EX-99.2 3 ex-9926x30x19.htm EXHIBIT 99.2 Exhibit

Exhibit 99.2

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RETAIL PROPERTIES OF AMERICA, INC. REPORTS
SECOND QUARTER AND YEAR TO DATE 2019 RESULTS
Oak Brook, IL – July 30, 2019 – Retail Properties of America, Inc. (NYSE: RPAI) (the “Company”) today reported financial and operating results for the quarter and six months ended June 30, 2019.
FINANCIAL RESULTS
For the quarter ended June 30, 2019, the Company reported:
▪
Net income attributable to common shareholders of $21.2 million, or $0.10 per diluted share, compared to $10.9 million, or $0.05 per diluted share, for the same period in 2018;
▪
Funds from operations (FFO) attributable to common shareholders of $55.2 million, or $0.26 per diluted share, compared to $55.0 million, or $0.25 per diluted share, for the same period in 2018; and
▪
Operating funds from operations (Operating FFO) attributable to common shareholders of $55.8 million, or $0.26 per diluted share, compared to $55.1 million, or $0.25 per diluted share, for the same period in 2018.
For the six months ended June 30, 2019, the Company reported:
▪
Net income attributable to common shareholders of $44.4 million, or $0.21 per diluted share, compared to $52.7 million, or $0.24 per diluted share, for the same period in 2018;
▪
FFO attributable to common shareholders of $112.9 million, or $0.53 per diluted share, compared to $107.8 million, or $0.49 per diluted share, for the same period in 2018; and
▪
Operating FFO attributable to common shareholders of $114.2 million, or $0.54 per diluted share, compared to $110.8 million, or $0.51 per diluted share, for the same period in 2018.
OPERATING RESULTS
For the quarter ended June 30, 2019, the Company’s portfolio results were as follows:
▪
2.9% increase in same store net operating income (NOI) over the comparable period in 2018;
▪
Retail portfolio occupancy: 92.4% at June 30, 2019, down 60 basis points from 93.0% at March 31, 2019 and up 40 basis points from 92.0% at June 30, 2018;
▪
Total same store portfolio percent leased, including leases signed but not commenced: 94.6% at June 30, 2019, down 40 basis points from 95.0% at March 31, 2019 and up 110 basis points from 93.5% at June 30, 2018;
▪
Retail portfolio percent leased, including leases signed but not commenced: 94.7% at June 30, 2019, down 40 basis points from 95.1% at March 31, 2019 and up 120 basis points from 93.5% at June 30, 2018;
▪
Retail portfolio annualized base rent (ABR) per occupied square foot of $19.27 at June 30, 2019, up 0.5% from $19.17 ABR per occupied square foot at March 31, 2019;
▪
519,000 square feet of retail leasing transactions comprised of 120 new and renewal leases; and
▪
Positive comparable cash leasing spreads of 13.2% on new leases and 6.9% on renewal leases for a blended re-leasing spread of 8.2%.

n Retail Properties of America, Inc.
T: 855.247.RPAI
www.rpai.com    2021 Spring Road, Suite 200
Oak Brook, IL 60523

For the six months ended June 30, 2019, the Company’s portfolio results were as follows:
▪
2.9% increase in same store NOI over the comparable period in 2018;
▪
1,374,000 square feet of retail leasing transactions comprised of 237 new and renewal leases; and
▪
Positive comparable cash leasing spreads of 11.4% on new leases and 5.7% on renewal leases for a blended re-leasing spread of 6.8%.
“We continued our above-plan performance with 2.9% same store NOI growth in the second quarter,” stated Steve Grimes, chief executive officer. “Base rent expansion contributed the majority of this growth, coupled with outperformance in several other categories. As we look ahead to the second half of the year, we remain acutely focused on realizing occupancy and delivering the majority of the $9.4 million in ABR from our signed but not commenced leases.”
INVESTMENT ACTIVITY
Dispositions
To date in 2019, the Company has completed two retail property dispositions totaling $44.8 million. During the quarter, the Company completed the sale of one non-target multi-tenant power center asset for $18.9 million, which marked its exit from South Carolina.
Additionally, during the quarter, the Company closed on the sale of land and the rights to develop 10 residential units at its One Loudoun Downtown multi-tenant retail operating property in the Washington, D.C. metropolitan statistical area for a gross sales price of $2.3 million. Subsequent to quarter end, the Company closed on the sale of land and the rights to develop the remaining 12 residential units for a gross sales price of $2.8 million.
Expansions and Redevelopments
Plaza del Lago
During the quarter, as previously reported, the Company completed the redevelopment of 18 apartment units at the historic Plaza del Lago mixed-use shopping center along Chicago’s North Shore in Wilmette, Illinois. The renovated units, known as “The Residences at Plaza del Lago,” provide residents with premier access to Chicago’s lakefront, walking trails, beaches, Northwestern University, public transportation and a diverse retail offering including boutique shops, restaurants and grocery. To date, the Company has signed leases with residents for 12 of the 18 apartment units.
One Loudoun Downtown
During the quarter, the Company and KETTLER, its joint venture partner, broke ground on One Loudoun’s first apartment community, Vyne. Inspired by nature and Virginia’s acclaimed wine country, the apartment community will offer elevated living spaces in the Washington, D.C. suburbs. Vyne will serve as the focal point of the larger mixed-use expansion project of Pads G & H at One Loudoun Downtown. The community will span two blocks and include over 22,000 square feet of street level retail space, 378 one- and two-bedroom units, and luxury amenities including a standalone clubhouse with rooftop terrace, co-working space, resident lounges, fitness center with studio, swimming pool, pet spa and two lushly landscaped courtyards offering four season outdoor amenities. Vyne is anticipated to open in late spring 2021.
Carillon
During the quarter, as previously announced, the Company executed a joint venture agreement with Trammell Crow to construct the medical office building portion of Phase One of the mixed-use project at Carillon. The retail portion of Phase One is 37% pre-leased as of June 30, 2019. Subsequent to quarter end, the Company began demolition of approximately 290,000 square feet of vacant retail gross leasable area. In addition, construction on the adjacent hospital continues

ii

to progress and recently passed a major milestone with the installation of the uppermost structural element and closure of the building.
Circle East
The Company remains in advanced lease negotiations with several leading regional and national retailers at its mixed-use project, Circle East. Additionally, AvalonBay has outlined expectations for tenant move-ins to the AvalonBay-owned multi-family portion of the project to begin in the first quarter of 2020, which remains in line with the Company’s scheduled completion date for the entire project that will result in 80,000 square feet of dual-sided street level retail.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
As of June 30, 2019, the Company had approximately $1.6 billion of consolidated indebtedness with a weighted average contractual interest rate of 4.04%, a weighted average maturity of 4.7 years and a net debt to adjusted EBITDAre ratio of 5.5x.
During the quarter, as previously announced, the Company entered into a note purchase agreement with certain institutional investors in a private placement transaction pursuant to which the Company issued $100.0 million of 10-year 4.82% senior unsecured notes on June 28, 2019. The proceeds were used to repay borrowings on the Company’s unsecured revolving line of credit on the same day.
Subsequent to quarter end, the Company entered into a term loan agreement with a group of financial institutions for a five-year $120.0 million unsecured term loan (Term Loan Due 2024) and a seven-year $150.0 million unsecured term loan (Term Loan Due 2026). The term loans bear interest at a rate of LIBOR plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% for the Term Loan Due 2024 and 1.50% to 2.20% for the Term Loan Due 2026. Both term loans currently bear interest at the low end of the leverage grid. In accordance with the term loan agreement, the Company may elect to convert to an investment grade pricing grid. The Company subsequently entered into agreements to swap $120.0 million of LIBOR-based variable rate debt to a fixed interest rate of 1.68% through July 2024 and $150.0 million of LIBOR-based variable rate debt to a fixed interest rate of 1.77% through July 2026, each with an effective date of August 15, 2019. The Company used a portion of the proceeds to repay all amounts outstanding on its unsecured revolving line of credit, resulting in an undrawn revolver.
2019 GUIDANCE
The Company expects to generate net income attributable to common shareholders of $0.19 to $0.22 per diluted share in 2019. The Company is updating its 2019 Operating FFO attributable to common shareholders guidance range to $1.04 to $1.07 per diluted share from $1.03 to $1.07 per diluted share, based, in part, on the following assumptions:
▪
Same store NOI growth of 1.75% to 2.75%;
▪
General and administrative expenses of $40 to $43 million;
▪
Additional acquisitions, including repurchases of Class A common stock, and property dispositions evaluated and executed opportunistically; and
▪
Aggregate issuances of $370 million of unsecured debt capital with proceeds primarily used to repay outstanding indebtedness.
DIVIDEND
On July 23, 2019, the Company declared the third quarter 2019 quarterly cash dividend of $0.165625 per share on its outstanding Class A common stock, which will be paid on October 10, 2019 to Class A common shareholders of record on September 26, 2019.

iii

WEBCAST AND CONFERENCE CALL INFORMATION
The Company’s management team will hold a webcast on Wednesday, July 31, 2019 at 11:00 AM (ET), 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 INVEST section. A replay of the webcast will be available. To listen to the replay, please go to www.rpai.com in the INVEST section of the website and follow the instructions.
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 call will be available from 2:00 PM (ET) on July 31, 2019 until midnight (ET) on August 14, 2019. The replay can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers and entering pin number 13691179.
SUPPLEMENTAL INFORMATION
The Company has posted supplemental financial and operating information and other data in the INVEST section of its website.
ABOUT RPAI
Retail Properties of America, Inc. is a REIT that owns and operates high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of June 30, 2019, the Company owned 104 retail operating properties in the United States representing 20.0 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.
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 “believes,” “expects,” “may,” “should,” “intends,” “plans,” “estimates” or “anticipates” and variations of such words or similar expressions or the negative of such words, 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, rental rates and/or vacancy rates, frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants, bankruptcy or insolvency of a major tenant or a significant number of smaller tenants, adverse impact of e-commerce developments and shifting consumer retail behavior on tenants, interest rates or operating costs, real estate valuations, the availability, terms and deployment of capital, general volatility of the capital and credit markets and the market price of the Company’s Class A common stock, risks generally associated with real estate acquisitions and dispositions, including the Company’s ability to identify and pursue acquisition and disposition opportunities, risks generally associated with redevelopment, including the impact of construction delays and cost overruns, the Company’s ability to lease redeveloped space and identify and pursue redevelopment opportunities, competitive and cost factors, the Company’s ability to enter into new leases or renew leases on favorable terms, the Company’s ability to create long-term shareholder value, satisfaction of closing conditions to the pending transactions described herein, 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.

iv

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 computed in accordance with generally accepted accounting principles (GAAP), excluding (i) depreciation and amortization related to real estate, (ii) gains from sales of real estate assets, (iii) gains and losses from change in control and (iv) impairment write-downs of real estate assets and investments in entities directly attributable to decreases in the value of real estate held by the entity. 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 supplemental non-GAAP financial 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 (i) “Net income” or “Net income attributable to common shareholders” as an indicator of the Company’s financial performance, or (ii) “Cash flows from operating activities” in accordance with 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 its real estate operating portfolio, which is its core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the impact on earnings from gains or losses associated with the early extinguishment of debt or other liabilities, litigation involving the Company, including actual or anticipated settlement and associated legal costs, the impact on earnings from executive separation and the excess of redemption value over carrying value of preferred stock redemption, which are not otherwise adjusted in the Company’s calculation of FFO attributable to common shareholders. The Company believes that Operating FFO attributable to common shareholders, which is a supplemental non-GAAP financial 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 (i) “Net income” or “Net income attributable to common shareholders” as an indicator of the Company’s financial performance, or (ii) “Cash flows from operating activities” in accordance with GAAP as a measure of the Company’s capacity to fund cash needs, including the payment of dividends. 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 Net Operating Income (NOI), which it defines as all revenues other than (i) straight-line rental income (non-cash), (ii) amortization of lease inducements, (iii) amortization of acquired above and below market lease intangibles and (iv) lease termination fee income, less real estate taxes and all operating expenses other than lease termination fee expense and non-cash ground rent expense, which is comprised of straight-line ground rent expense and amortization of acquired ground lease intangibles for the three and six months ended June 30, 2018 and amortization of right-of-use lease assets and amortization of lease liabilities for the three and six months ended June 30, 2019. NOI consists of Same Store NOI and NOI from Other Investment Properties. Same Store NOI for the three and six months ended June 30, 2019 represents NOI from the Company’s same store portfolio consisting of 102 retail operating properties acquired or placed in service and stabilized prior to January 1, 2018. NOI from Other Investment Properties for the three and six months ended June 30, 2019 represents NOI primarily from (i) properties acquired or placed in service during 2018 and 2019, including Reisterstown Road Plaza, which was reclassified from active redevelopment into the Company’s retail operating portfolio during 2018, (ii) Circle East, which is in active redevelopment, (iii) the multi-family rental units at Plaza del Lago, which are in active redevelopment, (iv) One Loudoun Downtown – Pads G & H, which are in active redevelopment, (v) Carillon, where the Company has begun activities in anticipation of future redevelopment, (vi) properties that were sold or held for sale during 2018 and 2019, and (vii) the net income from the Company’s wholly-owned captive insurance company. The Company believes that NOI, Same Store NOI and NOI from Other Investment Properties, which are supplemental non-GAAP financial measures, provide an additional and useful operating perspective not immediately apparent from “Net income” or “Net income attributable to common shareholders” in accordance with GAAP. The Company uses these measures to evaluate its performance on a property-by-property basis because they allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base have on the Company’s operating results. NOI, Same Store NOI and NOI from Other Investment Properties do not represent alternatives to “Net income” or “Net income attributable to common shareholders” in accordance with GAAP as indicators of the Company’s financial performance. Comparison of the Company’s presentation of NOI, Same Store NOI and NOI from Other Investment Properties to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
As defined by NAREIT, EBITDA for real estate (EBITDAre) means net income (loss) computed in accordance with GAAP, plus (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) impairment charges on investment property and (v) impairment charges on investments in unconsolidated affiliates if caused by a decrease in the value of depreciable property in the affiliate, plus or minus (i) gains from sales of investment property, including gains (or losses) on change in control, and (ii) adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates.

v

The Company reports Adjusted EBITDAre, which excludes the impact of certain discrete non-operating transactions and other events such as the impact on earnings from executive separation. The Company believes that Adjusted EBITDAre is useful because it allows investors and management to evaluate and compare the Company’s performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. EBITDAre and Adjusted EBITDAre are supplemental non-GAAP financial measures and should not be considered alternatives to “Net income” or “Net income attributable to common shareholders” as indicators of the Company’s financial performance. Comparison of the Company’s presentation of EBITDAre and Adjusted EBITDAre to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
Net Debt to Adjusted EBITDAre is a supplemental non-GAAP financial measure and represents (i) the Company’s total debt principal, which excludes unamortized premium, discount and capitalized loan fees, less (ii) cash and cash equivalents divided by (iii) Adjusted EBITDAre for the prior three months, annualized (Annualized Adjusted EBITDAre). The Company believes that this ratio is useful because it provides investors with information regarding its total debt principal net of cash and cash equivalents, which could be used to repay debt, compared to its performance as measured using Annualized Adjusted EBITDAre. Comparison of the Company’s presentation of Net Debt to Adjusted EBITDAre to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
CONTACT INFORMATION
Michael Gaiden
Vice President – Investor Relations
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 2019
 
 
Low
 
High
 
 
 
 
 
Net income attributable to common shareholders
 
$
0.19

 
$
0.22

Depreciation and amortization of real estate
 
0.90

 
0.90

Gain on sales of investment properties
 
(0.09
)
 
(0.09
)
FFO attributable to common shareholders
 
$
1.00

 
$
1.03

 
 
 
 
 
Impact on earnings from the early extinguishment of debt
 
0.04

 
0.04

Other
 
—

 
—

Operating FFO attributable to common shareholders
 
$
1.04

 
$
1.07




vii


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

 
 
June 30,
2019
 
December 31,
2018
Assets
 
 

 
 

Investment properties:
 
 

 
 

Land
 
$
1,037,381

 
$
1,036,901

Building and other improvements
 
3,587,241

 
3,607,484

Developments in progress
 
69,963

 
48,369

 
 
4,694,585

 
4,692,754

Less accumulated depreciation
 
(1,358,059
)
 
(1,313,602
)
Net investment properties
 
3,336,526

 
3,379,152

 
 
 
 
 
Cash and cash equivalents
 
28,456

 
14,722

Accounts and notes receivable, net
 
77,337

 
78,398

Acquired lease intangible assets, net
 
88,492

 
97,090

Right-of-use lease assets
 
50,881

 
—

Other assets, net
 
71,387

 
78,108

Total assets
 
$
3,653,079

 
$
3,647,470

 
 
 
 
 
Liabilities and Equity
 
 

 
 

Liabilities:
 
 

 
 

Mortgages payable, net (includes unamortized premium of $650 and $775,
respectively, unamortized discount of $(515) and $(536), respectively, and
unamortized capitalized loan fees of $(329) and $(369), respectively)
 
$
203,726

 
$
205,320

Unsecured notes payable, net (includes unamortized discount of $(675) and $(734),
respectively, and unamortized capitalized loan fees of $(3,423) and $(2,904), respectively)
 
795,902

 
696,362

Unsecured term loans, net (includes unamortized capitalized loan fees of $(2,243)
and $(2,633), respectively)
 
447,757

 
447,367

Unsecured revolving line of credit
 
193,000

 
273,000

Accounts payable and accrued expenses
 
57,940

 
82,942

Distributions payable
 
35,388

 
35,387

Acquired lease intangible liabilities, net
 
67,505

 
86,543

Lease liabilities
 
91,129

 
—

Other liabilities
 
46,111

 
73,540

Total liabilities
 
1,938,458

 
1,900,461

 
 
 
 
 
Commitments and contingencies
 
 

 
 

 
 
 
 
 
Equity:
 
 

 
 

Preferred stock, $0.001 par value, 10,000 shares authorized, none issued or outstanding
 
—

 
—

Class A common stock, $0.001 par value, 475,000 shares authorized,
213,662 and 213,176 shares issued and outstanding as of June 30, 2019
and December 31, 2018, respectively
 
214

 
213

Additional paid-in capital
 
4,507,488

 
4,504,702

Accumulated distributions in excess of earnings
 
(2,783,183
)
 
(2,756,802
)
Accumulated other comprehensive loss
 
(11,343
)
 
(1,522
)
Total shareholders' equity
 
1,713,176

 
1,746,591

Noncontrolling interests
 
1,445

 
418

Total equity
 
1,714,621

 
1,747,009

Total liabilities and equity
 
$
3,653,079

 
$
3,647,470



2nd Quarter 2019 Supplemental Information
 
1


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

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 

 
 

Lease income
 
$
118,449

 
$
119,164

 
$
241,152

 
$
244,006

 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 

 
 

Operating expenses
 
17,129

 
19,384

 
34,815

 
39,639

Real estate taxes
 
18,534

 
17,701

 
36,937

 
38,169

Depreciation and amortization
 
42,882

 
43,710

 
86,149

 
88,938

Provision for impairment of investment properties
 
—

 
724

 
—

 
1,316

General and administrative expenses
 
9,353

 
10,274

 
19,852

 
22,769

Total expenses
 
87,898

 
91,793

 
177,753

 
190,831

 
 
 
 
 
 
 
 
 
Other (expense) income:
 
 
 
 
 
 
 
 
Interest expense
 
(17,363
)
 
(16,817
)
 
(34,793
)
 
(35,582
)
Gain on sales of investment properties
 
8,454

 
—

 
16,903

 
34,519

Other (expense) income, net
 
(472
)
 
328

 
(1,131
)
 
550

Net income
 
21,170

 
10,882

 
44,378

 
52,662

Net income attributable to noncontrolling interests
 
—

 
—

 
—

 
—

Net income attributable to common shareholders
 
$
21,170

 
$
10,882

 
$
44,378

 
$
52,662

 
 
 
 
 
 
 
 
 
Earnings per common share – basic and diluted:
 
 
 
 
 
 

 
 

Net income per common share attributable to common shareholders
 
$
0.10

 
$
0.05

 
$
0.21

 
$
0.24

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – basic
 
212,951

 
218,982

 
212,900

 
218,915

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – diluted
 
213,090

 
219,410

 
213,156

 
219,406



2nd Quarter 2019 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
Net income attributable to common shareholders
$
21,170

 
$
10,882

 
$
44,378

 
$
52,662

 
Depreciation and amortization of real estate
42,531

 
43,415

 
85,444

 
88,365

 
Provision for impairment of investment properties
—

 
724

 
—

 
1,316

 
Gain on sales of investment properties
(8,454
)
 
—

 
(16,903
)
 
(34,519
)
(b)
FFO attributable to common shareholders
$
55,247

 
$
55,021

 
$
112,919

 
$
107,824

(b)
 
 
 
 
 
 
 
 
 
FFO attributable to common shareholders
per common share outstanding – diluted
$
0.26

 
$
0.25

 
$
0.53

 
$
0.49

(b)
 
 
 
 
 
 
 
 
 
FFO attributable to common shareholders
$
55,247

 
$
55,021

 
$
112,919

 
$
107,824

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

 
24

 
—

 
1,052

 
Impact on earnings from executive separation (c)
—

 
—

 
—

 
1,737

 
Other (d)
569

 
16

 
1,280

 
223

 
Operating FFO attributable to common shareholders
$
55,816

 
$
55,061

 
$
114,199

 
$
110,836

 
 
 
 
 
 
 
 
 
 
Operating FFO attributable to common shareholders
per common share outstanding – diluted
$
0.26

 
$
0.25

 
$
0.54

 
$
0.51

 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – diluted
213,090

 
219,410

 
213,156

 
219,406

 
Dividends declared per common share
$
0.165625

 
$
0.165625

 
$
0.33125

 
$
0.33125

 
 
 
 
 
 
 
 
 
 
Additional Information (e)
 
 
 
 
 

 
 

 
Lease-related expenditures (f)
 
 
 
 
 
 
 
 
Same store
$
9,753

 
$
7,634

 
$
18,363

 
$
13,309

 
Other investment properties (g)
$
874

 
$
5,949

 
$
1,242

 
$
7,728

 
 
 
 
 
 
 
 
 
 
Capital expenditures (h)
 
 
 
 
 
 
 
 
Same store
$
9,864

 
$
7,954

 
$
19,059

 
$
12,291

 
Other investment properties (g)
$
496

 
$
982

 
$
1,117

 
$
2,122

 
Predevelopment costs
$
2,582

 
$
255

 
$
5,273

 
$
1,164

 
 
 
 
 
 
 
 
 
 
Straight-line rental income, net
$
616

 
$
1,401

 
$
2,116

 
$
3,880

 
Amortization of above and below market lease intangibles
and lease inducements
$
392

 
$
2,108

 
$
2,430

 
$
2,721

 
Non-cash ground rent expense, net
$
332

 
$
439

 
$
690

 
$
965

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDAre (a)
$
72,961

 
$
72,133

 
$
148,417

 
$
145,716

 

(a)
Refer to pages 20 – 23 for definitions and reconciliations related to FFO attributable to common shareholders, Operating FFO attributable to common shareholders and Adjusted EBITDAre.
(b)
The Company adopted the National Association of Real Estate Investment Trusts' "NAREIT Funds From Operations White Paper – 2018 Restatement" effective January 1, 2019 on a retrospective basis. As a result of the adoption, all gains on sale and impairments of real estate are excluded from FFO, whereas the Company previously only excluded gains on sale and impairments of depreciable investment properties. The Company restated FFO attributable to common shareholders for the six months ended June 30, 2018 to exclude the gain on sale of non-depreciable investment property of $2,179. As this gain was previously excluded from Operating FFO attributable to common shareholders, there was no change to Operating FFO attributable to common shareholders for the six months ended June 30, 2018.
(c)
Reflected as an increase within "General and administrative expenses" in the condensed consolidated statements of operations.
(d)
Primarily consists of the impact on earnings from litigation involving the Company, including actual or anticipated settlement and associated legal costs, which are included within "Other (expense) income, net" in the condensed consolidated statements of operations.
(e)
The same store portfolio for the three and six months ended June 30, 2019 consists of 102 retail operating properties. Refer to pages 20 – 23 for definitions and reconciliations of non-GAAP financial measures.
(f)
Consists of payments for tenant improvements, lease commissions and lease inducements and excludes active development projects which are included within "Developments in progress" in the condensed consolidated balance sheets.
(g)
2018 expenditures are primarily associated with Schaumburg Towers prior to its disposition on May 31, 2018.
(h)
Capital expenditures consist of payments for building, site and other improvements, net of anticipated recoveries, and exclude active development projects which are included within "Developments in progress" in the condensed consolidated balance sheets. Predevelopment costs consist of payments related to future redevelopment and expansion projects incurred before each project is considered active and are included within "Other assets, net" in the condensed consolidated balance sheets.

2nd Quarter 2019 Supplemental Information
 
3


Retail Properties of America, Inc.
Supplemental Financial Statement Detail
(amounts in thousands)
(unaudited)
 
Supplemental Balance Sheet Detail
 
June 30,
2019
 
December 31,
2018
Developments in Progress
 
 
 
 
Active developments/redevelopments (a)
 
$
44,513

 
$
22,919

Land held for development
 
25,450

 
25,450

Total
 
$
69,963

 
$
48,369

 
 
 
 
 
Accounts and Notes Receivable, Net
 
 

 
 

Accounts and notes receivable, net
 
$
27,703

 
$
30,592

Straight-line receivables, net
 
49,634

 
47,806

Total
 
$
77,337

 
$
78,398

 
 
 
 
 
Other Assets, Net
 
 

 
 

Deferred costs, net
 
$
36,583

 
$
34,419

Restricted cash (b)
 
4,871

 
4,879

Fair value of derivatives
 
—

 
2,324

Other assets, net
 
29,933

 
36,486

Total
 
$
71,387

 
$
78,108

 
 
 
 
 
Other Liabilities
 
 

 
 

Unearned income
 
$
13,423

 
$
16,565

Straight-line ground rent liabilities (c)
 
—

 
31,030

Fair value of derivatives
 
11,343

 
3,846

Other liabilities (c)
 
21,345

 
22,099

Total
 
$
46,111

 
$
73,540

Supplemental Statements of Operations Detail
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Lease Income (c)
 

 
 

 
 

 
 

Base rent
$
89,135

 
$
88,344

 
$
178,069

 
$
178,285

Percentage and specialty rent
683

 
793

 
2,002

 
2,215

Tenant recoveries
25,879

 
25,183

 
52,706

 
53,273

Lease termination fee income (c)
232

 
208

 
1,420

 
1,227

Other lease-related income (c)
1,589

 
1,127

 
2,886

 
2,405

Bad debt, net (c)
(77
)
 
—

 
(477
)
 
—

Straight-line rent
616

 
1,401

 
2,116

 
3,880

Amortization of above and below market lease intangibles
and lease inducements
392

 
2,108

 
2,430

 
2,721

Total
$
118,449

 
$
119,164

 
$
241,152

 
$
244,006

 
 
 
 
 
 
 
 
Operating Expense Supplemental Information
 
 
 
 
 
 
 
Bad debt, net (c)
$
—

 
$
338

 
$
—

 
$
850

Non-cash ground rent expense, net (c)
$
332

 
$
439

 
$
690

 
$
965

Lease Termination Fee Expense (d)
$
—

 
$
1,900

 
$
—

 
$
1,900

 
 
 
 
 
 
 
 
General and Administrative Expense Supplemental Information
 
 
 
 
 
 
 
Non-cash amortization of stock-based compensation
$
1,857

 
$
1,596

 
$
3,823

 
$
3,729

 
 
 
 
 
 
 
 
Additional Supplemental Information
 
 
 
 
 
 
 
Capitalized compensation costs – development and capital projects
$
985

 
$
589

 
$
2,025

 
$
1,170

Capitalized internal leasing incentives
$
82

 
$
133

 
$
136

 
$
170

Capitalized interest
$
226

 
$
77

 
$
370

 
$
250


(a)
Represents the active redevelopments at Circle East, the multi-family rental units at Plaza del Lago and One Loudoun Downtown – Pads G & H. See page 9 for further details.
(b)
Consists of funds restricted through lender or other agreements.
(c)
The Company adopted ASU 2016-02, Leases, effective January 1, 2019 and as a result, the Company (i) recorded lease liabilities and right-of-use lease (ROU) assets, which were initially measured at the present value of future lease payments; (ii) reclassified the previously existing straight-line rent liabilities related to long-term ground and office leases (previously presented within "Other liabilities") and acquired ground lease intangible liability (previously presented within "Acquired lease intangible liabilities, net") to be presented net of the ROU assets in the condensed consolidated balance sheets; (iii) retrospectively presented all lease-related revenue within "Lease income" in the condensed consolidated statements of operations (lease termination fee income and other lease-related income were previously presented within "Other property income"); and (iv) prospectively presented bad debt as an adjustment to revenue whereas it is included within operating expenses for periods prior to adoption. Non-cash ground rent expense consists of straight-line ground rent expense and amortization of acquired ground lease intangibles for the three and six months ended June 30, 2018 and amortization of ROU assets and amortization of lease liabilities for the three and six months ended June 30, 2019.
(d)
Represents termination fee recorded during the second quarter of 2018 within "Operating expenses" in the condensed consolidated statements of operations related to the Toys "R" Us auction process whereby the Company was the winning bidder on two leases.

2nd Quarter 2019 Supplemental Information
 
4


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


Same store portfolio (a)
 
 
 
 
 
 
 
 
Based on Same store portfolio
as of June 30, 2019
 
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
Number of retail operating properties in same store portfolio
 
102

 
102

 
—

 
 
 
 
 
 
 
Occupancy
 
92.2
%
 
91.9
%
 
0.3
%
 
 
 
 
 
 
 
Percent leased (b)
 
94.6
%
 
93.5
%
 
1.1
%
 
 
 
 
 
 
 

Same Store NOI (c)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Base rent
$
85,664

 
$
83,827

 
 
 
$
170,871

 
$
167,361

 
 
Percentage and specialty rent
630

 
733

 
 
 
1,835

 
1,833

 
 
Tenant recoveries
24,988

 
24,511

 
 
 
51,472

 
51,173

 
 
Other lease-related income
1,461

 
1,094

 
 
 
2,739

 
2,265

 
 
Bad debt, net
(46
)
 
(246
)
 
 
 
(485
)
 
(828
)
 
 
Property operating expenses (d)
(15,120
)
 
(15,033
)
 
 
 
(30,693
)
 
(30,659
)
 
 
Real estate taxes
(17,885
)
 
(17,454
)
 
 
 
(36,156
)
 
(36,027
)
 
 
Same Store NOI (c)
$
79,692

 
$
77,432

 
2.9
%
 
$
159,583

 
$
155,118

 
2.9
%


(a)
For the three and six months ended June 30, 2019, the Company's same store portfolio consists of 102 retail operating properties and excludes (i) properties acquired or placed in service and stabilized during 2018 and 2019, including Reisterstown Road Plaza, which was reclassified from active redevelopment into the Company's retail operating portfolio during 2018, (ii) Circle East, which is in active redevelopment, (iii) the multi-family rental units at Plaza del Lago, which are in active redevelopment, (iv) One Loudoun Downtown – Pads G & H, which are in active redevelopment, (v) Carillon, where the Company has begun activities in anticipation of future redevelopment, and (vi) properties that were sold or held for sale during 2018 and 2019.
(b)
Includes leases signed but not commenced.
(c)
Refer to pages 20 – 23 for definitions and reconciliations of non-GAAP financial measures. Comparison of the Company's presentation of Same Store NOI to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
(d)
Consists of all property operating items included within "Operating expenses" in the condensed consolidated statements of operations, which includes all items other than (i) lease termination fee expense, (ii) bad debt for the three and six months ended June 30, 2018, and (iii) non-cash ground rent expense, which is comprised of straight-line ground rent expense and amortization of acquired ground lease intangibles for the three and six months ended June 30, 2018 and amortization of right-of-use lease assets and amortization of lease liabilities for the three and six months ended June 30, 2019.

2nd Quarter 2019 Supplemental Information
 
5


Retail Properties of America, Inc.
Capitalization
(dollar amounts in thousands, except share price and ratio)
 

Capitalization Data
 
 
 
 
 
 
June 30,
2019
 
December 31,
2018
Equity Capitalization
 
 

 
 

Common stock shares outstanding (a)
 
213,662

 
213,176

Common stock share price
 
$
11.76

 
$
10.85

Total equity capitalization
 
$
2,512,665

 
$
2,312,960

 
 
 
 
 
Debt Capitalization
 
 

 
 

Mortgages payable (b)
 
$
203,920

 
$
205,450

Unsecured notes payable (c)
 
800,000

 
700,000

Unsecured term loans (d)
 
450,000

 
450,000

Unsecured revolving line of credit
 
193,000

 
273,000

Total debt capitalization
 
$
1,646,920

 
$
1,628,450

 
 
 
 
 
Total capitalization at end of period
 
$
4,159,585

 
$
3,941,410

 

Calculation of Net Debt to Adjusted EBITDAre Ratio (e)
 
 
June 30,
2019
 
December 31,
2018
 
 
 
 
 
Total debt principal
 
$
1,646,920

 
$
1,628,450

Less: consolidated cash and cash equivalents
 
(28,456
)
 
(14,722
)
Total net debt
 
$
1,618,464

 
$
1,613,728

Annualized Adjusted EBITDAre
 
$
291,844

 
$
294,420

Net Debt to Adjusted EBITDAre (f)
 
5.5x

 
5.5x



(a)
Excludes performance restricted stock units and options outstanding, which could potentially convert into common stock in the future.
(b)
Mortgages payable excludes mortgage premium of $650 and $775, discount of $(515) and $(536), and capitalized loan fees of $(329) and $(369), net of accumulated amortization, as of June 30, 2019 and December 31, 2018, respectively.
(c)
Unsecured notes payable excludes discount of $(675) and $(734) and capitalized loan fees of $(3,423) and $(2,904), net of accumulated amortization, as of June 30, 2019 and December 31, 2018, respectively.
(d)
Unsecured term loans exclude capitalized loan fees of $(2,243) and $(2,633), net of accumulated amortization, as of June 30, 2019 and December 31, 2018, respectively.
(e)
Refer to pages 20 – 23 for definitions and reconciliations of non-GAAP financial measures.
(f)
For purposes of this ratio calculation, annualized three months ended figures were used.

2nd Quarter 2019 Supplemental Information
 
6




Retail Properties of America, Inc.
Covenants
 
Unsecured Credit Facility, Term Loan Due 2023 and Notes Due 2021, 2024, 2026, 2028 and 2029 (a)
 
 
 
 
 
 
 
 
 
Covenant
 
June 30, 2019
 
 
 
 
 

Leverage ratio (b)
Unsecured Credit Facility, Term Loan
Due 2023 and Notes Due 2026, 2028 and 2029:
Notes Due 2021 and 2024:
≤ 60.0%
≤ 60.0%
 
32.4%
34.2%

 
 
 
 
 
Secured leverage ratio (b)
Unsecured Credit Facility and
Term Loan Due 2023:
Notes Due 2021, 2024, 2026, 2028 and 2029:

≤ 45.0%
≤ 40.0%
 

4.0%

 
 
 
 
 
Fixed charge coverage ratio (c)
 
≥ 1.50x
 
4.0x

 
 
 
 
 

Interest coverage ratio (d)
 
≥ 1.50x
 
4.2x

 
 
 
 
 
Unencumbered leverage ratio (b)
 
≤ 60.0%
 
31.6
%
 
 
 
 
 

Unencumbered interest coverage ratio
 
≥ 1.75x
 
4.9x



Notes Due 2025 (e)
 
 
 
 
Covenant
 
June 30, 2019
 
 
 
 

Leverage ratio (f)
≤ 60.0%
 
35.2
%
 
 
 
 

Secured leverage ratio (f)
≤ 40.0%
 
4.1
%
 
 
 
 
Debt service coverage ratio (g)
≥ 1.50x
 
4.3x

 
 
 
 
Unencumbered assets to unsecured debt ratio
≥ 150%
 
312
%


(a)
For a complete listing of all covenants related to the Company's Unsecured Credit Facility (comprised of the unsecured term loan due 2021 and the unsecured revolving line of credit) as well as covenant definitions, refer to the Fifth Amended and Restated Credit Agreement filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on May 2, 2018. For a complete listing of all covenants as well as covenant definitions related to the Company's Term Loan Due 2023, refer to the credit agreement filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, dated November 29, 2016, the First Amendment to the Term Loan Agreement filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, filed on August 1, 2018 and the Second Amendment to the Term Loan Agreement filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 13, 2019. For a complete listing of all covenants related to the Company's 4.12% senior unsecured notes due 2021 and 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024) as well as covenant definitions, refer to the Note Purchase Agreement filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, dated May 22, 2014. For a complete listing of all covenants related to the Company's 4.08% senior unsecured notes due 2026 and 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028) as well as covenant definitions, refer to the Note Purchase Agreement filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, dated October 5, 2016. For a complete listing of all covenants related to the Company's 4.82% senior unsecured notes due 2029 (Notes Due 2029) as well as covenant definitions, refer to the Note Purchase Agreement filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, dated April 5, 2019.
(b)
Based upon a capitalization rate of 6.50%.
(c)
Applies only to the Company's Unsecured Credit Facility, Term Loan Due 2023, Notes Due 2026 and 2028 and Notes Due 2029. This ratio is based upon consolidated debt service, including interest expense and principal amortization, excluding interest expense related to defeasance costs and prepayment premiums.
(d)
Applies only to the Notes Due 2021 and 2024, Notes Due 2026 and 2028 and Notes Due 2029.
(e)
For a complete listing of all covenants related to the Company's 4.00% senior unsecured notes due 2025 (Notes Due 2025) as well as covenant definitions, refer to the First Supplemental Indenture filed as Exhibit 4.2 to the Company's 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 referenced in footnote (e) above.
(g)
Based upon interest expense and excludes principal amortization. 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.

2nd Quarter 2019 Supplemental Information
 
7


Retail Properties of America, Inc.
Summary of Indebtedness as of June 30, 2019
(dollar amounts in thousands)
Description
 
Balance
 
Interest
Rate (a)
 
Maturity
Date
 
WA Years to
Maturity
 
Type
Consolidated Indebtedness
 
 
 
 
 
 
 
 
 
 
Sawyer Heights Village
 
$
18,700

 
5.00%
 
07/01/21
 
2.0 years
 
Fixed/Secured
Ashland & Roosevelt (bank pad)
 
551

 
7.48%
 
02/25/22
 
2.7 years
 
Fixed/Secured
Gardiner Manor Mall
 
33,140

 
4.95%
 
03/01/22
 
2.7 years
 
Fixed/Secured
Peoria Crossings
 
24,131

 
4.82%
 
04/01/22
 
2.8 years
 
Fixed/Secured
Southlake Corners
 
20,945

 
4.89%
 
04/01/22
 
2.8 years
 
Fixed/Secured
Tollgate Marketplace
 
35,000

 
4.84%
 
04/01/22
 
2.8 years
 
Fixed/Secured
Gateway Village
 
33,098

 
4.14%
 
01/01/23
 
3.5 years
 
Fixed/Secured
Northgate North
 
25,068

 
4.50%
 
06/01/27
 
7.9 years
 
Fixed/Secured
The Shoppes at Union Hill
 
13,287

 
3.75%
 
06/01/31
 
11.9 years
 
Fixed/Secured
Mortgages payable (b)
 
203,920

 
4.65%
 
07/09/23
 
4.0 years
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior notes – 4.12% due 2021
 
100,000

 
4.12%
 
06/30/21
 
2.0 years
 
Fixed/Unsecured
Senior notes – 4.58% due 2024
 
150,000

 
4.58%
 
06/30/24
 
5.0 years
 
Fixed/Unsecured
Senior notes – 4.00% due 2025
 
250,000

 
4.00%
 
03/15/25
 
5.7 years
 
Fixed/Unsecured
Senior notes – 4.08% due 2026
 
100,000

 
4.08%
 
09/30/26
 
7.3 years
 
Fixed/Unsecured
Senior notes – 4.24% due 2028
 
100,000

 
4.24%
 
12/28/28
 
9.5 years
 
Fixed/Unsecured
Senior notes – 4.82% due 2029 (c)
 
100,000

 
4.82%
 
06/28/29
 
10.0 years
 
Fixed/Unsecured
Unsecured notes payable (b)
 
800,000

 
4.27%
 
10/22/25
 
6.3 years
 
 
 
 
 
 
 
 
 
 
 
 
 
Term loan due 2021 (b)
 
250,000

 
3.20%
(d)
01/05/21
 
1.5 years
 
Fixed/Unsecured
Revolving line of credit
 
193,000

 
3.45%
(e)
04/22/22
 
2.8 years
 
Variable/Unsecured
Unsecured credit facility
 
443,000

 
3.31%
 
07/29/21
 
2.1 years
 
 
 
 
 
 
 
 
 
 
 
 
 
Term Loan Due 2023 (b)
 
200,000

 
4.05%
(f)
11/22/23
 
4.4 years
 
Fixed/Unsecured
 
 
 
 
 
 
 
 
 
 
 
Total consolidated indebtedness (g)
 
$
1,646,920

 
4.04%
 
02/26/24
 
4.7 years
 
 

Consolidated Debt Maturity Schedule as of June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
$
1,560

 
4.48
%
 
$
—

 
—

 
$
1,560

 
0.1
%
 
4.48
%
2020
 
3,228

 
4.48
%
 
—

 
—

 
3,228

 
0.2
%
 
4.48
%
2021
 
372,080

 
3.56
%
 
—

 
—

 
372,080

 
22.6
%
 
3.56
%
2022
 
113,946

 
4.90
%
 
193,000

 
3.45
%
 
306,946

 
18.6
%
 
3.99
%
2023
 
231,758

 
4.06
%
 
—

 
—

 
231,758

 
14.1
%
 
4.06
%
2024
 
151,737

 
4.57
%
 
—

 
—

 
151,737

 
9.2
%
 
4.57
%
2025
 
251,809

 
4.00
%
 
—

 
—

 
251,809

 
15.3
%
 
4.00
%
2026
 
101,884

 
4.08
%
 
—

 
—

 
101,884

 
6.2
%
 
4.08
%
2027
 
21,409

 
4.46
%
 
—

 
—

 
21,409

 
1.3
%
 
4.46
%
2028
 
101,229

 
4.23
%
 
—

 
—

 
101,229

 
6.1
%
 
4.23
%
Thereafter
 
103,280

 
4.79
%
 
—

 
—

 
103,280

 
6.3
%
 
4.79
%
Total
 
$
1,453,920

 
4.11
%
 
$
193,000

 
3.45
%
 
$
1,646,920

 
100.0
%
 
4.04
%

(a)
Interest rates presented exclude the impact of the premium, discount and capitalized loan fee amortization. As of June 30, 2019, the Company's overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 4.22%.
(b)
Mortgages payable excludes mortgage premium of $650, discount of $(515) and capitalized loan fees of $(329), net of accumulated amortization, as of June 30, 2019. Unsecured notes payable excludes discount of $(675) and capitalized loan fees of $(3,423), net of accumulated amortization, as of June 30, 2019. Term loans exclude capitalized loan fees of $(2,243), net of accumulated amortization, as of June 30, 2019. In the consolidated debt maturity schedule, maturity amounts for each year include scheduled principal amortization payments.
(c)
On June 28, 2019, the Company issued $100,000 of 10-year 4.82% senior unsecured notes in a private placement transaction pursuant to a note purchase agreement it entered into with certain institutional investors on April 5, 2019.
(d)
Reflects $250,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 2.00% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through January 5, 2021. The applicable credit spread was 1.20% as of June 30, 2019.
(e)
Represents interest rates as of June 30, 2019.
(f)
Reflects $200,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging from 1.20% to 1.85% through November 22, 2023. The applicable credit spread was 1.20% as of June 30, 2019.
(g)
Subsequent to June 30, 2019, the Company entered into a term loan agreement with a group of financial institutions for a five-year $120,000 unsecured term loan (Term Loan Due 2024) and a seven-year $150,000 unsecured term loan (Term Loan Due 2026). The term loans bear interest at a rate of LIBOR, adjusted based on applicable reserve percentages established by the Federal Reserve, plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% for the Term Loan Due 2024 and 1.50% to 2.20% for the Term Loan Due 2026. In accordance with the term loan agreement, the Company may elect to convert to an investment grade pricing grid. In addition, the Company entered into agreements to swap $120,000 of LIBOR-based variable rate debt to a fixed interest rate of 1.68% through July 2024 and $150,000 of LIBOR-based variable rate debt to a fixed interest rate of 1.77% through July 2026, each with an effective date of August 15, 2019.

2nd Quarter 2019 Supplemental Information
 
8


Retail Properties of America, Inc.
Development Projects as of June 30, 2019
(dollar amounts in thousands)
Property Name and
Metropolitan
Statistical Area (MSA)
 
Estimated
Project
Commercial
GLA
 
Estimated
Project
Multi-Family
Rental Units (MFR)
 
JV / Air Rights
 
Estimated
Net RPAI
Project
Investment (a)
 
Net RPAI Project Investment
Inception
to Date
 
Estimated
Incremental
Return on
Investment (b)
 
Anticipated
Commencement
 
Targeted
Stabilization
(c)
 
Property
Included in
Same Store
Portfolio (d)
 
Project Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Active Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Circle East (e)
(Baltimore MSA)
 
80,000
 
370
 
MFR: Air rights sale
 
$34,000–$36,000
 
$
16,920

(f)
8.0%–10.0%
 
n/a
 
Q4 2020
 
No (e)
 
Mixed-use redevelopment that will include dual-sided street level retail with approx. 370 third-party-owned MFR above
Plaza del Lago – MFR
(Chicago MSA)
 
—
 
18
 
n/a
 
$1,350–$1,400
 
$
1,357

 
8.5%–9.0%
 
n/a
 
Q3 2019
 
No (g)
 
Reconfiguration of 18 MFR, which are 33% leased
One Loudoun Downtown – Pads G & H
(Washington, D.C. MSA)
 
67,000–70,000
 
378
 
MFR: 90%/10% JV
 
$125,000–$135,000
 
$
3,139

 
6.0%–7.0%
 
n/a
 
Q2–Q3 2022
 
No (g)
 
Vacant pad development; Groundbreaking held June 13, 2019. See site plan on page 12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Near-Term Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Main Street Promenade (h)
(Chicago MSA)
 
18,900
 
74
 
TBD
 
$25,000–$30,000
 
n/a
 
6.5%–8.0%
 
Q3–Q4 2019
 
Q3–Q4 2021
 
Yes
 
Vacant pad development
Downtown Crown
(Washington, D.C. MSA)
 
36,000
 
—
 
n/a
 
$13,000–$15,000
 
n/a
 
6.0%–7.0%
 
Q3–Q4 2019
 
Q3–Q4 2021
 
Yes
 
Vacant pad development
Carillon – Phase One (i)
(Washington, D.C. MSA)
 
225,800
 
350
 
MFR: 95%/5% JV
MOB: 95%/5% JV
 
$194,000–$215,000
 
n/a
 
6.0%–7.0%
 
Q3 2019
 
Q3–Q4 2022
 
No
 
Phased project that will include retail, MFR and medical office use. Phase One retail is 37% pre-leased. See site plan on page 13

(a)
Net project investment represents the Company's estimated share of the project costs, net of proceeds from land sales, sales of air rights, reimbursement from third parties and excludes contributions from project partners, as applicable.
(b)
Estimated Incremental Return on Investment (ROI) generally reflects only the unleveraged incremental NOI generated by the project upon stabilization and is calculated as incremental NOI divided by net project investment. Incremental NOI is the difference between NOI expected to be generated by the stabilized project and the NOI generated prior to the commencement of active redevelopment, development or expansion of the space. ROI does not include peripheral impacts, such as the impact on future lease rollover at the property or the impact on the long-term value of the property.
(c)
Targeted stabilization represents the projected date of the redevelopment reaching 90% occupancy, but generally no later than one year from the completion of major construction activity.
(d)
The Company's same store portfolio consists of retail operating properties acquired or placed in service and stabilized prior to January 1, 2018. A property is removed from the Company's same store portfolio if the project is considered to significantly impact the existing property's NOI and activities have begun in anticipation of the project. Expansions and pad developments are generally not considered to significantly impact the existing property's NOI, and therefore, the existing properties have not been removed from the Company's same store portfolio if they otherwise met the criteria to be included in the Company's same store portfolio as of June 30, 2019.
(e)
Circle East is the Company's rebranded redevelopment at Towson Circle (which has been excluded from the Company's same store portfolio due to the ongoing redevelopment).
(f)
Net project investment inception to date is net of proceeds of $11,820 received in the first quarter of 2018 from the sale of air rights to a third party to develop the MFR.
(g)
The property is comprised of the redevelopment project (which has been excluded from the Company's same store portfolio due to the ongoing redevelopment) and the remaining retail operating portion of the property (which is included in the Company's same store portfolio as of June 30, 2019).
(h)
Project remains subject to the approval of the Company's Investment Committee and/or Board of Directors.
(i)
Carillon – Phase One includes two separate joint venture (JV) arrangements. The JV agreements related to the MFR and medical office building (MOB) have been executed and are 95% owned by the Company.
The Company cannot guarantee that (i) ROI will be generated at the percentage listed or at all, (ii) total actual net investment associated with these projects will be equal to the total estimated net project investment, (iii) project commencement or stabilization will occur when anticipated or (iv) that the Company will ultimately complete any or all of these projects. The ROI and total estimated net project investment reflect the Company's best estimate based upon current information, may change over time and are subject to certain conditions which are beyond the Company's control, including, without limitation, general economic conditions, market conditions and other business factors.

2nd Quarter 2019 Supplemental Information
 
9


Retail Properties of America, Inc.
Development Projects as of June 30, 2019 (continued)
(dollar amounts in thousands)


The Company has identified the following potential development, redevelopment, expansion and pad development opportunities to develop or redevelop significant portions of the property, add stand-alone buildings, convert previously under-utilized space or develop additional commercial GLA at existing properties. Executing on these opportunities may be subject to certain conditions which are beyond the Company's control, including, without limitation, government approvals, tenant consents as well as general economic, market and other conditions and, therefore, the Company can provide no assurances that any of the development, redevelopment, expansion and pad development opportunities (i) will be executed on, (ii) will commence when anticipated or (iii) will ultimately be realized.
Property Name
 
MSA
 
Included in
Same store
portfolio (a)
 
Estimated Project
Commercial GLA
 
Estimated
Project MFR
 
Residential Unit
Rights Under
Contract for Sale
 
Developable
Acreage
 
 
 
 
 
 
 
 
 
 
 
 
 
Development, Redevelopment, Expansion and Pad Development Opportunities
 
 
 
 
 
 
 
 
 
 
One Loudoun Uptown – land held for development
 
Washington, D.C.
 
No
 
2,300,000
 
 
 
 
 
32
Carillon – Future Phases (b)
 
Washington, D.C.
 
No
 
975,000
 
2,650
 
 
 
 
Southlake Town Square
 
Dallas
 
Yes
 
275,000
 
 
 
 
 
 
One Loudoun Downtown – Pad T and Future Phases (c)
 
Washington, D.C.
 
Yes
 
102,000 – 135,000
 
 
 
12 (c)
 
 
Merrifield Town Center II (b)
 
Washington, D.C.
 
Yes
 
80,000 – 100,000
 
350 – 400
 
 
 
 
Tysons Corner (b)
 
Washington, D.C.
 
Yes
 
50,000 – 75,000
 
350 – 450
 
 
 
 
Plaza del Lago – Future Phase
 
Chicago
 
Yes
 
20,600
 
 
 
 
 
 
Reisterstown Road Plaza
 
Baltimore
 
No (d)
 
8,000 – 12,000
 
 
 
 
 
 
Lakewood Towne Center
 
Seattle
 
Yes
 
10,500
 
 
 
 
 
 
Gateway Plaza
 
Dallas
 
Yes
 
8,000
 
 
 
 
 
 
Humblewood Shopping Center
 
Houston
 
Yes
 
5,000
 
 
 
 
 
 
Watauga Pavilion
 
Dallas
 
Yes
 
5,000
 
 
 
 
 
 
Edwards Multiplex – Ontario, CA
 
Riverside-San Bernadino
 
Yes
 
3,000
 
 
 
 
 
 


(a)
See footnote (d) on page 9 regarding the Company's same store portfolio.
(b)
Project may require demolition of a portion of the property's existing GLA.
(c)
One Loudoun Downtown – Future Phases includes three vacant parcels that have been identified as future pad development opportunities of up to 135,000 square feet of commercial GLA. In addition, as of June 30, 2019, the property is under contract for the phased sale of a land parcel and rights to develop 12 residential units, which closed on July 12, 2019. The first phase of the land parcel sale and rights to develop eight residential units closed on July 9, 2018 and the second phase with rights to develop 10 residential units closed on May 2, 2019. See site plan on page 12.
(d)
The property was reclassified from active redevelopment into the Company's retail operating portfolio during the three months ended December 31, 2018 and is expected to be included in the Company's same store portfolio beginning in the first quarter of 2020 as it will be considered operating for the entirety of 2020 and 2019.

2nd Quarter 2019 Supplemental Information
 
10


Retail Properties of America, Inc.
Development Projects as of June 30, 2019 (continued)
(dollar amounts in thousands)


Property Name and MSA
 
Project
Commercial
GLA
 
Estimated
Net RPAI Project
Investment (a)
 
Net RPAI
Project
Investment
Inception to Date
 
Estimated
Incremental
Return on
Investment (a)
 
Stabilization
(a)
 
Property
Included in
Same Store
Portfolio (a)
 
Project Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed Redevelopment Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reisterstown Road Plaza
(Baltimore MSA)
 
40,500
 
$
10,500

 
$
9,743

 
10.5%–11.0%
 
Q4 2018
 
No (b)
 
Reconfigured existing space and facade renovation; redevelopment GLA is 100% leased and 89% occupied


Property Name and MSA
 
Project
Commercial
GLA
 
Projected
Net RPAI
Investment (a)
 
Net Costs
Inception
to Date
 
Projected
Incremental
Return on
Cost (a)
 
Completion
 
Property
Included in
Same Store
Portfolio (a)
 
Project Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed Expansions and Pad Developments
 
 
 
 
 
 
 
 
 
 
 
 
Lake Worth Towne Crossing – Parcel
(Dallas MSA)
 
15,030
 
$
2,872

 
$
2,872

 
11.3%
 
Q4 2015
 
Yes
 
15,030 sq. ft. multi-tenant retail
Parkway Towne Crossing
(Dallas MSA)
 
21,000
 
$
3,468

 
$
3,468

 
9.9%
 
Q3 2016
 
Yes
 
21,000 sq. ft. multi-tenant retail
Heritage Square
(Seattle MSA)
 
4,200
 
$
1,507

 
$
1,507

 
11.2%
 
Q3 2016
 
Yes
 
4,200 sq. ft. redevelopment of outparcel for new tenant, Corner Bakery
Pavilion at King's Grant
(Charlotte MSA)
 
32,500
 
$
2,470

 
$
2,470

 
14.7%
 
Q2 2017
 
Yes
 
32,500 sq. ft. multi-tenant retail
Shops at Park Place
(Dallas MSA)
 
25,040
 
$
3,956

 
$
3,956

 
9.1%
 
Q2 2017
 
Yes
 
25,040 sq. ft. pad development
Lakewood Towne Center
(Seattle MSA)
 
4,500
 
$
1,900

 
$
1,900

 
7.3%
 
Q3 2017
 
Yes
 
4,500 sq. ft. pad development


(a)
See footnote (a), (b), (c) and (d) on page 9 regarding the estimated net RPAI project investment, estimated incremental return on investment, stabilization and same store portfolio, respectively.
(b)
The property was reclassified from active redevelopment into the Company's retail operating portfolio during the three months ended December 31, 2018 and is expected to be included in the Company's same store portfolio beginning in the first quarter of 2020 as it will be considered operating for the entirety of 2020 and 2019.

2nd Quarter 2019 Supplemental Information
 
11


Retail Properties of America, Inc.
Development Projects as of June 30, 2019 (continued)
One Loudoun Downtown Site Plan

oneloudounsiteplanq22019.jpg

2nd Quarter 2019 Supplemental Information
 
12


Retail Properties of America, Inc.
Development Projects as of June 30, 2019 (continued)
Carillon Site Plan

carillonsiteplanq22019.jpg

2nd Quarter 2019 Supplemental Information
 
13


Retail Properties of America, Inc.
Acquisitions and Dispositions for the Six Months Ended June 30, 2019
(amounts in thousands, except square footage amounts)


Acquisitions
Property Name
 
Acquisition Date
 
MSA
 
Property Type
 
GLA
 
Purchase Price
 
 
 
 
 
 
 
 
 
 
 
North Benson Center
 
March 7, 2019
 
Seattle
 
Multi-tenant retail
 
70,500

 
$
25,340

Paradise Valley Marketplace – Parcel
 
June 10, 2019
 
Phoenix
 
Land (a)
 
—

 
1,343

 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2019 acquisitions (through June 30, 2019)
 
70,500

 
$
26,683



(a)
The Company acquired a parcel adjacent to its Paradise Valley Marketplace multi-tenant retail operating property. The total number of properties in the Company's portfolio was not affected by this transaction.


Property Dispositions
Property Name
 
Disposition Date
 
Property Type
 
GLA
 
Consideration
 
Debt Repaid
 
Prepayment
Premium
 
 
 
 
 
 
 
 
 
 
 
 
 
Edwards Multiplex – Fresno, CA
 
March 8, 2019
 
Single-user retail
 
94,600

 
$
25,850

 
$
—

 
$
—

North Rivers Towne Center
 
June 28, 2019
 
Multi-tenant retail
 
141,500

 
18,900

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2019 property dispositions (through June 30, 2019)
 
236,100

 
$
44,750

 
$
—

 
$
—



Development Transactions
Property Name
 
Transaction Date
 
Transaction
 
Consideration
 
 
 
 
 
 
 
One Loudoun Downtown
 
May 2, 2019
 
Sale of land parcel and development rights (b)
 
$
2,306

 
 
 
 
 
 
 
 
 
Total development transactions (through June 30, 2019)
 
$
2,306





Subsequent to June 30, 2019, the Company completed the following development transaction:
Property Name
 
Transaction Date
 
Transaction
 
Consideration
 
 
 
 
 
 
 
One Loudoun Downtown
 
July 12, 2019
 
Sale of land parcel and development rights (b)
 
$
2,783

 
 
 
 
 
 
 
 
 
Subsequent development transaction
 
$
2,783



(b)
During the three months ended June 30, 2019, the Company disposed of the second phase of a land parcel and the rights to develop 10 residential units. Subsequent to quarter end, the Company sold the final phase consisting of land and the rights to develop 12 residential units.

2nd Quarter 2019 Supplemental Information
 
14


Retail Properties of America, Inc.
Retail Market Summary as of June 30, 2019
(dollar amounts and square footage in thousands)


Property Type/Market
 
Number of
Properties
 
Annualized
Base Rent
(ABR) (a)
 
% of Total
Multi-Tenant
Retail
ABR (a)
 
ABR per
Occupied
Sq. Ft.
 
GLA (a)
 
% of Total
Multi-Tenant
Retail
GLA (a)
 
Occupancy
 
% Leased
Including
Signed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multi-Tenant Retail:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Top 25 MSAs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dallas
 
19

 
$
79,943

 
22.9
%
 
$
22.47

 
3,939

 
20.0
%
 
90.3
%
 
92.8
%
Washington, D.C.
 
8

 
38,360

 
11.0
%
 
28.78

 
1,387

 
7.0
%
 
96.1
%
 
96.4
%
New York
 
9

 
36,288

 
10.4
%
 
29.27

 
1,292

 
6.6
%
 
95.9
%
 
97.3
%
Chicago
 
8

 
28,828

 
8.2
%
 
23.43

 
1,358

 
6.9
%
 
90.6
%
 
92.3
%
Seattle
 
9

 
22,808

 
6.5
%
 
16.16

 
1,548

 
7.9
%
 
91.2
%
 
93.9
%
Baltimore
 
5

 
21,148

 
6.1
%
 
15.10

 
1,604

 
8.1
%
 
87.3
%
 
93.0
%
Atlanta
 
9

 
19,662

 
5.6
%
 
13.76

 
1,513

 
7.7
%
 
94.5
%
 
97.3
%
Houston
 
9

 
15,801

 
4.5
%
 
14.93

 
1,141

 
5.8
%
 
92.8
%
 
92.8
%
San Antonio
 
3

 
12,703

 
3.6
%
 
17.99

 
722

 
3.7
%
 
97.9
%
 
98.7
%
Phoenix
 
3

 
10,445

 
3.0
%
 
17.85

 
632

 
3.2
%
 
92.7
%
 
97.1
%
Los Angeles
 
1

 
5,264

 
1.5
%
 
29.29

 
241

 
1.2
%
 
74.5
%
 
95.3
%
Riverside
 
1

 
4,624

 
1.3
%
 
15.81

 
292

 
1.5
%
 
100.0
%
 
100.0
%
St. Louis
 
1

 
4,204

 
1.2
%
 
9.77

 
453

 
2.3
%
 
95.0
%
 
95.0
%
Charlotte
 
1

 
3,071

 
0.9
%
 
12.75

 
320

 
1.6
%
 
75.3
%
 
90.6
%
Tampa
 
1

 
2,379

 
0.7
%
 
19.51

 
126

 
0.6
%
 
97.0
%
 
97.0
%
Subtotal
 
87

 
305,528

 
87.4
%
 
20.08

 
16,568

 
84.1
%
 
91.9
%
 
94.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Top 25 MSAs by State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Texas
 
7

 
13,854

 
4.0
%
 
14.54

 
1,002

 
5.1
%
 
95.1
%
 
96.7
%
Michigan
 
1

 
7,453

 
2.1
%
 
23.89

 
332

 
1.7
%
 
94.0
%
 
94.0
%
Massachusetts
 
2

 
7,158

 
2.0
%
 
11.94

 
643

 
3.2
%
 
93.2
%
 
93.2
%
Virginia
 
1

 
4,972

 
1.4
%
 
18.07

 
308

 
1.6
%
 
89.4
%
 
89.4
%
Washington
 
1

 
4,520

 
1.3
%
 
12.25

 
378

 
1.9
%
 
97.6
%
 
97.6
%
Tennessee
 
2

 
4,104

 
1.2
%
 
11.57

 
364

 
1.8
%
 
97.4
%
 
97.8
%
Maryland
 
1

 
2,167

 
0.6
%
 
20.80

 
113

 
0.6
%
 
92.2
%
 
92.2
%
Subtotal
 
15

 
44,228

 
12.6
%
 
14.91

 
3,140

 
15.9
%
 
94.5
%
 
95.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Multi-Tenant Retail
 
102

 
349,756

 
100.0
%
 
19.23

 
19,708

 
100.0
%
 
92.3
%
 
94.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Single-User Retail
 
2

 
5,679

 
 
 
21.78

 
260

 
 
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Retail
Operating Portfolio (b)
 
104

 
$
355,435

 
 
 
$
19.27

 
19,968

 
 
 
92.4
%
 
94.7
%


(a)
Excludes $1,898 of multi-tenant retail ABR and 395 square feet of multi-tenant retail GLA attributable to (i) Circle East, which is in active redevelopment and (ii) Carillon, where the Company has begun activities in anticipation of future redevelopment, which are located in the Baltimore and Washington, D.C. MSAs, respectively. Including these amounts, 87.4% of the Company's multi-tenant retail ABR and 84.4% of the Company's multi-tenant retail GLA is located in the top 25 MSAs.
(b)
Excludes the 18 multi-family rental units at Plaza del Lago, which are in active redevelopment. As of June 30, 2019, six multi-family rental units are leased at an average monthly rental rate per unit of $1,367.

2nd Quarter 2019 Supplemental Information
 
15



Retail Properties of America, Inc.
Retail Operating Portfolio Occupancy Breakdown as of June 30, 2019
(square footage in thousands)


Total Retail Operating Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Top 25 MSAs
 
Non-Top 25 MSAs
 
Total Multi-Tenant Retail
 
Single-User Retail
 
Total Retail
Number of Properties
87
 
15
 
102
 
2
 
104
 
GLA
 
Occupancy
 
GLA
 
Occupancy
 
GLA
 
Occupancy
 
GLA
 
Occupancy
 
GLA
 
Occupancy
 
% Leased
Including Signed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25,000+ sq ft
7,676

 
94.5
%
 
1,507

 
97.5
%
 
9,183

 
95.0
%
 
260

 
100.0
%
 
9,443

 
95.1
%
 
97.1
%
10,000-24,999 sq ft
3,243

 
92.0
%
 
586

 
95.8
%
 
3,829

 
92.6
%
 
—

 
—
%
 
3,829

 
92.6
%
 
97.2
%
Anchor
10,919

 
93.8
%
 
2,093

 
97.1
%
 
13,012

 
94.3
%
 
260

 
100.0
%
 
13,272

 
94.4
%
 
97.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000-9,999 sq ft
2,241

 
90.2
%
 
376

 
95.5
%
 
2,617

 
90.9
%
 
—

 
—

 
2,617

 
90.9
%
 
92.1
%
0-4,999 sq ft
3,408

 
86.8
%
 
671

 
85.9
%
 
4,079

 
86.7
%
 
—

 
—

 
4,079

 
86.7
%
 
88.5
%
Non-Anchor
5,649

 
88.2
%
 
1,047

 
89.4
%
 
6,696

 
88.4
%
 
—

 
—

 
6,696

 
88.4
%
 
89.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
16,568

 
91.9
%
 
3,140

 
94.5
%
 
19,708

 
92.3
%
 
260

 
100.0
%
 
19,968

 
92.4
%
 
94.7
%




2nd Quarter 2019 Supplemental Information
 
16



Retail Properties of America, Inc.
Top Retail Tenants as of June 30, 2019
(dollar amounts and square footage in thousands)


The following table sets forth information regarding the 20 largest tenants in the Company's retail operating portfolio based on ABR as of June 30, 2019. Dollars (other than per square foot information) and square feet of GLA are presented in thousands.
Tenant
 
Primary DBA/Number of Stores
 
Number
of Stores
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
Occupied
GLA
 
% of
Occupied
GLA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Best Buy Co., Inc.
 
Best Buy (11), Pacific Sales (1)
 
12

 
$
8,857

 
2.5
%
 
$
18.04

 
491

 
2.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The TJX Companies, Inc.
 
T.J. Maxx (10), Marshalls (7), HomeGoods (6)
 
23

 
7,071

 
2.0
%
 
10.76

 
657

 
3.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AB Acquisition LLC
 
Safeway (4), Jewel-Osco (3), Tom Thumb (2)
 
9

 
6,674

 
1.9
%
 
13.73

 
486

 
2.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bed Bath & Beyond Inc.
 
Bed Bath & Beyond (12), Cost Plus World Market (3), buybuy BABY (2)
 
17

 
6,344

 
1.8
%
 
14.04

 
452

 
2.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ross Stores, Inc.
 
Ross Dress for Less
 
18

 
5,765

 
1.6
%
 
10.92

 
528

 
2.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PetSmart, Inc.
 
 
 
17

 
5,741

 
1.6
%
 
16.59

 
346

 
1.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ahold U.S.A. Inc.
 
Stop & Shop (3), Giant Eagle (1)
 
4

 
5,389

 
1.5
%
 
22.27

 
242

 
1.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gap Inc.
 
Old Navy (12), The Gap (4), Banana Republic (3), Janie &
Jack (2), Athleta (1), Gap Factory Store (1)
 
23

 
4,987

 
1.4
%
 
19.56

 
255

 
1.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michaels Stores, Inc.
 
Michaels
 
16

 
4,855

 
1.4
%
 
12.88

 
377

 
2.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BJ's Wholesale Club, Inc.
 
 
 
2

 
4,659

 
1.3
%
 
19.02

 
245

 
1.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ascena Retail Group, Inc.
 
Lane Bryant (10), Catherine's (5), Dress Barn (5), Justice (5),
LOFT (5), Ann Taylor (4)
 
34

 
4,062

 
1.2
%
 
22.82

 
178

 
1.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lowe's Companies, Inc.
 
 
 
4

 
3,944

 
1.1
%
 
6.47

 
610

 
3.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regal Entertainment Group
 
Edwards Cinema
 
1

 
3,697

 
1.0
%
 
29.58

 
125

 
0.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Kroger Co.
 
Kroger (5), Harris Teeter (1),
QFC (1)
 
7

 
3,639

 
1.0
%
 
10.43

 
349

 
1.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Barnes & Noble, Inc.
 
 
 
7

 
3,592

 
1.0
%
 
20.88

 
172

 
0.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Home Depot, Inc.
 
 
 
3

 
3,484

 
1.0
%
 
9.60

 
363

 
2.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Party City Holdings Inc.
 
 
 
16

 
3,365

 
0.9
%
 
14.08

 
239

 
1.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Depot, Inc.
 
Office Depot (8), OfficeMax (2)
 
10

 
3,300

 
0.9
%
 
14.29

 
231

 
1.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Petco Animal Supplies, Inc.
 
 
 
13

 
3,155

 
0.9
%
 
17.63

 
179

 
1.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dick's Sporting Goods, Inc.
 
 
 
5

 
3,101

 
0.9
%
 
13.14

 
236

 
1.3
%
Total Top Retail Tenants
 
 
 
241

 
$
95,681

 
26.9
%
 
$
14.15

 
6,761

 
36.7
%


2nd Quarter 2019 Supplemental Information
 
17



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


The following table summarizes the leasing activity in the Company's retail operating portfolio as of June 30, 2019 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
Q2 2019
 
120

 
519

 
$
24.34

 
$
22.49

 
8.2
%
 
6.0

 
$
13.78

Q1 2019
 
117

 
855

 
$
23.08

 
$
21.82

 
5.8
%
 
6.3

 
$
18.75

Q4 2018
 
147

 
1,082

 
$
17.45

 
$
16.42

 
6.3
%
 
6.1

 
$
12.47

Q3 2018
 
140

 
999

 
$
22.13

 
$
20.81

 
6.3
%
 
6.0

 
$
12.74

Total – 12 months
 
524

 
3,455

 
$
21.22

 
$
19.93

 
6.5
%
 
6.1

 
$
14.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
Q2 2019
 
72

 
351

 
$
22.71

 
$
21.24

 
6.9
%
 
5.3

 
$
2.13

Q1 2019
 
74

 
501

 
$
22.51

 
$
21.48

 
4.8
%
 
5.1

 
$
4.27

Q4 2018
 
93

 
718

 
$
17.59

 
$
17.07

 
3.0
%
 
5.1

 
$
1.00

Q3 2018
 
86

 
671

 
$
20.27

 
$
19.15

 
5.8
%
 
5.2

 
$
1.27

Total – 12 months
 
325

 
2,241

 
$
20.29

 
$
19.33

 
5.0
%
 
5.2

 
$
1.99

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
Q2 2019
 
27

 
67

 
$
32.89

 
$
29.05

 
13.2
%
 
7.7

 
$
39.52

Q1 2019
 
16

 
109

 
$
25.69

 
$
23.36

 
10.0
%
 
9.5

 
$
60.12

Q4 2018
 
16

 
114

 
$
16.62

 
$
12.32

 
34.9
%
 
8.5

 
$
33.49

Q3 2018
 
19

 
110

 
$
33.40

 
$
30.92

 
8.0
%
 
10.8

 
$
65.83

Total – 12 months
 
78

 
400

 
$
26.42

 
$
23.24

 
13.7
%
 
9.4

 
$
50.65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
Q2 2019
 
21

 
101

 
$
32.71

 
n/a
 
n/a
 
6.6

 
$
37.24

Q1 2019
 
27

 
245

 
$
18.55

 
n/a
 
n/a
 
7.3

 
$
29.91

Q4 2018
 
38

 
250

 
$
16.81

 
n/a
 
n/a
 
8.0

 
$
35.79

Q3 2018
 
35

 
218

 
$
23.60

 
n/a
 
n/a
 
4.8

 
$
21.10

Total – 12 months
 
121

 
814

 
$
21.13

 
n/a
 
n/a
 
6.6

 
$
30.26

 

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

2nd Quarter 2019 Supplemental Information
 
18


Retail Properties of America, Inc.
Retail Lease Expirations as of June 30, 2019
(dollar amounts and square footage in thousands)

The following tables set forth a summary, as of June 30, 2019, of lease expirations scheduled to occur during the remainder of 2019 and each of the nine calendar years from 2020 to 2028 and thereafter, assuming no exercise of renewal options or early termination rights for all leases in the Company's retail operating portfolio. The following tables are based on leases commenced as of June 30, 2019. Dollars (other than per square foot information) and square feet of GLA are presented in thousands in the table.
Lease Expiration Year
 
Lease
Count
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
ABR at
Exp. (a)
 
ABR per
Occupied Sq.
Ft. at Exp.
 
GLA
 
% of
Occupied
GLA
 
% of Total
GLA
2019
 
143

 
$
10,897

 
3.0
%
 
$
20.68

 
$
10,897

 
$
20.68

 
527

 
2.9
%
 
2.6
%
2020
 
339

 
33,324

 
9.3
%
 
20.55

 
33,587

 
20.71

 
1,622

 
8.8
%
 
8.2
%
2021
 
308

 
45,943

 
12.9
%
 
19.58

 
46,631

 
19.87

 
2,347

 
12.7
%
 
11.8
%
2022
 
332

 
50,584

 
14.3
%
 
16.79

 
51,807

 
17.19

 
3,013

 
16.4
%
 
15.0
%
2023
 
340

 
49,825

 
14.0
%
 
19.56

 
51,292

 
20.14

 
2,547

 
13.8
%
 
12.7
%
2024
 
367

 
55,868

 
15.7
%
 
19.39

 
59,130

 
20.52

 
2,882

 
15.6
%
 
14.4
%
2025
 
124

 
25,694

 
7.2
%
 
17.71

 
27,767

 
19.14

 
1,451

 
7.8
%
 
7.3
%
2026
 
85

 
16,204

 
4.5
%
 
21.58

 
18,805

 
25.04

 
751

 
4.1
%
 
3.8
%
2027
 
82

 
13,019

 
3.7
%
 
15.90

 
14,658

 
17.90

 
819

 
4.5
%
 
4.1
%
2028
 
81

 
18,588

 
5.3
%
 
23.12

 
21,172

 
26.33

 
804

 
4.3
%
 
4.0
%
Thereafter
 
109

 
34,563

 
9.8
%
 
21.15

 
41,473

 
25.38

 
1,634

 
8.8
%
 
8.2
%
Month to month
 
18

 
926

 
0.3
%
 
19.29

 
926

 
19.29

 
48

 
0.3
%
 
0.3
%
Leased Total
 
2,328

 
$
355,435

 
100.0
%
 
$
19.27

 
$
378,145

 
$
20.50

 
18,445

 
100.0
%
 
92.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leases signed but not commenced
 
61

 
$
9,425

 
—

 
$
20.01

 
$
10,737

 
$
22.80

 
471

 
—

 
2.3
%
Available
 
 

 
 

 
 

 
 

 
 

 
 

 
1,052

 
—

 
5.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following tables break down the above information into anchor (10,000 sf and above) and non-anchor (under 10,000 sf) details for the Company's 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
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
ABR at
Exp. (a)
 
ABR per
Occupied Sq.
Ft. at Exp.
 
GLA
 
% of
Occupied
GLA
 
% of Total
GLA
2019
 
9

 
$
1,852

 
0.5
%
 
$
10.01

 
$
1,852

 
$
10.01

 
185

 
1.0
%
 
0.9
%
2020
 
34

 
10,467

 
2.9
%
 
13.88

 
10,490

 
13.91

 
754

 
4.1
%
 
3.8
%
2021
 
53

 
24,909

 
7.0
%
 
15.64

 
25,131

 
15.78

 
1,593

 
8.6
%
 
8.0
%
2022
 
62

 
27,340

 
7.7
%
 
12.39

 
27,591

 
12.51

 
2,206

 
12.0
%
 
11.0
%
2023
 
58

 
23,390

 
6.6
%
 
14.10

 
23,492

 
14.16

 
1,659

 
9.0
%
 
8.3
%
2024
 
66

 
26,855

 
7.5
%
 
13.73

 
27,528

 
14.07

 
1,956

 
10.6
%
 
9.8
%
2025
 
33

 
15,308

 
4.3
%
 
13.77

 
16,099

 
14.48

 
1,112

 
6.0
%
 
5.6
%
2026
 
24

 
8,647

 
2.4
%
 
17.26

 
9,503

 
18.97

 
501

 
2.7
%
 
2.5
%
2027
 
15

 
6,033

 
1.7
%
 
10.30

 
6,557

 
11.19

 
586

 
3.2
%
 
2.9
%
2028
 
20

 
10,534

 
3.0
%
 
18.32

 
11,504

 
20.01

 
575

 
3.1
%
 
2.9
%
Thereafter
 
38

 
26,510

 
7.5
%
 
19.06

 
31,435

 
22.60

 
1,391

 
7.5
%
 
7.0
%
Month to month
 
1

 
189

 
0.1
%
 
17.18

 
189

 
17.18

 
11

 
0.1
%
 
0.1
%
Leased Total
 
413

 
$
182,034

 
51.2
%
 
$
14.53

 
$
191,371

 
$
15.27

 
12,529

 
67.9
%
 
62.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leases signed but not commenced
 
16

 
$
5,872

 
—

 
$
16.04

 
$
6,484

 
$
17.72

 
366

 
—

 
1.8
%
Available
 
 
 
 
 
 
 
 
 
 
 
 
 
377

 
—

 
1.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Anchor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease Expiration Year
 
Lease
Count
 
ABR
 
% of Total
ABR
 
ABR per
Occupied
Sq. Ft.
 
ABR at
Exp. (a)
 
ABR per
Occupied Sq.
Ft. at Exp.
 
GLA
 
% of
Occupied
GLA
 
% of Total
GLA
2019
 
134

 
$
9,045

 
2.5
%
 
$
26.45

 
$
9,045

 
$
26.45

 
342

 
1.9
%
 
1.7
%
2020
 
305

 
22,857

 
6.4
%
 
26.33

 
23,097

 
26.61

 
868

 
4.7
%
 
4.4
%
2021
 
255

 
21,034

 
5.9
%
 
27.90

 
21,500

 
28.51

 
754

 
4.1
%
 
3.8
%
2022
 
270

 
23,244

 
6.6
%
 
28.80

 
24,216

 
30.01

 
807

 
4.4
%
 
4.0
%
2023
 
282

 
26,435

 
7.4
%
 
29.77

 
27,800

 
31.31

 
888

 
4.8
%
 
4.4
%
2024
 
301

 
29,013

 
8.2
%
 
31.33

 
31,602

 
34.13

 
926

 
5.0
%
 
4.6
%
2025
 
91

 
10,386

 
2.9
%
 
30.64

 
11,668

 
34.42

 
339

 
1.8
%
 
1.7
%
2026
 
61

 
7,557

 
2.1
%
 
30.23

 
9,302

 
37.21

 
250

 
1.4
%
 
1.3
%
2027
 
67

 
6,986

 
2.0
%
 
29.98

 
8,101

 
34.77

 
233

 
1.3
%
 
1.2
%
2028
 
61

 
8,054

 
2.3
%
 
35.17

 
9,668

 
42.22

 
229

 
1.2
%
 
1.1
%
Thereafter
 
71

 
8,053

 
2.3
%
 
33.14

 
10,038

 
41.31

 
243

 
1.3
%
 
1.2
%
Month to month
 
17

 
737

 
0.2
%
 
19.92

 
737

 
19.92

 
37

 
0.2
%
 
0.2
%
Leased Total
 
1,915

 
$
173,401

 
48.8
%
 
$
29.31

 
$
186,774

 
$
31.57

 
5,916

 
32.1
%
 
29.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leases signed but not commenced
 
45

 
$
3,553

 
—

 
$
33.84

 
$
4,253

 
$
40.50

 
105

 
—

 
0.5
%
Available
 
 
 
 
 
 
 
 
 
 
 
 
 
675

 
—

 
3.4
%

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

2nd Quarter 2019 Supplemental Information
 
19


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


Gross Leasable Area (GLA)
Gross Leasable Area (GLA) is defined as the aggregate number of square feet available for lease. GLA excludes square footage attributable to third-party managed storage units, of which the Company owned 62,000 square feet as of June 30, 2019.
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.
Metropolitan Statistical Area (MSA)
Metropolitan Statistical Area (MSA) information is sourced from the United States Census Bureau and rank is determined based on the most recently available population estimates.
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 computed in accordance with generally accepted accounting principles (GAAP), excluding (i) depreciation and amortization related to real estate, (ii) gains from sales of real estate assets, (iii) gains and losses from change in control and (iv) impairment write-downs of real estate assets and investments in entities directly attributable to decreases in the value of real estate held by the entity. 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 supplemental non-GAAP financial 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 (i) "Net income" or "Net income attributable to common shareholders" as an indicator of the Company's financial performance, or (ii) "Cash flows from operating activities" in accordance with GAAP as a measure of the Company's 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 the Company does not consider representative of the comparable operating results of its real estate operating portfolio, which is its core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the impact on earnings from gains or losses associated with the early extinguishment of debt or other liabilities, litigation involving the Company, including actual or anticipated settlement and associated legal costs, the impact on earnings from executive separation and the excess of redemption value over carrying value of preferred stock redemption, which are not otherwise adjusted in the Company's calculation of FFO attributable to common shareholders. The Company believes that Operating FFO attributable to common shareholders, which is a supplemental non-GAAP financial 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 (i) "Net income" or "Net income attributable to common shareholders" as an indicator of the Company's financial performance, or (ii) "Cash flows from operating activities" in accordance with GAAP as a measure of the Company's capacity to fund cash needs, including the payment of dividends. 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.
Net Operating Income (NOI)
The Company defines Net Operating Income (NOI) as all revenues other than (i) straight-line rental income (non-cash), (ii) amortization of lease inducements, (iii) amortization of acquired above and below market lease intangibles and (iv) lease termination fee income, less real estate taxes and all operating expenses other than lease termination fee expense and non-cash ground rent expense, which is comprised of straight-line ground rent expense and amortization of acquired ground lease intangibles for the three and six months ended June 30, 2018 and amortization of right-of-use lease assets and amortization of lease liabilities for the three and six months ended June 30, 2019. NOI consists of Same Store NOI and NOI from Other Investment Properties. The Company believes that NOI, which is a supplemental non-GAAP financial measure, provides an additional and useful operating perspective not immediately apparent from "Net income" or "Net income attributable to common shareholders" in accordance with GAAP. The Company uses NOI to evaluate its 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 have on the Company's operating results. NOI does not represent an alternative to "Net income" or "Net income attributable to common shareholders" in accordance with GAAP as an indicator of the Company's financial performance. Comparison of the Company's presentation of NOI to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

2nd Quarter 2019 Supplemental Information
 
20


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


Same Store NOI and NOI from Other Investment Properties
Same Store NOI for the three and six months ended June 30, 2019 represents NOI from the Company's same store portfolio consisting of 102 retail operating properties acquired or placed in service and stabilized prior to January 1, 2018. NOI from Other Investment Properties for the three and six months ended June 30, 2019 represents NOI primarily from (i) properties acquired or placed in service during 2018 and 2019, including Reisterstown Road Plaza, which was reclassified from active redevelopment into the Company's retail operating portfolio during 2018, (ii) Circle East, which is in active redevelopment, (iii) the multi-family rental units at Plaza del Lago, which are in active redevelopment, (iv) One Loudoun Downtown – Pads G & H, which are in active redevelopment, (v) Carillon, where the Company has begun activities in anticipation of future redevelopment, (vi) properties that were sold or held for sale during 2018 and 2019, and (vii) the net income from the Company's wholly-owned captive insurance company.
The Company believes that Same Store NOI and NOI from Other Investment Properties, which are supplemental non-GAAP financial measures, provide an additional and useful operating perspective not immediately apparent from "Net income" or "Net income attributable to common shareholders" in accordance with GAAP. The Company uses these measures to evaluate its performance on a property-by-property basis because they allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base have on the Company's operating results. Same Store NOI and NOI from Other Investment Properties do not represent alternatives to "Net income" or "Net income attributable to common shareholders" in accordance with GAAP as indicators of the Company's financial performance. Comparison of the Company's presentation of Same Store NOI and NOI from Other Investment Properties to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
EBITDAre and Adjusted EBITDAre
As defined by NAREIT, EBITDA for real estate (EBITDAre) means net income (loss) computed in accordance with GAAP, plus (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) impairment charges on investment property and (v) impairment charges on investments in unconsolidated affiliates if caused by a decrease in the value of depreciable property in the affiliate, plus or minus (i) gains from sales of investment property, including gains (or losses) on change in control, and (ii) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates. The Company has adopted the NAREIT definition in its computation of EBITDAre as it believes it provides a basis for comparing the Company's performance to that of other REITs. The Company also reports Adjusted EBITDAre, which excludes the impact of certain discrete non-operating transactions and other events such as the impact on earnings from executive separation. The Company believes that Adjusted EBITDAre is useful because it allows investors and management to evaluate and compare the Company's performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. EBITDAre and Adjusted EBITDAre are supplemental non-GAAP financial measures and should not be considered alternatives to "Net income" or "Net income attributable to common shareholders" as indicators of the Company's financial performance. Comparison of the Company's presentation of EBITDAre and Adjusted EBITDAre to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
Net Debt to Adjusted EBITDAre
Net Debt to Adjusted EBITDAre is a supplemental non-GAAP financial measure and represents (i) the Company's total debt principal, which excludes unamortized premium, discount and capitalized loan fees, less (ii) cash and cash equivalents divided by (iii) Adjusted EBITDAre for the prior three months, annualized (Annualized Adjusted EBITDAre). The Company believes that this ratio is useful because it provides investors with information regarding its total debt principal net of cash and cash equivalents, which could be used to repay debt, compared to its performance as measured using Annualized Adjusted EBITDAre. Comparison of the Company's presentation of Net Debt to Adjusted EBITDAre to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

2nd Quarter 2019 Supplemental Information
 
21


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


Reconciliation of Net Income Attributable to Common Shareholders to Same Store NOI
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
 

 
 

 
 

 
 

Net income attributable to common shareholders
$
21,170

 
$
10,882

 
$
44,378

 
$
52,662

Adjustments to reconcile to Same Store NOI:
 

 
 

 
 

 
 

Gain on sales of investment properties
(8,454
)
 
—

 
(16,903
)
 
(34,519
)
Depreciation and amortization
42,882

 
43,710

 
86,149

 
88,938

Provision for impairment of investment properties
—

 
724

 
—

 
1,316

General and administrative expenses
9,353

 
10,274

 
19,852

 
22,769

Interest expense
17,363

 
16,817

 
34,793

 
35,582

Straight-line rental income, net
(616
)
 
(1,401
)
 
(2,116
)
 
(3,880
)
Amortization of acquired above and below market lease intangibles, net
(711
)
 
(2,354
)
 
(3,045
)
 
(3,208
)
Amortization of lease inducements
319

 
246

 
615

 
487

Lease termination fees, net
(232
)
 
1,692

 
(1,420
)
 
673

Non-cash ground rent expense, net
332

 
439

 
690

 
965

Other expense (income), net
472

 
(328
)
 
1,131

 
(550
)
NOI
81,878

 
80,701

 
164,124

 
161,235

NOI from Other Investment Properties
(2,186
)
 
(3,269
)
 
(4,541
)
 
(6,117
)
Same Store NOI
$
79,692

 
$
77,432

 
$
159,583

 
$
155,118



2nd Quarter 2019 Supplemental Information
 
22


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


Reconciliation of Mortgages Payable, Net, Unsecured Notes Payable, Net,
Unsecured Term Loans, Net and Unsecured Revolving Line of Credit to Total Net Debt
 
 
June 30,
2019
 
December 31,
2018
 
 
 
 
 
Mortgages payable, net
 
$
203,726

 
$
205,320

Unsecured notes payable, net
 
795,902

 
696,362

Unsecured term loans, net
 
447,757

 
447,367

Unsecured revolving line of credit
 
193,000

 
273,000

Total
 
1,640,385

 
1,622,049

Mortgage premium, net of accumulated amortization
 
(650
)
 
(775
)
Mortgage discount, net of accumulated amortization
 
515

 
536

Unsecured notes payable discount, net of accumulated amortization
 
675

 
734

Capitalized loan fees, net of accumulated amortization
 
5,995

 
5,906

Total debt principal
 
1,646,920

 
1,628,450

Less: consolidated cash and cash equivalents
 
(28,456
)
 
(14,722
)
Total net debt
 
$
1,618,464

 
$
1,613,728




Reconciliation of Net Income to Adjusted EBITDAre
 
Three Months Ended
 
Six Months Ended
 
 
June 30, 2019
 
June 30, 2018
 
December 31, 2018
 
June 30, 2019
 
June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
21,170

 
$
10,882

 
$
12,144

 
$
44,378

 
$
52,662

 
Interest expense
17,363

 
16,817

 
16,828

 
34,793

 
35,582

 
Depreciation and amortization
42,882

 
43,710

 
43,870

 
86,149

 
88,938

 
Gain on sales of investment properties
(8,454
)
 
—

 
—

 
(16,903
)
 
(34,519
)
 
Provision for impairment of investment properties
—

 
724

 
763

 
—

 
1,316

 
EBITDAre
$
72,961

 
$
72,133

 
$
73,605

 
$
148,417

 
$
143,979

(a)
Impact on earnings from executive separation
—

 
—

 
—

 
—

 
1,737

 
Adjusted EBITDAre
$
72,961

 
$
72,133

 
$
73,605

 
$
148,417

 
$
145,716

(a)
Annualized Adjusted EBITDAre
$
291,844

 
$
288,532

 
$
294,420

 
$
296,834

 
$
291,432

(a)


(a)
EBITDAre for the six months ended June 30, 2018 has been restated to exclude $2,179 of gain on sale of non-depreciable investment property in connection with the Company's adoption of "NAREIT Funds From Operations White Paper – 2018 Restatement" effective January 1, 2019 on a retrospective basis. As the gain on sale of non-depreciable investment property was previously excluded from Adjusted EBITDAre, there was no change to Adjusted EBITDAre.


2nd Quarter 2019 Supplemental Information
 
23