UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
Form 10-Q
 
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934
 
For the quarterly period ended March 31, 2019
 
Commission file number 1-10093
 
RPT REALTY
(Exact name of registrant as specified in its charter)
 
MARYLAND
 
13-6908486
(State of other jurisdiction of incorporation or organization)
 
(I.R.S Employer Identification Numbers)
 
 
 
31500 Northwestern Highway, Suite 300
Farmington Hills, Michigan
 
48334
(Address of principal executive offices)
 
(Zip Code)
 
248-350-9900
 
(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   x                        No  o
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes   x                        No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
Accelerated filer  o
Non-accelerated filer  o
Smaller reporting company  o
 
 
 
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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  x
 
Securities Registered Pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange
On Which Registered
Common Shares of Beneficial Interest, ($0.01 Par Value Per Share)
 
RPT
 
New York Stock Exchange
7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest ($0.01 Par Value Per Share)
 
RPT.PRD
 
New York Stock Exchange

Number of common shares of beneficial interest ($0.01 par value) of the registrant outstanding as of April 26, 2019 : 80,352,686




INDEX
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Page 2





PART 1 – FINANCIAL INFORMATION
Item 1.  Unaudited Condensed Consolidated Financial Statements
RPT REALTY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
 
 
 
 
March 31,
2019
 
December 31,
2018
 
(unaudited)
 
 
ASSETS
 
 
 
Income producing properties, at cost:
 
 
 
Land
$
361,973

 
$
373,490

Buildings and improvements
1,598,812

 
1,652,283

Less accumulated depreciation and amortization
(352,074
)
 
(358,195
)
Income producing properties, net
1,608,711

 
1,667,578

Construction in progress and land available for development
47,799

 
53,222

Net real estate
1,656,510

 
1,720,800

Equity investments in unconsolidated joint ventures
1,606

 
1,572

Cash and cash equivalents
85,016

 
41,064

Restricted cash and escrows
3,297

 
3,658

Accounts receivable (net of allowance for doubtful accounts of $978 and $858 as of March 31, 2019 and December 31, 2018, respectively)
26,671

 
23,802

Acquired lease intangibles, net
40,802

 
44,432

Operating lease right-of-use assets
17,698

 

Other assets, net
90,451

 
93,112

TOTAL ASSETS
$
1,922,051

 
$
1,928,440

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 

 
 

Notes payable, net
$
962,433

 
$
963,149

Finance lease obligation
975

 
975

Accounts payable and accrued expenses
47,526

 
56,355

Distributions payable
19,772

 
19,728

Acquired lease intangibles, net
46,321

 
48,647

Operating lease liabilities
16,403

 

Other liabilities
6,830

 
8,043

TOTAL LIABILITIES
1,100,260

 
1,096,897

 
 
 
 
Commitments and Contingencies


 


 
 
 
 
RPT Realty ("RPT") Shareholders' Equity:
 
 

Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 1,849 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively
92,427

 
92,427

Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,757 and 79,734 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively
798

 
797

Additional paid-in capital
1,166,048

 
1,164,848

Accumulated distributions in excess of net income
(459,365
)
 
(450,130
)
Accumulated other comprehensive income
2,517

 
4,020

TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT
802,425

 
811,962

Noncontrolling interest
19,366

 
19,581

TOTAL SHAREHOLDERS' EQUITY
821,791

 
831,543

 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,922,051

 
$
1,928,440

 

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

Page 3





RPT REALTY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
2019

2018
REVENUE
 
 
 
Rental income
$
58,358

 
$
61,818

Other property income
1,299

 
814

Management and other fee income
51

 
86

TOTAL REVENUE
59,708

 
62,718

 
 
 
 
EXPENSES
 

 
 

Real estate taxes
9,822

 
10,157

Recoverable operating expense
6,681

 
6,806

Non-recoverable operating expense
2,490

 
1,712

Depreciation and amortization
19,219

 
21,112

General and administrative expense
6,066

 
5,176

TOTAL EXPENSES
44,278

 
44,963

 
 
 
 
OPERATING INCOME
15,430

 
17,755

 
 
 
 
OTHER INCOME AND EXPENSES
 

 
 

Other (expense) income, net
(108
)
 
253

Gain on sale of real estate
5,702

 

Earnings from unconsolidated joint ventures
54

 
71

Interest expense
(10,349
)
 
(10,601
)
INCOME BEFORE TAX
10,729

 
7,478

Income tax provision
(36
)
 
(18
)
NET INCOME
10,693

 
7,460

Net income attributable to noncontrolling partner interest
(250
)
 
(174
)
NET INCOME ATTRIBUTABLE TO RPT
10,443

 
7,286

Preferred share dividends
(1,675
)
 
(1,675
)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
8,768

 
$
5,611

 
 
 
 
EARNINGS PER COMMON SHARE
 

 
 

Basic
$
0.11

 
$
0.07

Diluted
$
0.11

 
$
0.07

 


 


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 

 
 

Basic
79,744

 
79,423

Diluted
79,931


79,570

 
 
 
 
Cash Dividend Declared per Common Share
$
0.22

 
$
0.22

 
 
 
 
OTHER COMPREHENSIVE INCOME
 

 
 

Net income
$
10,693

 
$
7,460

Other comprehensive gain (loss):
 

 
 

(Loss) gain on interest rate swaps
(1,539
)
 
2,442

Comprehensive income
9,154

 
9,902

Comprehensive income attributable to noncontrolling interest
(214
)
 
(232
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RPT
$
8,940

 
$
9,670


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

Page 4





RPT REALTY
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Three Months Ended March 31, 2019 and March 31, 2018
(In thousands)
(Unaudited)
 
 
 
 
 
 
 
Shareholders' Equity of RPT Realty
 
 
 
 
 
Preferred
Shares
 
Common
Shares
 
Additional
Paid-in Capital
 
Accumulated Distributions in Excess of Net Income
 
Accumulated Other Comprehensive Income
 
Noncontrolling Interest
 
Total Shareholders’ Equity
Balance, December 31, 2018
$
92,427

 
$
797

 
$
1,164,848

 
$
(450,130
)
 
$
4,020

 
$
19,581

 
$
831,543

Adoption of ASU 2016-02

 

 

 
(325
)
 

 
(8
)
 
(333
)
Share-based compensation, net of shares withheld for employee taxes

 
1

 
1,200

 

 

 

 
1,201

Dividends declared to common shareholders

 

 

 
(17,546
)
 

 

 
(17,546
)
Dividends declared to preferred shareholders

 

 

 
(1,675
)
 

 

 
(1,675
)
Distributions declared to noncontrolling interests

 

 

 

 

 
(421
)
 
(421
)
Dividends declared to deferred shares

 

 

 
(132
)
 

 

 
(132
)
Other comprehensive income adjustment

 

 

 

 
(1,503
)
 
(36
)
 
(1,539
)
Net income

 

 

 
10,443

 

 
250

 
10,693

Balance, March 31, 2019
$
92,427

 
$
798

 
$
1,166,048

 
$
(459,365
)
 
$
2,517

 
$
19,366

 
$
821,791

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2017
$
92,427

 
$
794

 
$
1,160,862

 
$
(392,619
)
 
$
2,858

 
$
20,847

 
$
885,169

Adoption of ASU 2017-05

 

 

 
2,109

 

 
51

 
2,160

Redemption of OP unit holders

 

 

 
(2
)
 

 
(5
)
 
(7
)
Share-based compensation, net of shares withheld for employee taxes

 
1

 
390

 

 

 

 
391

Dividends declared to common shareholders

 

 

 
(17,484
)
 

 

 
(17,484
)
Dividends declared to preferred shareholders

 

 

 
(1,675
)
 

 

 
(1,675
)
Distributions declared to noncontrolling interests

 

 

 

 

 
(421
)
 
(421
)
Dividends declared to deferred shares

 

 

 
(127
)
 

 

 
(127
)
Other comprehensive income adjustment

 

 

 

 
2,385

 
57

 
2,442

Net income

 

 

 
7,286

 

 
174

 
7,460

Balance, March 31, 2018
$
92,427

 
$
795

 
$
1,161,252

 
$
(402,512
)
 
$
5,243

 
$
20,703

 
$
877,908

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


Page 5





RPT REALTY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
2019
 
2018
OPERATING ACTIVITIES
 
 
 
Net income
$
10,693

 
$
7,460

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
19,219

 
21,112

Amortization of deferred financing fees
362

 
380

Income tax provision
36

 
18

Earnings from unconsolidated joint ventures
(54
)
 
(71
)
Distributions received from operations of unconsolidated joint ventures
17

 
222

Gain on sale of real estate
(5,702
)
 

Amortization of premium on mortgages, net
(242
)
 
(260
)
Service-based restricted share expense
812

 
724

Long-term incentive cash and equity compensation expense
206

 
71

Changes in assets and liabilities:
 

 
 

Accounts receivable, net
(2,687
)
 
891

Acquired lease intangibles and other assets, net
(454
)
 
206

Accounts payable, acquired lease intangibles and other liabilities
(8,330
)
 
(3,205
)
Net cash provided by operating activities
13,876

 
27,548

 
 
 
 
INVESTING ACTIVITIES
 

 
 

Acquisition of real estate

 
(6,365
)
Development and capital improvements
(16,760
)
 
(22,816
)
Net proceeds from sales of real estate
66,960

 

Net cash provided by (used in) investing activities
50,200

 
(29,181
)
 
 
 
 
FINANCING ACTIVITIES
 

 
 

Repayments of mortgages and notes payable
(654
)
 
(642
)
Proceeds on revolving credit facility

 
25,000

Redemption of operating partnership units for cash

 
(7
)
Shares used for employee taxes upon vesting of awards
(101
)
 
(411
)
Dividends paid to preferred shareholders
(1,675
)
 
(1,675
)
Dividends paid to common shareholders and deferred shares
(17,634
)
 
(17,573
)
Distributions paid to operating partnership unit holders
(421
)
 
(421
)
Net cash (used in) provided by financing activities
(20,485
)
 
4,271

 
 
 
 
Net change in cash, cash equivalents and restricted cash
43,591

 
2,638

Cash, cash equivalents and restricted cash at beginning of period
44,722

 
12,891

Cash, cash equivalents and restricted cash at end of period
$
88,313

 
$
15,529

 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 

 
 

Cash paid for interest (net of capitalized interest of $24 and $245 in 2019 and 2018, respectively)
$
7,296

 
$
6,078

Deferred gain recognized in equity
$

 
$
2,160


 
As of March 31,
Reconciliation of cash, cash equivalents and restricted cash
2019
 
2018
Cash and cash equivalents
$
85,016

 
$
10,315

Restricted cash and escrows
3,297

 
5,214

 
$
88,313

 
$
15,529

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

Page 6





RPT REALTY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.  Organization and Basis of Presentations

Organization

RPT Realty, together with its subsidiaries (the “Company” or “RPT”), is a real estate investment trust (“REIT”) engaged in the business of owning and operating a national portfolio of dynamic open-air shopping destinations principally located in the top U.S. markets. The Company's locally-curated consumer experience reflects the lifestyles of its diverse neighborhoods and match the modern expectation of its retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the New York Stock Exchange under the ticker symbol RPT. As of March 31, 2019 , the Company's portfolio consisted of 49 shopping centers (including one shopping center owned through a joint venture) representing 11.9 million square feet.  As of March 31, 2019 , the Company’s aggregate portfolio was 94.8% leased.

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and our majority owned subsidiary, the operating partnership, RPT Realty, L.P. (the "OP") ( 97.7% owned by the Company at March 31, 2019 and December 31, 2018 ), and all wholly-owned subsidiaries, including entities in which we have a controlling financial interest.

We have elected to be a REIT for federal income tax purposes.  All intercompany balances and transactions have been eliminated in consolidation.  The information furnished is unaudited and reflects all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature.  These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018 .

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

Reclassifications

Certain amounts in the prior period have been reclassified in order to conform with the current period’s presentation. The Company reclassified $0.7 million of expense associated with property related employee compensation and benefits from General and administrative expense to Non-recoverable operating expense for the three months ended March 31, 2018.

Recently Adopted Accounting Pronouncements

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


Page 7





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

In January 2018, the FASB issued ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842”. The standard provides an optional transition practical expedient for the adoption of ASU 2016-02 that, if elected, does not require an organization to reconsider its accounting for existing land easements that are not currently accounted for under the old leases standard.
In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases,” which affects narrow aspects of the guidance issued in the amendments in ASU 2016-02.
In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and certain criteria are met. The guidance also provides an optional transition method which would allow entities to initially apply the new guidance in the period of adoption, recognizing a cumulative-effect adjustment to the opening balance of retained earnings, if necessary.
In December 2018, the FASB issued ASU 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors,” which addresses specific issues in the leasing guidance, including sales taxes and other similar taxes collected from lessees, certain lessor costs paid directly by lessees, and recognition of variable payments for contracts with lease and non-lease components.

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

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

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

Page 8






Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” which amends ASC 820, Fair Value Measurement. ASU 2018-13 modified the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. This standard is effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We are currently evaluating the guidance and have not determined the impact this standard may have on our consolidated financial statements.

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

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

2.  Real Estate

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

We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable.  These changes in circumstances include, but are not limited to, changes in occupancy, rental rates, net operating income, real estate values and expected holding period.

For the three months ended March 31, 2019 and March 31, 2018 , we recorded no impairment provision.

Land available for development includes real estate projects where vertical construction has yet to commence, but which have been identified by us and are available for future development when market conditions dictate the demand for a new shopping center or outparcel pad. The viability of all projects under construction or development is regularly evaluated under applicable accounting requirements, including requirements relating to abandonment of assets or changes in use.  Land available for development was $28.3 million and $29.5 million at March 31, 2019 and December 31, 2018 , respectively.

Construction in progress represents existing development, redevelopment and tenant build-out projects.  When projects are substantially complete and ready for their intended use, balances are transferred to land or building and improvements as appropriate.  Construction in progress was $19.5 million and $23.7 million at March 31, 2019 and December 31, 2018 , respectively. The decrease in construction in progress from December 31, 2018 to March 31, 2019 was due primarily to property dispositions and the completion of ongoing expansion projects, partially offset by capital expenditures for ongoing projects.

Pursuant to the criteria established under ASC Topic 360 we classify properties as held for sale when executed purchase and sales agreement contingencies have been satisfied thereby signifying that the sale is legally binding and probable of closing within one year of the reporting date. As of March 31, 2019 , and December 31, 2018 , we had no properties and no land parcels classified as held for sale.

Page 9





3.  Property Acquisitions and Dispositions

Acquisitions

There were no acquisitions in the three months ended March 31, 2019 .

Dispositions

The following table provides a summary of our disposition activity in the three months ended March 31, 2019 :
 
 
 
 
 
 
 
 
 
 
Gross
Property Name
 
Location
 
GLA
 
Acreage

 
Date
Sold
 
Sales Price
 
Gain on Sale
 
 
 
 
(in thousands)

 
 
 
 
 
(In thousands)
East Town Plaza
 
Madison, WI
 
217

 
N/A

 
02/20/19
 
$
13,500

 
$
1,169

The Shoppes at Fox River
 
Waukesha, WI
 
332

 
N/A

 
03/06/19
 
55,000

 
4,533

Total income producing dispositions
 
549

 
N/A

 
 
 
$
68,500

 
$
5,702

 
 
 
 
 
 
 
 
 
 
 
 
 
Total dispositions
 
 
 
549

 

 
 
 
$
68,500

 
$
5,702

 
 
 
 
 
 
 
 
 
 
 
 
 

4.  Equity Investments in Unconsolidated Joint Ventures

We are an investor in three joint venture agreements: 1) Ramco/Lion Venture LP, 2) Ramco 450 Venture LLC, and 3) Ramco HHF NP LLC, whereby we own 7% , 20% , and 30% , respectively, of the equity in each joint venture. We and the joint venture partners have joint approval rights for major decisions, including those regarding property operations.  We cannot make significant decisions without our partner’s approval.  Accordingly, we account for our interest in the joint ventures using the equity method of accounting.

The combined condensed financial information for our unconsolidated joint ventures is summarized as follows:
Balance Sheets
 
March 31, 2019
 
December 31, 2018
 
 
(In thousands)
ASSETS
 
 
 
 
Investment in real estate, net
 
$
22,450

 
$
22,591

Other assets
 
2,122

 
2,099

Total Assets
 
$
24,572

 
$
24,690

LIABILITIES AND OWNERS' EQUITY
 
 

 
 

Total liabilities
 
$
249

 
$
525

Owners' equity
 
24,323

 
24,165

Total Liabilities and Owners' Equity
 
$
24,572

 
$
24,690

 
 
 
 
 
RPT's equity investments in unconsolidated joint ventures
 
$
1,606

 
$
1,572

 
 
 
 
 


Page 10





 
 
Three Months Ended March 31,
Statements of Operations
 
2019
 
2018
 
 
(In thousands)
Total revenue
 
$
794

 
$
1,187

Total expenses  
 
396

 
748

Net income
 
$
398

 
$
439

 
 
 
 
 
RPT's share of earnings from unconsolidated joint ventures
 
$
54

 
$
71

 
 
 
 
 

Acquisitions

There was no acquisition activity in the three months ended March 31, 2019 by any of our unconsolidated joint ventures.

Dispositions

There was no disposition activity in the three months ended March 31, 2019 by any of our unconsolidated joint ventures.

Joint Venture Management and Other Fee Income

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

The following table provides information for our fees earned which are reported in our condensed consolidated statements of operations:
 
 
Three Months Ended March 31,
 
 
2019
 
2018
 
 
(In thousands)
Management fees
 
$
27

 
$
46

Leasing fees
 
24

 
40

Total
 
$
51

 
$
86

 
 
 
 
 


Page 11





5.  Debt

The following table summarizes our mortgages, notes payable and finance lease obligation as of March 31, 2019 and December 31, 2018 :
Notes Payable and Finance Lease Obligation
 
March 31,
2019
 
December 31,
2018
 
 
(In thousands)
Senior unsecured notes
 
$
610,000

 
$
610,000

Unsecured term loan facilities
 
210,000

 
210,000

Fixed rate mortgages
 
114,480

 
115,134

Unsecured revolving credit facility
 

 

Junior subordinated notes
 
28,125

 
28,125

 
 
962,605

 
963,259

Unamortized premium
 
2,706

 
2,948

Unamortized deferred financing costs
 
(2,878
)
 
(3,058
)
Total notes payable
 
$
962,433

 
$
963,149

 
 
 
 
 
Finance lease obligation
 
$
975

 
$
975

 
 
 
 
 
 
Senior Unsecured Notes

The following table summarizes the Company's senior unsecured notes:
 
 
 
 
March 31, 2019
 
December 31, 2018
Senior Unsecured Notes
 
Maturity Date
 
Principal Balance
 
Interest Rate/Weighted Average Interest Rate
 
Principal Balance
 
Interest Rate/Weighted Average Interest Rate
 
 
 
 
(in thousands)
 
 
 
(in thousands)
 
 
Senior unsecured notes
 
6/27/2021
 
$
37,000

 
3.75
%
 
$
37,000

 
3.75
%
Senior unsecured notes
 
12/21/2022
 
25,000

 
4.13
%
 
25,000

 
4.13
%
Senior unsecured notes
 
6/27/2023
 
41,500

 
4.12
%
 
41,500

 
4.12
%
Senior unsecured notes
 
5/28/2024
 
50,000

 
4.65
%
 
50,000

 
4.65
%
Senior unsecured notes
 
11/4/2024
 
50,000

 
4.16
%
 
50,000

 
4.16
%
Senior unsecured notes
 
11/18/2024
 
25,000

 
4.05
%
 
25,000

 
4.05
%
Senior unsecured notes
 
6/27/2025
 
31,500

 
4.27
%
 
31,500

 
4.27
%
Senior unsecured notes
 
7/6/2025
 
50,000

 
4.20
%
 
50,000

 
4.20
%
Senior unsecured notes
 
9/30/2025
 
50,000

 
4.09
%
 
50,000

 
4.09
%
Senior unsecured notes
 
5/28/2026
 
50,000

 
4.74
%
 
50,000

 
4.74
%
Senior unsecured notes
 
11/4/2026
 
50,000

 
4.30
%
 
50,000

 
4.30
%
Senior unsecured notes
 
11/18/2026
 
25,000

 
4.28
%
 
25,000

 
4.28
%
Senior unsecured notes
 
12/21/2027
 
30,000

 
4.57
%
 
30,000

 
4.57
%
Senior unsecured notes
 
11/30/2028
 
75,000

 
3.64
%
 
75,000

 
3.64
%
Senior unsecured notes
 
12/21/2029
 
20,000

 
4.72
%
 
20,000

 
4.72
%
 
 
 
 
$
610,000

 
4.21
%
 
$
610,000

 
4.21
%
Unamortized deferred financing costs
 
 
 
(1,480
)
 
 
 
(1,546
)
 
 
 
 
Total
 
$
608,520

 
 
 
$
608,454

 


 
 
 
 
 
 
 
 
 
 
 



Page 12





Unsecured Term Loan Facilities and Revolving Credit Facility

The following table summarizes the Company's unsecured term loan facilities and revolving credit facility:
 
 
 
 
March 31, 2019
 
December 31, 2018
Unsecured Credit Facilities
 
Maturity Date
 
Principal Balance
 
Interest Rate/Weighted Average Interest Rate
 
Principal Balance
 
Interest Rate/Weighted Average Interest Rate
 
 
 
 
(in thousands)
 
 
 
(in thousands)
 
 
Unsecured term loan - fixed rate (1)
 
5/16/2020
 
$
75,000

 
2.99
%
 
$
75,000

 
2.99
%
Unsecured term loan - fixed rate (2)
 
5/29/2021
 
75,000

 
2.79
%
 
75,000

 
2.84
%
Unsecured term loan - fixed rate (3)
 
3/1/2023
 
60,000

 
3.37
%
 
60,000

 
3.42
%
 
 
 
 
$
210,000

 
3.03
%
 
$
210,000

 
3.06
%
Unamortized deferred financing costs
 
 
 
(716
)
 
 
 
(808
)
 
 
Term loans, net
 
 
 
$
209,284

 
 
 
$
209,192

 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit facility - variable rate
 
9/14/2021
 
$

 
3.80
%
 

 
3.81
%
 
 
 
 
 
 
 
 
 
 
 
(1)  
Swapped to a weighted average fixed rate of 1.69% , plus a credit spread of 1.30% , based on a leverage grid at March 31, 2019 .
(2)  
Swapped to a weighted average fixed rate of 1.49% , plus a credit spread of 1.30% , based on a leverage grid at March 31, 2019 .
(3)  
Swapped to a weighted average fixed rate of 1.77% , plus a credit spread of 1.60% , based on a leverage grid at March 31, 2019 .

As of March 31, 2019 and December 31, 2018 , we had no balance outstanding under our revolving credit facility. After adjusting for outstanding letters of credit issued under our revolving credit facility, not reflected in the accompanying condensed consolidated balance sheets, totaling $0.2 million , we had $349.8 million of availability under our revolving credit facility. The interest rate as of March 31, 2019 was 3.80% .

Mortgages

The following table summarizes the Company's fixed rate mortgages:
 
 
 
 
March 31, 2019
 
December 31, 2018
Mortgage Debt
 
Maturity Date
 
Principal Balance
 
Interest Rate/Weighted Average Interest Rate
 
Principal Balance
 
Interest Rate/Weighted Average Interest Rate
 
 
 
 
(in thousands)
 
 
 
(in thousands)
 
 
West Oaks II and Spring Meadows Place
 
4/20/2020
 
$
25,588

 
6.50
%
 
$
25,804

 
6.50
%
Bridgewater Falls Shopping Center
 
2/6/2022
 
54,237

 
5.70
%
 
54,514

 
5.70
%
The Shops on Lane Avenue
 
1/10/2023
 
28,650

 
3.76
%
 
28,650

 
3.76
%
Nagawaukee II
 
6/1/2026
 
6,005

 
5.80
%
 
6,166

 
5.80
%
 
 
 
 
$
114,480

 
5.40
%
 
$
115,134

 
5.40
%
Unamortized premium
 
 
 
2,706

 
 
 
2,948

 
 
Unamortized deferred financing costs
 
 
 
(59
)
 
 
 
(73
)
 
 
 
 
Total
 
$
117,127

 
 
 
$
118,009

 
 
 
 
 
 
 
 
 
 
 
 
 

The fixed rate mortgages are secured by properties that have an approximate net book value of $180.3 million as of March 31, 2019 .

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

Page 13





petition by the borrower, we would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses.

We have entered into a mortgage loan which is secured by multiple properties and contains cross-collateralization and cross-default provisions.  Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that we default under the loan.  Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan.

Junior Subordinated Notes

Our junior subordinated notes have a variable rate of LIBOR plus 3.30% . The maturity date is January 2038.

Covenants

Our unsecured revolving credit facility, senior unsecured notes, and unsecured term loan facilities contain financial covenants relating to total leverage, fixed charge coverage ratio, unencumbered assets, tangible net worth and various other calculations. As of March 31, 2019 , we were in compliance with these covenants.

Debt Maturities

The following table presents scheduled principal payments on mortgages and notes payable as of March 31, 2019 :
Year Ending December 31,
 
(In thousands)
2019
$
1,957

2020
102,269

2021
114,508

2022
77,397

2023
129,388

Thereafter
537,086

Subtotal debt
962,605

Unamortized premium
2,706

Unamortized deferred financing costs
(2,878
)
Total debt
$
962,433

 
 


6.  Fair Value

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

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

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

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


Page 14





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

Derivative Assets and Liabilities

All of our derivative instruments are interest rate swaps for which quoted market prices are not readily available.  For those derivatives, we measure fair value on a recurring basis using valuation models that use primarily market observable inputs, such as yield curves.  We classify these instruments as Level 2.  Refer to Note 7 Derivative Financial Instruments of the notes to the condensed consolidated financial statements for additional information on our derivative financial instruments.

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 .
 
 
 
 
Total
Fair Value
 
Level 2
 
 
Balance Sheet Location
 
 
March 31, 2019
 
 
 
(In thousands)
Derivative assets - interest rate swaps
 
Other assets
 
$
2,576

 
$
2,576

Derivative liabilities - interest rate swaps
 
Other liabilities
 
$

 
$

December 31, 2018
 
 
 
 
 
 
Derivative assets - interest rate swaps
 
Other assets
 
$
4,115

 
$
4,115

Derivative liabilities - interest rate swaps
 
Other liabilities
 
$

 
$

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

We estimated the fair value of our debt based on our incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt.  The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assume the debt is outstanding through maturity and consider the debt’s collateral (if applicable).  Since such amounts are estimates that are based on limited available market information for similar transactions (Level 3), there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument. 

Fixed rate debt (including variable rate debt swapped to fixed through derivatives) with carrying values of $934.5 million and $935.1 million as of March 31, 2019 and December 31, 2018 , respectively, had fair values of approximately $942.4 million and $928.2 million , respectively.  Variable rate debt’s fair value is estimated to be the carrying values of $28.1 million as of March 31, 2019 and December 31, 2018 .

The following is a description of valuation methodologies used for our assets and liabilities recorded at fair value on a nonrecurring basis:

Net Real Estate

Our net investment in real estate, including any identifiable intangible assets, is subject to impairment testing on a nonrecurring basis. To estimate fair value, we use discounted cash flow models that include assumptions of the discount rates that market participants would use in pricing the asset or pricing from potential or comparable market transactions. To the extent impairment has occurred, we charge to expense the excess of the carrying value of the property over its estimated fair value. We classify impaired real estate assets as nonrecurring Level 3. During the three months ended March 31, 2019 , we did not incur any impairment for income producing shopping centers that are required to be measured at fair value on a nonrecurring basis. We did not have any material liabilities that were required to be measured at fair value on a nonrecurring basis during the period.


Page 15





7.  Derivative Financial Instruments

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

The following table summarizes the notional values and fair values of our derivative financial instruments as of March 31, 2019 :
 
 
Hedge
Type
 
Notional
Value
 
Fixed
Rate
 
Fair
Value
 
Expiration
Date
Underlying Debt
 
 
 
 
 
 
 
 
 
(In thousands)
 
 

 
(In thousands)
 
 
Derivative Assets
 
 
 
 
 
 
 
 
 
 
Unsecured term loan
 
Cash Flow
 
$
15,000

 
2.150
%
 
$
36

 
05/2020
Unsecured term loan
 
Cash Flow
 
10,000

 
2.150
%
 
24

 
05/2020
Unsecured term loan
 
Cash Flow
 
50,000

 
1.460
%
 
508

 
05/2020
Unsecured term loan
 
Cash Flow
 
20,000

 
1.498
%
 
305

 
05/2021
Unsecured term loan
 
Cash Flow
 
15,000

 
1.490
%
 
232

 
05/2021
Unsecured term loan
 
Cash Flow
 
40,000

 
1.480
%
 
625

 
05/2021
Unsecured term loan
 
Cash Flow
 
60,000

 
1.770
%
 
846

 
03/2023
 
 
 
 
$
210,000

 
 
 
$
2,576

 
 
 
 
 
 
 
 
 
 
 
 
 

The effect of derivative financial instruments on our condensed consolidated statements of operations for the three months ended March 31, 2019 and 2018 is summarized as follows:
 
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
 
Location of Gain
(Loss)
Reclassified from
Accumulated OCI
into Income
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income
Derivatives in Cash Flow Hedging Relationship
 
Three Months Ended March 31,
 
 
Three Months Ended March 31,
 
2019
 
2018
 
 
2019
 
2018
 
 
(In thousands)
 
 
 
(In thousands)
Interest rate contracts - assets
 
$
(1,988
)
 
$
2,278

 
Interest Expense
 
$
449

 
$
(33
)
Interest rate contracts - liabilities
 

 
277

 
Interest Expense
 

 
(80
)
Total
 
$
(1,988
)
 
$
2,555

 
Total
 
$
449

 
$
(113
)
 
 
 
 
 
 
 
 
 
 
 


Page 16





8. Leases

Revenues

Approximate future minimum revenues from rentals under non-cancelable operating leases in effect at March 31, 2019 , assuming no new or renegotiated leases or option extensions on lease agreements and no early lease terminations were as follows:
Year Ending December 31,
 
 
(In thousands)
2019 (remaining)
$
124,826

2020
155,214

2021
136,845

2022
114,215

2023
92,956

Thereafter
315,063

Total
$
939,119

 
 


We recognized rental income related to variable lease payments of $15.1 million for the three months ended March 31, 2019 .

Substantially all of the assets included as Income producing properties, net on the condensed consolidated balance sheets, relate to our portfolio of wholly owned shopping centers, in which we are the lessor under operating leases with our tenants. As of March 31, 2019 , the Company’s aggregate portfolio was 94.8% leased.
 
Expenses

We have operating leases for our two corporate offices that expire in August 2019 and January 2024, and an operating ground lease at Centennial Shops located in Edina, Minnesota which includes rent escalations throughout the lease period and expires in April 2105. We also have a finance ground lease at our Buttermilk Towne Center with the City of Crescent Springs that expires in December 2032. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expenses for these leases on a straight-line basis over the lease term.

The components of lease expense were as follows:
 
 
Three Months Ended March 31,
Statements of Operations
Classification
2019
 
2018
 
 
(In thousands)
Operating ground lease cost
Non-recoverable operating expense
$
291

 
$
291

Operating administrative lease cost
General and administrative expense
$
233

 
$
149

Finance lease cost
Interest Expense
$
13

 
$
13

 
 
 
 
 

Page 17





Supplemental balance sheet information related to leases is as follows:
Balance Sheet
Classification
March 31, 2019
 
 
(In thousands)
ASSETS
 
 
Operating lease assets
Operating lease right-of-use assets
$
17,698

Finance lease asset
Land
13,249

Total leased assets
 
$
30,947

 
 
 
LIABILITIES
 
 
Operating lease liabilities
Operating lease liabilities
$
16,403

Finance lease liability
Finance lease liability
975

Total lease liabilities
 
$
17,378

 
 
 
Weighted Average Remaining Lease Terms
 
Operating leases
 
76 years

Finance lease
 
14 years

Weighted Average Incremental Borrowing Rate
 
Operating leases
 
6.21
%
Finance lease
 
5.23
%
 
 
 

Supplemental cash flow information related to leases is as follows:
 
Three Months Ended
 
March 31, 2019
 
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
434

Operating cash flows from finance lease

Financing cash flows from finance lease

 
 

Maturities of lease liabilities as of March 31, 2019 were as follows:
Maturity of Lease Liabilities
 
Operating Leases
 
Finance Lease
 
 
(In thousands)
2019 (remaining)
 
$
1,193

 
$
100

2020
 
1,243

 
100

2021
 
1,252

 
100

2022
 
1,262

 
100

2023
 
1,272

 
100

Thereafter
 
94,462

 
900

Total lease payments
 
$
100,684

 
$
1,400

Less imputed interest
 
(84,281
)
 
(425
)
Total
 
$
16,403

 
$
975

 
 
 

 
 


Page 18





9.   Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per share:
 
Three Months Ended
 
March 31,
 
2019
 
2018
 
(In thousands, except per share data)
Net income
$
10,693

 
$
7,460

Net income attributable to noncontrolling interest
(250
)
 
(174
)
Allocation of income to restricted share awards
(132
)
 
(108
)
Income attributable to RPT
10,311


7,178

Preferred share dividends
(1,675
)
 
(1,675
)
Net income available to common shareholders - Basic and Diluted
$
8,636

 
$
5,503

 
 
 
 
Weighted average shares outstanding, Basic
79,744

 
79,423

Restricted stock awards using the treasury method
187

 
147

Weighted average shares outstanding, Diluted
79,931

 
79,570


 

 
 

Income per common share, Basic
$
0.11

 
$
0.07

Income per common share, Diluted
$
0.11

 
$
0.07

 
 
 
 

We exclude certain securities from the computation of diluted earnings per share. The following table presents the outstanding securities that were excluded from the computation of diluted earnings per share and the number of common shares each was convertible into (in thousands):
 
Three Months Ended March 31,
 
2019
 
2018
 
Outstanding
Convertible
 
Outstanding
Convertible
Operating Partnership Units
1,909

1,909

 
1,916

1,916

Series D Preferred Shares
1,849

6,891

 
1,849

6,772

Performance Share Units


 
196


 
3,758

8,800

 
3,961

8,688

 
 
 
 
 
 

10.  Share-based Compensation Plans

As of March 31, 2019 , we have two share-based compensation plans in effect: 1) the 2012 Omnibus Long-Term Incentive Plan (“2012 LTIP”) under which our compensation committee may grant, subject to any Company performance conditions as specified by the compensation committee, restricted shares, restricted share units, options and other awards to trustees, officers and other key employees; and 2) the Inducement Incentive Plan (“Inducement Plan”), which was approved by the Board of Trustees in April 2018 and under which our compensation committee may grant, subject to any Company performance conditions as specified by the compensation committee, restricted shares, restricted share units, options and other awards to individuals who were not previously employees or members of the Board as an inducement to the individual’s entry into employment with the Company.  The 2012 LTIP allows us to issue up to 2.0 million common shares of beneficial interest, of which 0.6 million remained available for issuance as of March 31, 2019 . The Inducement Plan allows us to issue up to 6.0 million common shares of beneficial interest, of which 5.4 million remained available for issuance as of March 31, 2019 .

As of March 31, 2019 , we had 312,997 unvested service-based share awards granted under the 2012 LTIP and 218,955 unvested service-based share awards granted under the Inducement Plan.  These awards have various expiration dates through March 2023.


Page 19





During the three months ended March 31, 2019 , we granted the following awards:

207,230 shares of service-based restricted stock. The service-based awards were valued based on our closing stock price as of the grant date; and
performance-based equity awards that are earned subject to a future performance measurement based on a three -year shareholder return peer comparison (“TSR Grants”).  

The service-based restricted share awards to employees vest over three years or five years and the compensation expense is recognized on a graded vesting basis. The service-based restricted share awards to trustees vest over one year . We recognized expense related to service-based restricted share grants of $0.8 million and $0.7 million for the three months ended March 31, 2019 and March 31, 2018 , respectively.

Pursuant to ASC 718 – Stock Compensation, we determine the grant date fair value of TSR Grants that will be settled in cash, and any subsequent re-measurements, based upon a Monte Carlo simulation model.  We will recognize the compensation expense ratably over the requisite service period.  We are required to re-value the cash awards at the end of each quarter using the same methodology as was used at the initial grant date and adjust the compensation expense accordingly.  If at the end of the three -year measurement period the performance criterion is not met, compensation expense related to the cash awards previously recognized would be reversed. Compensation expense (benefit) related to the cash awards was $(0.3) million and $0.0 million for the three months ended March 31, 2019 and March 31, 2018 , respectively. The weighted average assumptions used in the Monte Carlo simulation models are summarized in the following table:
 
 
March 31, 2019
 
December 31, 2018
Closing share price
 
$
12.01

 
$
11.95

Expected dividend rate
 
7.3
%
 
7.4
%
Expected stock price volatility
 
23.2% - 25.2%

 
24.9
%
Risk-free interest rate
 
2.2% - 2.4%

 
2.6
%
Expected life (years)
 
0.75 - 2.75

 
1.00

 
 
 
 
 

The Company also determines the grant date fair value of the TSR Grants that will be settled in equity based upon a Monte Carlo simulation model and recognizes the compensation expense ratably over the requisite service period. These equity awards are not re-valued at the end of each quarter. The compensation cost will be recognized regardless of whether the performance criterion are met, provided the requisite service has been provided. Compensation expense related to the equity awards was $0.5 million and $0.1 million for the three months ended March 31, 2019 and March 31, 2018 , respectively. The fair value of each grant for the reported periods is estimated on the date of grant using the Monte Carlo simulation model using the weighted average assumptions noted in the following table.
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Closing share price
 
$
12.05

 
$
11.89

Expected dividend rate
 
7.3
%
 
7.4
%
Expected stock price volatility
 
22.9
%
 
21.5
%
Risk-free interest rate
 
2.5
%
 
2.3
%
Expected life (years)
 
2.85

 
2.85

 
 
 
 
 

We recognized total share-based compensation expense of $1.0 million and $0.8 million for the three months ended March 31, 2019 and March 31, 2018 , respectively.

As of March 31, 2019 , we had $9.1 million of total unrecognized compensation expense related to unvested restricted shares and performance based equity and cash awards.  This expense is expected to be recognized over a weighted-average period of 2.4 years.


Page 20





11.  Taxes

Income Taxes

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

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

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

As of March 31, 2019 , we had a federal and state deferred tax asset of $7.6 million and a valuation allowance of $7.6 million .  Our deferred tax assets are reduced by an offsetting valuation allowance where there is uncertainty regarding their realizability. We believe that it is more likely than not that the results of future operations will not generate sufficient taxable income to recognize the deferred tax assets.  These future operations are primarily dependent upon the profitability of our TRSs, the timing and amounts of gains on land sales, and other factors affecting the results of operations of the TRSs.  

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

Income tax provisions recorded for the three months ended March 31, 2019 and 2018 were negligible.

Sales Taxes

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

12.  Commitments and Contingencies

Construction Costs

In connection with the development and expansion of various shopping centers as of March 31, 2019 , we had entered into agreements for construction costs of approximately $7.2 million .

Litigation

From time to time, we are involved in certain litigation arising in the ordinary course of business; however, we do not believe that any of this litigation will have a material effect on our consolidated financial statements.

Development Obligations

As of  March 31, 2019 , the Company has  $2.2 million  of development related obligations that require annual payments through December 2034.


Page 21





Guarantee

A redevelopment agreement was entered into between the City of Jacksonville, the Jacksonville Economic Development Commission and the Company, to construct and develop River City Marketplace in 2005. As part of the agreement, the city agreed to finance up to  $12.2 million  of bonds. Repayment of the bonds is to be made in accordance with a level-payment amortization schedule over  20  years, and repayments are made out of tax revenues generated by the redevelopment. The remaining debt service payments due over the life of the bonds, including principal and interest, are  $10.3 million . As part of the redevelopment, the Company executed a guaranty agreement whereby the Company would fund debt service payments if incremental tax revenues were not sufficient to fund repayment. There have been no payments made by the Company under this guaranty agreement to date.

Environmental Matters

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

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

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

13.  Subsequent Events

On April 30, 2019, we prepaid the outstanding balance of our $28.1 million junior subordinated note. The unamortized deferred financing costs at payoff approximated $0.6 million .

Page 22





Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Where we say "we," "us," or "our," we mean RPT Realty, RPT Realty, L.P., and/or its subsidiaries, as the context may require.

The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements, including the respective notes thereto, which are included in this Form 10-Q.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements represent our expectations, plans or beliefs concerning future events and may be identified by terminology such as “may,” “will,” “should,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” “predict” or similar terms.  Although the forward-looking statements made in this document are based on our good faith beliefs, reasonable assumptions and our best judgment based upon current information, certain factors could cause actual results to differ materially from those in the forward-looking statements, including: our success or failure in implementing our business strategy; economic conditions generally and in the commercial real estate and finance markets specifically; the cost and availability of capital, which depends in part on our asset quality and our relationships with lenders and other capital providers; our business prospects and outlook; changes in governmental regulations, tax rates and similar matters; our continuing to qualify as a REIT; and other factors detailed from time to time in our filings with the SEC, including in particular those set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 .   Given these uncertainties, you should not place undue reliance on any forward-looking statements.  Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future.

Overview

We own and operate a national portfolio of dynamic open-air shopping destinations principally located in the top U.S. markets. The Company's locally-curated consumer experience reflect the lifestyles of its diverse neighborhoods and match the modern expectation of its retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the New York Stock Exchange under the ticker symbol RPT. As of March 31, 2019 , the Company's portfolio consisted of 49 shopping centers (including one shopping center owned through a joint venture) representing 11.9 million square feet.  As of March 31, 2019 , the Company’s aggregate portfolio was 94.8% leased.

Our Strategy

Our goal is to be a dominant shopping center owner, with a focus on the following:
Own and manage high quality open-air shopping centers predominantly concentrated in the top U.S. metro areas;
Maintain a value creation redevelopment and expansion pipeline;
Maximize balance sheet liquidity and flexibility; and
Retain motivated, talented and high performing employees.

Key methods to achieve our strategy:
Deliver above average relative shareholder return and generate outsized consistent and sustainable same property NOI and Operating FFO per share growth;
Pursue selective redevelopment projects with significant pre-leasing for which we expect to achieve attractive returns on investment;
Sell assets that no longer meet our long-term strategy and redeploy the proceeds to lease, redevelop and acquire assets in our core markets;
Achieve lower leverage while maintaining low variable interest rate risk; and
Retain access to diverse sources of capital, maintain liquidity through borrowing capacity under our unsecured line of credit and minimize the amount of debt maturities in a single year.

Page 23





The following table summarizes our operating portfolio by market as of March 31, 2019 :
Market Summary
MSA
 
Number of Properties
 
GLA (in thousands)
 
Leased %
 
Occupied %
 
ABR/SF
 
% of ABR
Top 40 MSAs:
 
 
 
 
 
 
 
 
 
 
 
 
Atlanta
 
3

 
526

 
95.8
%
 
91.6
%
 
$
11.99

 
3.5
%
Baltimore
 
1

 
252

 
94.7
%
 
89.7
%
 
9.76

 
1.3
%
Chicago
 
4

 
767

 
92.0
%
 
86.1
%
 
15.97

 
6.4
%
Cincinnati
 
3

 
1,263

 
93.2
%
 
92.4
%
 
15.70

 
11.0
%
Columbus
 
2

 
434

 
93.1
%
 
87.3
%
 
16.95

 
3.9
%
Denver
 
1

 
503

 
91.3
%
 
76.4
%
 
20.94

 
4.8
%
Detroit
 
9

 
2,315

 
98.4
%
 
96.0
%
 
14.73

 
19.8
%
Indianapolis
 
1

 
247

 
89.4
%
 
86.0
%
 
13.61

 
1.7
%
Jacksonville
 
2

 
707

 
87.9
%
 
87.7
%
 
17.65

 
6.6
%
Miami
 
6

 
1,035

 
95.7
%
 
95.2
%
 
17.57

 
10.4
%
Milwaukee
 
2

 
546

 
89.9
%
 
89.9
%
 
12.23

 
3.6
%
Minneapolis
 
2

 
445

 
91.3
%
 
88.9
%
 
24.30

 
5.8
%
Nashville
 
1

 
633

 
98.4
%
 
98.0
%
 
13.30

 
5.0
%
St. Louis
 
4

 
827

 
97.1
%
 
89.0
%
 
15.74

 
7.0
%
Tampa
 
4

 
749

 
99.0
%
 
97.7
%
 
12.62

 
5.6
%
Top 40 MSA subtotal
 
45

 
11,249

 
94.8
%
 
91.7
%
 
$
15.50

 
96.4
%
Non Top 40 MSA
 
3

 
516

 
95.0
%
 
93.9
%
 
12.22

 
3.6
%
Total
 
48

 
11,765

 
94.8
%
 
91.8
%
 
$
15.36

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 

We accomplished the following activity during the three months ended March 31, 2019 :

Leasing Activity

For our consolidated properties we reported the following leasing activity:
 
Leasing Transactions

Square Footage

 Base Rent/SF (1)
Prior Rent/SF (2)
Tenant Improvements/SF (3)
Leasing Commissions/SF
Renewals
36

268,935

$17.09
$15.23
$0.56
$0.00
New Leases - Comparable
10

37,894

$27.36
$19.32
$72.02
$9.47
New Leases - Non-Comparable  (4)
14

176,110

$11.20
N/A
$24.10
$5.04
Total
60

482,939

$15.75
N/A
$14.75
$2.58
 
 
 
 
 
 
 
(1)  
Base rent represents contractual minimum rent under the new lease for the first 12 months of the term.
(2)  
Prior rent represents minimum rent, if any, paid by the prior tenant in the final 12 months of the term.
(3)  
Includes tenant improvement cost, tenant allowances, and landlord costs. Excludes first generation space and new leases related to development and redevelopment activity.
(4)  
Non-comparable lease transactions include leases for space vacant for greater than 12 months, leases for space which has been combined from smaller spaces or demised from larger spaces and leases structured differently from the prior lease. As a result, there is no comparable prior rent per square foot to compare to the base rent per square foot of the new lease.

Page 24





Investing Activity

At March 31, 2019 , we have three properties where there is a pad development or GLA expansion that have an aggregate estimated cost of $5.7 million , of which $2.3 million remains to be invested. Completion for these projects is expected over the next twelve months.

Financing Activity

Debt
As of March 31, 2019 , we had net debt to total market capitalization of 44.9% as compared to 48.2% at March 31, 2018 . The decrease is attributable to a decrease in net debt of $148.3 million primarily as a result of repayments using proceeds from property disposals completed in the last six months, partially offset by a decrease in the price of our common shares of 2.8%, which decreased our total market capitalization.
At March 31, 2019 and March 31, 2018 , we had $349.8 million and $294.3 million, respectively, available to draw under our unsecured revolving line of credit.
Equity

For the three months ended March 31, 2019 , we did not issue any common shares through our equity distribution arrangement. The shares issuable are registered with the Securities and Exchange Commission (“SEC”) on our registration statement on Form S-3 (No. 333-211925).

Land Available for Development

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

Our development and construction activities are subject to risks such as our inability to obtain the necessary governmental approvals for a project, our determination that the expected return on a project is not sufficient to warrant continuation of the planned development, or our change in plan or scope for the development.  If any of these events occur, we may record an impairment provision.

Accounting Policies and Estimates

Our Annual Report on Form 10-K for the year ended December 31, 2018, contains a description of our critical accounting policies, including policies for the initial adoption of accounting policies, revenue recognition and accounts receivable, real estate investment, off balance sheet arrangements, fair value measurements and deferred charges. 


Page 25





Comparison of three months ended March 31, 2019 to March 31, 2018

The following summarizes certain line items from our unaudited condensed consolidated statements of operations that we believe are important in understanding our operations and/or have significantly changed in the three months ended March 31, 2019 as compared to the same period in 2018 :
 
 
Three Months Ended March 31,
 
 
2019
 
2018
 
Dollar
Change

 
Percent
Change

 
 
(In thousands)
 
 
Total revenue
 
$
59,708

 
$
62,718

 
$
(3,010
)
 
(4.8
)%
Real estate taxes
 
9,822

 
10,157

 
(335
)
 
(3.3
)%
Recoverable operating expense
 
6,681

 
6,806

 
(125
)
 
(1.8
)%
Non-recoverable operating expense
 
2,490

 
1,712

 
778

 
45.4
 %
Depreciation and amortization
 
19,219

 
21,112

 
(1,893
)
 
(9.0
)%
General and administrative expense
 
6,066

 
5,176

 
890

 
17.2
 %
Gain on sale of real estate
 
5,702

 

 
5,702

 
 %
Earnings from unconsolidated joint ventures
 
54

 
71

 
(17
)
 
(23.9
)%
Interest expense
 
10,349

 
10,601

 
(252
)
 
(2.4
)%
Preferred share dividends
 
1,675

 
1,675

 

 
 %
 
 
 
 
 
 
 
 
 

Total revenue for the three months ended March 31, 2019 decrease d $3.0 million , or (4.8)% , from 2018 . The decrease is primarily due to the following: 
$5.9 million decrease related to properties sold in 2018 and 2019; partially offset by a
$2.5 million increase related to our existing centers largely attributable to higher minimum rent primarily from occupancy gains and contractual rent increases and higher recovery income mainly as a result of an increase in recoverable expenses, and a
$0.5 increase in other property income mainly attributable to a tenant bankruptcy and a lease termination fee.

Real estate tax expense for the three months ended March 31, 2019 decrease d $0.3 million , or (3.3)% from 2018 , primarily due to properties sold during the fourth quarter of 2018 and the first quarter of 2019, partially offset by higher net expense at our existing properties and lower capitalized real estate tax.

Recoverable operating expense for the three months ended March 31, 2019 decrease d $0.1 million , or (1.8)% from 2018 , primarily due to properties sold during the fourth quarter of 2018 and the first quarter of 2019, partially offset by higher common area maintenance expenses at existing properties.

Non-recoverable operating expense for the three months ended March 31, 2019 increase d $0.8 million , or 45.4% from 2018 , primarily due to higher internal leasing costs as a result of the adoption of ASC 842 which eliminated the capitalization of these costs in the current year.

Depreciation and amortization expense for the three months ended March 31, 2019 decrease d $1.9 million , or (9.0)% , from 2018 .  The decrease is primarily a result of properties sold during the fourth quarter of 2018 and the first quarter of 2019.

General and administrative expense for the three months ended March 31, 2019 increased $0.9 million or 17.2% from 2018 . The net increase was primarily due to the following:
$0.7 million increase in bonus compensation as a result of a below-target payout in the first quarter of 2018 coupled with an above-target payout in the first quarter of 2019;
$0.5 million increase in share-based compensation expense primarily as a result of a one-time inducement equity award in 2018 to our newly hired Chief Executive Officer; partially offset by a
$0.4 million decrease in executive recruiting fees.


Page 26





The Company had gains on real estate disposals of $5.7 million during the three months ended March 31, 2019 , generated from two shopping centers. Refer to Note 3 of the notes to the condensed consolidated financial statements for further detail on dispositions.

Earnings from unconsolidated joint ventures for the three months ended March 31, 2019 remained flat from the comparable period in 2018 .

Interest expense for the three months ended March 31, 2019 decrease d $0.3 million , or (2.4)% , from 2018 , primarily as a result of a 5.9% decrease in our average outstanding debt, offset partially by lower capitalized interest. The decline in our average outstanding debt is the result of using proceeds from asset sales in the second half of 2018 to paydown our revolving credit line.

Liquidity and Capital Resources

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

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

At March 31, 2019 and 2018 , we had $ 88.3 million and $15.5 million , respectively, in cash and cash equivalents and restricted cash.  Restricted cash generally consists of funds held in escrow by lenders to pay real estate taxes, insurance premiums and certain capital expenditures. As of March 31, 2019 we had no debt maturing for the remainder of 2019 and we had $349.8 million available to be drawn on our $350.0 million unsecured revolving credit facility subject to our compliance with certain covenants.

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

For the three months ended March 31, 2019 , our cash flows were as follows compared to the same period in 2018 :
 
Three Months Ended March 31,
 
2019
 
2018
 
(In thousands)
Net cash provided by operating activities
$
13,876

 
$
27,548

Net cash provided by (used in) investing activities
50,200

 
(29,181
)
Net cash (used in) provided by financing activities
(20,485
)
 
4,271

 
 
 
 

Operating Activities

Net cash provided by operating activities decreased  $13.7 million  in  2019  compared to  2018  primarily due to the following:
Decrease of approximately $4.5 million, as a result of shopping centers sold in 2018 and 2019; and

Page 27





Decrease of $9.4 million in working capital assets and liabilities due mainly to timing differences in the collection of receipts and the disbursement of obligations.

Investing Activities

Net cash provided by investing activities was  $50.2 million  in 2019 compared to net cash used in investing activities of  $29.2 million  in 2018 . The  $79.4 million  change in net cash provided by (used in) investing activities was primarily because:
Net proceeds from the sale of real estate increased $67.0 million ;
Acquisitions of real estate decreased $6.4 million ; and
Development and capital improvements decreased $6.1 million .

At March 31, 2019 , we had three properties where there is a pad development GLA expansion that have an aggregate estimated cost of $5.7 million , of which $2.3 million remains to be invested. Completion for these projects is expected over the next twelve months.

During the three months ended March 31, 2019  we sold two properties for aggregate net proceeds of  $67.0 million . Refer to Note 3 Property Acquisitions and Dispositions of the notes to the condensed consolidated financial statements for additional information related to dispositions.

Financing Activities

Net cash used in financing activities increase d $ 24.8 million compared to 2018 primarily because net borrowings on our revolving credit facility decrease d $25.0 million .

As of March 31, 2019 , $349.8 million was available to be drawn on our $350.0 million unsecured revolving credit facility subject to our compliance with certain covenants. It is anticipated that additional funds borrowed under our credit facilities will be used for general corporate purposes, including working capital, capital expenditures, the repayment of indebtedness or other corporate activities.  For further information on the credit facility and other debt, refer to Note 5 Debt of the notes to the condensed consolidated financial statements.

Dividends and Equity

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

On February 5, 2019 our Board of Trustees declared a quarterly cash dividend of $0.22 per common share to shareholders of record as of March 20, 2019 .  Additionally, we declared a quarterly cash dividend of $0.90625 per preferred share to preferred shareholders of record as of March 20, 2019 . Our dividend policy is to make distributions to shareholders of at least 90% of our REIT taxable income, excluding net capital gains, in order to maintain qualification as a REIT. On an annualized basis, our current dividend is above our estimated minimum required distribution.  Distributions paid by us are generally expected to be funded from cash flows from operating activities.  To the extent that cash flows from operating activities are insufficient to pay total distributions for any period, alternative funding sources are used.  Examples of alternative funding sources include proceeds from sales of real estate and bank borrowings.  During the three months ended March 31, 2019 , the sum of our principal and interest payments, operating expenses, shareholder distributions and ongoing capital expenditures exceeded our cash flow from operations by $12.1 million, and we used other sources of liquidity, including a portion of the proceeds from asset sales, to meet our cash requirements. The $12.1 million shortfall was primarily the result of a $13.7 million year-over-year decrease in net cash provided by operating activities due mainly to timing differences in the collection and disbursement of working capital items and asset sales in the fourth quarter of 2018 and first quarter of 2019.

We have an equity distribution agreement pursuant to which we may sell up to an aggregate of 8.0 million common shares from time to time, in our sole discretion in an at-the-market equity program. For the three months ended March 31, 2019 , we did not issue any common shares through the arrangement. The sale of such shares issuable pursuant to the distribution agreement is registered with the Securities and Exchange Commission (“SEC”) on our registration statement on Form S-3 (No. 333-211925).

Page 28





Debt

At March 31, 2019 , we had $962.6 million of debt outstanding consisting of $610.0 million in senior unsecured notes, $210.0 million of unsecured term loan facilities, $114.5 million of fixed rate mortgage loans encumbering certain properties, $28.1 million of junior subordinated notes and $0.0 million on our revolving credit facility.

In addition, we had interest rate swap derivative instruments in effect for an aggregate notional amount of $210.0 million converting a portion of our floating rate corporate debt to fixed rate debt.  After taking into account the impact of converting our variable rate debt to fixed rate debt by use of the interest rate swap agreements, at March 31, 2019 , we had $28.1 million of variable rate debt outstanding.

Off Balance Sheet Arrangements

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

As of March 31, 2019 , our investments in unconsolidated joint ventures were approximately $ 1.6 million representing our ownership inter est in three join t ventures. We account for these entities under the equity method. Refer to Note 4 Equity Investments in Unconsolidated Joint Ventures of the notes to the condensed consolidated financial statements for more information.

We review our equity investments in unconsolidated entities for impairment on a venture-by-venture basis whenever events or changes in circumstances indicate that the carrying value of the equity investment may not be recoverable.  In testing for impairment of these equity investments, we primarily use cash flow models, discount rates, and capitalization rates to estimate the fair value of properties held in joint ventures, and we also estimate the fair value of the debt of the joint ventures based on borrowing rates for similar types of borrowing arrangements with the same remaining maturity.  Considerable judgment by management is applied when determining whether an equity investment in an unconsolidated entity is impaired and, if so, the amount of the impairment.  Changes to assumptions regarding cash flows, discount rates, or capitalization rates could be material to our condensed consolidated financial statements.
 
We are engaged by our joint ventures to provide asset management, property management, leasing and investing services for such venture’s respective properties.  We receive fees for our services, including a property management fee calculated as a percentage of gross revenues received.  

Guarantee

A redevelopment agreement was entered into between the City of Jacksonville, the Jacksonville Economic Development Commission and the Company, to construct and develop River City Marketplace in 2005. As part of the agreement, the city agreed to finance up to  $12.2 million  of bonds. Repayment of the bonds is to be made in accordance with a level-payment amortization schedule over  20  years, and repayments are made out of tax revenues generated by the redevelopment. The remaining debt service payments due over the life of the bonds, including principal and interest, are  $10.3 million . As part of the redevelopment, the Company executed a guaranty agreement whereby the Company would fund debt service payments if incremental tax revenues were not sufficient to fund repayment. There have been no payments made by the Company under this guaranty agreement to date.

Page 29





Contractual Obligations

The following are our contractual cash obligations as of March 31, 2019 :
 
Payments due by period
Contractual Obligations
Total
 
Less than
1 year (1)
 
1-3 years
 
3-5 years
 
More than
5 years
 
(In thousands)
Mortgages and notes payable:
 
 
 
 
 
 
 
 
 
Scheduled amortization
$
11,755

 
$
1,957

 
$
6,508

 
$
1,708

 
$
1,582

Payments due at maturity
950,850

 

 
287,666

 
253,559

 
409,625

  Total mortgages and notes payable (2)
962,605

 
1,957

 
294,174

 
255,267

 
411,207

Interest expense (3)
234,558

 
30,442

 
102,158

 
46,955

 
55,003

Employment contracts
4,018

 
1,487

 
2,531

 

 

Finance lease (4)
1,400

 
100

 
300

 
200

 
800

Operating leases
100,684

 
1,193

 
3,757

 
2,164

 
93,570

Construction commitments
7,186

 
7,186

 

 

 

Development obligations
3,665

 
517

 
974

 
463

 
1,711

Total contractual obligations
$
1,314,116

 
$
42,882

 
$
403,894

 
$
305,049

 
$
562,291

 
 
 
 
 
 
 
 
 
 
(1)  
Amounts represent balance of obligation for the remainder of 2019 .
(2)  
Excludes $ 2.7 million of unamortized mortgage debt premium and $2.9 million in net deferred financing costs.
(3)  
Variable-rate debt interest is calculated using rates at March 31, 2019 .
(4)  
Includes interest payments associated with the finance lease obligation.

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

Debt

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

Employment Contracts

At March 31, 2019 , we had employment contract obligations with our Chief Executive Officer, Chief Financial Officer, former Chief Executive Officer and former Chief Operating Officer that contain minimum guaranteed compensation.  All other employees are subject to at-will employment.

Operating and Finance Leases

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

We have an operating lease for our 29,802 square foot corporate office in Farmington Hills, Michigan, and an operating lease for our 5,629 square foot corporate office in New York, New York. These leases are set to expire in August 2019 and January 2024, respectively.

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

Construction Costs

In connection with the pad development and expansion of various shopping centers as of March 31, 2019 , we have entered into agreements for construction activities with an aggregate remaining cost of approximately $7.2 million .


Page 30





Planned Capital Spending

We are focused on our core strengths of enhancing the value of our existing portfolio of shopping centers through successful leasing efforts and the completion of our pad development and expansion projects currently in process.

For remainder of 2019 , we anticipate spending betwee n $35.0 million and $40.0 million for capital expenditures, of which $7.2 million is reflected in the construction commitments in the contractual obligations table. The total anticipated spending relates to leasing capital expenditures, building improvements, targeted remerchandising, outlots, expansions, development and redevelopment. Estimates for future spending will change as new projects are approved.

Capitalization

At March 31, 2019 our total market capitalization was $2.0 billion and is detailed below:
 
(In thousands)
Notes payable, net
$
962,433

Add: Unamortized premiums and deferred financing costs
172

Finance lease obligation
975

Less: Cash and cash equivalents
(85,016
)
Net debt
$
878,564

 
 
Common shares outstanding
79,757

Operating Partnership Units outstanding
1,909

Restricted share awards (treasury method)
187

Total common shares and equivalents
81,853

Market price per common share (at March 31, 2019)
$
12.01

Equity market capitalization
$
983,055

 
 
7.25% Series D Cumulative Convertible Perpetual Preferred Shares
1,849

Market price per convertible preferred share (at March 31, 2019)
$
50.56

Convertible perpetual preferred shares (at market)
$
93,485

 
 
Total market capitalization
$
1,955,104

 
 
Net debt to total market capitalization
44.9
%
 
 

At March 31, 2019 , the non-controlling interest in the Operating Partnership was approximately 2.3% .  The OP Units outstanding may, under certain circumstances, be exchanged for our common shares of beneficial interest on a one-for-one basis.  We, as sole general partner of the Operating Partnership, have the option, but not the obligation, to settle exchanged OP Units held by others in cash based on the current trading price of our common shares of beneficial interest.  Assuming the exchange of all non-controlling interest OP units, there would have been approximately 81.7 million common shares of beneficial interest outstanding at March 31, 2019 , with a market value of approximately $980.8 million .

Inflation

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


Page 31





Non-GAAP Financial Measures

Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operations results. We believe these additional measures provide users of our financial information additional comparable indicators of our industry, as well as, our performance.

Funds from Operations

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

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

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

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


Page 32





The following table illustrates the reconciliation of net income available to common shareholders to FFO to Operating FFO:
 
Three Months Ended
 
March 31,
 
2019
 
2018
 
(In thousands, except per share data)
Net income
$
10,693


$
7,460

Net income attributable to noncontrolling partner interest
(250
)

(174
)
Preferred share dividends
(1,675
)

(1,675
)
Net income available to common shareholders
8,768

 
5,611

Adjustments:
 
 
 
Rental property depreciation and amortization expense
19,122

 
21,050

Pro-rata share of real estate depreciation from unconsolidated joint ventures
14

 
72

Gain on sale of depreciable real estate
(5,702
)
 

FFO available to common shareholders
22,202

 
26,733

Noncontrolling interest in Operating Partnership (1)
250

 
174

Preferred share dividends (assuming conversion)  (2)
1,675

 
1,675

FFO available to common shareholders and dilutive securities
24,127

 
28,582

 
 
 
 
Severance expense
98

 
14

Executive management reorganization, net (3)
(252
)
 
419

Contingent gain in other income (expense)

 
(398
)
Operating FFO available to common shareholders and dilutive securities
$
23,973

 
$
28,617

 
 
 
 
Weighted average common shares
79,744


79,423

Shares issuable upon conversion of Operating Partnership Units (1)
1,909

 
1,916

Dilutive effect of restricted stock
187

 
147

Shares issuable upon conversion of preferred shares  (2)
6,891

 
6,772

Weighted average equivalent shares outstanding, diluted
88,731

 
88,258

 
 
 
 
Diluted earnings per share (4)
$
0.11

 
$
0.07

Per share adjustments for FFO available to common shareholders and dilutive securities
0.16

 
0.25

FFO available to common shareholders and dilutive securities per share, diluted
$
0.27


$
0.32

 
 
 
 
Per share adjustments for Operating FFO available to common shareholders and dilutive securities

 

Operating FFO available to common shareholders and dilutive securities per share, diluted
$
0.27


$
0.32

 
 
 
 
(1)  
The total non-controlling interest reflects OP units convertible 1:1 into common shares.
(2)  
Series D cumulative convertible perpetual preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.9 million common shares. They are dilutive only when earnings or FFO exceed approximately $0.24 per diluted share per quarter, which was the case for FFO for the three months ended March 31, 2019 and 2018 . The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D cumulative convertible perpetual preferred shares on earnings per share and FFO in future periods.
(3)  
For 2019, largely comprised of a performance award benefit related to the Company's former chief executive officer and, for 2018, largely comprised of recruiting fees.
(4)  
The denominator to calculate diluted earnings per share excludes shares issuable upon conversion of OP units and preferred shares for the three months ended March 31, 2019 and 2018 .


Page 33





Same Property Operating Income

Same Property NOI and NOI from Other Investments are supplemental non-GAAP financial measures of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable consolidated operating properties for the reporting period. Same Property NOI for the three months ended March 31, 2019 represents NOI from the Company's same property portfolio consisting of 46 consolidated operating properties acquired or placed in service and stabilized prior to January 1, 2018 . Same Property NOI excludes properties under redevelopment or where activities have started in preparation for redevelopment. A property is designated as a redevelopment when planned improvements significantly impact the property. Same Property NOI is calculated using consolidated operating income and adjusted to exclude management and other fee income, depreciation and amortization, general and administrative expense, provision for impairment and non-comparable income and expense adjustments such as straight-line rents, lease termination fees, above/below market rents, and other non-comparable operating income and expense adjustments. NOI from Other Investments for the three months ended March 31, 2019 and 2018 represents NOI primarily from (i) properties disposed of during 2018 and 2019 , (ii) Webster Place and Rivertowne Square where the Company has begun activities in anticipation of future redevelopment, (iii) certain property related employee compensation and benefits expense and (iv) non-comparable operating income and expense adjustments.

Same Property NOI should not be considered an alternative to net income in accordance with GAAP or as a measure of liquidity. Our method of calculating Same Property NOI may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

The following is a summary of our wholly owned properties for the periods noted with consistent classification in the prior period for presentation of Same Property NOI:
 
Three Months Ended March 31,
Property Designation
 
2019
 
2018
Same-property
46
 
46
Acquisitions
 
Redevelopment (1)
2
 
2
Total wholly owned properties
48
 
48
 
 
 
 
(1)  
Includes the following properties: Rivertowne Square and Webster Place. The entire property indicated for each period is completely excluded from Same Property NOI.



Page 34





The following is a reconciliation of our net income available to common shareholders to Same Property NOI:
 
Three Months Ended March 31,
 
2019
 
2018
 
(in thousands)
 
 
 
 
Net income available to common shareholders
$
8,768

 
$
5,611

Adjustments to reconcile to Same Property NOI:
 
 
 
Preferred share dividends
1,675

 
1,675

Net income attributable to noncontrolling interest
250

 
174

Income tax provision
36

 
18

Interest expense
10,349

 
10,601

Earnings from unconsolidated joint ventures
(54
)
 
(71
)
Gain on sale of real estate
(5,702
)
 

Other expense (income), net
108

 
(253
)
Management and other fee income
(51
)
 
(86
)
Depreciation and amortization
19,219

 
21,112

General and administrative expenses
6,066

 
5,176

Amortization of lease inducements
96

 
43

Amortization of acquired above and below market lease intangibles
(909
)
 
(1,122
)
Lease termination fees
(149
)
 

Straight-line ground rent expense
77

 
76

Straight-line rental income
(810
)
 
(878
)
NOI
38,969

 
42,076

NOI from Other Investments
(200
)

(4,999
)
Same Property NOI
$
38,769


$
37,077

 
 
 
 
Period-end Occupancy
91.7
%
 
91.8
%
 
 
 
 


Page 35





Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We have exposure to interest rate risk on our variable rate debt obligations.  Based on market conditions, we may manage our exposure to interest rate risk by entering into interest rate swap agreements to hedge our variable rate debt.  We are not subject to any foreign currency exchange rate risk or commodity price risk, or other material rate or price risks.  Based on our variable rate debt, interest rates and interest rate swap agreements in effect at March 31, 2019 , a 100 basis point change in interest rates would impact our future earnings and cash flows by approximately $0.3 million annually.  We believe that a 100 basis point increase in interest rates would decrease the fair value of our total outstanding debt by approximately $37.5 million at March 31, 2019 .

We had derivative instruments outstanding with an aggregate notional amount of $210.0 million as of March 31, 2019 .  The agreements provided for swapping one-month LIBOR to fixed interest rates ranging from 1.46% to 2.15% and had expirations ranging from 2020 to 2023 .  The following table sets forth information as of March 31, 2019 concerning our long-term debt obligations, including principal cash flows by scheduled amortization payment and scheduled maturity, weighted average interest rates of maturing amounts and fair market value:
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
Total
 
Fair
Value
 
 
(In thousands)
Fixed-rate debt
 
$
1,957

 
$
102,269

 
$
114,508

 
$
77,397

 
$
129,388

 
$
508,961

 
$
934,480

 
$
942,400

Average interest rate
 
6.0
%
 
3.9
%
 
3.2
%
 
5.2
%
 
3.7
%
 
4.3
%
 
4.1
%
 
4.1
%
Variable-rate debt
 
$

 
$

 
$

 
$

 
$

 
$
28,125

 
$
28,125

 
$
28,125

Average interest rate
 
%
 
%
 
%
 
%
 
%
 
6.1
%
 
6.1
%
 
6.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
We estimated the fair value of our fixed rate mortgages using a discounted cash flow analysis, based on borrowing rates for similar types of borrowing arrangements with the same remaining maturity.  Considerable judgment is required to develop estimated fair values of financial instruments.  The table incorporates only those exposures that exist at March 31, 2019 and does not consider those exposures or positions which could arise after that date or firm commitments as of such date.  Therefore, the information presented therein has limited predictive value.  Our actual interest rate fluctuations will depend on the exposures that arise during the period and on market interest rates at that time.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports under the  Securities Exchange Act of 1934, as amended (“Exchange Act”), such as this report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives, and therefore management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2019 , there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Page 36





PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

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

Item 1A.  Risk Factors

For a discussion of our potential risks and uncertainties, see the information under the heading “ Risk Factors ” in our Annual Report on Form 10-K for the year ended December 31, 2018 .

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Common share repurchases during the quarterly period ended March 31, 2019 were as follows:
Period
 
Total Number of Shares Purchased
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2019 to January 31, 2019
 
424

 
$
12.80

 
 
February 1, 2019 to February 28, 2019
 
485

 
12.74

 
 
March 1, 2019 to March 31, 2019
 
7,544

 
11.97

 
 
Total
 
8,453

 
$
12.06

 
 
 
 
 
 
 
 
 
 

During the quarterly period ended March 31, 2019 , we withheld 8,453 shares from employees to satisfy estimated statutory income tax obligations related to vesting of restricted share awards. The value of the common shares withheld was based on the closing price of our common shares on the applicable vesting date.


Page 37





Item 6. Exhibits
Exhibit No.
Description
10.1
2019 Omnibus Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1  to the Company's Current Report on Form 8-K dated April 30, 2019.
10.2
2019 Executive Incentive Plan, dated April 29, 2019, incorporated by reference to Exhibit 10.2  to the Company's Current Report on Form 8-K dated April 30, 2019.
10.3*
10.4*
10.5*
31.1*
31.2*
32.1*
32.2*
101.INS (1)
XBRL Instance Document.
101.SCH (1)
XBRL Taxonomy Extension Schema.
101.CAL (1)
XBRL Taxonomy Extension Calculation.
101.DEF (1)
XBRL Taxonomy Extension Definition.
101.LAB (1)
XBRL Taxonomy Extension Label.
101.PRE (1)
XBRL Taxonomy Extension Presentation.
___________________________
*
Filed herewith
(1)  
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability thereunder.

Page 38





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
RPT REALTY
 
 
Date: May 2, 2019
By: /s/ BRIAN L. HARPER
Brian L. Harper
President and Chief Executive Officer
(Principal Executive Officer)
 
 
Date: May 2, 2019
By: /s/ MICHAEL P. FITZMAURICE
Michael P. Fitzmaurice
Chief Financial Officer
(Principal Financial Officer)
 
 
Date: May 2, 2019
By: /s/ RAYMOND J. MERK
Raymond J. Merk
Chief Accounting Officer
(Principal Accounting Officer)

Page 39




Exhibit 10.3

PERFORMANCE SHARE AWARD NOTICE

RPT Realty

[DATE]


THIS PERFORMANCE SHARE AWARD NOTICE, dated as of [DATE], sets forth the terms of a grant of performance shares by RPT Realty, a real estate investment trust organized in Maryland (the “ Trust ”), to the Grantee named below.
 
WHEREAS, the Trust has adopted the 2012 Omnibus Long-Term Incentive Plan (the “ Plan ”) to enhance the ability of the Trust to attract and retain highly qualified employees and to motivate those employees to improve the business results of the Trust; and
 
WHEREAS, the Committee has determined to grant to the Grantee an award of Performance Shares as provided herein to encourage the Grantee’s efforts toward the continuing success of the Trust.
 
The Trust grants to the Grantee an award on the following terms and subject to the following conditions:

1.
Grant by the Trust .  The Trust grants to the Grantee a Performance Award for Performance Shares (the “ Award ”). Subject to the terms and conditions hereof, payment with respect to vested Awards shall be made in the form of common shares of beneficial interest of the Trust. This Award shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this Award shall have the same definitions as set forth in the Plan.

AWARD SUMMARY
Name of Grantee:
 
Target Number of Performance Shares:
 
Grant Date:
[DATE]
Performance Period:
[DATE] through [DATE]
Vesting Date:
[DATE] (for any earned shares)
 
2.
Performance Objective . Performance Shares shall be earned based on the achievement of Total Shareholder Return of the Trust compared to the Total Shareholder Return of designated peer companies over the Performance Period as provided on the attached Appendix A .  “ Total Shareholder Return ” shall be defined as the increase in value of a fixed amount invested in the common shares of an entity, taking into account both stock price appreciation and dividends or other distributions, during the Performance Period (dividends are calculated as if they are reinvested in a company’s stock as of the ex-dividend date based on such date’s closing stock price).  In determining the value of shares at the beginning and end of the Performance Period, the Committee shall use the average closing price for the twenty (20) trading days ending on the beginning and end of the Performance Period. The Trust’s Total Shareholder Return shall be compared to the Total Shareholder Returns achieved by a group of peer companies (the “ Peer Group ”) whose shares are expected to be impacted by the same economic factors and secular trends as the Trust, with the result expressed as a percentile (where the Trust is considered to be part of the peer set).  The applicable Peer Group for the Performance Period is the group of publically traded shopping center REITs listed on the attached Appendix A .

3.
Peer Group Adjustments . Any company in the Peer Group that files for bankruptcy protection shall be placed at the bottom of the Peer Group.  Any company in the Peer Group that is acquired and is no longer separately trading will be excluded from the Peer Group, and the size of the Peer Group will be reduced by one.  No changes to the Peer Group will be made as a result of an acquisition or divestiture by a company in the Peer Group of a portion of its business, as such events are generally considered to be part of the ordinary course of business; however, in the instance where a peer company has entered an agreement to be acquired and such transaction has not yet been consummated at the end of the performance period, such peer company will be excluded from results as if it had already been acquired. 

4.
Determination of Award and Notice . As soon as possible after the end of the Performance Period, but in no event later than March 15 of the year following the end of the Performance Period, the Compensation Committee of the Board of Trustees





(the “Committee”) will certify in writing whether and to what extent the performance measure has been achieved for the Performance Period and determine the number of shares, if any, to be issued to the Grantee in accordance with the matrix set forth in Appendix A ; provided, that, if the Committee certifies that the performance measure has been met, the Committee may, in its sole discretion, reduce the number of shares to be issued to the Grantee with respect to the Award. The date of the Committee’s certification pursuant to this Section 4 shall hereinafter be referred to as the “ Certification Date .” The Trust will notify the Grantee of the Committee’s certification promptly following the Certification Date. Shares shall be issued to the Grantee within ten days of the Certification Date.

[In the event Grantee is entitled to receive more than 100,000 shares in any one calendar year, such shares in excess of the 100,000 share limit shall be settled in cash based on the value of a share on the Certification Date, payable to the Grantee in accordance with this Section 4 and subject to applicable withholding.]

5.
Forfeiture of Award Prior to Issue Date . Except as provided by the Committee, the Grantee will not be entitled to any issuance of shares with respect to the Award if the Grantee is not, for any reason, employed by the Trust or an Affiliate of the Trust on the Certification Date; provided that (i) upon a Change in Control occurring prior to the end of the Performance Period while the Grantee remains employed by the Trust or an Affiliate, so long as such action does not result in the Grantee being subject to additional tax under Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and guidance thereunder (“ Code Section 409A ”), to the extent the Award is assumed or substituted by the successor/acquirer company, in the event the Grantee is terminated without “Cause” or by the Grantee for “Good Reason” (as such terms are defined below) within twelve (12) months following such Change in Control, such Award shall vest at Target Levels and be paid out within 30 days after such date of Grantee’s termination of employment.  [Notwithstanding the foregoing or anything to the contrary herein, the terms of that certain Employment Agreement, dated as of [DATE], by and between the Trust and the Grantee (as it may be amended and/or restated from time to time, the “Employment Agreement”) shall govern the Award in the event the Grantee’s employment by the Trust is terminated (i) involuntarily, either by the Trust without “Cause” or by the Grantee for “Good Reason,” or (ii) because of the Grantee’s death or “disability,” or (iii) within 24 months after a “Change in Control” either by the Trust without “Cause” or by the Grantee for “Good Reason” (as all such terms are defined in the Employment Agreement).]

6.
No Rights as a Shareholder .  Prior to any issuance of shares, the Grantee shall not at any time have any rights as a shareholder with respect to any Award.  No dividends (or dividend equivalents) will be paid on any earned or unearned Performance Shares.

7.
No Right to Continued Employment .   Nothing in this Award or the Plan shall interfere with or limit in any way the right of the Trust to terminate the Grantee’s employment, nor confer upon the Grantee any right to continuance of employment by the Trust or any Affiliate.

8.
Construction . This Award is made and granted pursuant to the Plan and is in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Award and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Committee with respect to any question or issue arising under the Plan or this Award shall be conclusive and binding on all persons having an interest in the Award.

9.
Resolution of Disputes .  Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Award shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Grantee, the Grantee’s heirs, executors, administrators and successors, and the Trust and its Affiliates for all purposes.

10.
Entire Statement of Award .  This Award and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Trust and its Affiliates, and supersede all other agreements, whether written or oral, with respect to the Award.

11.
Headings .  The headings of this Award are inserted for convenience only and do not constitute a part of this Award.

12.
Code Section 409A .  The Award is intended to either be exempt from or to comply with Code Section 409A and shall be interpreted and administered consistent with that intent, provided , however , that the Trust makes no representation regarding the status of the Award under Code Section 409A and the Trust shall not be liable for any additional tax, interest or penalty that may be imposed upon the Grantee, or other damage that may be suffered by the Grantee, as a result of the Award being subject to and not in compliance with Code Section 409A.  Each payment required to be made hereunder shall be treated as a separate and distinct payment for purposes of Code Section 409A. If (i) an amount owing to the Grantee hereunder constitutes nonqualified deferred compensation subject to Code Section 409A, (ii) the amount is considered to be payable to the Grantee as a result of the Grantee’s “separation from service” with the Trust and its Affiliates for purposes and within the meaning of Code Section 409A, and (iii) the Grantee is at the time of separation from service a “specified employee” of the Trust and its Affiliates, then (notwithstanding any other provision hereof) the amount shall not be paid to the Grantee any earlier than the





time when such amount may be paid to the Grantee without the Grantee being subject to liability for additional tax on such amount under Code Section 409A.

13.
Tax Withholding Obligation . If upon the Certification Date or other applicable date there shall be payable by the Trust or an affiliate of the Trust any statutory income and/or employment tax withholding, in the Trust's discretion, then unless provided otherwise by the Trust, such tax withholding obligations, if any, will be satisfied by the Trust withholding a number of shares of Common Stock that would otherwise be vested under the Award in an amount that the Trust determines has a fair market value sufficient to meet such tax withholding obligations, up to the maximum statutory withholding requirement. In the Trust's discretion, it may require or permit reimbursement or payment of such tax withholding obligations by wire transfer, certified check, additional payroll withholding or other means acceptable to the Trust and upon such terms and conditions as the Trust may prescribe. The Trust may also permit the Grantee to tender shares to the Trust subsequent to receipt of such shares in respect of an Award. The Trust is permitted to defer issuance of shares until reimbursement or payment by the Grantee to the Trust or an affiliate of the Trust of the amount of any such tax.

The Grantee is ultimately liable and responsible for all taxes owed by such Grantee in connection with the Award, regardless of any action the Trust takes with respect to any tax withholding obligations that arise in connection with the Award. The Trust makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant or issuance of the Performance Shares or the subsequent sale of any of the shares underlying the Performance Shares. The Trust does not commit and is under no obligation to structure the Award program to reduce or eliminate the Participant's tax liability.
IN WITNESS WHEREOF, this Award Notice is duly authorized as of the date first above written.
RPT REALTY, a Maryland real estate investment trust

By: _____________________________________

Its:______________________________________



Accepted:


                
[NAME]





APPENDIX A
 


Acadia Realty Trust,
Agree Realty Corporation,
Brixmor Property Group, Inc.,
Cedar Realty Trust,
Federal Realty Investment Trust,
Kimco Realty Corporation,
Kite Realty Group,
Regency Centers Corporation,
Retail Opportunity Investments Corp.,
Retail Properties of America, Inc.
Saul Centers, Inc.,
Seritage Growth Properties,
SITE Centers Corp.,
Urban Edge Properties,
Urstadt-Biddle Properties,
Washington Prime Group, Inc.
and
Weingarten Realty Investors


Level
Comparative Total Shareholder Return Percentile
Percentage of Target Number of Performance   Shares
Threshold
33 rd
50%
Target
50 th
100%
Maximum
90 th
200%

There will be a linear increase in payout between the performance levels if Threshold performance is achieved; no payout shall occur below 33 rd percentile performance.




Exhibit 10.4

RPT REALTY

Restricted Share Unit Award Notice
Under the 2012 Omnibus Long-Term Incentive Plan

Participant Name:
_____________
Grant Date:
[DATE]
Restricted Share Units Granted:
_____________

This Restricted Share Unit Award Notice (this “Award Notice”) sets forth the terms upon which RPT Realty, a Maryland real estate investment trust (the “Trust”), issues restricted share units to ___________ (the “Participant”). Capitalized terms not defined herein have the meanings ascribed to such terms in the 2012 Omnibus Long-Term Incentive Plan of the Trust, as amended from time to time (the “Plan”).
1.     The Award . The Trust hereby grants the restricted share units set forth above (the “Award”) to the Participant, as of the Grant Date, pursuant to and subject to all of the terms and conditions of this Award Notice and the Plan, the provisions of which are incorporated herein. A copy of the Plan is on file in the office of the Trust. If there is any conflict between the provisions of this Award Notice and the Plan, the Plan will control.

2.     Restricted Share Units and Vesting . Each restricted share unit granted hereunder represents the right of the Participant to receive, upon vesting and the satisfaction of any required tax withholding obligation, one common share of beneficial interest, par value $0.01, of the Trust (“Common Stock”). As of the date hereof and until the date such restricted share units are vested, or are terminated or forfeited in accordance with this Award Notice, the Participant shall be entitled to the right to be paid an amount equal to the dividends paid on outstanding common shares of beneficial interest of the Trust. The Participant may not sell, assign, transfer, pledge, hypothecate, mortgage or otherwise dispose of, by gift or otherwise, or in any way encumber any of the restricted share units prior to vesting, except as otherwise permitted by the Plan.

Subject to the terms and conditions set forth herein, the restricted share units shall vest in three equal installments on each of the first, second and third anniversaries of the Grant Date (“Vesting Date”). As soon as practicable after vesting, but no later than the date that is 2 ½ months after the end of the Participant’s tax year in which the Vesting Date occurs, the Trust shall deliver certificate(s) representing the shares of Common Stock vested as of such period to the Participant or its designee. Such certificate(s) shall be registered in the name of the Participant.
3.     Forfeitures . Except as determined by the Compensation Committee of the Trust’s Board of Trustees (the “Committee”) at any time, upon the failure of the Participant to be employed by the Trust or any of its affiliates for any reason, all unvested restricted share units shall be forfeited by the Participant to the Trust without the payment of any consideration by the Trust; provided, that except as specified in the Plan, in the event of a Participant’s retirement, permanent disability, other termination of employment or death, or in cases of special circumstances, the Committee may, in its sole discretion, when it finds that a waiver would be in the best interests of the Trust, waive in whole or in part any or all remaining restrictions with respect to such Participant’s restricted share units. [Notwithstanding the foregoing or anything to the contrary herein, the terms of that certain Employment Agreement, dated as of [DATE], by and between the Trust and Participant (as it may be amended and/or restated from time to time, the “Employment Agreement”) shall govern the Award in the event Participant’s employment by the Trust is terminated (i) involuntarily, either by the Trust without “Cause” or by the Participant for “Good Reason,” or (ii) because of the Participant’s death or “disability,” or (iii) within 24 months after a “Change in Control” either by the Trust without “Cause” or by the Participant for “Good Reason” (as all such terms are defined in the Employment Agreement).]

4. Tax Withholding Obligation . If upon the Grant Date, Vesting Date or other applicable date there shall be payable by the Trust or an Affiliate of the Trust any statutory income and/or employment tax withholding, in the Trust's discretion, then unless provided otherwise by the Trust, such tax withholding obligations, if any, will be satisfied by the Trust withholding a number of shares of Common Stock that would otherwise be vested under the Award in an amount that the Trust determines has a Fair Market Value sufficient to meet such tax withholding obligations, up to the maximum statutory withholding requirement. In the Trust's discretion, it may require or permit reimbursement or payment of such tax withholding obligations by wire transfer, certified check, additional payroll withholding or other means acceptable to the Trust and upon such terms and conditions as the Trust may prescribe. The Trust may also permit the Participant to tender shares of Common Stock to the Trust subsequent to receipt of such





shares in respect of an Award. The Trust is permitted to defer issuance of shares under the Plan until reimbursement or payment by the Participant to the Trust or an Affiliate of the Trust of the amount of any such tax.

The Participant is ultimately liable and responsible for all taxes owed by such Participant in connection with the Award, regardless of any action the Trust takes with respect to any tax withholding obligations that arise in connection with the Award. The Trust makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance, vesting or settlement of the restricted share units or the subsequent sale of any of the shares of Common Stock underlying the restricted share units that vest. The Trust does not commit and is under no obligation to structure the Award program to reduce or eliminate the Participant's tax liability.
5.     Rights of Participant . The Award does not confer on the Participant any right to continue in the employ of the Trust or any of its affiliates or interfere in any way with the right of the Trust or any of its affiliates to determine the terms of the Participant’s employment.

6. Registration . The Trust currently has an effective registration statement on file with the Securities and Exchange Commission with respect to the shares of Common Stock subject to this Award. The Trust intends to maintain this registration but has no obligation to do so. If the registration ceases to be effective, the Participant will not be able to transfer or sell shares issued pursuant to this Award unless exemptions from registration under applicable securities laws are available. Such exemptions from registration are very limited and might be unavailable. The Participant agrees that any resale by him or her of the shares of Common Stock issued pursuant to this Award will comply in all respects with the requirements of all applicable securities laws, rules, and regulations (including, without limitation, the provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the respective rules and regulations promulgated thereunder) and any other law, rule, or regulation applicable thereto, as such laws, rules, and regulations may be amended from time to time. The Trust will not be obligated to either issue the shares or permit the resale of any shares if such issuance or resale would violate any such requirements.

IN WITNESS WHEREOF, this Award Notice is duly authorized as of the date first above written.

RPT REALTY, a Maryland real estate investment trust

__________________________________________
By:                
Title:                 


Accepted:


______________________
[NAME]






Exhibit 10.5
Tim Collier
[Address]
[Address]

Dear Tim,

The following will outline the items regarding employment with RAMCO. A summary of the terms (while not all­ inclusive) of your employment should you accept are as follows:

Position Title :        Executive Vice President of Leasing

Annual Salary :        $400,000

Annual Bonus :
Current bonus target is 65% of base comp to a max of 150% target. Based on the Company achieving its maximum performance targets and/or the Executive exceeding individual job performance targets.

Guaranteed minimum bonus for 2018 no less than target based on a pro-rata formula for the portion of the year in which you were employed by the Trust (100% of target for 6 months of the year, assuming a July start date), paid in March 2019.

2018 approved financial performance metrics include: FFO/share and strategic goal metrics. Subject to change in future years but will remain consistent with all other senior executives.

Long Term Incentive :
Eligibility begins in 2019
LTIP annual grant valued at $450,000
Current mix of equity is 50% performance share units and 50% time-vested restricted stock units. Equity mix and vesting is subject to change and will be determined by the Compensation Committee.

Inducement Award :
One - time stock grant made on Start Date equal to $450,000 ($450,000 divided by grant date close price used to determine numbers of shares. Actual accounting cost may differ). Details are as follows:

50% of this award will be in the form of time-based restricted stock units (RSUs) with 3-year ratable vesting (33-1/3% per year for 3 years).

50% of this award will be in the form of performance stock units based on Relative TSR as described below:

Performance period to be 20-day average price ending on date of hire through December 31, 2020 (average of final 20-day price).

Vesting will be 100% on 3rd anniversary of grant date on any earned shares.

Same payout scale as all participants (Threshold equals 33rd percentile of peers and results in 50% of target shares, Target equals 50th percentile of peers and results in 100% of target shares, Maximum equals 90th percentile of peers and results in 200% of target shares). No payout for performance below threshold.

Benefits :
In addition to your compensation, you will be entitled to receive the fringe benefit package that is available at RAMCO . While these benefits may change from time to time this currently includes : Medical, Dental, Vision , and Prescription Drug Insurance , with a cost sharing arrangement between the employer and employee as well as Life Insurance and Disability Insurance that is 100% employer paid .

As a new hire, your eligibility date for Medical, Dental, Vision, Prescription, Life and Long-Term Disability coverage begins on the 1st of the month following 30 calendar days of employment.

401K:
Eligible to participate in the Plan the quarter following the first day of employment. Eligible for employer match if applicable for a given Plan year under the match guidelines of the 401K plan.






Employee Time Off :
Maximum available to other Senior officers but not less than 3 weeks.

Termination without Cause :
Cash severance equal to 1 times the sum of base salary and target bonus, subject to mitigation if the Executive is employed during the severance period.

After 2018 prorated annual bonus based on actual performance in the year of termination.

Lump sum reimbursement for COBRA/medical expense for 1 year of coverage.

Immediate vesting of inducement equity grant (with the performance share portion vesting at target if the performance period has not yet ended).
    
Equity grants beginning with 2019 grant will be consistent with RAMCO's existing practices and terms provided to all senior executives (forfeiture of all except in the event of termination due to death or disability).
    
Payment of severance benefit subject to execution of full release agreement in standard Trust form.

Change of Control :
Cash severance equal to 1.5 times the sum of base salary and target bonus, subject to mitigation if the Executive is employed during the severance period.

After 2018 prorated annual bonus based on actual performance in the year of termination.

Lump sum reimbursement for COBRA/medical expense for 1 year of coverage.

Immediate vesting of inducement equity grant (with the performance share portion vesting at target if the performance period has not yet ended).
    
Equity grants beginning with 2019 grant will be consistent with RAMCO's existing practices and terms provided to all senior executives (forfeiture of all except in the event of termination due to death or disability).

Payment of severance benefit subject to execution of full release agreement in standard Trust form.

We look forward to hearing from you and are excited to offer this opportunity to you.

Sincerely,

/s/ BRIAN HARPER
Brian Harper
Chief Executive Officer
RAMCO Properties




I accept the offer as outlined as above.

Name:
/s/ TIMOTHY COLLIER
Timothy Collier
June 25, 2018




Exhibit 31.1
CERTIFICATION
I, Brian L. Harper, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of RPT Realty;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining  disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness  of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: May 2, 2019
By: /s/ BRIAN L. HARPER
Brian L. Harper
President and Chief Executive Officer




Exhibit 31.2
 
CERTIFICATION
I, Michael P. Fitzmaurice, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of RPT Realty;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining  disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness  of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2019
By: /s/ MICHAEL P. FITZMAURICE
Michael P. Fitzmaurice
Chief Financial Officer




Exhibit 32.1
Certification
Pursuant to 18 U.S.C. Section 1350

In connection with the quarterly report of RPT Realty (the “Company”) on Form 10-Q for the period ended March 31, 2019 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian L. Harper, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act, that:

(1)
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 2, 2019
By: /s/ BRIAN L. HARPER
Brian L. Harper
President and Chief Executive Officer




Exhibit 32.2
Certification
Pursuant to 18 U.S.C. Section 1350

In connection with the quarterly report of RPT Realty (the “Company”) on Form 10-Q for the period ended March 31, 2019 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael P. Fitzmaurice, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act, that:

(1)
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 2, 2019
By: /s/ MICHAEL P. FITZMAURICE
Michael P. Fitzmaurice
Chief Financial Officer