RETAIL PROPERTIES OF AMERICA, INC. (Form: 10-Q, Received: 11/02/2016 16:30:20)

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 EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016



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

For the transition period from to

Commission File Number: 001-35481

RETAIL PROPERTIES OF AMERICA, INC.

(Exact name of registrant as specified in its charter)



Maryland		42-1579325
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2021 Spring Road, Suite 200, Oak Brook, Illinois		60523
(Address of principal executive offices)		(Zip Code)

( 630) 634-4200

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

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



Large accelerated filer x		Accelerated filer o

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

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

Number of shares outstanding of the registrant’s classes of common stock as of October 28, 2016 :

Class A common stock: 237,374,540 shares

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

TABLE OF CONTENTS



PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44

Item 4.	Controls and Procedures	45

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	47

SIGNATURES		48

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)



	September 30, 2016			December 31, 2015
Assets
Investment properties:
Land	$	1,235,929		$	1,254,131
Building and other improvements	4,333,989			4,428,554
Developments in progress	5,860			5,157
	5,575,778			5,687,842
Less accumulated depreciation	(1,460,799		)	(1,433,195		)
Net investment properties	4,114,979			4,254,647
Cash and cash equivalents	69,071			51,424
Accounts and notes receivable (net of allowances of $6,277 and $7,910, respectively)	79,943			82,804
Acquired lease intangible assets, net	137,310			138,766
Assets associated with investment properties held for sale	3,581			—
Other assets, net	108,117			93,610
Total assets	$	4,513,001		$	4,621,251

Liabilities and Equity
Liabilities:
Mortgages payable, net	$	1,000,089		$	1,123,136
Unsecured notes payable, net	595,479			495,576
Unsecured term loans, net	447,302			447,526
Unsecured revolving line of credit	—			100,000
Accounts payable and accrued expenses	67,141			69,800
Distributions payable	39,315			39,297
Acquired lease intangible liabilities, net	105,211			114,834
Liabilities associated with investment properties held for sale	36			—
Other liabilities	76,444			75,745
Total liabilities	2,331,017			2,465,914

Commitments and contingencies (Note 14)

Equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative redeemable preferred stock, 5,400 shares issued and outstanding as of September 30, 2016 and December 31, 2015; liquidation preference $135,000	5			5
Class A common stock, $0.001 par value, 475,000 shares authorized, 237,376 and 237,267 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	237			237
Additional paid-in capital	4,934,381			4,931,395
Accumulated distributions in excess of earnings	(2,752,743		)	(2,776,215		)
Accumulated other comprehensive income (loss)	104			(85		)
Total equity	2,181,984			2,155,337
Total liabilities and equity	$	4,513,001		$	4,621,251

See accompanying notes to condensed consolidated financial statements

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Operations and Other Comprehensive Income

(Unaudited)

(in thousands, except per share amounts)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenues
Rental income	$	113,627		$	116,715		$	344,081		$	355,525
Tenant recovery income	29,130			28,901			89,140			89,617
Other property income	1,769			5,339			7,170			9,898
Total revenues	144,526			150,955			440,391			455,040

Expenses
Operating expenses	20,285			22,741			63,438			71,589
Real estate taxes	19,937			20,961			60,966			61,957
Depreciation and amortization	56,763			52,871			163,602			163,345
Provision for impairment of investment properties	4,742			169			11,048			4,113
General and administrative expenses	11,110			10,939			33,289			35,949
Total expenses	112,837			107,681			332,343			336,953

Operating income	31,689			43,274			108,048			118,087

Gain on extinguishment of debt	—			—			13,653			—
Gain on extinguishment of other liabilities	—			—			6,978			—
Interest expense	(25,602		)	(40,425		)	(78,343		)	(110,610		)
Other income, net	22			479			449			1,398
Income from continuing operations	6,109			3,328			50,785			8,875
Gain on sales of investment properties	66,385			75,001			97,737			113,214
Net income	72,494			78,329			148,522			122,089
Preferred stock dividends	(2,362		)	(2,362		)	(7,087		)	(7,087		)
Net income attributable to common shareholders	$	70,132		$	75,967		$	141,435		$	115,002

Earnings per common share – basic and diluted
Net income per common share attributable to common shareholders	$	0.30		$	0.32		$	0.60		$	0.49

Net income	$	72,494		$	78,329		$	148,522		$	122,089
Other comprehensive income:
Net unrealized gain on derivative instruments (Note 9)	666			155			189			157
Comprehensive income attributable to the Company	$	73,160		$	78,484		$	148,711		$	122,246

Weighted average number of common shares outstanding – basic	236,783			236,439			236,692			236,348

Weighted average number of common shares outstanding – diluted	237,108			236,553			236,983			236,400

See accompanying notes to condensed consolidated financial statements

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands, except per share amounts)



	Preferred Stock			Class A Common Stock				Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity			Noncontrolling Interest		Total Equity
	Shares	Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Distributions in Excess of Earnings			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity			Noncontrolling Interest		Total Equity
Balance as of January 1, 2015	5,400	$	5	236,602		$	237	$	4,922,864		$	(2,734,688	)	$	(537	)	$	2,187,881		$	1,494	$	2,189,375
Net income	—	—		—		—		—			122,089			—			122,089			—		122,089
Other comprehensive income	—	—		—		—		—			—			157			157			—		157
Distributions declared to preferred shareholders ($1.3125 per share)	—	—		—		—		—			(7,087		)	—			(7,087		)	—		(7,087		)
Distributions declared to common shareholders ($0.496875 per share)	—	—		—		—		—			(117,876		)	—			(117,876		)	—		(117,876		)
Issuance of common stock, net of offering costs	—	—		—		—		(111		)	—			—			(111		)	—		(111		)
Issuance of restricted shares	—	—		801		—		—			—			—			—			—		—
Stock-based compensation expense, net of forfeitures	—	—		(4	)	—		8,225			—			—			8,225			—		8,225
Shares withheld for employee taxes	—	—		(112	)	—		(1,723		)	—			—			(1,723		)	—		(1,723		)
Balance as of September 30, 2015	5,400	$	5	237,287		$	237	$	4,929,255		$	(2,737,562	)	$	(380	)	$	2,191,555		$	1,494	$	2,193,049

Balance as of January 1, 2016	5,400	$	5	237,267		$	237	$	4,931,395		$	(2,776,215	)	$	(85	)	$	2,155,337		$	—	$	2,155,337
Cumulative effect of accounting change	—	—		—		—		17			(17		)	—			—			—		—
Net income	—	—		—		—		—			148,522			—			148,522			—		148,522
Other comprehensive income	—	—		—		—		—			—			189			189			—		189
Distributions declared to preferred shareholders ($1.3125 per share)	—	—		—		—		—			(7,087		)	—			(7,087		)	—		(7,087		)
Distributions declared to common shareholders ($0.496875 per share)	—	—		—		—		—			(117,946		)	—			(117,946		)	—		(117,946		)
Issuance of common stock, net of offering costs	—	—		—		—		(100		)	—			—			(100		)	—		(100		)
Issuance of restricted shares	—	—		269		—		—			—			—			—			—		—
Exercise of stock options	—	—		2		—		23			—			—			23			—		23
Stock-based compensation expense, net of forfeitures	—	—		(10	)	—		5,296			—			—			5,296			—		5,296
Shares withheld for employee taxes	—	—		(152	)	—		(2,250		)	—			—			(2,250		)	—		(2,250		)
Balance as of September 30, 2016	5,400	$	5	237,376		$	237	$	4,934,381		$	(2,752,743	)	$	104		$	2,181,984		$	—	$	2,181,984

See accompanying notes to condensed consolidated financial statements

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)



	Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	148,522		$	122,089
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	163,602			163,345
Provision for impairment of investment properties	11,048			4,113
Gain on sales of investment properties	(97,737		)	(113,214		)
Gain on extinguishment of debt	(13,653		)	—
Gain on extinguishment of other liabilities	(6,978		)	—
Amortization of loan fees and debt premium and discount, net	4,372			3,881
Amortization of stock-based compensation	5,296			8,225
Premium paid in connection with defeasance of mortgages payable	—			16,285
Payment of leasing fees and inducements	(7,730		)	(6,151		)
Changes in accounts receivable, net	(1,109		)	6,820
Changes in accounts payable and accrued expenses, net	803			2,325
Changes in other operating assets and liabilities, net	(637		)	2,930
Other, net	(791		)	(1,572		)
Net cash provided by operating activities	205,008			209,076

Cash flows from investing activities:
Changes in restricted escrows, net	(5,904		)	21,268
Purchase of investment properties	(266,377		)	(407,857		)
Capital expenditures and tenant improvements	(43,207		)	(35,565		)
Proceeds from sales of investment properties	307,355			395,207
Investment in developments in progress	(315		)	(1,019		)
Other, net	194			(26		)
Net cash used in investing activities	(8,254		)	(27,992		)

Cash flows from financing activities:
Proceeds from mortgages payable	—			967
Principal payments on mortgages payable	(45,244		)	(346,164		)
Proceeds from unsecured notes payable	100,000			248,815
Proceeds from unsecured credit facility	390,000			550,000
Repayments of unsecured credit facility	(490,000		)	(420,000		)
Payment of loan fees and deposits, net	(6,386		)	(2,237		)
Purchase of U.S. Treasury securities in connection with defeasance of mortgages payable	—			(81,547		)
Distributions paid	(125,015		)	(124,849		)
Other, net	(2,462		)	(1,823		)
Net cash used in financing activities	(179,107		)	(176,838		)

Net increase in cash and cash equivalents	17,647			4,246
Cash and cash equivalents, at beginning of period	51,424			112,292
Cash and cash equivalents, at end of period	$	69,071		$	116,538
(continued)

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)



	Nine Months Ended September 30,
	2016			2015
Supplemental cash flow disclosure, including non-cash activities:
Cash paid for interest, net of interest capitalized	$	73,603		$	86,054
Distributions payable	$	39,315		$	39,301
Accrued capital expenditures and tenant improvements	$	7,740		$	5,875
Accrued leasing fees and inducements	$	913		$	532
Amounts reclassified to developments in progress	$	2,467		$	—
Developments in progress placed in service	$	—		$	2,288
U.S. Treasury securities transferred in connection with defeasance of mortgages payable	$	—		$	81,547
Defeasance of mortgages payable	$	—		$	65,262

Purchase of investment properties (after credits at closing):
Land, building and other improvements, net	$	(261,657	)	$	(400,484	)
Accounts receivable, acquired lease intangibles and other assets	(25,049		)	(41,450		)
Accounts payable, acquired lease intangibles and other liabilities	5,013			34,077
Mortgages payable assumed, net	15,316			—
	$	(266,377	)	$	(407,857	)

Proceeds from sales of investment properties:
Land, building and other improvements, net	$	282,661		$	279,559
Accounts receivable, acquired lease intangibles and other assets	15,306			6,583
Accounts payable, acquired lease intangibles and other liabilities	(9,149		)	(4,181		)
Deferred gain	1,500			32
Mortgage debt forgiven or assumed	(94,353		)	—
Gain on extinguishment of debt	13,653			—
Gain on sales of investment properties	97,737			113,214
	$	307,355		$	395,207

See accompanying notes to condensed consolidated financial statements

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited financial statements of Retail Properties of America, Inc. for the year ended December 31, 2015 , which are included in its 2015 Annual Report on Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in the Annual Report have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary, all of which were of normal recurring nature, for a fair presentation have been included in this Quarterly Report.

(1) ORGANIZATION AND BASIS OF PRESENTATION

Retail Properties of America, Inc. (the Company) was formed on March 5, 2003 and its primary purpose is to own and operate high quality, strategically located shopping centers in the United States.

The Company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended (the Code). The Company believes it qualifies for taxation as a REIT and, as such, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax on its taxable income. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and U.S. federal income and excise taxes on its undistributed income. The Company has one wholly-owned subsidiary that has jointly elected to be treated as a taxable REIT subsidiary (TRS) and is subject to U.S. federal, state and local income taxes at regular corporate tax rates. The income tax expense incurred by the TRS did not have a material impact on the Company’s accompanying condensed consolidated financial statements.

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

All share amounts and dollar amounts in the condensed consolidated financial statements and notes thereto are stated in thousands with the exception of per share amounts and per square foot amounts.

The accompanying condensed consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries and any consolidated variable interest entities (VIEs). All intercompany balances and transactions have been eliminated in consolidation. Wholly-owned subsidiaries generally consist of limited liability companies (LLCs), limited partnerships and statutory trusts.

The Company’s property ownership as of September 30, 2016 is summarized below:



	Wholly-owned
Retail operating properties (a)	174
Office properties	1
Total operating properties	175

Development and redevelopment properties	2


(a)	Excludes one wholly-owned operating property classified as held for sale as of September 30, 2016 .

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Refer to the Company’s 2015 Annual Report on Form 10-K for a summary of its significant accounting policies. Except as disclosed below, there have been no changes to the Company’s significant accounting policies in the nine months ended September 30, 2016 .

Recently Adopted Accounting Pronouncements

Effective January 1, 2016, the Company adopted Accounting Standards Update (ASU) 2015-02, Consolidation , which revised the consolidation guidance for all entities. The new standard modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs. The adoption of this pronouncement under the modified retrospective method did not have any effect on the Company’s condensed consolidated financial statements as the Company did not have any VIEs as of January 1, 2016; however, during the nine months ended September 30, 2016 , the Company had acquired three properties through consolidated VIEs and, accordingly, applied the revised consolidation guidance. See Note 3 to the condensed consolidated financial statements for further details.

Effective January 1, 2016, the Company adopted ASU 2015-16, Business Combinations , which requires the acquirer in a business combination to recognize in the period any adjustments to provisional amounts that are identified during the measurement period rather than retrospectively accounting for those adjustments. The adoption of this pronouncement did not have any effect on the Company’s condensed consolidated financial statements.

The Company elected to early adopt ASU 2014-15, Presentation of Financial Statements – Going Concern , on January 1, 2016. The new standard requires a company’s management to assess the entity’s ability to continue as a going concern for a period of one year after the date the financial statements are issued (or available to be issued) and provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The adoption of this pronouncement did not have any effect on the Company’s condensed consolidated financial statements.

The Company elected to early adopt ASU 2016-09, Compensation – Stock Compensation , on January 1, 2016. The new standard allowed the Company to make an accounting policy election to account for share-based payment award forfeitures when they occur, which required a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning of the period of adoption and resulted in an adjustment of $17 to additional paid-in capital and accumulated distributions in excess of earnings as of January 1, 2016.

Other Recently Issued Accounting Pronouncements

In May 2014 with subsequent updates issued in August 2015 and March, April and May 2016, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers . This new standard is effective January 1, 2018, with early adoption permitted beginning January 1, 2017, and will replace existing revenue recognition standards. The sale of investment property and any non-lease components contained within lease agreements will be required to follow the new standard; however, lease components of lease contracts will be excluded from this standard. This pronouncement allows either a full or a modified retrospective method of adoption. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this guidance. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall . This new standard is effective January 1, 2018 and will require companies to disclose the fair value of financial assets and financial liabilities measured at amortized cost in accordance with the exit price notion and will no longer require disclosure of the methods and significant assumptions used, including any changes, to estimate fair value. In addition, companies will be required to disclose all financial assets and financial liabilities grouped by 1) measurement category and 2) form of financial instrument. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective.

In February 2016, the FASB issued ASU 2016-02, Leases . This new standard is effective January 1, 2019, with early adoption permitted, and will require lessees to recognize a liability to make lease payments and a right-of-use asset, initially measured at the present value of lease payments, for both operating and financing leases. For leases with a term of 12 months or less, lessees

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

will be permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Under this new pronouncement, lessor accounting will be largely unchanged from existing GAAP. The pronouncement requires a modified retrospective method of adoption, with some optional practical expedients. Upon adoption, the Company will recognize a lease liability and a right-of-use asset for operating leases where it is the lessee, such as ground leases and office and equipment leases. The Company will continue to evaluate the impact of this guidance until it becomes effective.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses . This new standard is effective January 1, 2020, with early adoption permitted beginning January 1, 2019, and replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. Financial assets that are measured at amortized cost will be required to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. In addition, an entity must consider broader information in developing its expected credit loss estimate, including the use of forecasted information. Generally, the pronouncement requires a modified retrospective method of adoption. The Company will continue to evaluate the impact of this guidance until it becomes effective.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows . This new standard is effective January 1, 2018, with early adoption permitted, and adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. Of the eight types of cash flows discussed in the new standard, the classification of debt prepayment and debt extinguishment costs as financing outflows will impact the Company as these items are currently reflected as operating outflows. The pronouncement requires a retrospective transition method of adoption. The Company will continue to evaluate the impact of this guidance until it becomes effective.

(3) ACQUISITIONS

The Company closed on the following acquisitions during the nine months ended September 30, 2016:

Date

Property Name

Metropolitan
Statistical Area (MSA)

Property Type

Square

Footage

Acquisition

Price

January 15, 2016

Shoppes at Hagerstown (a)

Hagerstown

Multi-tenant retail

113,000

27,055

January 15, 2016

Merrifield Town Center II (a)

Washington, D.C.

Multi-tenant retail

76,000

45,676

March 29, 2016

Oak Brook Promenade

Chicago

Multi-tenant retail

183,200

65,954

April 1, 2016

The Shoppes at Union Hill (b)

New York

Multi-tenant retail

91,700

63,060

April 29, 2016

Ashland & Roosevelt – Fee Interest (c)

Chicago

Ground lease interest

—

13,850

May 5, 2016

Tacoma South

Seattle

Multi-tenant retail

230,700

39,400

June 15, 2016

Eastside

Dallas

Multi-tenant retail

67,100

23,842

August 30, 2016

Woodinville Plaza – Anchor Space

Improvements (d)

Seattle

Anchor space improvements (d)

—

4,500

761,700

283,337


(a)	These properties were acquired as a two -property portfolio. Merrifield Town Center II also contains 62,000 square feet of storage space for a total of 138,000 square feet.


(b)	In conjunction with the acquisition, the Company assumed mortgage debt with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031.

(c)

The Company acquired the fee interest in an existing wholly-owned multi-tenant retail operating property located in Chicago, Illinois, which was previously subject to a ground lease with a third party. In conjunction with this transaction, the Company reversed the straight-line ground rent liability of $6,978 , which is reflected as “Gain on extinguishment of other liabilities” in the accompanying condensed consolidated statements of operations and other comprehensive income.


(d)	The Company acquired the anchor space improvements, which were previously subject to a ground lease with the Company, in an existing wholly-owned multi-tenant retail operating property located in Woodinville, Washington.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company closed on the following acquisitions during the nine months ended September 30, 2015:

Date

Property Name

MSA

Property Type

Square

Footage

Acquisition

Price

January 8, 2015

Downtown Crown

Washington, D.C.

Multi-tenant retail

258,000

162,785

January 23, 2015

Merrifield Town Center

Washington, D.C.

Multi-tenant retail

84,900

56,500

January 23, 2015

Fort Evans Plaza II

Washington, D.C.

Multi-tenant retail

228,900

65,000

February 19, 2015

Cedar Park Town Center

Austin

Multi-tenant retail

179,300

39,057

March 24, 2015

Lake Worth Towne Crossing – Parcel (a)

Dallas

Land

—

400

May 4, 2015

Tysons Corner

Washington, D.C.

Multi-tenant retail

37,700

31,556

June 10, 2015

Woodinville Plaza

Seattle

Multi-tenant retail

170,800

35,250

July 31, 2015

Southlake Town Square – Outparcel (b)

Dallas

Single-user outparcel

13,800

8,440

August 27, 2015

Coal Creek Marketplace

Seattle

Multi-tenant retail

55,900

17,600

1,029,300

416,588


(a)	The Company acquired a parcel located at its Lake Worth Towne Crossing multi-tenant retail operating property.


(b)	The Company acquired a single-user outparcel located at its Southlake Town Square multi-tenant retail operating property that was subject to a ground lease with the Company prior to the transaction.

The following table summarizes the acquisition date fair values, before prorations, the Company recorded in conjunction with the acquisitions discussed above:



	Nine Months Ended September 30,
	2016			2015
Land	$	84,720		$	146,107
Building and other improvements	176,937			254,377
Acquired lease intangible assets (a)	25,016			39,986
Acquired lease intangible liabilities (b)	(3,991		)	(23,882		)
Mortgages payable, net	(15,316		)	—
Net assets acquired	$	267,366		$	416,588


(a)	The weighted average amortization period for acquired lease intangible assets is 6 years and 15 years for acquisitions completed during the nine months ended September 30, 2016 and 2015 , respectively.


(b)	The weighted average amortization period for acquired lease intangible liabilities is 11 years and 21 years for acquisitions completed during the nine months ended September 30, 2016 and 2015 , respectively.

The above acquisitions were funded using a combination of available cash on hand, proceeds from dispositions and proceeds from the Company’s unsecured revolving line of credit. Transaction costs totaling $913 and $1,297 for the nine months ended September 30, 2016 and 2015 , respectively, were expensed as incurred and are included in “General and administrative expenses” in the accompanying condensed consolidated statements of operations and other comprehensive income.

Included in the Company’s condensed consolidated statements of operations and other comprehensive income from the properties acquired that were accounted for as business combinations are $36,210 and $41,169 in total revenues and $7,760 and $7,575 in net income attributable to common shareholders from the date of acquisition through September 30, 2016 and 2015 , respectively. These amounts do not include the total revenue and net income attributable to common shareholders from the 2016 acquisitions of the anchor space improvements in Woodinville Plaza and the fee interest in Ashland & Roosevelt and the 2015 acquisition of a parcel at Lake Worth Towne Crossing as they have been accounted for as asset acquisitions.

Condensed Pro Forma Financial Information

The results of operations for the acquisitions accounted for as business combinations that were completed during the period, or after such period through the financial statement issuance date, for which financial information was available, are included in the following unaudited condensed pro forma financial information as if these acquisitions had been completed as of the beginning of the year prior to the acquisition date. The following unaudited condensed pro forma financial information is presented as if the 2016 acquisitions were completed as of January 1, 2015 and as if the 2015 acquisitions completed through the date the September 30,

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

2015 financial statements were issued, were completed as of January 1, 2014. The results of operations associated with the 2016 acquisitions of the anchor space improvements in Woodinville Plaza and the fee interest in Ashland & Roosevelt and the 2015 acquisition of a parcel at Lake Worth Towne Crossing have not been adjusted in the pro forma presentation as they have been accounted for as asset acquisitions. The results of operations associated with the 2015 acquisitions of the outparcels at Southlake Town Square on July 31, 2015 and Royal Oaks Village II on October 27, 2015 have not been adjusted in the pro forma presentation due to a lack of historical financial information. These pro forma results are for comparative purposes only and are not necessarily indicative of what the Company’s actual results of operations would have been had the acquisitions occurred at the beginning of the periods presented, nor are they necessarily indicative of future operating results.

The unaudited condensed pro forma financial information is as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Total revenues	$	144,526	$	156,158	$	444,622	$	473,387
Net income	$	72,494	$	77,232	$	147,421	$	118,753
Net income attributable to common shareholders	$	70,132	$	74,870	$	140,334	$	111,666
Earnings per common share – basic and diluted
Net income per common share attributable to common shareholders	$	0.30	$	0.32	$	0.59	$	0.47
Weighted average number of common shares outstanding – basic	236,783		236,439		236,692		236,348

Variable Interest Entities

During the nine months ended September 30, 2016 , the Company entered into agreements with a qualified intermediary related to Internal Revenue Code Section 1031 tax-deferred exchanges (1031 Exchanges). The Company loaned $65,419 , $39,215 and $23,522 to the VIEs to acquire Oak Brook Promenade, Tacoma South and Eastside, respectively. Each 1031 Exchange was completed during the three months ended September 30, 2016 and, in accordance with applicable provisions of the Code, within 180 days after the acquisition date of the property that is the subject of such 1031 Exchange. At the completion of the 1031 Exchanges, the sole membership interests of the VIEs were assigned to the Company and the respective outstanding loans were extinguished, resulting in the entities being wholly owned by the Company and no longer considered VIEs.

Prior to the completion of the 1031 Exchanges, the Company was deemed to be the primary beneficiary of the VIEs as it had the ability to direct the activities of the VIEs that most significantly impacted their economic performance and had all of the risks and rewards of ownership. Accordingly, the Company consolidated the VIEs. No value or income was attributed to the noncontrolling interests. The assets of the VIEs consisted of the investment properties which were operated by the Company.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(4) DISPOSITIONS

The Company closed on the following dispositions during the nine months ended September 30, 2016:



Date	Property Name	Property Type	Square Footage	Consideration		Aggregate Proceeds, Net (a)			Gain
February 1, 2016	The Gateway (b)	Multi-tenant retail	623,200	$	75,000	$	(795	)	$	3,868
February 10, 2016	Stateline Station	Multi-tenant retail	142,600	17,500		17,210			4,253
March 30, 2016	Six Property Portfolio (c)	Single-user retail	230,400	35,413		34,986			13,618
April 20, 2016	CVS Pharmacy – Oklahoma City	Single-user retail	10,900	4,676		4,608			1,764
June 2, 2016	Rite Aid Store (Eckerd) – Canandaigua & Tim Horton Donut Shop (d)	Single-user retail	16,600	5,400		5,333			1,444
June 15, 2016	Academy Sports – Midland (e)	Single-user retail	61,200	5,541		5,399			2,220
June 23, 2016	Four Rite Aid Portfolio (f)	Single-user retail	45,400	15,934		14,646			2,287
July 8, 2016	Broadway Shopping Center	Multi-tenant retail	190,300	20,500		20,103			7,958
July 21, 2016	Mid-Hudson Center	Multi-tenant retail	235,600	27,500		25,615			—
July 27, 2016	Rite Aid Store (Eckerd), Main St. – Buffalo	Single-user retail	10,900	3,388		3,296			344
July 29, 2016	Rite Aid Store (Eckerd) – Lancaster	Single-user retail	10,900	3,425		3,349			625
August 4, 2016	Alison’s Corner	Multi-tenant retail	55,100	7,850		7,559			3,334
August 5, 2016	Rite Aid Store (Eckerd) – Lake Ave.	Single-user retail	13,200	5,400		5,334			907
August 12, 2016	Maple Tree Place	Multi-tenant retail	489,000	90,000		87,047			15,566
August 12, 2016	CVS Pharmacy – Burleson	Single-user retail	10,900	4,190		4,102			1,425
August 18, 2016	Mitchell Ranch Plaza	Multi-tenant retail	199,600	55,625		54,305			33,612
August 22, 2016	Rite Aid Store (Eckerd), E. Main St. – Batavia	Single-user retail	13,800	5,050		4,924			1,249
September 9, 2016	Rite Aid Store (Eckerd) – Lockport	Single-user retail	13,800	4,690		4,415			753
September 9, 2016	Rite Aid Store (Eckerd), Ferry St. – Buffalo	Single-user retail	10,900	3,600		3,370			612
			2,384,300	$	390,682	$	304,806		$	95,839


(a)	Aggregate proceeds are net of transaction costs.

(b)

The property was disposed of through a lender-directed sale in full satisfaction of the Company’s $94,353 mortgage obligation. Immediately prior to the disposition, the lender reduced the Company’s loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653 .

(c)

Portfolio consists of the following properties: (i) Academy Sports – Houma, (ii) Academy Sports – Port Arthur, (iii) Academy Sports – San Antonio, (iv) CVS Pharmacy – Moore, (v) CVS Pharmacy – Saginaw and (vi) Rite Aid Store (Eckerd) – Olean. At the closing of the disposition, proceeds of $34,973 were temporarily restricted related to potential 1031 Exchanges. During the three months ended September 30, 2016 , the related 1031 Exchanges closed and the proceeds were released to the Company.


(d)	The terms of the disposition of Rite Aid Store (Eckerd) – Canandaigua and Tim Horton Donut Shop were negotiated as a single transaction.


(e)	At the closing of the disposition, proceeds of $5,383 were temporarily restricted related to a potential 1031 Exchange. During the three months ended September 30, 2016 , the related 1031 Exchange closed and the proceeds were released to the Company.


(f)	Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Cheektowaga, (ii) Rite Aid Store (Eckerd), W. Main St. – Batavia, (iii) Rite Aid Store (Eckerd), Union Rd. and (iv) Rite Aid Store (Eckerd) – Greece.

During the nine months ended September 30, 2016 , the Company also disposed of an outparcel for consideration of $2,639 and recorded a gain of $1,898 from the transaction. At the closing of the disposition, proceeds of $2,549 were temporarily restricted related to a potential 1031 Exchange. During the three months ended September 30, 2016 , the related 1031 Exchange closed and the proceeds were released to the Company. The aggregate proceeds, net of closing costs, from the property dispositions and this additional transaction totaled $307,355 with aggregate gains of $97,737 .

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company closed on the following dispositions during the nine months ended September 30, 2015:



Date	Property Name	Property Type	Square Footage	Consideration		Aggregate Proceeds, Net (a)		Gain
January 20, 2015	Aon Hewitt East Campus	Single-user office	343,000	$	17,233	$	16,495	$	—
February 27, 2015	Promenade at Red Cliff	Multi-tenant retail	94,500	19,050		18,848		4,572
April 7, 2015	Hartford Insurance Building	Single-user office	97,400	6,015		5,663		860
April 30, 2015	Rasmussen College	Single-user office	26,700	4,800		4,449		1,334
May 15, 2015	Mountain View Plaza	Multi-tenant retail	162,000	28,500		27,949		10,184
June 4, 2015	Massillon Commons	Multi-tenant retail	245,900	12,520		12,145		—
June 5, 2015	Citizen's Property Insurance Building	Single-user office	59,800	3,650		3,368		440
June 17, 2015	Pine Ridge Plaza	Multi-tenant retail	236,500	33,200		31,858		12,938
June 17, 2015	Bison Hollow	Multi-tenant retail	134,800	18,800		18,657		4,061
June 17, 2015	The Village at Quail Springs	Multi-tenant retail	100,400	11,350		11,267		3,824
July 17, 2015	Greensburg Commons	Multi-tenant retail	272,500	18,400		18,283		2,810
July 28, 2015	Arvada Connection and Arvada Marketplace	Multi-tenant retail	367,500	54,900		53,159		20,208
July 30, 2015	Traveler's Office Building	Single-user office	50,800	4,841		4,643		—
August 6, 2015	Shaw's Supermarket	Single-user retail	65,700	3,000		2,769		—
August 24, 2015	Harvest Towne Center	Multi-tenant retail	39,700	7,800		7,381		1,217
August 31, 2015	Trenton Crossing & McAllen Shopping Center (b)	Multi-tenant retail	265,900	39,295		38,410		13,760
September 15, 2015	The Shops at Boardwalk	Multi-tenant retail	122,400	27,400		26,634		3,146
September 29, 2015	Best on the Boulevard	Multi-tenant retail	204,400	42,500		41,542		15,932
September 29, 2015	Montecito Crossing	Multi-tenant retail	179,700	52,200		51,415		17,928
			3,069,600	$	405,454	$	394,935	$	113,214


(a)	Aggregate proceeds are net of transaction costs and exclude $272 of condemnation proceeds, which did not result in any additional gain recognition.


(b)	The terms of the disposition of Trenton Crossing and McAllen Shopping Center were negotiated as a single transaction.

None of the dispositions completed during the nine months ended September 30, 2016 and 2015 qualified for discontinued operations treatment.

As of September 30, 2016 , the Company had entered into a contract to sell Walgreens – Northwoods, a 16,300 square foot single-user retail property located in Northwoods, Missouri. This property qualified for held for sale accounting treatment upon meeting all applicable GAAP criteria during the quarter ended September 30, 2016 , at which time depreciation and amortization were ceased. As such, the assets and liabilities associated with this property are separately classified as held for sale in the condensed consolidated balance sheet as of September 30, 2016 . No properties qualified for held for sale accounting treatment as of December 31, 2015.

The following table presents the assets and liabilities associated with the investment property classified as held for sale:



	September 30, 2016
Assets
Land, building and other improvements	$	5,524
Accumulated depreciation	(2,042		)
Net investment properties	3,482
Other assets	99
Assets associated with investment properties held for sale	$	3,581

Liabilities
Other liabilities	$	36
Liabilities associated with investment properties held for sale	$	36

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(5) EQUITY COMPENSATION PLANS

The Company’s 2014 Long-Term Equity Compensation Plan, subject to certain conditions, authorizes the issuance of incentive and non-qualified stock options, restricted stock and restricted stock units, stock appreciation rights and other similar awards as well as cash-based awards to the Company’s employees, non-employee directors, consultants and advisors in connection with compensation and incentive arrangements that may be established by the Company’s board of directors or executive management.

The following table summarizes the Company’s unvested restricted shares as of and for the nine months ended September 30, 2016 :



	Unvested Restricted Shares		Weighted Average Grant Date Fair Value per Restricted Share
Balance as of January 1, 2016	788		$	15.52
Shares granted (a)	269		$	14.74
Shares vested	(460	)	$	15.48
Shares forfeited (b)	(10	)	$	14.70
Balance as of September 30, 2016 (c)	587		$	15.21


(a)	Shares granted vest over periods ranging from 0.4 years to 3.9 years in accordance with the terms of applicable award agreements.


(b)	Effective January 1, 2016, the Company made an accounting policy election to account for forfeitures when they occur.


(c)	As of September 30, 2016 , total unrecognized compensation expense related to unvested restricted shares was $4,120 , which is expected to be amortized over a weighted average term of 1.4 years .

In addition, during the nine months ended September 30, 2016 , performance restricted stock units (RSUs) were granted to the Company’s executives. In 2019, following the performance period which concludes on December 31, 2018, one-third of the RSUs will convert into shares of common stock and two-thirds will convert into restricted shares with a one year vesting term. As long as the minimum hurdle is achieved and the executive remains employed during the performance period, the RSUs will convert into shares of common stock and restricted shares at a conversion rate of between 50% and 200% based upon the Company’s Total Shareholder Return as compared to that of the peer companies within the National Association of Real Estate Investment Trusts (NAREIT) Shopping Center Index for 2016 through 2018. If an executive terminates employment during the performance period by reason of a qualified termination, as defined in the agreement, only a prorated portion of his or her outstanding RSUs will be eligible for conversion based upon the period in which the executive was employed during the performance period. If an executive terminates for any reason other than a qualified termination during the performance period, he or she would forfeit his or her outstanding RSUs. In 2019, additional shares of common stock will also be issued in an amount equal to the accumulated value of the dividends that would have been paid during the performance period on the shares of common stock and restricted shares issued at the end of the performance period divided by the then-current market price of the Company’s common stock. The Company calculated the grant date fair value per unit using a Monte Carlo simulation based on the probability of satisfying the market performance hurdles over the remainder of the performance period. Assumptions as of the grant dates included a weighted average risk-free interest rate of 0.89% , the Company’s historical common stock performance relative to the peer companies within the NAREIT Shopping Center Index and the Company’s weighted average common stock dividend yield of 4.59% .

The following table summarizes the Company’s unvested RSUs as of and for the nine months ended September 30, 2016 :



	Unvested RSUs		Weighted Average Grant Date Fair Value per RSU
RSUs eligible for future conversion as of January 1, 2016	174		$	14.20
RSUs granted	246		$	13.85
RSUs ineligible for conversion	(29	)	$	13.56
RSUs eligible for future conversion as of September 30, 2016 (a)	391		$	14.02


(a)	As of September 30, 2016 , total unrecognized compensation expense related to unvested RSUs was $3,861 , which is expected to be amortized over a weighted average term of 2.7 years .

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

During the three months ended September 30, 2016 and 2015 , the Company recorded compensation expense of $1,594 and $2,099 , respectively, related to unvested restricted shares and RSUs. During the nine months ended September 30, 2016 and 2015 , the Company recorded compensation expense of $5,296 and $8,225 , respectively, related to unvested restricted shares and RSUs. Included within the compensation expense recorded during the nine months ended September 30, 2015 is compensation expense of $1,680 related to the accelerated vesting of 134 restricted shares in conjunction with the departure of the Company’s former Chief Financial Officer and Treasurer. The total fair value of restricted shares vested during the nine months ended September 30, 2016 was $6,830 .

Prior to 2013, non-employee directors had been granted options to acquire shares under the Company’s Third Amended and Restated Independent Director Stock Option and Incentive Plan. During the three months ended September 30, 2016 , options to purchase two shares were exercised and options to purchase 10 shares were forfeited. As of September 30, 2016 , options to purchase 41 shares of common stock remained outstanding and exercisable. The Company did not grant any options in 2016 or 2015 and did not record any compensation expense related to stock options during the nine months ended September 30, 2016 and 2015 .

(6) MORTGAGES PAYABLE

The following table summarizes the Company’s mortgages payable:



	September 30, 2016						December 31, 2015
	Aggregate Principal Balance			Weighted Average Interest Rate		Weighted Average Years to Maturity	Aggregate Principal Balance				Weighted Average Interest Rate		Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	1,004,879		6.06	%	3.7	$	1,128,505		(b)	6.08	%	3.9
Premium, net of accumulated amortization	1,544						1,865
Discount, net of accumulated amortization	(633		)				(1		)
Capitalized loan fees, net of accumulated amortization	(5,701		)				(7,233		)
Mortgages payable, net	$	1,000,089					$	1,123,136


(a)	The fixed rate mortgages had interest rates ranging from 3.50% to 8.00% and 3.35% to 8.00% as of September 30, 2016 and December 31, 2015 , respectively.


(b)	Includes $7,910 of variable rate mortgage debt that was swapped to a fixed rate as of December 31, 2015 .

During the nine months ended September 30, 2016 , the Company disposed of The Gateway through a lender-directed sale in full satisfaction of its $94,353 mortgage obligation, which had a fixed interest rate of 6.57% . Immediately prior to the disposition, the lender reduced the Company’s loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653 . In addition, during the nine months ended September 30, 2016 , the Company repaid mortgages payable in the total amount of $35,344 which had a weighted average fixed interest rate of 4.34% and made scheduled principal payments of $9,900 related to amortizing loans. One of the mortgages repaid, with a principal balance of $7,750 at maturity, had been swapped to a fixed rate and the Company had guaranteed a portion of the outstanding balance. Upon repayment of the mortgage on its scheduled maturity date, the interest rate swap expired and the Company’s guarantee was extinguished. The Company also assumed a mortgage payable with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031 in conjunction with the acquisition of The Shoppes at Union Hill.

The majority of the Company’s mortgages payable require monthly payments of principal and interest, as well as reserves for real estate taxes and certain other costs. The Company’s properties and the related tenant leases are pledged as collateral for its mortgages payable. At times, the Company has borrowed funds financed as part of a cross-collateralized package, with cross-default provisions. In those circumstances, one or more of the Company’s properties may secure the debt of another of the Company’s properties. As of September 30, 2016 , the Company had a pool of mortgages with a principal balance of $391,436 that was cross-collateralized by the 48 properties in its IW JV 2009, LLC portfolio.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Debt Maturities

The following table shows the scheduled maturities and principal amortization of the Company’s indebtedness as of September 30, 2016 for the remainder of 2016 , each of the next four years and thereafter and the weighted average interest rates by year. The table does not reflect the impact of any debt activity that occurred after September 30, 2016 .



	2016			2017			2018			2019			2020			Thereafter			Total
Debt:
Fixed rate debt:
Mortgages payable (a)	$	2,865		$	227,451		$	11,647		$	444,324		$	4,334		$	314,258		$	1,004,879
Unsecured credit facility – fixed rate term loan (b)	—			—			—			—			—			250,000			250,000
Unsecured notes payable (c)	—			—			—			—			—			600,000			600,000
Total fixed rate debt	2,865			227,451			11,647			444,324			4,334			1,164,258			1,854,879

Variable rate debt:
Unsecured credit facility – variable rate term loan	—			—			200,000			—			—			—			200,000
Total variable rate debt	—			—			200,000			—			—			—			200,000
Total debt (d)	$	2,865		$	227,451		$	211,647		$	444,324		$	4,334		$	1,164,258		$	2,054,879

Weighted average interest rate on debt:
Fixed rate debt	7.18		%	5.08		%	6.52		%	7.49		%	4.58		%	3.85		%	4.90		%
Variable rate debt (e)	—			—			1.97		%	—			—			—			1.97		%
Total	7.18		%	5.08		%	2.22		%	7.49		%	4.58		%	3.85		%	4.61		%


(a)	Excludes mortgage premium of $1,544 and discount of $(633) , net of accumulated amortization, as of September 30, 2016 .


(b)	$250,000 of London Interbank Offered Rate (LIBOR)-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a weighted average fixed rate of 0.6677% through December 31, 2017.


(c)	Excludes discount of $(1,001) , net of accumulated amortization, as of September 30, 2016 and $100,000 of 12-year 4.24% senior unsecured notes which the Company expects to issue on December 28, 2016 pursuant to a note purchase agreement it entered into with certain institutional investors on September 30, 2016.


(d)	Total debt excludes capitalized loan fees of $(11,919) , net of accumulated amortization, as of September 30, 2016 which are included as a reduction to the respective debt balances. The weighted average years to maturity of consolidated indebtedness was 4.8 years as of September 30, 2016 .


(e)	Represents interest rates as of September 30, 2016 .

The Company plans on addressing its debt maturities through a combination of proceeds from asset dispositions, capital markets transactions and its unsecured revolving line of credit.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(7) UNSECURED NOTES PAYABLE

The following table summarizes the Company’s unsecured notes payable:



		September 30, 2016						December 31, 2015
Unsecured Notes Payable	Maturity Date	Principal Balance				Interest Rate/ Weighted Average Interest Rate		Principal Balance			Interest Rate/ Weighted Average Interest Rate
Senior notes – 4.12% due 2021	June 30, 2021	$	100,000			4.12	%	$	100,000		4.12	%
Senior notes – 4.58% due 2024	June 30, 2024	150,000				4.58	%	150,000			4.58	%
Senior notes – 4.00% due 2025	March 15, 2025	250,000				4.00	%	250,000			4.00	%
Senior notes – 4.08% due 2026 (a)	September 30, 2026	100,000			(a)	4.08	%	—			—	%
		600,000				4.18	%	500,000			4.20	%
Discount, net of accumulated amortization		(1,001		)				(1,090		)
Capitalized loan fees, net of accumulated amortization		(3,520		)				(3,334		)
	Total	$	595,479					$	495,576

(a)

On September 30, 2016, the Company issued $100,000 of 10-year 4.08% senior unsecured notes (Notes Due 2026) in a private placement transaction pursuant to a note purchase agreement it entered into with certain institutional investors on September 30, 2016. The proceeds were used to pay down the Company’s unsecured revolving line of credit and for general corporate purposes. Pursuant to the same note purchase agreement, the Company also expects to issue $100,000 of 12-year 4.24% senior unsecured notes on December 28, 2016.

The indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 ( 4.00% Notes Due 2025) (the Indenture) contains customary covenants and events of default. Pursuant to the terms of the Indenture, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum secured and total leverage ratios; (ii) a debt service coverage ratio; and (iii) maintenance of an unencumbered assets to unsecured debt ratio.

The note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (collectively, Notes Due 2021 and 2024) contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial covenants, some of which are based upon the financial covenants in effect in the Company’s primary credit facility, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage and unencumbered interest coverage ratios; and (iii) a minimum consolidated net worth.

The note purchase agreement governing the 4.08% senior unsecured notes due 2026 and that will govern the 4.24% senior unsecured notes due 2028 (collectively, Notes Due 2026 and 2028) contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) a minimum interest coverage ratio; (iii) a fixed charge coverage ratio (as set forth in the Company’s unsecured credit facility); and (iv) an unencumbered interest coverage ratio (as set forth in the Company’s unsecured credit facility and the note purchase agreement governing the Notes Due 2021 and 2024).

As of September 30, 2016 , management believes the Company was in compliance with the financial covenants under the Indenture and the note purchase agreements.

(8) UNSECURED CREDIT FACILITY

On January 6, 2016, the Company entered into its fourth amended and restated unsecured credit agreement with a syndicate of financial institutions led by KeyBank National Association serving as administrative agent and Wells Fargo Bank, National Association serving as syndication agent to provide for an unsecured credit facility aggregating $1,200,000 . The Company’s unsecured credit facility consists of a $750,000 unsecured revolving line of credit, a $250,000 unsecured term loan and a $200,000 unsecured term loan (collectively, the Company’s Unsecured Credit Facility) and is priced on a leverage grid at a rate of LIBOR plus a credit spread. The Company received investment grade credit ratings from two rating agencies in 2014. In accordance with the unsecured credit agreement, the Company may elect to convert to an investment grade pricing grid. As of September 30, 2016 , making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table summarizes the key terms of the Company’s Unsecured Credit Facility:

Leverage-Based Pricing

Ratings-Based Pricing

Unsecured Credit Facility

Maturity Date

Extension Option

Extension Fee

Credit Spread

Unused Fee

Credit Spread

Facility Fee

$250,000 unsecured term loan

1/5/2021

N/A

1.30% - 2.20%

N/A

0.90% - 1.75%

N/A

$200,000 unsecured term loan

5/11/2018

2 one year

0.15%

1.45% - 2.20%

N/A

1.05% - 2.05%

N/A

$750,000 unsecured revolving line of credit

1/5/2020

2 six month

0.075%

1.35% - 2.25%

0.15% - 0.25%

0.85% - 1.55%

0.125% - 0.30%

The Company’s Unsecured Credit Facility has a $400,000 accordion option that allows the Company, at its election, to increase the total credit facility up to $1,600,000 , subject to (i) customary fees and conditions including, but not limited to, the absence of an event of default as defined in the agreement and (ii) the Company’s ability to obtain additional lender commitments.

The following table summarizes the Company’s Unsecured Credit Facility:



	September 30, 2016					December 31, 2015
Unsecured Credit Facility	Balance			Interest Rate/ Weighted Average Interest Rate		Balance			Interest Rate/ Weighted Average Interest Rate
$250,000 unsecured term loan – fixed rate (a)	$	250,000		1.97	%	$	—		—	%
$200,000 unsecured term loan – variable rate	200,000			1.97	%	—			—	%
$450,000 unsecured term loan – fixed rate portion (b)	—			—	%	300,000			1.99	%
$450,000 unsecured term loan – variable rate portion	—			—	%	150,000			1.88	%
Subtotal	450,000					450,000
Capitalized loan fees, net of accumulated amortization	(2,698		)			(2,474		)
Term loans, net	447,302					447,526
Revolving line of credit – variable rate (c)	—			1.87	%	100,000			1.93	%
Total unsecured credit facility, net	$	447,302		1.97	%	$	547,526		1.95	%


(a)	As of September 30, 2016 , $250,000 of LIBOR-based variable rate debt has been swapped to a weighted average fixed rate of 0.6677% plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of September 30, 2016 .


(b)	As of December 31, 2015, $300,000 of LIBOR-based variable rate debt had been swapped to a fixed rate of 0.53875% plus a credit spread based on a leverage grid ranging from 1.45% to 2.00% through February 2016. The applicable credit spread was 1.45% as of December 31, 2015.


(c)	Excludes capitalized loan fees, which are included in “Other assets, net” in the accompanying condensed consolidated balance sheets.

The fourth amended and restated unsecured credit agreement contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of the fourth amended and restated unsecured credit agreement, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of September 30, 2016 , management believes the Company was in compliance with the financial covenants and default provisions under the unsecured credit agreement.

The Company previously had a $1,000,000 unsecured credit facility that consisted of a $550,000 unsecured revolving line of credit and a $450,000 unsecured term loan that bore interest at a rate of LIBOR plus a credit spread ranging from 1.45% to 2.05% and was scheduled to mature on May 12, 2017 for the unsecured revolving line of credit and May 11, 2018 for the unsecured term loan.

(9) DERIVATIVES

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

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company utilizes two interest rate swaps to hedge the variable cash flows associated with variable rate debt. The effective portion of changes in the fair value of derivatives that are designated and that qualify as cash flow hedges is recorded in “Accumulated other comprehensive income (loss)” and is reclassified to interest expense as interest payments are made on the Company’s variable rate debt. Over the next 12 months, the Company estimates that an additional $34 will be reclassified as a decrease to interest expense. The ineffective portion of the change in fair value of derivatives is recognized directly in earnings.

During the nine months ended September 30, 2016 , the Company entered into the following two interest rate swaps which effectively convert one-month floating rate LIBOR to a fixed rate:



Effective Date	Notional		Fixed Interest Rate		Termination Date
March 1, 2016	$	100,000	0.6591	%	December 31, 2017
May 16, 2016	$	150,000	0.6735	%	December 31, 2017

The Company previously had a $300,000 interest rate swap that matured on February 24, 2016. In addition, during the nine months ended September 30, 2016 , the Company repaid a $7,750 variable rate mortgage payable that had been swapped to a fixed rate. Upon repayment of the mortgage on its scheduled maturity date, the interest rate swap expired. As of December 31, 2015, the outstanding principal balance of this variable rate mortgage was $7,910 .

The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:



	Number of Instruments		Notional
Interest Rate Derivatives	September 30, 2016	December 31, 2015	September 30, 2016		December 31, 2015
Interest rate swaps	2	2	$	250,000	$	307,910

The table below presents the estimated fair value of the Company’s derivative financial instruments as well as their classification in the condensed consolidated balance sheets. The valuation techniques utilized are described in Note 13 to the condensed consolidated financial statements.

September 30, 2016

December 31, 2015

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as cash flow hedges:

Interest rate swaps

Other assets, net

138

N/A

—

Interest rate swaps

N/A

—

Other liabilities

The following table presents the effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations and other comprehensive income:



Derivatives in Cash Flow Hedging Relationships	Amount of (Gain) Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)					Location of Loss Reclassified from Accumulated Other Comprehensive Income (AOCI) into Income (Effective Portion)	Amount of Loss Reclassified from AOCI into Income (Effective Portion)				Location of Gain Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Interest rate swaps	Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
2016	$	(534	)	$	153	Interest expense	$	132	$	342	Other income, net	$	(38	)	$	(35	)
2015	$	109		$	691	Interest expense	$	264	$	848	Other income, net	$	(4	)	$	(25	)

(10) EQUITY

In December 2015, the Company entered into a new at-the-market (ATM) equity program under which it may issue and sell shares of its Class A common stock, having an aggregate offering price of up to $250,000 , from time to time. The 2015 ATM equity program supersedes the Company’s previous $200,000 ATM equity program which was in place from March 2013 through

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

November 2015. Actual sales may depend on a variety of factors, including, among others, market conditions and the trading price of the Company’s Class A common stock. Any net proceeds are expected to be used for general corporate purposes, which may include the funding of acquisitions and redevelopment activities and the repayment of debt, including the Company’s Unsecured Credit Facility. The Company did not sell any shares under its ATM equity programs during the nine months ended September 30, 2016 and 2015 . As of September 30, 2016 , the Company had Class A common shares having an aggregate offering price of up to $250,000 remaining available for sale under its ATM equity program.

In December 2015, the Company’s board of directors authorized a common stock repurchase program under which the Company may repurchase, from time to time, up to a maximum of $250,000 of shares of its Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of the Company’s assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program may be suspended or terminated at any time without prior notice. As of September 30, 2016 , the Company had not repurchased any shares under this program.

(11) EARNINGS PER SHARE

The following table summarizes the components used in the calculation of basic and diluted earnings per share (EPS):



	Three Months Ended September 30,								Nine Months Ended September 30,
	2016				2015				2016				2015
Numerator:
Income from continuing operations	$	6,109			$	3,328			$	50,785			$	8,875
Gain on sales of investment properties	66,385				75,001				97,737				113,214
Preferred stock dividends	(2,362		)		(2,362		)		(7,087		)		(7,087		)
Net income attributable to common shareholders	70,132				75,967				141,435				115,002
Distributions paid on unvested restricted shares	(108		)		(130		)		(348		)		(340		)
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	70,024			$	75,837			$	141,087			$	114,662

Denominator:
Denominator for earnings per common share – basic:
Weighted average number of common shares outstanding	236,783			(a)	236,439			(b)	236,692			(a)	236,348			(b)
Effect of dilutive securities:
Stock options	2			(c)	2			(c)	2			(c)	2			(c)
RSUs	323			(d)	112			(e)	289			(d)	50			(e)
Denominator for earnings per common share – diluted:
Weighted average number of common and common equivalent shares outstanding	237,108				236,553				236,983				236,400


(a)	Excludes 587 shares of unvested restricted common stock as of September 30, 2016 , which equate to 596 and 657 shares, respectively, on a weighted average basis for the three and nine months ended September 30, 2016 . These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the shares are released.


(b)	Excludes 848 shares of unvested restricted common stock as of September 30, 2015 , which equate to 818 and 760 shares, respectively, on a weighted average basis for the three and nine months ended September 30, 2015 . These shares were excluded from the computation of basic EPS as the contingencies remained and the shares had not been released as of the end of the reporting period.

(c)

There were outstanding options to purchase 41 and 53 shares of common stock as of September 30, 2016 and 2015 , respectively, at a weighted average exercise price of $19.33 and $19.39 , respectively. Of these totals, outstanding options to purchase 35 and 45 shares of common stock as of September 30, 2016 and 2015 , respectively, at a weighted average exercise price of $20.63 and $20.74 , respectively, have been excluded from the common shares used in calculating diluted earnings per share as including them would be anti-dilutive.

(d)

There were 391 RSUs eligible for future conversion following the performance periods as of September 30, 2016 (see Note 5 to the condensed consolidated financial statements), which equate to 391 and 360 RSUs on a weighted average basis for the three and nine months ended September 30, 2016 , respectively. These contingently issuable shares are included in diluted EPS based on the weighted average number of shares that would be outstanding during the period, if any, assuming the end of the reporting period was the end of the contingency periods.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(e)

There were 180 RSUs eligible for future conversion following the performance period as of September 30, 2015 , which equate to 168 and 76 RSUs on a weighted average basis for the three and nine months ended September 30, 2015 , respectively. These contingently issuable shares are included in diluted EPS based on the weighted average number of shares that would have been outstanding during the period, if any, assuming September 30, 2015 was the end of the contingency period.

(12) PROVISION FOR IMPAIRMENT OF INVESTMENT PROPERTIES

As of September 30, 2016 and 2015 , the Company identified indicators of impairment at certain of its properties. Such indicators included a low occupancy rate, difficulty in leasing space and related cost of re-leasing, financially troubled tenants or reduced anticipated holding periods. The following table summarizes the results of these analyses as of September 30, 2016 and 2015 :



	September 30, 2016		September 30, 2015
Number of properties for which indicators of impairment were identified	5		3		(a)
Less: number of properties for which an impairment charge was recorded	1		—
Less: number of properties that were held for sale as of the date the analysis was performed for which indicators of impairment were identified but no impairment charge was recorded	1		—
Remaining properties for which indicators of impairment were identified but no impairment charge was considered necessary	3		3

Weighted average percentage by which the projected undiscounted cash flows exceeded its respective carrying value for each of the remaining properties	14	%	39	%


(a)	Includes two properties which have subsequently been sold as of September 30, 2016 .

The Company recorded the following investment property impairment charges during the nine months ended September 30, 2016 :



Property Name	Property Type	Impairment Date	Square Footage	Provision for Impairment of Investment Properties
South Billings Center (a)	Development	March 31, 2016	—	$	2,164
Mid-Hudson Center (b)	Multi-tenant retail	June 30, 2016	235,600	4,142
Saucon Valley Square (c)	Multi-tenant retail	September 30, 2016	80,700	4,742
				$	11,048
	Estimated fair value of impaired properties as of impairment date			$	37,100


(a)	The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract, which was subsequently terminated. The property was not under active development as of September 30, 2016 .


(b)	The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was classified as held for sale as of June 30, 2016 and was sold on July 21, 2016.


(c)	The Company recorded an impairment charge driven by a change in the estimated holding period for the property.

The Company recorded the following investment property impairment charges during the nine months ended September 30, 2015 :



Property Name	Property Type	Impairment Date	Square Footage	Provision for Impairment of Investment Properties
Massillon Commons (a)	Multi-tenant retail	June 4, 2015	245,900	$	2,289
Traveler’s Office Building (b)	Single-user office	June 30, 2015	50,800	1,655
Shaw’s Supermarket (a)	Single-user retail	August 6, 2015	65,700	169
				$	4,113
	Estimated fair value of impaired properties as of impairment date			$	20,970


(a)	The Company recorded impairment charges based upon the terms and conditions of an executed sales contract for the respective properties, which were sold during 2015.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


(b)	The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was classified as held for sale as of June 30, 2015 and was sold on July 30, 2015.

The Company can provide no assurance that material impairment charges with respect to its investment properties will not occur in future periods.

(13) FAIR VALUE MEASUREMENTS

The following table presents the carrying value and estimated fair value of the Company’s financial instruments:



	September 30, 2016				December 31, 2015
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Derivative asset	$	138	$	138	$	—	$	—
Financial liabilities:
Mortgages payable, net	$	1,000,089	$	1,094,472	$	1,123,136	$	1,213,620
Unsecured notes payable, net	$	595,479	$	617,473	$	495,576	$	486,701
Unsecured term loans, net	$	447,302	$	450,000	$	447,526	$	450,000
Unsecured revolving line of credit	$	—	$	—	$	100,000	$	100,000
Derivative liability	$	—	$	—	$	85	$	85

The carrying value of the derivative asset is included in “Other assets, net” and the carrying value of the derivative liability is included in “Other liabilities” in the accompanying condensed consolidated balance sheets.

Recurring Fair Value Measurements

The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.



	Fair Value
	Level 1		Level 2		Level 3		Total
September 30, 2016
Derivative asset	$	—	$	138	$	—	$	138

December 31, 2015
Derivative liability	$	—	$	85	$	—	$	85

Derivatives: The fair value of the derivative asset and derivative liability are determined using a discounted cash flow analysis on the expected future cash flows of each derivative. This analysis utilizes observable market data including forward yield curves and implied volatilities to determine the market’s expectation of the future cash flows of the variable component. The fixed and variable components of the derivative are then discounted using calculated discount factors developed based on the LIBOR swap rate and are aggregated to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2016 and December 31, 2015 , the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation. As a result, the Company has determined that its derivative valuations in their entirety are classified within Level 2 of the fair value hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements. The Company’s derivative instruments are further described in Note 9 to the condensed consolidated financial statements.

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Nonrecurring Fair Value Measurements

The following table presents the Company’s assets measured at fair value on a nonrecurring basis as of September 30, 2016 aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to properties remeasured to fair value during the nine months ended September 30, 2016 , except for those properties sold prior to September 30, 2016 . Methods and assumptions used to estimate the fair value of these assets are described after the table.



	Fair Value
	Level 1		Level 2			Level 3			Total		Provision for Impairment (a)
September 30, 2016
Investment properties	$	—	$	3,000	(b)	$	6,600	(c)	$	9,600	$	6,906


(a)	Excludes impairment charges recorded on investment properties sold prior to September 30, 2016.


(b)	Represents the fair value of the Company’s South Billings Center development property, which was not under active development during the nine months ended September 30, 2016 . The estimated fair value of South Billings Center was based upon the expected sales price from the executed sales contract, which was subsequently terminated, and determined to be a Level 2 input.

(c)

Represents the fair value of the Company’s Saucon Valley Square investment property. The estimated fair value of Saucon Valley Square was determined using the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding period to a present value at a risk-adjusted rate. Discount rates, growth assumptions and terminal capitalization rates utilized in this approach are derived from property-specific information, market transactions and other financial and industry data. The terminal capitalization rate and discount rate are significant inputs to this valuation. The following are the key Level 3 inputs used in estimating the fair value of Saucon Valley Square as of September 30, 2016 , the date the asset was measured at fair value:



		Saucon Valley Square
Rental growth rates		Varies (i)
Operating expense growth rate		3.10%
Discount rate		9.35%
Terminal capitalization rate		8.35%


(i)	Since cash flow models are established at the tenant level, projected rental revenue growth rates fluctuate over the course of the estimated holding period based upon the timing of lease rollover, amount of available space and other property and space-specific factors.

The Company did not have any assets measured at fair value on a nonrecurring basis as of December 31, 2015.

Fair Value Disclosures

The following table presents the Company’s financial liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.



	Fair Value
	Level 1		Level 2		Level 3		Total
September 30, 2016
Mortgages payable, net	$	—	$	—	$	1,094,472	$	1,094,472
Unsecured notes payable, net	$	249,908	$	—	$	367,565	$	617,473
Unsecured term loans, net	$	—	$	—	$	450,000	$	450,000

December 31, 2015
Mortgages payable, net	$	—	$	—	$	1,213,620	$	1,213,620
Unsecured notes payable, net	$	239,482	$	—	$	247,219	$	486,701
Unsecured term loans, net	$	—	$	—	$	450,000	$	450,000
Unsecured revolving line of credit	$	—	$	—	$	100,000	$	100,000

Table of Contents

RETAIL PROPERTIES OF AMERICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Mortgages payable, net: The Company estimates the fair value of its mortgages payable by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rate for each of the Company’s individual mortgages payable based upon the specific terms of the agreement, including the term to maturity, the quality and nature of the underlying property and its leverage ratio. The rates used range from 2.5% to 3.8% and 2.2% to 6.0% as of September 30, 2016 and December 31, 2015 , respectively.

Unsecured notes payable, net: The quoted market price as of September 30, 2016 was used to value the Company’s 4.00% Notes Due 2025. The Company estimates the fair value of its Notes Due 2021 and 2024 and Notes Due 2026 by discounting the future cash flows at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The weighted average rates used were 3.61% and 4.64% as of September 30, 2016 and December 31, 2015 , respectively.

Unsecured term loans, net: The Company estimates the fair value of its unsecured term loans, net by discounting the anticipated future cash flows related to the credit spreads at rates currently offered to the Company by its lenders for similar instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The weighted average rates used to discount the credit spreads were 1.37% and 1.30% as of September 30, 2016 and December 31, 2015 , respectively.

Unsecured revolving line of credit: The Company estimates the fair value of its unsecured revolving line of credit by discounting the anticipated future cash flows related to the credit spreads at rates currently offered to the Company by its lenders for similar facilities of comparable maturity. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The rate used to discount the credit spread was 1.35% as of December 31, 2015 . There were no amounts drawn on the unsecured revolving line of credit as of September 30, 2016 .

There were no transfers between the levels of the fair value hierarchy during the nine months ended September 30, 2016 .

(14) COMMITMENTS AND CONTINGENCIES

As of September 30, 2016 , the Company had letter(s) of credit outstanding totaling $143 which serve as collateral for certain capital improvements at one of its properties and reduce the available borrowings on its unsecured revolving line of credit.

As of September 30, 2016 , the Company had one active redevelopment at Reisterstown Road Plaza located in Baltimore, Maryland. The Company estimates that it will incur net costs of approximately $11,000 to $12,000 related to the redevelopment, of which $610 has been incurred as of September 30, 2016 .

(15) LITIGATION

The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the Company’s condensed consolidated financial statements.

(16) SUBSEQUENT EVENTS

On October 24, 2016, the Company’s board of directors (Board) increased the number of directors comprising the Board from eight to nine and appointed Robert G. Gifford as a Director of the Company, effective immediately, to serve until the Company’s 2017 annual meeting of stockholders.

On October 25, 2016, the Company declared the cash dividend for the fourth quarter of 2016 for its 7.00% Series A cumulative redeemable preferred stock. The dividend of $0.4375 per preferred share will be paid on December 30, 2016 to preferred shareholders of record at the close of business on December 20, 2016.

On October 25, 2016, the Company declared the distribution for the fourth quarter of 2016 of $0.165625 per share on its outstanding Class A common stock, which will be paid on January 10, 2017 to Class A common shareholders of record at the close of business on December 22, 2016.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act). Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “should,” “intends,” “plans,” “estimates,” “continue” or “anticipates” and variations of such words or similar expressions or the negative of such words. You can also identify forward-looking statements by discussions of strategies, plans or intentions. Risks, uncertainties and changes in the following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:


•	economic, business and financial conditions, and changes in our industry and changes in the real estate markets in particular;


•	economic and other developments in the state of Texas and in other markets where we have a high concentration of properties;


•	our business strategy;


•	our projected operating results;


•	rental rates and/or vacancy rates;


•	frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants;


•	bankruptcy or insolvency of a major tenant or a significant number of smaller tenants;


•	interest rates or operating costs;


•	real estate and zoning laws and changes in real property tax rates;


•	real estate valuations;


•	our leverage;


•	our ability to generate sufficient cash flows to service our outstanding indebtedness and make distributions to our shareholders;


•	our ability to obtain necessary outside financing;


•	the availability, terms and deployment of capital;


•	general volatility of the capital and credit markets and the market price of our Class A common stock;


•	risks generally associated with real estate acquisitions and dispositions, including our ability to identify and pursue acquisition and disposition opportunities;


•	risks generally associated with redevelopment, including the impact of construction delays and cost overruns, our ability to lease redeveloped space and our ability to identify and pursue redevelopment opportunities;


•	composition of members of our senior management team;


•	our ability to attract and retain qualified personnel;


•	our ability to continue to qualify as a real estate investment trust (REIT);


•	governmental regulations, tax laws and rates and similar matters;


•	our compliance with laws, rules and regulations;


•	environmental uncertainties and exposure to natural disasters;

Table of Contents


•	insurance coverage; and


•	the likelihood or actual occurrence of terrorist attacks in the U.S.

For a further discussion of these and other factors that could impact our future results, performance or transactions, see Item 1A. “Risk Factors” in this document and in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016. Readers should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements). We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q, except as required by applicable law.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes included in this report.

Executive Summary

Retail Properties of America, Inc. is a REIT and is one of the largest owners and operators of high quality, strategically located shopping centers in the United States. As of September 30, 2016 , we owned 174 retail operating properties representing 26,515,000 square feet of gross leasable area (GLA). Our retail operating portfolio includes (i) power centers, (ii) neighborhood and community centers, and (iii) lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties.

The following table summarizes our operating portfolio as of September 30, 2016 :



Property Type	Number of Properties	GLA (in thousands)	Occupancy		Percent Leased Including Leases Signed (a)
Operating portfolio:
Multi-tenant retail
Power centers	52	11,872	94.5	%	96.5	%
Neighborhood and community centers	83	10,251	91.5	%	94.0	%
Lifestyle centers and mixed-use properties	14	3,645	88.1	%	88.7	%
Total multi-tenant retail	149	25,768	92.4	%	94.4	%
Single-user retail	25	747	100.0	%	100.0	%
Total retail operating portfolio	174	26,515	92.6	%	94.5	%
Office	1	895	100.0	%	100.0	%
Total operating portfolio (b)	175	27,410	92.9	%	94.7	%


(a)	Includes leases signed but not commenced.


(b)	Excludes one single-user retail operating property classified as held for sale as of September 30, 2016 .

In addition to our operating portfolio, we owned one development property, which was not under active development, and one property where we have begun redevelopment as of September 30, 2016 .

Table of Contents

Company Highlights — Nine Months Ended September 30, 2016

Acquisitions

During the nine months ended September 30, 2016 , we continued to execute our investment strategy by acquiring six multi-tenant retail operating properties, the fee interest in an existing wholly-owned multi-tenant retail operating property and the anchor space improvements in an existing wholly-owned multi-tenant retail operating property for a total purchase price of $283,337 .

The following table summarizes our acquisitions during the nine months ended September 30, 2016 :

Date

Property Name

Metropolitan
Statistical Area (MSA)

Property Type

Square

Footage

Acquisition

Price

January 15, 2016

Shoppes at Hagerstown (a)

Hagerstown

Multi-tenant retail

113,000

27,055

January 15, 2016

Merrifield Town Center II (a)

Washington, D.C.

Multi-tenant retail

76,000

45,676

March 29, 2016

Oak Brook Promenade

Chicago

Multi-tenant retail

183,200

65,954

April 1, 2016

The Shoppes at Union Hill (b)

New York

Multi-tenant retail

91,700

63,060

April 29, 2016

Ashland & Roosevelt – Fee Interest (c)

Chicago

Ground lease interest

—

13,850

May 5, 2016

Tacoma South

Seattle

Multi-tenant retail

230,700

39,400

June 15, 2016

Eastside

Dallas

Multi-tenant retail

67,100

23,842

August 30, 2016

Woodinville Plaza – Anchor Space

Improvements (d)

Seattle

Anchor space improvements (d)

—

4,500

761,700

283,337


(a)	These properties were acquired as a two-property portfolio. Merrifield Town Center II also contains 62,000 square feet of storage space for a total of 138,000 square feet.


(b)	In conjunction with the acquisition, we assumed mortgage debt with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031.

(c)

We acquired the fee interest in an existing wholly-owned multi-tenant retail operating property located in Chicago, Illinois, which was previously subject to a ground lease with a third party. In conjunction with this transaction, we reversed the straight-line ground rent liability of $6,978, which is reflected as “Gain on extinguishment of other liabilities” in the accompanying condensed consolidated statements of operations and other comprehensive income.


(d)	We acquired the anchor space improvements, which were previously subject to a ground lease with us, in an existing wholly-owned multi-tenant retail operating property located in Woodinville, Washington.

In total for 2016 , we expect to acquire approximately $400,000 to $450,000 of strategic acquisitions in our target markets, some of which have been, and some of which may be, structured as Internal Revenue Code Section 1031 tax-deferred exchanges (1031 Exchanges).

Dispositions

During the nine months ended September 30, 2016 , we continued to pursue targeted dispositions of select non-target and single-user properties. Consideration from dispositions totaled $390,682 and included the sales of seven multi-tenant retail operating properties aggregating 1,935,400 square feet for total consideration of $293,975 and 21 single-user retail properties aggregating 448,900 square feet for total consideration of $96,707.

Table of Contents

The following table summarizes our dispositions during the nine months ended September 30, 2016 :



Date	Property Name	Property Type	Square Footage	Consideration
February 1, 2016	The Gateway (a)	Multi-tenant retail	623,200	$	75,000
February 10, 2016	Stateline Station	Multi-tenant retail	142,600	17,500
March 30, 2016	Six Property Portfolio (b)	Single-user retail	230,400	35,413
April 20, 2016	CVS Pharmacy – Oklahoma City	Single-user retail	10,900	4,676
June 2, 2016	Rite Aid Store (Eckerd) – Canandaigua & Tim Horton Donut Shop (c)	Single-user retail	16,600	5,400
June 15, 2016	Academy Sports – Midland (d)	Single-user retail	61,200	5,541
June 23, 2016	Four Rite Aid Portfolio (e)	Single-user retail	45,400	15,934
July 8, 2016	Broadway Shopping Center	Multi-tenant retail	190,300	20,500
July 21, 2016	Mid-Hudson Center	Multi-tenant retail	235,600	27,500
July 27, 2016	Rite Aid Store (Eckerd), Main St. – Buffalo	Single-user retail	10,900	3,388
July 29, 2016	Rite Aid Store (Eckerd) – Lancaster	Single-user retail	10,900	3,425
August 4, 2016	Alison’s Corner	Multi-tenant retail	55,100	7,850
August 5, 2016	Rite Aid Store (Eckerd) – Lake Ave.	Single-user retail	13,200	5,400
August 12, 2016	Maple Tree Place	Multi-tenant retail	489,000	90,000
August 12, 2016	CVS Pharmacy – Burleson	Single-user retail	10,900	4,190
August 18, 2016	Mitchell Ranch Plaza	Multi-tenant retail	199,600	55,625
August 22, 2016	Rite Aid Store (Eckerd), E. Main St. – Batavia	Single-user retail	13,800	5,050
September 9, 2016	Rite Aid Store (Eckerd) – Lockport	Single-user retail	13,800	4,690
September 9, 2016	Rite Aid Store (Eckerd), Ferry St. – Buffalo	Single-user retail	10,900	3,600
			2,384,300	$	390,682

(a)

The property was disposed of through a lender-directed sale in full satisfaction of our $94,353 mortgage obligation. Immediately prior to the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653.

(b)


(c)	The terms of the disposition of Rite Aid Store (Eckerd) – Canandaigua and Tim Horton Donut Shop were negotiated as a single transaction.


(d)	At the closing of the disposition, proceeds of $5,383 were temporarily restricted related to a potential 1031 Exchange. During the three months ended September 30, 2016 , the related 1031 Exchange closed and the proceeds were released to us.


(e)	Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Cheektowaga, (ii) Rite Aid Store (Eckerd) – W. Main St., Batavia, (iii) Rite Aid Store (Eckerd) – Union Rd., West Seneca and (iv) Rite Aid Store (Eckerd) – Greece.

During the nine months ended September 30, 2016 , we also disposed of an outparcel for consideration of $2,639. At the closing of the disposition, proceeds of $2,549 were temporarily restricted related to a potential 1031 Exchange. During the three months ended September 30, 2016 , the related 1031 Exchange closed and the proceeds were released to us.

In total for 2016 , we continue to expect targeted dispositions to be approximately $600,000 to $700,000, some of which have been, and some of which may be, structured as 1031 Exchanges.

Table of Contents

Market Summary

As a result of our capital recycling efforts over the past several years, we increased the amount of annualized base rent (ABR) in our target markets to 64.6% of our total multi-tenant retail ABR. The following table summarizes our operating portfolio by market as of September 30, 2016 :



Property Type/Market	Number of Properties	ABR (a)		% of Total Multi-Tenant Retail ABR (a)		ABR per Occupied Sq. Ft.		GLA (in thousands) (a)	% of Total Multi-Tenant Retail GLA (a)		Occupancy		% Leased Including Signed
Multi-Tenant Retail:
Target Markets
Dallas, Texas	20	$	81,261	20.3	%	$	21.55	4,094	15.9	%	92.1	%	93.5	%
Washington, D.C. / Baltimore, Maryland	13	43,404		10.8	%	21.04		2,388	9.3	%	86.4	%	86.7	%
New York, New York	8	33,864		8.4	%	27.74		1,260	4.9	%	96.9	%	98.0	%
Chicago, Illinois	6	19,988		5.0	%	19.87		1,076	4.2	%	93.5	%	94.5	%
Seattle, Washington	8	19,352		4.8	%	14.23		1,473	5.7	%	92.3	%	94.5	%
Atlanta, Georgia	9	18,988		4.7	%	12.86		1,513	5.9	%	97.6	%	98.2	%
Houston, Texas	9	15,231		3.8	%	14.01		1,141	4.4	%	95.3	%	95.9	%
San Antonio, Texas	3	11,770		2.9	%	16.54		724	2.8	%	98.3	%	98.6	%
Phoenix, Arizona	3	10,000		2.5	%	17.14		632	2.4	%	92.3	%	92.5	%
Austin, Texas	4	5,227		1.4	%	15.96		350	1.4	%	93.6	%	93.6	%
Subtotal	83	259,085		64.6	%	19.04		14,651	56.9	%	92.9	%	93.8	%

Non-Target – Top 50 MSAs	29	57,811		14.4	%	15.41		4,326	16.7	%	86.7	%	94.2	%

Subtotal Target Markets and Top 50 MSAs	112	316,896		79.0	%	18.25		18,977	73.6	%	91.5	%	93.9	%

Non-Target – Other	37	84,020		21.0	%	13.01		6,791	26.4	%	95.1	%	95.7	%

Total Multi-Tenant Retail	149	400,916		100.0	%	16.84		25,768	100.0	%	92.4	%	94.4	%

Single-User Retail	25	17,251				23.09		747			100.0	%	100.0	%

Total Retail	174	418,167				17.03		26,515			92.6	%	94.5	%

Office	1	10,476				11.71		895			100.0	%	100.0	%

Total Operating Portfolio (b)	175	$	428,643			$	16.83	27,410			92.9	%	94.7	%


(a)	Excludes $8,257 of multi-tenant retail ABR and 740 square feet of multi-tenant retail GLA attributable to our active redevelopment, which is located in the Washington, D.C./Baltimore MSA. Including these amounts, 65.3% of our multi-tenant retail ABR and 58.1% of our multi-tenant retail GLA is located in Target Markets.


(b)	Excludes one single-user retail operating property classified as held for sale as of September 30, 2016 .

Leasing Activity

The following table summarizes the leasing activity in our retail operating portfolio during the nine months ended September 30, 2016 . Leases with terms of less than 12 months have been excluded from the table.



	Number of Leases Signed	GLA Signed (in thousands)	New Contractual Rent per Square Foot (PSF) (a)		Prior Contractual Rent PSF (a)		% Change over Prior ABR (a) (b)		Weighted Average Lease Term	Tenant Allowances PSF
Comparable Renewal Leases	283	1,964	$	18.92	$	17.65	7.2	%	4.72	$	1.41
Comparable New Leases	44	278	$	17.84	$	16.07	11.0	%	9.59	$	28.22
Non-Comparable New and Renewal Leases (c)	77	588	$	12.63	N/A		N/A		7.47	$	16.38
Total	404	2,830	$	18.78	$	17.46	7.6	%	5.62	$	7.16


(a)	Total excludes the impact of Non-Comparable New and Renewal Leases.


(b)	Excluding the impact from eight Rite Aid leases executed in the first quarter that were extended to effectuate the planned 2016 disposition of these single-user assets, all of which were sold during the second and third quarters, combined comparable re-leasing spreads were

Table of Contents

approximately 8.1% and comparable renewal re-leasing spreads were approximately 7.7% over previous rental rates for the nine months ended September 30, 2016 .


(c)	Includes (i) leases signed on units that were vacant for over 12 months, (ii) leases signed without fixed rental payments and (iii) leases signed where the previous and the current lease do not have a consistent lease structure.

Regarding an update on The Sports Authority, Inc. (Sports Authority) bankruptcy proceedings, nine of the 10 leases we had at the beginning of the year have been rejected and one has been assumed by Dick’s Sporting Goods, Inc. During the third quarter of 2016, we signed leases to backfill two of the nine locations. Despite the disruption from these vacancies, our retail portfolio anchor percent leased, including leases signed was 96.9% as of September 30, 2016. Given the continued strength of our portfolio, we plan to remain strategic as we pursue opportunities to upgrade our tenancy and ensure the right mix of operators and unique retailers at our properties. We anticipate that the majority of new leasing activity, based on ABR, for the remainder of 2016 will be attributable to the remaining vacant Sports Authority locations and small shop tenants. The small shop leases are generally expected to be non-comparable in nature as the leased space is more likely to have been vacant for longer than 12 months.

The lease at our one remaining office asset is scheduled to expire on November 30, 2016. We continue to focus on leasing the pending vacant space and have signed one lease to backfill 309,000 square feet of the 895,000 square foot property.

Capital Markets

During the nine months ended September 30, 2016 , we:


•	issued $100,000 of 10-year 4.08% senior unsecured notes in a private placement transaction pursuant to a note purchase agreement we entered into with certain institutional investors on September 30, 2016. Pursuant to the same note purchase agreement, we also expect to issue $100,000 of 12-year 4.24% senior unsecured notes on December 28, 2016;


•	entered into our fourth amended and restated unsecured credit agreement with a syndicate of financial institutions to provide for an unsecured credit facility aggregating $1,200,000, consisting of a $750,000 unsecured revolving line of credit and two unsecured term loans totaling $450,000 (collectively, our Unsecured Credit Facility);


•	disposed of The Gateway through a lender-directed sale in full satisfaction of our $94,353 mortgage obligation;


•	repaid $100,000, net of borrowings, on our unsecured revolving line of credit;

•

entered into the following interest rate swaps that terminate on December 31, 2017: (i) $100,000 interest rate swap that effectively converts one-month floating rate London Interbank Offered Rate (LIBOR) to a fixed rate of 0.6591% and (ii) $150,000 interest rate swap that effectively converts one-month floating rate LIBOR to a fixed rate of 0.6735%. We previously had a $300,000 interest rate swap that matured on February 24, 2016;


•	as discussed above, assumed a mortgage payable with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031 in conjunction with the acquisition of The Shoppes at Union Hill; and

•

repaid mortgages payable totaling $35,344 and made scheduled principal payments of $9,900 related to amortizing loans. One of the mortgages repaid, with a principal balance of $7,750 at maturity, had been swapped to a fixed rate and we had guaranteed a portion of the outstanding balance. Upon repayment of the mortgage on its scheduled maturity date, the interest rate swap expired and our guarantee was extinguished.

Distributions

We declared quarterly distributions totaling $1.3125 per share of preferred stock and quarterly distributions totaling $0.496875 per share of common stock during the nine months ended September 30, 2016 .

Table of Contents

Results of Operations

Comparison of Results for the Three Months Ended September 30, 2016 and 2015



	Three Months Ended September 30,
	2016			2015			Change
Revenues
Rental income	$	113,627		$	116,715		$	(3,088	)
Tenant recovery income	29,130			28,901			229
Other property income	1,769			5,339			(3,570		)
Total revenues	144,526			150,955			(6,429		)

Expenses
Operating expenses	20,285			22,741			(2,456		)
Real estate taxes	19,937			20,961			(1,024		)
Depreciation and amortization	56,763			52,871			3,892
Provision for impairment of investment properties	4,742			169			4,573
General and administrative expenses	11,110			10,939			171
Total expenses	112,837			107,681			5,156

Operating income	31,689			43,274			(11,585		)

Interest expense	(25,602		)	(40,425		)	14,823
Other income, net	22			479			(457		)
Income from continuing operations	6,109			3,328			2,781
Gain on sales of investment properties	66,385			75,001			(8,616		)
Net income	72,494			78,329			(5,835		)
Preferred stock dividends	(2,362		)	(2,362		)	—
Net income attributable to common shareholders	$	70,132		$	75,967		$	(5,835	)

Net income attributable to common shareholders decreased $5,835 from $75,967 for the three months ended September 30, 2015 to $70,132 for the three months ended September 30, 2016 primarily as a result of the following:


•	a $8,616 decrease in gain on sales of investment properties related to the sales of 12 investment properties, representing approximately 1,254,000 square feet of GLA, during the three months ended September 30, 2016 compared to the sales of 10 investment properties, representing approximately 1,568,600 square feet of GLA, during the three months ended September 30, 2015 ;


•	a $4,573 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 12 and 13 to the accompanying condensed consolidated financial statements), we recognized impairment charges of $4,742 and $169 for the three months ended September 30, 2016 and 2015, respectively;


•	a $3,892 increase in depreciation and amortization primarily due to the write-off of assets taken out of service at a redevelopment property during the three months ended September 30, 2016;


•	a $3,570 decrease in other property income primarily as a result of a decrease in lease termination fee income from our same store portfolio; and


•	a $3,088 decrease in rental income primarily consisting of:


•	a $4,033 decrease in base rent primarily from the operating properties sold or held for sale as of September 30, 2016 and our redevelopment properties, partially offset by an increase from the properties acquired after June 30, 2015 and our same store portfolio;

partially offset by


•	a $936 increase in amortization of acquired above and below market lease intangibles primarily from the properties acquired after June 30, 2015;

Table of Contents

partially offset by


•	a $14,823 decrease in interest expense primarily consisting of:


•	a $10,136 decrease in prepayment penalties and defeasance premiums; and


•	a $4,438 decrease in interest on mortgages payable due to a reduction in mortgage debt; and


•	a $3,709 decrease in operating expenses and real estate taxes, net of tenant recovery income, primarily as a result of our same store portfolio and the operating properties sold or held for sale as of September 30, 2016 .

Net operating income (NOI)

We define NOI as all revenues other than straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income, less real estate taxes and all operating expenses other than straight-line ground rent expense and amortization of acquired ground lease intangibles, which are non-cash items. NOI consists of same store NOI (Same Store NOI) and NOI from other investment properties (NOI from Other Investment Properties). We believe that NOI, Same Store NOI and NOI from Other Investment Properties, which are supplemental non-GAAP financial measures, provide an additional and useful operating perspective not immediately apparent from “Operating income” or “Net income attributable to common shareholders” in accordance with accounting principles generally accepted in the United States (GAAP). We use these measures to evaluate our performance on a property-by-property basis because they allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base have on our operating results. NOI, Same Store NOI and NOI from Other Investment Properties do not represent alternatives to “Net income” or “Net income attributable to common shareholders” in accordance with GAAP as indicators of our financial performance. Comparison of our presentation of NOI, Same Store NOI and NOI from Other Investment Properties to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs. For reference and as an aid in understanding our computation of NOI, a reconciliation of net income attributable to common shareholders as computed in accordance with GAAP to Same Store NOI has been presented for each comparable period presented.

Same store portfolio – quarter

For the three months ended September 30, 2016 , our same store portfolio consisted of 164 retail operating properties acquired or placed in service and stabilized prior to July 1, 2015. The number of properties in our same store portfolio decreased to 164 as of September 30, 2016 from 172 as of June 30, 2016 as a result of the following:


•	the removal of nine same store investment properties sold during the three months ended September 30, 2016 ; and


•	the removal of one same store investment property classified as held for sale as of September 30, 2016 ;

partially offset by


•	the addition of two investment properties acquired during the second quarter of 2015.

The sales of Broadway Shopping Center on July 8, 2016, Mid-Hudson Center on July 21, 2016 and Alison’s Corner on August 4, 2016 did not impact the number of same store properties as they were classified as held for sale as of June 30, 2016.

The properties and financial results reported in “Other investment properties” primarily include the following:


•	properties acquired after June 30, 2015;


•	our development property;


•	our one remaining office property;


•	three properties where we have begun redevelopment and/or activities in anticipation of future redevelopment;


•	properties that were sold or held for sale in 2015 and 2016;


•	the net income from our wholly-owned captive insurance company; and

Table of Contents


•	the historical ground rent expense related to an existing same store investment property that was subject to a ground lease with a third party prior to our acquisition of the fee interest on April 29, 2016.

The following tables present a reconciliation of net income attributable to common shareholders to Same Store NOI and details of the components of Same Store NOI for the three months ended September 30, 2016 and 2015 :



	Three Months Ended September 30,
	2016			2015			Change
Net income attributable to common shareholders	$	70,132		$	75,967		$	(5,835	)
Adjustments to reconcile to Same Store NOI:
Preferred stock dividends	2,362			2,362			—
Gain on sales of investment properties	(66,385		)	(75,001		)	8,616
Depreciation and amortization	56,763			52,871			3,892
Provision for impairment of investment properties	4,742			169			4,573
General and administrative expenses	11,110			10,939			171
Interest expense	25,602			40,425			(14,823		)
Straight-line rental income, net	(1,226		)	(655		)	(571		)
Amortization of acquired above and below market lease intangibles, net	(1,441		)	(505		)	(936		)
Amortization of lease inducements	265			256			9
Lease termination fees	(385		)	(3,245		)	2,860
Straight-line ground rent expense	692			931			(239		)
Amortization of acquired ground lease intangibles	(140		)	(140		)	—
Other income, net	(22		)	(479		)	457
NOI	102,069			103,895			(1,826		)
NOI from Other Investment Properties	(11,763		)	(17,581		)	5,818
Same Store NOI	$	90,306		$	86,314		$	3,992



	Three Months Ended September 30,
	2016			2015		Change
Same Store NOI:
Base rent	$	97,262		$	95,092	$	2,170
Percentage and specialty rent	565			708		(143		)
Tenant recovery income	26,125			25,029		1,096
Other property operating income	954			1,032		(78		)
	124,906			121,861		3,045

Property operating expenses	16,903			17,393		(490		)
Bad debt expense	(250		)	38		(288		)
Real estate taxes	17,947			18,116		(169		)
	34,600			35,547		(947		)

Same Store NOI	$	90,306		$	86,314	$	3,992

Same Store NOI increased $3,992 , or 4.6% , primarily due to the following:


•	base rent increased $2,170 primarily due to an increase of $1,037 from occupancy growth, $830 from contractual rent changes and $647 from re-leasing spreads, partially offset by a decrease of $143 primarily from percentage and specialty rent; and


•	property operating expenses, bad debt expense and real estate taxes, net of tenant recovery income, decreased $2,043 primarily as a result of decreases in net recoverable property operating expenses, net real estate taxes resulting from lower than anticipated real estate tax assessments and the receipt of real estate tax refunds, non-recoverable property operating expenses and bad debt expense.

Table of Contents

Comparison of Results for the Nine Months Ended September 30, 2016 and 2015



	Nine Months Ended September 30,
	2016			2015			Change
Revenues
Rental income	$	344,081		$	355,525		$	(11,444	)
Tenant recovery income	89,140			89,617			(477		)
Other property income	7,170			9,898			(2,728		)
Total revenues	440,391			455,040			(14,649		)

Expenses
Operating expenses	63,438			71,589			(8,151		)
Real estate taxes	60,966			61,957			(991		)
Depreciation and amortization	163,602			163,345			257
Provision for impairment of investment properties	11,048			4,113			6,935
General and administrative expenses	33,289			35,949			(2,660		)
Total expenses	332,343			336,953			(4,610		)

Operating income	108,048			118,087			(10,039		)

Gain on extinguishment of debt	13,653			—			13,653
Gain on extinguishment of other liabilities	6,978			—			6,978
Interest expense	(78,343		)	(110,610		)	32,267
Other income, net	449			1,398			(949		)
Income from continuing operations	50,785			8,875			41,910
Gain on sales of investment properties	97,737			113,214			(15,477		)
Net income	148,522			122,089			26,433
Preferred stock dividends	(7,087		)	(7,087		)	—
Net income attributable to common shareholders	$	141,435		$	115,002		$	26,433

Net income attributable to common shareholders increased $26,433 from $115,002 for the nine months ended September 30, 2015 to $141,435 for the nine months ended September 30, 2016 primarily as a result of the following:


•	a $32,267 decrease in interest expense primarily consisting of:


•	a $19,097 decrease in interest on mortgages payable due to a reduction in mortgage debt; and


•	a $17,027 decrease in prepayment penalties and defeasance premiums;

partially offset by


•	a $2,217 increase in interest on our Unsecured Credit Facility primarily due to higher average balances on our unsecured revolving line of credit; and


•	a $1,944 increase in interest on our unsecured notes payable related to our 4.00% senior unsecured notes due 2025 (4.00% Notes Due 2025), which were issued in March 2015;


•	a $13,653 gain on extinguishment of debt recognized during the nine months ended September 30, 2016 associated with the disposition of The Gateway through a lender-directed sale in full satisfaction of our mortgage obligation. No such gain was recorded during the nine months ended September 30, 2015 ;


•	an $8,665 decrease in operating expenses and real estate taxes, net of tenant recovery income, primarily as a result of the operating properties sold or held for sale as of September 30, 2016 and our same store portfolio; and


•	a $6,978 gain on extinguishment of other liabilities recognized during the nine months ended September 30, 2016 related to the acquisition of the fee interest in one of our existing investment properties that was previously subject to a ground lease with a third party. The amount recognized represents the reversal of the straight-line ground rent liability associated with the ground lease;

Table of Contents

partially offset by


•	a $15,477 decrease in gain on sales of investment properties related to the sales of 28 investment properties and one outparcel, representing approximately 2,387,700 square feet of GLA, during the nine months ended September 30, 2016 compared to the sales of 20 investment properties, representing approximately 3,069,600 square feet of GLA, during the nine months ended September 30, 2015 ;


•	an $11,444 decrease in rental income primarily consisting of:


•	a $12,365 decrease in base rent from the operating properties sold or held for sale as of September 30, 2016 and our redevelopment properties, partially offset by an increase from the properties acquired during 2015 and 2016 and our same store portfolio;

partially offset by


•	a $1,066 increase in amortization of acquired above and below market lease intangibles primarily from the properties acquired during 2015 and 2016; and


•	a $6,935 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 12 and 13 to the accompanying consolidated financial statements), we recognized impairment charges of $11,048 and $4,113 for the nine months ended September 30, 2016 and 2015, respectively.

Same store portfolio – year to date

For the nine months ended September 30, 2016 , our same store portfolio consisted of 158 retail operating properties acquired or placed in service and stabilized prior to January 1, 2015. The number of properties in our same store portfolio decreased to 158 as of September 30, 2016 from 168 as of June 30, 2016. Refer to the lead-in paragraph to the comparison of the three months ended September 30, 2016 and 2015 table for an explanation of the change in the number of properties in our same store portfolio; however, the same store portfolio for the three months ended September 30, 2016 , consisting of 164 retail operating properties, includes two investment properties acquired during the second quarter of 2015 and four investment properties acquired during the first quarter of 2015, none of which are included in the same store portfolio for the nine months ended September 30, 2016 .

The following tables present a reconciliation of net income attributable to common shareholders to Same Store NOI and details of the components of Same Store NOI for the nine months ended September 30, 2016 and 2015 :



	Nine Months Ended September 30,
	2016			2015			Change
Net income attributable to common shareholders	$	141,435		$	115,002		$	26,433
Adjustments to reconcile to Same Store NOI:
Preferred stock dividends	7,087			7,087			—
Gain on sales of investment properties	(97,737		)	(113,214		)	15,477
Depreciation and amortization	163,602			163,345			257
Provision for impairment of investment properties	11,048			4,113			6,935
General and administrative expenses	33,289			35,949			(2,660		)
Gain on extinguishment of debt	(13,653		)	—			(13,653		)
Gain on extinguishment of other liabilities	(6,978		)	—			(6,978		)
Interest expense	78,343			110,610			(32,267		)
Straight-line rental income, net	(3,054		)	(2,297		)	(757		)
Amortization of acquired above and below market lease intangibles, net	(2,412		)	(1,346		)	(1,066		)
Amortization of lease inducements	817			636			181
Lease termination fees	(3,070		)	(3,712		)	642
Straight-line ground rent expense	2,372			2,797			(425		)
Amortization of acquired ground lease intangibles	(420		)	(420		)	—
Other income, net	(449		)	(1,398		)	949
NOI	310,220			317,152			(6,932		)
NOI from Other Investment Properties	(55,162		)	(71,058		)	15,896
Same Store NOI	$	255,058		$	246,094		$	8,964

Table of Contents



	Nine Months Ended September 30,
	2016			2015		Change
Same Store NOI:
Base rent	$	275,664		$	270,173	$	5,491
Percentage and specialty rent	2,676			2,559		117
Tenant recovery income	73,383			72,316		1,067
Other property operating income	2,468			2,703		(235		)
	354,191			347,751		6,440

Property operating expenses	48,149			50,196		(2,047		)
Bad debt expense	(450		)	709		(1,159		)
Real estate taxes	51,434			50,752		682
	99,133			101,657		(2,524		)

Same Store NOI	$	255,058		$	246,094	$	8,964

Same Store NOI increased $8,964 , or 3.6% , primarily due to the following:


•	base rent increased $5,491 primarily due to an increase of $2,370 from contractual rent changes, $2,089 from occupancy growth and $1,698 from re-leasing spreads, partially offset by a decrease of $661 from rent abatements; and


•	property operating expenses, bad debt expense and real estate taxes, net of tenant recovery income, decreased $3,591 primarily as a result of decreases in non-recoverable property operating expenses, bad debt expense, net recoverable property operating expenses, and net real estate taxes resulting from lower than anticipated real estate tax assessments and the receipt of real estate tax refunds.

Funds From Operations Attributable to Common Shareholders

The National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a financial measure known as funds from operations (FFO). As defined by NAREIT, FFO means net income (loss) computed in accordance with GAAP, excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate. We have adopted the NAREIT definition in our computation of FFO attributable to common shareholders. Management believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing our performance and operations to those of other REITs.

We define Operating FFO attributable to common shareholders as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the financial statement impact of gains or losses associated with the early extinguishment of debt or other liabilities, impairment charges to write down the carrying value of assets other than depreciable real estate, actual or anticipated settlement of litigation involving the Company and executive and realignment separation charges, which are otherwise excluded from our calculation of FFO attributable to common shareholders.

We believe that FFO attributable to common shareholders and Operating FFO attributable to common shareholders, which are supplemental non-GAAP financial measures, provide an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders and Operating FFO attributable to common shareholders do not represent alternatives to (i) “Net Income” or “Net income attributable to common shareholders” as indicators of our financial performance, or (ii) “Cash flows from operating activities” in accordance with GAAP as measures of our capacity to fund cash needs, including the payment of dividends. Comparison of our presentation of Operating FFO attributable to common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

Table of Contents

The following table presents a reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders and Operating FFO attributable to common shareholders:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net income attributable to common shareholders	$	70,132		$	75,967		$	141,435		$	115,002
Depreciation and amortization of depreciable real estate	56,384			52,596			162,577			162,520
Provision for impairment of investment properties	4,742			169			8,884			4,113
Gain on sales of depreciable investment properties	(66,385		)	(75,001		)	(97,737		)	(113,214		)
FFO attributable to common shareholders	$	64,873		$	53,731		$	215,159		$	168,421

FFO attributable to common shareholders per common share outstanding	$	0.27		$	0.23		$	0.91		$	0.71

FFO attributable to common shareholders	$	64,873		$	53,731		$	215,159		$	168,421
Impact on earnings from the early extinguishment of debt, net	—			10,618			(12,842		)	17,635
Provision for hedge ineffectiveness	(38		)	(4		)	(35		)	(25		)
Provision for impairment of non-depreciable investment property	—			—			2,164			—
Gain on extinguishment of other liabilities	—			—			(6,978		)	—
Executive separation charges (a)	—			—			—			3,537
Other (b)	(5		)	91			(189		)	(909		)
Operating FFO attributable to common shareholders	$	64,830		$	64,436		$	197,279		$	188,659

Operating FFO attributable to common shareholders per common share outstanding	$	0.27		$	0.27		$	0.83		$	0.80


(a)	Included in “General and administrative expenses” in the condensed consolidated statements of operations and other comprehensive income.


(b)	Consists of the impact on earnings from net settlements and easement proceeds, which are included in “Other income, net” in the accompanying condensed consolidated statements of operations and other comprehensive income.

Liquidity and Capital Resources

We anticipate that cash flows from the below-listed sources will provide adequate capital for the next 12 months and beyond for all scheduled principal and interest payments on our outstanding indebtedness, including maturing debt, current and anticipated tenant allowances or other capital obligations, the shareholder distributions required to maintain our REIT status and compliance with the financial covenants of our Unsecured Credit Facility and our unsecured notes.

Our primary expected sources and uses of liquidity are as follows:



	SOURCES		USES
▪	Operating cash flow	▪	Tenant allowances and leasing costs
▪	Cash and cash equivalents	▪	Improvements made to individual properties that are not
▪	Available borrowings under our unsecured revolving		recoverable through common area maintenance charges to tenants
	line of credit	▪	Acquisitions
▪	Proceeds from capital markets transactions	▪	Debt repayments
▪	Proceeds from asset dispositions	▪	Distribution payments
		▪	Redevelopment, renovation or expansion activities
		▪	New development
		▪	Repurchases of our common stock

We have made substantial progress over the last several years in strengthening our balance sheet and addressing debt maturities funded primarily through asset dispositions and capital markets transactions, including public offerings of our common stock and preferred stock and private and public offerings of senior unsecured notes. As of September 30, 2016 , we had $2,865 of scheduled principal amortization related to longer-dated maturities through the end of 2016 , which we plan on satisfying through a combination of proceeds from asset dispositions, capital markets transactions and our unsecured revolving line of credit.

Table of Contents

The table below summarizes our consolidated indebtedness as of September 30, 2016 :



Debt	Aggregate Principal Amount		Weighted Average Interest Rate		Maturity Date	Weighted Average Years to Maturity
Fixed rate mortgages payable (a)	$	1,004,879	6.06	%	Various	3.7 years

Unsecured notes payable:
Senior notes – 4.12% due 2021	100,000		4.12	%	June 30, 2021	4.8 years
Senior notes – 4.58% due 2024	150,000		4.58	%	June 30, 2024	7.8 years
Senior notes – 4.00% due 2025	250,000		4.00	%	March 15, 2025	8.5 years
Senior notes – 4.08% due 2026 (b)	100,000		4.08	%	September 30, 2026	10.0 years
Total unsecured notes payable (a)	600,000		4.18	%		7.9 years

Unsecured credit facility:
Term loan – fixed rate (c)	250,000		1.97	%	January 5, 2021	4.3 years
Term loan – variable rate (d)	200,000		1.97	%	May 11, 2018 (c)	1.6 years
Revolving line of credit – variable rate (d)	—		1.87	%	January 5, 2020 (c)	3.3 years
Total unsecured credit facility (a)	450,000		1.97	%		3.1 years

Total consolidated indebtedness	$	2,054,879	4.61	%		4.8 years

(a)

Fixed rate mortgages payable excludes mortgage premium of $1,544 , discount of $(633) and capitalized loan fees of $(5,701) , net of accumulated amortization, as of September 30, 2016 . Unsecured notes payable excludes discount of $(1,001) and capitalized loan fees of $(3,520) , net of accumulated amortization, as of September 30, 2016 . Term loans exclude capitalized loan fees of $(2,698) , net of accumulated amortization, as of September 30, 2016 . Capitalized loan fees related to the revolving line of credit are included in “Other assets, net” in the accompanying condensed consolidated balance sheets.


(b)	On September 30, 2016, we issued $100,000 of 10-year 4.08% senior unsecured notes in a private placement transaction pursuant to a note purchase agreement we entered into with certain institutional investors on September 30, 2016. Pursuant to the same note purchase agreement, we also expect to issue $100,000 of 12-year 4.24% senior unsecured notes on December 28, 2016.


(c)	Reflects $250,000 of LIBOR-based variable rate debt that has been swapped to a weighted average fixed rate of 0.6677% plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of September 30, 2016 .


(d)	We have two one year extension options on the term loan due 2018 and two six-month extension options on the revolving line of credit, which we may exercise as long as we are in compliance with the terms of the unsecured credit agreement and we pay an extension fee equal to 0.15% for the term loan and 0.075% of the commitment amount being extended for the revolving line of credit.

Mortgages Payable

During the nine months ended September 30, 2016 , we disposed of The Gateway through a lender-directed sale in full satisfaction of our $94,353 mortgage obligation, which had a fixed interest rate of 6.57%. Immediately prior to the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653. In addition, during the nine months ended September 30, 2016 , we repaid mortgages payable in the total amount of $35,344 which had a weighted average fixed interest rate of 4.34% and made scheduled principal payments of $9,900 related to amortizing loans. One of the mortgages repaid, with a principal balance of $7,750 at maturity, had been swapped to a fixed rate and we had guaranteed a portion of the outstanding balance. Upon repayment of the mortgage on its scheduled maturity date, the interest rate swap expired and our guarantee was extinguished. We also assumed a mortgage payable with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031 in conjunction with the acquisition of The Shoppes at Union Hill.

Unsecured Notes Payable

On September 30, 2016, we issued $100,000 of 10-year 4.08% senior unsecured notes due 2026 (Notes Due 2026) in a private placement transaction pursuant to a note purchase agreement we entered into with certain institutional investors on September 30, 2016. The proceeds were used to pay down our unsecured revolving line of credit and for general corporate purposes. Pursuant to the same note purchase agreement, we also expect to issue $100,000 of 12-year 4.24% senior unsecured notes on December 28, 2016 (Notes Due 2028 and, collectively, Notes Due 2026 and 2028). On March 12, 2015, we completed a public offering of $250,000 in aggregate principal amount of our 4.00% Notes Due 2025. The 4.00% Notes Due 2025 were priced at 99.526% of

Table of Contents

the principal amount to yield 4.058% to maturity. In addition, on June 30, 2014, we completed a private placement of $250,000 of unsecured notes, consisting of $100,000 of 4.12% senior unsecured notes due 2021 and $150,000 of 4.58% senior unsecured notes due 2024 (collectively, Notes Due 2021 and 2024). The proceeds from the 4.00% Notes Due 2025 and the Notes Due 2021 and 2024 were used to repay a portion of our unsecured revolving line of credit.

The note purchase agreement governing the Notes Due 2026 and 2028 contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of the note purchase agreement, we are subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) a minimum interest coverage ratio; (iii) a fixed charge coverage ratio (as set forth in our unsecured credit facility); and (iv) an unencumbered interest coverage ratio (as set forth in our unsecured credit facility and the note purchase agreement governing the Notes Due 2021 and 2024).

The indenture, as supplemented, governing the 4.00% Notes Due 2025 (the Indenture) contains customary covenants and events of default. Pursuant to the terms of the Indenture, we are subject to various financial covenants, including the requirement to maintain the following: (i) maximum secured and total leverage ratios; (ii) a debt service coverage ratio; and (iii) maintenance of an unencumbered assets to unsecured debt ratio.

The note purchase agreement governing the Notes Due 2021 and 2024 contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of the note purchase agreement, we are subject to various financial covenants, some of which are based upon the financial covenants in effect in our primary credit facility, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage and unencumbered interest coverage ratios; and (iii) a minimum consolidated net worth.

As of September 30, 2016 , management believes we were in compliance with the financial covenants under the Indenture and the note purchase agreements.

Unsecured Credit Facility

On January 6, 2016, we entered into our fourth amended and restated unsecured credit agreement with a syndicate of financial institutions led by KeyBank National Association serving as administrative agent and Wells Fargo Bank, National Association serving as syndication agent to provide for an unsecured credit facility aggregating $1,200,000, or our Unsecured Credit Facility. Our Unsecured Credit Facility consists of a $750,000 unsecured revolving line of credit, a $250,000 unsecured term loan and a $200,000 unsecured term loan and is priced on a leverage grid at a rate of LIBOR plus a credit spread. We received investment grade credit ratings from two rating agencies in 2014. In accordance with the unsecured credit agreement, we may elect to convert to an investment grade pricing grid. As of September 30, 2016 , making such an election would have resulted in a higher interest rate and, as such, we have not made the election to convert to an investment grade pricing grid.

The following table summarizes the key terms of our Unsecured Credit Facility:

Leverage-Based Pricing

Ratings-Based Pricing

Unsecured Credit Facility

Maturity Date

Extension Option

Extension Fee

Credit Spread

Unused Fee

Credit Spread

Facility Fee

$250,000 unsecured term loan

1/5/2021

N/A

1.30% - 2.20%

N/A

0.90% - 1.75%

N/A

$200,000 unsecured term loan

5/11/2018

2 one year

0.15%

1.45% - 2.20%

N/A

1.05% - 2.05%

N/A

$750,000 unsecured revolving line of credit

1/5/2020

2 six month

0.075%

1.35% - 2.25%

0.15% - 0.25%

0.85% - 1.55%

0.125% - 0.30%

Our Unsecured Credit Facility has a $400,000 accordion option that allows us, at our election, to increase the total credit facility up to $1,600,000, subject to (i) customary fees and conditions including, but not limited to, the absence of an event of default as defined in the agreement and (ii) our ability to obtain additional lender commitments.

The fourth amended and restated unsecured credit agreement contains customary representations, warranties and covenants, and events of default. Pursuant to the terms of the fourth amended and restated unsecured credit agreement, we are subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of September 30, 2016 , management believes we were in compliance with the financial covenants and default provisions under the unsecured credit agreement.

As of September 30, 2016 , we had letter(s) of credit outstanding totaling $143 which serve as collateral for certain capital improvements at one of our properties and reduce the available borrowings on our unsecured revolving line of credit.

Table of Contents

Debt Maturities

The following table shows the scheduled maturities and principal amortization of our indebtedness as of September 30, 2016 for the remainder of 2016 , each of the next four years and thereafter and the weighted average interest rates by year, as well as the fair value of our indebtedness as of September 30, 2016 . The table does not reflect the impact of any debt activity that occurred after September 30, 2016 .



	2016			2017			2018			2019			2020			Thereafter			Total			Fair Value
Debt:
Fixed rate debt:
Mortgages payable (a)	$	2,865		$	227,451		$	11,647		$	444,324		$	4,334		$	314,258		$	1,004,879		$	1,094,472
Unsecured credit facility – fixed rate term loan (b)	—			—			—			—			—			250,000			250,000			250,000
Unsecured notes payable (c)	—			—			—			—			—			600,000			600,000			617,473
Total fixed rate debt	2,865			227,451			11,647			444,324			4,334			1,164,258			1,854,879			1,961,945

Variable rate debt:
Unsecured credit facility – variable rate term loan	—			—			200,000			—			—			—			200,000			200,000
Total variable rate debt	—			—			200,000			—			—			—			200,000			200,000
Total debt (d)	$	2,865		$	227,451		$	211,647		$	444,324		$	4,334		$	1,164,258		$	2,054,879		$	2,161,945

Weighted average interest rate on debt:
Fixed rate debt	7.18		%	5.08		%	6.52		%	7.49		%	4.58		%	3.85		%	4.90		%
Variable rate debt (e)	—			—			1.97		%	—			—			—			1.97		%
Total	7.18		%	5.08		%	2.22		%	7.49		%	4.58		%	3.85		%	4.61		%


(a)	Excludes mortgage premium of $1,544 and discount of $(633) , net of accumulated amortization, as of September 30, 2016 .


(b)	$250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a weighted average fixed rate of 0.6677% through December 31, 2017.


(c)	Excludes discount of $(1,001) , net of accumulated amortization, as of September 30, 2016 and $100,000 of 12-year 4.24% senior unsecured notes which we expect to issue on December 28, 2016 pursuant to a note purchase agreement we entered into with certain institutional investors on September 30, 2016.

(d)

Total debt excludes capitalized loan fees of $(11,919) , net of accumulated amortization, as of September 30, 2016 which are included as a reduction to the respective debt balances. The weighted average years to maturity of consolidated indebtedness was 4.8 years as of September 30, 2016 . The $107,066 difference between total debt outstanding and its fair value is primarily attributable to a $57,011 difference related to our IW JV 2009, LLC pool of mortgages. This pool matures in 2019, has an interest rate of 7.50% and an outstanding principal balance of $391,436 as of September 30, 2016 .


(e)	Represents interest rates as of September 30, 2016 .

We plan on addressing our debt maturities through a combination of proceeds from asset dispositions, capital markets transactions and our unsecured revolving line of credit.

Distributions and Equity Transactions

Our distributions of current and accumulated earnings and profits for U.S. federal income tax purposes are taxable to shareholders, generally, as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. We intend to continue to qualify as a REIT for U.S. federal income tax purposes. The Internal Revenue Code of 1986, as amended (the Code) generally requires that a REIT annually distributes to its shareholders at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains. The Code imposes tax on any undistributed REIT taxable income.

To satisfy the requirements for qualification as a REIT and generally not be subject to U.S. federal income and excise tax, we intend to make regular quarterly distributions of all, or substantially all, of our taxable income to shareholders. Our future distributions will be at the discretion of our board of directors. When determining the amount of future distributions, we expect to consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future cash flow, (iii) our determination of near-term cash needs for debt repayments, acquisitions of new properties, redevelopment opportunities and existing or future share repurchases, (iv) the timing of significant re-leasing activities and the establishment of

Table of Contents

additional cash reserves for anticipated tenant allowances and general property capital improvements, (v) our ability to continue to access additional sources of capital, (vi) the amount required to be distributed to maintain our status as a REIT and to reduce any income and excise taxes that we otherwise would be required to pay, (vii) the amount required to declare and pay in cash, or set aside for the payment of, the dividends on our Series A preferred stock for all past dividend periods and (viii) the requirement contained in our Unsecured Credit Facility to distribute at least an amount necessary to maintain our qualification. Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements.

In December 2015, we entered into a new at-the-market (ATM) equity program under which we may issue and sell shares of our Class A common stock, having an aggregate offering price of up to $250,000, from time to time. The 2015 ATM equity program supersedes our previous $200,000 ATM equity program which was in place from March 2013 through November 2015. Actual sales may depend on a variety of factors, including, among others, market conditions and the trading price of our Class A common stock. Any net proceeds are expected to be used for general corporate purposes, which may include the funding of acquisitions and redevelopment activities and the repayment of debt, including our Unsecured Credit Facility. We did not sell any shares under our ATM equity program during the nine months ended September 30, 2016 . As of September 30, 2016 , we had Class A common shares having an aggregate offering price of up to $250,000 remaining available for sale under our ATM equity program.

In December 2015, our board of directors authorized a common stock repurchase program under which we may repurchase, from time to time, up to a maximum of $250,000 of shares of our Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of our assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program may be suspended or terminated at any time without prior notice. As of September 30, 2016 , we had not repurchased any shares under this program.

Capital Expenditures and Redevelopment Activity

We anticipate that obligations related to capital improvements, including expansions and pad developments, at our operating properties in 2016 can be met with cash flows from operations and working capital.

As of September 30, 2016 , we owned one development property, South Billings Center located in Billings, Montana, with a carrying value of $3,000 which was not under active development. We began active redevelopment at Reisterstown Road Plaza, located in Baltimore, Maryland, in the third quarter of 2016. We anticipate stabilization in 2017 and estimate that we will incur net costs of approximately $11,000 to $12,000 related to the redevelopment, of which $610 has been incurred as of September 30, 2016 . We anticipate funding the redevelopment with cash flows from operations, working capital and proceeds from our unsecured revolving line of credit.

Dispositions

We continue to execute our long-term portfolio repositioning strategy of disposing of select non-target and single-user properties. The following table highlights our property dispositions during 2015 and the nine months ended September 30, 2016 :



	Number of Properties Sold	Square Footage	Consideration		Aggregate Proceeds, Net (a)		Debt Extinguished
2016 Dispositions (through September 30, 2016)	28	2,384,300	$	390,682	$	304,806	$	94,353	(b)
2015 Dispositions	26	3,917,200	$	516,444	$	505,524	$	25,724	(c)


(a)	Represents total consideration net of transaction costs. 2015 dispositions include the disposition of two development properties, one of which had been held in a consolidated joint venture.

(b)

Represents The Gateway’s outstanding mortgage payable prior to the lender-directed sale of the property. Immediately prior to the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653.


(c)	Excludes $95,881 of mortgages payable repayments or defeasances completed prior to disposition of the respective property for the year ended December 31, 2015.

In addition to the transactions presented in the preceding table, during the nine months ended September 30, 2016 , we received net proceeds of $2,549 from the sale of an outparcel at one of our properties. During the year ended December 31, 2015 , we received net proceeds of $300 from condemnation awards.

Table of Contents

Acquisitions

We continue to execute our investment strategy of acquiring high quality, multi-tenant retail assets within our target markets. The following table highlights our asset acquisitions during 2015 and the nine months ended September 30, 2016 :



	Number of Assets Acquired	Square Footage	Acquisition Price		Mortgage Debt
2016 Acquisitions (through September 30, 2016) (a)	8	761,700	$	283,337	$	15,971
2015 Acquisitions (b)	11	1,179,800	$	463,136	$	—

(a)

2016 acquisitions include the purchase of the fee interest in our Ashland & Roosevelt multi-tenant retail operating property that was previously subject to a ground lease with a third party and the anchor space improvements in our Woodinville Plaza multi-tenant retail operating property that was previously subject to a ground lease with us. The total number of properties in our portfolio was not affected by these transactions.

(b)

2015 acquisitions include the purchase of the following: 1) a land parcel at our Lake Worth Towne Crossing multi-tenant retail operating property, 2) a single-user outparcel located at our Southlake Town Square multi-tenant retail operating property that was subject to a ground lease with us prior to the transaction, and 3) a single-user outparcel located at our Royal Oaks Village II multi-tenant retail operating property. The total number of properties in our portfolio was not affected by these transactions.

Summary of Cash Flows



	Nine Months Ended September 30,
	2016			2015			Change
Cash provided by operating activities	$	205,008		$	209,076		$	(4,068	)
Cash used in investing activities	(8,254		)	(27,992		)	19,738
Cash used in financing activities	(179,107		)	(176,838		)	(2,269		)
Increase in cash and cash equivalents	17,647			4,246			13,401
Cash and cash equivalents, at beginning of period	51,424			112,292
Cash and cash equivalents, at end of period	$	69,071		$	116,538

Cash Flows from Operating Activities

Cash flows from operating activities consist primarily of net income from property operations, adjusted for the following, among others: (i) depreciation and amortization, (ii) provision for impairment of investment properties, (iii) gain on sales of investment properties, (iv) gain on extinguishment of debt, and (v) gain on extinguishment of other liabilities. Net cash provided by operating activities during the nine months ended September 30, 2016 decreased $4,068 primarily due to the following:


•	a $6,932 decrease in NOI (including a decrease in NOI from Other Investment Properties of $15,896, partially offset by an increase in Same Store NOI of $8,964);


•	a $5,427 increase in cash bonuses paid;


•	a $1,579 increase in cash paid for leasing fees and inducements; and


•	ordinary course fluctuations in working capital accounts;

partially offset by


•	a $12,451 reduction in cash paid for interest.

Cash Flows from Investing Activities

Cash flows from investing activities consist primarily of proceeds from the sales of investment properties, net of cash paid to purchase investment properties and to fund capital expenditures, tenant improvements and developments in progress, in addition to changes in restricted escrows. Net cash used in investing activities during the nine months ended September 30, 2016 decreased $19,738 primarily due to the following:


•	a $141,480 decrease in cash paid to purchase investment properties;

partially offset by

Table of Contents


•	an $87,852 decrease in proceeds from the sales of investment properties; and


•	a $27,172 net change in restricted escrow activity;

We will continue to execute our investment strategy by pursuing targeted dispositions. The majority of the proceeds from disposition activity for the remainder of 2016 is expected to be used to acquire high quality, multi-tenant retail assets within our target markets, repay debt or potentially repurchase our common stock. In addition, tenant improvement costs associated with re-leasing vacant space may continue to be significant.

Cash Flows from Financing Activities

Cash flows from financing activities primarily consist of proceeds from our Unsecured Credit Facility and the issuance of debt instruments, partially offset by distribution payments, repayments of our Unsecured Credit Facility, principal payments on mortgages payable and the purchase of U.S. Treasury securities in connection with defeasance of mortgages payable. Net cash used in financing activities during the nine months ended September 30, 2016 increased $2,269 primarily due to the following:


•	a $230,000 decrease in net proceeds from our Unsecured Credit Facility;


•	a $148,815 decrease in proceeds from the issuance of unsecured notes related to a $100,000 private placement transaction during the nine months ended September 30, 2016 and a $248,815 underwritten public offering in 2015; and


•	a $4,149 increase in the payment of loan fees and deposits;

partially offset by


•	a $300,920 decrease in principal payments on mortgages payable; and


•	an $81,547 decrease in the purchase of U.S. Treasury securities in connection with defeasance of mortgages payable during the nine months ended September 30, 2015 .

We plan to continue to address our debt maturities through a combination of proceeds from asset dispositions, capital markets transactions and our unsecured revolving line of credit.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

During the nine months ended September 30, 2016 , there were no material changes outside the normal course of business to the contractual obligations identified in our Annual Report on Form 10-K for the year ended December 31, 2015 .

Critical Accounting Policies and Estimates

Our 2015 Annual Report on Form 10-K contains a description of our critical accounting policies, including those relating to the acquisition of investment properties, impairment of long-lived assets and unconsolidated joint ventures, cost capitalization, depreciation and amortization, development and redevelopment, investment properties held for sale, partially-owned entities, derivative and hedging, revenue recognition, accounts and notes receivable and allowance for doubtful accounts and income taxes. For the nine months ended September 30, 2016 , there were no significant changes to these policies.

Impact of Recently Issued Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies to our condensed consolidated financial statements contained herein regarding recently issued accounting pronouncements.

Table of Contents

Subsequent Events

On October 24, 2016, our board of directors (Board) increased the number of directors comprising our Board from eight to nine and appointed Robert G. Gifford as a Director, effective immediately, to serve until our 2017 annual meeting of stockholders.

On October 25, 2016, we declared the cash dividend for the fourth quarter of 2016 for our 7.00% Series A cumulative redeemable preferred stock. The dividend of $0.4375 per preferred share will be paid on December 30, 2016 to preferred shareholders of record at the close of business on December 20, 2016.

On October 25, 2016, we declared the distribution for the fourth quarter of 2016 of $0.165625 per share on our outstanding Class A common stock, which will be paid on January 10, 2017 to Class A common shareholders of record at the close of business on December 22, 2016.

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We may be exposed to interest rate changes primarily as a result of our long-term debt that is used to maintain liquidity and fund our operations. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we borrow primarily at fixed rates, and in some cases variable rates with the ability to convert to fixed rates.

With regard to variable rate financing, we assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We maintain risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates on our future cash flows.

As of September 30, 2016 , we had $250,000 of variable rate debt based on LIBOR that has been swapped to fixed rate debt through interest rate swaps. Our interest rate swaps as of September 30, 2016 are summarized in the following table:



	Notional Amount		Termination Date	Fair Value of Derivative Asset
Fixed rate portion of unsecured credit facility	$	250,000	December 31, 2017	$	138

For a discussion concerning the scheduled debt maturities and principal amortization of our indebtedness as of September 30, 2016 for the remainder of 2016 , each of the next four years and thereafter and the weighted average interest rates by year to evaluate the expected cash flows and sensitivity to interest rate changes, refer to Note 6 to the condensed consolidated financial statements and “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt Maturities.”

A decrease of 1% in market interest rates would result in a hypothetical decrease in our derivative asset of approximately $2,187.

The combined carrying amount of our mortgages payable, unsecured notes payable and Unsecured Credit Facility is approximately $119,075 lower than the fair value as of September 30, 2016 .

We had $200,000 of variable rate debt, excluding $250,000 of variable rate debt that has been swapped to fixed rate debt, with interest rates varying based upon LIBOR, with a weighted average interest rate of 1.97% as of September 30, 2016 . An increase in the variable interest rate on this debt constitutes a market risk. If interest rates increase by 1% based on debt outstanding as of September 30, 2016 , interest expense would increase by approximately $2,000 on an annualized basis.

We may use additional derivative financial instruments to hedge exposures to changes in interest rates. To the extent we do, we are exposed to market and credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, we generally are not exposed to the credit risk of the counterparty. We minimize credit risk in derivative instruments by entering into transactions with highly rated counterparties or with the same party providing the financing, with the right of offset.

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to the members of senior management and the board of directors.

Based on management’s evaluation as of September 30, 2016 , our president and chief executive officer and our executive vice president, chief financial officer and treasurer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our president and chief executive officer and our executive vice president, chief financial officer and treasurer to allow timely decisions regarding required disclosure.

There were no changes to our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Table of Contents

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, we believe, based on currently available information, that the final outcome of such matters will not have a material effect on our condensed consolidated financial statements.

ITEM 1A. RISK FACTORS

Except to the extent updated below or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such factors (including, without limitation, the matters discussed in Part I, “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there have been no material changes to our risk factors during the three months ended September 30, 2016 compared to those risk factors presented in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2015 .

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


(a)	Not applicable.


(b)	Not applicable.


(c)	Issuer Purchases of Equity Securities

The following table summarizes the number of shares of Class A common stock surrendered to the Company by employees to satisfy their tax withholding obligations in connection with the vesting of restricted shares for the specified periods and amounts outstanding under our common stock repurchase program.



Period	Total number of shares of Class A common stock purchased	Average price paid per share of Class A common stock		Total number of shares purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (a)
July 1, 2016 to July 31, 2016	—	$	—	N/A	$	250,000
August 1, 2016 to August 31, 2016	5	$	16.78	N/A	$	250,000
September 1, 2016 to September 30, 2016	—	$	—	N/A	$	250,000
Total	5	$	16.78	N/A	$	250,000


(a)	Represents the amount outstanding under our $250,000 common stock repurchase program, which has no scheduled expiration date. As of September 30, 2016 , we had not repurchased any shares under our common stock repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On October 31, 2016, following an ordinary course review of our existing executive compensation arrangements and in connection with the upcoming expiration of the current terms of our existing retention agreements, we entered into retention agreements with each of Steven P. Grimes, Shane C. Garrison, Heath R. Fear and Paula C. Maggio. The retention agreements for Messrs. Grimes and Garrison replaced their prior retention agreements with us.

The term of each retention agreement is for three years beginning on October 31, 2016, with automatic two-year renewals thereafter unless written notice of termination is provided by either party. The term will also be automatically extended if a change in control, as defined in the agreement, occurs before the end of the then current term.

Table of Contents

Provided the executive enters into a general release of claims for our benefit, the retention agreements provide for the following payments and benefits in connection with the termination of each executive’s employment by us without cause or termination by him or her for good reason: (1) cash payment equal to an agreed upon multiple (as described below) times the sum of (i) such executive’s annual base salary and (ii) an amount equal to the greater of (A) the dollar amount of such executive’s target annual cash bonus opportunity, or (B) the actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined; (2) cash payment of (i) any unpaid annual cash bonus earned for the prior year and (ii) a pro-rata annual cash bonus for the year in which the termination occurs; (3) acceleration of vesting of unvested equity awards that are only subject to time-based vesting conditions; (4) retention of outstanding equity awards granted on or after the date the retention agreements were entered into that remain subject to performance-based vesting conditions, with the earning of such awards to be based on achievement of the original performance-based vesting conditions in the same manner as if such termination had not occurred; provided that the portion of each such equity awards that is earned will be prorated based on the portion of the performance period that elapsed through the date of termination unless such termination occurred in connection with a change in control; and (5) healthcare continuation premiums for specified periods. The multiples to be used to determine the cash payment described above are two times for Mr. Grimes and one and a half times for Messrs. Garrison and Fear and Ms. Maggio if the termination does not occur in connection with or within two years after a change in control. If the termination occurs in connection with or within two years after a change in control, the multiples will be three times for Mr. Grimes and two times for Messrs. Garrison and Fear and Ms. Maggio.

Each retention agreement also provides that upon a change in control, the achievement of the performance-based vesting conditions of any outstanding equity awards granted on or after the date the retention agreements were entered into that remain subject to such vesting conditions will be measured based on performance through the day prior to the date of the change in control using performance metrics that have been prorated, to the extent applicable, to reflect the shortened performance period. Vesting conditions for these awards that are based on continued employment will continue to apply unless accelerated due to a termination of employment or otherwise. Furthermore, each retention agreement also provides that upon a termination as a result of death or disability, the executive’s outstanding unvested equity awards will generally be treated in the same manner as they would in the event of a termination by us without cause or termination by such executive for good reason.

The foregoing summary is qualified in its entirety by reference to the copies of the retention agreements, which are filed with this report as Exhibits 10.3 through 10.6 and are incorporated herein by reference.

ITEM 6. EXHIBITS



Exhibit No.		Description

10.1		Note Purchase Agreement dated as of September 30, 2016, among the Registrant as Issuer and Certain Institutions as Purchasers (Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 5, 2016).
10.2		Indemnification Agreement, dated October 25, 2016, by and between the Registrant and Robert G. Gifford (filed herewith).
10.3		Amended and Restated Retention Agreement dated October 31, 2016 by and between the Registrant and Steven P. Grimes (filed herewith).
10.4		Amended and Restated Retention Agreement dated October 31, 2016 by and between the Registrant and Shane C. Garrison (filed herewith).
10.5		Retention Agreement dated October 31, 2016 by and between the Registrant and Heath R. Fear (filed herewith).
10.6		Retention Agreement dated October 31, 2016 by and between the Registrant and Paula C. Maggio (filed herewith).
31.1		Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
31.2		Certification of Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
32.1		Certification of President and Chief Executive Officer and Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 (furnished herewith).
101		Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive Income for the Three-Month Periods and Nine-Month Periods Ended September 30, 2016 and 2015, (iii) Condensed Consolidated Statements of Equity for the Nine-Month Periods Ended September 30, 2016 and 2015, (iv) Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2016 and 2015, and (v) Notes to Condensed Consolidated Financial Statements.

Table of Contents

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.

RETAIL PROPERTIES OF AMERICA, INC.



By:	/s/ STEVEN P. GRIMES

	Steven P. Grimes
	President and Chief Executive Officer
Date:	November 2, 2016

By:	/s/ HEATH R. FEAR

	Heath R. Fear
	Executive Vice President,
	Chief Financial Officer and Treasurer (Principal Financial Officer)
Date:	November 2, 2016

By:	/s/ JULIE M. SWINEHART

	Julie M. Swinehart
	Senior Vice President and Chief Accounting Officer
	(Principal Accounting Officer)
Date:	November 2, 2016

Exhibit 10.2

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is made and entered into this 25 ^th day of October, 2016 ("Agreement"), by and between RETAIL PROPERTIES OF AMERICA, INC., a Maryland corporation (the "Company"), and ROBERT G. GIFFORD ("Indemnitee").

WHEREAS, at the request of the Company, Indemnitee currently serves as a director of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of his service; and

WHEREAS, as an inducement to Indemnitee to continue to serve as such director, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section I. Definitions. For purposes of this Agreement:

(a) "Change in Control" means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the "Act"), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of the Company's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) during any period of two consecutive years, other than as a result of an event described in clause (a)(ii) of this Section 1, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

(b) "Corporate Status" means the status of a person who is or was a director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for which such person is or was serving at the request of the Company.

(c) "Disinterested Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d) "Effective Date" means the date set forth in the first paragraph of this Agreement.

(e) "Expenses" shall include all reasonable and out-of-pocket attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

(f) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to or witness in the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. If a Change of Control has not occurred, Independent Counsel shall be selected by the Board of Directors, with the approval of Indemnitee, which approval will not be unreasonably withheld. If a Change of Control has occurred, Independent Counsel shall be selected by Indemnitee, with the approval of the Board of Directors, which approval will not be unreasonably withheld.

(g) "Proceeding" includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee.

Section 2. Services by Indemnitee. Indemnitee will serve as an officer of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee's service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

Section 3. Indemnification - General. The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the date hereof and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the date hereof. The rights of Indemnitee

provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law ("MGCL").

Section 4. Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his/her Corporate Status, he/she is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed Proceeding, other than a Proceeding by or in the right of the Company. Pursuant to this Section 4, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection with a Proceeding by reason of his/her Corporate Status unless it is established that (i) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) Indemnitee actually received an improper personal benefit in money, property or services, or (iii) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his/her conduct was unlawful.

Section 5. Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 5 if, by reason of his/her Corporate Status, he/she is, or is threatened to be, made a party to or a witness in any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 5, Indemnitee shall be indemnified against all amounts paid in settlement and all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection with such Proceeding unless it is established that (i) the act or omission of Indemnitee was material to the matter giving rise to such a Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (ii) Indemnitee actually received an improper personal benefit in money, property or services.

Section 6. Court-Ordered Indemnification. Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification in the following circumstances:

(a) if it determines Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the expenses of securing such reimbursement; or

(b) if it determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any Proceeding by or in the right of the Company or in which liability shall have been adjudged in the circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses actually and reasonably incurred by him/her or on his/her behalf in connection with a Proceeding.

Section 7. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of his/her Corporate Status, made a party to and is successful, on the merits or otherwise, in the defense of any Proceeding, he/she shall be indemnified for all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 8. Advance of Expenses. The Company shall advance all reasonable Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding (other than a Proceeding brought to enforce indemnification under this Agreement, applicable law, the Charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors) to which Indemnitee is, or is threatened to be, made a party or a witness, within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee's good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established that the standard of conduct has not been met and which have not been successfully resolved as described in Section 7. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee's financial ability to repay such advanced Expenses and without any requirement to post security therefor.

Section 9. Procedure for Determination of Entitlement to Indemnification.

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 9(a) hereof, a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Directors (as herein defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 9. Any Expenses actually and reasonably incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.

Section 10. Presumptions and Effect of Certain Proceedings.

(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.

(b) The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

Section 11. Remedies of Indemnitee.

(a) If (i) a determination is made pursuant to Section 9 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 9(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 7 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, of his/her entitlement to such indemnification or advance of Expenses. Alternatively, Indemnitee, at his/her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 11(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce his/her rights under Section 7 of this Agreement.

(b) In any judicial proceeding or arbitration commenced pursuant to this Section 11 the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.

(c) If a determination shall have been made pursuant to Section 9(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 11, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification.

(d) In the event that Indemnitee, pursuant to this Section 11, seeks a judicial adjudication of or an award in arbitration to enforce his/her rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him/her in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

Section 12. Defense of the Underlying Proceeding.

(a) Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance

of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company's ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b) Subject to the provisions of the last sentence of this Section 12(b) and of Section 12(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 12(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 12(b) shall not apply to a Proceeding brought by Indemnitee under Section 11 above or Section 18 below.

(c) Notwithstanding the provisions of Section 12(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that he/she may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee's choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company (subject to Section 11(d)), to represent Indemnitee in connection with any such matter.

Section 13. Non-Exclusivity; Survival of Rights; Subrogation; Insurance.

(a) The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision

hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his/her Corporate Status prior to such amendment, alteration or repeal.

(b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(c) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 14. Insurance. The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors of the Company, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee for service as a director or officer of the Company and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee for service as a director or officer of the Company. Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and reasonable Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in the previous sentence.

Section 15. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of his/her Corporate Status, a witness in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party but in which the Indemnitee receives a subpoena to testify, he/she shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection therewith.

Section 16. Duration of Agreement; Binding Effect.

(a) This Agreement shall continue until and terminate ten years after the date that Indemnitee's Corporate Status shall have ceased; provided, that the rights of Indemnitee hereunder shall continue until the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advance of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 11 of this Agreement relating thereto.

(b) The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as

to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the written request of the Company, and shall inure to the benefit of Indemnitee and his/her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

Section 17. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 18. Exception to Right of Indemnification or Advance of Expenses. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (a) the Proceeding is brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Sections 8 and 11 of this Agreement, or (b) the Company's Bylaws, as amended, the Charter, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.

Section 19. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

Section 20. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 21. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver

of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 22. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to Indemnitee, to: The address set forth on the signature page hereto.

(b) If to the Company to:

Retail Properties of America, Inc.

2021 Spring Road, Suite 200

Oak Brook, Illinois 60523

Attn: President and Chief Executive Officer

With a copy to:

Retail Properties of America, Inc.

2021 Spring Road, Suite 200

Oak Brook, Illinois 60523

Attn: General Counsel

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 23. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

Section 24. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.



ATTEST:	COMPANY

	RETAIL PROPERTIES OF AMERICA, INC., a
	Maryland corporation

/s/ PAULA C. MAGGIO	By:	/s/ STEVEN P. GRIMES
Paula C. Maggio		Steven P. Grimes
Secretary		President and Chief Executive Officer



		INDEMNITEE

		/s/ ROBERT G. GIFFORD
		Robert G. Gifford

		Address:	Retail Properties of America, Inc.
			2021 Spring Road, Suite 200
			Oak Brook, Illinois 60523

EXHIBIT A

FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED

The Board of Directors of Retail Properties of America, Inc.

Re: Undertaking to Repay Expenses Advanced

Ladies and Gentlemen:

This undertaking is being provided pursuant to that certain Indemnification Agreement dated the ____ day of ___________________, 20___, by and between Retail Properties of America, Inc. (the "Company") and the undersigned Indemnitee (the "Indemnification Agreement"), pursuant to which I am entitled to advance of expenses in connection with [description of proceeding] (the "Proceeding").

Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm that at all times, insofar as I was involved as a [director or officer] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) acted in good faith and honestly, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.

In consideration of the advance of Expenses by the Company for reasonable attorneys' fees and related expenses incurred by me in connection with the Proceeding (the "Advanced Expenses"), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 7 of the Indemnification Agreement. To the extent that Advanced Expenses do not relate to a specific claim, issue or matter in the Proceeding, I agree that such Expenses shall be allocated on a reasonable and proportionate basis.

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this day of __________________, _______ .

WITNESS:

________________________ (SEAL)

Exhibit 10.3

RETAIL PROPERTIES OF AMERICA, INC.

AMENDED AND RESTATED

RETENTION AGREEMENT

This Amended and Restated Retention Agreement (the “ Agreement ”) is made and entered into by and between Steven P. Grimes (“ Executive ”) and Retail Properties of America, Inc., a Maryland corporation (the “ Company ”), effective as of October 31, 2016 (the “ Effective Date ”).

R E C I T A L S

A. On February 19, 2013, Executive and the Company entered into that certain Retention Agreement (the “Retention Agreement”).

B. On February 19, 2015, Executive and the Company entered into that certain Amendment to the Retention Agreement (the “Amended Retention Agreement”).

C. Although the Company anticipates the continuation of a mutually rewarding employment relationship with Executive, the Compensation Committee (the “ Committee ”) of the Board of Directors of the Company (the “ Board ”) believes that it is in the best interests of the Company and its stockholders to amend and restate the Amended Retention Agreement to provide Executive with certain assurances in the event of the occurrence of an involuntary termination of Executive’s employment with the Company. Further, it is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change in control. The Committee recognizes that such consideration as well as the possibility of an involuntary termination or reduction in responsibility can be a distraction to Executive and can cause Executive to consider alternative employment opportunities. Accordingly, the Committee has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of such an event.

D. Certain capitalized terms used in this Agreement are defined in Section 8 below.

NOW THEREFORE, the parties hereto agree as follows:

1. Term of Agreement . This Agreement shall have a term commencing on the Effective Date and continuing for three (3) years following the Effective Date (the “ Term ”). The Term shall be automatically extended for successive two (2) year periods unless the Committee has delivered notice to Executive no later than ninety (90) days prior to the completion of the then effective Term that this Agreement is not be extended; provided, however, that if, during the then effective Term, a Change in Control has occurred or the Company has entered into a definitive agreement that, upon consummation, would result in a Change in Control, then the Term shall automatically be extended until the second anniversary of the effective date of such Change in Control or, in the event such a definitive agreement is

terminated without the Change in Control being consummated, the second anniversary of the date on which the Company entered into such definitive agreement.

2. Termination Upon Disability or Death . The Company may terminate Executive’s employment immediately at any time following Executive’s Disability. Executive’s employment shall terminate automatically upon Executive’s death. In the event that Executive’s employment is terminated in accordance with this Section 2, Executive shall be entitled to receive only the following payments and benefits: (i) unpaid base salary at the rate then in effect, prorated to the date of Executive’s termination of employment (the “ Termination Date ”), together with any amounts to which Executive is then entitled pursuant to any employee benefit or business expense reimbursement plan or arrangement in which Executive is then a participant, (ii) acceleration in full upon the Termination Date of the vesting of all then unvested equity awards granted to Executive pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based solely on Executive’s continued employment or service through specified dates (“ Time-Based Equity Awards ”) and (iii) treatment of unvested equity awards, if any, granted to Executive on or after the date hereof pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based on the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates (“ Performance-Based Equity Awards ”) in accordance with the provisions of this Section 2. In the event that Executive’s employment is terminated in accordance with this Section 2, Performance-Based Equity Awards will be treated as follows: (i) if the Termination Date occurs prior to the end of the performance period applicable to a Performance-Based Equity Award, then all of the vesting conditions applicable to such Performance-Based Equity Award that are based on Executive’s continued employment or service through specified dates will be deemed to have been satisfied and the portion of such Performance-Based Equity Award that will be earned and vest based the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates (the “ Performance-Based Conditions ” of such Performance-Based Equity Award) will equal the portion of such Performance-Based Equity Award that would have been earned or vested based on the achievement of such Performance-Based Conditions if Executive’s employment had not been terminated, determined in accordance with the applicable award agreement (and Section 5 below, if applicable), multiplied by a fraction, the numerator of which is the number of full and partial months in which Executive was employed by the Company during such performance period and the denominator of which is the total number of full and partial months in such performance period; and (b) if the Termination Date occurs after the end of the performance period applicable to a Performance-Based Equity Award, then the portion of such Performance-Based Equity Award that is or was earned based on the achievement of the Performance-Based Conditions of such Performance-Based Equity Award, but would not otherwise vest, will vest upon the later of the Termination Date or the date on which the portion of such Performance-Based Equity Award that is earned based on the achievement of such Performance-Based Conditions is determined. The foregoing provisions, as they relate to the acceleration of vesting, are hereby deemed to be a part of each agreement evidencing each applicable Time-Based Equity Award and Performance-Based Equity Award to which Executive is a party and to supersede any contrary provision in any such agreement unless

- 2 -

such agreement specifically refers to and disclaims this provision. Any other unvested equity awards granted pursuant to an agreement between the Company and Executive that are not specifically described herein (i.e., unvested equity awards, if any, granted to Executive prior the date hereof pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based on the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates) will not be subject to acceleration pursuant to this Section, but will be governed by their terms. All other Company obligations to Executive pursuant to this Agreement shall be automatically terminated and completely extinguished. Executive shall not be entitled to receive the Severance Benefits described in Section 3 below.

3. Involuntary Termination . The Company may terminate Executive’s employment with the Company without Cause at any time. Executive may terminate Executive’s employment with the Company by reason of a Resignation for Good Reason. In the event of any such Involuntary Termination: (i) Executive shall be entitled to receive unpaid base salary at the rate then in effect, prorated to the Termination Date, together with any amounts to which Executive is then entitled pursuant to any employee benefit or business expense reimbursement plan or arrangement in which Executive is then a participant, and (ii) in addition, provided that Executive executes and delivers to the Company in connection with such termination of employment a release of claims substantially in the form attached hereto as Exhibit A , amended as necessary to comply with applicable law (the “ Release ”) and the period for revocation, if any, of the Release has lapsed on or before the sixtieth (60th) day following the Termination Date without the Release having been revoked, the Company shall provide Executive with the following (the “ Severance Benefits ”), and all other Company obligations to Executive pursuant to this Agreement shall be automatically terminated and completely extinguished:

(a) Cash Severance (Non-Change in Control) . Executive shall receive on the sixtieth (60th) day following the Termination Date a lump sum cash amount (less applicable withholdings) equal to (i) two (2) times the sum of (x) Executive’s annual base salary at the rate then in effect (without giving effect to any reduction in the base salary rate amounting to Good Reason), (y) an amount equal to the greater of (1) Executive’s target annual cash bonus opportunity for the year in which Executive’s employment was terminated (or the prior year if a target annual cash bonus amount hadn’t yet been established for such year), (the “ Target Bonus ”) or (2) Executive’s actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined preceding the year in which Executive’s employment was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

(b) Cash Severance (Change in Control) . In the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in

- 3 -

Control Period, then, in lieu of the amounts set forth above under Section 3(a), Executive shall receive on the sixtieth (60th) day following the Termination Date a lump sum cash amount (less applicable withholdings) equal to (i) three (3) times the sum of (x) Executive’s annual base salary at the rate then in effect (without giving effect to any reduction in the base salary rate amounting to Good Reason), (y) an amount equal to the greater of (1) Executive’s Target Bonus or (2) Executive’s actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined preceding the year in which Executive’s employment was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

(i) Time-Based Equity Awards . The vesting of all Time-Based Equity Awards shall accelerate in full upon the Termination Date.

(ii) Performance-Based Equity (Non-Change in Control) . In the event that Executive’s Involuntary Termination does not occur in connection with a Change in Control or during a Change in Control Period, Performance-Based Equity Awards will be treated as follows: (i) if the Termination Date occurs prior to the end of the performance period applicable to a Performance-Based Equity Award, then all of the vesting conditions applicable to such Performance-Based Equity Award that are based on Executive’s continued employment or service through specified dates will be deemed to have been satisfied and the portion of such Performance-Based Equity Award that will be earned and vest based the achievement of the Performance-Based Conditions of such Performance-Based Equity Award will equal the portion of such Performance-Based Equity Award that would have been earned or vested based on the achievement of such Performance-Based Conditions if Executive’s employment had not been terminated, determined in accordance with the applicable award agreement (and Section 5 below, if applicable), multiplied by a fraction, the numerator of which is the number of full and partial months in which Executive was employed by the Company during such performance period and the denominator of which is the total number of full and partial months in such performance period; and (b) if the Termination Date occurs after the end of the performance period applicable to a Performance-Based Equity Award, then the portion of such Performance-Based Equity Award that is or was earned based on the achievement of the Performance-Based Conditions of such Performance-Based Equity Award, but would not otherwise vest, will vest upon the later of the Termination Date or the date on which the portion of such Performance-Based Equity Award that is earned based on the achievement of such Performance-Based Conditions is determined.

- 4 -

Equity Awards that are based on Executive’s continued employment or service through specified dates will be deemed to have been satisfied and the portion of such Performance-Based Equity Awards that will be earned and vest based the achievement of the Performance-Based Conditions of such Performance-Based Equity Awards will equal the portion of such Performance-Based Equity Awards that would have been earned or vested based on the achievement of such Performance-Based Conditions if Executive’s employment had not been terminated, determined in accordance with the applicable award agreement (and Section 5 below, if applicable), with such vesting occurring, for each Performance-Based Equity Award, upon the later of the Termination Date or the date on which the portion of such Performance-Based Equity Award that is earned based on the achievement of such Performance-Based Conditions is determined.

(iv) The foregoing provisions are hereby deemed to be a part of each agreement evidencing each applicable Time-Based Equity Award and Performance-Based Equity Award to which Executive is a party and to supersede any contrary provision in any such agreement unless such agreement specifically refers to and disclaims this provision. Any other unvested equity awards granted pursuant to an agreement between the Company and Executive that are not specifically described herein (i.e., unvested equity awards, if any, granted to Executive prior the date hereof pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based on the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates) will not be subject to acceleration pursuant to this Section, but will be governed by their terms.

(d) Continued Healthcare . If Executive was participating in the Company’s group health plan immediately prior to the Termination Date then the Company shall pay Executive a monthly cash payment for a period of up to: (x) twenty four (24) months after the Termination Date, in the event of Executive’s Involuntary Termination other than in connection with a Change in Control; or (y) thirty six (36) months after the Termination Date, in the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in Control Period, as applicable, equal to the total premiums for such group health plan coverage (based on Executive’s coverage elections in effect as of the Termination Date) (the “ Company Benefit Payment ”); provided , that notwithstanding the foregoing, in no event will Executive be entitled to the Company Benefit Payment after the first date on which Executive becomes eligible for healthcare coverage under the plan of a subsequent employer of Executive.

4. Voluntary Resignation by Executive; Termination for Cause . Executive may voluntarily resign from employment with the Company for any reason, at any time, on thirty (30) days’ advance written notice. In addition, the Company may terminate Executive’s employment immediately at any time for Cause. In the event of Executive’s resignation which is not a Resignation for Good Reason or the Company’s termination of Executive’s employment for Cause, Executive will be entitled to receive only unpaid base salary at the rate then in effect, prorated to the Termination Date, together with any amounts to which Executive is then entitled pursuant to any employee benefit or business expense reimbursement plan or arrangement in which Executive is then a participant. All other Company obligations to Executive pursuant to

- 5 -

this Agreement shall be automatically terminated and completely extinguished. Executive shall not be entitled to receive the Severance Benefits described in Section 3 above.

5. Determination of Performance Conditions upon a Change in Control . If, prior to the end of the performance period applicable to a Performance-Based Equity Award, a Change in Control occurs, then the portion of such Performance-Based Equity Award that will be earned and vest based the achievement of the Performance-Based Conditions will be determined: (i) immediately prior to, but subject to the consummation of, the Change in Control, (ii) as if the performance period ended on the day prior to the consummation of the Change in Change and (A) with respect to Performance-Based Conditions that are based on stock price, total return to stockholders or a similar market based metric, based on performance through such date and, to the extent applicable, based on the transaction price in connection with the Change in Control, (B) with respect to Performance-Based Conditions that are based on financial or operational metrics, based on performance through the most recently completed quarter prior to such date for which final results are available on such date and (C) with respect to Performance-Based Conditions that are based on other metrics, based on performance through a date on or before such date as may be set forth in the applicable award agreement for such Performance-Based Equity Award or as is otherwise agreed by Executive and the Company and (iii) using metrics for the Performance-Based Conditions that have been pro-rated based on the shortened length of the performance period, as applicable. For avoidance of doubt, this Section is not intended to impact any vesting conditions applicable to Performance-Based Equity Awards that are based on Executive’s continued employment or service through specified dates and such vesting conditions will continue to apply unless otherwise accelerated or waived (e.g., in the event of Executive’s Involuntary Termination in connection with the Change in Control). The foregoing provisions are hereby deemed to be a part of each agreement evidencing each applicable Performance-Based Equity Award to which Executive is a party and to supersede any contrary provision in any such agreement unless such agreement specifically refers to and disclaims this provision.

6. Recoupment . Bonus, incentive and equity compensation paid or provided to Executive, whether pursuant to this Agreement or otherwise, shall be subject to the terms and conditions of such policy of recoupment of compensation as shall be adopted from time to time by the Board or the Committee as it deems necessary or desirable to comply with the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (providing for recovery of erroneously awarded compensation), Section 304 of the Sarbanes-Oxley Act of 2002 (providing for forfeiture of certain bonuses and profits), and any implementing rules and regulations of the U.S. Securities and Exchange Commission and applicable listing standards of a national securities exchange adopted in accordance with any such Act (the “ Recoupment Policy ”). The terms and conditions of the Recoupment Policy are hereby incorporated by reference into this Agreement and the Employment Agreement.

- 6 -

Code (“ Excise Tax ”), then Executive’s severance payments and benefits under this Agreement, the Employment Agreement or otherwise shall be payable either

(a) in full, or

(b) in such lesser amount which would result in no portion of such severance payments or benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance payments and benefits under this Agreement, the Employment Agreement or otherwise, notwithstanding that all or some portion of such severance payments or benefits may be taxable under Section 4999 of the Code. Any reduction in the severance payments and benefits required by this Section will made in the following order: (i) reduction of cash payments; (ii) reduction of accelerated vesting of equity awards other than stock options; (iii) reduction of accelerated vesting of stock options; and (iv) reduction of other benefits paid or provided to Executive. In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards. If two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis.

The professional firm engaged by the Company for general tax purposes as of the day prior to the date of the event that might reasonably be anticipated to result in severance payments and benefits that would otherwise be subject to the Excise Tax will perform the foregoing calculations. If the tax firm so engaged by the Company is serving as accountant or auditor for the acquiring company, the Company will appoint a nationally recognized tax firm to make the determinations required by this Section. The Company will bear all expenses with respect to the determinations by such firm required to be made by this Section. The Company and Executive shall furnish such tax firm such information and documents as the tax firm may reasonably request in order to make its required determination. The tax firm will provide its calculations, together with detailed supporting documentation, to the Company and Executive as soon as practicable following its engagement. Any good faith determinations of the tax firm made hereunder will be final, binding and conclusive upon the Company and Executive.

8. Definition of Terms . Capitalized terms not otherwise defined by this Agreement shall have the following meanings:

(a) “ Cause ” means (i) theft, material dishonesty in connection with Executive’s employment, or intentional falsification of any employment or Company records; (ii) intentional and improper disclosure of the Company’s confidential or proprietary information; (iii) Executive’s conviction (including any plea of guilty or nolo contendere ) for any criminal act that materially impairs Executive’s ability to perform his or her duties for Company; (iv) willful misconduct or breach of fiduciary duty for personal profit by Executive, (v) Executive’s material failure to abide by the Company’s code of conduct or code of ethics policies resulting in demonstrable injury to the Company or its reputation, or (vi) a material breach of this Agreement by Executive which is not cured within thirty (30) days of receipt by Executive of reasonably detailed written notice from Company.

- 7 -

(b) “ Change in Control ” means the first day that any one or more of the following conditions shall have been satisfied:

(i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), other than Executive or a group that includes Executive, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of stock of the Company that, together with stock held by such person or group, constitutes more than thirty percent (30%) of either the total fair market value of the stock of the Company then outstanding or the total voting power of the stock of the Company then outstanding having the right to vote in an election of the Board (the “ Voting Stock ”), excluding the acquisition of beneficial ownership of additional stock by a person or group who, immediately prior to such acquisition, beneficially owned stock that constituted more than thirty percent (30%) of either the total fair market value of the stock of the Company then outstanding or the total voting power of the Voting Stock then outstanding;

(ii) the members of the Board at the beginning of any consecutive 12- month period commencing on or after the date hereof (the “ Incumbent Directors ”) cease for any reason other than due to death to constitute at least a majority of the members of the Board prior to the end of such period; provided that any director whose appointment, election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors, shall be deemed to be an Incumbent Director; and provided, further, that notwithstanding the foregoing, no director initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed an Incumbent Director;

(iii) there is consummated any consolidation or merger of the Company resulting in the Voting Stock of the Company outstanding immediately prior to the consolidation or merger representing (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) less than a majority of the total voting power of the voting securities of the surviving entity or its parent outstanding immediately after such consolidation or merger;

(iv) there is consummated any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to a subsidiary of the Company or an entity in which securities constituting at least a majority of the voting power of the voting securities of such entity or its parent outstanding immediately after such transaction are owned by the stockholders of the Company in substantially the same proportion as their ownership of the Voting Stock immediately prior to such transaction; or

(v) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company.

- 8 -

(c) “ Change in Control Period ” means a period commencing upon the consummation of a Change in Control and ending on the date occurring two (2) years thereafter.

(d) “ Disability ” means Executive has been determined by a physician selected by the Company and reasonably acceptable to Executive to be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

(e) “ Involuntary Termination ” means the occurrence of either (i) termination by the Company of Executive’s employment with the Company for any reason other than Cause or (ii) Executive’s Resignation for Good Reason; provided, however that Involuntary Termination shall not include any termination of Executive’s employment which is (x) for Cause, (y) a result of Executive’s death or Disability, or (z) a result of Executive’s voluntary termination of employment which is not a Resignation for Good Reason.

(f) “ Resignation for Good Reason ” means the voluntary resignation by Executive from employment with the Company at any time on ten (10) days’ advance written notice to the Company given within a period of one hundred eighty (180) days following the initial existence, without Executive’s express written consent, of any of the following conditions (each, a “ Good Reason ”) which remains in effect for thirty (30) days after Executive’s delivery of written notice of the existence of such condition(s) to the Company within ninety (90) days following the initial existence of such condition(s):

(i) a material, adverse change in Executive’s authority, duties or responsibilities; provided, that for purposes of this Agreement and without limiting the generality of the foregoing, a material, adverse change shall be deemed to occur if Executive no longer serves as President and Chief Executive Officer (who shall be the most senior executive) of a publicly-traded company reporting directly to the Board;

(ii) a failure to pay when due Executive’s base salary or any bonus actually earned;

(iii) any material reduction in Executive’s base salary rate or the stated target amount of Executive’s annual bonus (the earning of which may be made subject to performance requirements determined by the Company in its sole discretion);

(iv) the relocation of Executive work place for the Company to a location more than thirty (30) miles from location of Executive’s work place prior to such relocation; or

(v) the failure of the Company or any Successor to honor any material term of this Agreement.

- 9 -

9. Successors .

(a) Company’s Successors . Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets (a “ Successor ”) shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “ Company ” shall include any Successor which executes and delivers the assumption agreement described in this Section 9(a) or which becomes bound by the terms of this Agreement by operation of law.

(b) Executive’s Successors . The terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

10. Notice.

(a) General . Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or one day following mailing via Federal Express or similar overnight courier service. In the case of Executive, mailed notices shall be addressed to Executive at Executive’s home address that the Company has on file for Executive. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Chief Executive Officer.

(b) Notice of Termination . Any termination by the Company for Cause or by Executive pursuant to a Resignation for Good Reason shall be communicated by a notice of termination to the other party hereto given in accordance with Section 10(a) of this Agreement. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date, consistent with the requirements of this Agreement. The failure by Executive to include in the notice any fact or circumstance that contributes to a showing of the existence of Good Reason shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing his rights hereunder.

11. Confidentiality; Non-Solicitation.

- 10 -

retained by Executive or furnished to any third party, in any form except as provided herein; provided, however , that Executive shall not be obligated to treat as confidential, or return to the Company copies of any Confidential Information that (i) was publicly known at the time of disclosure to Executive, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by any person or entity, or (iii) is lawfully disclosed to Executive by a third party. For purposes of this Agreement, the term “ Confidential Information ” shall mean information disclosed to Executive or known by Executive as a consequence of or through his or her relationship with the Company, about the customers, employees, business methods, public relations methods, organization, procedures or finances, including, without limitation, information of or relating to customer lists, of the Company and its affiliates. Executive understands that pursuant to the Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, nothing in this Agreement shall be interpreted or applied to prohibit Executive from making any good faith report to any governmental agency or other governmental entity concerning any acts or omissions that Executive may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation. Further, this Agreement does not limit your ability to communicate with any government agency or otherwise participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice to the Company nor does it limit any right you may have to receive an award for information provided to any government agencies.

(b) Non-Solicitation; Non-Disparagement . Executive shall not for a period of one (1) year following Executive’s termination of employment for any reason, either on Executive’s own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or corporation, directly or indirectly solicit or attempt to solicit away from the Company any of its officers or employees or offer employment to any person who is an officer or employee of the Company; provided, however , that a general advertisement to which an employee of the Company responds shall in no event be deemed to result in a breach of this Section 11(b). Executive also agrees not to harass or disparage the Company or its employees, clients, directors or agents.

(c) Survival of Provisions . The provisions of this Section 11 shall survive the termination or expiration of the Executive’s employment with the Company and shall be fully enforceable thereafter. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 11 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

- 11 -

12. Dispute Resolution .

(a) To ensure the timely and economical resolution of disputes that arise in connection with this Agreement, Executive and the Company agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance or interpretation of this Agreement, Executive’s employment, or the termination of Executive’s employment, shall be resolved to the fullest extent permitted by law by final, binding and confidential arbitration, by a single neutral arbitrator, in DuPage County, Illinois, conducted by the American Arbitration Association. (“ AAA ”) under its rules for arbitration of employment disputes. By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. The arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall be authorized to award any or all remedies that Executive or the Company would be entitled to seek in a court of law. Each party shall bear its own respective attorney fees and all other costs, unless provided by law and awarded by the arbitrator; provided, however, that the Company shall pay all AAA arbitration fees in excess of the amount of court fees that would be required if the dispute were decided in a court of law. Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by Court action instead of arbitration.

(b) Executive understands that this Agreement does not prohibit Executive from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the workers’ compensation Committee. This Agreement, does, however, preclude Executive from pursuing court action regarding any such claim.

(c) Executive acknowledges and agrees that Executive is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive further acknowledges and agrees that Executive has carefully read this Agreement and that Executive has asked any questions needed for Executive to understand the terms, consequences and binding effect of this Agreement and fully understands it, including that Executive is waiving Executive’s right to a jury trial. Finally, Executive agrees that Executive has been provided an opportunity to seek the advice of an attorney of Executive’s choice before signing this Agreement.

- 12 -

(9)(iii), or otherwise. To the extent Section 409A is applicable to such payments, the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:

(a) No amount payable pursuant to this Agreement which constitutes a “deferral of compensation” within the meaning of Section 409A shall be paid unless and until Executive has incurred a “separation from service” within the meaning of Section 409A. Furthermore, to the extent that Executive is a “specified employee” within the meaning of Section 409A (determined using the identification methodology selected by the Company from time to time, or if none, the default methodology) as of the date of Executive’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Executive’s separation from service shall paid to Executive before the date (the “ Delayed Payment Date ”) which is first day of the seventh month after the date of Executive’s separation from service or, if earlier, the date of Executive’s death following such separation from service. All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

(b) Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

(c) With regard to any provision in this Agreement that provides for reimbursement of expenses or in-kind benefits, except for any expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a “deferral of compensation,” within the meaning of Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be deemed to be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect, and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.

(d) The Company intends that income provided to Executive pursuant to this Agreement will not be subject to taxation under Section 409A of the Code. However, the Company does not guarantee any particular tax effect for income provided to Executive pursuant to this Agreement. In any event, except for the Company’s responsibility to withhold applicable income and employment taxes from compensation paid or provided to Executive, the Company shall not be responsible for the payment of any applicable taxes on compensation paid or provided to Executive pursuant to this Agreement.

- 13 -

14. Miscellaneous Provisions.

(a) At-Will Employment . Executive acknowledges and agrees that nothing in this Agreement shall be construed to imply that Executive’s employment is guaranteed for any period of time. Unless stated in a written agreement signed by an officer of the Company authorized by the Board or Committee and Executive, Executive’s employment is at-will and either the Company or Executive may terminate the employment relationship at any time with or without cause and with or without notice.

(b) Unfunded Obligation . Any amounts payable to Executive pursuant to this Agreement are unfunded obligations. The Company shall not be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any account shall not create or constitute a trust or fiduciary relationship between the Board or the Company and Executive, or otherwise create any vested or beneficial interest in Executive or Executive’s creditors in any assets of the Company.

(c) No Duty to Mitigate . Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement by seeking employment with a new employer or otherwise, nor shall any such payment or benefit be reduced by any compensation or benefits that Executive may receive from employment by another employer other than as provided in Section 3(d).

(d) Waiver . No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(e) Whole Agreement . This Agreement represents the entire understanding of the parties hereto with respect to the subject matter hereof and supersede all prior arrangements and understandings regarding same.

(f) Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

(g) Choice of Law; Venue . The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Illinois without giving effect to any conflict of law principles. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties pursuant to this Agreement that is not subject to arbitration pursuant to Section 12, the parties hereby submit to and consent to the jurisdiction of the State of Illinois and agree that such litigation shall be conducted only in the

- 14 -

courts of DuPage County, Illinois, or the federal courts of the United States for the Northern District of Illinois, and no other courts.

(h) Severability . The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(i) Benefits Not Assignable . Except as otherwise provided herein or by law, no right or interest of Executive under this Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including, without limitation, by execution, levy, garnishment, attachment, pledge or in any other manner, and no attempted transfer or assignment thereof shall be effective. No right or interest of Executive under this Agreement shall be liable for, or subject to, any obligation or liability of Executive.

(j) Further Assurances . From time to time, at the Company’s request and without further consideration, Executive shall execute and deliver such additional documents and take all such further action as reasonably requested by the Company to be necessary or desirable to make effective, in the most expeditious manner possible, the terms of this Agreement and the Release, and to provide adequate assurance of Executive’s due performance thereunder.

(k) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(l) Acknowledgment. Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.



RETAIL PROPERTIES OF AMERICA, INC.

By:	/s/ PAULA C. MAGGIO	Date:	10/31/16

Title:	Executive Vice President, General Counsel



EXECUTIVE
/s/ STEVEN P. GRIMES		Date:	10/31/16

- 15 -

EXHIBIT A

FORM OF
SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“ Agreement ”) is being entered into by Retail Properties of America, Inc. (“ Employer ” or “ Company ”) and ______________ (“ Employee ”) (together, the “ Parties ”).

1. SEPARATION DATE

1.1 Employee and Employer are parties to a Retention Agreement, dated effective as of ___________, 2016 (the “ Retention Agreement ”). Employee’s last day of employment with Employer is ________________ (“ Separation Date ”).

2. VALUABLE CONSIDERATION

2.1 Severance Package . Employer agrees to provide Employee with the following payments and benefits (“ Severance Package ”). Employee acknowledges and agrees that the Severance Package constitutes adequate legal consideration for the promises and representations made by him or her in the Agreement. Receipt of the Severance Package is contingent upon the following conditions: (i) Employee must continue to abide by the covenants regarding confidentiality, non-solicitation and non-disparagement described in Section 11 of the Retention Agreement, and (ii) application of the Recoupment Policy described in Section 6 of the Retention Agreement, the Golden Parachute Payments provision described in Section 7 of the Retention Agreement, and the provisions regarding compliance with Section 409A of the Internal Revenue Code described in Section 13 of the Retention Agreement. Subject to the foregoing, Employer will pay the Severance Payment on the sixtieth (60th) day after the Separation Date.

2.1.1. Severance Payment . Employer agrees to pay Employee a total of $___________, computed in accordance with Section [3(a)] [3(b)] of the Retention Agreement, less all appropriate federal and state income and employment taxes (“ Severance Payment ”).

2.1.2. Acceleration of Vesting . The vesting of all unvested equity awards granted to Employee that are listed on Exhibit A hereto shall become vested in accordance with Section 3(c) of the Retention Agreement. The Performance-Based Equity Awards (as defined in the Retention Agreement), or the portions thereof, that are listed as such on Exhibit A will remain outstanding following the Separation Date and will vest based on the achievement of the Performance-Based Conditions (as defined in the Retention Agreement) of such Performance-Based Equity Awards determined in accordance with the applicable award agreement (and Section 5 of the Retention Agreement, if applicable) All other equity awards (or portions thereof) made to the Employee by the Employer that were unvested immediately prior to the Separation Date will be forfeited as of the Separation Date.

2.1.3. Continued Healthcare . Employer will pay the amounts described in Section 3(d) of the Retention Agreement on the terms set forth therein.

A-1

2.2 Employee acknowledges that the benefits described above are over and above anything owed to him or her by law, contract or under the policies of Employer, and that they are being provided to him or her expressly in exchange for his or her entering into this Agreement.

3. GENERAL RELEASE AND WAIVER

3.1 In consideration of Employer’s promises made within this Agreement, Employee unconditionally, irrevocably and absolutely waives, releases and discharges Employer, and any parent and subsidiary corporations, divisions and affiliated corporations, partnerships or other affiliated entities of Employer, past and present, as well as the past and present employees, officers, directors, agents, successors and assigns of Employer (collectively, “ Released Parties ”), from all claims related in any way to the transactions or occurrences between them to date, to the fullest extent permitted by law, including, but not limited to, Employee’s employment with Employer, the termination of Employee’s employment with Employer, and all other losses, liabilities, claims, charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Employee’s employment with Employer. This release is intended to have the broadest possible application and includes, but is not limited to, any tort, contract, common law, constitutional or other statutory claims, including, but not limited to claims involving intellectual property or innovations that Employee may have worked on or come up with during the period in which he or she was being compensated by any of the Released Parties, alleged violations of the Illinois Human Rights Act, the Illinois Minimum Wage Law, the Illinois Wage Payment and Collection Act, the Illinois One Day Rest in Seven Act, the Illinois Victims' Economic Security and Safety Act, the Illinois Personnel Record Review Act, the Illinois Worker Adjustment and Retraining Notification Act, the Illinois Right to Privacy in the Workplace Act, the Illinois Workers' Compensation Act and any other statute set forth in Chapter 820 or any other chapter of the Illinois Compiled Statutes that pertains or relates to, or otherwise touches upon, the employment relationship between Employer and Employee, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and all claims for attorneys’ fees, costs and expenses. Employee expressly waives Employee’s right to recovery of any type, including damages, in any administrative or court action, whether state or federal, and whether brought by Employee or on Employee’s behalf, related in any way to the matters released herein. However, this general release is not intended to bar any claims that, by statute, may not be waived, such as claims for any challenge to the validity of Employee’s release of claims under the Age Discrimination in Employment Act, as set forth in this Agreement. Further, nothing in this Section 3.1 shall release any of the Released Parties’ obligations, covenants, and agreements under this Agreement or Employee’s rights under applicable law, the Company’s Bylaws, any Company officer indemnity agreement to which Employee is a party or the Company’s director and officer liability policy to seek indemnity for acts committed, or omissions, within the course and scope of Employee’s employment duties.

3.2 Employee acknowledges that Employee may discover facts or law different from, or in addition to, the facts or law that Employee knows or believes to be true with respect to the claims released in this Agreement and agrees, nonetheless, that this Agreement and the release contained in it shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them.

A-2

3.3 Employee declares and represents that Employee intends this Agreement to be complete and not subject to any claim of mistake, and that the release herein expresses a full and complete release and Employee intends the release herein to be final and complete.

3.4 Employee represents that, as of the date of this Agreement, he or she has not filed any lawsuits, charges, complaints, petitions, claims or other accusatory pleadings against Employer or any of the other Released Parties in any court or with any governmental agency.

3.5 Employee acknowledges and agrees that the general release and waiver clause in this Agreement is an essential and material term of the Agreement, and that without such clause, no agreement would have been reached by the Parties.

4. ACKNOWLEDGEMENTS BY EMPLOYEE

4.1 Employee acknowledges that he or she is subject to, and will continue to abide by, all surviving provisions of the Retention Agreement, including, without limitation, the covenants regarding confidentiality, non-solicitation and non-disparagement set forth in Section 11 of the Retention Agreement (the “ Covenants ”), all of which are incorporated herein by reference as if set forth herein in their entirety. Nothing in this Agreement is intended to modify, supersede or replace any provision, right or obligation of Employee under the Covenants.

4.2 Employee acknowledges that he or she has been paid all wages, commissions, incentive payments, and bonuses owed to him or her by Employer, to date.

5. NON-DISPARAGEMENT

5.1 Employee confirms and agrees that he or she will not make any oral or written statements to any third party about any of the Released Parties that are intended or reasonably likely either to disparage any of the Released Parties. Employee acknowledges and agrees that the non-disparagement clause in this Agreement is an essential and material term of the Agreement, and that without such clause, no agreement would have been reached by the Parties. Additionally, if Employee is compelled by the legal process to provide statements, information, or testimony regarding his or her employment with any of the Released Parties, he or she will do so in a truthful manner, and doing so is not a breach of the terms of this Agreement.

6. OLDER WORKERS’ BENEFIT PROTECTION ACT. This Agreement is intended to satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. sec. 626(f). Employee is advised to consult with an attorney before executing this Agreement.

6.1 Acknowledgements/Time to Consider . Employee acknowledges and agrees that (a) Employee has read and understands the terms of this Agreement; (b) Employee has been advised in writing to consult with an attorney before executing this Agreement; (c) Employee has obtained and considered such legal counsel as Employee deems necessary; (d) Employee has been given twenty-one (21) days to consider whether or not to enter into this Agreement (although Employee may elect not to use the full 21-day period at Employee’s option); and (e) by signing this Agreement, Employee acknowledges that Employee does so freely, knowingly, and voluntarily.

A-3

6.2 Revocation/Effective Date . This Agreement shall not become effective or enforceable until the eighth day after Employee signs this Agreement. In other words, Employee may revoke Employee’s acceptance of this Agreement within seven (7) days after the date Employee signs it. Employee’s revocation must be in writing and received by ______________, the Company’s ______________ Officer, 2021 Spring Road, Suite 200, Oak Brook, IL 60523 by 5:00 p.m. Central Time on the seventh day in order to be effective. If Employee does not revoke acceptance within the seven (7) day period, Employee’s acceptance of this Agreement shall become binding and enforceable on the eighth day (“ Effective Date ”). The Severance Package shall become due and payable in accordance with Section 2 above after the Effective Date.

6.3 Preserved Rights of Employee . This Agreement does not waive or release any rights or claims that Employee may have under the Age Discrimination in Employment Act that arise after the execution of this Agreement. In addition, this Agreement does not prohibit Employee from challenging the validity of this Agreement’s waiver and release of claims under the Age Discrimination in Employment Act.

7. CONFIDENTIALITY/RETURN OF COMPANY PROPERTY

7.1 Employee represents and warrants that as of the Separation Date, he or she will have returned all property belonging to Employer. Such property includes, but is not limited to, keys, passwords, access cards, credit or phone cards, any computer hardware or software, any products relating to Employer or its competition, any design work, product engineering, test results, customer information, pricing and cost information, financial data or information, any vendor samples or information, management materials, including all correspondence, manuals, letters, notes, notebooks, data report programs, plan proposals, and other confidential, proprietary and/or trade secret information, regardless of whether the information is in written, printed, electronic, or other form and regardless of whether it was written or compiled by Employee or other persons, as well as any and all other property that comprises property owned by Employer. Employee agrees that he or she will not retain any originals or copies of any Employer property, whether prepared or created by Employee or otherwise coming into Employee’s possession or control in the course of his or her employment with Employer. Employee agrees to keep the terms of the Agreement confidential between him or her and Employer, except that he or she may tell his or her immediate family and attorney or accountant, if any, as needed, but in no event should he or she discuss the Agreement or its terms with any current or prospective employee of Employer. Notwithstanding the foregoing, Executive understands that pursuant to the Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, nothing in this Agreement shall be interpreted or applied to prohibit Executive from making any good faith report to any governmental agency or other governmental entity concerning any acts or omissions that Executive may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation. Further, this Agreement does not limit your ability to communicate with any

A-4

government agency or otherwise participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice to the Company nor does it limit any right you may have to receive an award for information provided to any government agencies.

8. MISCELLANEOUS

8.1 The Parties agree that this Agreement, including the surviving provisions of the Retention Agreement expressly incorporated herein by reference, set forth the entire agreement between them and supersedes all other written or oral understandings or contracts. This Agreement may not be modified or amended except by a written instrument executed by both of the Parties.

8.2 The Parties agree to do all things necessary and to execute all further documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement.

8.3 Each of the Parties to this Agreement represents and warrants that: (a) no other person or entity has or has had any interest in the claims released under this Agreement and (b) he, she or it has not assigned, transferred, conveyed, subjected to a security interest, or otherwise encumbered or impaired in any way any of the claims released under this Agreement.

8.4 In the event any provision of this Agreement is adjudicated to be unenforceable in whole or in part, the Parties intend for such provision to be modified to the extent necessary to render it enforceable, or alternatively, excised from the Agreement without effecting the validity of the remaining provisions of the Agreement.

8.5 By entering into this Agreement, the Released Parties make no admission that they have engaged, or are now engaging, in any unlawful conduct. This Agreement is not an admission of wrongdoing or liability by either Employer or Employee and shall not be used or construed as such in any legal or administrative proceeding.

8.6 This Agreement may be pled as a full and complete defense to, and may be used as a basis for an injunction against, any action, suit or other proceeding that may be prosecuted, instituted or attempted by Employee in breach hereof.

8.7 This Agreement shall be subject to and construed in accordance with the laws of the State of Illinois. Venue shall be in DuPage County for any disputes arising out of the interpretation or enforcement of this Agreement.

8.8 This Agreement is binding on and inures to the benefit of Employer, its successors and assigns, and is binding on and inures to the benefit of Employee, his or her heirs and assigns.

8.9 This Agreement may be executed in counterparts. Signatures transmitted electronically are as effective as original signatures.

8.10 Each person signing this Agreement hereby expressly represents and warrants that he or she is expressly authorized in law and in fact to do so individually and/or on behalf of any entity listed herein as a signatory of this Agreement.

A-5

HAVING READ AND UNDERSTOOD THIS AGREEMENT, CONSULTED COUNSEL OR VOLUNTARILY ELECTED NOT TO CONSULT COUNSEL, AND HAVING HAD SUFFICIENT TIME TO CONSIDER WHETHER TO ENTER INTO THIS AGREEMENT, THE UNDERSIGNED HEREBY EXECUTE THIS AGREEMENT ON THE DATES SET FORTH BELOW.



EMPLOYEE			RETAIL PROPERTIES OF AMERICA, INC.
			By:

Date:			Date:

A-6

Exhibit A

Unvested Equity Awards

A-7

Exhibit 10.4

RETAIL PROPERTIES OF AMERICA, INC.

AMENDED AND RESTATED

RETENTION AGREEMENT

This Amended and Restated Retention Agreement (the “ Agreement ”) is made and entered into by and between Shane C. Garrison (“ Executive ”) and Retail Properties of America, Inc., a Maryland corporation (the “ Company ”), effective as of October 31, 2016 (the “ Effective Date ”).

R E C I T A L S

A. On February 19, 2013, Executive and the Company entered into that certain Retention Agreement (the “Retention Agreement”).

B. On February 19, 2015, Executive and the Company entered into that certain Amendment to the Retention Agreement (the “Amended Retention Agreement”).

D. Certain capitalized terms used in this Agreement are defined in Section 8 below.

NOW THEREFORE, the parties hereto agree as follows:

terminated without the Change in Control being consummated, the second anniversary of the date on which the Company entered into such definitive agreement.

- 2 -

(a) Cash Severance (Non-Change in Control) . Executive shall receive on the sixtieth (60th) day following the Termination Date a lump sum cash amount (less applicable withholdings) equal to (i) one and a half (1.5) times the sum of (x) Executive’s annual base salary at the rate then in effect (without giving effect to any reduction in the base salary rate amounting to Good Reason), (y) an amount equal to the greater of (1) Executive’s target annual cash bonus opportunity for the year in which Executive’s employment was terminated (or the prior year if a target annual cash bonus amount hadn’t yet been established for such year), (the “ Target Bonus ”) or (2) Executive’s actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined preceding the year in which Executive’s employment was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

(b) Cash Severance (Change in Control) . In the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in

- 3 -

Control Period, then, in lieu of the amounts set forth above under Section 3(a), Executive shall receive on the sixtieth (60th) day following the Termination Date a lump sum cash amount (less applicable withholdings) equal to (i) two (2) times the sum of (x) Executive’s annual base salary at the rate then in effect (without giving effect to any reduction in the base salary rate amounting to Good Reason), (y) an amount equal to the greater of (1) Executive’s Target Bonus or (2) Executive’s actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined preceding the year in which Executive’s employment was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

(i) Time-Based Equity Awards . The vesting of all Time-Based Equity Awards shall accelerate in full upon the Termination Date.

- 4 -

(d) Continued Healthcare . If Executive was participating in the Company’s group health plan immediately prior to the Termination Date then the Company shall pay Executive a monthly cash payment for a period of up to: (x) eighteen (18) months after the Termination Date, in the event of Executive’s Involuntary Termination other than in connection with a Change in Control; or (y) twenty four (24) months after the Termination Date, in the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in Control Period, as applicable, equal to the total premiums for such group health plan coverage (based on Executive’s coverage elections in effect as of the Termination Date) (the “ Company Benefit Payment ”); provided , that notwithstanding the foregoing, in no event will Executive be entitled to the Company Benefit Payment after the first date on which Executive becomes eligible for healthcare coverage under the plan of a subsequent employer of Executive.

- 5 -

this Agreement shall be automatically terminated and completely extinguished. Executive shall not be entitled to receive the Severance Benefits described in Section 3 above.

- 6 -

Code (“ Excise Tax ”), then Executive’s severance payments and benefits under this Agreement, the Employment Agreement or otherwise shall be payable either

(a) in full, or

8. Definition of Terms . Capitalized terms not otherwise defined by this Agreement shall have the following meanings:

- 7 -

(b) “ Change in Control ” means the first day that any one or more of the following conditions shall have been satisfied:

(v) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company.

- 8 -

(c) “ Change in Control Period ” means a period commencing upon the consummation of a Change in Control and ending on the date occurring two (2) years thereafter.

(i) a material, adverse change in Executive’s authority, duties or responsibilities; provided, that for purposes of this Agreement and without limiting the generality of the foregoing, a material, adverse change shall be deemed to occur if Executive no longer serves as Executive Vice President, Chief Investment Officer and Chief Operating Officer (who shall be the most senior investment and operating officer) of a publicly-traded company reporting directly to the Board;

(ii) a failure to pay when due Executive’s base salary or any bonus actually earned;

(iv) the relocation of Executive work place for the Company to a location more than thirty (30) miles from location of Executive’s work place prior to such relocation; or

(v) the failure of the Company or any Successor to honor any material term of this Agreement.

- 9 -

9. Successors .

10. Notice.

11. Confidentiality; Non-Solicitation.

- 10 -

- 11 -

12. Dispute Resolution .

- 12 -

- 13 -

14. Miscellaneous Provisions.

(f) Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

- 14 -

courts of DuPage County, Illinois, or the federal courts of the United States for the Northern District of Illinois, and no other courts.

(k) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.



RETAIL PROPERTIES OF AMERICA, INC.

By:	/s/ STEVEN P. GRIMES	Date:	10/31/16

Title:	President and Chief Executive Officer



EXECUTIVE
/s/ SHANE C. GARRISON		Date:	10/31/16

- 15 -

EXHIBIT A

FORM OF
SEPARATION AGREEMENT AND GENERAL RELEASE

1. SEPARATION DATE

2. VALUABLE CONSIDERATION

A-1

2.1.3. Continued Healthcare . Employer will pay the amounts described in Section 3(d) of the Retention Agreement on the terms set forth therein.

3. GENERAL RELEASE AND WAIVER

3.2 Employee acknowledges that Employee may discover facts or law different from, or in addition to, the facts or law that Employee knows or believes to be true with respect to the

A-2

claims released in this Agreement and agrees, nonetheless, that this Agreement and the release contained in it shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them.

4. ACKNOWLEDGEMENTS BY EMPLOYEE

4.2 Employee acknowledges that he or she has been paid all wages, commissions, incentive payments, and bonuses owed to him or her by Employer, to date.

5. NON-DISPARAGEMENT

A-3

and considered such legal counsel as Employee deems necessary; (d) Employee has been given twenty-one (21) days to consider whether or not to enter into this Agreement (although Employee may elect not to use the full 21-day period at Employee’s option); and (e) by signing this Agreement, Employee acknowledges that Employee does so freely, knowingly, and voluntarily.

7. CONFIDENTIALITY/RETURN OF COMPANY PROPERTY

A-4

in this Agreement shall be interpreted or applied to prohibit Executive from making any good faith report to any governmental agency or other governmental entity concerning any acts or omissions that Executive may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation. Further, this Agreement does not limit your ability to communicate with any government agency or otherwise participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice to the Company nor does it limit any right you may have to receive an award for information provided to any government agencies.

8. MISCELLANEOUS

8.2 The Parties agree to do all things necessary and to execute all further documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement.

8.8 This Agreement is binding on and inures to the benefit of Employer, its successors and assigns, and is binding on and inures to the benefit of Employee, his or her heirs and assigns.

A-5

8.9 This Agreement may be executed in counterparts. Signatures transmitted electronically are as effective as original signatures.



EMPLOYEE			RETAIL PROPERTIES OF AMERICA, INC.
			By:

Date:			Date:

A-6

Exhibit A

Unvested Equity Awards

A-7

Exhibit 10.5

RETAIL PROPERTIES OF AMERICA, INC.

RETENTION AGREEMENT

This Retention Agreement (the “ Agreement ”) is made and entered into by and between Heath R. Fear (“ Executive ”) and Retail Properties of America, Inc., a Maryland corporation (the “ Company ”), effective as of October 31, 2016 (the “ Effective Date ”).

R E C I T A L S

A. Although the Company anticipates the continuation of a mutually rewarding employment relationship with Executive, the Compensation Committee (the “ Committee ”) of the Board of Directors of the Company (the “ Board ”) believes that it is in the best interests of the Company and its stockholders to provide Executive with certain assurances in the event of the occurrence of an involuntary termination of Executive’s employment with the Company. Further, it is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change in control. The Committee recognizes that such consideration as well as the possibility of an involuntary termination or reduction in responsibility can be a distraction to Executive and can cause Executive to consider alternative employment opportunities. Accordingly, the Committee has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of such an event.

B. Certain capitalized terms used in this Agreement are defined in Section 8 below.

NOW THEREFORE, the parties hereto agree as follows:

amounts to which Executive is then entitled pursuant to any employee benefit or business expense reimbursement plan or arrangement in which Executive is then a participant, (ii) acceleration in full upon the Termination Date of the vesting of all then unvested equity awards granted to Executive pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based solely on Executive’s continued employment or service through specified dates (“ Time-Based Equity Awards ”) and (iii) treatment of unvested equity awards, if any, granted to Executive on or after the date hereof pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based on the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates (“ Performance-Based Equity Awards ”) in accordance with the provisions of this Section 2. In the event that Executive’s employment is terminated in accordance with this Section 2, Performance-Based Equity Awards will be treated as follows: (i) if the Termination Date occurs prior to the end of the performance period applicable to a Performance-Based Equity Award, then all of the vesting conditions applicable to such Performance-Based Equity Award that are based on Executive’s continued employment or service through specified dates will be deemed to have been satisfied and the portion of such Performance-Based Equity Award that will be earned and vest based the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates (the “ Performance-Based Conditions ” of such Performance-Based Equity Award) will equal the portion of such Performance-Based Equity Award that would have been earned or vested based on the achievement of such Performance-Based Conditions if Executive’s employment had not been terminated, determined in accordance with the applicable award agreement (and Section 5 below, if applicable), multiplied by a fraction, the numerator of which is the number of full and partial months in which Executive was employed by the Company during such performance period and the denominator of which is the total number of full and partial months in such performance period; and (b) if the Termination Date occurs after the end of the performance period applicable to a Performance-Based Equity Award, then the portion of such Performance-Based Equity Award that is or was earned based on the achievement of the Performance-Based Conditions of such Performance-Based Equity Award, but would not otherwise vest, will vest upon the later of the Termination Date or the date on which the portion of such Performance-Based Equity Award that is earned based on the achievement of such Performance-Based Conditions is determined. The foregoing provisions, as they relate to the acceleration of vesting, are hereby deemed to be a part of each agreement evidencing each applicable Time-Based Equity Award and Performance-Based Equity Award to which Executive is a party and to supersede any contrary provision in any such agreement unless such agreement specifically refers to and disclaims this provision. Any other unvested equity awards granted pursuant to an agreement between the Company and Executive that are not specifically described herein (i.e., unvested equity awards, if any, granted to Executive prior the date hereof pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based on the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates) will not be subject to acceleration pursuant to this Section, but will be governed by their terms. All other Company obligations to Executive

-2-

pursuant to this Agreement shall be automatically terminated and completely extinguished. Executive shall not be entitled to receive the Severance Benefits described in Section 3 below.

(a) Cash Severance (Non-Change in Control) . Executive shall receive on the sixtieth (60th) day following the Termination Date a lump sum cash amount (less applicable withholdings) equal to (i) one and a half (1.5) times the sum of (x) Executive’s annual base salary at the rate then in effect (without giving effect to any reduction in the base salary rate amounting to Good Reason), (y) an amount equal to the greater of (1) Executive’s target annual cash bonus opportunity for the year in which Executive’s employment was terminated (or the prior year if a target annual cash bonus amount hadn’t yet been established for such year), (the “ Target Bonus ”) or (2) Executive’s actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined preceding the year in which Executive’s employment was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

(b) Cash Severance (Change in Control) . In the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in Control Period, then, in lieu of the amounts set forth above under Section 3(a), Executive shall receive on the sixtieth (60th) day following the Termination Date a lump sum cash amount (less applicable withholdings) equal to (i) two (2) times the sum of (x) Executive’s annual base salary at the rate then in effect (without giving effect to any reduction in the base salary rate amounting to Good Reason), (y) an amount equal to the greater of (1) Executive’s Target Bonus or (2) Executive’s actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined preceding the year in which Executive’s employment was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of

-3-

employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

(i) Time-Based Equity Awards . The vesting of all Time-Based Equity Awards shall accelerate in full upon the Termination Date.

(iii) Performance-Based Equity (Change in Control) . In the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in Control Period, all of the vesting conditions applicable to the Performance-Based Equity Awards that are based on Executive’s continued employment or service through specified dates will be deemed to have been satisfied and the portion of such Performance-Based Equity Awards that will be earned and vest based the achievement of the Performance-Based Conditions of such Performance-Based Equity Awards will equal the portion of such Performance-Based Equity Awards that would have been earned or vested based on the achievement of such Performance-Based Conditions if Executive’s employment had not been terminated, determined in accordance with the applicable award agreement (and Section 5 below, if applicable), with such vesting occurring, for each Performance-Based Equity Award, upon the later of the

-4-

Termination Date or the date on which the portion of such Performance-Based Equity Award that is earned based on the achievement of such Performance-Based Conditions is determined.

(d) Continued Healthcare . If Executive was participating in the Company’s group health plan immediately prior to the Termination Date then the Company shall pay Executive a monthly cash payment for a period of up to: (x) eighteen (18) months after the Termination Date, in the event of Executive’s Involuntary Termination other than in connection with a Change in Control; or (y) twenty four (24) months after the Termination Date, in the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in Control Period, as applicable, equal to the total premiums for such group health plan coverage (based on Executive’s coverage elections in effect as of the Termination Date) (the “ Company Benefit Payment ”); provided , that notwithstanding the foregoing, in no event will Executive be entitled to the Company Benefit Payment after the first date on which Executive becomes eligible for healthcare coverage under the plan of a subsequent employer of Executive.

-5-

performance period ended on the day prior to the consummation of the Change in Change and (A) with respect to Performance-Based Conditions that are based on stock price, total return to stockholders or a similar market based metric, based on performance through such date and, to the extent applicable, based on the transaction price in connection with the Change in Control, (B) with respect to Performance-Based Conditions that are based on financial or operational metrics, based on performance through the most recently completed quarter prior to such date for which final results are available on such date and (C) with respect to Performance-Based Conditions that are based on other metrics, based on performance through a date on or before such date as may be set forth in the applicable award agreement for such Performance-Based Equity Award or as is otherwise agreed by Executive and the Company and (iii) using metrics for the Performance-Based Conditions that have been pro-rated based on the shortened length of the performance period, as applicable. For avoidance of doubt, this Section is not intended to impact any vesting conditions applicable to Performance-Based Equity Awards that are based on Executive’s continued employment or service through specified dates and such vesting conditions will continue to apply unless otherwise accelerated or waived (e.g., in the event of Executive’s Involuntary Termination in connection with the Change in Control). The foregoing provisions are hereby deemed to be a part of each agreement evidencing each applicable Performance-Based Equity Award to which Executive is a party and to supersede any contrary provision in any such agreement unless such agreement specifically refers to and disclaims this provision.

7. Golden Parachute Payments . In the event that the severance payments and other benefits provided for in this Agreement, the Employment Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this Section, would be subject to the excise tax imposed by Section 4999 of the Code (“ Excise Tax ”), then Executive’s severance payments and benefits under this Agreement, the Employment Agreement or otherwise shall be payable either

(a) in full, or

-6-

results in the receipt by Executive on an after-tax basis, of the greatest amount of severance payments and benefits under this Agreement, the Employment Agreement or otherwise, notwithstanding that all or some portion of such severance payments or benefits may be taxable under Section 4999 of the Code. Any reduction in the severance payments and benefits required by this Section will made in the following order: (i) reduction of cash payments; (ii) reduction of accelerated vesting of equity awards other than stock options; (iii) reduction of accelerated vesting of stock options; and (iv) reduction of other benefits paid or provided to Executive. In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards. If two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis.

8. Definition of Terms . Capitalized terms not otherwise defined by this Agreement shall have the following meanings:

(b) “ Change in Control ” means the first day that any one or more of the following conditions shall have been satisfied:

-7-

such person or group, constitutes more than thirty percent (30%) of either the total fair market value of the stock of the Company then outstanding or the total voting power of the stock of the Company then outstanding having the right to vote in an election of the Board (the “ Voting Stock ”), excluding the acquisition of beneficial ownership of additional stock by a person or group who, immediately prior to such acquisition, beneficially owned stock that constituted more than thirty percent (30%) of either the total fair market value of the stock of the Company then outstanding or the total voting power of the Voting Stock then outstanding;

(v) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company.

(c) “ Change in Control Period ” means a period commencing upon the consummation of a Change in Control and ending on the date occurring two (2) years thereafter.

-8-

(i) a material, adverse change in Executive’s authority, duties or responsibilities; provided, that for purposes of this Agreement and without limiting the generality of the foregoing, a material, adverse change shall be deemed to occur if Executive no longer serves as Executive Vice President, Chief Financial Officer and Treasurer (who shall be the most senior financial officer) of a publicly-traded company reporting directly to the Board;

(ii) a failure to pay when due Executive’s base salary or any bonus actually earned;

(iv) the relocation of Executive work place for the Company to a location more than thirty (30) miles from location of Executive’s work place prior to such relocation; or

(v) the failure of the Company or any Successor to honor any material term of this Agreement.

9. Successors .

-9-

10. Notice.

11. Confidentiality; Non-Solicitation.

(a) Confidentiality . Executive hereby agrees to hold in strict confidence and not to disclose or make available to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, any Confidential Information (as defined below). Upon termination of Executive’s employment with the Company, all Confidential Information in Executive’s possession that is in written or other tangible form (together with all copies or duplicates thereof, including computer files) shall be returned to the Company and shall not be retained by Executive or furnished to any third party, in any form except as provided herein; provided, however , that Executive shall not be obligated to treat as confidential, or return to the Company copies of any Confidential Information that (i) was publicly known at the time of disclosure to Executive, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by any person or entity, or (iii) is lawfully disclosed to Executive by a third party. For purposes of this Agreement, the term “ Confidential Information ” shall mean information disclosed to Executive or known by Executive as a consequence of or through his or her relationship with the Company, about the customers, employees, business methods, public relations methods, organization, procedures or finances, including, without limitation, information of or relating to customer lists, of the Company and its affiliates. Executive understands that pursuant to the Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade

-10-

secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, nothing in this Agreement shall be interpreted or applied to prohibit Executive from making any good faith report to any governmental agency or other governmental entity concerning any acts or omissions that Executive may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation. Further, this Agreement does not limit your ability to communicate with any government agency or otherwise participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice to the Company nor does it limit any right you may have to receive an award for information provided to any government agencies.

12. Dispute Resolution .

-11-

dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall be authorized to award any or all remedies that Executive or the Company would be entitled to seek in a court of law. Each party shall bear its own respective attorney fees and all other costs, unless provided by law and awarded by the arbitrator; provided, however, that the Company shall pay all AAA arbitration fees in excess of the amount of court fees that would be required if the dispute were decided in a court of law. Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by Court action instead of arbitration.

13. Compliance with Section 409A of the Code . The parties intend that this Agreement (and all payments and other benefits provided under this Agreement) be exempt from the requirements of Section 409A of the Code and the regulations and ruling issued thereunder (collectively “ Section 409A ”), to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Section 409A is applicable to such payments, the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:

-12-

time to time, or if none, the default methodology) as of the date of Executive’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Executive’s separation from service shall paid to Executive before the date (the “ Delayed Payment Date ”) which is first day of the seventh month after the date of Executive’s separation from service or, if earlier, the date of Executive’s death following such separation from service. All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

14. Miscellaneous Provisions.

-13-

investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any account shall not create or constitute a trust or fiduciary relationship between the Board or the Company and Executive, or otherwise create any vested or beneficial interest in Executive or Executive’s creditors in any assets of the Company.

(f) Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

-14-

(k) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.



RETAIL PROPERTIES OF AMERICA, INC.

By:	/s/ STEVEN P. GRIMES	Date:	10/31/16

Title:	President and Chief Executive Officer



EXECUTIVE
/s/ HEATH R. FEAR		Date:	10/31/16

-15-

EXHIBIT A

FORM OF
SEPARATION AGREEMENT AND GENERAL RELEASE

1. SEPARATION DATE

2. VALUABLE CONSIDERATION

A-1

2.1.3. Continued Healthcare . Employer will pay the amounts described in Section 3(d) of the Retention Agreement on the terms set forth therein.

3. GENERAL RELEASE AND WAIVER

3.2 Employee acknowledges that Employee may discover facts or law different from, or in addition to, the facts or law that Employee knows or believes to be true with respect to the

A-2

4. ACKNOWLEDGEMENTS BY EMPLOYEE

4.2 Employee acknowledges that he or she has been paid all wages, commissions, incentive payments, and bonuses owed to him or her by Employer, to date.

5. NON-DISPARAGEMENT

A-3

7. CONFIDENTIALITY/RETURN OF COMPANY PROPERTY

A-4

8. MISCELLANEOUS

8.2 The Parties agree to do all things necessary and to execute all further documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement.

8.8 This Agreement is binding on and inures to the benefit of Employer, its successors and assigns, and is binding on and inures to the benefit of Employee, his or her heirs and assigns.

A-5

8.9 This Agreement may be executed in counterparts. Signatures transmitted electronically are as effective as original signatures.



EMPLOYEE			RETAIL PROPERTIES OF AMERICA, INC.
			By:

Date:			Date:

A-6

Exhibit A

Unvested Equity Awards

A-7

Exhibit 10.6

RETAIL PROPERTIES OF AMERICA, INC.

RETENTION AGREEMENT

This Retention Agreement (the “ Agreement ”) is made and entered into by and between Paula C. Maggio (“ Executive ”) and Retail Properties of America, Inc., a Maryland corporation (the “ Company ”), effective as of October 31, 2016 (the “ Effective Date ”).

R E C I T A L S

B. Certain capitalized terms used in this Agreement are defined in Section 8 below.

NOW THEREFORE, the parties hereto agree as follows:

following payments and benefits: (i) unpaid base salary at the rate then in effect, prorated to the date of Executive’s termination of employment (the “ Termination Date ”), together with any amounts to which Executive is then entitled pursuant to any employee benefit or business expense reimbursement plan or arrangement in which Executive is then a participant, (ii) acceleration in full upon the Termination Date of the vesting of all then unvested equity awards granted to Executive pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based solely on Executive’s continued employment or service through specified dates (“ Time-Based Equity Awards ”) and (iii) treatment of unvested equity awards, if any, granted to Executive on or after the date hereof pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based on the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates (“ Performance-Based Equity Awards ”) in accordance with the provisions of this Section 2. In the event that Executive’s employment is terminated in accordance with this Section 2, Performance-Based Equity Awards will be treated as follows: (i) if the Termination Date occurs prior to the end of the performance period applicable to a Performance-Based Equity Award, then all of the vesting conditions applicable to such Performance-Based Equity Award that are based on Executive’s continued employment or service through specified dates will be deemed to have been satisfied and the portion of such Performance-Based Equity Award that will be earned and vest based the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates (the “ Performance-Based Conditions ” of such Performance-Based Equity Award) will equal the portion of such Performance-Based Equity Award that would have been earned or vested based on the achievement of such Performance-Based Conditions if Executive’s employment had not been terminated, determined in accordance with the applicable award agreement (and Section 5 below, if applicable), multiplied by a fraction, the numerator of which is the number of full and partial months in which Executive was employed by the Company during such performance period and the denominator of which is the total number of full and partial months in such performance period; and (b) if the Termination Date occurs after the end of the performance period applicable to a Performance-Based Equity Award, then the portion of such Performance-Based Equity Award that is or was earned based on the achievement of the Performance-Based Conditions of such Performance-Based Equity Award, but would not otherwise vest, will vest upon the later of the Termination Date or the date on which the portion of such Performance-Based Equity Award that is earned based on the achievement of such Performance-Based Conditions is determined. The foregoing provisions, as they relate to the acceleration of vesting, are hereby deemed to be a part of each agreement evidencing each applicable Time-Based Equity Award and Performance-Based Equity Award to which Executive is a party and to supersede any contrary provision in any such agreement unless such agreement specifically refers to and disclaims this provision. Any other unvested equity awards granted pursuant to an agreement between the Company and Executive that are not specifically described herein (i.e., unvested equity awards, if any, granted to Executive prior the date hereof pursuant to an agreement between the Company and Executive that are subject to vesting conditions that are based on the achievement of corporate financial, stockholder return or other performance goals or any condition other than or in addition to Executive’s continued employment or service through specified dates) will not be subject to acceleration pursuant to

- 2 -

this Section, but will be governed by their terms. All other Company obligations to Executive pursuant to this Agreement shall be automatically terminated and completely extinguished. Executive shall not be entitled to receive the Severance Benefits described in Section 3 below.

(a) Cash Severance (Non-Change in Control) . Executive shall receive on the sixtieth (60th) day following the Termination Date a lump sum cash amount (less applicable withholdings) equal to (i) one and a half (1.5) times the sum of (x) Executive’s annual base salary at the rate then in effect (without giving effect to any reduction in the base salary rate amounting to Good Reason), (y) an amount equal to the greater of (1) Executive’s target annual cash bonus opportunity for the year in which Executive’s employment was terminated (or the prior year if a target annual cash bonus amount hadn’t yet been established for such year), (the “ Target Bonus ”) or (2) Executive’s actual annual cash bonus earned for the most recent completed year for which an annual cash bonus had been determined preceding the year in which Executive’s employment was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

- 3 -

was terminated, plus (ii) to the extent not paid prior to the date of Executive’s termination of employment, Executive’s annual cash bonus for the year prior to the year in which Executive’s employment was terminated, determined based upon the Company’s and Executive’s actual performance, paid as and when such annual cash bonuses are paid to similarly situated active employees of the Company, plus (iii) an amount equal to the Target Bonus multiplied by a fraction the numerator of which is the number of days in the year up to the Termination Date and the denominator of which is 365.

(i) Time-Based Equity Awards . The vesting of all Time-Based Equity Awards shall accelerate in full upon the Termination Date.

- 4 -

such vesting occurring, for each Performance-Based Equity Award, upon the later of the Termination Date or the date on which the portion of such Performance-Based Equity Award that is earned based on the achievement of such Performance-Based Conditions is determined.

(d) Continued Healthcare . If Executive was participating in the Company’s group health plan immediately prior to the Termination Date then the Company shall pay Executive a monthly cash payment for a period of up to: (x) eighteen (18) months after the Termination Date, in the event of Executive’s Involuntary Termination other than in connection with a Change in Control; or (y) twenty four (24) months after the Termination Date, in the event that Executive’s Involuntary Termination occurs in connection with a Change in Control or during a Change in Control Period, as applicable, equal to the total premiums for such group health plan coverage (based on Executive’s coverage elections in effect as of the Termination Date) (the “ Company Benefit Payment ”); provided , that notwithstanding the foregoing, in no event will Executive be entitled to the Company Benefit Payment after the first date on which Executive becomes eligible for healthcare coverage under the plan of a subsequent employer of Executive.

- 5 -

immediately prior to, but subject to the consummation of, the Change in Control, (ii) as if the performance period ended on the day prior to the consummation of the Change in Change and (A) with respect to Performance-Based Conditions that are based on stock price, total return to stockholders or a similar market based metric, based on performance through such date and, to the extent applicable, based on the transaction price in connection with the Change in Control, (B) with respect to Performance-Based Conditions that are based on financial or operational metrics, based on performance through the most recently completed quarter prior to such date for which final results are available on such date and (C) with respect to Performance-Based Conditions that are based on other metrics, based on performance through a date on or before such date as may be set forth in the applicable award agreement for such Performance-Based Equity Award or as is otherwise agreed by Executive and the Company and (iii) using metrics for the Performance-Based Conditions that have been pro-rated based on the shortened length of the performance period, as applicable. For avoidance of doubt, this Section is not intended to impact any vesting conditions applicable to Performance-Based Equity Awards that are based on Executive’s continued employment or service through specified dates and such vesting conditions will continue to apply unless otherwise accelerated or waived (e.g., in the event of Executive’s Involuntary Termination in connection with the Change in Control). The foregoing provisions are hereby deemed to be a part of each agreement evidencing each applicable Performance-Based Equity Award to which Executive is a party and to supersede any contrary provision in any such agreement unless such agreement specifically refers to and disclaims this provision.

(a) in full, or

(b) in such lesser amount which would result in no portion of such severance payments or benefits being subject to the Excise Tax, whichever of the foregoing amounts,

- 6 -

taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance payments and benefits under this Agreement, the Employment Agreement or otherwise, notwithstanding that all or some portion of such severance payments or benefits may be taxable under Section 4999 of the Code. Any reduction in the severance payments and benefits required by this Section will made in the following order: (i) reduction of cash payments; (ii) reduction of accelerated vesting of equity awards other than stock options; (iii) reduction of accelerated vesting of stock options; and (iv) reduction of other benefits paid or provided to Executive. In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards. If two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis.

8. Definition of Terms . Capitalized terms not otherwise defined by this Agreement shall have the following meanings:

(b) “ Change in Control ” means the first day that any one or more of the following conditions shall have been satisfied:

- 7 -

Rule 13d-3 under the Exchange Act) of stock of the Company that, together with stock held by such person or group, constitutes more than thirty percent (30%) of either the total fair market value of the stock of the Company then outstanding or the total voting power of the stock of the Company then outstanding having the right to vote in an election of the Board (the “ Voting Stock ”), excluding the acquisition of beneficial ownership of additional stock by a person or group who, immediately prior to such acquisition, beneficially owned stock that constituted more than thirty percent (30%) of either the total fair market value of the stock of the Company then outstanding or the total voting power of the Voting Stock then outstanding;

(v) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company.

(c) “ Change in Control Period ” means a period commencing upon the consummation of a Change in Control and ending on the date occurring two (2) years thereafter.

- 8 -

impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

(i) a material, adverse change in Executive’s authority, duties or responsibilities; provided, that for purposes of this Agreement and without limiting the generality of the foregoing, a material, adverse change shall be deemed to occur if Executive no longer serves as Executive Vice President, General Counsel and Secretary (who shall be the most senior legal officer) of a publicly-traded company reporting directly to the Board;

(ii) a failure to pay when due Executive’s base salary or any bonus actually earned;

(iv) the relocation of Executive work place for the Company to a location more than thirty (30) miles from location of Executive’s work place prior to such relocation; or

(v) the failure of the Company or any Successor to honor any material term of this Agreement.

9. Successors .

- 9 -

the term “ Company ” shall include any Successor which executes and delivers the assumption agreement described in this Section 9(a) or which becomes bound by the terms of this Agreement by operation of law.

10. Notice.

11. Confidentiality; Non-Solicitation.

- 10 -

customers, employees, business methods, public relations methods, organization, procedures or finances, including, without limitation, information of or relating to customer lists, of the Company and its affiliates. Executive understands that pursuant to the Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, nothing in this Agreement shall be interpreted or applied to prohibit Executive from making any good faith report to any governmental agency or other governmental entity concerning any acts or omissions that Executive may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation. Further, this Agreement does not limit your ability to communicate with any government agency or otherwise participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice to the Company nor does it limit any right you may have to receive an award for information provided to any government agencies.

12. Dispute Resolution .

- 11 -

the American Arbitration Association. (“ AAA ”) under its rules for arbitration of employment disputes. By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. The arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall be authorized to award any or all remedies that Executive or the Company would be entitled to seek in a court of law. Each party shall bear its own respective attorney fees and all other costs, unless provided by law and awarded by the arbitrator; provided, however, that the Company shall pay all AAA arbitration fees in excess of the amount of court fees that would be required if the dispute were decided in a court of law. Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by Court action instead of arbitration.

- 12 -

14. Miscellaneous Provisions.

- 13 -

(f) Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

- 14 -

limitation, by execution, levy, garnishment, attachment, pledge or in any other manner, and no attempted transfer or assignment thereof shall be effective. No right or interest of Executive under this Agreement shall be liable for, or subject to, any obligation or liability of Executive.

(k) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.



RETAIL PROPERTIES OF AMERICA, INC.

By:	/s/ STEVEN P. GRIMES	Date:	10/31/16

Title:	President and Chief Executive Officer



EXECUTIVE
/s/ PAULA C. MAGGIO		Date:	10/31/16

- 15 -

EXHIBIT A

FORM OF
SEPARATION AGREEMENT AND GENERAL RELEASE

1. SEPARATION DATE

2. VALUABLE CONSIDERATION

A-1

2.1.3. Continued Healthcare . Employer will pay the amounts described in Section 3(d) of the Retention Agreement on the terms set forth therein.

3. GENERAL RELEASE AND WAIVER

3.2 Employee acknowledges that Employee may discover facts or law different from, or in addition to, the facts or law that Employee knows or believes to be true with respect to the

A-2

4. ACKNOWLEDGEMENTS BY EMPLOYEE

4.2 Employee acknowledges that he or she has been paid all wages, commissions, incentive payments, and bonuses owed to him or her by Employer, to date.

5. NON-DISPARAGEMENT

A-3

7. CONFIDENTIALITY/RETURN OF COMPANY PROPERTY

A-4

8. MISCELLANEOUS

8.2 The Parties agree to do all things necessary and to execute all further documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement.

8.8 This Agreement is binding on and inures to the benefit of Employer, its successors and assigns, and is binding on and inures to the benefit of Employee, his or her heirs and assigns.

A-5

8.9 This Agreement may be executed in counterparts. Signatures transmitted electronically are as effective as original signatures.



EMPLOYEE			RETAIL PROPERTIES OF AMERICA, INC.
			By:

Date:			Date:

A-6

Exhibit A

Unvested Equity Awards

A-7

Exhibit 31.1

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven P. Grimes, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Retail Properties of America, Inc.;


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 change 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.



By:	/s/ STEVEN P. GRIMES

	Steven P. Grimes
	President and Chief Executive Officer

Date:	November 2, 2016

Exhibit 31.2

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Heath R. Fear, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Retail Properties of America, Inc.;


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 change 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.



By:	/s/ HEATH R. FEAR

	Heath R. Fear
	Executive Vice President,
	Chief Financial Officer and Treasurer

Date:	November 2, 2016

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Retail Properties of America, Inc. (the “Company”) for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Steven P. Grimes as President and Chief Executive Officer of the Company and Heath R. Fear as Executive Vice President, Chief Financial Officer and Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



By:	/s/ STEVEN P. GRIMES

	Steven P. Grimes
	President and Chief Executive Officer

Date:	November 2, 2016

By:	/s/ HEATH R. FEAR

	Heath R. Fear
	Executive Vice President,
	Chief Financial Officer and Treasurer

Date:	November 2, 2016