.8
%
 
5,403

 
1.2
%
 
10.92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ascena Retail Group Inc.
 
Dress Barn, Lane Bryant, Justice, Catherine's, Ann Taylor, Maurices, LOFT
 
47

 
254

 
0.9
%
 
5,316

 
1.2
%
 
20.93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Gap Inc.
 
Old Navy, Banana Republic, The Gap, Gap Factory Store
 
25

 
344

 
1.3
%
 
5,065

 
1.2
%
 
14.72

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staples, Inc.
 
 
 
14

 
301

 
1.1
%
 
4,984

 
1.1
%
 
16.56

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Kroger Co.
 
Kroger, Harris Teeter, King Soopers, QFC
 
9

 
506

 
1.9
%
 
4,978

 
1.1
%
 
9.84

Total Top Retail Tenants
 
 
409

 
11,064

 
40.8
%
 
$
151,113

 
34.4
%
 
$
13.66



3rd Quarter 2015 Supplemental Information
 
14



Retail Properties of America, Inc.
Retail Leasing Activity Summary
(square footage amounts in thousands)


The following table summarizes the leasing activity in our retail operating portfolio as of September 30, 2015 and for the preceding four quarters. Leases of less than 12 months have been excluded.
Total Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
Leases Signed
 
GLA Signed
 
New Contractual
Rent per Square
Foot (PSF) (a)
 
Prior
Contractual
Rent PSF (a)
 
% Change
over Prior
ABR (a)
 
WA Lease
Term
 
Tenant
Allowances
PSF
Q3 2015
 
131

 
666

 
$
19.01

 
$
17.38

 
9.38
%
 
5.94

 
$
13.99

Q2 2015
 
142

 
782

 
$
19.52

 
$
17.95

 
8.75
%
 
6.28

 
$
7.70

Q1 2015
 
139

 
765

 
$
16.80

 
$
15.69

 
7.07
%
 
5.87

 
$
14.35

Q4 2014
 
139

 
732

 
$
18.91

 
$
18.54

 
2.00
%
 
5.12

 
$
11.77

Total - 12 months
 
551

 
2,945

 
$
18.52

 
$
17.31

 
6.99
%
 
5.84

 
$
11.86

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable Renewal Leases
 
 
 
 

 
 

 
 

 
 

 
 

 
 
Number of
Leases Signed
 
GLA Signed
 
New
Contractual
Rent PSF
 
Prior
Contractual
Rent PSF
 
% Change
over Prior
ABR
 
WA Lease
Term
 
Tenant
Allowances
PSF
Q3 2015
 
80

 
412

 
$
18.85

 
$
17.57

 
7.29
%
 
4.61

 
$
0.05

Q2 2015
 
92

 
528

 
$
18.58

 
$
17.34

 
7.15
%
 
4.85

 
$
1.82

Q1 2015
 
89

 
488

 
$
16.99

 
$
16.17

 
5.07
%
 
4.60

 
$
0.94

Q4 2014
 
82

 
363

 
$
18.86

 
$
18.47

 
2.11
%
 
4.03

 
$
0.45

Total - 12 months
 
343

 
1,791

 
$
18.26

 
$
17.30

 
5.55
%
 
4.56

 
$
0.89

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable New Leases
 
 
 
 

 
 

 
 

 
 

 
 

 
 
Number of
Leases Signed
 
GLA Signed
 
New
Contractual
Rent PSF
 
Prior
Contractual
Rent PSF
 
% Change
over Prior
ABR
 
WA Lease
Term
 
Tenant
Allowances
PSF
Q3 2015
 
14

 
89

 
$
19.77

 
$
16.53

 
19.60
%
 
8.58

 
$
32.56

Q2 2015
 
15

 
39

 
$
32.24

 
$
26.21

 
23.01
%
 
8.11

 
$
33.63

Q1 2015
 
13

 
76

 
$
15.56

 
$
12.59

 
23.59
%
 
7.95

 
$
26.10

Q4 2014
 
14

 
53

 
$
19.29

 
$
19.00

 
1.53
%
 
8.25

 
$
29.59

Total - 12 months
 
56

 
257

 
$
20.32

 
$
17.35

 
17.12
%
 
8.26

 
$
30.20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable New and Renewal Leases (b)
 
 

 
 

 
 

 
 

 
 

 
 
Number of
Leases Signed
 
GLA Signed
 
New
Contractual
Rent PSF
 
Prior
Contractual
Rent PSF
 
% Change
over Prior
ABR
 
WA Lease
Term
 
Tenant
Allowances
PSF
Q3 2015
 
37

 
165

 
$
22.41

 
n/a
 
n/a
 
7.49

 
$
38.86

Q2 2015
 
35

 
215

 
$
19.41

 
n/a
 
n/a
 
9.09

 
$
17.45

Q1 2015
 
37

 
201

 
$
18.36

 
n/a
 
n/a
 
8.08

 
$
42.39

Q4 2014
 
43

 
316

 
$
12.20

 
n/a
 
n/a
 
6.21

 
$
21.80

Total - 12 months
 
152

 
897

 
$
17.19

 
n/a
 
n/a
 
7.75

 
$
28.52

 

(a)
Excludes the impact of Non-Comparable New and Renewal Leases.
(b)
Includes leases signed on units that were vacant for over 12 months, leases signed without fixed rental payments and leases signed where the previous and the current lease do not have a consistent lease structure.

3rd Quarter 2015 Supplemental Information
 
15


Retail Properties of America, Inc.
Retail Lease Expirations as of September 30, 2015
(dollar amounts and square footage in thousands)

The following tables set forth a summary, as of September 30, 2015, of lease expirations scheduled to occur during the remainder of 2015 and each of the nine calendar years from 2016 to 2024 and thereafter, assuming no exercise of renewal options or early termination rights for all leases in our retail operating portfolio. The following tables are based on leases commenced as of September 30, 2015. Dollars (other than per square foot information) and square feet of GLA are presented in thousands in the table.
Lease Expiration Year
 
Lease
Count
 
GLA
 
% of
Occupied
GLA
 
% of Total
GLA
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
ABR at
Exp. (a)
 
ABR per
Occupied Sq.
Ft. at Exp.
2015
 
62

 
259

 
0.9
%
 
0.9
%
 
$
4,014

 
0.9
%
 
$
15.50

 
$
4,014

 
$
15.50

2016
 
406

 
1,829

 
6.8
%
 
6.3
%
 
35,121

 
8.0
%
 
19.20

 
35,214

 
19.25

2017
 
437

 
2,833

 
10.5
%
 
9.7
%
 
43,858

 
10.0
%
 
15.48

 
44,437

 
15.69

2018
 
483

 
3,042

 
11.2
%
 
10.5
%
 
54,461

 
12.4
%
 
17.90

 
55,713

 
18.31

2019
 
517

 
4,150

 
15.3
%
 
14.2
%
 
74,668

 
17.1
%
 
17.99

 
76,362

 
18.40

2020
 
368

 
3,334

 
12.2
%
 
11.4
%
 
50,788

 
11.5
%
 
15.23

 
52,610

 
15.78

2021
 
163

 
2,083

 
7.7
%
 
7.2
%
 
31,998

 
7.3
%
 
15.36

 
34,990

 
16.80

2022
 
102

 
2,047

 
7.6
%
 
7.0
%
 
28,240

 
6.4
%
 
13.80

 
30,207

 
14.76

2023
 
99

 
1,620

 
6.0
%
 
5.5
%
 
24,625

 
5.6
%
 
15.20

 
26,366

 
16.28

2024
 
155

 
2,253

 
8.3
%
 
7.7
%
 
33,040

 
7.6
%
 
14.66

 
35,661

 
15.83

Thereafter
 
159

 
3,544

 
13.1
%
 
12.1
%
 
55,302

 
12.7
%
 
15.60

 
62,964

 
17.77

Month to month
 
49

 
103

 
0.4
%
 
0.4
%
 
1,998

 
0.5
%
 
19.40

 
1,998

 
19.40

Leased Total
 
3,000

 
27,097

 
100.0
%
 
92.9
%
 
$
438,113

 
100.0
%
 
$
16.17

 
$
460,536

 
$
17.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leases signed but not commenced
 
64

 
494

 
—

 
1.7
%
 
$
9,282

 
—

 
$
18.79

 
$
11,023

 
$
22.31

Available
 
 

 
1,569

 
—

 
5.4
%
 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following tables break down the above information into anchor (10,000 sf and above) and non-anchor (under 10,000 sf) details for our retail operating portfolio. Dollars (other than per square foot information) and square feet of GLA are presented in thousands in the tables.
Anchor
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Lease Expiration Year
 
Lease
Count
 
GLA
 
% of
Occupied
GLA
 
% of Total
GLA
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
ABR at
Exp. (a)
 
ABR per
Occupied Sq.
Ft. at Exp.
2015
 
6

 
124

 
0.4
%
 
0.4
%
 
$
1,308

 
0.3
%
 
$
10.55

 
$
1,308

 
$
10.55

2016
 
38

 
831

 
3.1
%
 
2.9
%
 
11,946

 
2.7
%
 
14.38

 
11,946

 
14.38

2017
 
55

 
1,780

 
6.6
%
 
6.1
%
 
17,676

 
4.0
%
 
9.93

 
17,698

 
9.94

2018
 
66

 
1,829

 
6.7
%
 
6.3
%
 
23,361

 
5.3
%
 
12.77

 
23,582

 
12.89

2019
 
114

 
2,970

 
11.0
%
 
10.2
%
 
44,530

 
10.2
%
 
14.99

 
44,804

 
15.09

2020
 
91

 
2,426

 
8.9
%
 
8.3
%
 
29,149

 
6.6
%
 
12.02

 
29,483

 
12.15

2021
 
55

 
1,660

 
6.1
%
 
5.7
%
 
22,641

 
5.2
%
 
13.64

 
24,231

 
14.60

2022
 
50

 
1,838

 
6.8
%
 
6.3
%
 
22,723

 
5.2
%
 
12.36

 
24,005

 
13.06

2023
 
41

 
1,384

 
5.1
%
 
4.7
%
 
18,826

 
4.3
%
 
13.60

 
19,801

 
14.31

2024
 
60

 
1,923

 
7.1
%
 
6.6
%
 
23,081

 
5.3
%
 
12.00

 
24,214

 
12.59

Thereafter
 
68

 
3,190

 
11.8
%
 
10.9
%
 
44,495

 
10.2
%
 
13.95

 
49,982

 
15.67

Month to month
 
—

 
—

 
—
%
 
—
%
 
—

 
—
%
 
—

 
—

 
—

Leased Total
 
644

 
19,955

 
73.6
%
 
68.4
%
 
$
259,736

 
59.3
%
 
$
13.02

 
$
271,054

 
$
13.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leases signed but not commenced
 
16

 
324

 
—

 
1.1
%
 
$
4,600

 
—

 
$
14.20

 
$
5,243

 
$
16.18

Available
 
 

 
510

 
—

 
1.8
%
 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Anchor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease Expiration Year
 
Lease
Count
 
GLA
 
% of
Occupied
GLA
 
% of Total
GLA
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
ABR at
Exp. (a)
 
ABR per
Occupied Sq.
Ft. at Exp.
2015
 
56

 
135

 
0.5
%
 
0.5
%
 
$
2,706

 
0.6
%
 
$
20.04

 
$
2,706

 
$
20.04

2016
 
368

 
998

 
3.7
%
 
3.4
%
 
23,175

 
5.3
%
 
23.22

 
23,268

 
23.31

2017
 
382

 
1,053

 
3.9
%
 
3.6
%
 
26,182

 
6.0
%
 
24.86

 
26,739

 
25.39

2018
 
417

 
1,213

 
4.5
%
 
4.2
%
 
31,100

 
7.1
%
 
25.64

 
32,131

 
26.49

2019
 
403

 
1,180

 
4.3
%
 
4.0
%
 
30,138

 
6.9
%
 
25.54

 
31,558

 
26.74

2020
 
277

 
908

 
3.3
%
 
3.1
%
 
21,639

 
4.9
%
 
23.83

 
23,127

 
25.47

2021
 
108

 
423

 
1.6
%
 
1.5
%
 
9,357

 
2.1
%
 
22.12

 
10,759

 
25.43

2022
 
52

 
209

 
0.8
%
 
0.7
%
 
5,517

 
1.2
%
 
26.40

 
6,202

 
29.67

2023
 
58

 
236

 
0.9
%
 
0.8
%
 
5,799

 
1.3
%
 
24.57

 
6,565

 
27.82

2024
 
95

 
330

 
1.2
%
 
1.1
%
 
9,959

 
2.3
%
 
30.18

 
11,447

 
34.69

Thereafter
 
91

 
354

 
1.3
%
 
1.2
%
 
10,807

 
2.5
%
 
30.53

 
12,982

 
36.67

Month to month
 
49

 
103

 
0.4
%
 
0.4
%
 
1,998

 
0.5
%
 
19.40

 
1,998

 
19.40

Leased Total
 
2,356

 
7,142

 
26.4
%
 
24.5
%
 
$
178,377

 
40.7
%
 
$
24.98

 
$
189,482

 
$
26.53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leases signed but not commenced
 
48

 
170

 
—

 
0.6
%
 
$
4,682

 
—

 
$
27.54

 
$
5,780

 
$
34.00

Available
 
 

 
1,059

 
—

 
3.6
%
 
 

 
 

 
 

 
 

 
 

(a)
Represents annualized base rent at the scheduled expiration of the lease giving effect to fixed contractual increases in base rent.

3rd Quarter 2015 Supplemental Information
 
16


Retail Properties of America, Inc.
Non-GAAP Financial Measures and Other Definitions


Occupancy
Occupancy is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the number of square feet of such property economically occupied by tenants under leases with an initial term of greater than one year, to (b) the aggregate number of square feet for such property.
Percent Leased Including Signed
Percent Leased Including Signed is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the sum of occupied square feet (pursuant to the definition above) of such property and vacant square feet for which a lease with an initial term of greater than one year has been signed, but rent has not yet commenced, to (b) the aggregate number of square feet for such property.
Funds From Operations (FFO) Attributable to Common Shareholders
As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, Funds From Operations (FFO) means net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate, including amounts from continuing and discontinued operations, as well as adjustments for unconsolidated joint ventures in which we hold an interest. We have adopted the NAREIT definition in our computation of FFO attributable to common shareholders. Management believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing our performance and operations to those of other real estate investment trusts (REITs). We believe that FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders does not represent an alternative to "Net income" or "Net income attributable to common shareholders" as an indicator of our performance or "Cash Flows from Operating Activities" as determined by GAAP as a measure of our capacity to fund cash needs, including the payment of dividends.
Operating FFO Attributable to Common Shareholders
Operating FFO attributable to common shareholders is defined as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our core business platform, our real estate operating portfolio. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the financial statement impact of gains or losses associated with the early extinguishment of debt or other liabilities, actual or anticipated settlement of litigation involving the Company, executive separation charges and impairment charges to write down the carrying value of assets other than depreciable real estate, which are otherwise excluded from our calculation of FFO attributable to common shareholders. We believe that Operating FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. Operating FFO attributable to common shareholders does not represent an alternative to "Net income" or "Net income attributable to common shareholders" as an indicator of our performance or "Cash Flows from Operating Activities" as determined by GAAP as a measure of our capacity to fund cash needs, including the payment of dividends. Further, comparison of our presentation of Operating FFO attributable to common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
Net Operating Income (NOI)
We define Net Operating Income (NOI) as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangibles and straight-line bad debt expense). We believe that NOI is a useful measure of our operating performance. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that NOI provides an operating perspective not immediately apparent from GAAP operating income or net income attributable to common shareholders. We use NOI to evaluate our performance on a property-by-property basis because this measure allows management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results. However, this measure should only be used as an alternative measure of our financial performance.
Same Store NOI, NOI from Other Investment Properties and Same Store NOI, Excluding the Impact of Strategic Remerchandising Activities
Same Store NOI for the nine months ended September 30, 2015 represents NOI from our same store portfolio consisting of 184 operating properties acquired or placed in service and stabilized prior to January 1, 2014. NOI from Other Investment Properties for the nine months ended September 30, 2015 represents NOI primarily from properties acquired during 2014 and 2015, our development properties, two properties where we have begun activities in anticipation of future redevelopment, one property that was impaired below its debt balance during 2014, the investment properties that were sold or held for sale in 2014 and 2015 that did not qualify for discontinued operations treatment and the historical ground rent expense related to an existing same store investment property that was subject to a ground lease with a third party prior to our acquisition of the fee interest during the first quarter of 2014. In addition, the financial results reported in "Other investment properties" for the nine months ended September 30, 2015 include the net income from our wholly-owned captive insurance company, which was formed on December 1, 2014, and the financial results reported in "Other investment properties" for the nine months ended September 30, 2014 include the historical intercompany expense elimination related to our former insurance captive unconsolidated joint venture investment, in which we terminated our participation effective December 1, 2014. For the nine months ended September 30, 2014, the historical captive insurance expense related to our portfolio was recorded in equity in loss of unconsolidated joint ventures, net. For the three months ended September 30, 2015, our same store portfolio consists of 191 operating properties inclusive of the same store portfolio for the nine months ended September 30, 2015 and seven additional operating properties acquired during the first half of 2014.


3rd Quarter 2015 Supplemental Information
 
17


Retail Properties of America, Inc.
Non-GAAP Financial Measures and Other Definitions (continued)


Same Store NOI, NOI from Other Investment Properties and Same Store NOI, Excluding the Impact of Strategic Remerchandising Activities (continued)
The financial results reported in "Other investment properties" for the three months ended September 30, 2015 are inclusive of the topics described above for the nine months ended September 30, 2015 excluding the seven investment properties acquired during the first half of 2014. NOI consists of the sum of Same Store NOI and NOI from Other Investment Properties.
Same Store NOI, excluding the impact of strategic remerchandising activities, represents Same Store NOI, less the operating revenues of the previously announced 15 anchor locations subject to strategic remerchandising that have vacated as of September 30, 2015, as well as the related revenue impact of such efforts due to co-tenancy provisions or otherwise.
We believe that Same Store NOI, NOI from Other Investment Properties and Same Store NOI, excluding the impact of strategic remerchandising activities, are useful measures of our operating performance. Further, we believe Same Store NOI, excluding the impact of strategic remerchandising activities, is also useful as it provides a basis for evaluating the impact of our previously announced remerchandising activities on our operating results. Other REITs may use different methodologies for calculating these metrics, and accordingly, our NOI metrics may not be comparable to other REITs. We believe that these metrics provide an operating perspective not immediately apparent from operating income or net income attributable to common shareholders as defined within GAAP. We use these metrics to evaluate our performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results. However, these measures should only be used as alternative measures of our financial performance.
Adjusted EBITDA
Adjusted EBITDA represents net income attributable to common shareholders before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing performance. We believe that Adjusted EBITDA is useful because it allows investors and management to evaluate and compare our performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to "Net income attributable to common shareholders" as an indicator of operating performance or any measure of performance derived in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, accordingly, comparability may be limited.
Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA represents (i) our total debt less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. We believe that this ratio is useful because it provides investors with information regarding total debt net of cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Adjusted EBITDA.
Net Debt and Preferred Stock to Adjusted EBITDA
Net Debt and Preferred Stock to Adjusted EBITDA represents (i) our total debt, plus preferred stock, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. We believe that this ratio is useful because it provides investors with information regarding total debt and preferred stock, net of cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Adjusted EBITDA.

3rd Quarter 2015 Supplemental Information
 
18


Retail Properties of America, Inc.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands)
(unaudited)

Reconciliation of Net Income (Loss) Attributable to Common Shareholders to NOI
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Operating revenues
 
 

 
 

 
 

 
 

Same store investment properties (191 and 184 properties, respectively):
 
 

 
 

 
 

 
 

Rental income
 
$
102,935

 
$
101,312

 
$
292,184

 
$
285,411

Tenant recovery income
 
25,611

 
25,259

 
72,118

 
70,492

Other property income
 
1,081

 
914

 
3,069

 
2,535

Other investment properties:
 
 

 
 
 
 

 
 
Rental income
 
12,876

 
17,798

 
60,334

 
65,020

Tenant recovery income
 
3,290

 
3,971

 
17,499

 
15,594

Other property income
 
1,013

 
1,014

 
3,117

 
3,091

Operating expenses
 
 

 
 

 
 

 
 

Same store investment properties (191 and 184 properties, respectively):
 
 

 
 

 
 

 
 

Property operating expenses
 
(18,338
)
 
(18,915
)
 
(54,293
)
 
(56,326
)
Real estate taxes
 
(18,718
)
 
(17,853
)
 
(50,328
)
 
(48,001
)
Other investment properties:
 
 
 
 

 
 

 
 

Property operating expenses
 
(3,612
)
 
(3,907
)
 
(14,919
)
 
(13,466
)
Real estate taxes
 
(2,243
)
 
(2,721
)
 
(11,629
)
 
(10,054
)
 
 
 
 
 
 
 
 
 
NOI from continuing operations
 
 

 
 

 
 

 
 

Same store investment properties
 
92,571

 
90,717

 
262,750

 
254,111

Other investment properties
 
11,324

 
16,155

 
54,402

 
60,185

Total NOI from continuing operations
 
103,895

 
106,872

 
317,152

 
314,296

 
 
 
 
 
 
 
 
 
Other income (expense)
 
 

 
 

 
 

 
 

Straight-line rental income, net
 
655

 
875

 
2,297

 
3,979

Amortization of acquired above and below market lease intangibles, net
 
505

 
334

 
1,346

 
1,216

Amortization of lease inducements
 
(256
)
 
(176
)
 
(636
)
 
(533
)
Lease termination fees
 
3,245

 
146

 
3,712

 
279

Straight-line ground rent expense
 
(931
)
 
(956
)
 
(2,797
)
 
(2,934
)
Amortization of acquired ground lease intangibles
 
140

 
140

 
420

 
420

Depreciation and amortization
 
(52,871
)
 
(54,691
)
 
(163,345
)
 
(163,582
)
Provision for impairment of investment properties
 
(169
)
 
(54,584
)
 
(4,113
)
 
(60,378
)
General and administrative expenses
 
(10,939
)
 
(6,982
)
 
(35,949
)
 
(22,794
)
Gain on extinguishment of other liabilities
 
—

 
—

 
—

 
4,258

Equity in loss of unconsolidated joint ventures, net
 
—

 
(232
)
 
—

 
(1,443
)
Gain on change in control of investment properties
 
—

 
—

 
—

 
24,158

Interest expense
 
(40,425
)
 
(37,356
)
 
(110,610
)
 
(101,092
)
Other income, net
 
479

 
4,706

 
1,398

 
5,383

Total other expense
 
(100,567
)
 
(148,776
)
 
(308,277
)
 
(313,063
)
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations
 
3,328

 
(41,904
)
 
8,875

 
1,233

 
 
 
 
 
 
 
 
 
Discontinued operations:
 
 

 
 

 
 

 
 

Loss, net
 
—

 
—

 
—

 
(148
)
Gain on sales of investment properties
 
—

 
—

 
—

 
655

Income from discontinued operations
 
—

 
—

 
—

 
507

Gain on sales of investment properties
 
75,001

 
15,168

 
113,214

 
15,695

Net income (loss)
 
78,329

 
(26,736
)
 
122,089

 
17,435

Net income (loss) attributable to the Company
 
78,329

 
(26,736
)
 
122,089

 
17,435

Preferred stock dividends
 
(2,362
)
 
(2,362
)
 
(7,087
)
 
(7,087
)
Net income (loss) attributable to common shareholders
 
$
75,967

 
$
(29,098
)
 
$
115,002

 
$
10,348

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store NOI, Excluding the Impact of Strategic Remerchandising Activities
 
 
 
 
 
 
 
 
Same store NOI
 
$
92,571

 
$
90,717

 
$
262,750

 
$
254,111

Less: Impact of strategic remerchandising activities
 
(653
)
 
(2,466
)
 
(3,828
)
 
(7,280
)
Same store NOI, excluding the impact of strategic remerchandising activities
 
$
91,918

 
$
88,251

 
$
258,922

 
$
246,831

 
 
 
 
 
 
 
 
 

3rd Quarter 2015 Supplemental Information
 
19


Retail Properties of America, Inc.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands)
(unaudited)


Reconciliation of Net Income Attributable to Common Shareholders to Adjusted EBITDA
 
 
Three Months Ended
 
 
September 30, 2015
 
December 31, 2014
 
 
 
 
 
Net income attributable to common shareholders
 
$
75,967

 
$
23,502

Preferred stock dividends
 
2,362

 
2,363

Interest expense
 
40,425

 
32,743

Depreciation and amortization
 
52,871

 
52,385

Gain on sales of investment properties
 
(75,001
)
 
(26,501
)
Provision for impairment of investment properties
 
169

 
11,825

Adjusted EBITDA
 
$
96,793

 
$
96,317

Annualized
 
$
387,172

 
$
385,268



3rd Quarter 2015 Supplemental Information
 
20