UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2012

or

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

For the transition period from to

Commission File Number: 001-35481

Retail Properties of America, Inc.

(Exact name of registrant as specified in its charter)

Maryland  (State or other jurisdiction of incorporation or organization)	42-1579325 (I.R.S. Employer Identification No.)
2901 Butterfield Road, Oak Brook, Illinois  (Address of principal executive offices)	60523 (Zip Code)

630-218-8000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý No o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer ý (Do not check if a smaller reporting company) Smaller reporting company o

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

Number of shares outstanding of the registrant's classes of common stock as of November 2, 2012:

Class A common stock:    133,606,778 shares

Class B-2 common stock:    48,518,389 shares

Class B-3 common stock:    48,518,389 shares

RETAIL PROPERTIES OF AMERICA, INC.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	47
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	48
SIGNATURES		49

Part I — Financial Information

Item 1.    Financial Statements

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

	September 30, 2012			December 31, 2011
Assets
Investment properties:
Land	$	1,255,881		$	1,334,363
Building and other improvements	4,896,652			5,057,252
Developments in progress	49,433			49,940
	6,201,966			6,441,555
Less accumulated depreciation	(1,284,426		)	(1,180,767		)
Net investment properties	4,917,540			5,260,788
Cash and cash equivalents	107,423			136,009
Investment in marketable securities, net	9,347			30,385
Investment in unconsolidated joint ventures	53,617			81,168
Accounts and notes receivable (net of allowances of $6,564 and $8,231, respectively)	79,709			94,922
Acquired lease intangibles, net	139,442			174,404
Investment properties held for sale	8,633			—
Other assets, net	166,877			164,218
Total assets	$	5,482,588		$	5,941,894
Liabilities and Equity
Liabilities:
Mortgages and notes payable	$	2,396,899		$	2,926,218
Credit facility	535,000			555,000
Accounts payable and accrued expenses	87,725			83,012
Distributions payable	38,200			31,448
Acquired below market lease intangibles, net	77,103			81,321
Other financings	—			8,477
Co-venture obligation	—			52,431
Liabilities associated with investment properties held for sale	228			—
Other liabilities	68,858			66,944
Total liabilities	3,204,013			3,804,851
Redeemable noncontrolling interests	—			525
Commitments and contingencies (Note 16)
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, 85,088 and 48,382 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	85			48
Class B-1 common stock, $0.001 par value, 55,000 shares authorized, 48,518 and 48,382 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	48			48
Class B-2 common stock, $0.001 par value, 55,000 shares authorized, 48,518 and 48,382 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	49			49
Class B-3 common stock, $0.001 par value, 55,000 shares authorized, 48,519 and 48,383 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	49			49
Additional paid-in capital	4,705,024			4,427,977
Accumulated distributions in excess of earnings	(2,436,010		)	(2,312,877		)
Accumulated other comprehensive income	7,836			19,730
Total shareholders' equity	2,277,081			2,135,024
Noncontrolling interests	1,494			1,494
Total equity	2,278,575			2,136,518
Total liabilities and equity	$	5,482,588		$	5,941,894

See accompanying notes to condensed consolidated financial statements

1

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

(in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues:
Rental income	$	116,811		$	116,062		$	350,390		$	349,828
Tenant recovery income	26,519			27,703			79,486			79,692
Other property income	1,962			2,280			7,532			7,861
Total revenues	145,292			146,045			437,408			437,381
Expenses:
Property operating expenses	23,089			23,077			70,860			74,673
Real estate taxes	19,503			19,273			57,972			57,196
Depreciation and amortization	56,527			57,286			170,009			171,601
Provision for impairment of investment properties	10,660			—			11,983			—
Loss on lease terminations	1,689			1,392			6,550			8,085
General and administrative expenses	7,227			5,011			18,691			16,382
Total expenses	118,695			106,039			336,065			327,937
Operating income	26,597			40,006			101,343			109,444
Dividend income	302			578			1,782			1,776
Interest income	16			157			56			507
Gain on extinguishment of debt	—			991			3,879			15,429
Equity in loss of unconsolidated joint ventures, net	(1,863		)	(1,869		)	(5,467		)	(6,028		)
Interest expense	(49,456		)	(56,903		)	(142,333		)	(170,121		)
Co-venture obligation expense	—			(1,791		)	(3,300		)	(5,375		)
Recognized gain on marketable securities	9,108			—			16,373			277
Other income (expense), net	726			567			(342		)	1,323
Loss from continuing operations	(14,570		)	(18,264		)	(28,009		)	(52,768		)
Discontinued operations:
Loss, net	(11,788		)	(378		)	(9,725		)	(28,830		)
Gain on sales of investment properties, net	8,756			14,517			16,518			18,678
(Loss) income from discontinued operations	(3,032		)	14,139			6,793			(10,152		)
Gain (loss) on sales of investment properties, net	1,650			(891		)	6,652			4,171
Net loss	(15,952		)	(5,016		)	(14,564		)	(58,749		)
Net income attributable to noncontrolling interests	—			(7		)	—			(23		)
Net loss attributable to Company shareholders	$	(15,952	)	$	(5,023	)	$	(14,564	)	$	(58,772	)
(Loss) earnings per common share — basic and diluted:
Continuing operations	$	(0.06	)	$	(0.10	)	$	(0.10	)	$	(0.25	)
Discontinued operations	(0.01		)	0.07			0.03			(0.06		)
Net loss per common share attributable to Company shareholders	$	(0.07	)	$	(0.03	)	$	(0.07	)	$	(0.31	)
Net loss	$	(15,952	)	$	(5,016	)	$	(14,564	)	$	(58,749	)
Other comprehensive loss:
Net unrealized (loss) gain on derivative instruments	(981		)	(140		)	(591		)	971
Net unrealized gain (loss) on marketable securities	1,426			(6,240		)	5,070			(3,843		)
Reversal of unrealized gain to recognized gain on marketable securities	(9,108		)	—			(16,373		)	(277		)
Comprehensive loss	(24,615		)	(11,396		)	(26,458		)	(61,898		)
Comprehensive income attributable to noncontrolling interests	—			(7		)	—			(23		)
Comprehensive loss attributable to Company shareholders	$	(24,615	)	$	(11,403	)	$	(26,458	)	$	(61,921	)
Weighted average number of common shares outstanding — basic and diluted	230,597			192,779			217,087			192,127

See accompanying notes to condensed consolidated financial statements

2

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands, except per share amounts)

	Class A Common Stock				Class B Common Stock				Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive Income			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
	Shares		Amount		Shares		Amount
Balance at January 1, 2011	47,734		$	47	143,204		$	144	$	4,383,567		$	(2,111,138	)	$	22,282		$	2,294,902		$	1,163		$	2,296,065
Net loss (excluding net income of $23 attributable to redeemable noncontrolling interests)	—		—		—		—		—			(58,772		)	—			(58,772		)	—			(58,772		)
Distribution upon dissolution of partnership	—		—		—		—		—			(8,483		)	—			(8,483		)	(1		)	(8,484		)
Net unrealized gain on derivative instruments	—		—		—		—		—			—			971			971			—			971
Net unrealized loss on marketable securities	—		—		—		—		—			—			(3,843		)	(3,843		)	—			(3,843		)
Reversal of unrealized gain to recognized gain on marketable securities	—		—		—		—		—			—			(277		)	(277		)	—			(277		)
Contributions from noncontrolling interests	—		—		—		—		—			—			—			—			332			332
Distributions declared ($0.30 per weighted average number of common shares outstanding)	—		—		—		—		—			(58,464		)	—			(58,464		)	—			(58,464		)
Distribution reinvestment program (DRP)	478		—		1,434		2		32,752			—			—			32,754			—			32,754
Issuance of restricted common stock	4		—		10		—		—			—			—			—			—			—
Stock based compensation expense	—		—		—		—		87			—			—			87			—			87
Balance at September 30, 2011	48,216		$	47	144,648		$	146	$	4,416,406		$	(2,236,857	)	$	19,133		$	2,198,875		$	1,494		$	2,200,369
Balance at January 1, 2012	48,382		$	48	145,147		$	146	$	4,427,977		$	(2,312,877	)	$	19,730		$	2,135,024		$	1,494		$	2,136,518
Net loss	—		—		—		—		—			(14,564		)	—			(14,564		)	—			(14,564		)
Net unrealized loss on derivative instruments	—		—		—		—		—			—			(591		)	(591		)	—			(591		)
Net unrealized gain on marketable securities	—		—		—		—		—			—			5,070			5,070			—			5,070
Reversal of unrealized gain to recognized gain on marketable securities	—		—		—		—		—			—			(16,373		)	(16,373		)	—			(16,373		)
Distributions declared ($0.50 per weighted average number of common shares outstanding)	—		—		—		—		—			(108,569		)	—			(108,569		)	—			(108,569		)
Issuance of common stock, net of offering costs	36,570		37		—		—		266,454			—			—			266,491			—			266,491
Redemption of fractional shares of common stock	(39	)	—		(118	)	—		(1,253		)	—			—			(1,253		)	—			(1,253		)
DRP	167		—		502		—		11,626			—			—			11,626			—			11,626
Issuance of restricted common stock	8		—		24		—		—			—			—			—			—			—
Stock based compensation expense	—		—		—		—		220			—			—			220			—			220
Balance at September 30, 2012	85,088		$	85	145,555		$	146	$	4,705,024		$	(2,436,010	)	$	7,836		$	2,277,081		$	1,494		$	2,278,575

See accompanying notes to condensed consolidated financial statements

3

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities:
Net loss	$	(14,564	)	$	(58,749	)
Adjustments to reconcile net loss to net cash provided by operating activities (including discontinued operations):
Depreciation and amortization	174,389			179,452
Provision for impairment of investment properties	23,490			31,752
Gain on sales of investment properties	(23,170		)	(22,849		)
Gain on extinguishment of debt	(3,879		)	(15,429		)
Loss on lease terminations	6,590			8,172
Amortization of loan fees, mortgage debt premium and discount on debt assumed, net	(2,633		)	4,029
Equity in loss of unconsolidated joint ventures, net	5,467			6,028
Distributions on investments in unconsolidated joint ventures	4,301			1,073
Recognized gain on sale of marketable securities	(16,373		)	(277		)
Payment of leasing fees and inducements	(38,140		)	(7,295		)
Changes in accounts receivable, net	10,120			9,704
Changes in accounts payable and accrued expenses, net	7,634			(6,090		)
Changes in other operating assets and liabilities, net	(630		)	(6,097		)
Other, net	(947		)	4,963
Net cash provided by operating activities	131,655			128,387
Cash flows from investing activities:
Proceeds from sale of marketable securities	25,799			359
Changes in restricted escrows, net	21,099			(3,395		)
Purchase of investment properties	—			(16,555		)
Capital expenditures and tenant improvements	(26,690		)	(20,205		)
Proceeds from sales of investment properties	200,645			160,303
Investment in developments in progress	(285		)	(2,441		)
Investment in unconsolidated joint ventures	(7,859		)	(9,557		)
Distributions of investments in unconsolidated joint ventures	17,403			2,384
Other, net	21			214
Net cash provided by investing activities	230,133			111,107
Cash flows from financing activities:
Repayments of margin debt related to marketable securities	(7,541		)	(2,073		)
Proceeds from mortgages and notes payable	281,874			70,476
Principal payments on mortgages and notes payable	(765,729		)	(571,147		)
Proceeds from credit facility	290,000			489,764
Repayments of credit facility	(310,000		)	(174,111		)
Payment of loan fees and deposits, net	(7,433		)	(10,836		)
Settlement of co-venture obligation	(50,000		)	—
Proceeds from issuance of common stock	272,081			—
Redemption of fractional shares of common stock	(1,253		)	—
Distributions paid, net of DRP	(90,191		)	(52,561		)
Other, net	(2,182		)	(2,601		)
Net cash used in financing activities	(390,374		)	(253,089		)
Net decrease in cash and cash equivalents	(28,586		)	(13,595		)
Cash and cash equivalents, at beginning of period	136,009			130,213
Cash and cash equivalents, at end of period	$	107,423		$	116,618
(continued)

4

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2012			2011
Supplemental cash flow disclosure, including non-cash activities:
Cash paid for interest, net of interest capitalized	$	147,746		$	173,260
Distributions payable	$	38,200		$	—
Distributions reinvested	$	11,626		$	32,754
Accrued capital expenditures and tenant improvements	$	4,045		$	4,797
Developments in progress placed in service	$	929		$	25,651
Forgiveness of mortgage debt	$	27,449		$	14,438
Purchase of investment properties (after credits at closing):
Land, building and other improvements, net	$	—		$	(12,546	)
Acquired lease intangibles and other assets	—			(4,547		)
Acquired below market lease intangibles and other liabilities	—			538
	$	—		$	(16,555	)
Proceeds from sales of investment properties:
Land, building and other improvements, net	$	188,616		$	190,013
Accounts receivable, acquired lease intangibles and other assets	12,855			9,430
Accounts payable, acquired below market lease intangibles and other liabilities	(108		)	(5,485		)
Assumption of mortgage debt	—			(60,000		)
Forgiveness of mortgage debt	(23,570		)	—
Deferred gains	(318		)	2,505
Gain on extinguishment of debt	—			991
Gain on sales of investment properties	23,170			22,849
	$	200,645		$	160,303
(concluded)

See accompanying notes to condensed consolidated financial statements

5

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited financial statements of Retail Properties of America, Inc. (formerly Inland Western Retail Real Estate Trust, Inc.) for the fiscal year ended December 31, 2011, which are included in the Company's 2011 Annual Report on Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in the Annual Report have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary, all of which were of normal recurring nature, for a fair presentation have been included in this Quarterly Report.

(1)   Organization and Basis of Presentation

Retail Properties of America, Inc. (the Company) was formed to acquire and manage a diversified portfolio of real estate, primarily multi-tenant shopping centers. The Company was initially formed on March 5, 2003 as Inland Western Retail Real Estate Trust, Inc. On March 8, 2012, the Company changed its name to Retail Properties of America, Inc.

All share amounts and dollar amounts in this Form 10-Q are stated in thousands with the exception of per share amounts and per square foot amounts.

On March 20, 2012, the Company effectuated a ten-to-one reverse stock split of its then outstanding common stock. Immediately following the reverse stock split, the Company redesignated all of its common stock as Class A common stock.

On March 21, 2012, the Company paid a stock dividend pursuant to which each then outstanding share of its Class A common stock received:

• one share of Class B-1 common stock; plus

• one share of Class B-2 common stock; plus

• one share of Class B-3 common stock.

These transactions are referred to as the Recapitalization. Class B-1 common stock, Class B-2 common stock and Class B-3 common stock are collectively referred to as the Company's Class B common stock, while Class A and Class B common stock are collectively referred to as the Company's common stock. The Company listed its Class A common stock on the New York Stock Exchange (NYSE) on April 5, 2012 under the symbol RPAI (the Listing). The Company's Class B common stock is identical to the Company's Class A common stock except that (i) the Company does not intend to list its Class B common stock on a national securities exchange and (ii) shares of the Company's Class B common stock will convert automatically into shares of the Company's Class A common stock at specified times. Subject to the provisions of the Company's charter, shares of Class B-1, Class B-2 and Class B-3 common stock will convert automatically into shares of the Company's Class A common stock six months following the Listing, 12 months following the Listing and 18 months following the Listing, respectively. On the 18 month anniversary of the Listing, all shares of the Company's Class B common stock will have converted into the Company's Class A common stock. On October 5, 2012, all 48,518 shares of Class B-1 common stock automatically converted to shares of Class A common stock. Each share of Class A common stock and Class B common stock participates in distributions equally. All common stock share and per share data included in these condensed consolidated financial statements give retroactive effect to the Recapitalization. In addition, upon Listing, the Company's distribution reinvestment program (DRP) and share repurchase program (SRP) were terminated.

The Company elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended, or the Code. The Company believes it has qualified for taxation as a REIT and, as such, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to shareholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax on its taxable income at regular corporate tax rates.

Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and U.S. federal income and excise taxes on its undistributed income. The Company has one wholly-owned subsidiary that has elected to be treated as a taxable REIT subsidiary (TRS) for U.S. federal income tax purposes. A TRS is taxed on its taxable income at regular corporate tax rates. The income tax expense incurred as a result of the TRS did not have a material impact on the Company's accompanying condensed consolidated financial statements. Through a merger consummated on November 15, 2007, the Company acquired four qualified REIT subsidiaries. Their income is consolidated with REIT income for federal and state income tax purposes.

6

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

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

Certain reclassifications, primarily as a result of discontinued operations, have been made to the 2011 condensed consolidated financial statements to conform to the 2012 presentation. In addition, certain captions have been condensed in the 2011 condensed consolidated statement of cash flows to conform to the 2012 presentation.

The accompanying condensed consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries and consolidated joint venture investments. Wholly-owned subsidiaries generally consist of limited liability companies (LLCs), limited partnerships (LPs) and statutory trusts.

The Company's property ownership as of September 30, 2012 is summarized below:

	Wholly-owned	Consolidated Joint Ventures (a)	Unconsolidated Joint Ventures (b)
Operating properties (c)	253	—	22
Development properties	2	1	—

(a) The Company has a 50% ownership interest in one LLC.

(b) The Company has ownership interests ranging from 20% to 96% in three LLCs or LPs.

(c) Excludes two wholly-owned properties classified as held for sale as of September 30, 2012.

The Company consolidates certain property holding entities and other subsidiaries in which it owns less than a 100% equity interest if it is deemed to be the primary beneficiary in a variable interest entity (VIE), an entity in which the contractual, ownership, or pecuniary interests change with changes in the fair value of the entity's net assets as defined by the Financial Accounting Standards Board (FASB). The Company also consolidates entities that are not VIEs in which it has financial and operating control. Intercompany balances and transactions have been eliminated in consolidation. Investments in real estate joint ventures in which the Company has the ability to exercise significant influence, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company's share of the income (or loss) of these unconsolidated joint ventures is included in consolidated net income (loss) in the accompanying condensed consolidated statements of operations and other comprehensive loss.

As of September 30, 2012, the Company is the controlling member in one less-than-wholly-owned consolidated entity. Noncontrolling interest is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. As controlling member, the Company has an obligation to cause the property-owning entity to distribute proceeds of liquidation to the noncontrolling interest holder only if the net proceeds received by the entity from the sale of assets warrant a distribution based on the terms of the underlying organizational agreement.

The Company evaluates the classification and presentation of the noncontrolling interests associated with its consolidated joint venture investments on an ongoing basis as facts and circumstances deem necessary. Such determinations are based on numerous factors, including evaluations of the terms in applicable agreements, specifically the redemption provisions. The amount at which these interests would be redeemed is based on a formula contained in each respective agreement and, as of September 30, 2012 and December 31, 2011, was determined to approximate the carrying value of these interests. No adjustment to the carrying value of the noncontrolling interests in the Company's consolidated joint venture investments was made during the nine months ended September 30, 2012 and 2011. In the condensed consolidated statements of operations and other comprehensive loss, revenues, expenses and net income or loss from such less-than-wholly-owned subsidiaries are reported at the consolidated amounts, including both the amounts attributable to Company shareholders and noncontrolling interests. Condensed consolidated statements of equity are included in the quarterly financial statements, including beginning balances, activity for the period and ending balances for total shareholders' equity, noncontrolling interests and total equity. Noncontrolling interests are adjusted for additional contributions

7

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

from and distributions to noncontrolling interest holders, as well as the noncontrolling interest holders' share of the net income or loss of each respective entity, as applicable.

On February 7, 2012, the Company paid a nominal amount to the partner in its Lake Mead Crossing consolidated joint venture to fully redeem the partner's ownership interest in such joint venture. The transaction resulted in an increase in the Company's ownership interest in Lake Mead Crossing from 86.7% as of December 31, 2011 to 100%.

On February 15, 2012, the Company fully redeemed the noncontrolling interests held by its partner in a consolidated limited partnership joint venture. Such redemption, reflected in the following table, was settled by transferring restricted cash as well as the Company's interest in the Britomart unconsolidated joint venture to the noncontrolling interest holder. See Note 12 for further discussion.

Below is a table reflecting the activity of redeemable noncontrolling interests for the nine months ended September 30, 2012 and 2011:

	2012			2011
Balance at January 1,	$	525		$	527
Redeemable noncontrolling interest income	—			23
Distributions	—			(23		)
Redemptions	(525		)	(2		)
Balance at September 30,	$	—		$	525

The Company is party to an agreement with an LLC formed as an insurance association captive (the Captive), which is wholly-owned by the Company and three other parties. The Captive was formed to insure/reimburse the members' deductible obligations for property and general liability insurance claims subject to certain limitations. The Company entered into the Captive to stabilize insurance costs, manage certain exposures and recoup expenses through the function of the captive program. It has been determined that the Captive is a VIE and because the Company does not receive the most benefit, nor the highest risk of loss, it is not considered to be the primary beneficiary. As a result, the Captive is not consolidated, but is recorded pursuant to the equity method of accounting. The Company's risk of loss is limited to its investment and the Company is not required to fund additional capital to the Captive. As of September 30, 2012 and December 31, 2011, the Company's interest in the Captive is reflected in "Investment in unconsolidated joint ventures" in the accompanying condensed consolidated balance sheets (see Note 12). The Company's share of the net (loss) income of the Captive for the three and nine months ended September 30, 2012 and 2011 is reflected in "Equity in loss of unconsolidated joint ventures, net" in the accompanying condensed consolidated statements of operations and other comprehensive loss.

(2)   Summary of Significant Accounting Policies

There have been no changes to the Company's significant accounting policies in the nine months ended September 30, 2012. Refer to the Company's 2011 Annual Report on Form 10-K for a summary of the Company's significant accounting policies.

Recent Accounting Pronouncements

Effective January 1, 2012, guidance on how to measure fair value and on what disclosures to provide about fair value measurements has been converged with international standards. The adoption required additional disclosures regarding fair value measurements (see Note 15).

Effective January 1, 2012, public companies are required to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. This guidance does not change the items that must be reported in other comprehensive income. The adoption did not have any effect on the Company's financial statements.

Effective June 30, 2012, a parent company that ceases to have a controlling financial interest in a subsidiary that is in-substance real estate because that subsidiary has defaulted on its non-recourse debt is required to apply real estate sales guidance to determine whether to derecognize the in-substance real estate. The adoption did not have any effect on the Company's financial statements.

(3)   Acquisitions

The Company did not acquire any properties during the nine months ended September 30, 2012.

8

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

During the nine months ended September 30, 2011, the Company acquired two additional phases of existing wholly-owned multi-tenant retail operating properties, in separate transactions, as follows:

Date	Square Footage	Property Type	Property Name	Purchase Price (a)
July 1, 2011	76,100	Multi-tenant retail	Greenwich Center II	$	9,720
July 22, 2011	44,000	Multi-tenant retail	Gateway Station III	7,085
	120,100			$	16,805	(b)

(a) No debt was assumed in either acquisition, but both properties were subsequently added as collateral to the credit facility, which has since been amended and restated. See Note 11 for further discussion.

(b) Amount represents the purchase price prior to customary prorations at closing. Separately, the Company recognized acquisition transaction costs of $48 related to these acquisitions.

(4)   Discontinued Operations and Investment Properties Held for Sale

The Company employs a business model that utilizes asset management as a key component of monitoring its investment properties to ensure that each property continues to meet expected investment returns and standards. This strategy incorporates the sale of non-core and non-strategic assets that no longer meet the Company's criteria.

The Company sold 20 properties during the nine months ended September 30, 2012, as summarized below:

Date	Square Footage	Property Type	Property Name	Consideration		Mortgage Debt Extinguished			Net Sales Proceeds/(Outflow)			Gain
February 1, 2012	13,800	Single-user retail	CVS - Jacksonville	$	5,800	$	—		$	5,702		$	915
April 10, 2012	501,000	Single-user office	GMAC Ins. Building	23,570		23,570			—			6,847		(a)
August 17, 2012	1,035,800	Single-user industrial	Cost Plus Dist. Center	63,000		16,300			46,555			8,235
September 18, 2012	1,000,400	Single-user retail	Various (b)	100,400		97,253		(b)	(251		)	—		(b)
September 25, 2012	132,600	Multi-tenant retail	Various (c)	19,050		—			18,048			—		(c)
September 28, 2012	75,200	Single-user retail	Winco - Ventura	8,015		—			7,999			521
	2,758,800			$	219,835	$	137,123		$	78,053		$	16,518

(a) This property was transferred to the lender through a deed-in-lieu of foreclosure transaction.

(b) The Company sold 13 former Mervyns properties located throughout California in a single transaction on September 18, 2012. No gain or loss was recognized upon disposition as the Company recorded an impairment charge of $1,100 during the three months ended September 30, 2012 based upon the negotiated sales price less costs to sell. Proceeds from the sale, along with restricted escrows held by the lender, were used to pay off, in its entirety, the $116,400 outstanding loan that was secured by the Company's entire portfolio of 23 former Mervyns properties.

(c) The terms of the sale of three properties located near Dallas, Texas were negotiated as a single transaction. No gain or loss was recognized upon disposition as the Company recognized an impairment charge of $5,528 during the three months ended September 30, 2012 based upon the negotiated sales price less costs to sell.

The Company also received net proceeds of $9,039 and recorded gains of $6,652 from condemnation awards, earnouts and the sale of parcels at certain operating properties. The aggregate proceeds, net of closing costs, from the property sales and additional transactions during the nine months ended September 30, 2012 totaled $200,645 with aggregate gains of $23,170.

During the year ended December 31, 2011, the Company sold 11 properties, six of which were sold during the nine months ended September 30, 2011. The dispositions and additional transactions, including the partial sale of a multi-tenant retail property to the Company's RioCan joint venture (see Note 12), condemnation awards, earnouts and the sale of a parcel at one of its operating properties, during the nine months ended September 30, 2011 resulted in sales proceeds, net of closing costs, to the Company of $160,303 with aggregate gains of $22,849.

As of September 30, 2012, the Company had entered into contracts to sell Mervyns - Bakersfield, a 75,100 square foot single-user retail property located in Bakersfield, California and American Express - Phoenix, a 117,600 square foot single-user office property

9

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

located in Phoenix, Arizona. Such properties qualified for held for sale accounting treatment upon meeting all applicable GAAP criteria during the third quarter of 2012, at which time depreciation and amortization were ceased. As such, the assets and liabilities associated with the two properties are separately classified as held for sale in the condensed consolidated balance sheets as of September 30, 2012 and the operations for all periods presented are classified as discontinued operations in the condensed consolidated statements of operations and other comprehensive loss. No consolidated properties were classified as held for sale as of December 31, 2011. The following table presents the assets and liabilities associated with the held for sale properties:

	September 30, 2012
Assets
Land, building and other improvements	$	8,996
Accumulated depreciation	(379		)
	8,617
Other assets	16
Investment properties held for sale	$	8,633
Liabilities
Other liabilities	$	228
Liabilities associated with investment properties held for sale	$	228

The Company does not allocate general corporate interest expense to discontinued operations. The results of operations for the investment properties that are accounted for as discontinued operations are presented in the table below:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues:
Rental income	$	2,741		$	5,531		$	11,875		$	18,957
Tenant recovery income	(565		)	687			165			2,095
Other property income	34			15			59			68
Total revenues	2,210			6,233			12,099			21,120
Expenses:
Property operating expenses	332			988			1,197			2,354
Real estate taxes	(503		)	487			326			2,132
Depreciation and amortization	952			2,206			4,380			7,851
Provision for impairment of investment properties	11,507			1,379			11,507			31,752
Loss on lease terminations	—			85			40			87
General and administrative expenses	—			—			—			34
Interest expense	1,709			1,465			4,374			5,736
Other expense	1			1			—			4
Total expenses	13,998			6,611			21,824			49,950
Loss from discontinued operations, net	$	(11,788	)	$	(378	)	$	(9,725	)	$	(28,830	)

(5)   Transactions with Previously-Related Parties

Previously, the Company considered the Inland Group, Inc. and its affiliates, or the Group, to be related parties due to the fact that certain individuals, who are significant shareholders, principals, directors or executive officers of the Group, had served on the Company's board of directors. The last such individual, Brenda Gujral, resigned from the Company's board of directors on May 31, 2012. Because no members of the Group can significantly influence the management or operating policies of the Company and no members of the Group are principal owners of the Company, the Company no longer considers the Group to be a related party.

10

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

The Company had entered into transactions with the Group, primarily through service agreements. During 2012, the Company provided written notice of termination of all of these agreements. Transactions involving the Group are set forth in the following table.

	Three Months Ended September 30,					Nine Months Ended September 30,					Unpaid Amount as of
											September 30, 2012		December 31, 2011
Services	2012		2011			2012		2011
Investment advisor (a)	$	—	$	68		$	116	$	209		$	—	$	22
Loan servicing (b)	52		45			129		143			—		—
Legal (c)	65		69			229		271			161		110
Computer services (b)	302		335			946		888			187		284
Office & facilities management services (d)	14		22			53		66			22		22
Other service agreements (b)	163		151			465		465			—		—
Office rent and reimbursements (e)	244		243			725		727			121		310
Total	$	840	$	933	(f)	$	2,663	$	2,769	(g)	$	491	$	748	(h)

(a) The Company terminated this agreement, which termination was effective during the second quarter of 2012.

(b) The Company provided written notice of termination of these agreements, which will be effective during the fourth quarter of 2012.

(c) The Company provided written notice of termination of this agreement, which will be effective during the second quarter of 2013.

(d) The Company provided written notice of termination of this agreement, which will be effective during the first quarter of 2013.

(e) The office lease expires on November 30, 2012. The Company executed a lease for new corporate space with an external third party and will relocate during the fourth quarter of 2012.

(f) Amount excludes $346 representing reimbursement of third-party costs.

(g) Amount excludes $904 representing reimbursement of third-party costs.

(h) Amount excludes $276 representing reimbursement of third-party costs.

(6)   Marketable Securities

The following tables summarize the Company's investment in marketable securities:

	Common Stock				Preferred Stock				Total Available-for-Sale Securities
As of September 30, 2012:
Fair value	$	573			$	8,774			$	9,347
Amortized cost basis	1,472				11,472				12,944
Total other-than-temporary impairment recognized	(972		)		(9,665		)		(10,637		)
Adjusted cost basis	500				1,807				2,307
Net gains in accumulated other comprehensive income (OCI)	90				6,967				7,057
Net losses in accumulated OCI	(17		)	(a)	—				(17		)
As of December 31, 2011:
Fair value	$	11,550			$	18,835			$	30,385
Amortized cost basis	28,997				38,242				67,239
Total other-than-temporary impairment recognized	(23,889		)		(31,308		)		(55,197		)
Adjusted cost basis	5,108				6,934				12,042
Net gains in accumulated OCI	6,615				11,942				18,557
Net losses in accumulated OCI	(173		)	(b)	(41		)	(c)	(214		)

11

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(a) This amount represents the gross unrealized losses of one common stock security with a fair value of $402 as of September 30, 2012. This security had been in a continuous unrealized loss position for less than 12 months as of September 30, 2012.

(b) This amount represents the gross unrealized losses of one common stock security with a fair value of $765 as of December 31, 2011. This security had been in a continuous unrealized loss position for less than 12 months as of December 31, 2011.

(c) This amount represents the gross unrealized losses of one preferred stock security with a fair value of $130 as of December 31, 2011. This security had been in a continuous unrealized loss position for less than 12 months as of December 31, 2011.

The following table summarizes activity related to the Company's marketable securities:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Net unrealized OCI gain (loss)	$	1,426	$	(6,240	)	$	5,070	$	(3,843	)
Net gain on sales and redemptions of securities	$	9,108	$	—		$	16,373	$	277

(7)   Compensation Plans

The Company's Equity Compensation Plan (Equity Plan), subject to certain conditions, authorizes the issuance of stock options, restricted stock, stock appreciation rights and other similar awards to the Company's employees in connection with compensation and incentive arrangements that may be established by the Company's board of directors.

The following represents a summary of the status of the Company's unvested restricted shares, all of which were granted to the Company's executives pursuant to the Equity Plan as of and for the nine months ended September 30, 2012:

	Unvested Restricted Shares	Weighted Average Grant Date Fair Value per Restricted Share
Balance at January 1, 2012	14	$	17.13
Shares granted (a)	32	17.38
Shares vested	—	—
Shares forfeited	—	—
Balance at September 30, 2012	46	$	17.30

(a) Of the shares granted, 50% vest on each of the third and fifth anniversaries of the grant date.

During the three months ended September 30, 2012 and 2011, the Company recorded compensation expense of $48 and $14, respectively, related to unvested restricted shares. During the nine months ended September 30, 2012 and 2011, the Company recorded compensation expense of $162 and $31, respectively, related to unvested restricted shares. As of September 30, 2012, total unrecognized compensation expense related to unvested restricted shares was $564, which is expected to be amortized over a weighted average term of 3.1 years.

The Company's Independent Director Stock Option Plan (Option Plan), as amended, provides, subject to certain conditions, for the grant to each independent director of options to acquire shares following their becoming a director and for the grant of additional options to acquire shares on the date of each annual shareholders' meeting. As of September 30, 2012 and December 31, 2011, options to purchase 70 shares of common stock had been granted, of which options to purchase one share had been exercised and none had expired.

The Company calculates the per share weighted average fair value of options granted on the date of the grant using the Black-Scholes option pricing model utilizing certain assumptions regarding the expected dividend yield, risk-free interest rate, expected life and expected volatility. Compensation expense of $14 and $16 related to these stock options was recorded during the three months ended September 30, 2012 and 2011, respectively. Compensation expense of $41 and $48 related to these stock options was recorded during the nine months ended September 30, 2012 and 2011, respectively.

12

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(8)   Leases

The majority of revenues from the Company's properties consist of rents received under long-term operating leases. Some leases provide for fixed base rent paid monthly in advance and for the reimbursement by tenants to the Company for the tenant's pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees and certain building repairs paid by the landlord and recoverable under the terms of the lease. Under these leases, the landlord pays all expenses and is reimbursed by the tenant for the tenant's pro rata share of recoverable expenses paid. Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed base rent, as well as all costs and expenses associated with occupancy. Under net leases, where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the accompanying condensed consolidated statements of operations and other comprehensive loss. Under net leases where all expenses are paid by the landlord, subject to reimbursement by the tenant, the expenses are included in "Property operating expenses" and reimbursements are included in "Tenant recovery income" in the accompanying condensed consolidated statements of operations and other comprehensive loss.

In certain municipalities, the Company is required to remit sales taxes to governmental authorities based upon the rental income received from properties in those regions. These taxes may be reimbursed by the tenant to the Company depending upon the terms of the applicable tenant lease. As with other recoverable expenses, the presentation of the remittance and reimbursement of these taxes is on a gross basis whereby sales tax expenses are included in "Property operating expenses" and sales tax reimbursements are included in "Other property income" in the accompanying condensed consolidated statements of operations and other comprehensive loss. Such taxes remitted to governmental authorities, which are reimbursed by tenants, exclusive of amounts attributable to discontinued operations, were $470 and $437 for the three months ended September 30, 2012 and 2011, respectively. Such taxes remitted to governmental authorities, which are reimbursed by tenants, exclusive of amounts attributable to discontinued operations, were $1,490 and $1,471 for the nine months ended September 30, 2012 and 2011, respectively.

The Company leases land under non-cancellable operating leases at certain of its properties expiring in various years from 2023 to 2105. The related ground lease rent expense is included in "Property operating expenses" in the accompanying condensed consolidated statements of operations and other comprehensive loss. In addition, the Company leases office space for certain management offices and its corporate office. In the accompanying condensed consolidated statements of operations and other comprehensive loss, office rent expense related to property management operations is included in "Property operating expenses" and office rent expense related to corporate office operations is included in "General and administrative expenses".

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Ground lease rent expense	$	2,733	$	2,517	$	7,782	$	7,577
Office rent expense	$	225	$	202	$	657	$	624

(9)   Mortgages and Notes Payable

The following table summarizes the Company's mortgages and notes payable at September 30, 2012 and December 31, 2011:

	September 30, 2012			December 31, 2011
Fixed rate mortgages payable:
Mortgage loans (a)	$	2,262,572		$	2,691,323
Premium, net of accumulated amortization	—			10,858
Discount, net of accumulated amortization	(1,619		)	(2,003		)
	2,260,953			2,700,178
Variable rate mortgages payable:
Construction loans	10,946			79,599
Mortgages payable	2,271,899			2,779,777
Notes payable	125,000			138,900
Margin payable	—			7,541
Mortgages and notes payable	$	2,396,899		$	2,926,218

13

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(a) Includes $76,109 and $76,269 of variable rate mortgage debt that was swapped to a fixed rate as of September 30, 2012 and December 31, 2011, respectively.

Mortgages Payable

Mortgages payable outstanding as of September 30, 2012 were $2,271,899 and had a weighted average interest rate of 6.11%. Of this amount, $2,260,953 had fixed rates ranging from 3.50% to 8.00% (9.78% for matured mortgages payable) and a weighted average fixed rate of 6.13% at September 30, 2012. The weighted average interest rate for the fixed rate mortgages payable excludes the impact of the discount amortization. The remaining $10,946 of mortgages payable represented a variable rate construction loan with an interest rate of 2.50% based on LIBOR at September 30, 2012. Properties with a net carrying value of $3,559,925 at September 30, 2012 and related tenant leases are pledged as collateral for the mortgage loans and a consolidated joint venture property with a net carrying value of $27,083 at September 30, 2012 and related tenant leases are pledged as collateral for the construction loan. As of September 30, 2012, the Company's outstanding mortgage indebtedness had a weighted average years to maturity of 6.0 years.

During the nine months ended September 30, 2012, the Company obtained mortgages payable proceeds of $281,874 (of which $280,586 represents mortgages payable originated on 10 properties and $1,288 relates to draws on construction loans), made mortgages payable repayments of $725,118 (excluding principal amortization of $26,711) and received forgiveness of debt of $27,449. The mortgages payable originated during the nine months ended September 30, 2012 have fixed interest rates ranging from 3.50% to 5.25%, a weighted average interest rate of 4.53% and a weighted average years to maturity of 9.4 years. The fixed and variable interest rates of the loans repaid during the nine months ended September 30, 2012 ranged from 3.25% to 7.50% and had a weighted average interest rate of 5.64%.

Mortgages payable outstanding as of December 31, 2011 were $2,779,777 and had a weighted average interest rate of 6.13%. Of this amount, $2,700,178 had fixed rates ranging from 4.61% to 8.00% (9.78% for matured mortgages payable) and a weighted average fixed rate of 6.20% at December 31, 2011. The weighted average interest rate for the fixed rate mortgages payable excludes the impact of premium and discount amortization. The remaining $79,599 of mortgages payable represented variable rate construction loans with a weighted average interest rate of 3.77% at December 31, 2011. Properties with a net carrying value of $4,086,595 at December 31, 2011 and related tenant leases are pledged as collateral for the mortgage loans. Properties with a net carrying value of $126,585 at December 31, 2011 and related tenant leases are pledged as collateral for the construction loans. As of December 31, 2011, the Company's outstanding mortgage indebtedness had a weighted average years to maturity of 6.1 years.

The majority of the Company's mortgages payable require monthly payments of principal and interest, as well as reserves for real estate taxes and certain other costs. Although the mortgage loans obtained by the Company are generally non-recourse, occasionally, when it is deemed necessary, the Company may guarantee all or a portion of the debt on a full-recourse basis. As of September 30, 2012, the Company had guaranteed $17,030 of the outstanding mortgage and construction loans with maturity dates ranging from February 11, 2013 through September 30, 2016 (see Note 16). At times, the Company has borrowed funds financed as part of a cross-collateralized package, with cross-default provisions, in order to enhance the financial benefits. In those circumstances, one or more of the properties may secure the debt of another of the Company's properties. Individual decisions regarding interest rates, loan-to-value, debt yield, fixed versus variable-rate financing, term and related matters are often based on the condition of the financial markets at the time the debt is issued, which may vary from time to time.

As of September 30, 2012, the Company had a $26,865 mortgage payable (University Square) that had matured and had not been repaid or refinanced. In the second quarter of 2010, the Company ceased making the monthly debt service payment on this matured mortgage payable, the non-payment of which amounts to $2,627 annually and does not result in noncompliance under any of the Company's other mortgages payable or unsecured credit agreements. The Company has attempted to negotiate and has made offers to the lender to determine an appropriate course of action under the non-recourse loan agreement; however, no assurance can be provided that negotiations will result in a favorable outcome. As of September 30, 2012, the Company had accrued $6,732 of interest related to this mortgage payable.

Some of the mortgage payable agreements include periodic reporting requirements and/or debt service coverage ratios which allow the lender to control property cash flow if the Company fails to meet such requirements. Management believes the Company was in compliance with such provisions as of September 30, 2012.

14

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

Notes Payable

The following table summarizes the Company's notes payable:

	September 30, 2012		December 31, 2011
IW JV Senior Mezzanine Note	$	85,000	$	85,000
IW JV Junior Mezzanine Note	40,000		40,000
Mezzanine Note	—		13,900
Notes payable	$	125,000	$	138,900

Notes payable outstanding as of September 30, 2012 and December 31, 2011 were $125,000 and $138,900, respectively, and had a weighted average interest rate of 12.80% and 12.62%, respectively. The September 30, 2012 balance represents notes payable proceeds from a third party lender related to the debt refinancing transaction for IW JV 2009, LLC (IW JV), which is a wholly-owned entity as of September 30, 2012. The notes have fixed interest rates of 12.24% and 14.00%, mature on December 1, 2019 and are secured by 100% of the Company's equity interest in the IW JV investment properties. The IW JV notes can be prepaid beginning in February 2013 for a fee ranging from 1% to 5% of the outstanding principal balance depending on the date the prepayment is made.

During the year ended December 31, 2010, the Company borrowed $13,900 from a third party in the form of a mezzanine note and used the proceeds as a partial paydown of a mortgage payable, as required by the lender. The mezzanine note bore interest at 11.00% and was scheduled to mature on December 16, 2013. On July 2, 2012, the Company repaid the entire balance of this mezzanine note.

Margin Payable

The Company purchased a portion of its securities through a margin account. As of September 30, 2012 and December 31, 2011, the Company had recorded a payable of none and $7,541, respectively, for securities purchased on margin. Interest expense on this debt in the amount of $3 and $11 was recognized within "Interest expense" in the accompanying condensed consolidated statements of operations and other comprehensive loss for the three months ended September 30, 2012 and 2011, respectively. Interest expense on this debt in the amount of $29 and $39 was recognized within "Interest expense" in the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended September 30, 2012 and 2011, respectively. During the nine months ended September 30, 2012, the Company did not borrow on its margin account, but paid down $7,541.

Debt Maturities

The following table shows the scheduled maturities of the Company's mortgages payable, notes payable, margin payable and unsecured credit facility (as described in Note 11) as of September 30, 2012 for the remainder of 2012, each of the next four years and thereafter and does not reflect the impact of any debt activity that occurred after September 30, 2012:

15

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

	2012			2013			2014			2015			2016			Thereafter			Total
Maturing debt (a):
Fixed rate debt:
Mortgages payable (b)	$	62,230		$	276,324		$	195,777		$	471,439		$	48,214		$	1,208,588		$	2,262,572
Notes payable	—			—			—			—			—			125,000			125,000
Unsecured credit facility - term loan (c)	—			—			—			—			300,000			—			300,000
Total fixed rate debt	62,230			276,324			195,777			471,439			348,214			1,333,588			2,687,572
Variable rate debt:
Mortgages payable	—			—			10,946			—			—			—			10,946
Unsecured credit facility - line of credit	—			—			—			235,000			—			—			235,000
Total variable rate debt	—			—			10,946			235,000			—			—			245,946
Total maturing debt (d)	$	62,230		$	276,324		$	206,723		$	706,439		$	348,214		$	1,333,588		$	2,933,518
Weighted average interest rate on debt:
Fixed rate debt	7.60		%	5.21		%	7.09		%	5.76		%	3.23		%	6.87		%	6.06		%
Variable rate debt	—		%	—		%	2.50		%	2.50		%	—		%	—		%	2.50		%
Total	7.60		%	5.21		%	6.84		%	4.68		%	3.23		%	6.87		%	5.77		%

(a) The debt maturity table does not include mortgage discount of $1,619, net of accumulated amortization, which was outstanding as of September 30, 2012.

(b) Includes $76,109 of variable rate mortgage debt that was swapped to a fixed rate.

(c) In July 2012, the Company entered into an interest rate swap transaction to convert the variable rate portion of $300,000 of London Interbank Offered Rate (LIBOR) based debt to a fixed rate through February 24, 2016, the maturity date of the Company's unsecured term loan. The swap effectively converts one-month floating rate LIBOR to a fixed rate of 0.53875% over the term of the swap.

(d) As of September 30, 2012, the weighted average years to maturity of consolidated indebtedness was 5.5 years.

The maturity table excludes accelerated principal payments that may be required as a result of covenants or conditions included in certain loan agreements due to the uncertainty in the timing and amount of these payments. In these cases, the total outstanding indebtedness is included in the year corresponding to the loan maturity date or, if the mortgage payable is amortizing, the payments are presented in accordance with the loan's original amortization schedule. As of September 30, 2012, the Company was making accelerated principal payments on two mortgages payable with a combined outstanding principal balance of $71,365, which are reflected in the years corresponding to the loan maturity dates. During the nine months ended September 30, 2012, the Company made accelerated principal payments of $5,937 with respect to these mortgages payable. If the Company is not able to cure these arrangements, these mortgages payable would have a weighted average years to maturity of 6.5 years. A $26,865 mortgage payable that had matured in 2010, and which remains outstanding as of September 30, 2012, is included in the 2012 column. The Company plans on addressing its mortgages payable maturities by using proceeds from its unsecured credit facility, by obtaining secured loans collateralized by individual properties, through asset sales and through other capital markets transactions.

(10)   Derivative Instruments

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments.

The Company has entered into derivative instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative instruments, described below, are used to manage differences in the amount, timing and duration of the Company's known or expected cash payments principally related to certain of the Company's borrowings.

16

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

Cash Flow Hedges of Interest Rate Risk

The Company's objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount.

The Company utilizes four interest rate swaps to hedge the variable cash flows associated with variable-rate debt. The effective portion of changes in the fair value of derivatives that are designated and that qualify as cash flow hedges is recorded in "Accumulated other comprehensive income" and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.

In July 2012, the Company entered into an interest rate swap with a notional amount of $300,000 that terminates on February 24, 2016, the maturity date of the Company's unsecured term loan (see Note 11). The swap was determined to be effective on July 31, 2012 and effectively converts one-month floating rate LIBOR into a fixed rate of 0.53875% on $300,000 of the Company's LIBOR-based debt over the term of the swap. As of September 30, 2012, the fair value of the Company’s $300,000 interest rate swap was a liability of $1,247, which is included in "Other liabilities" in the condensed consolidated balance sheets.

Amounts reported in "Accumulated other comprehensive income" related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Over the next 12 months, the Company estimates that an additional $1,987 will be reclassified as an increase to interest expense.

The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

	Number of Instruments		Notional
Interest Rate Derivatives	September 30, 2012	December 31, 2011	September 30, 2012		December 31, 2011
Interest Rate Swap	4	3	$	376,109	$	76,269

The table below presents the estimated fair value of the Company's derivative financial instruments as well as their classification in the condensed consolidated balance sheets. The valuation techniques utilized are described in Note 15 to the condensed consolidated financial statements.

	Liability Derivatives
	September 30, 2012			December 31, 2011
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as cash flow hedges:
Interest rate swaps	Other Liabilities	$	3,482	Other Liabilities	$	2,891

The table below presents the effect of the Company's derivative financial instruments in the condensed consolidated statements of operations and other comprehensive loss.

Derivatives in Cash Flow Hedging Relationships Amount of Loss Recognized in OCI on Derivative (Effective Portion) Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) Location of Loss Recognized In Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) Amount of Loss Recognized in Income on