EX-99.2 3 ex-99212x31x17.htm EXHIBIT 99.2 Exhibit

Exhibit 99.2

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RETAIL PROPERTIES OF AMERICA, INC. REPORTS
FOURTH QUARTER AND FULL YEAR 2017 RESULTS
Oak Brook, IL – February 13, 2018 – Retail Properties of America, Inc. (NYSE: RPAI) (the “Company”) today reported financial and operating results for the quarter and year ended December 31, 2017.
FINANCIAL RESULTS
For the quarter ended December 31, 2017, the Company reported:
Net income attributable to common shareholders of $103.1 million, or $0.46 per diluted share, compared to $15.9 million, or $0.07 per diluted share, for the same period in 2016;
Funds from operations (FFO) attributable to common shareholders of $50.4 million, or $0.23 per diluted share, compared to $52.9 million, or $0.22 per diluted share, for the same period in 2016; and
Operating funds from operations (Operating FFO) attributable to common shareholders of $56.4 million, or $0.25 per diluted share, compared to $59.9 million, or $0.25 per diluted share, for the same period in 2016.
For the year ended December 31, 2017, the Company reported:
Net income attributable to common shareholders of $237.6 million, or $1.03 per diluted share, compared to $157.4 million, or $0.66 per diluted share, for 2016;
FFO attributable to common shareholders of $168.8 million, or $0.73 per diluted share, compared to $268.0 million, or $1.13 per diluted share, for 2016; and
Operating FFO attributable to common shareholders of $245.5 million, or $1.06 per diluted share, compared to $257.2 million, or $1.09 per diluted share, for 2016.
OPERATING RESULTS
For the quarter ended December 31, 2017, the Company’s portfolio results were as follows:
2.7% increase in same store net operating income (NOI) over the comparable period in 2016;
Total same store portfolio percent leased, including leases signed but not commenced: 95.2% at December 31, 2017, up 120 basis points from 94.0% at September 30, 2017 and down 30 basis points from 95.5% at December 31, 2016;
Retail portfolio percent leased, including leases signed but not commenced: 94.9% at December 31, 2017, up 220 basis points from 92.7% at September 30, 2017 and down 10 basis points from 95.0% at December 31, 2016;
Retail portfolio annualized base rent (ABR) per occupied square foot of $18.72 at December 31, 2017, up 9.4% from $17.11 ABR per occupied square foot at December 31, 2016;
665,000 square feet of retail leasing transactions comprised of 126 new and renewal leases; and
Positive comparable cash leasing spreads of 37.4% on new leases and 5.1% on renewal leases for a blended re-leasing spread of 16.3%.

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


For the year ended December 31, 2017, the Company’s portfolio results were as follows:
2.0% increase in same store NOI over the comparable period in 2016;
2,715,000 square feet of retail leasing transactions comprised of 510 new and renewal leases; and
Positive comparable cash leasing spreads of 28.6% on new leases and 6.4% on renewal leases for a blended re-leasing spread of 10.1%.
“2017 marks the year we virtually completed our portfolio transformation plan with over $1.1 billion in total transactions,” stated Steve Grimes, president and chief executive officer. “We achieved an all-time high for blended re-leasing spreads of 10% and further strengthened our best-in-class balance sheet with the redemption of our preferred equity, ending the year with net debt to adjusted EBITDA of 5.5x. Our very well-positioned portfolio, platform and balance sheet will allow us to make the turn and focus inward as we begin to capitalize on our organic growth opportunities.”
INVESTMENT ACTIVITY
Dispositions
In 2017, the Company completed $917.8 million of dispositions, which included the sales of 41 multi-tenant retail assets for $870.2 million, six single-user retail assets for $30.1 million and one single-user parcel for $17.5 million. The Company completed its multi-tenant retail exit from six states and 25 markets in 2017.
During the quarter ended December 31, 2017, the Company completed $275.1 million of dispositions, which included the sales of 13 multi-tenant retail assets.
Subsequent to year end, the Company completed the sale of one single-user retail asset, which was classified as held for sale as of December 31, 2017, for $6.9 million. The Company is under contract for dispositions totaling $173.1 million, comprised of its one remaining office building, Schaumburg Towers, which is located in the northwest suburbs of Chicago, for a purchase price of $86.6 million, five multi-tenant retail assets for $83.1 million and two single-user retail assets for $3.4 million. These transactions are expected to close during the first quarter of 2018, subject to satisfaction of customary closing conditions.
Acquisitions
In 2017, the Company completed $202.9 million of acquisitions, which included three multi-tenant retail shopping centers, five additional phases at One Loudoun Downtown, the fee interest in an existing multi-tenant retail shopping center and an outparcel at an existing multi-tenant retail shopping center. These acquisitions are located in the Chicago, Dallas, New York and Washington, D.C. metropolitan statistical areas (MSAs) and possess strong demographic profiles, with weighted average household income of $142,000 and weighted average population of 98,000 within a three-mile radius.
During the quarter, the Company completed the acquisition of the Z Gallerie Building at Southlake Town Square in the Dallas MSA for $7.0 million. In addition, the Company completed the acquisition of Plaza del Lago, a grocery-anchored center located in the affluent community of Wilmette, Illinois in the Chicago MSA, for a gross purchase price of $48.3 million. Plaza del Lago sits in a high barrier-to-entry sub-market and features 100,213 square feet of retail and office space as well as 15 second-story residential apartments. Plaza del Lago is 91.2% leased and anchored by a diverse line-up of retailers including Jewel-Osco, Starbucks, CVS Pharmacy and NorthShore University HealthSystem, as well as a variety of boutique local restaurants and soft-goods retailers. The property is located within a “super-zip,” one of the most affluent and well-educated zip codes in the country, and boasts average household income of $163,000 and population of 83,000 within a three-mile radius.

ii


APPOINTMENT OF CHIEF FINANCIAL OFFICER
On February 6, 2018, the board of directors of the Company appointed Julie M. Swinehart to serve as the Company’s executive vice president, chief financial officer and treasurer. Ms. Swinehart’s role will include the oversight and execution of all the Company’s financial activities, including internal and external reporting, capital markets, investor relations, internal audit and treasury.
Ms. Swinehart joined RPAI in June 2008 and held the position of senior vice president and chief accounting officer from July 2015 through February 2018. Before assuming her role as chief accounting officer in 2015, Ms. Swinehart served as the Company’s senior vice president and corporate controller since April 2013 and held various accounting and financial reporting positions since joining the team in 2008. Before joining RPAI, Ms. Swinehart was a manager of external reporting at Equity Office Properties Trust for two years and she spent eight years in public accounting in the audit practices of Arthur Andersen LLP and Deloitte & Touche LLP. Ms. Swinehart received her B.S. in accountancy from the University of Illinois at Urbana-Champaign and is a certified public accountant.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
As of December 31, 2017, the Company had approximately $1.8 billion of consolidated indebtedness with a weighted average contractual interest rate of 3.83%, a weighted average maturity of 5.1 years and a net debt to adjusted EBITDA ratio of 5.5x.
During 2017, the Company executed on numerous significant capital markets initiatives, including the following:
In January, defeased the $379.4 million IW JV cross-collateralized portfolio of mortgages payable that was scheduled to mature in 2019 and had an interest rate of 7.50%. In connection with this transaction, the Company incurred approximately $60.2 million in defeasance costs;
During 2017, repaid $102.1 million of mortgage debt, excluding amortization, with a weighted average interest rate of 5.63%, of which $7.7 million was repaid during the fourth quarter with an interest rate of 7.70%. In connection with these transactions, the Company incurred approximately $8.3 million in prepayment penalties;
In January, drew the full balance of a seven-year $200.0 million senior unsecured term loan (Term Loan Due 2023) with an interest rate of London Interbank Offered Rate (LIBOR) plus a credit spread between 1.70% and 2.55% based on the Company’s leverage ratio. The applicable credit spread was 1.70% as of December 31, 2017;
In January, entered into two interest rate swap agreements to effectively fix the interest rate on the Term Loan Due 2023 at 1.26% plus the applicable credit spread through November 2018;
In September, repaid $100.0 million of its unsecured term loan due 2018, which had an interest rate of 2.93% and a remaining outstanding balance of $100.0 million as of December 31, 2017;
In December, redeemed all 5.4 million outstanding shares of its 7.00% Series A cumulative redeemable preferred stock for cash at a redemption price of $25.00 per preferred share, plus $0.3840 per preferred share representing all accrued and unpaid dividends;
In December, entered into three interest rate swap agreements to effectively fix the interest rate on its unsecured term loan due 2021 at 2.00% plus a credit spread based on the Company’s leverage ratio through January 2021. The applicable credit spread was 1.30% as of December 31, 2017;
During 2017, repurchased 17.7 million shares of common stock under its stock repurchase program at an average price per share of $12.82 for a total of approximately $227.1 million, of which 7.9 million shares of common stock were repurchased during the fourth quarter at an average price per share of $12.90 for a total of approximately $101.5 million; and

iii


In December, the Company’s Board of Directors authorized a $250.0 million increase to the size of its existing stock repurchase program. Together with amounts previously authorized that have not been used for repurchases, the Company has approximately $264.1 million available for repurchases under its stock repurchase program as of December 31, 2017.
2018 GUIDANCE
The Company expects to generate net income attributable to common shareholders of $0.36 to $0.40 per diluted share in 2018. The Company expects to generate Operating FFO of $0.98 to $1.02 per diluted share in 2018, based, in part, on the following assumptions:
Same store NOI growth of 2.0% to 3.0%;
Asset acquisitions of $50 to $150 million;
Asset dispositions of approximately $200 million; and
General and administrative expenses of $40 to $43 million.
The following table reconciles the Company’s reported 2017 Operating FFO to the Company’s 2018 Operating FFO guidance range.
 
Low
 
High
2017 Operating FFO per common share outstanding – diluted
$
1.06

 
$
1.06

 
 
 
 
2017 net retail investment activity
(0.12
)
 
(0.12
)
2018 net retail investment activity(1)
(0.04
)
 
(0.025
)
Schaumburg Towers
0.015

 
0.015

Subtotal
$
0.915

 
$
0.93

 
 
 
 
Same store NOI growth
0.025

 
0.04

Redevelopment assets(2)
(0.005
)
 
(0.005
)
Interest expense(1)
0.02

 
0.015

General and administrative expenses
(0.005
)
 
0.01

Lease termination fee income(3)
(0.005
)
 
(0.005
)
Non-cash items(4)
(0.005
)
 
(0.005
)
Preferred stock dividends
0.04

 
0.04

2018 estimated Operating FFO per common share outstanding – diluted
$
0.98

 
$
1.02

(1)
Reflects the expected relative timing of acquisitions and dispositions during the year
(2)
Primarily represents three properties where the Company has begun redevelopment and/or activities in anticipation of future redevelopment: Reisterstown Road Plaza, Towson Circle and Boulevard at the Capital Centre
(3)
The Company has not forecasted speculative lease termination fee income for 2018
(4)
Non-cash items include straight-line rental income, amortization of above and below market lease intangibles and lease inducements, and non-cash ground rent expense
DIVIDEND
On February 8, 2018, the Company declared the first quarter 2018 quarterly cash dividend of $0.165625 per share on its outstanding Class A common stock, which will be paid on April 10, 2018 to Class A common shareholders of record on March 27, 2018.
WEBCAST AND CONFERENCE CALL INFORMATION
The Company’s management team will hold a webcast on Wednesday, February 14, 2018 at 11:00 AM (ET), to discuss its quarterly and full year 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.

iv


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 February 14, 2018 until midnight (ET) on February 28, 2018. The replay can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers and entering pin number 13674071.
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 shopping centers in the United States. As of December 31, 2017, the Company owned 112 retail operating properties representing 20.3 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,” “continue” 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, 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.
NON-GAAP FINANCIAL MEASURES
As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, Funds From Operations (FFO) means net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate. 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”

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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, impairment charges to write down the carrying value of assets other than depreciable real estate, 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 straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income, less real estate taxes and all operating expenses other than straight-line ground rent expense (non-cash) and amortization of acquired ground lease intangibles (non-cash). NOI consists of Same Store NOI and NOI from Other Investment Properties. Same Store NOI for the three months and year ended December 31, 2017 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, 2016. NOI from Other Investment Properties for the three months and year ended December 31, 2017 represents NOI primarily from properties acquired during 2016 and 2017, the Company’s one remaining office property, three properties where the Company has begun redevelopment and/or activities in anticipation of future redevelopment, the properties that were sold or held for sale in 2016 and 2017, the net income from the Company’s wholly-owned captive insurance company and the historical ground rent expense related to an existing same store investment property that was subject to a ground lease with a third party prior to the Company’s acquisition of the fee interest on April 29, 2016. 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 “Operating 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.
Adjusted EBITDA is a supplemental non-GAAP financial measure and represents net income attributable to common shareholders before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing performance. The Company believes that Adjusted EBITDA is useful because it allows investors and management to evaluate and compare the Company’s performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA should not be considered an alternative to “Net income attributable to common shareholders” as an indicator of the Company’s financial performance. Comparison of the Company’s presentation of Adjusted EBITDA 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 EBITDA is a supplemental non-GAAP financial measure and represents (i) the Company’s total notional debt, excluding unamortized premium, discount and capitalized loan fees, less cash and cash equivalents and disposition proceeds temporarily restricted related to potential Internal Revenue Code Section 1031 tax-deferred exchanges (1031 Exchanges) divided by (ii) Adjusted EBITDA for the prior three months, annualized. The Company believes that this ratio is useful because it provides investors with information regarding its total notional debt net of cash and cash equivalents and disposition proceeds temporarily restricted related to potential 1031 Exchanges, which could be used to repay debt, compared to its performance as measured using Adjusted EBITDA. Comparison of the Company’s

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presentation of Net Debt to Adjusted EBITDA 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 Fitzmaurice
Senior Vice President – Finance
Retail Properties of America, Inc.
(630) 634-4233

vii



Retail Properties of America, Inc.
FFO Attributable to Common Shareholders and
Operating FFO Attributable to Common Shareholders Guidance
 
 
 
 
Per Share Guidance Range
Full Year 2018
 
 
Low
 
High
 
 
 
 
 
Net income attributable to common shareholders
 
$
0.36

 
$
0.40

Depreciation and amortization of depreciable real estate
 
0.785

 
0.785

Provision for impairment of investment properties
 

 

Gain on sales of depreciable investment properties
 
(0.15
)
 
(0.15
)
FFO attributable to common shareholders
 
$
0.995

 
$
1.035

 
 
 
 
 
Impact on earnings from the early extinguishment of debt, net
 
0.01

 
0.01

Provision for hedge ineffectiveness
 

 

Gain on sale of non-depreciable investment property
 
(0.025
)
 
(0.025
)
Other
 

 

Operating FFO attributable to common shareholders
 
$
0.98

 
$
1.02



viii



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

 
 
December 31,
2017
 
December 31,
2016
Assets
 
 

 
 

Investment properties:
 
 

 
 

Land
 
$
1,066,705

 
$
1,191,403

Building and other improvements
 
3,686,200

 
4,284,664

Developments in progress
 
33,022

 
23,439

 
 
4,785,927

 
5,499,506

Less accumulated depreciation
 
(1,215,990
)
 
(1,443,333
)
Net investment properties
 
3,569,937

 
4,056,173

 
 
 
 
 
Cash and cash equivalents
 
25,185

 
53,119

Accounts and notes receivable (net of allowances of $6,567 and $6,886, respectively)
 
71,678

 
78,941

Acquired lease intangible assets, net
 
122,646

 
142,015

Assets associated with investment properties held for sale
 
3,647

 
30,827

Other assets, net
 
125,171

 
91,898

Total assets
 
$
3,918,264

 
$
4,452,973

 
 
 
 
 
Liabilities and Equity
 
 

 
 

Liabilities:
 
 

 
 

Mortgages payable, net (includes unamortized premium of $1,024 and $1,437,
respectively, unamortized discount of $(579) and $(622), respectively, and
unamortized capitalized loan fees of $(615) and $(5,026), respectively)
 
$
287,068

 
$
769,184

Unsecured notes payable, net (includes unamortized discount of $(853) and $(971),
respectively, and unamortized capitalized loan fees of $(3,399) and $(3,886), respectively)
 
695,748

 
695,143

Unsecured term loans, net (includes unamortized capitalized loan fees of $(2,730)
and $(2,402), respectively)
 
547,270

 
447,598

Unsecured revolving line of credit
 
216,000

 
86,000

Accounts payable and accrued expenses
 
82,698

 
83,085

Distributions payable
 
36,311

 
39,222

Acquired lease intangible liabilities, net
 
97,971

 
105,290

Liabilities associated with investment properties held for sale
 

 
864

Other liabilities
 
69,498

 
74,501

Total liabilities
 
2,032,564

 
2,300,887

 
 
 
 
 
Commitments and contingencies
 
 

 
 

 
 
 
 
 
Equity:
 
 

 
 

Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative
redeemable preferred stock, liquidation preference $135,000, 0 and 5,400 shares issued
and outstanding as of December 31, 2017 and 2016, respectively
 

 
5

Class A common stock, $0.001 par value, 475,000 shares authorized,
219,237 and 236,770 shares issued and outstanding as of December 31, 2017
and 2016, respectively
 
219

 
237

Additional paid-in capital
 
4,574,428

 
4,927,155

Accumulated distributions in excess of earnings
 
(2,690,021
)
 
(2,776,033
)
Accumulated other comprehensive income
 
1,074

 
722

Total equity
 
1,885,700

 
2,152,086

Total liabilities and equity
 
$
3,918,264

 
$
4,452,973



4th Quarter 2017 Supplemental Information
 
1



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

 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
 
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 

 
 

Rental income
 
$
97,836

 
$
111,577

 
$
414,804

 
$
455,658

Tenant recovery income
 
27,610

 
29,429

 
115,944

 
118,569

Other property income
 
1,142

 
1,746

 
7,391

 
8,916

Total revenues
 
126,588

 
142,752

 
538,139

 
583,143

 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 

 
 

Operating expenses
 
22,116

 
22,457

 
84,556

 
85,895

Real estate taxes
 
17,526

 
20,808

 
82,755

 
81,774

Depreciation and amortization
 
46,598

 
60,828

 
203,866

 
224,430

Provision for impairment of investment properties
 
8,147

 
9,328

 
67,003

 
20,376

General and administrative expenses
 
11,356

 
11,233

 
40,724

 
44,522

Total expenses
 
105,743

 
124,654

 
478,904

 
456,997

 
 
 
 
 
 
 
 
 
Operating income
 
20,845

 
18,098

 
59,235

 
126,146

 
 
 
 
 
 
 
 
 
Gain on extinguishment of debt
 

 

 

 
13,653

Gain on extinguishment of other liabilities
 

 

 

 
6,978

Interest expense
 
(18,015
)
 
(31,387
)
 
(146,092
)
 
(109,730
)
Other (expense) income, net
 
(7
)
 
(386
)
 
373

 
63

Income (loss) from continuing operations
 
2,823

 
(13,675
)
 
(86,484
)
 
37,110

Gain on sales of investment properties
 
107,101

 
31,970

 
337,975

 
129,707

Net income
 
109,924

 
18,295

 
251,491

 
166,817

Preferred stock dividends
 
(6,780
)
 
(2,363
)
 
(13,867
)
 
(9,450
)
Net income attributable to common shareholders
 
$
103,144

 
$
15,932

 
$
237,624

 
$
157,367

 
 
 
 
 
 
 
 
 
Earnings per common share – basic and diluted
 
 
 
 
 
 

 
 

Net income per common share attributable to common shareholders
 
$
0.46

 
$
0.07

 
$
1.03

 
$
0.66

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – basic
 
222,942

 
236,528

 
230,747

 
236,651

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – diluted
 
223,095

 
236,852

 
230,927

 
236,951



4th Quarter 2017 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
December 31,
 
Year Ended
December 31,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Net income attributable to common shareholders
 
$
103,144

 
$
15,932

 
$
237,624

 
$
157,367

Depreciation and amortization of depreciable real estate
 
46,253

 
60,441

 
202,110

 
223,018

Provision for impairment of investment properties
 
8,147

 
8,485

 
67,003

 
17,369

Gain on sales of depreciable investment properties
 
(107,101
)
 
(31,970
)
 
(337,975
)
 
(129,707
)
FFO attributable to common shareholders
 
$
50,443

 
$
52,888

 
$
168,762

 
$
268,047

 
 
 
 
 
 
 
 
 
FFO attributable to common shareholders
per common share outstanding – diluted
 
$
0.23

 
$
0.22

 
$
0.73

 
$
1.13

 
 
 
 
 
 
 
 
 
FFO attributable to common shareholders
 
$
50,443

 
$
52,888

 
$
168,762

 
$
268,047

Impact on earnings from the early extinguishment of debt, net
 
979

 
5,814

 
72,654

 
(7,028
)
Provision for hedge ineffectiveness
 
(7
)
 
14

 
9

 
(21
)
Provision for impairment of non-depreciable investment property
 

 
843

 

 
3,007

Gain on extinguishment of other liabilities
 

 

 

 
(6,978
)
Impact on earnings from executive separation, net (b)
 

 

 
(1,086
)
 

Excess of redemption value over carrying value of preferred stock
redemption (c)
 
4,706

 

 
4,706

 

Other (d)
 
253

 
321

 
441

 
132

Operating FFO attributable to common shareholders
 
$
56,374

 
$
59,880

 
$
245,486

 
$
257,159

 
 
 
 
 
 
 
 
 
Operating FFO attributable to common shareholders
per common share outstanding – diluted
 
$
0.25

 
$
0.25

 
$
1.06

 
$
1.09

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – diluted
 
223,095

 
236,852

 
230,927

 
236,951

Dividends declared per common share
 
$
0.165625

 
$
0.165625

 
$
0.6625

 
$
0.6625

 
 
 
 
 
 
 
 
 
Additional Information (e)
 
 
 
 
 
 

 
 

Lease-related expenditures (f)
 
 
 
 
 
 
 
 
Same store
 
$
5,179

 
$
3,619

 
$
24,434

 
$
27,644

Other investment properties (g)
 
$
7,654

 
$
1,030

 
$
23,377

 
$
6,949

 
 
 
 
 
 
 
 
 
Capital expenditures (h)
 
 
 
 
 
 
 
 
Same store
 
$
6,483

 
$
3,582

 
$
26,312

 
$
17,041

Other investment properties (g)
 
$
4,310

 
$
2,240

 
$
15,608

 
$
9,774

 
 
 
 
 
 
 
 
 
Straight-line rental income, net
 
$
1,537

 
$
1,547

 
$
4,646

 
$
4,601

Amortization of above and below market lease intangibles
and lease inducements
 
$
1,310

 
$
363

 
$
2,248

 
$
1,958

Non-cash ground rent expense (i)
 
$
533

 
$
741

 
$
2,150

 
$
2,693


(a)
Refer to page 19 for definitions of FFO attributable to common shareholders and Operating FFO attributable to common shareholders.
(b)
Reflected as a reduction to "General and administrative expenses" in the consolidated statements of operations.
(c)
Included in "Preferred stock dividends" in the 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 in "Other (expense) income, net" in the consolidated statements of operations.
(e)
The same store portfolio for the three months and year ended ended December 31, 2017 consists of 102 retail operating properties. Refer to pages 19 – 22 for definitions and reconciliations of non-GAAP financial measures.
(f)
Consists of payments for tenant improvements, lease commissions and lease inducements and excludes developments in progress.
(g)
2017 expenditures are primarily associated with Schaumburg Towers, the Company's one remaining office property.
(h)
Consists of payments for building, site and other improvements, net of anticipated recoveries, and excludes developments in progress.
(i)
Includes amortization of acquired ground lease intangibles and straight-line ground rent expense.

4th Quarter 2017 Supplemental Information
 
3



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

 
Supplemental Balance Sheet Detail
 
December 31,
2017
 
December 31,
2016
Accounts and Notes Receivable
 
 

 
 

Accounts and notes receivable (net of allowances of $5,618 and $6,200, respectively)
 
$
25,605

 
$
27,948

Straight-line receivables (net of allowances of $949 and $686, respectively)
 
46,073

 
50,993

Total
 
$
71,678

 
$
78,941

 
 
 
 
 
Other Assets, Net
 
 

 
 

Deferred costs, net
 
$
32,146

 
$
30,657

Restricted cash – 1031 Exchanges (a)
 
54,087

 

Restricted cash – other (b)
 
7,063

 
29,230

Fair value of derivatives
 
1,086

 
743

Other assets, net
 
30,789

 
31,268

Total
 
$
125,171

 
$
91,898

 
 
 
 
 
Other Liabilities
 
 

 
 

Unearned income
 
$
14,976

 
$
16,883

Straight-line ground rent liability
 
32,513

 
31,516

Other liabilities
 
22,009

 
26,102

Total
 
$
69,498

 
$
74,501

 
 
 
 
 
Developments in Progress
 
 

 
 

Active developments/redevelopments (c)
 
$
33,022

 
$
23,439

 
Supplemental Statements of Operations Detail
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Rental Income
 

 
 

 
 

 
 

Base rent
$
93,581

 
$
108,310

 
$
402,277

 
$
443,941

Percentage and specialty rent
1,408

 
1,357

 
5,633

 
5,158

Straight-line rent
1,537

 
1,547

 
4,646

 
4,601

Amortization of above and below market lease intangibles and lease inducements
1,310

 
363

 
2,248

 
1,958

Total
$
97,836

 
$
111,577

 
$
414,804

 
$
455,658

 
 
 
 
 
 
 
 
Other Property Income
 

 
 

 
 

 
 

Lease termination income, net
$
(289
)
 
$
269

 
$
2,021

 
$
3,339

Other property income
1,431

 
1,477

 
5,370

 
5,577

Total
$
1,142

 
$
1,746

 
$
7,391

 
$
8,916

 
 
 
 
 
 
 
 
Property Operating Expense Supplemental Information
 
 
 
 
 
 
 
Bad debt expense
$
908

 
$
989

 
$
1,835

 
$
1,763

Non-cash ground rent expense (d)
$
533

 
$
741

 
$
2,150

 
$
2,693

 
 
 
 
 
 
 
 
General and Administrative Expense Supplemental Information
 
 
 
 
 
 
 
Acquisition costs (e)
$

 
$

 
$

 
$
913

Non-cash amortization of stock-based compensation
$
1,576

 
$
1,913

 
$
6,059

 
$
7,206

 
 
 
 
 
 
 
 
Additional Supplemental Information
 
 
 
 
 
 
 
Capitalized compensation costs – development and capital projects
$
572

 
$
430

 
$
1,826

 
$
1,196

Capitalized internal leasing incentives
$
81

 
$
99

 
$
368

 
$
423

Capitalized interest
$
169

 
$
68

 
$
485

 
$
69


(a)
Represents disposition proceeds temporarily restricted related to potential Internal Revenue Code Section 1031 tax-deferred exchanges (1031 Exchanges).
(b)
Consists of lenders' escrows and funds restricted through lender or other agreements.
(c)
Represents Reisterstown Road Plaza and Towson Circle. See page 10 for further details.
(d)
Includes amortization of acquired ground lease intangibles and straight-line ground rent expense.
(e)
The Company adopted ASU 2017-01, Business Combinations, on a prospective basis as of October 1, 2016. As a result, acquisition costs incurred during 2017 and the three months ended December 31, 2016 were capitalized.

4th Quarter 2017 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 December 31, 2017
 
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
Number of retail operating properties in same store portfolio
 
102

 
102

 

 
 
 
 
 
 
 
Occupancy
 
94.5
%
 
94.7
%
 
(0.2
)%
 
 
 
 
 
 
 
Percent leased (b)
 
95.2
%
 
95.5
%
 
(0.3
)%
 
 
 
 
 
 
 

Same store NOI (c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rent
 
$
78,520

 
$
77,472

 
 
 
$
313,253

 
$
308,383

 
 
Percentage and specialty rent
 
1,023

 
1,038

 
 
 
3,307

 
3,509

 
 
Tenant recovery income
 
22,872

 
22,459

 
 
 
91,669

 
88,536

 
 
Other property operating income (d)
 
845

 
805

 
 
 
2,883

 
2,770

 
 
 
 
103,260

 
101,774

 
 
 
411,112

 
403,198

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses (e)
 
15,439

 
15,392

 
 
 
57,933

 
59,067

 
 
Bad debt expense
 
399

 
824

 
 
 
1,012

 
1,161

 
 
Real estate taxes
 
15,913

 
15,940

 
 
 
65,249

 
61,703

 
 
 
 
31,751

 
32,156

 
 
 
124,194

 
121,931

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store NOI (c)
 
$
71,509

 
$
69,618

 
2.7
%
 
$
286,918

 
$
281,267

 
2.0
%


(a)
For the three months and year ended December 31, 2017, the Company's same store portfolio consisted of 102 retail operating properties and excluded properties acquired or placed in service and stabilized during 2016 and 2017, the Company's one remaining office property, three properties where the Company has begun redevelopment and/or activities in anticipation of future redevelopment and investment properties sold or classified as held for sale during 2016 and 2017.
(b)
Includes leases signed but not commenced.
(c)
Refer to pages 19 – 22 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 operating items included in "Other property income" in the consolidated statements of operations, which include all items other than lease termination fee income.
(e)
Consists of all property operating items included in "Operating expenses" in the consolidated statements of operations, which include all items other than straight-line ground rent expense (non-cash) and amortization of acquired ground lease intangibles (non-cash).

4th Quarter 2017 Supplemental Information
 
5



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

Capitalization Data
 
 
 
 
 
 
December 31,
2017
 
December 31,
2016
Equity Capitalization
 
 

 
 

Common stock shares outstanding (a)
 
219,237

 
236,770

Common share price
 
$
13.44

 
$
15.33

 
 
2,946,545

 
3,629,684

Series A preferred stock (b)
 

 
135,000

Total equity capitalization
 
$
2,946,545

 
$
3,764,684

 
 
 
 
 
Debt Capitalization
 
 

 
 

Mortgages payable (c)
 
$
287,238

 
$
773,395

Unsecured notes payable (d)
 
700,000

 
700,000

Unsecured term loans (e)
 
550,000

 
450,000

Unsecured revolving line of credit
 
216,000

 
86,000

Total debt capitalization
 
$
1,753,238

 
$
2,009,395

 
 
 
 
 
Total capitalization at end of period
 
$
4,699,783

 
$
5,774,079



Calculation of Net Debt to Adjusted EBITDA Ratios (f)
 
 
December 31,
2017
 
December 31,
2016
 
 
 
 
 
Total notional debt
 
$
1,753,238

 
$
2,009,395

Less: consolidated cash and cash equivalents
 
(25,185
)
 
(53,119
)
Less: disposition proceeds temporarily restricted related to potential 1031 Exchanges
 
(54,087
)
 

Total net debt
 
$
1,673,966

 
$
1,956,276

Total net debt and preferred stock (b)
 
$
1,673,966

 
$
2,091,276

Adjusted EBITDA (g)
 
$
302,332

 
$
351,472

Net Debt to Adjusted EBITDA
 
5.5x

 
5.6x

Net Debt and Preferred Stock to Adjusted EBITDA (b)
 
5.5x

 
6.0x



(a)
Excludes performance restricted stock units and options outstanding, which could potentially convert to common stock in the future.
(b)
On December 20, 2017, the Company redeemed all 5,400 outstanding shares of its 7.00% Series A cumulative redeemable preferred stock for cash at a redemption price of $25.00 per preferred share.
(c)
Mortgages payable excludes mortgage premium of $1,024 and $1,437, discount of $(579) and $(622), and capitalized loan fees of $(615) and $(5,026), net of accumulated amortization, as of December 31, 2017 and 2016, respectively.
(d)
Unsecured notes payable exclude discount of $(853) and $(971) and capitalized loan fees of $(3,399) and $(3,886), net of accumulated amortization, as of December 31, 2017 and 2016, respectively.
(e)
Unsecured term loans excludes capitalized loan fees of $(2,730) and $(2,402), net of accumulated amortization, as of December 31, 2017 and 2016, respectively.
(f)
Refer to pages 19 – 22 for definitions and reconciliations of non-GAAP financial measures.
(g)
For purposes of these ratio calculations, annualized three months ended figures were used.

4th Quarter 2017 Supplemental Information
 
6





Retail Properties of America, Inc.
Covenants

 
Unsecured Credit Facility, Term Loan Due 2023 and Notes Due 2021, 2024, 2026 and 2028 (a)
 
 
 
 
Covenant
 
December 31, 2017
 
 
 
 
 

Leverage ratio (b)
 
< 60.0%
(b)
34.9
%
 
 
 
 
 

Secured leverage ratio (b)
Unsecured Credit Facility and
Term Loan Due 2023:
Notes Due 2021, 2024, 2026 and 2028:
< 45.0%
< 40.0%
(b)
5.7
%
 
 
 
 
 
Fixed charge coverage ratio (c)
 
> 1.50x
 
3.5x

 
 
 
 
 

Interest coverage ratio (d)
 
> 1.50x
 
4.3x

 
 
 
 
 
Unencumbered leverage ratio (b)
 
< 60.0%
(b)
33.8
%
 
 
 
 
 

Unencumbered interest coverage ratio
 
> 1.75x
 
5.2x



Notes Due 2025 (e)
 
 
 
 
Covenant
 
December 31, 2017
 
 
 
 

Leverage ratio (f)
< 60.0%
 
34.6
%
 
 
 
 

Secured leverage ratio (f)
< 40.0%
 
5.7
%
 
 
 
 
Debt service coverage ratio (g)
> 1.50x
 
4.6x

 
 
 
 
Unencumbered assets to unsecured debt ratio
> 150%
 
302
%


(a)
For a complete listing of all covenants related to the Company's Unsecured Credit Facility (comprised of the unsecured term loans and unsecured revolving line of credit) as well as covenant definitions, refer to the Fourth Amended and Restated Credit Agreement filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 2015, filed on February 17, 2016. 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 Term Loan Due 2023 closed during the year ended December 31, 2016 and funded on January 3, 2017. 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.
(b)
Based upon a capitalization rate of 6.75%.
(c)
Applies only to the Company's Unsecured Credit Facility, Term Loan Due 2023 and Notes Due 2026 and 2028. This ratio is based upon consolidated debt service, including interest expense, principal amortization and preferred dividends declared, excluding interest expense related to defeasance costs and prepayment premiums.
(d)
Applies only to the Company's Notes Due 2021, 2024, 2026 and 2028.
(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 and preferred dividends declared. This ratio is calculated on a pro forma basis with the assumption that debt and property transactions occurred on the first day of the preceding four-quarter period.

4th Quarter 2017 Supplemental Information
 
7




Retail Properties of America, Inc.
Consolidated Debt Summary as of December 31, 2017
(dollar amounts in thousands)

 
 
Balance
 
Weighted
Average (WA)
Interest Rate (a)
 
WA Years to
Maturity
 
 
 
 
 
 
 
Fixed rate mortgages payable (b)
 
$
287,238

 
4.99
%
 
5.2 years
 
 
 
 
 
 
 
Unsecured notes payable:
 
 
 
 
 
 
Senior notes – 4.12% due 2021
 
100,000

 
4.12
%
 
3.5 years
Senior notes – 4.58% due 2024
 
150,000

 
4.58
%
 
6.5 years
Senior notes – 4.00% due 2025
 
250,000

 
4.00
%
 
7.2 years
Senior notes – 4.08% due 2026
 
100,000

 
4.08
%
 
8.8 years
Senior notes – 4.24% due 2028
 
100,000

 
4.24
%
 
11.0 years
Total unsecured notes payable (b)
 
700,000

 
4.19
%
 
7.3 years
 
 
 
 
 
 
 
Unsecured credit facility:
 
 

 
 

 
 
Term loan due 2021 – fixed rate (c)
 
250,000

 
3.30
%
 
3.0 years
Term loan due 2018 – variable rate
 
100,000

 
2.93
%
 
0.4 years
Revolving line of credit – variable rate
 
216,000

 
2.92
%
 
2.0 years
Total unsecured credit facility (b)
 
566,000

 
3.09
%
 
2.2 years
 
 
 
 
 
 
 
Term Loan Due 2023 – fixed rate (b) (d)
 
$
200,000

 
2.96
%
 
5.9 years
 
 
 
 
 
 
 
Total consolidated indebtedness
 
$
1,753,238

 
3.83
%
 
5.1 years


Consolidated Debt Maturity Schedule as of December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year
 
Fixed
Rate (b)
 
WA Rates on
Fixed Debt
 
Variable
Rate (b)
 
WA Rates on
Variable Debt (e)
 
Total
 
% of Total
 
WA Rates on
Total Debt (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
$
4,166

 
5.07
%
 
$
100,000

 
2.93
%
 
$
104,166

 
5.9
%
 
3.01
%
2019
 
25,257

 
7.29
%
 

 

 
25,257

 
1.4
%
 
7.29
%
2020
 
3,923

 
4.62
%
 
216,000

 
2.92
%
 
219,923

 
12.5
%
 
2.95
%
2021
 
372,820

 
3.62
%
 

 

 
372,820

 
21.3
%
 
3.62
%
2022
 
157,216

 
4.97
%
 

 

 
157,216

 
9.0
%
 
4.97
%
2023
 
231,758

 
3.12
%
 

 

 
231,758

 
13.2
%
 
3.12
%
2024
 
151,737

 
4.57
%
 

 

 
151,737

 
8.7
%
 
4.57
%
2025
 
251,809

 
4.00
%
 

 

 
251,809

 
14.4
%
 
4.00
%
2026
 
112,634

 
4.15
%
 

 

 
112,634

 
6.4
%
 
4.15
%
2027
 
21,409

 
4.46
%
 

 

 
21,409

 
1.2
%
 
4.46
%
Thereafter
 
104,509

 
4.22
%
 

 

 
104,509

 
6.0
%
 
4.22
%
Total
 
$
1,437,238

 
4.02
%
 
$
316,000

 
2.92
%
 
$
1,753,238

 
100.0
%
 
3.83
%


(a)
Interest rates presented exclude the impact of premium, discount and capitalized loan fee amortization. As of December 31, 2017, the Company's overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 4.03%.
(b)
Fixed rate mortgages payable excludes mortgage premium of $1,024, discount of $(579) and capitalized loan fees of $(615), net of accumulated amortization, as of December 31, 2017. Unsecured notes payable excludes discount of $(853) and capitalized loan fees of $(3,399), net of accumulated amortization, as of December 31, 2017. Term loans exclude capitalized loan fees of $(2,730), net of accumulated amortization, as of December 31, 2017. In the consolidated debt maturity schedule, maturity amounts for each year include scheduled principal amortization payments.
(c)
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 1.30% to 2.20% through January 5, 2021. The applicable credit spread was 1.30% as of December 31, 2017.
(d)
Reflects $200,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.26% plus a credit spread based on a leverage grid ranging from 1.70% to 2.55% through November 22, 2018. The applicable credit spread was 1.70% as of December 31, 2017.
(e)
Represents interest rates as of December 31, 2017.


4th Quarter 2017 Supplemental Information
 
8



Retail Properties of America, Inc.
Summary of Indebtedness as of December 31, 2017
(dollar amounts in thousands)


Description
 
Maturity
Date
 
Interest
Rate (a)
 
Interest
Rate Type
 
Secured or
Unsecured
 
Balance as of
12/31/2017
Consolidated Indebtedness
 
 
 
 
 
 
 
 
 
 
Shops at Park Place
 
05/01/19
 
7.48%
 
Fixed
 
Secured
 
$
7,399

Shoppes of New Hope
 
06/01/19
 
7.75%
 
Fixed
 
Secured
 
3,286

Village Shoppes at Simonton
 
06/01/19
 
7.75%
 
Fixed
 
Secured
 
3,034

Plaza at Marysville
 
09/01/19
 
8.00%
 
Fixed
 
Secured
 
8,362

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

Ashland & Roosevelt (bank pad)
 
02/25/22
 
7.48%
 
Fixed
 
Secured
 
815

Gardiner Manor Mall
 
03/01/22
 
4.95%
 
Fixed
 
Secured
 
34,128

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

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

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

Reisterstown Road Plaza
 
06/01/22
 
5.25%
 
Fixed
 
Secured
 
46,003

Gateway Village
 
01/01/23
 
4.14%
 
Fixed
 
Secured
 
34,263

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

Northgate North
 
06/01/27
 
4.50%
 
Fixed
 
Secured
 
25,856

The Shoppes at Union Hill
 
06/01/31
 
3.75%
 
Fixed
 
Secured
 
14,566

Mortgages payable (b)
 
 
 
 
 
 
 
 
 
287,238

 
 
 
 
 
 
 
 
 
 
 
Senior notes – 4.12% due 2021
 
06/30/21
 
4.12%
 
Fixed
 
Unsecured
 
100,000

Senior notes – 4.58% due 2024
 
06/30/24
 
4.58%
 
Fixed
 
Unsecured
 
150,000

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

Senior notes – 4.08% due 2026
 
09/30/26
 
4.08%
 
Fixed
 
Unsecured
 
100,000

Senior notes – 4.24% due 2028
 
12/28/28
 
4.24%
 
Fixed
 
Unsecured
 
100,000

Unsecured notes payable (b)
 
 
 
 
 
 
 
 
 
700,000

 
 
 
 
 
 
 
 
 
 
 
Term loan due 2021
 
01/05/21
 
3.30%
(c)
Fixed
 
Unsecured
 
250,000

Term loan due 2018
 
05/11/18
 
2.93%
 
Variable
 
Unsecured
 
100,000

Revolving line of credit
 
01/05/20
 
2.92%
 
Variable
 
Unsecured
 
216,000

Unsecured credit facility (b)
 
 
 
 
 
 
 
 
 
566,000

 
 
 
 
 
 
 
 
 
 
 
Term Loan Due 2023 (b)
 
11/22/23
 
2.96%
(d)
Fixed
 
Unsecured
 
200,000

 
 
 
 
 
 
 
 
 
 
 
Total consolidated indebtedness
 
02/16/23
 
3.83%
 
 
 
 
 
$
1,753,238



(a)
Interest rates presented exclude the impact of premium, discount and capitalized loan fee amortization. As of December 31, 2017, the Company's overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 4.03%.
(b)
Mortgages payable excludes mortgage premium of $1,024, discount of $(579) and capitalized loan fees of $(615), net of accumulated amortization, as of December 31, 2017. Unsecured notes payable excludes discount of $(853) and capitalized loan fees of $(3,399), net of accumulated amortization, as of December 31, 2017. Term loans exclude capitalized loan fees of $(2,730), net of accumulated amortization, as of December 31, 2017.
(c)
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 1.30% to 2.20% through January 5, 2021. The applicable credit spread was 1.30% as of December 31, 2017.
(d)
Reflects $200,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.26% plus a credit spread based on a leverage grid ranging from 1.70% to 2.55% through November 22, 2018. The applicable credit spread was 1.70% as of December 31, 2017.

4th Quarter 2017 Supplemental Information
 
9



Retail Properties of America, Inc.
Development Projects as of December 31, 2017
(dollar amounts in thousands)


Property Name
 
Metropolitan
Statistical Area
(MSA)
 
Included in
Same store
portfolio (a)
 
Total
Estimated
Net Costs (b)
 
Net Costs
Inception
to Date
 
Incremental
Gross
Leasable
Area (GLA)
 
Completion/Targeted
Completion (c)
 
Targeted
Stabilization
(d)
 
Projected
Incremental
Return on
Cost (e)
 
Project Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redevelopments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reisterstown Road Plaza
 
Baltimore
 
No
 
$9,500-$10,500
 
$
7,133

 
(61,200
)
 
Q4 2017
 
Q4 2018
 
10.5%-11.5%
 
Reconfigured existing space and completed a facade renovation; redevelopment GLA of approximately 39,600 sq. ft. is 77% leased and 0% occupied as of December 31, 2017
Towson Circle
 
Baltimore
 
No
 
$33,000-$35,000
 
$
13,461

 
(40,000
)
 
Q4 2019
 
Q4 2020
 
8.0%-10.0%
 
Mixed-use redevelopment that will include double-sided street level retail with approximately 370 third-party-owned residential units above

Property Name
 
MSA
 
Included in
Same store
portfolio (a)
 
Targeted
Commencement
 
Project Description
 
 
 
 
 
 
 
 
 
Redevelopment Pipeline
 
 
 
 
 
 
 
 
Boulevard at the Capital Centre
 
Washington, D.C.
 
No
 
2018
 
Phased redevelopment with the University of Maryland Capital Region Medical Center, which broke ground in November 2017. In addition to the Medical Center, the project could include up to 3,000,000 sq. ft. of retail, residential, hospitality and medical office use
Merrifield Town Center II
 
Washington, D.C.
 
No (f)
 
(g)
 
Mixed-use redevelopment with increased density and site optimization
Tysons Corner
 
Washington, D.C.
 
Yes
 
(g)
 
Redevelopment with increased density


(a)
The Company's same store portfolio consists of retail operating properties acquired or placed in service and stabilized prior to January 1, 2016. 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.
(b)
Net costs represent the Company's estimated share of the project costs, net of proceeds from land sales, sales of air rights, reimbursement from third parties and contributions from a project partner, as applicable.
(c)
Targeted completion represents the projected date of completion of major construction activity of the redevelopment's base building. Generally, targeted completion is expected to occur prior to the redevelopment being considered substantially complete and ready for its intended use due to expected timing of the completion of tenant improvements.
(d)
Targeted stabilization represents the projected date of the redevelopment reaching 90% occupancy, but no later than one year from the completion of major construction activity.
(e)
Projected Incremental Return on Cost (ROC) generally reflects only the unleveraged incremental NOI generated by the project upon stabilization and is calculated as incremental NOI divided by incremental cost. 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. ROC 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.
(f)
Property was acquired subsequent to December 31, 2015, and as such, does not meet the criteria to be included in the Company's same store portfolio.
(g)
Targeted commencement has not been determined.

The Company cannot guarantee that (i) ROC will be generated at the percentage listed or at all, (ii) total net costs associated with these projects will be equal to the total estimated net costs, (iii) project completion or stabilization will occur when anticipated or (iv) that the Company will ultimately complete any or all of these projects. The ROC and total estimated net costs 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.

4th Quarter 2017 Supplemental Information
 
10



Retail Properties of America, Inc.
Development Projects as of December 31, 2017 (continued)
(dollar amounts in thousands)

The Company has identified the following potential expansion and pad development opportunities to add stand-alone buildings, convert previously under-utilized space or develop additional retail 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 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)
 
Potential
Additional
Commercial
Square Feet
 
Potential
Residential Units
 
Residential Unit
Rights Under
Contract for Sale
 
 
 
 
 
 
 
 
 
 
 
Expansions and Pad Development Opportunities
 
 
 
 
 
 
 
 
Southlake Town Square
 
Dallas
 
Yes
 
275,000

 
 
 
 
One Loudoun Downtown (b)
 
Washington, D.C.
 
No (c)
 
182,000

 
378

 
30

Main Street Promenade
 
Chicago
 
No (c)
 
62,000

 
 
 
 
Plaza del Lago
 
Chicago
 
No (c)
 
20,600

 
 
 
 
Governor's Marketplace
 
Tallahassee
 
Yes
 
20,600

 
 
 
 
Lakewood Towne Center
 
Seattle
 
Yes
 
10,500

 
 
 
 
Reisterstown Road Plaza
 
Baltimore
 
No (d)
 
8,000 - 12,000

 
 
 
 
Gateway Plaza
 
Dallas
 
Yes
 
8,000

 
 
 
 
Humblewood Shopping Center
 
Houston
 
Yes
 
5,000

 
 
 
 
Watauga Pavilion
 
Dallas
 
Yes
 
5,000

 
 
 
 
Downtown Crown
 
Washington, D.C.
 
Yes
 
3,500 - 27,000

 
 
 
 
Edwards Multiplex – Ontario, CA
 
Riverside-San Bernadino
 
Yes
 
3,000

 
 
 
 

(a)
The Company's same store portfolio consists of retail operating properties acquired or placed in service and stabilized prior to January 1, 2016. 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 not considered to significantly impact the existing property's NOI, and therefore, have not been removed from the Company's same store portfolio if they have otherwise met the criteria to be included in the Company's same store portfolio as of December 31, 2017.
(b)
One Loudoun Downtown includes six vacant parcels, which may be further subdivided, that have been identified for future development of up to 182,000 square feet of commercial GLA and rights to develop 408 residential units at the property.
(c)
Property was acquired subsequent to December 31, 2015, and as such, does not meet the criteria to be included in the Company's same store portfolio as of December 31, 2017.
(d)
Property is an active redevelopment, and as such, does not meet the criteria to be included in the Company's same store portfolio as of December 31, 2017.
Property Name
 
MSA
 
Included in
Same store
portfolio (e)
 
Total
Estimated
Net Costs (f)
 
Net Costs
Inception
to Date
 
Incremental
GLA
 
Completion
 
Projected
Incremental
Return on
Cost (f)
 
Project Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed Expansions and Pad Developments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Worth Towne Crossing – Parcel
 
Dallas
 
Yes
 
$
2,872

 
$
2,872

 
15,030

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

 
$
3,468

 
21,000

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

 
$
1,507

 
(360
)
 
Q3 2016
 
11.2%
 
4,200 sq. ft. redevelopment of outparcel for new tenant, Corner Bakery
Pavilion at King's Grant
 
Charlotte
 
Yes
 
$
2,470

 
$
2,470

 
32,500

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

 
$
3,956

 
25,040

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

 
$
1,669

 
4,500

 
Q3 2017