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 June 30, 2017
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM            TO
COMMISSION FILE NUMBER: 000-51609
INVENTRUST PROPERTIES CORP.
(Exact name of registrant as specified in its charter)

Maryland
 
34-2019608
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
3025 Highland Parkway, Suite 350, Downers Grove, Illinois
 
60515
(Address of principal executive offices)
 
(Zip Code)
855-377-0510
(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 the filing requirements for the past 90 days.
Yes x    No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one)
Large accelerated filer ¨
 
Accelerated filer ¨
 
 
 
Non-accelerated filer   x
 
Smaller reporting company ¨
 
 
 
(Do not check if a smaller reporting company)
 
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ¨    No x
As of August 1, 2017 there were 773,515,187 shares of the registrant’s common stock outstanding.
 



InvenTrust Properties Corp.

Quarterly Report on Form 10-Q
For the quarterly period ended June 30, 2017
Table of Contents

 
Part I - Financial Information
Page
Item 1.
Financial Statements (unaudited)
 
 
Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016
 
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2017 and 2016
 
Consolidated Statements of Changes in Equity for the six months ended June 30, 2017 and 2016
 
Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016
 
Notes to Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
 
Part II - Other Information
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
 
Signatures



- i -
INVENTRUST PROPERTIES CORP.

Consolidated Balance Sheets


(Amounts in thousands, except share and per share amounts)



 
 
As of
 
June 30, 2017
 
December 31, 2016
 
(unaudited)
 
 
Assets
 
 
 
Investment properties
 
 
 
Land
$
613,505

 
$
572,260

Building and other improvements
1,735,247

 
1,650,560

Construction in progress
8,627

 
1,316

Total
2,357,379

 
2,224,136

Less accumulated depreciation
(351,978
)
 
(353,989
)
Net investment properties
2,005,401

 
1,870,147

Cash and cash equivalents
366,237

 
397,250

Restricted cash
60,475

 
18,325

Investment in marketable securities
31,542

 
183,883

Investment in unconsolidated entities
182,213

 
178,728

Intangible assets, net
86,006

 
72,258

Accounts and rents receivable (net of allowance of $1,283 and $1,032)
25,936

 
30,480

Deferred costs and other assets
40,034

 
35,308

Assets of discontinued operations
—

 
375

Total assets
$
2,797,844

 
$
2,786,754

 
 
 
 
Liabilities
 
 
 
Debt, net
$
770,072

 
$
730,605

Accounts payable and accrued expenses
31,724

 
38,251

Distributions payable
13,440

 
13,041

Intangible liabilities, net
47,034

 
43,939

Other liabilities
21,505

 
11,265

Liabilities of discontinued operations
—

 
125

Total liabilities
883,775

 
837,226

Commitments and contingencies


 


 
 
 
 
Stockholders' Equity
 
 
 
Preferred stock, $.001 par value, 40,000,000 shares authorized, none outstanding
—

 
—

Common stock, $.001 par value, 1,460,000,000 shares authorized,
773,510,082 shares issued and outstanding at June 30, 2017 and
773,304,997 shares issued and outstanding at December 31, 2016, respectively
773

 
773

Additional paid in capital
5,680,258

 
5,676,639

Distributions in excess of accumulated net income
(3,777,803
)
 
(3,786,943
)
Accumulated comprehensive income
10,841

 
59,059

Total stockholders' equity
1,914,069

 
1,949,528

Total liabilities and stockholders' equity
$
2,797,844

 
$
2,786,754

See accompanying notes to the consolidated financial statements.

1
INVENTRUST PROPERTIES CORP.

Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)

(Amounts in thousands, except share and per share amounts)

 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Income
 
 
 
 
 
 
 
Rental income
$
47,443

 
$
48,686

 
$
96,089

 
$
96,458

Tenant recovery income
14,188

 
12,920

 
28,076

 
25,950

Other property income
626

 
374

 
1,091

 
1,875

Other fee income
1,102

 
988

 
2,194

 
2,082

Total income
63,359

 
62,968

 
127,450

 
126,365

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
General and administrative expenses
11,921

 
14,876

 
24,260

 
28,257

Property operating expenses
7,920

 
7,300

 
15,767

 
15,327

Real estate taxes
9,364

 
9,317

 
17,695

 
18,861

Depreciation and amortization
23,333

 
22,542

 
46,778

 
43,291

Provision for asset impairment
—

 
29,931

 
16,440

 
38,321

Total expenses
52,538

 
83,966

 
120,940

 
144,057

Operating income (loss)
10,821

 
(20,998
)
 
6,510

 
(17,692
)
Interest and dividend income
745

 
2,707

 
2,915

 
5,409

Gain on sale of investment properties
13,360

 
52,385

 
14,381

 
76,411

Gain (loss) on extinguishment of debt
882

 
(4,723
)
 
882

 
(5,672
)
Other (expense) income
(79
)
 
364

 
(3,282
)
 
448

Interest expense
(8,617
)
 
(13,873
)
 
(16,871
)
 
(28,600
)
Equity in earnings of unconsolidated entities
675

 
2,596

 
1,247

 
3,890

Marketable securities realized gain
16,339

 
73

 
30,869

 
628

Income from continuing operations before income taxes
34,126

 
18,531

 
36,651

 
34,822

Income tax (expense) benefit
(231
)
 
63

 
(513
)
 
(193
)
Net income from continuing operations
33,895

 
18,594

 
36,138

 
34,629

Net income (loss) from discontinued operations
25

 
145,106

 
(122
)
 
154,478

Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding,
basic and diluted
773,381,165

 
862,205,672

 
773,348,893

 
862,205,672

 
 
 
 
 
 
 
 
Net income per common share, from continuing operations,
basic and diluted
$
0.04

 
$
0.02

 
$
0.05

 
$
0.04

Net income per common share, from discontinued operations, basic and diluted
$
—

 
$
0.17

 
$
—

 
$
0.18

Net income per common share, basic and diluted
$
0.04

 
$
0.19

 
$
0.05

 
$
0.22

 
 
 
 
 
 
 
 
Distributions declared per common share outstanding
$
0.02

 
$
0.03

 
$
0.03

 
$
0.06

Distributions paid per common share outstanding
$
0.02

 
$
0.01

 
$
0.03

 
$
0.06

 
 
 
 
 
 
 
 
Comprehensive income (loss)
 
 
 
 
 
 
 
Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

  Unrealized gain (loss) on investment securities
2,907

 
11,274

 
(17,664
)
 
16,486

  Unrealized (loss) gain on derivatives
(182
)
 
1,705

 
315

 
(2,616
)
    Reclassification for amounts recognized in net income
(16,339
)
 
427

 
(30,869
)
 
425

Comprehensive income (loss)
$
20,306

 
$
177,106

 
$
(12,202
)
 
$
203,402

See accompanying notes to the consolidated financial statements.

2
INVENTRUST PROPERTIES CORP.

Consolidated Statements of Changes in Equity
(unaudited)

(Amounts in thousands, except share amounts)

For the six months ended June 30, 2017
 
Number of Shares
 
Common
Stock
 
Additional
Paid-in Capital
 
Distributions
in excess of accumulated
net income
 
Accumulated Other Comprehensive Income
 
Total
Balance at January 1, 2017
773,304,997

 
$
773

 
$
5,676,639

 
$
(3,786,943
)
 
$
59,059

 
$
1,949,528

Net income
—

 
—

 
—

 
36,016

 
—

 
36,016

Unrealized loss on investment securities
—

 
—

 
—

 
—

 
(17,664
)
 
(17,664
)
Unrealized gain on derivatives
—

 
—

 
—

 
—

 
315

 
315

Reclassification for amounts recognized in net income
—

 
—

 
—

 
—

 
(30,869
)
 
(30,869
)
Distributions declared
—

 
—

 
—

 
(26,876
)
 
—

 
(26,876
)
Stock-based compensation
205,085

 
—

 
1,690

 
—

 
—

 
1,690

Refund of excess funds associated with 2016 tender offer
—

 
—

 
1,929

 
—

 
—

 
1,929

Balance at June 30, 2017
773,510,082
 
$
773

 
$
5,680,258

 
$
(3,777,803
)
 
$
10,841

 
$
1,914,069

See accompanying notes to the consolidated financial statements.


3
INVENTRUST PROPERTIES CORP.

Consolidated Statements of Changes in Equity
(unaudited)

(Amounts in thousands, except share amounts)

For the six months ended June 30, 2016
 
Number of Shares
 
Common
Stock
 
Additional
Paid-in Capital
 
Distributions
in excess of accumulated
net income
 
Accumulated Other Comprehensive Income
 
Total
Balance at January 1, 2016
862,205,672

 
$
862

 
$
6,066,583

 
$
(3,956,032
)
 
$
37,290

 
$
2,148,703

Net income
—

 
—

 
—

 
189,107

 
—

 
189,107

Unrealized gain on investment securities
—

 
—

 
—

 
—

 
16,486

 
16,486

Unrealized loss on derivatives
—

 
—

 
—

 
—

 
(2,616
)
 
(2,616
)
Reclassification for amounts recognized in net income
—

 
—

 
—

 
—

 
425

 
425

Distributions declared
—

 
—

 
—

 
(56,042
)
 
—

 
(56,042
)
Stock-based compensation
—

 
—

 
804

 
—

 
—

 
804

Spin-off of Highlands REIT, Inc.
—

 
—

 
(151,105
)
 
—

 
—

 
(151,105
)
Balance at June 30, 2016
862,205,672

 
$
862

 
$
5,916,282

 
$
(3,822,967
)
 
$
51,585

 
$
2,145,762

See accompanying notes to the consolidated financial statements.


4
INVENTRUST PROPERTIES CORP.

Consolidated Statements of Cash Flows
(unaudited)

(Amounts in thousands)

 
Six months ended June 30,
 
2017
 
2016
Cash flows from operating activities
 
 
 
Net income
$
36,016

 
$
189,107

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
46,838

 
72,751

Amortization of above and below market leases, net
(2,964
)
 
(1,561
)
Amortization of debt premiums, discounts and financing costs
668

 
3,583

Straight-line rental income
(1,125
)
 
809

Provision for asset impairment
16,440

 
114,904

Gain on sale of investment properties, net
(14,381
)
 
(301,697
)
(Gain) loss on extinguishment of debt
(882
)
 
7,880

Equity in earnings of unconsolidated entities
(1,247
)
 
(3,872
)
Distributions from unconsolidated entities
351

 
2,788

Gain on sale of investment in unconsolidated entities
—

 
(1,434
)
Marketable securities realized gain
(30,869
)
 
(628
)
Non-cash stock-based compensation, net
2,411

 
1,321

Prepayment penalties and defeasance costs
—

 
(7,753
)
Changes in assets and liabilities:
 
 
 
  Accounts and rents receivable
190

 
7,424

  Deferred costs and other assets
1,140

 
3,192

  Accounts payable and accrued expenses
(4,642
)
 
947

  Other assets (liabilities)
12,315

 
(2,268
)
Net cash provided by operating activities
$
60,259

 
$
85,493

Cash flows from investing activities
 
 
 
Purchase of investment properties
(230,623
)
 
(295,787
)
Acquired in-place and market lease intangibles, net
(17,651
)
 
(14,277
)
Capital expenditures and tenant improvements
(13,025
)
 
(3,843
)
Investment in development projects
—

 
(50,423
)
Proceeds from sale of investment properties, net
56,924

 
1,389,845

Proceeds from sale of marketable securities
136,696

 
1,591

Proceeds from the sale of and return of capital from unconsolidated entities
—

 
5,480

Contributions to unconsolidated entities
(3,189
)
 
(3,600
)
Distributions from unconsolidated entities
600

 
3,537

Payment of leasing fees
(1,759
)
 
(1,590
)
Restricted cash and other assets
12,232

 
(2,990
)
Other assets
(6,013
)
 
(11,333
)
Net cash (used in) provided by investing activities
$
(65,808
)
 
$
1,016,610

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5
INVENTRUST PROPERTIES CORP.

Consolidated Statements of Cash Flows
(unaudited)

(Amounts in thousands)

 
Six months ended June 30,
 
2017
 
2016
Cash flows from financing activities
 
 
 
Distributions paid
$
(26,477
)
 
$
(56,035
)
Refund of excess funds associated with 2016 tender offer
1,929

 
—

Proceeds from debt
—

 
299,646

Payoffs of debt
—

 
(704,651
)
Principal payments of mortgage debt
(623
)
 
(10,205
)
Payment of loan fees and deposits
(293
)
 
(31
)
Cash contributed to Highlands REIT, Inc.
—

 
(21,195
)
Net cash used in financing activities
$
(25,464
)
 
$
(492,471
)
Net (decrease) increase in cash and cash equivalents
(31,013
)
 
609,632

Cash and cash equivalents, at beginning of period
397,250

 
203,285

Cash and cash equivalents, at end of period
$
366,237

 
$
812,917

 
 
 
 
Supplemental disclosure of cash flow information
 
 
 
Cash paid for interest, net of capitalized interest of $0 and $1,147
$
16,257

 
$
39,686

Cash paid for income taxes
$
883

 
$
1,861

 
 
 
 
Supplemental schedule of non-cash investing and financing activities
 
 
 
Assumption of mortgage debt upon acquisition of investment property
$
41,717

 
$
16,000

Property surrendered in extinguishment of debt
2,440

 
—

Assumption of lender held escrows
586

 
—

Net equity distributed to Highlands REIT, Inc. (net of cash contributed)
—

 
129,910

Mortgage assumed by buyer upon disposal of property
—

 
131,189

Net assets transferred at sale of real estate investments
—

 
2,007


See accompanying notes to the consolidated financial statements.


6
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited consolidated financial statements of InvenTrust Properties Corp. (the "Company") as of and for the year ended December 31, 2016, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 ("Annual Report"), as certain note disclosures contained in such audited consolidated financial statements have been omitted from these interim consolidated financial statements ("Quarterly Report"). In the opinion of management, all adjustments (consisting of normal recurring accruals, except as otherwise noted) necessary for a fair presentation have been included in these consolidated financial statements.
1. Organization
The Company was incorporated as Inland American Real Estate Trust, Inc. in October 2004, as a Maryland corporation and has elected to be taxed, and currently qualifies, as a real estate investment trust ("REIT") for federal tax purposes. The Company changed its name to InvenTrust Properties Corp. in April 2015. The Company was formed to own, manage, acquire and develop a diversified portfolio of commercial real estate located throughout the United States and to own properties in development and partially own properties through joint ventures, as well as investments in marketable securities and other assets. The Company is no longer a diversified portfolio and is now focused on being a multi-tenant retail platform. As used in these Notes and throughout this Quarterly Report on Form 10-Q, the terms "Company," "InvenTrust," "we," "us," or "our" mean InvenTrust Properties Corp. and its wholly owned and unconsolidated joint venture investments.
Unless otherwise noted, all dollar amounts are stated in thousands, except per share and per square foot amounts.
Segment Reporting
Following the Highlands REIT, Inc. ("Highlands") spin-off and sale of the student housing platform, University House Communities Group, Inc. ("University House"), in 2016, as disclosed in the Company's Annual Report, the Company no longer has a non-core or student housing segment, respectively, as previously reported. These previously reported segments have been classified as discontinued operations as they represented a strategic shift that has had a major effect on the Company's operations and financial results. The assets and liabilities related to discontinued operations are separately classified on the consolidated balance sheets as of December 31, 2016, and the operations have been classified as net income (loss) from discontinued operations on the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016 .
With the completion of the University House sale on June 21, 2016 the Company is now focused on investing in a multi-tenant retail platform as described above. In addition, the Company's assets now have similar characteristics, such as tenant type and economic performance, and are all multi-tenant retail assets, with the exception of one non-core office asset, and the Company does not distinguish its principal business or group its operations on a geographical basis for measuring performance. Accordingly, the Company believes it has a single reportable segment for disclosure purposes in accordance with GAAP as of June 30, 2017 .
The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries. Subsidiaries generally consist of limited liability companies (LLCs) and limited partnerships (LPs). All significant intercompany balances and transactions have been eliminated.
Each multi-tenant retail asset is owned by a separate legal entity which maintains its own books and financial records, and each entity's assets are not available to satisfy the liabilities of other affiliated entities, except as otherwise disclosed in "Note 7. Debt".
As of June 30, 2017 , the Company's portfolio included 70 wholly owned multi-tenant retail assets with 12,204,807 square feet, of which approximately 93.3% was occupied, one non-core office asset with 322,326 square feet, of which approximately 51.0% was occupied, and one significant investment in a joint venture, which the Company owns an interest in and manages 15 multi-tenant retail assets with 2,977,302 square feet.
As of December 31, 2016, the Company had 72 wholly owned assets, which included 71 multi-tenant retail assets and one non-core office asset. As of June 30, 2016 , the Company owned a combined total of 78 assets, which included retail assets, a student housing asset, and a non-core asset. As of December 31, 2016 and June 30, 2016 , the Company held an interest in 15 multi-tenant retail assets through an unconsolidated joint venture.

7
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

2. Basis of Presentation and Recently Issued Accounting Pronouncements
The accompanying consolidated financial statements reflect the consolidated financial position of the Company as of June 30, 2017 and December 31, 2016 and the consolidated results of its operations and cash flows for the three and six months ended June 30, 2017 and 2016. These consolidated financial statements have been prepared in accordance with GAAP which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, judgments and assumptions are required in a number of areas, including, but not limited to, evaluating the impairment of long-lived assets, allocating the purchase price of acquired assets, determining the fair value of debt and evaluating the collectability of accounts receivable. The Company bases these estimates, judgments and assumptions on historical experience and various other factors that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates.
Reclassifications
Certain reclassifications have been made to the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 to conform to the 2017 presentation. These are as follows:
•
the reclassification of fees earned from providing property management, asset management, leasing commissions and other services to our unconsolidated joint venture partnerships from other income to other fee income for the three and six months ended June 30, 2016 of $988 and $2,082 , respectively; and
•
the reclassification of depreciation and amortization incurred on corporate level assets from general and administrative expenses to depreciation and amortization of $241 and $474 for the three and six months ended June 30, 2016 , respectively, of which $28 and $60 was included as part of net income (loss) from discontinued operations for the three and six months ended June 30, 2016 , respectively.
In addition, certain reclassifications have been made to the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 to reflect the results of Highlands (spun off on April 28, 2016) and University House (sold on June 21, 2016) as discontinued operations.
Recently Issued Accounting Pronouncements Adopted
In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business , with the objective of providing guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The revised guidance will result in many real estate transactions being classified as asset acquisitions with transaction costs being capitalized. The guidance is effective beginning January 1, 2018. Early adoption is permitted. The Company early adopted ASU No. 2017-01 effective as of October 1, 2016.
In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, which outlines improvements to Employee Share-Based Payment Accounting. The new standard impacts certain aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statements of cash flows. The Company has concluded that its adoption of ASU No. 2016-09, as issued, did not have a significant impact on the consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective, although it will not affect the accounting for revenue deemed to be related to lease components of contracts. In April 2015, the FASB approved an amendment to the ASU, deferring the effective date one year to annual reporting periods beginning after December 15, 2017 for public entities. The standard permits the use of either the retrospective or cumulative effect transition method. Early adoption is prohibited. Most significantly for the real estate industry, revenue deemed to be related to non-lease components of contracts is

8
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

within the scope of the new standard. A majority of the Company’s tenant-related revenue is related to lease components, and will be governed by the recently issued leasing guidance discussed below. As a result, while the total revenue recognized over time would not differ under the new guidance, the recognition pattern and presentation of revenue related to non-lease components would be different. The Company anticipates expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this guidance. However, the Company may elect certain practical expedients of the recently issued leasing guidance. As a result, the Company may generally not need to revisit historical accounting for leases executed prior to the leasing guidance effective date, which will be effective for annual reporting periods beginning after December 15, 2018. The Company is continuing to evaluate this guidance and it does not expect its adoption will have a significant impact on the consolidated financial statements. The Company is also evaluating whether it will adopt this guidance on a retrospective basis or a modified retrospective basis.
In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which revises an entity's accounting related to: (i) the classification and measurement of investments in equity securities; (ii) the presentation of certain fair value changes for financial liabilities measured at fair value; and (iii) amends certain disclosure requirements associated with the fair value of financial instruments, including eliminating the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is continuing to evaluate this guidance and does not expect its adoption will have a significant impact on the consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases , amending the existing accounting standards for lease accounting for both parties to a lease contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset ("ROU") and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU No. 2016-02 will be effective for annual reporting periods beginning after December 15, 2018, and early adoption is permitted as of the standard's issuance date. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain practical expedients available. On June 21, 2017 the FASB met to discuss an implementation question related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. The FASB clarified that companies will not need to revisit the allocation of contract consideration to lease and non-lease components within the scope of ASU No. 2016-02 when an entity adopts ASU No. 2014-09. This clarification is limited to situations where companies decide not to early adopt ASU No. 2016-02 coincident with ASU No. 2014-09. Based on this clarification, if the Company elects the package of practical expedients, it will not need to revisit historical accounting for leases. Therefore, ASU No. 2016-02 would only apply to new leases executed after the effective date of January 1, 2019. The Company will continue to evaluate the impact this guidance will have on its financial position and results of operations prior to it becoming effective. As a lessee, the Company does not expect this standard will have a material effect on the consolidated financial statements. While the Company continues to assess the effect of adoption as a lessee, it currently believes the most significant change relates to the recognition of a new ROU asset and lease liability on the consolidated balance sheets for its corporate office leases, as well as the ground lease agreement the Company is the lessee for land underneath a building at a multi-tenant retail asset (see Note 12). Currently, the Company accounts for both the office and the ground lease arrangement as operating leases and they are not material to the Company’s consolidated financial statements.
As a lessor, the Company believes substantially all of the Company's leases will continue to be classified as operating leases under the new standard. Common area maintenance ("CAM"), utility recovery services, and non-routine major maintenance provided for in real estate contracts will be accounted for as non-lease components within the scope of the new revenue standard. As a result, we will be required to recognize revenues associated with real estate leases separately from revenues associated with CAM, utility recovery services, or non-routine major maintenance. The Company also has certain lease arrangements with its tenants for space at its retail assets in which the contractual amounts due under the lease from the lessee are not allocated between the rental and expense reimbursement components ("Gross Leases"). The aggregate revenue earned under Gross Leases is presented as rental income in the consolidated statements of operations. Under the new standard, the

9
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

Company anticipates it will be required to allocate the embedded revenue associated with these reimbursements under its Gross Leases, which represent an immaterial portion of the Company’s lease portfolio, and separately present such amounts in its consolidated statements of operations. The Company is continuing to evaluate whether the variable payment provisions in the new lease standard, or the allocation and recognition provisions of the new revenue standard, will affect the timing of recognition for the Company’s lease and non-lease revenue. Lastly, due to the new standard’s narrowed definition of initial direct costs, the Company expects to expense as incurred certain lease origination costs currently capitalized and amortized to expense over the lease term. However, the Company does not believe this change will have a material impact on its consolidated financial statements. The Company has not selected an adoption date and will continue to evaluate the impact of this guidance until it is adopted.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows . The new guidance is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The core principle of the ASU requires the classification of eight specific issues identified under ASC 230, Statement of Cash Flows, to be presented as either financing, investing or operating, or some combination thereof, depending upon the nature of the cash flows. ASU No. 2016-15 will be effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2017, and early adoption is permitted. Entities are required to use a retrospective transition approach for each period presented. The presentation of distributions from equity method investments may be impacted as a result of the Company adopting this guidance. The Company is continuing to evaluate this guidance and does not expect its adoption will have a significant impact on the consolidated financial statements. The Company expects to adopt this guidance on January 1, 2018.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows. This new guidance is intended to reduce the existing diversity in practice in how certain transfers between cash and restricted cash are classified as operating, investing, or financing activities within the statement of cash flows. ASU No. 2016-18 will be effective for annual reporting periods beginning after December 31, 2017, and interim periods within those fiscal years. Early adoption is permitted. This guidance requires a retrospective transition method of adoption for each period presented. The Company is continuing to evaluate this guidance and does not expect its adoption will have a significant impact on the consolidated financial statements. The Company expects to adopt this guidance on January 1, 2018.

10
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

3. Acquired Properties
The Company records identifiable assets, liabilities and noncontrolling interests acquired at fair value. During the six months ended June 30, 2017 , the Company acquired three wholly owned multi-tenant retail assets for a gross acquisition price of $289,900 and assumed mortgage debt of $41,717 on one acquisition reported as part of non-cash financing activities. Under the newly adopted ASU No. 2017-01, the Company determined these transactions should be accounted for as acquisitions of assets. Accordingly, the Company capitalized transaction costs of approximately $1,168 during the six months ended June 30, 2017 .
The following table reflects the multi-tenant retail assets acquired during the six months ended June 30, 2017 .
Asset
 
Location
 
Acquisition Date
 
Gross Acquisition Price
 
Square Feet
Campus Marketplace
 
San Marcos, CA
 
1/6/2017
 
$
73,350

 
144,000
Paraiso Parc and Westfork Plaza
 
Pembroke Pines, FL
 
2/1/2017
 
163,000

 
369,000
The Shops at Town Center
 
Germantown, MD
 
2/21/2017
 
53,550

 
125,000
 
 
 
 
 
 
$
289,900

 
638,000
The following table summarizes the estimated fair value of the multi-tenant retail assets acquired and liabilities assumed for the six months ended June 30, 2017 , as listed above.
 
2017 Acquisitions
Land
$
75,194

Building and other improvements
181,389

Total investment properties
256,583

Intangible assets (a)
25,193

Intangible liabilities (b)
(8,516
)
Net other assets and liabilities
16,640

Total fair value of assets acquired and liabilities assumed
$
289,900

(a)
Intangible assets include in-place leases and above market leases.
(b)
Intangible liabilities include below market leases.
For assets acquired in 2017, the Company recorded income of $5,455 and $8,986 , respectively, for the three and six months ended June 30, 2017 . In addition, the Company recorded property net income of $3,935 and $6,672 , respectively, for the three and six months ended June 30, 2017 .

11
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

The following table reflects the multi-tenant retail assets acquired during the six months ended June 30, 2016 .
Asset
 
Location
 
Acquisition Date
 
Gross Acquisition Price
 
Square Feet
Shops at the Galleria
 
Bee Cave, TX
 
4/1/2016
 
$
132,000

 
538,000
Renaissance Center
 
Durham, NC
 
4/1/2016
 
129,200

 
363,000
Stevenson Ranch
 
Stevenson, CA
 
4/15/2016
 
72,500

 
187,000
 
 
 
 
 
 
$
333,700

 
1,088,000
The following table summarizes the estimated fair value of the multi-tenant retail assets acquired and liabilities assumed for the six months ended June 30, 2016 , as listed above. In addition, The Company assumed mortgage debt of $16,000 on one acquisition reported as part of non-cash financing activities.
 
2016 Acquisitions
Land
$
108,340

Building and other improvements
211,014

Total investment properties
319,354

Intangible assets (a)
28,944

Intangible liabilities (b)
(14,858
)
Net other assets and liabilities
260

Total fair value of assets acquired and liabilities assumed
$
333,700

(a)
Intangible assets include in-place leases, above market leases, tenant improvement allowance and leasing commissions.
(b)
Intangible liabilities include below market leases.
The acquired assets are included in the Company's results of operations based on their date of acquisition. The following unaudited pro-forma results of operations reflect these transactions as if each had occurred on January 1, 2016. The pro-forma information is not necessarily indicative of the results that actually would have occurred nor does it indicate future operating results.
 
Three months ended
June 30, 2016
 
Six months ended
June 30, 2016
Revenues
$
62,993

 
$
131,723

Net income from continuing operations
$
19,697

 
$
35,282

For assets acquired during the six months ended June 30, 2016 , the Company recorded income of $6,589 for the three and six months then ended June 30, 2016 . In addition, the Company recorded property net income of $4,897 , excluding acquisition costs expensed as general and administrative expense of $627 and $770 , respectively, for the three and six months then ended June 30, 2016 .


12
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

4. Disposed Properties
Multi-tenant retail assets
The Company sold three multi-tenant retail assets during the six months ended June 30, 2017 for an aggregate gross disposition price of $99,330 and generated net proceeds from the sale of those assets of $56,924 . The Company recognized a net gain on sale from these three assets of $13,360 and $14,381 , respectively, for the three and six months ended June 30, 2017 .
The following multi-tenant retail assets were sold during the six months ended June 30, 2017 .
Asset
 
Location
 
Disposition Date
 
Gross Disposition Price
 
Square Feet
Penn Park
 
Oklahoma City, OK
 
1/10/2017
 
$
29,050

 
242,000
Sparks Crossing
 
Sparks, NV
 
5/19/2017
 
40,280

 
336,000
Lincoln Village
 
Chicago, IL
 
6/23/2017
 
30,000

 
164,000
 
 
 
 
 
 
$
99,330

 
742,000
In addition, the Company surrendered one asset to the lender (in satisfaction of non-recourse debt) on May 17, 2017 . The Company is not aware of any material outstanding commitments and contingencies related to this asset. The Company recognized a gain on debt extinguishment of $882 related to this transaction as part of income from continuing operations for the three and six months ended June 30, 2017 .
The Company sold eighteen multi-tenant retail assets, one non-core asset, and University House during the six months ended June 30, 2016 for an aggregate gross disposition price of $1,728,600 and generated net proceeds from these sales of $1,389,845 . The Company recognized an aggregate net gain on sale of $52,385 and $76,411 , respectively, as part of income from continuing operations on the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 . The Company recognized an aggregate net gain of $225,286 as part of income (loss) from discontinued operations on the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 . In addition, during the six months ended June 30, 2017, the Company completed the spin-off of Highlands.

13
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

5 . Investment in Partially Owned Entities
Unconsolidated Entities
The entities listed below are owned by the Company and other unaffiliated parties in joint ventures. Net income, distributions and capital transactions for these entities are allocated to the Company and its joint venture partners in accordance with the respective partnership agreements.
The Company analyzed the joint venture agreements and determined that the joint ventures were not variable interest entities. The Company also considered the joint venture partners' participating rights under the joint venture agreements and determined that the joint venture partners have the ability to participate in major decisions, which equates to shared decision making. Accordingly, the Company has significant influence but does not control the joint ventures. Therefore, these joint ventures are not consolidated by the Company and the equity method of accounting is used to account for these investments. Under the equity method of accounting, the net equity investment of the Company and the Company's share of net income or loss from the unconsolidated entity are reflected in the consolidated balance sheets and the consolidated statements of operations and comprehensive income (loss) .
 
 
 
 
 
 
Carrying Value of Investment at
Entity
 
Description
 
Ownership %
 
June 30, 2017
 
December 31, 2016
IAGM Retail Fund I, LLC
 
Multi-tenant retail shopping centers
 
55%
 
$
126,451


$
126,090

Downtown Railyard Venture, LLC
 
Land development
 
(a)
 
55,508

 
52,365

Other unconsolidated entities
 
Various real estate investments
 
Various
 
254


273


 

 

 
$
182,213

 
$
178,728

(a)
The Company's ownership percentage in Downtown Railyard Venture, LLC ("DRV") is based upon a waterfall calculation outlined in the operating agreement.
A gain on the sale of a joint venture for the development of a student housing community of $1,434 was recorded for the six months ended June 30, 2016 and is included as part of net income (loss) from discontinued operations on the consolidated statements of operations and comprehensive income (loss) .
Combined Financial Information
The following tables present the combined condensed financial information for the Company's unconsolidated entities.
 
As of
 
June 30, 2017
 
December 31, 2016
Assets:
 
 
 
Real estate assets, net of accumulated depreciation
$
625,782

 
$
628,667

Other assets
71,157

 
71,288

Total assets
$
696,939

 
$
699,955

Liabilities and equity:
 
 
 
Mortgage debt
311,476

 
311,378

Other liabilities
58,806

 
65,225

Equity
326,657

 
323,352

Total liabilities and equity
$
696,939

 
$
699,955

Company's share of equity
$
195,311

 
$
192,124

Net excess of the net book value of underlying assets over the cost of investments (net of accumulated amortization of $2,527 and $2,229, respectively)
(13,098
)
 
(13,396
)
Carrying value of investments in unconsolidated entities
$
182,213

 
$
178,728


14
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Revenues
$
16,944

 
$
19,846

 
$
33,764

 
$
37,134

Expenses:
 
 
 
 
 
 
 
Interest expense and loan cost amortization
3,276

 
778

 
6,527

 
6,638

Depreciation and amortization
6,422

 
8,352

 
12,614

 
14,667

Operating expenses, ground rent and general and administrative expenses
5,986

 
7,045

 
12,270

 
10,666

Total expenses
15,684

 
16,175

 
31,411

 
31,971

Net income
$
1,260

 
$
3,671

 
$
2,353

 
$
5,163

 
 
 
 
 
 
 
 
Company's share of net income, net of excess basis depreciation of $130, $130, $260 and $260, respectively
$
675

 
$
2,241

 
$
1,247

 
$
3,260

Distributions from unconsolidated entities in excess of the investments' carrying value
—

 
355

 
—

 
630

Equity in earnings of unconsolidated entities
$
675

 
$
2,596

 
$
1,247

 
$
3,890

The unconsolidated entities had total third party debt of $311,476 at June 30, 2017 that matures as follows:
Maturities during the year ended December 31,
 
Amount
2017
 
$
—

2018
 
203,906

2019
 
16,247

2020
 
—

2021
 
22,973

Thereafter
 
68,350

 
 
$
311,476

Of the total outstanding debt related to assets held by the Company's unconsolidated joint ventures, approximately $23,000 is recourse to the Company. It is anticipated that the joint ventures will be able to repay or refinance all of their debt on a timely basis.

15
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

6. Investment in Marketable Securities
Investment in marketable securities of $31,542 and $183,883 at June 30, 2017 and December 31, 2016 , respectively, consists primarily of preferred and common stock investments in other REITs and certain real estate related bonds which are classified as available-for-sale securities and recorded at fair value. The cost basis net of impairments of available-for-sale securities was $21,503 and $125,311 as of June 30, 2017 and December 31, 2016 , respectively. The Company recognized net proceeds from sales of marketable securities of $136,696 during the six months ended June 30, 2017.
Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported as a separate component of comprehensive income until realized. The Company has net accumulated comprehensive income related to its marketable securities portfolio of $10,039 and $58,572 , which includes gross unrealized losses of $36 and $598 related to its marketable securities as of June 30, 2017 and December 31, 2016 , respectively. Securities with gross unrealized losses have a related fair value of $0 and $1,204 as of June 30, 2017 and December 31, 2016 , respectively.
The Company’s policy for assessing recoverability of its available-for-sale securities is to record a charge against net earnings when the Company determines that a decline in the fair value of a security drops below the cost basis and believes that decline to be other-than-temporary. Factors in the assessment of other-than-temporary impairment include determining whether (1) the Company expects the value of the security to recover, (2) the Company has the ability and intent to hold the security until it recovers, and (3) the length of time and degree to which the security’s price has declined. The Company recorded no impairment on available-for-sale securities for the three and six months ended June 30, 2017 and 2016.
Dividend income is recognized when earned. During the three and six months ended June 30, 2017 , dividend income of $389 and $2,232 , respectively, was recognized and is included as part of continuing operations in interest and dividend income on the consolidated statements of operations and comprehensive income (loss) . During the three and six months ended June 30, 2016 , $2,645 and $5,300 , respectively, was recognized and is included as part of continuing operations in interest and dividend income on the consolidated statements of operations and comprehensive income (loss) .

16
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

7. Debt
Mortgages payable
As of June 30, 2017 and December 31, 2016, the Company had the following mortgages payable outstanding:
 
June 30, 2017
 
December 31, 2016
Mortgages payable (a)
$
473,346

 
$
434,746

Premium, net of accumulated amortization
598

 
—

Discount, net of accumulated amortization
(214
)
 
(317
)
Debt issuance costs, net of accumulated amortization
(1,841
)
 
(1,780
)
Total mortgages payable, net
$
471,889

 
$
432,649

(a)
Mortgages payable had fixed interest rates (for both conforming loans and loans in default) ranging from 3.49% to 10.45% , with a weighted average interest rate of 5.19% as of June 30, 2017 , and 3.49% to 11.24% , with a weighted average interest rate of 4.85% , as of December 31, 2016.
Some of the mortgage loans require compliance with certain covenants, such as debt service coverage ratios, investment restrictions and distribution limitations. As of June 30, 2017 , the Company was in compliance with all mortgage loan requirements except two loans in default with an aggregate carrying value of $42,073 , both of which matured in 2017. As of December 31, 2016 , the Company was in compliance with all mortgage loan requirements except one loan with a carrying value of $3,151 , which matured in 2016 , which was surrendered to the lender in 2017, as described in "Note 4. Disposed Properties". These loans are not cross-collateralized with any other mortgage loans and are not recourse to the Company.
The following table shows the scheduled maturities of the Company's mortgages payable as of June 30, 2017 , for the remainder of 2017, each of the next four years, and thereafter.
 
Maturities during the year ending December 31,
 
 
 
 
 
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
Mortgages payable
$
136,363

 
$
59,575

 
$
—

 
$
41,000

 
$
12,957

 
$
223,451

 
$
473,346

The Company has the ability to repay, refinance or extend the debt maturing in 2017 , and the Company believes it has adequate sources of funds to meet short-term cash needs related to these refinancings or extensions. It is anticipated that the Company will use proceeds from sales, cash on hand, capacity on term loan and line of credit to repay, refinance or extend the debt maturing in 2017 and 2018. Of the total outstanding debt for all years, approximately $26,000 is recourse to the Company at June 30, 2017 , of which $23,000 is related to assets held by the Company's unconsolidated joint ventures.
During the six months ended June 30, 2017 , the Company assumed mortgage debt of $41,717 on one acquisition as part of non-cash financing activities.
Credit agreements
On November 5, 2015 , the Company entered into a term loan credit agreement for a $300,000 unsecured credit facility with a syndicate of seven lenders led by Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith, Incorporated and PNC Capital Markets LLC as joint lead arrangers. The accordion feature allows the Company to increase the size of the unsecured term loan credit facility to $600,000 , subject to certain conditions.
The term loan credit facility consists of two tranches: a five-year tranche maturing on January 15, 2021, and a seven-year tranche maturing on November 5, 2022 . Interest rates are based on the Company's total leverage ratio. Based upon the Company's total leverage ratios, the five- and seven-year tranches bear interest at rates of 1-Month LIBOR plus 1.3% and 1-Month LIBOR plus 1.6% , respectively. As of June 30, 2017 , the Company has swapped $150,000 of variable rate debt on the five-year tranche to fixed rate debt through two interest rate swaps.

17
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

On February 3, 2015, the Company entered into an amended and restated credit agreement for a $300,000 unsecured revolving line of credit with KeyBank National Association, JP Morgan Chase Bank National Association and other financial institutions. The accordion feature allows the Company to increase the size of its unsecured line of credit up to $600,000 , subject to certain conditions. The unsecured revolving line of credit matures on February 2, 2019 and contains one twelve-month extension option that the Company may exercise upon payment of an extension fee equal to 0.15% of the commitment amount on the maturity date and subject to certain other conditions. The unsecured revolving line of credit bears interest at a rate equal to 1-Month LIBOR plus 1.40% and requires the maintenance of certain financial covenants. The Company had $300,000 available under the revolving line of credit as of June 30, 2017 .
The credit facility is subject to maintenance of certain financial covenants. As of June 30, 2017 and December 31, 2016 , the Company was in compliance with all of the covenants and default provisions under the credit agreement.
As of June 30, 2017 and December 31, 2016, the Company had the following credit agreements outstanding:
 
June 30, 2017
 
December 31, 2016
 
 
 
Aggregate
Principal Balance
 
Interest
Rate
 
Aggregate
Principal Balance
 
Interest
Rate
 
Maturity
Date
Unsecured term loan credit facility,
5 year - swapped to fixed rate (a)
$
90,000

 
1.3510%
 
$
90,000

 
1.3510%
 
1/15/2021
Unsecured term loan credit facility,
5 year - swapped to fixed rate (b)
60,000

 
1.3525%
 
60,000

 
1.3525%
 
1/15/2021
Unsecured term loan credit facility,
5 year - variable rate (c)
50,000

 
2.3505%
 
50,000

 
1.9167%
 
1/15/2021
Unsecured term loan credit facility,
7 year - variable rate (d)
100,000

 
2.6505%
 
100,000

 
2.2167%
 
11/5/2022
Total unsecured term loans
300,000

 
 
 
300,000

 
 
 
 
Debt issuance costs, net of accumulated amortization
(1,817
)
 
 
 
(2,044
)
 
 
 
 
Total, unsecured term loan credit facilities, net
$
298,183

 
 
 
$
297,956

 
 
 
 
(a)
The Company swapped $90,000 of variable rate debt at an interest rate of 1-Month LIBOR plus 1.3% to a fixed rate of 1.3510% . The swap has an effective date of December 10, 2015, a termination date of December 1, 2019, and a notional amount of $90,000 .
(b)
The Company swapped $60,000 of variable rate debt at an interest rate of 1-Month LIBOR plus 1.3% to a fixed rate of 1.3525% . The swap has an effective date of December 10, 2015, a termination date of December 1, 2019, and a notional amount of $60,000 .
(c)
Interest rate reflects 1-Month LIBOR plus 1.3% as of June 30, 2017 and December 31, 2016.
(d)
Interest rate reflects 1-Month LIBOR plus 1.6% as of June 30, 2017 and December 31, 2016.

18
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

8. Fair Value Measurements
In accordance with ASC 820, Fair Value Measurement and Disclosures , the Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
•
Level 1 – Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
•
Level 2 – Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition.
Recurring Measurements
For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of the fair value for each major category of assets and liabilities is presented below:
 
 
Fair Value Measurements at June 30, 2017
Assets
 
Level 1
 
Level 2
 
Level 3
Available-for-sale marketable securities
 
$
30,968

 
$
—

 
$
—

Real estate related bonds
 
—

 
574

 
—

Derivative interest rate swaps
 
—

 
802

 
—

Total assets
 
$
30,968

 
$
1,376

 
$
—

 
 
Fair Value Measurements at December 31, 2016
Assets
 
Level 1
 
Level 2
 
Level 3
Available-for-sale marketable securities
 
$
182,569


$
—


$
—

Real estate related bonds
 
—


1,314


—

Derivative interest rate swaps
 
—


487


—

Total assets
 
$
182,569

 
$
1,801

 
$
—

Level 1
At June 30, 2017 and December 31, 2016 , the fair value of the available for sale marketable equity securities have been estimated based upon quoted market prices. Unrealized gains or losses on investment are reflected in unrealized gain (loss) on investment securities in comprehensive income on the consolidated statements of operations and comprehensive income (loss) .
Level 2
To calculate the fair value of the real estate related bonds and the derivative interest rate instruments, the Company primarily uses quoted prices for similar securities and contracts. For the real estate related bonds, the Company reviews price histories for similar market transactions. For the derivative interest rate instruments, the Company uses inputs based on data that is observed in the forward yield curve which is widely observable in the marketplace.  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 which utilizes Level 3 inputs, such as estimates of current credit spreads. However, as of June 30,

19
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

2017 and December 31, 2016 , the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. As of June 30, 2017 and December 31, 2016 , the Company had outstanding interest rate swap agreements with an aggregate notional value of $150,000 .
Level 3
At June 30, 2017 and December 31, 2016 , the Company had no Level 3 recurring fair value measurements.
Nonrecurring Measurements
The following table summarizes activity for the Company’s assets measured at fair value on a nonrecurring basis. The Company recognized certain impairment charges to reflect the investments at their fair values for the three and six months ended June 30, 2017 and 2016 . The asset groups that were reflected at fair value through this evaluation are:
 
For the three months ended
 
June 30, 2017
 
June 30, 2016
 
Level 3
 
Total Impairment Losses
 
Level 3
 
Total Impairment Losses
Investment properties, continuing operations
$
—

 
$
—

 
$
42,150

 
$
29,931

Investment properties, discontinued operations
—

 
—

 
542,208

 
76,583

Total
 
 
$
—

 
 
 
$
106,514

 
For the six months ended
 
June 30, 2017
 
June 30, 2016
 
Level 3
 
Total Impairment Losses
 
Level 3
 
Total Impairment Losses
Investment properties, continuing operations
$
36,676

 
$
16,440

 
$
81,300

 
$
38,321

Investment properties, discontinued operations
—

 
—

 
542,208

 
76,583

Total
 
 
$
16,440

 
 
 
$
114,904

Investment properties, continuing operations
During the three and six months ended June 30, 2017 , the Company identified certain assets which may have a reduction in the expected holding period and reviewed the probability of these assets' disposition. The Company's estimated fair value relating to the investment assets' impairment analyses was based on broker opinions of value and letters of intent. As a result, during the three months ended March 31, 2017, the Company recorded a provision for asset impairment of $16,440 in continuing operations on three multi-tenant retail assets. There was no impairment recorded for the three months ended June 30, 2017 .
During the three and six months ended June 30, 2016 , the Company identified certain assets which may have a reduction in the expected holding period and reviewed the probability of these assets' disposition. The Company's estimated fair value relating to the investment assets' impairment analyses was based on purchase contracts and ten-year discounted cash flow models, which includes contractual revenues and unobservable inputs such as forecasted revenues and expenses. These unobservable inputs are based on market conditions and the Company's expected growth rates.
During the six months ended June 30, 2016 , capitalization rates ranging from 6.75% to 7.00% and discount rates ranging from 7.00% to 8.00% were utilized in the model and are based upon observable rates that the Company believes to be within a reasonable range of current market rates. The Company recorded a provision for asset impairment of $29,931 in continuing operations for the three months ended June 30, 2016 on one non-core asset based on a discounted cash flow analysis. In addition, the Company recorded a provision for asset impairment of $8,390 in continuing operations on three multi-tenant retail assets based on purchase contracts for a total provision for asset impairment of $38,321 in continuing operations on the consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2016 .

20
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

Investment properties, discontinued operations
In connection with the Highlands spin-off during the six months ended June 30, 2016, as disclosed in the Company's Annual Report, the Company evaluated Highlands as a disposal group for impairment. The Company's estimated fair value relating to the disposal group's impairment analysis was based on 10-year discounted cash flow models, which includes contractual inflows and outflows over a specific holding period. The cash flows consist of observable inputs such as contractual revenues and unobservable inputs forecasted revenues and expenses. These unobservable inputs are based on market conditions and the Company’s expected growth rates.
As of the spin date, capitalization rates ranging from 6.75% to 10.00% and discount rates ranging from 7.75% to 15.25% were utilized in the model and were based upon observable rates that the Company believed to be within a reasonable range of current market rates. Based on this analysis, the Company recorded an impairment of $76,583 for the three and six months ended June 30, 2016 .
Financial Instruments Not Measured at Fair Value
The table below represents the fair value of financial instruments presented at carrying values in the Company's consolidated financial statements as of June 30, 2017 and December 31, 2016 .
 
June 30, 2017

December 31, 2016
 
Carrying Value
Estimated Fair Value

Carrying Value
Estimated Fair Value
Mortgages payable
$
473,346

$
475,714


$
434,746

$
435,513

Line of credit and term loan
$
300,000

$
299,760

 
$
300,000

$
299,741

The Company estimated the fair value of its mortgages payable and term loan using a weighted average effective market interest rate of 4.90% as of June 30, 2017 compared to 5.07% as of December 31, 2016. The fair value estimate of the line of credit and term loan approximates the carrying value due to limited market volatility in pricing. The assumptions reflect the terms currently available on similar borrowing terms to borrowers with credit profiles similar to the Company's. As a result, the Company used a weighted average interest rate of 3.18% as of June 30, 2017 compared to 3.15% as of December 31, 2016 to estimate the fair value of its line of credit and term loan. The Company has determined that its debt instrument valuations are classified in Level 2 of the fair value hierarchy.

21
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

9. Income Taxes
The Company has elected and has operated so as to qualify to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with the tax year ended December 31, 2005. So long as it qualifies as a REIT, the Company generally will not be subject to federal income tax on taxable income that is distributed currently to stockholders. A REIT is subject to a number of organizational and operational requirements including a requirement that it currently distribute at least 90% of its REIT taxable income (subject to certain adjustments) to its stockholders each year. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates and would not be able to re-elect REIT during the four years following the year of the failure. 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 federal income and excise taxes on its undistributed income.
The Company has elected to treat certain of its consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries pursuant to the Code. Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates.
For the three and six months ended June 30, 2017 , income tax expense of $5 and benefit of $5 , respectively, was included in net income (loss) from discontinued operations on the consolidated statements of operations and comprehensive income (loss) . For the three and six months ended June 30, 2016 , income tax expense of $159 and $189 , respectively, was included in net income (loss) from discontinued operations on the consolidated statements of operations and comprehensive income (loss) .
10. Earnings per share
Basic earnings per share ("EPS") are computed using the two-class method by dividing net income by the weighted average number of common shares outstanding for the period (the "common shares"). Diluted EPS is computed using the treasury method if more dilutive, by dividing net income by the common shares plus potential common shares issuable upon exercising options or other contracts. The following table reconciles the amounts used in calculating basic and diluted income per share (in thousands, except weighted average share and per share amounts):
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income from continuing operations
$
33,895

 
$
18,594

 
$
36,138

 
$
34,629

Net income (loss) from discontinued operations
25

 
145,106

 
(122
)
 
154,478

Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

 
 
 
 
 
 
 
 
Weighted average shares outstanding, basic and diluted
773,381,165

 
862,205,672

 
773,348,893

 
862,205,672

 
 
 
 
 
 
 
 
Income from continuing operations allocated to common shareholders per share
$
0.04

 
$
0.02

 
$
0.05

 
$
0.04

Income from discontinued operations allocated to common shareholders per share
$
—

 
$
0.17

 
$
—

 
$
0.18

Net income per common share, basic and diluted
$
0.04

 
$
0.19

 
$
0.05

 
$
0.22


22
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

11. Stock-Based Compensation
Incentive Award Plan
Effective as of June 19, 2015, the Company's board of directors adopted and approved the InvenTrust Properties Corp. 2015 Incentive Award Plan (as amended, the "Incentive Award Plan"), under which the Company may grant cash and equity incentive awards to eligible employees, directors, and consultants. Under the Incentive Award Plan, the Company is authorized to grant up to 30,000,000 shares of the Company's common stock pursuant to awards under the plan. At June 30, 2017 , 24,697,230 shares were available for future issuance under the Incentive Award Plan. A summary of the Company's restricted stock unit activity as of June 30, 2017 is as follows:
 
Restricted Stock Units
 
Share Price at Grant Date
Outstanding at December 31, 2016
1,646,523

 
(a)
Restricted stock units granted in 2016
35,829

 
$3.14
Restricted stock units granted in 2017
1,964,442

 
3.29
Restricted stock units vested, granted in 2015
(21,627
)
 
4.00
Restricted stock units vested, granted in 2016
(182,384
)
 
3.14
Restricted stock units vested, granted in 2017
(11,824
)
 
3.14
Restricted stock units vested, granted in 2017
(83,592
)
 
3.29
Restricted stock units forfeited, granted in 2015
(10,489
)
 
4.00
Restricted stock units forfeited, granted in 2016
(58,710
)
 
3.14
Outstanding at June 30, 2017
3,278,168

 
(a)
(a)
The weighted average grant date price per share of common stock underlying the unvested restricted stock units based on total outstanding restricted stock units as of June 30, 2017 and December 31, 2016 was $3.29 .
At June 30, 2017 , there was $8,314 of total unrecognized compensation expense for unvested stock-based compensation arrangements granted under the Incentive Award Plan for 1,420,400 , 1,286,522 and 571,246 unvested shares vesting in 2017, 2018 and 2019, respectively. Stock-based compensation expense will be amortized on a straight-line basis over the vesting period. The Company recognized stock-based compensation expense of $1,701 and $2,709 for the three and six months ended June 30, 2017 , respectively, and $899 and $1,336 for the three and six months ended June 30, 2016, respectively, related to the Incentive Award Plan. The Company has elected to account for stock-based compensation forfeitures as they occur.
12. Commitments and Contingencies
The Company is subject, from time to time, to various types of third-party legal claims or litigation that arise in the ordinary course of business, including, but not limited to, property loss claims, personal injury or other damages resulting from contact with the Company’s properties. These claims and lawsuits and any resulting damages are generally covered by the Company's insurance policies. The Company accrues for legal costs associated with loss contingencies when these costs are probable and reasonably estimable. While the resolution of these matters cannot be predicted with certainty, management does not expect, based on currently available information, that the final outcome of any pending claims or legal proceedings will have a material adverse effect on the financial condition, results of operations or cash flows of the Company.
As previously disclosed in our Quarterly Report for the quarter ended March 31, 2017, on September 6, 2013, a former tenant at the Legacy Corner Apartments property in Midwest City, Oklahoma filed a complaint in the District Court of Oklahoma County against the Company and other named defendants, Case No. CJ-2013-5011, alleging premises liability and negligent maintenance. At December 31, 2016, based on the facts and circumstances of this case, the Company believed it had a viable defense and was prepared to defend the suit vigorously. Due to the pendency of the Company's defenses and insurance policies, together with the inherent difficulty and uncertainty of predicting the outcome of litigation generally, the Company did not believe a risk of loss associated with compensatory damages was probable. Furthermore, the Company did not believe a risk of loss associated with punitive damages, which would be awarded due to gross negligence, was probable based on the information known, nor did the Company know what an estimated range of uninsured punitive damages could be. Therefore, at December 31, 2016, no loss contingency amounts related to this case had been accrued.

23
INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements
(Amounts in thousands, except square feet, share and per share amounts)

June 30, 2017
(unaudited)

The jury trial commenced on April 3, 2017. On April 12, 2017, the jury entered a verdict against the Company’s subsidiary and the other named defendants in favor of the plaintiff of $6,000  in compensatory damages and $6,000  in punitive damages. The compensatory portion of the verdict is fully insured by the Company’s insurance policies. However, the Company's insurance carrier served the Company with a reservation of rights letter stating that insurance coverage may not be provided for punitive damages awarded in this case. As a result, the Company’s potential loss contingency exposure is $6,000 . The Company is currently evaluating, in conjunction with the insurance carriers and the respective panel counsels, all alternatives and strategies available in this case, including filing any post-trial motions, appeals or potential participation in a settlement with the plaintiff. During the three and six months ended June 30, 2017 , one of the Company's insurance carriers provided a $1,000 payment to the plaintiff.
The Company has been advised by counsel that the Company has several potential mitigating factors available to it, which may result in a reduced or mitigated punitive award. While it is difficult to ascertain with certainty the result of those potential mitigating factors, the Company intends to vigorously pursue all potential causes of action available to it in appealing and mitigating the damages award. Nevertheless, based on GAAP standards, during the three months ended March 31, 2017, the Company accrued for a potential loss contingency of $3,000 . As of June 30, 2017, The Company recorded a $8,000 liability as part of other liabilities and a $5,000 insurance receivable as part of deferred costs and other assets on the consolidated balance sheet.
Leasing commitments
As of June 30, 2017 , one of the Company’s multi-tenant retail assets is subject to a ground lease. The Company records ground rent expense on a straight-line basis over the term of the leases. The leases require rental payments or rental payment increases based upon the appraised value of the property at specified dates, increases in pricing indexes, or certain financial calculations based on the operations of the respective property. Any incremental changes in the rental payments as a result of these adjustments are not included in the table below because the amount of the change is not determinable. In addition, the Company has non-cancelable operating leases pertaining to office space from which the Company conducts its business.
The Company recognized rent expense associated with ground leases of $0 and $67 for the three and six months ended June 30, 2017 , respectively, and $107 and $176 for the three and six months ended June 30, 2016, respectively. The Company recognized rent expense associated with office space leases of $316 and $671 for the three and six months ended June 30, 2017 , respectively, and $318 and $693 for the three and six months ended June 30, 2016 , respectively.
13. Subsequent Events
Subsequent to June 30, 2017, the Company disposed of two multi-tenant retail assets, consisting of a combined 358,000 square feet, for a gross disposition price of $31,950 .

24

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, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. This includes statements about the Company's plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance," "predict," "potential," "continue," "likely," "will," "would," "illustrative", "should" and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us based on our knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements.
There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report. Such risks, uncertainties and other important factors, include, among others, the risks, uncertainties and factors set forth in our filings with the U.S. Securities and Exchange Commission ("SEC"), including our Annual Report for the year ended December 31, 2016, as may be updated in this Quarterly Report and other quarterly and current reports, which are on file with the SEC and available at the SEC’s website (http://www.sec.gov). Such risks and uncertainties, among others, include market, political and economic volatility experienced by the U.S. economy or real estate industry as a whole, and the regional and local political and economic conditions in the markets in which our properties are located; our ability to complete a strategic transaction, enhance stockholder value and provide liquidity to stockholders; our ability to identify, execute and complete disposition opportunities; our ability to identify, execute and complete acquisition opportunities and to integrate and successfully operate any properties acquired in the future and the risks associated with such properties; our ability to manage the risks of expanding, developing or re-developing some of our current or future acquired assets; our transition to an integrated operating platform may not prove successful over the long term; loss of members of our senior management team or key personnel; changes in governmental regulations and generally accepted accounting standards or interpretations thereof; our ability to access capital for renovations and acquisitions on terms and at times that are acceptable to us; changes in the competitive environment in the leasing market and any other market in which we operate; forthcoming expirations of certain of our leases and our ability to re-lease such properties; our ability to collect rent from tenants or to rent space on favorable terms or at all; the impact of leasing and capital expenditures to improve our properties in order to retain and attract tenants; events beyond our control, such as war, terrorist attacks, natural disasters and severe weather incidents, and any uninsured or underinsured loss resulting therefrom; actions or failures by our joint venture partners; the cost of compliance with and liabilities under environmental, health and safety laws; changes in real estate and zoning laws and increases in real property tax rates; the economic success and viability of our anchor retail tenants; our multi-tenant retail properties face considerable competition for the tenancy of our lessees and the business of retail shoppers, including changing consumer preferences and increasing competition from other forms of retailing, such as e-commerce websites and catalogues; our debt financing, including risk of default, loss and other restrictions placed on us; our ability to refinance maturing debt or to obtain new financing on attractive terms; future increases in interest rates; the availability of cash flow from operating activities to fund distributions; our investment in equity and debt securities; our status as a REIT for federal tax purposes; and changes in federal, state or local tax law, including legislative, administrative, regulatory or other actions affecting REITs; and the outcome of legal proceedings.
The following discussion and analysis relates to the three and six months ended June 30, 2017 and 2016 and at June 30, 2017 and December 31, 2016 . You should read the following discussion and analysis along with our Consolidated Financial Statements and the related notes included in this Quarterly Report.


25

Overview
We have been implementing our strategy of focusing our portfolio as described in more detail below under "Highlights for the six months ended June 30, 2017 " and "Recent Activities." As of June 30, 2017 , our portfolio included 70 wholly owned multi-tenant retail assets with a gross leasable area ("GLA") of approximately 12.2 million square feet, one non-core office asset with a GLA of approximately 0.3 million square feet and investments in five unconsolidated entities. In addition, we manage 15 multi-tenant retail assets with a GLA of approximately 3.0 million square feet owned through an interest in one of our joint ventures, IAGM Retail Fund I, LLC ("IAGM"), an unconsolidated retail joint venture partnership between the Company as 55% owner and PGGM Private Real Estate Fund ("PGGM").
Our multi-tenant retail platform is defined as our 70 wholly owned multi-tenant retail assets and the 15 multi-tenant retail assets in our IAGM joint venture.
On a consolidated basis, substantially all of our income and related cash flows from operations for the six months ended June 30, 2017 were generated by collecting rental and other payments from our tenants, distributions from unconsolidated entities and dividend income earned from investments in marketable securities. Also, on a consolidated basis, substantially all of our expenses and related cash flows from operations for the six months ended June 30, 2017 relate to the operation of our assets and the interest expense on our mortgages. Our property operating expenses include, but are not limited to real estate taxes, regular repair and maintenance, utilities, and insurance (some of which are recoverable from our tenants).
In evaluating our financial condition and operating performance, management focuses on the following financial and non-financial indicators, discussed in further detail herein:
•
Funds From Operations ("FFO"), a supplemental non-GAAP measure to net income determined in accordance with GAAP;
•
Property net operating income ("NOI"), which excludes interest expense, depreciation and amortization, general and administrative expenses, net income of noncontrolling interest, and other investment income from corporate investments;
•
Modified NOI, which reflects the income from operations excluding lease termination income and GAAP rent adjustments (such as straight-line rent and above/below market lease amortization);
•
Cash flow from operations as determined in accordance with GAAP;
•
Economic and physical occupancy and rental rates;
•
Leasing activity and lease rollover;
•
Management of operating expenses;
•
Management of general and administrative expenses;
•
Debt maturities and leverage ratios; and
•
Liquidity levels.

26

Highlights for the six months ended June 30, 2017
Transactions and Capital Markets Highlights
Acquisitions and Dispositions
For the six months ended June 30, 2017 , we completed $389.2 million of real estate transactions, including the following:
•
Acquisition of three multi-tenant retail assets for an aggregate gross acquisition price of approximately $289.9 million (see Note 3. Acquired Properties, in the consolidated financial statements for details); and
•
Disposition of three multi-tenant retail assets for a gross disposition price of approximately $99.3 million (see Note 4. Disposed Properties, in the consolidated financial statements for details).
Joint Venture Activity
During the three and six months ended June 30, 2017 , we earned other fee income of $1.1 and $2.2 million , respectively, which are fees derived from property management, asset management, leasing commissions and other fees earned from providing services to IAGM Retail Fund I, LLC ("IAGM"), an unconsolidated retail joint venture partnership between the Company and PGGM Private Real Estate Fund ("PGGM").
Capital Markets
During the six months ended June 30, 2017 , we assumed debt of approximately $41.7 million associated with one of our completed acquisitions.
Recent Activities
Subsequent to June 30, 2017, we disposed of two multi-tenant retail assets, consisting of a combined 358,000 square feet, for a gross disposition price of $32.0 million .
Current Strategy and Outlook
As we continue to execute our retail strategy in 2017, our goal is to construct a portfolio with the right centers in the right markets driven by a simple, focused and disciplined capital allocation strategy. The right properties for InvenTrust include open-air grocery anchored and necessity-based power centers. While there has been recent news regarding the impact of e-commerce on retail performance and on the overall strength of bricks and mortar retail, our grocery-anchored community and neighborhood centers bring consumers to our well-located properties, while our larger-format necessity-based power center retailers continue to adapt their business models to embrace omni-channel retail and appeal to the consumer's continuing value focus. Additionally, there has recently been an upsurge in retail tenant bankruptcies and store closures. The impact of this to date on our portfolio has not been material and we believe that our strong locations will allow us to backfill most vacancies that occur though the re-leasing may be slower than previously.
The right markets for InvenTrust include growing Sunbelt markets, such as Dallas, Denver, Houston, Florida, Raleigh, Atlanta, suburban Washington D.C. and southern California. These markets all have above average population and employment growth, which we believe will lead to future rent increases and sustained occupancy at our properties in these regions. We see ongoing retailer demand for well-located grocery-anchored and power center assets in these markets, further supporting our Sunbelt market approach. With limited new development and controlled retailer expansion, we believe retail rental rates in our target markets will be stable.
We have also launched a coordinated program to increase rental income by maximizing re-development opportunities and identifying locations in our current retail portfolio where we can develop pad sites. In addition, we are working with our tenant partners to expand rentable square footage at select properties where demand warrants. The retail rental market continues to show modest improvement in our key markets and our leasing staff is capitalizing on this by leasing space at favorable rates, while establishing a more favorable tenant mix and identifying complementary uses to maximize tenant performance. Our property management team is focused on maintaining strong tenant relationships, controlling expenses, and providing an enhanced consumer shopping experience. We continue to implement a property branding program to leverage our market presence in our core markets. We have also implemented a sustainability program at our properties which includes trash recycling, water conservation and programs to reduce energy consumption and expenses.
Following our transition to self-management, we continue to make a significant commitment to enhancing our operational leadership team with key senior hires in most operational areas of the Company. In 2017, we continue to make meaningful

27

investments in technology, including enhancements to our data and reporting systems. We are in the final phase of implementing a robust data integrity process that will enhance our management reporting capabilities and operational decision making.
We recently hired senior staff with significant retail development experience. While we have begun a program maximizing redevelopment opportunities within our existing portfolio, these recent hires will also allow us to expand this program to pursue value add acquisition opportunities.
While our portfolio is geographically diverse, approximately 38% of our multi-tenant retail platform's GLA is located in Texas. Texas leads the nation in job creation and our properties are located in the top four Texas markets of Dallas, Austin, San Antonio and Houston. We continue to believe our Texas markets will provide growth opportunities for our platform.
We also continue to opportunistically sell assets in low growth markets or where the assets' values have been maximized. We currently operate in over 20 markets. However, as we continue to execute on our strategy, the number of our markets will decrease. This will serve to hone our strategy and provide capital that can be redeployed into our target retail markets.
Our disposition activity could continue to cause us to experience dilution in financial operating performance during the period we dispose of properties. We are redeploying sale proceeds with a disciplined approach into strategic retail assets and intend to continue to do so throughout 2017. We believe this strategy will enhance the overall value of our multi-tenant retail platform over time.
We believe that our debt maturities over the next five years are manageable, and while we anticipate interest rates will rise over the long term, we expect low interest rates to prevail through 2017. We will fund our distributions with cash flows from operations as well as from unconsolidated entities and a portion of the proceeds from our property sales.
As we execute on our retail strategy, our board has been and will continue evaluating our distribution rate and, if the board deems appropriate, adjust the rate to take into account our progress in refining and balancing our multi-tenant retail platform. Our board of directors approved an increase to our annual distribution rate effective for the quarterly distribution paid in April 2017.
We believe that the continuing refinement of our portfolio will position us for future success, maximize long-term value for stockholders, and put us in a position to evaluate and execute on strategic transactions aimed at achieving liquidity for our stockholders. While we believe in our ability to execute on our plan, the speed of completion of this refinement and tailoring is unclear and may be shortened or extended by external and macroeconomic factors including, among others, interest rate movements, national and global economic performance, impact of e-commerce on the retail industry and government policy changes.

28

Results of Operations
General
Consolidated Results of Operations
This section describes and compares our results of operations for the three and six months ended June 30, 2017 and 2016 . We generate most of our net income from property operations. In order to evaluate our overall portfolio, management analyzes the operating performance of all assets from period to period and assets we have owned and operated for the same period during each year. Investment properties owned for the entire three and six months ended June 30, 2017 and 2016 are referred to herein as "same-property". All dollar amounts shown in tables are stated in thousands unless otherwise noted (except per share amounts).  
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income from continuing operations
$
33,895

 
$
18,594

 
$
36,138

 
$
34,629

Net income (loss) from discontinued operations
25

 
145,106

 
(122
)
 
154,478

Net income
33,920

 
163,700

 
36,016

 
189,107

Net income per common share, from continuing operations,
basic and diluted
$
0.04

 
$
0.02

 
$
0.05

 
$
0.04

Net income per common share, from discontinued operations, basic and diluted
$
—

 
$
0.17

 
$
—

 
$
0.18

Our net income from continuing operations of $33.9 million during the three months ended June 30, 2017 was primarily a result of $61.6 million of operating income generated by our 70 wholly-owned multi-tenant retail assets owned as of June 30, 2017 , gains from the sale of two multi-tenant retail assets of $13.4 million , and realized gains from the sale of our marketable securities of $16.3 million . This income was offset by depreciation and amortization expense of $23.3 million , property operating expenses and real estate taxes of $17.3 million , general and administrative expenses of $11.9 million , and interest expense of $8.6 million .
Our net income from continuing operations of $36.1 million during the six months ended June 30, 2017 was primarily a result of $124.2 million of operating income generated by our 70 wholly-owned multi-tenant retail assets owned as of June 30, 2017 , gains from the sale of three multi-tenant retail assets of $14.4 million , and realized gains from the sale of our marketable securities of $30.9 million . This income was offset by depreciation and amortization of $46.8 million and a provision for asset impairment of $16.4 million recognized on three multi-tenant retail assets, property operating expenses and real estate taxes of $33.5 million , general and administrative expenses of $24.3 million , and interest expense of $16.9 million .
Our net income from continuing operations of $18.6 million during the three months ended June 30, 2016 was primarily a result of $61.6 million of operating income generated by our 62 wholly-owned multi-tenant retail assets owned as of June 30, 2016 and a gain on the sale of 13 multi-tenant retail assets of $52.4 million . This income was offset by a provision for asset impairment of $29.9 million recorded on one non-core office asset during the three months ended June 30, 2016 .
Our net income from continuing operations of $34.6 million during the six months ended June 30, 2016 was primarily a result of $122.4 million of operating income generated by our 62 wholly-owned multi-tenant retail assets owned as of June 30, 2016 and a gain on the sale of 18 multi-tenant retail assets of $76.4 million . This income was offset by a provision for asset impairment of $38.3 million recorded on two multi-tenant retail assets and one non-core office asset during the six months ended June 30, 2016 .
In addition, we recorded net income from discontinued operations of $145.1 and $154.5 million for the three and six months ended June 30, 2016 , respectively, related to assets included in the sale of University House and the spin-off of Highlands in 2016. This income was primarily the result of a gain of $225.3 million recognized on the sale of University House and was offset by a provision for asset impairment of $76.6 million recorded related to the Highlands spin-off.
A detailed discussion of our financial performance follows.

29

Operating Income and Expenses:
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
Increase (Decrease)
 
2017
 
2016
 
Increase (Decrease)
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Rental income
$
47,443

 
$
48,686

 
$
(1,243
)
 
$
96,089

 
$
96,458

 
$
(369
)
Tenant recovery income
14,188

 
12,920

 
1,268

 
28,076

 
25,950

 
2,126

Other property income
626

 
374

 
252

 
1,091

 
1,875

 
(784
)
Other fee income
1,102

 
988

 
114

 
2,194

 
2,082

 
112

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses
$
7,920

 
$
7,300

 
$
620

 
$
15,767

 
$
15,327

 
$
440

Real estate taxes
9,364

 
9,317

 
47

 
17,695

 
18,861

 
(1,166
)
Depreciation and amortization
23,333

 
22,542

 
791

 
46,778

 
43,291

 
3,487

Provision for asset impairment
—

 
29,931

 
(29,931
)
 
16,440

 
38,321

 
(21,881
)
General and administrative expenses
11,921

 
14,876

 
(2,955
)
 
24,260

 
28,257

 
(3,997
)
Rental, Tenant Recovery and Other Property Income and Operating Expenses
Rental income consists of basic monthly rent, straight-line rent adjustments, amortization of acquired above and below market leases and percentage rental income recorded pursuant to tenant leases. Tenant recovery income consists of reimbursements for real estate taxes, common area maintenance costs, management fees, and insurance costs. Other property income consists of lease termination fees and other miscellaneous property income. Property operating expenses consist of regular repair and maintenance, management fees, utilities, and insurance (some of which are recoverable from the tenant).
Operating income
•
Total operating income increased $0.4 million when comparing the three months ended June 30, 2017 to the same period in 2016 as a result of an increase in tenant recovery income of $1.3 million from eight assets acquired since June 30, 2016 and was offset by a decrease in rental income of approximately $1.2 million from the disposal of 14 assets that did not qualify as discontinued operations since June 30, 2016 . The eight assets acquired since June 30, 2016 are recognizing higher tenant recovery income compared to the 14 assets disposed of since June 30, 2016.
•
Total operating income increased $1.1 million when comparing the six months ended June 30, 2017 to the same period in 2016 primarily as a result of an increase in rental and tenant recovery income of $2.1 million from eight assets acquired since June 30, 2016 and was offset by a decrease in other property income of approximately $0.8 million , which was primarily a result of termination fee income of $0.8 million received during the six months ended June 30, 2016.
Property operating expenses
•
Property operating expenses and depreciation and amortization increased $1.4 million when comparing the three months ended June 30, 2017 to the same period in 2016 primarily as a result of an increase in property operating expenses of $1.4 million and an increase in depreciation and amortization of $3.9 million from eight assets acquired since June 30, 2016 . These increases were offset by a decrease in property operating expenses of $1.3 million and a decrease in depreciation and amortization expense of $2.3 million from the disposal of 14 assets that did not qualify as discontinued operations since June 30, 2016 .
•
Property operating expenses and depreciation and amortization increased $3.9 million when comparing the six months ended June 30, 2017 to the same period in 2016 as a result of an increase in property operating expenses of $2.4 million and an increase in depreciation and amortization of $8.1 million from eight assets acquired since June 30, 2016 and was offset by a decrease in property operating expenses of $3.3 million and a decrease in depreciation and amortization expense of $6.3 million from the disposal of 14 assets that did not qualify as discontinued operations since June 30, 2016 .

30

Real estate taxes
•
Real estate tax expense decreased $1.2 million when comparing the six months ended June 30, 2017 to the same period in 2016 primarily as a result of 14 assets disposed of since June 30, 2016 and eight assets acquired since June 30, 2016 .
Other fee income
Other fee income consists of income earned from property management, asset management, leasing commissions and other fees earned from providing services to our joint venture partnerships as shown in the following table.
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
Increase
(Decrease)
 
2017
 
2016
 
Increase (Decrease)
Property management fee
$
715

 
$
685

 
$
30

 
$
1,455

 
$
1,407

 
$
48

Asset management fee
303

 
303

 
—

 
607

 
607

 
—

Leasing commissions and other fees
84

 
—

 
84

 
132

 
67

 
65

Other fee income
$
1,102

 
$
988

 
$
114

 
$
2,194

 
$
2,081

 
$
113

Other fee income for the three and six months ended June 30, 2017 increased $0.1 and $0.1 million , respectively, compared to the same periods in 2016.
Provision for asset impairment
•
During the three months ended March 31, 2017, we identified certain assets which did have a reduction in the expected holding period and reviewed the probability of these assets' disposition. Our estimated fair value relating to the investment assets' impairment analysis was based on broker opinions of value and letters of intent. As a result, we recorded a provision for asset impairment of $16.4 million on three multi-tenant retail assets for the three months ended March 31, 2017.
•
During the three and six months ended June 30, 2016 , we identified certain assets which may have a reduction in the expected holding period and reviewed the probability of these assets' disposition. Our estimated fair value relating to the investment assets' impairment analysis was based on purchase contracts and ten-year discounted cash flow models. As a result, we recorded a provision for asset impairment of $29.9 million in continuing operations for the three months ended June 30, 2016 on one non-core asset based on a discounted cash flow analysis. In addition, the Company recorded a provision for asset impairment of $8.4 million on three multi-tenant retail assets based on purchase contracts for a total provision for asset impairment of $38.3 million for the six months ended June 30, 2016 .
General and administrative expenses
•
General and administrative expenses for the three and six months ended June 30, 2017 decreased $3.0 and $4.0 million , respectively, when compared to the same periods in 2016 as a result of being a more focused company with a smaller operating platform, as well as continued focus on reducing general and administrative expenses.

31

Non-Operating Income and Expenses:
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
Increase
(Decrease)
 
2017
 
2016
 
Increase
(Decrease)
Interest and dividend income
$
745

 
$
2,707

 
$
(1,962
)
 
$
2,915

 
$
5,409

 
$
(2,494
)
Gain on sale of investment properties
13,360

 
52,385

 
(39,025
)
 
14,381

 
76,411

 
(62,030
)
Gain (loss) on extinguishment of debt
882

 
(4,723
)
 
5,605

 
882

 
(5,672
)
 
6,554

Other (expense) income
(79
)
 
364

 
(443
)
 
(3,282
)
 
448

 
(3,730
)
Interest expense
(8,617
)
 
(13,873
)
 
(5,256
)
 
(16,871
)
 
(28,600
)
 
(11,729
)
Equity in earnings of unconsolidated entities
675

 
2,596

 
(1,921
)
 
1,247

 
3,890

 
(2,643
)
Marketable securities realized gain
16,339

 
73

 
16,266

 
30,869

 
628

 
30,241

Net income (loss) from discontinued operations
25

 
145,106

 
(145,081
)
 
(122
)
 
154,478

 
(154,600
)
Interest and dividend income
•
Interest and dividend income for the three and six months ended June 30, 2017 decreased $2.0 and $2.5 million , respectively, when compared to the same periods in 2016 as a result of increased sales of our marketable securities portfolio since June 30, 2016. Our investment in marketable securities has decreased approximately $160.8 million, from $192.3 million as of June 30, 2016 to $31.5 million as of June 30, 2017.
Gain on sale of investment properties
•
During the three and six months ended June 30, 2017 , we sold two and three multi-tenant retail assets, respectively, and recognized a gain on the sale of these assets of $13.4 and $14.4 million , respectively, as part of continuing operations.
•
During the three and six months ended June 30, 2016 , we sold 13 and 18 multi-tenant retail assets, respectively, and recognized a gain on the sale of these assets of $52.4 and $76.4 million , respectively, as part of continuing operations.
Gain (loss) on extinguishment of debt
•
During the three and six months ended June 30, 2017 , we surrendered one asset to the lender (in satisfaction of non-recourse debt). We recognized a gain on debt extinguishment of $0.9 million related to this transaction.
•
During the three and six months ended June 30, 2016 , we recognized a loss on extinguishment of debt of $4.7 and $5.7 million , respectively. These losses were a result of loan payoffs on ten dispositions and the payoff of debt on 11 other assets, including $4.5 million in prepayment penalties and $1.2 million in loan fee write offs.
Other (expense) income
•
Other (expense) income for the three and six months ended June 30, 2017 decreased $0.4 and $3.7 million , respectively, when compared to the same periods in 2016. We accrued for a potential loss contingency of $3.0 million as of June 30, 2017 on the consolidated balance sheet and the consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2017 . See "Note 12. Commitments and Contingencies" to our consolidated financial statements for additional information.
Interest expense
•
Interest expense for the three and six months ended June 30, 2017 decreased $5.3 and $11.7 million , respectively, when compared to the same periods in 2016. These decreases are primarily a result of the payoff of debt since June 30, 2016 of approximately $373.4 million, offset by new borrowings of approximately $192.8 million since June 30, 2016 , with an overall net decrease in debt of $177.6 million, from $947.7 million at June 30, 2016 to $770.1 million at June 30, 2017 .
Equity in earnings of unconsolidated entities
•
Equity in earnings of unconsolidated entities for the three and six months ended June 30, 2017 decreased $1.9 and $2.6 million , respectively, when compared to the same periods in 2016 as a result of a decrease of $0.8 million in equity recognized from one unconsolidated entity in 2017.

32

Marketable securities realized gain
•
Marketable securities realized gain for the three and six months ended June 30, 2017 increased $16.3 and $30.2 million , respectively, when compared to the same periods in 2016 as a result of increased sales of our marketable securities portfolio since June 30, 2016. Our investment in marketable securities has decreased approximately $160.8 million, from $192.3 million as of June 30, 2016 to $31.5 million as of June 30, 2017.
Net income (loss) from discontinued operations
•
Net income from discontinued operations for the three and six months ended June 30, 2016 included 17 student housing assets included in the University House sale on June 21, 2016, one unconsolidated student housing joint venture sold on February 25, 2016, l8 assets and four parcels of unimproved land included in the Highlands spin-off on April 28, 2016, one non-core asset sold in second quarter 2016 and one student housing asset sold in third quarter 2016 (which was not included as part of the sale of University House). Net income (loss) from discontinued operations for the three and six months ended June 30, 2017 included minor post-close activity.

33

Portfolio Performance
As of June 30, 2017 , our portfolio included 70 wholly owned multi-tenant retail assets with a GLA of 12.2 million square feet, one non-core office asset with a GLA of 0.3 million square feet and investments in five unconsolidated entities. In addition, we manage 15 multi-tenant retail assets with a GLA of 3.0 million square feet owned through a 55% interest in one of our joint ventures, IAGM. Our multi-tenant retail platform is defined as our 70 wholly owned multi-tenant retail assets and the 15 multi-tenant retail assets in IAGM, as described above, for a total of 85 multi-tenant retail assets with a total GLA of 15.2 million square feet.
Assets included in our multi-tenant retail platform are located in 18 states. Of our multi-tenant retail platform GLA, approximately 38.1% , 10.5% and 10.0% of our assets are located in Texas, North Carolina, and Florida, respectively. Our multi-tenant retail assets consist of community and neighborhood centers and power centers, which are defined as follows:
•
Community or neighborhood centers, which are generally open air and designed for tenants that offer a wide array of types of merchandise including groceries, apparel and other soft goods. Typically, community centers contain large anchor stores and a significant presence of national retail tenants. Our neighborhood shopping centers are generally smaller open air centers with a grocery store anchor and/or drugstore, and other small service type retailers.
•
Power centers are generally larger and consist of several anchors, such as discount department stores, off-price stores, specialty grocers, warehouse clubs or stores that offer a large selection of merchandise. Typically, the number of specialty tenants is limited and most are national or regional in scope.
We have not experienced bankruptcies or receivable write-offs in our multi-tenant retail portfolio that would have a material impact on our results of operations. Our retail business is not highly dependent on specific retailers or specific retail industries, nor is it subject to lease roll over concentration. We believe this minimizes risk to the portfolio from significant revenue variances over time.
A significant focus of our strategy will be to continue to maximize the performance of our multi-tenant retail platform by accretive acquisitions in key markets and select dispositions of assets that are in markets that we do not believe provide sufficient opportunities for growth. We will support our key market approach by leveraging our regional offices and further embedding leasing, development and operations staff in these respective markets. We believe this strategy will provide us with strong local market knowledge and enhanced tenant relationships.
Performance evaluation
The tables below summarize certain key operating performance measures for the six months ended June 30, 2017 and 2016. The rental rates shown are inclusive of rent abatements, lease inducements, ground rent income, and straight-line rent GAAP adjustments, and exclusive of tenant improvements and lease commissions.
The following table summarizes the GLA, economic occupancy and annualized base rent ("ABR") per square foot of the assets included in our multi-tenant retail platform as of June 30, 2017 and 2016.
 
Multi-tenant Retail Platform
June 30,
 
Wholly-owned Retail Assets
June 30,
 
IAGM Retail Assets (a)
June 30,
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
No. of assets
85
 
77
 
70
 
62
 
15
 
15
GLA (square feet)
15,182,109
 
13,950,290
 
12,204,807
 
10,978,116
 
2,977,302
 
2,972,174
Economic occupancy (b)
92.8%
 
93.8%
 
93.3%
 
94.1%
 
90.7%
 
92.9%
ABR per square foot (c)
$15.94
 
$15.26
 
$15.75
 
$14.96
 
$16.73
 
$16.36
(a)
Of the 15 assets owned through an interest in IAGM, one asset is under re-development and has been classified as unstabilized. This asset has been removed from the results shown for GLA, economic occupancy, and ABR per square foot. The asset is included in the property counts at June 30, 2017 and 2016.
(b)
Economic occupancy is defined as the percentage of total GLA for which a tenant is obligated to pay rent under the terms of its lease agreement, regardless of the actual use or occupancy by that tenant of the area being leased. Actual use may be less than economic square footage. Prior year economic occupancy excludes assets sold.
(c)
ABR is computed as revenue for the last month of the period multiplied by twelve months. ABR includes the effect of rent abatements, lease inducements, straight-line rent GAAP adjustments and ground rent income. ABR per square foot is computed as ABR divided by the total occupied square footage at the end of the period. Specialty leasing represents leases of less than one year in duration for inline space

34

and includes any term length for a common area space, and is excluded from the ABR and occupied square footage figures when computing the ABR per square foot. Prior year ABR per square foot excludes assets sold.
The following table summarizes the GLA, economic occupancy and ABR per square foot of the assets included in our multi-tenant retail platform by center type as of June 30, 2017 and 2016.
 
Power Centers
 
Multi-tenant Retail Platform
June 30,
 
Wholly-owned Retail Assets
June 30,
 
IAGM Retail Assets
June 30,
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
No. of assets
40
 
39
 
32
 
31
 
8
 
8
GLA (square feet)
10,276,807
 
9,726,951
 
8,567,101
 
8,022,500
 
1,709,706
 
1,704,451
Economic occupancy
92.7%
 
93.8%
 
93.3%
 
94.4%
 
89.9%
 
91.0%
ABR per square foot
$15.27
 
$14.81
 
$15.29
 
$14.82
 
$15.19
 
$14.74
 
Community and Neighborhood Centers
 
Multi-tenant Retail Platform
June 30,
 
Wholly-owned Retail Assets
June 30,
 
IAGM Retail Assets
June 30,
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
No. of assets
45
 
38
 
38
 
31
 
7
 
7
GLA (square feet)
4,905,302
 
4,223,339
 
3,637,706
 
2,955,616
 
1,267,596
 
1,267,723
Economic occupancy
93.0%
 
93.8%
 
93.5%
 
93.1%
 
91.7%
 
95.5%
ABR per square foot
$17.32
 
$16.30
 
$16.84
 
$15.36
 
$18.70
 
$18.44
The following table represents lease expirations for our multi-tenant retail platform as of June 30, 2017 .
Lease Expiration Year
 
No. of Expiring Leases
 
GLA of Expiring Leases (square feet)
 
ABR of Expiring Leases
 
Percent of
Total GLA
 
Percent of
Total ABR
 
Expiring ABR per sq. ft.
2017
 
100
 
313,955
 
$6,925
 
2.2%
 
3.1%
 
$22.06
2018
 
284
 
1,307,902
 
23,835
 
9.3%
 
10.7%
 
18.22
2019
 
316
 
2,171,029
 
33,062
 
15.4%
 
14.9%
 
15.23
2020
 
286
 
1,423,498
 
25,618
 
10.2%
 
11.5%
 
18.00
2021
 
275
 
1,893,928
 
31,013
 
13.5%
 
13.9%
 
16.37
2022
 
271
 
2,054,979
 
33,444
 
14.6%
 
15.0%
 
16.27
2023
 
72
 
972,478
 
13,380
 
6.9%
 
6.0%
 
13.76
2024
 
77
 
989,411
 
13,413
 
7.0%
 
6.0%
 
13.56
2025
 
75
 
873,820
 
12,483
 
6.2%
 
5.6%
 
14.29
2026
 
69
 
396,083
 
7,349
 
2.8%
 
3.3%
 
18.55
Month to Month
 
36
 
95,532
 
1,765
 
0.7%
 
0.8%
 
18.48
Thereafter
 
94
 
1,494,596
 
20,381
 
10.6%
 
9.1%
 
13.64
Specialty Leasing (a)
 
190
 
88,216
 
246
 
0.6%
 
0.1%
 
2.79
 
 
2,145
 
14,075,427
 
$222,914
 
100.0%
 
100.0%
 
$15.84
(a)
Specialty leasing represents leases of less than one year in duration for inline space and includes any term length for a common area space. Examples include retail holiday stores, storage, and short-term clothing and furniture consignment stores. Specialty leasing includes, but is not limited to, any term length for a common area space, including but not limited to: tent sales, automated teller machines, cell towers, billboards, and vending.
We believe the percentage of leases expiring annually over the next five years may allow us to capture an appropriate portion of potential market rent increases while allowing us to manage any potential re-leasing risk. For purposes of preparing the table, we have not assumed that un-exercised contractual lease options contained in certain of our leases will in fact be exercised.

35

The following table represents lease spread metrics for leases that commenced during the six months ended June 30, 2017 compared to expiring leases for the same or previous tenant in the same unit for assets in our multi-tenant retail platform.
 
No. of Leases Commenced as of June 30, 2017
 
GLA SF
 
New Contractual Rent ($PSF) (b)
 
Prior Contractual Rent ($PSF) (b)
 
% Change over Prior Contract Rent (b)
 
Weighted Average Lease Term
(Years)
 
Tenant Improve-ment Allowance ($PSF)
 
Lease Com-missions ($PSF)
All tenants
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable Renewal Leases (a)
158
 
1,150,219
 
$16.35
 
$15.76
 
3.7%
 
4.95
 
$0.25
 
$0.05
Comparable New Leases (a)
15
 
35,585
 
24.05
 
19.37
 
24.2%
 
8.1
 
16.42
 
7.00
Non-Comparable Renewal and New Leases
26
 
94,642
 
17.19
 
 N/A
 
N/A
 
6.71
 
26.89
 
6.58
Total
199
 
1,280,446
 
$16.58
 
$15.86
 
4.5%
 
5.17
 
$2.67
 
$0.73
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anchor Tenants (leases over 10,000 square feet)
 
 
 
 
 
 
 
 
 
 
Comparable Renewal Leases (a)
29
 
800,922
 
$12.80
 
$12.51
 
2.3%
 
4.83
 
$0.02
 
$—
Comparable New Leases (a)
1
 
11,210
 
$19.25
 
$10.50
 
83.3%
 
10.24
 
$20.00
 
$9.83
Non-Comparable Renewal and New Leases
2
 
33,845
 
$8.06
 
 N/A
 
N/A
 
6.83
 
$46.47
 
$10.70
Total
32
 
845,977
 
$12.88
 
$12.48
 
3.2%
 
4.98
 
$2.14
 
$0.56
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-anchor tenants (leases under 10,000 square feet)
 
 
 
 
 
 
 
 
 
 
Comparable Renewal Leases (a)
129
 
349,297
 
$24.48
 
$23.21
 
5.5%
 
5.22
 
$0.78
 
$0.18
Comparable New Leases (a)
14
 
24,375
 
$26.25
 
$23.44
 
12.0%
 
7.12
 
$14.78
 
$5.70
Non-Comparable Renewal and New Leases
24
 
60,797
 
$22.28
 
 N/A
 
N/A
 
6.64
 
$15.98
 
$4.28
Total
167
 
434,469
 
$24.60
 
$23.22
 
5.9%
 
5.53
 
$3.69
 
$1.06
(a)
Comparable lease is defined as a lease that meets all of the following criteria: same unit, square footage of unit remains unchanged or within 10% of prior unit square footage, consistent rent structure, and, for new leases, leased within one year of the prior tenant.
(b)
Non-comparable leases are not included in totals.
We had GLA totaling 1,453,982 square feet set to expire in the first six months of 2017, of which 1,208,111 was rolled over. This achieved a retention rate of 83.0% .

36

Evaluation of Performance on a Same-Property Basis
We evaluate the performance of our wholly-owned multi-tenant retail assets and non-core office asset primarily based on net operating income and modified net operating income. Modified net operating income reflects the income from operations excluding lease termination income and GAAP rent adjustments (such as straight-line rent and above/below market lease amortization).
In order to evaluate our overall portfolio, management analyzes the operating performance of our assets on a same-property basis, which is defined as those assets that we have owned and operated and are fully operational for the entirety of both periods being compared. A total of 61 and 59 of our multi-tenant retail assets met our same-property criteria for the three and six months ended June 30, 2017 and 2016 , respectively. This same-property analysis allows management to monitor the operations of our existing assets for comparable periods while excluding the impact of our acquisitions and dispositions.
Other investments for the three and six months ended June 30, 2017 and 2016 includes assets that did not meet our same-property criteria, our one non-core office asset, assets acquired in 2017 and 2016, and assets sold in 2017 and 2016.
The following table represents the reconciliation of net income, the most directly comparable GAAP measure, to total modified NOI for the three and six months ended June 30, 2017 and 2016.
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

Net loss (income) from discontinued operations
(25
)
 
(145,106
)
 
122

 
(154,478
)
Net income from continuing operations
33,895

 
18,594

 
36,138

 
34,629

Other fee income
(1,102
)
 
(988
)
 
(2,194
)
 
(2,082
)
Provision for asset impairment
—

 
29,931

 
16,440

 
38,321

Equity in earnings of unconsolidated entities
(675
)
 
(2,596
)
 
(1,247
)
 
(3,890
)
Other income and expenses (a)
(22,399
)
 
(36,996
)
 
(28,381
)
 
(48,431
)
Non-allocated expenses (b)
35,254

 
37,418

 
71,038

 
71,548

Net operating income
44,973

 
45,363

 
91,794

 
90,095

Adjustments to modified net operating income
 
 
 
 
 
 
 
GAAP rental adjustments
(2,078
)
 
(1,359
)
 
(4,030
)
 
(1,852
)
Termination fee income
(102
)
 
(482
)
 
(108
)
 
(1,342
)
Total modified net operating income
$
42,793

 
$
43,522

 
$
87,656

 
$
86,901

(a)
Other income and expenses consist of interest and dividend income, gain on sale of investment properties, loss on extinguishment of debt, other (expense) income, interest expense, marketable securities realized gain and income tax expense.
(b)
Non-allocated expenses consist of general and administrative expenses and depreciation and amortization.

37

The following table represents the reconciliation of total modified net operating income to net operating income, on a same-property basis, for our wholly owned assets, for the three and six months ended June 30, 2017 and 2016 .
 
Three months ended June 30,
 
Six months ended June 30,

2017
 
2016
 
Increase
(Decrease)
 
Variance
 
2017
 
2016
 
Increase
(Decrease)
 
Variance
No. of same-property assets
61
 
61
 
 
 
 
 
59
 
59
 
 
 
 
Operating income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
$
37,695

 
$
37,415

 
$
280

 
0.7%
 
$
68,977

 
$
67,920

 
$
1,057

 
1.6%
Tenant recovery income
11,671

 
10,877

 
794

 
7.3%
 
20,179

 
20,055

 
124

 
0.6%
Other property income
553

 
380

 
173

 
45.5%
 
882

 
782

 
100

 
12.8%
Total income
49,919

 
48,672

 
1,247

 
2.6%
 
90,038

 
88,757

 
1,281

 
1.4%
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 


 

Property operating expenses
6,107

 
5,581

 
526

 
9.4%
 
11,133

 
10,535

 
598

 
5.7%
Real estate taxes
7,769

 
7,056

 
713

 
10.1%
 
12,462

 
13,065

 
(603
)
 
(4.6)%
Total operating expenses
13,876

 
12,637

 
1,239

 
9.8%
 
23,595

 
23,600

 
(5
)
 
0.0%
Same-property modified NOI
36,043

 
36,035

 
8

 
0.0%
 
66,443

 
65,157

 
1,286

 
2.0%
Other investments modified NOI (a)
6,750

 
7,487

 
(737
)
 
(9.8)%
 
21,213

 
21,744

 
(531
)
 
(2.4)%
Total modified NOI
42,793

 
43,522

 
(729
)
 
(1.7)%
 
87,656

 
86,901

 
755

 
0.9%
Adjustments
 
 
 
 
 
 
 
 
 
 
 
 


 

GAAP rental adjustments
2,078

 
1,359

 
719

 
52.9%
 
4,030

 
1,852

 
2,178

 
117.6%
Termination fee income
102

 
482

 
(380
)
 
(78.8)%
 
108

 
1,342

 
(1,234
)
 
(92.0)%
Total adjustments
2,180

 
1,841

 
339

 
18.4%
 
4,138

 
3,194

 
944

 
29.6%
Net operating income
$
44,973

 
$
45,363

 
$
(390
)
 
(0.9)%
 
$
91,794

 
$
90,095

 
$
1,699

 
1.9%
(a)
Other investments includes assets that did not meet our same-property criteria, as defined earlier, including assets acquired and disposed during 2017 and 2016, and the non-core office asset.
The following tables summarize the GLA, economic occupancy and ABR per square foot of the assets included in our multi-tenant retail platform on a same-property basis as of June 30, 2017 and 2016.
 
Same-Property Results for the three months ended June 30
 
Multi-tenant Retail Platform
June 30,
 
Wholly-owned Retail Assets
June 30,
 
IAGM Retail Assets
June 30,
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
No. of same-property assets
75
 
75
 
61
 
61
 
14
 
14
GLA (square feet)
13,938,240
 
13,763,256
 
10,960,938
 
10,791,081
 
2,977,302
 
2,972,175
Economic occupancy
92.6%
 
93.8%
 
93.2%
 
94.0%
 
90.7%
 
92.9%
ABR per square foot
$15.36
 
$15.15
 
$15.00
 
$14.82
 
$16.73
 
$13.36
 
Same-Property Results for the six months ended June 30
 
Multi-tenant Retail Platform
June 30,
 
Wholly-owned Retail Assets
June 30,
 
IAGM Retail Assets
June 30,
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
No. of same-property assets
73
 
73
 
59
 
59
 
14
 
14
GLA (square feet)
13,037,922
 
13,027,697
 
10,060,620
 
10,055,522
 
2,977,302
 
2,972,175
Economic occupancy
92.3%
 
93.7%
 
92.8%
 
93.9%
 
90.7%
 
92.9%
ABR per square foot
$15.23
 
$14.94
 
$14.80
 
$14.52
 
$16.73
 
$16.36
Same-property modified net operating income
Same-property modified net operating income remained unchanged when comparing the three months ended June 30, 2017 to the same period in 2016 as a result of an increase in real estate taxes, which was offset by an increase in recovery income.
Same-property modified net operating income increased $1.3 million , or 2.0% , when comparing the six months ended June 30, 2017 to the same period in 2016 as a result of an increase in base rent.

38

Total modified net operating income
Total modified net operating income decreased $0.7 million , or 1.7% , when comparing the three months ended June 30, 2017 to the same period in 2016 as a result of a decrease in occupancy at our one non-core office asset.
Total modified net operating income increased $0.8 million , or 0.9% when comparing the six months ended June 30, 2017 to the same period in 2016 as a result of an increase in base rent and was offset by a decrease in occupancy at our one non-core office asset.
Liquidity and Capital Resources
As of June 30, 2017 , we had $366.2 million of cash and cash equivalents. We continually evaluate the economic and credit environment and its impact on our business. We believe we are appropriately positioned to have significant liquidity to continue executing our strategy.
Strategic transactions have reduced our cash flows from operations. On April 28, 2016, we completed the spin-off of Highlands, which held substantially all of the remaining assets included in our non-core segment. In addition, on June 21, 2016, we sold our student housing platform, University House.
Following the completion of the Highlands spin-off and the sale of University House, our objectives are to maximize revenue generated by our existing multi-tenant retail assets, to further enhance the value of our retail assets to produce attractive current yield and long-term risk-adjusted returns to our stockholders and to generate sustainable and predictable cash flow from our operations to distribute to our stockholders. We believe the repositioning and growing of our retail assets will increase our operating cash flows.
Our principal demands for funds have been and will continue to be:
•
to pay our operating expenses;
•
to make distributions to our stockholders;
•
to service or pay down our debt;
•
to fund capital expenditures and leasing related costs;
•
to invest in properties and portfolios of properties; and
•
to fund development or re-development investments.
Generally, our cash needs have been and will be funded from:
•
cash flows from our investment properties;
•
income earned on our investment in marketable securities;
•
distributions from our joint venture investments;
•
proceeds from sales of properties and marketable securities;
•
proceeds from borrowings on properties; and
•
proceeds from our line of credit.
We may, from time to time, seek to retire or purchase additional amounts of our outstanding equity and/or debt securities through cash purchases or exchanges for other securities. Such purchases or exchanges, if any, will depend on our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.
Distributions
We declared cash distributions to our stockholders during the period from January 1, 2017 to June 30, 2017 totaling $26.9 million . During the six months ended June 30, 2017 , we paid cash distributions of $26.5 million .
As we execute on our retail strategy, our board has been and expects to continue evaluating our distribution rate on a quarterly basis. See "Current Strategy and Outlook" for more information regarding our retail strategy.

39

Borrowings
The following schedule shows the scheduled maturities and principal amortization of the Company's indebtedness as of June 30, 2017 for the remainder of 2017 and each of the next four years and thereafter. The table does not reflect the impact of debt activity that occurred subsequent to June 30, 2017 .
Mortgages payable, maturities
The following table shows the scheduled maturities and principal amortization of the Company's mortgages payable as of June 30, 2017 , for the remainder of 2017, and each of the next four years and thereafter.
 
Maturities during the year ending December 31,
 
 
 
 
 
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
Mortgages payable
$
136,363

 
$
59,575

 
$
—

 
$
41,000

 
$
12,957

 
$
223,451

 
$
473,346

Credit agreements, maturities
As of June 30, 2017 , the Company had the following credit agreements outstanding:
 
Aggregate
Principal Balance
 
Interest
Rate
 
Maturity
Date
Unsecured term loan credit facility, 5 year - swapped to fixed rate
$
90,000

 
1.3510%
 
1/15/2021
Unsecured term loan credit facility, 5 year - swapped to fixed rate
60,000

 
1.3525%
 
1/15/2021
Unsecured term loan credit facility, 5 year - variable rate
50,000

 
2.3505%
 
1/15/2021
Unsecured term loan credit facility, 7 year - variable rate
100,000

 
2.6505%
 
11/5/2022
Total unsecured term loans
$
300,000

 
 
 
 
Summary of Cash Flows
 
Six months ended June 30,
 
Change
 
2017
 
2016
 
Cash provided by operating activities
$
60,259

 
$
85,493

 
$
(25,234
)
Cash (used in) provided by investing activities
(65,808
)
 
1,016,610

 
(1,082,418
)
Cash used in financing activities
(25,464
)
 
(492,471
)
 
467,007

(Decrease) increase in cash and cash equivalents
(31,013
)
 
609,632

 
(640,645
)
Cash and cash equivalents, at beginning of period
397,250

 
203,285

 
193,965

Cash and cash equivalents, at end of period
$
366,237

 
$
812,917

 
$
(446,680
)
Operating activities
Cash provided by operating activities of $60.3 million and $85.5 million for the six months ended June 30, 2017 and 2016, respectively, was generated primarily from operating income from property operations and interest and dividends. Cash provided by operating activities decreased $25.2 million when comparing the six months ended June 30, 2017 to the same period in 2016 as a result of the sale of 14 multi-tenant retail assets since June 30, 2016 , the spin-off of Highlands on April 28, 2016, and the sale of University House on June 21, 2016. During the six months ended June 30, 2016 , cash provided by operating activities from assets included in the spin-off of Highlands and the sale of University House was $32.6 million . These decreases were partially offset by the acquisition of eight multi-tenant retail assets since June 30, 2016 .
Investing activities
Cash used in investing activities of $65.8 million for the six months ended June 30, 2017 was primarily the result of cash used in three asset acquisitions of $230.6 million and was offset by proceeds from the sale of marketable securities of $136.7 million and proceeds from the sale of three multi-tenant retail assets of $56.9 million .
Cash provided by investing activities of $1,016.6 million for the six months ended June 30, 2016 was primarily the result of cash provided from the sale of 18 multi-tenant retail assets of $1,389.8 million , offset by the cash used in development projects of $50.4 million . During the six months ended June 30, 2016 , cash provided by investing activities from assets included in the spin-off of Highlands and the sale of University House was $1,194.4 million .

40

Financing activities
Cash used in financing activities of $25.5 million for the six months ended June 30, 2017 was primarily the result of cash used to pay distributions of $26.5 million . Cash used in financing activities of $492.5 million for the six months ended June 30, 2016 was primarily the result of debt payoffs of $704.7 million and was offset by proceeds from debt of $299.6 million .
We consider all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements with a maturity of three months or less, at the date of purchase, to be cash equivalents. We maintain our cash and cash equivalents at financial institutions. The combined account balances at one or more institutions periodically exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage.
Contractual Obligations
We have debt obligations related to our mortgage loans, credit facility, term loan, and interest rate swap obligations as described in "Note 7. Debt" in the Consolidated Financial Statements. In addition, we have one multi-tenant retail asset subject to a long term ground lease where a third party owns the underlying land and has leased it to us for our use. Our unconsolidated entities have third party mortgage debt of $311.5 million as of June 30, 2017 , of which approximately $23.0 million is recourse to the Company, as described in "Note 5. Investment in Partially Owned Entities" in the Consolidated Financial Statements. It is anticipated that our unconsolidated entities will be able to repay or refinance all of their debt on a timely basis.
The table below presents, on a consolidated basis, obligations and commitments to make future payments under debt obligations and lease agreements as of June 30, 2017 . The table excludes recorded debt premiums and discounts that are not obligations.
 
Payments due by year ending December 31,
 
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
Long term debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fixed rate debt (a)
$
136,363

 
$
59,575

 
$
—

 
$
41,000

 
$
162,957

 
$
223,451

 
$
623,346

Total variable rate debt
—

 
—

 
—

 
—

 
50,000

 
100,000

 
150,000

Interest
13,057

 
23,235

 
22,077

 
21,060

 
14,722

 
18,085

 
112,236

Total long term debt
149,420

 
82,810

 
22,077

 
62,060

 
227,679

 
341,536

 
885,582

Operating lease obligations (b)
643

 
650

 
635

 
540

 
458

 
2,453

 
5,379

Grand total
$
150,063

 
$
83,460

 
$
22,712

 
$
62,600

 
$
228,137

 
$
343,989

 
$
890,961

(a)
Includes $150.0 million of variable rate unsecured term loan credit facility debt that has been swapped to a fixed rate as of June 30, 2017 .
(b)
Includes a long term ground lease on one underlying multi-tenant retail asset and leases on corporate office space.
Off Balance Sheet Arrangements
We do not have material off-balance sheet arrangements, financings, or relationships with unconsolidated entities not previously disclosed.

41

Selected Financial Data
The following table shows our consolidated selected financial data relating to our consolidated historical financial condition and results of operations. Such selected data should be read in conjunction with "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes appearing elsewhere in this report (amounts are stated in thousands, except share and per share amounts).
 
As of
 
June 30, 2017
 
December 31, 2016
Balance Sheet Data:
 
 
 
Total assets
$
2,797,844

 
$
2,786,754

Debt, net
$
770,072

 
$
730,605

 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Operating Data:
 
 
 
 
 
 
 
Total income
$
63,359

 
$
62,968

 
$
127,450

 
$
126,365

Total interest and dividend income
$
745

 
$
2,707

 
$
2,915

 
$
5,409

Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

Net income per common share, basic and diluted
$
0.04

 
$
0.19

 
$
0.05

 
$
0.22

Common Stock Distributions:
 
 
 
 
 
 
 
Distributions declared to common stockholders
$
13,440

 
$
28,019

 
$
26,876

 
$
56,042

Distributions paid to common stockholders
$
13,436

 
$
28,022

 
$
26,477

 
$
56,035

Distributions declared per weighted average common share
$
0.02

 
$
0.03

 
$
0.03

 
$
0.06

Distributions paid per weighted average
common share
$
0.02

 
$
0.03

 
$
0.03

 
$
0.06

Supplemental Non-GAAP Measures:
 
 
 
 
 
 
 
Funds from operations (a)
$
46,767

 
$
30,789

 
$
90,551

 
$
81,698

Modified net operating income (b)
$
42,793

 
$
43,522

 
$
87,656

 
$
86,901

Cash Flow Data:
 
 
 
 
 
 
 
Cash provided by operating activities
$
33,768

 
$
49,352

 
$
60,259

 
$
85,493

Cash provided by (used in) investing activities
$
102,744

 
$
942,803

 
$
(65,808
)
 
$
1,016,610

Cash used in financing activities
$
(13,518
)
 
$
(614,890
)
 
$
(25,464
)
 
$
(492,471
)
Other Information:
 
 
 
 
 
 
 
Weighted average number of common shares outstanding, basic and diluted
773,381,165

 
862,205,672

 
773,348,893

 
862,205,672

(a)
The National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a standard known as FFO, or Funds from Operations. Our FFO, which is based on the NAREIT definition, is net income (loss) in accordance with GAAP excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable property, after adjustments for unconsolidated partnerships and joint ventures in which we hold an interest, and extraordinary items. We have adopted the NAREIT definition in our calculation of NAREIT FFO Applicable to Common Shares as management considers FFO a widely accepted and appropriate measure of performance for REITs.
In calculating FFO, impairment charges of depreciable real estate assets are added back even though the impairment charge may represent a permanent decline in value due to decreased operating performance of the applicable property. Further, because gains and losses from sales of property are excluded from FFO, it is consistent and appropriate that impairments, which are often early recognition of losses on prospective sales of property, also be excluded. If evidence exists that a loss reflected in the investment of an unconsolidated entity is due to the write-down of depreciable real estate assets, our share of these impairment charges is added back to FFO. The methodology is consistent with the concept of excluding impairment charges of depreciable assets or early recognition of losses on sale of depreciable real estate assets held by the Company.

42

The Company believes that FFO is a useful measure of properties' operating performance because FFO excludes non-cash items which are deducted in determining GAAP net income. FFO is neither intended to be an alternative to "net income" nor to "cash flows from operating activities" as determined by GAAP. Other REITs may use alternative methodologies for calculating similarly titled measures, which may not be comparable to the Company's calculation of FFO Applicable to Common Shares. FFO is calculated as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Funds from Operations:
 
 
 
 
 
 
 
 
Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

Add:
Depreciation and amortization related to investment properties
22,675

 
34,210

 
45,538

 
72,751

 
Our share of depreciation and amortization related to investment in unconsolidated entities
3,532

 
4,036

 
6,938

 
8,067

 
Provision for asset impairment, continuing operations
—

 
29,931

 
16,440

 
38,321

 
Provision for asset impairment, discontinued operations
—

 
76,583

 
—

 
76,583

 
 
 
 
 
 
 
 
 
Less:
Gains from property sales and transfer of assets
13,360

 
277,671

 
14,381

 
301,697

 
Gains from sales of investment in unconsolidated entities, discontinued operations
—

 
—

 
—

 
1,434

 
FFO Applicable to Common Shares
$
46,767

 
$
30,789

 
$
90,551

 
$
81,698

The table below reflects additional information related to certain items that significantly impact the comparability of our FFO and net income (loss) or significant non-cash items from the periods presented. We have included this table because these items are not included in our definition of FFO, but we believe these items provide useful supplemental information that may facilitate comparisons of our ongoing operating performance between periods, as well as between REITs that include similar disclosure. We believe these items help our investors assess the sustainability of our operating performance exclusive of non-cash revenues or expenses, or the impacts of certain transactions that are not related to the ongoing profitability of our portfolio of properties.

Three months ended June 30,
 
Six months ended June 30,

2017
 
2016
 
2017
 
2016
Amortization of above and below market leases
$
(1,323
)
 
$
(1,198
)
 
$
(2,964
)

$
(1,751
)
Amortization of mark to market debt discounts
(50
)
 
1,102

 
(16
)

2,360

Loss on extinguishment of debt, continuing operations
(882
)
 
4,723

 
(882
)
 
5,672

Loss on extinguishment of debt, discontinued operations
—

 
2,208

 
—

 
2,208

Straight-line rental income adjustment
(783
)
 
41

 
(1,125
)

809

Acquisition costs expensed
3

 
642

 
6


864

Stock-based compensation expense
1,701

 
899

 
2,709

 
1,336


43

(b)
The Company believes modified net operating income provides comparability across periods when evaluating financial condition and operating performance. Modified net operating income reflects the income from operations excluding lease termination income and GAAP rent adjustments (such as straight line rent and above/below market lease amortization). Net operating income excludes interest expense, depreciation and amortization, general and administrative expenses, net income of noncontrolling interest, and other investment income from corporate investments.
The following table reflects a reconciliation of modified net operating income to the net income attributable to the Company on the consolidated statements of operations and comprehensive income (loss) :
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

 
 
 
 
 
 
 
 
Reconciliation of modified NOI to Net income
 
 
 
 
 
 
 
Modified NOI
42,793

 
43,522

 
87,656

 
86,901

Adjustments to modified NOI (i)
2,180

 
1,841

 
4,138

 
3,194

Net operating income
44,973

 
45,363

 
91,794

 
90,095

Other fee income
1,102

 
988

 
2,194

 
2,082

Non-allocated expenses (ii)
(35,254
)
 
(37,418
)
 
(71,038
)
 
(71,548
)
Other income and expenses (iii)
22,399

 
36,996

 
28,381

 
48,431

Equity in earnings of unconsolidated entities
675

 
2,596

 
1,247

 
3,890

Provision for asset impairment
—

 
(29,931
)
 
(16,440
)
 
(38,321
)
Net income from continuing operations
33,895

 
18,594

 
36,138

 
34,629

Net income (loss) from discontinued operations
25

 
145,106

 
(122
)
 
154,478

Net income
$
33,920

 
$
163,700

 
$
36,016

 
$
189,107

(i)
Includes adjustments for lease termination fee income and GAAP rent adjustments (such as straight-line rent and above/below market lease amortization).
(ii)
Non-allocated expenses consist of general and administrative expenses and depreciation and amortization.
(iii)
Other income and expenses consist of interest and dividend income, gain on sale of investment properties, loss on extinguishment of debt, other (expenses) income, interest expense, marketable securities realized gain and income tax expense.

44

Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to market risk associated with changes in interest rates both in terms of variable-rate debt and the price of new fixed-rate debt upon maturity of existing debt and for acquisitions. We are also subject to market risk associated with our marketable securities investments.
Interest Rate Risk
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. As of June 30, 2017 , our debt included an outstanding variable rate term loan of $150.0 million, which has been swapped to a fixed rate as of June 30, 2017 . If market rates of interest on all of the floating rate debt as of June 30, 2017 permanently increased by 1%, the annual increase in interest expense on the floating rate debt would decrease future earnings and cash flows by $1.5 million. If market rates of interest on all of the floating rate debt as of June 30, 2017 permanently decreased by 1%, the annual decrease in interest expense on the floating rate debt would increase future earnings and cash flows by $1.5 million.
With regard to our 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 of 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. We continue to assess retaining cash flows that may assist us in maintaining a flexible low debt balance sheet and diminishing the impact of upcoming debt maturities.
We monitor interest rate risk using a variety of techniques, including periodically evaluating fixed interest rate quotes on all variable rate debt and the costs associated with converting the debt to fixed rate debt. Also, existing fixed and variable rate loans that are scheduled to mature in the next year or two are evaluated for possible early refinancing and/or extension due to consideration given to current interest rates. Refer to our Borrowings table in Item 2 of this Quarterly Report for mortgage debt principal amounts and weighted average interest rates by year and expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.
We may use financial instruments to hedge exposures to changes in interest rates on loans. To the extent we do, we are exposed to credit risk and market risk. 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, it does not pose credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with what we believe are high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates.
As of June 30, 2017 , we had $150.0 million of variable rate debt on the 5-year tranche of our unsecured term loan credit facility with interest based on LIBOR that has been swapped to fixed rate debt through two interest rate swaps. The following table summarizes those interest rate swap contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value as of
Variable Rate Debt Swapped to Fixed Rate
 
Effective
Date
 
Termination Date
 
Bank Pays
Variable Rate of
 
InvenTrust Pays Fixed Rate of
 
Notional Amount
as of
June 30, 2017
 
June 30, 2017
 
December 31, 2016
5 year - fixed portion
 
12/10/2015
 
12/1/2019
 
1-Month LIBOR + 1.3%
 
1.3510%
 
$
90,000

 
$
480

 
$
294

5 year - fixed portion
 
12/10/2015
 
12/1/2019
 
1-Month LIBOR + 1.3%
 
1.3525%
 
60,000

 
322

 
193

Total 5 year, fixed portion
 
 
 
 
 
 
 
 
 
$
150,000

 
$
802

 
$
487

We have, and may in the future enter into, derivative positions that do not qualify for hedge accounting treatment. The gains or losses resulting from marking-to-market these derivatives at the end of each reporting period are recognized as an increase or decrease in interest expense on our consolidated statements of operations and comprehensive income (loss) .
Equity Price Risk
We are exposed to equity price risk as a result of our investments in marketable equity securities. We incurred no impairments on our investment in marketable securities for the six months ended June 30, 2017 and 2016 . We believe that our investments will continue to generate dividend income and we could continue to recognize gains on sale. However, due to general economic

45

and credit market uncertainties it is difficult to project how our marketable equity securities portfolio will perform in 2017 and beyond.
Although it is difficult to project what factors may affect the prices of marketable securities and how much the effect might be, the table below illustrates the impact of what a 10% increase and decrease in the price of the equities portfolio held by us would have as of June 30, 2017 .
 
Cost
 
Fair Value
 
Fair Value after Hypothetical 10% Decrease in Market Value
 
Fair Value after Hypothetical 10%
Increase in Market Value
Equity securities
$21,173
 
$30,968
 
$27,871
 
$34,065
Item 4. Controls and Procedures
Disclosure Controls and Procedures
As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), our management, including our principal executive officer and our principal financial officer evaluated, as of June 30, 2017 , the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and Rule 15d-15(e) of the Exchange Act. Based on that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures, as of June 30, 2017 , were effective at a reasonable assurance level for the purpose of ensuring that information required to be disclosed by us in this Quarterly Report is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including our principal executive officer and our principal financial officer as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There has been no change in the Company's internal control over financial reporting during the quarter ended June 30, 2017 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
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 these 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 adverse effect on our financial condition, results of operations or liquidity. In addition, please see the legal proceedings disclosed in repsonse to Item I to Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in response to Item 1A. to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 .
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits
The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto and are incorporated herein by reference.

46

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.

InvenTrust Properties Corp.

Date:
August 10, 2017
By:
/s/ Thomas P. McGuinness
 
 
Name:
Thomas P. McGuinness
Title:
President and Chief Executive Officer (Principal Executive Officer)
 
 
 
 
Date:
August 10, 2017
By:
/s/ Michael E. Podboy
 
 
Name:
Michael E. Podboy
Title:
Executive Vice President, Chief Financial Officer, Chief Investment Officer and Treasurer (Principal Financial Officer)

47


EXHIBIT NO.
 
DESCRIPTION
 
 
 
31.1*
 
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
 
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
 
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
 
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
10.1*
 
Director Compensation Program dated May 1, 2017
10.2*
 
Form of Time-Based Restricted Stock Unit Agreement
10.3*
 
Form of Director Restricted Stock Unit Agreement for 2017 Annual Pro Rated Awards
10.4*
 
Form of Director Restricted Stock Unit Agreement
101
 
The following financial information from our Quarterly Report on Form 10-Q for the period ended June 30, 2017, filed with the SEC on August 10, 2017, is formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive (Loss) Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows (v) Notes to Consolidated Financial Statements (tagged as blocks of text).


*    Filed as part of this Quarterly Report on Form 10-Q.

48
Exhibit 10.1

 
INVENTRUST PROPERTIES CORP.
DIRECTOR COMPENSATION PROGRAM
 
This InvenTrust Properties Corp. (the “ Company ”) Director Compensation Program (this “ Program ”) for non-employee directors of the Company (the “ Directors ”) shall be effective as of May 1, 2017 (the “ Effective Date ”).
 
Cash Compensation
 
Annual retainers will be paid in the following amounts to Directors:
 
Director:
 

$65,000

 
Chair of Audit Committee:
 

$23,000

 
Chair of Compensation Committee:
 

$17,500

 
Chair of Nominating and Governance Committee:
 

$12,000

 
Chair of Executive Committee:
 

$15,000

 
Non-Chair Audit Committee Member:
 

$10,000

 
Non-Chair Compensation Committee Member:
 

$7,500

 
Non-Chair Nominating and Governance Committee Member:
 

$5,000

 
Non-Chair Executive Committee Member:
 

$6,000

 
Non-Executive Chairman (additional retainer):
 

$30,000

 
 
All annual retainers will be paid in cash quarterly in arrears promptly following the end of the applicable calendar quarter, but in no event more than thirty (30) days after the end of such quarter.
 
Equity Compensation
   
Annual Grant:
Each individual who is initially elected as a Director on the date of an annual meeting of the Company’s stockholders and each Director who is serving on the Board as of the date of each annual meeting of the Company’s stockholders and who is re-elected as a Director at such annual meeting shall, on the date of such annual meeting, automatically be granted restricted stock units (“ RSUs ”) with a value of $110,000 (the “ Annual Grant ”), and a tandem dividend equivalent award with respect thereto. Each Annual Grant shall vest in full on the earlier of (i) the date of the next annual meeting of the Company’s stockholders following the grant date or (ii) the first anniversary of the grant date, subject to the Director’s continued service on the vesting date.
 
Business Expenses
 
The Company shall reimburse each Director for reasonable business expenses incurred by such Director in connection with his or her services to the Company (including, without limitation, expenses for continuing education programs), pursuant to the Company’s standard expense reimbursement policy as in effect from time to time.
 
Miscellaneous
 
For purposes of determining the number of RSUs subject to each Annual Grant, the dollar value of such grant shall be divided by the fair market value of a share of common stock of the Company on the date of such grant, as determined by reference to the most recently approved Company estimated per share valuation as of the date of such grant, in each case rounded up to the nearest whole RSU.
 
The terms of each award of RSUs (including, without limitation, the form of payment under such award) and dividend equivalents shall be set forth in an award agreement in a form prescribed by the Board, and RSUs and dividend equivalents granted under this Program shall be subject to the terms of such award agreement and the applicable Company equity incentive plan under which the award is granted.
 
Effectiveness, Amendment, Modification and Termination

 This Program shall become effective as of the Effective Date, and as of the Effective Date shall replace and supersede all previous director compensation programs of the Company. This Program may be amended, modified or terminated by the Board at any time and from time to time its sole discretion.

 

EXHIBIT 10.2

TIME-BASED RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “ Agreement ”), dated as of <GRANT_DT> (the “ Grant Date ”), is made by and between InvenTrust Properties Corp., a Maryland corporation (the “ Company ”), and <PARTC_NAME> (the “ Participant ”).
WHEREAS , the Company maintains the InvenTrust Properties Corp. 2015 Incentive Award Plan (as amended from time to time, the “ Plan ”);
WHEREAS , the Company wishes to carry out the Plan (the terms of which are hereby incorporated by reference and made a part of this Agreement);
WHEREAS , Section 9.4 of the Plan provides for the issuance of Restricted Stock Units (“ RSUs ”);
WHEREAS , Section 9.2 of the Plan provides for the issuance of Dividend Equivalent awards; and
WHEREAS , the Administrator has determined that it would be to the advantage and in the best interest of the Company to issue the RSUs and Dividend Equivalents provided for herein to the Participant as an inducement to enter into or remain in the service of the Company and its Subsidiaries, and as an additional incentive during such service, and has advised the Company thereof.
NOW, THEREFORE , in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. Issuance of Award of RSUs . Pursuant to the Plan, in consideration of the Participant’s agreement to provide services to the Company and its Subsidiaries, the Company hereby issues to the Participant an award of <RSUS_GRANTED> RSUs. Each RSU that vests shall represent the right to receive payment, in accordance with this Agreement, of one share of the Company’s common stock, par value $0.001 per share (the “ Common Stock ”). Unless and until an RSU vests, the Participant will have no right to payment in respect of any such RSU. Prior to actual payment in respect of any vested RSU, such RSU will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.
2. Dividend Equivalents . Each RSU granted hereunder is hereby granted in tandem with a corresponding Dividend Equivalent, which Dividend Equivalent shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the RSU to which it corresponds. With respect to each dividend for which the record date occurs on or after the Grant Date and on or prior to the earlier to occur of the payment or forfeiture of the RSU underlying such Dividend Equivalent, each outstanding Dividend Equivalent shall entitle the Participant to receive payments equal to dividends paid, if any, on the Shares underlying the RSU to which such Dividend Equivalent relates, payable in the same form and amounts as dividends paid to each holder of a Share. Each such payment shall be made no later than sixty (60) days following the applicable dividend payment date. Dividend Equivalents shall not entitle the Participant to any payments relating to dividends for which the record date occurs after the earlier to occur of the payment or forfeiture of the RSU underlying such Dividend Equivalent. In addition, notwithstanding the foregoing, in the event of a Termination of Service for any reason, the Participant shall not be entitled to any Dividend Equivalent payments with respect to dividends declared but not paid prior to the date of such termination on Shares underlying RSUs which are unvested as of the date of such termination (after taking into account any accelerated vesting that occurs in connection with such termination). Dividend Equivalents and any amounts that may become distributable in respect thereof shall be treated separately from the RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Code.
3. Definitions . For purposes of this Agreement, the following terms shall have the meanings set forth below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
(a) “ Cause ” means “Cause” as defined in the Participant’s applicable employment or similar agreement with the Company if such an agreement exists and contains a definition of Cause, or, if no such agreement exists or such agreement does not contain a definition of Cause, then Cause means (i) the willful fraud or material dishonesty of the Participant in connection with the performance of the Participant’s duties to the Company or any Subsidiary; (ii) the deliberate or intentional failure by the Participant to substantially perform the Participant’s duties to the Company or any Subsidiary (other than the Participant’s failure resulting from his or her incapacity due to physical or mental illness) after a written notice is delivered to the Participant by the Company, which demand specifically identifies the manner in which the Company believes the Participant has not substantially performed his or her duties; (iii) willful misconduct by the Participant that is materially detrimental to the reputation, goodwill or business operations of the Company or any Subsidiary; (iv) willful disclosure of the Company’s or any Subsidiary’s confidential information or trade secrets; (v) a material breach of the terms of this Agreement or the Plan; or (vi) the conviction of, or plea of nolo contendere to a charge of commission of a felony or crime of moral turpitude by the Participant. For purposes of this definition, no act or failure to act will be considered “willful,” unless it is done or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best interests of the Company or any Subsidiary.

(b) “ Disability ” means a disability that qualifies or, had the Participant been a participant, would qualify the Participant to receive long-term disability payments under the Company’s group long-term disability insurance plan or program, as it may be amended from time to time.

(c) “ Good Reason ” means “Good Reason” as defined in the Participant’s applicable employment or similar agreement with the Company if such an agreement exists and contains a definition of Good Reason, or, if no such agreement exists or such agreement does not contain a definition of Good Reason, then Good Reason means the occurrence of any of the following events or conditions without the Participant’s written consent:
(i)
a material diminution in the Participant’s authority, duties or responsibilities;
(ii)
a material diminution in the Participant’s base salary, target annual bonus level, [or target annual equity-based compensation opportunity,] in each case, as in effect on the date of this Agreement and as may be increased from time to time; and
(iii)
the Participant being required to relocate his or her principal place of employment with the Company or a Subsidiary (as applicable) more than 50 miles from his or her principal place of employment immediately prior to the occurrence of the event constituting Good Reason.
A termination of employment by the Participant shall not be deemed to be for Good Reason unless (A) the Participant gives the Company written notice describing the event or events which are the basis for such termination within sixty (60) days after the event or events occur, (B) such grounds for termination (if susceptible to correction) are not corrected by the Company within thirty (30) days of the Company’s receipt of such notice (“ Correction Period ”), and (C) the Participant terminates his or her employment no later than thirty (30) days following the Correction Period.
(d) “ Qualifying Termination ” means a Termination of Service by reason of (i) the Participant’s death, (ii) a termination by the Company or any Subsidiary due to the Participant’s Disability, or (iii) a termination by the Company or any Subsidiary other than for Cause or by the Participant for Good Reason, in either case, on the date of, or during the twenty-four (24) month period following, a Change in Control.

(e) “ Service Provider ” means an Employee, Consultant or member of the Board, as applicable.

4. RSUs and Dividend Equivalents Subject to the Plan; Ownership and Transfer Restrictions .
(a)      The RSUs and Dividend Equivalents are subject to the terms, definitions and provisions of the Plan, which is incorporated herein by reference, including, without limitation, the restrictions on transfer set forth in Section 10.3 of the Plan and the REIT restrictions set forth in Section 12.7 of the Plan.
(b)      Without limiting the foregoing, the RSUs and Common Stock issuable with respect thereto shall be subject to the restrictions on ownership and transfer set forth in the charter of the Company, as amended and supplemented from time to time.
5. Vesting . Subject to Section 6 below, the RSUs will vest and become nonforfeitable in accordance with and subject to the time vesting schedule set forth on Exhibit A attached hereto, subject to the Participant’s continued status as a Service Provider on each applicable vesting date.
6. Effect of Termination of Service .
(a)      Termination of Service . Subject to Section 6(b) below, in the event of the Participant’s Termination of Service for any reason, any and all RSUs that have not vested as of the date of such Termination of Service (after taking into account any accelerated vesting that occurs in connection with such termination) will automatically and without further action be cancelled and forfeited without payment of any consideration therefor, and the Participant shall have no further right to or interest in such RSUs. No RSUs which have not vested as of the date of the Participant’s Termination of Service shall thereafter become vested.
(b)      Qualifying Termination . In the event that the Participant incurs a Qualifying Termination, the RSUs will vest in full and become nonforfeitable upon such Qualifying Termination.
7. Payment . Payments in respect of any RSUs that vest in accordance herewith shall be made to the Participant (or in the event of the Participant’s death, to his or her estate) in whole Shares, and any fractional Share will be rounded as determined by the Company; provided, however , that in no event shall the aggregate number of RSUs that vest or become payable hereunder exceed the total number of RSUs set forth in Section 1 of this Agreement. The Company shall make such payments as soon as practicable after the applicable vesting date, but in any event within sixty (60) days after such vesting date.
8. Restrictions on New RSUs or Shares . In the event that the RSUs or the Shares underlying the RSUs are changed into or exchanged for a different number or kind of securities of the Company or of another corporation or other entity by reason of merger, consolidation, recapitalization, reclassification, stock split, stock dividend or combination of shares, such new or additional or different securities which are issued upon conversion of or in exchange or substitution for RSUs or the Shares underlying the RSUs which are then subject to vesting shall be subject to the same vesting conditions as such RSUs or Shares, as applicable, unless the Administrator provides for the vesting of the RSUs or the Shares underlying the RSUs, as applicable.
9. Conditions to Issuance of Shares . Shares issued as payment for the RSUs will be issued out of the Company’s authorized but unissued Shares. Upon issuance, such Shares shall be fully paid and nonassessable. The Shares issued pursuant to this Agreement shall be held in book-entry form and no certificates shall be issued therefor. In addition to the other requirements set forth herein, the Shares issued as payment for the RSUs shall be issued only upon the fulfillment of all of the following conditions:
(a)      In the event that the Common Stock is listed on an established securities exchange, the admission of such Shares to listing on such exchange;
(b)      The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable;
(c)      The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;
(d)      The lapse of such reasonable period of time as the Administrator may from time to time establish for reasons of administrative convenience; and
(e)      The receipt by the Company of full payment for any applicable withholding or other employment tax or required payments with respect to any such Shares to the Company with respect to the issuance or vesting of such Shares.
In the event that the Company delays a distribution or payment in settlement of RSUs because it reasonably determines that the issuance of Shares in settlement of RSUs will violate federal securities laws or other applicable law, such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii). The Company shall not delay any payment if such delay will result in a violation of Section 409A of the Code.
10. Rights as Stockholder . Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant or any person claiming under or through the Participant.
11. Tax Withholding . The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require the Participant to remit to such entity, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents. The Administrator may in its discretion and in satisfaction of the foregoing requirement or in satisfaction of such additional withholding obligations as the Participant may have elected, allow the Participant to elect to have the Company or the Subsidiary (as applicable) withhold Shares otherwise issuable under such award (or allow the return of Shares) having a Fair Market Value equal to the sums to be withheld. Notwithstanding any other provision of the Plan or this Agreement, the number of Shares which may be withheld with respect to the issuance, vesting or payment of the RSUs in order to satisfy the Participant’s income and payroll tax liabilities with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents shall be limited to the number of shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum statutory withholding rates in the Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.
12. Remedies . The Participant shall be liable to the Company for all costs and damages, including incidental and consequential damages, resulting from a disposition of the RSUs which is in violation of the provisions of this Agreement. Without limiting the generality of the foregoing, the Participant agrees that the Company shall be entitled to obtain specific performance of the obligations of the Participant under this Agreement and immediate injunctive relief in the event any action or proceeding is brought in equity to enforce the same. The Participant will not urge as a defense that there is an adequate remedy at law.

13. Restrictions on Public Sale by the Participant . To the extent not inconsistent with applicable law, the Participant agrees not to effect any sale or distribution of the RSUs or the Shares underlying the RSUs or any similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during the fourteen (14) days prior to, and during the up to 90-day period beginning on, the date of the pricing of any public or private debt or equity securities offering by the Company (except as part of such offering), if and to the extent requested in writing by the Company in the case of a non-underwritten public or private offering or if and to the extent requested in writing by the managing underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be) and consented to by the Company, which consent may be given or withheld in the Company’s sole and absolute discretion, in the case of an underwritten public or private offering (such agreement to be in the form of a lock-up agreement provided by the Company, managing underwriter or underwriters, or initial purchaser or initial purchasers, as the case may be).

14. Conformity to Securities Laws . The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all applicable federal and state laws, rules and regulations (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 of the Exchange Act) and to such approvals by any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan, this Agreement and the RSUs shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

15. Code Section 409A . To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this Agreement. Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date of this Agreement, the Company determines that the RSUs may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the effective date of this Agreement ), the Company may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect ), or take any other actions, that the Company determines are necessary or appropriate to (a) exempt the RSUs from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the RSUs, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however , that this Section 15 shall not create any obligation on the part of the Company or any Subsidiary to adopt any such amendment, policy or procedure or take any such other action. For purposes of Section 409A of the Code, any right to a series of payments pursuant to this Agreement shall be treated as a right to a series of separate payments.

16. No Right to Continued Service . Nothing in this Agreement shall confer upon the Participant any right to continue as a Service Provider of the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company or any Subsidiary, which rights are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without cause.
17. Miscellaneous .

(a)      Incorporation of the Plan . This Agreement is made under and subject to and governed by all of the terms and conditions of the Plan. In the event of any discrepancy or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control. By signing this Agreement, the Participant confirms that he or she has received access to a copy of the Plan and has had an opportunity to review the contents thereof.

(b)      Clawback . This award, the RSUs and the Shares issuable with respect to the RSUs shall be subject to any clawback or recoupment policy currently in effect or as may be adopted by the Company, as may be amended from time to time.

(c)      Successors and Assigns . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and assigns of the parties hereto, including, without limitation, any business entity that succeeds to the business of the Company.

(d)      Entire Agreement; Amendments and Waivers. This Agreement, together with the Plan, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. In the event that the provisions of such other agreement conflict or are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall control. Except as set forth in Section 15 above, this Agreement may not be amended except in an instrument in writing signed on behalf of each of the parties hereto and approved by the Administrator. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

(e)      Severability . If for any reason one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.

(f)      Titles . The titles, captions or headings of the Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

(g)      Counterparts . This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile (including, without limitation, transfer by .pdf), and each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.

(h)      Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland applicable to contracts entered into and wholly to be performed within the State of Maryland by Maryland residents, without regard to any otherwise governing principles of conflicts of law that would choose the law of any state other than the State of Maryland.

(i)      Notices . Any notice to be given by the Participant under the terms of this Agreement shall be addressed to the Legal Department of the Company at the Company’s address set forth in Exhibit A attached hereto. Any notice to be given to the Participant shall be addressed to him or her at the Participant’s then current address on the books and records of the Company. By a notice given pursuant to this Section 17(i), either party may hereafter designate a different address for notices to be given to him or her. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 17(i) (and the Company shall be entitled to rely on any such notice provided to it that it in good faith believes to be true and correct, with no duty of inquiry). Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed as set forth above or upon confirmation of delivery by a nationally recognized overnight delivery service.


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


INVENTRUST PROPERTIES CORP.,
a Maryland corporation



By: __________________________________
Name:    _______________________________
Title: _________________________________


The Participant hereby accepts and agrees to be bound by all of the terms and conditions of this Agreement.

____________________________
<PARTC_NAME>


Exhibit A
Vesting Schedule and Notice Address
Vesting Commencement Date : [ ______________]

Vesting Schedule

Vesting Dates
(Anniversaries of Vesting Commencement Date)*
 
Percentage of Total Award Vesting
First Anniversary
 
33%
Second Anniversary
 
33%
Third Anniversary
 
34%

* In the event that any vesting date is not a regular business day, then the vesting date shall instead be the last business day immediately preceding such date.

Company Address

2809 Butterfield Road
Suite 200
Oak Brook, IL 60523

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Exhibit 10.3

DIRECTOR RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “ Agreement ”), dated as of May 1, 2017 (the “ Grant Date ”), is made by and between InvenTrust Properties Corp., a Maryland corporation (the “ Company ”), and <PARTC_NAME> (the “ Participant ”).
WHEREAS , the Participant serves as a non-employee director on the Board of Directors of the Company (a “ Non-Employee Director ”);
WHEREAS , the Company maintains the InvenTrust Properties Corp. 2015 Incentive Award Plan (as amended from time to time, the “ Plan ”);
WHEREAS , the Company wishes to carry out the Plan (the terms of which are hereby incorporated by reference and made a part of this Agreement);
WHEREAS , Section 9.4 of the Plan provides for the issuance of Restricted Stock Units (“ RSUs ”);
WHEREAS , Section 9.2 of the Plan provides for the issuance of Dividend Equivalent awards; and
WHEREAS , the Administrator has determined that it would be to the advantage and in the best interest of the Company to issue the RSUs and Dividend Equivalents provided for herein to the Participant as an inducement to enter into or remain in the service of the Company, and as an additional incentive during such service, and has advised the Company thereof.
NOW, THEREFORE , in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. Issuance of Award of RSUs . Pursuant to the Plan, in consideration of the Participant’s agreement to provide services to the Company, the Company hereby issues to the Participant an award of [_____] RSUs. Each RSU that vests shall represent the right to receive payment, in accordance with this Agreement, of one share of the Company’s common stock, par value $0.001 per share (the “ Common Stock ”) or the Fair Market Value thereof, as set forth herein. Unless and until an RSU vests, the Participant will have no right to payment in respect of any such RSU. Prior to actual payment in respect of any vested RSU, such RSU will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.
2. Dividend Equivalents . Each RSU granted hereunder is hereby granted in tandem with a corresponding Dividend Equivalent, which Dividend Equivalent shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the RSU to which it corresponds. With respect to each dividend for which the record date occurs on or after the Vesting Commencement Date specified in Exhibit A attached hereto and on or prior to the earlier to occur of the payment or forfeiture of the RSU underlying such Dividend Equivalent, each outstanding Dividend Equivalent shall entitle the Participant to receive payments equal to dividends paid, if any, on the Shares underlying the RSU to which such Dividend Equivalent relates, payable in the same form and amounts as dividends paid to each holder of a Share. Each such payment shall be made no later than sixty (60) days following the later of the Grant Date or the applicable dividend payment date. Dividend Equivalents shall not entitle the Participant to any payments relating to dividends for which the record date occurs after the earlier to occur of the payment or forfeiture of the RSU underlying such Dividend Equivalent. In addition, notwithstanding the foregoing, in the event of a Termination of Service for any reason, the Participant shall not be entitled to any Dividend Equivalent payments with respect to dividends declared but not paid prior to the date of such termination on Shares underlying RSUs which are unvested as of the date of such termination (after taking into account any accelerated vesting that occurs in connection with such termination). Dividend Equivalents and any amounts that may become distributable in respect thereof shall be treated separately from the RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Code.
3. Definitions . For purposes of this Agreement, the following terms shall have the meanings set forth below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
(a) “ Disability ” means a disability that would qualify the Participant to receive long-term disability payments under the Company’s group long-term disability insurance plan or program, as it may be amended from time to time, had the Participant been a participant in such plan or program.

(b) “ Service Provider ” means an Employee, Consultant or member of the Board, as applicable.

4. RSUs and Dividend Equivalents Subject to the Plan; Ownership and Transfer Restrictions .
(a)      The RSUs and Dividend Equivalents are subject to the terms, definitions and provisions of the Plan, which is incorporated herein by reference, including, without limitation, the restrictions on transfer set forth in Section 10.3 of the Plan and the REIT restrictions set forth in Section 12.7 of the Plan.
(b)      Without limiting the foregoing, the RSUs and Common Stock issuable with respect thereto shall be subject to the restrictions on ownership and transfer set forth in the charter of the Company, as amended and supplemented from time to time.
5. Vesting .
(a)      Time Vesting . Subject to Sections 5(b) and 6 below, the RSUs will vest and become nonforfeitable in accordance with and subject to the vesting schedule set forth on Exhibit A attached hereto, subject to the Participant’s continued status as a Service Provider on the applicable vesting date.
(b)      Change in Control . Notwithstanding the foregoing, in the event that a Change in Control occurs and the Participant has not incurred a Termination of Service prior to such Change in Control, the RSUs will vest in full and become nonforfeitable immediately prior to such Change in Control.  
6. Effect of Termination of Service .
(a)      Termination of Service . Except as may otherwise be determined by the Administrator, and subject to Section 6(b) below, in the event of the Participant’s Termination of Service for any reason, any and all RSUs that have not vested as of the date of such Termination of Service (after taking into account any accelerated vesting that occurs in connection with such termination) will automatically and without further action be cancelled and forfeited without payment of any consideration therefor, and the Participant shall have no further right to or interest in such RSUs. No RSUs which have not vested as of the date of the Participant’s Termination of Service shall thereafter become vested.
(b)      Termination Due to Death or Disability . In the event of the Participant’s Termination of Service due to the Participant’s death or Disability, the RSUs will vest in full and become nonforfeitable upon such Termination of Service.
7. Payment . Payment in respect of seventy-five percent (75%) of the RSUs that vest in accordance herewith shall be made to the Participant (or in the event of the Participant’s death, to his or her estate) in whole Shares, and payment in respect of twenty-five percent (25%) of the RSUs that vest in accordance herewith shall be made to the Participant (or in the event of the Participant’s death, to his or her estate) in cash; provided, however , that the Administrator may, in its discretion, instead provide for the payment of up to fifty-five percent (55%) of the RSUs that vest in accordance herewith to the Participant (or in the event of the Participant’s death, to his or her estate) in cash, and the remaining portion of such RSUs in whole Shares. Payments made in Shares shall be made by the Company in the form of whole shares of Common Stock, and any fractional share shall be distributed in cash in an amount equal to the value of such fractional share determined based on the Fair Market Value as of the date immediately prior to such distribution. With respect to the cash-settled RSUs, the amount payable in cash for each such vested RSU shall be equal to the Fair Market Value of a Share as of the date immediately prior to such payment. The Company shall make all such payments within sixty (60) days after such vesting date, provided that, in the event of vesting upon a Change in Control under Section 5(b) above, such payment shall be made or deemed made immediately preceding and effective upon the occurrence of such Change in Control.
8. Restrictions on New RSUs or Shares . In the event that the RSUs or the Shares underlying the RSUs are changed into or exchanged for a different number or kind of securities of the Company or of another corporation or other entity by reason of merger, consolidation, recapitalization, reclassification, stock split, stock dividend or combination of shares, such new or additional or different securities which are issued upon conversion of or in exchange or substitution for RSUs or the Shares underlying the RSUs which are then subject to vesting shall be subject to the same vesting conditions as such RSUs or Shares, as applicable, unless the Administrator provides for the vesting of the RSUs or the Shares underlying the RSUs, as applicable.
9. Conditions to Issuance of Shares . Shares issued as payment for the RSUs will be issued out of the Company’s authorized but unissued Shares. Upon issuance, such Shares shall be fully paid and nonassessable. The Shares issued pursuant to this Agreement shall be held in book-entry form and no certificates shall be issued therefor. In addition to the other requirements set forth herein, the Shares issued as payment for the RSUs shall be issued only upon the fulfillment of all of the following conditions:
(a)      In the event that the Common Stock is listed on an established securities exchange, the admission of such Shares to listing on such exchange;
(b)      The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable;
(c)      The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;
(d)      The lapse of such reasonable period of time as the Administrator may from time to time establish for reasons of administrative convenience; and
(e)      The receipt by the Company of full payment for any applicable withholding or other employment tax or required payments with respect to any such Shares to the Company with respect to the issuance or vesting of such Shares.
In the event that the Company delays a distribution or payment in settlement of RSUs because it reasonably determines that the issuance of Shares in settlement of RSUs will violate federal securities laws or other applicable law, such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii). The Company shall not delay any payment if such delay will result in a violation of Section 409A of the Code.
10. Rights as Stockholder . Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant or any person claiming under or through the Participant.
11. Tax Withholding . The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require the Participant to remit to such entity, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents. The Administrator may in its discretion and in satisfaction of the foregoing requirement or in satisfaction of such additional withholding obligations as the Participant may have elected, allow the Participant to elect to have the Company or the Subsidiary (as applicable) withhold Shares otherwise issuable under such award (or allow the return of Shares) having a Fair Market Value equal to the sums to be withheld. Notwithstanding any other provision of the Plan or this Agreement, the number of Shares which may be withheld with respect to the issuance, vesting or payment of the RSUs in order to satisfy the Participant’s income and payroll tax liabilities with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents shall be limited to the number of shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum statutory withholding rates in the Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.
12. Remedies . The Participant shall be liable to the Company for all costs and damages, including incidental and consequential damages, resulting from a disposition of the RSUs which is in violation of the provisions of this Agreement. Without limiting the generality of the foregoing, the Participant agrees that the Company shall be entitled to obtain specific performance of the obligations of the Participant under this Agreement and immediate injunctive relief in the event any action or proceeding is brought in equity to enforce the same. The Participant will not urge as a defense that there is an adequate remedy at law.

13. Restrictions on Public Sale by the Participant . To the extent not inconsistent with applicable law, the Participant agrees not to effect any sale or distribution of the RSUs or the Shares underlying the RSUs or any similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during the fourteen (14) days prior to, and during the up to 90-day period beginning on, the date of the pricing of any public or private debt or equity securities offering by the Company (except as part of such offering), if and to the extent requested in writing by the Company in the case of a non-underwritten public or private offering or if and to the extent requested in writing by the managing underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be) and consented to by the Company, which consent may be given or withheld in the Company’s sole and absolute discretion, in the case of an underwritten public or private offering (such agreement to be in the form of a lock-up agreement provided by the Company, managing underwriter or underwriters, or initial purchaser or initial purchasers, as the case may be).

14. Conformity to Securities Laws . The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all applicable federal and state laws, rules and regulations (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 of the Exchange Act) and to such approvals by any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan, this Agreement and the RSUs shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

15. Code Section 409A . To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this Agreement. Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date of this Agreement, the Company determines that the RSUs may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the effective date of this Agreement ), the Company may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect ), or take any other actions, that the Company determines are necessary or appropriate to (a) exempt the RSUs from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the RSUs, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however , that this Section 15 shall not create any obligation on the part of the Company or any Subsidiary to adopt any such amendment, policy or procedure or take any such other action. For purposes of Section 409A of the Code, any right to a series of payments pursuant to this Agreement shall be treated as a right to a series of separate payments.

16. No Right to Continued Service . Nothing in this Agreement shall confer upon the Participant any right to continue as a Service Provider of the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company or any Subsidiary, which rights are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without cause.

17. Miscellaneous .

(a)      Incorporation of the Plan . This Agreement is made under and subject to and governed by all of the terms and conditions of the Plan. In the event of any discrepancy or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control. By signing this Agreement, the Participant confirms that he or she has received access to a copy of the Plan and has had an opportunity to review the contents thereof.

(b)      Successors and Assigns . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and assigns of the parties hereto, including, without limitation, any business entity that succeeds to the business of the Company.

(c)      Entire Agreement; Amendments and Waivers. This Agreement, together with the Plan, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. In the event that the provisions of such other agreement conflict or are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall control. Except as set forth in Section 15 above, this Agreement may not be amended except in an instrument in writing signed on behalf of each of the parties hereto and approved by the Administrator. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

(d)      Severability . If for any reason one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.

(e)      Titles . The titles, captions or headings of the Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

(f)      Counterparts . This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile (including, without limitation, transfer by .pdf), and each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.

(g)      Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland applicable to contracts entered into and wholly to be performed within the State of Maryland by Maryland residents, without regard to any otherwise governing principles of conflicts of law that would choose the law of any state other than the State of Maryland.

(h)      Notices . Any notice to be given by the Participant under the terms of this Agreement shall be addressed to the Legal Department of the Company at the Company’s address set forth in Exhibit A attached hereto. Any notice to be given to the Participant shall be addressed to him or her at the Participant’s then current address on the books and records of the Company. By a notice given pursuant to this Section 17(h), either party may hereafter designate a different address for notices to be given to him or her. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 17(h) (and the Company shall be entitled to rely on any such notice provided to it that it in good faith believes to be true and correct, with no duty of inquiry). Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed as set forth above or upon confirmation of delivery by a nationally recognized overnight delivery service.


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


INVENTRUST PROPERTIES CORP.,
a Maryland corporation



By: __________________________________
Name:    _______________________________
Title: _________________________________


The Participant hereby accepts and agrees to be bound by all of the terms and conditions of this Agreement.

____________________________
<PARTC_NAME>


Exhibit A
Vesting Schedule and Notice Address
Vesting Commencement Date : May 1, 2017

Vesting Schedule : The RSUs shall vest in full on June 1, 2017

Company Address

2809 Butterfield Road
Suite 200
Oak Brook, IL 60523

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Exhibit 10.4

TIME-BASED RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “ Agreement ”), dated as of May 1, 2017 (the “ Grant Date ”), is made by and between InvenTrust Properties Corp., a Maryland corporation (the “ Company ”), and <PARTC_NAME> (the “ Participant ”).
WHEREAS , the Company maintains the InvenTrust Properties Corp. 2015 Incentive Award Plan (as amended from time to time, the “ Plan ”);
WHEREAS , the Company wishes to carry out the Plan (the terms of which are hereby incorporated by reference and made a part of this Agreement);
WHEREAS , Section 9.4 of the Plan provides for the issuance of Restricted Stock Units (“ RSUs ”);
WHEREAS , Section 9.2 of the Plan provides for the issuance of Dividend Equivalent awards; and
WHEREAS , the Administrator has determined that it would be to the advantage and in the best interest of the Company to issue the RSUs and Dividend Equivalents provided for herein to the Participant as an inducement to enter into or remain in the service of the Company and its Subsidiaries, and as an additional incentive during such service, and has advised the Company thereof.
NOW, THEREFORE , in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. Issuance of Award of RSUs . Pursuant to the Plan, in consideration of the Participant’s agreement to provide services to the Company and its Subsidiaries, the Company hereby issues to the Participant an award of <RSUS_GRANTED> RSUs. Each RSU that vests shall represent the right to receive payment, in accordance with this Agreement, of one share of the Company’s common stock, par value $0.001 per share (the “ Common Stock ”). Unless and until an RSU vests, the Participant will have no right to payment in respect of any such RSU. Prior to actual payment in respect of any vested RSU, such RSU will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.
2. Dividend Equivalents . Each RSU granted hereunder is hereby granted in tandem with a corresponding Dividend Equivalent, which Dividend Equivalent shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the RSU to which it corresponds. With respect to each dividend for which the record date occurs on or after the Grant Date and on or prior to the earlier to occur of the payment or forfeiture of the RSU underlying such Dividend Equivalent, each outstanding Dividend Equivalent shall entitle the Participant to receive payments equal to dividends paid, if any, on the Shares underlying the RSU to which such Dividend Equivalent relates, payable in the same form and amounts as dividends paid to each holder of a Share. Each such payment shall be made no later than sixty (60) days following the applicable dividend payment date. Dividend Equivalents shall not entitle the Participant to any payments relating to dividends for which the record date occurs after the earlier to occur of the payment or forfeiture of the RSU underlying such Dividend Equivalent. In addition, notwithstanding the foregoing, in the event of a Termination of Service for any reason, the Participant shall not be entitled to any Dividend Equivalent payments with respect to dividends declared but not paid prior to the date of such termination on Shares underlying RSUs which are unvested as of the date of such termination (after taking into account any accelerated vesting that occurs in connection with such termination). Dividend Equivalents and any amounts that may become distributable in respect thereof shall be treated separately from the RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Code.
3. Definitions . For purposes of this Agreement, the following terms shall have the meanings set forth below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
(a) “ Cause ” means “Cause” as defined in the Participant’s applicable employment or similar agreement with the Company if such an agreement exists and contains a definition of Cause, or, if no such agreement exists or such agreement does not contain a definition of Cause, then Cause means (i) the willful fraud or material dishonesty of the Participant in connection with the performance of the Participant’s duties to the Company or any Subsidiary; (ii) the deliberate or intentional failure by the Participant to substantially perform the Participant’s duties to the Company or any Subsidiary (other than the Participant’s failure resulting from his or her incapacity due to physical or mental illness) after a written notice is delivered to the Participant by the Company, which demand specifically identifies the manner in which the Company believes the Participant has not substantially performed his or her duties; (iii) willful misconduct by the Participant that is materially detrimental to the reputation, goodwill or business operations of the Company or any Subsidiary; (iv) willful disclosure of the Company’s or any Subsidiary’s confidential information or trade secrets; (v) a material breach of the terms of this Agreement or the Plan; or (vi) the conviction of, or plea of nolo contendere to a charge of commission of a felony or crime of moral turpitude by the Participant. For purposes of this definition, no act or failure to act will be considered “willful,” unless it is done or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best interests of the Company or any Subsidiary.

(b) “ Disability ” means a disability that qualifies or, had the Participant been a participant, would qualify the Participant to receive long-term disability payments under the Company’s group long-term disability insurance plan or program, as it may be amended from time to time.

(c) “ Good Reason ” means “Good Reason” as defined in the Participant’s applicable employment or similar agreement with the Company if such an agreement exists and contains a definition of Good Reason, or, if no such agreement exists or such agreement does not contain a definition of Good Reason, then Good Reason means the occurrence of any of the following events or conditions without the Participant’s written consent:
(i)
a material diminution in the Participant’s authority, duties or responsibilities;
(ii)
a material diminution in the Participant’s base salary, target annual bonus level, [or target annual equity-based compensation opportunity,] in each case, as in effect on the date of this Agreement and as may be increased from time to time; and
(iii)
the Participant being required to relocate his or her principal place of employment with the Company or a Subsidiary (as applicable) more than 50 miles from his or her principal place of employment immediately prior to the occurrence of the event constituting Good Reason.
A termination of employment by the Participant shall not be deemed to be for Good Reason unless (A) the Participant gives the Company written notice describing the event or events which are the basis for such termination within sixty (60) days after the event or events occur, (B) such grounds for termination (if susceptible to correction) are not corrected by the Company within thirty (30) days of the Company’s receipt of such notice (“ Correction Period ”), and (C) the Participant terminates his or her employment no later than thirty (30) days following the Correction Period.
(d) “ Qualifying Termination ” means a Termination of Service by reason of (i) the Participant’s death, (ii) a termination by the Company or any Subsidiary due to the Participant’s Disability, or (iii) a termination by the Company or any Subsidiary other than for Cause or by the Participant for Good Reason, in either case, on the date of, or during the twenty-four (24) month period following, a Change in Control.

(e) “ Service Provider ” means an Employee, Consultant or member of the Board, as applicable.

4. RSUs and Dividend Equivalents Subject to the Plan; Ownership and Transfer Restrictions .
(a)      The RSUs and Dividend Equivalents are subject to the terms, definitions and provisions of the Plan, which is incorporated herein by reference, including, without limitation, the restrictions on transfer set forth in Section 10.3 of the Plan and the REIT restrictions set forth in Section 12.7 of the Plan.
(b)      Without limiting the foregoing, the RSUs and Common Stock issuable with respect thereto shall be subject to the restrictions on ownership and transfer set forth in the charter of the Company, as amended and supplemented from time to time.
5. Vesting . Subject to Section 6 below, the RSUs will vest and become nonforfeitable in accordance with and subject to the time vesting schedule set forth on Exhibit A attached hereto, subject to the Participant’s continued status as a Service Provider on each applicable vesting date.
6. Effect of Termination of Service .
(a)      Termination of Service . Subject to Section 6(b) below, in the event of the Participant’s Termination of Service for any reason, any and all RSUs that have not vested as of the date of such Termination of Service (after taking into account any accelerated vesting that occurs in connection with such termination) will automatically and without further action be cancelled and forfeited without payment of any consideration therefor, and the Participant shall have no further right to or interest in such RSUs. No RSUs which have not vested as of the date of the Participant’s Termination of Service shall thereafter become vested.
(b)      Qualifying Termination . In the event that the Participant incurs a Qualifying Termination, the RSUs will vest in full and become nonforfeitable upon such Qualifying Termination.
7. Payment . Payments in respect of any RSUs that vest in accordance herewith shall be made to the Participant (or in the event of the Participant’s death, to his or her estate) in whole Shares, and any fractional Share will be rounded as determined by the Company; provided, however , that in no event shall the aggregate number of RSUs that vest or become payable hereunder exceed the total number of RSUs set forth in Section 1 of this Agreement. The Company shall make such payments as soon as practicable after the applicable vesting date, but in any event within sixty (60) days after such vesting date.
8. Restrictions on New RSUs or Shares . In the event that the RSUs or the Shares underlying the RSUs are changed into or exchanged for a different number or kind of securities of the Company or of another corporation or other entity by reason of merger, consolidation, recapitalization, reclassification, stock split, stock dividend or combination of shares, such new or additional or different securities which are issued upon conversion of or in exchange or substitution for RSUs or the Shares underlying the RSUs which are then subject to vesting shall be subject to the same vesting conditions as such RSUs or Shares, as applicable, unless the Administrator provides for the vesting of the RSUs or the Shares underlying the RSUs, as applicable.
9. Conditions to Issuance of Shares . Shares issued as payment for the RSUs will be issued out of the Company’s authorized but unissued Shares. Upon issuance, such Shares shall be fully paid and nonassessable. The Shares issued pursuant to this Agreement shall be held in book-entry form and no certificates shall be issued therefor. In addition to the other requirements set forth herein, the Shares issued as payment for the RSUs shall be issued only upon the fulfillment of all of the following conditions:
(a)      In the event that the Common Stock is listed on an established securities exchange, the admission of such Shares to listing on such exchange;
(b)      The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable;
(c)      The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;
(d)      The lapse of such reasonable period of time as the Administrator may from time to time establish for reasons of administrative convenience; and
(e)      The receipt by the Company of full payment for any applicable withholding or other employment tax or required payments with respect to any such Shares to the Company with respect to the issuance or vesting of such Shares.
In the event that the Company delays a distribution or payment in settlement of RSUs because it reasonably determines that the issuance of Shares in settlement of RSUs will violate federal securities laws or other applicable law, such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii). The Company shall not delay any payment if such delay will result in a violation of Section 409A of the Code.
10. Rights as Stockholder . Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant or any person claiming under or through the Participant.
11. Tax Withholding . The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require the Participant to remit to such entity, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents. The Administrator may in its discretion and in satisfaction of the foregoing requirement or in satisfaction of such additional withholding obligations as the Participant may have elected, allow the Participant to elect to have the Company or the Subsidiary (as applicable) withhold Shares otherwise issuable under such award (or allow the return of Shares) having a Fair Market Value equal to the sums to be withheld. Notwithstanding any other provision of the Plan or this Agreement, the number of Shares which may be withheld with respect to the issuance, vesting or payment of the RSUs in order to satisfy the Participant’s income and payroll tax liabilities with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents shall be limited to the number of shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum statutory withholding rates in the Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.
12. Remedies . The Participant shall be liable to the Company for all costs and damages, including incidental and consequential damages, resulting from a disposition of the RSUs which is in violation of the provisions of this Agreement. Without limiting the generality of the foregoing, the Participant agrees that the Company shall be entitled to obtain specific performance of the obligations of the Participant under this Agreement and immediate injunctive relief in the event any action or proceeding is brought in equity to enforce the same. The Participant will not urge as a defense that there is an adequate remedy at law.

13. Restrictions on Public Sale by the Participant . To the extent not inconsistent with applicable law, the Participant agrees not to effect any sale or distribution of the RSUs or the Shares underlying the RSUs or any similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during the fourteen (14) days prior to, and during the up to 90-day period beginning on, the date of the pricing of any public or private debt or equity securities offering by the Company (except as part of such offering), if and to the extent requested in writing by the Company in the case of a non-underwritten public or private offering or if and to the extent requested in writing by the managing underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be) and consented to by the Company, which consent may be given or withheld in the Company’s sole and absolute discretion, in the case of an underwritten public or private offering (such agreement to be in the form of a lock-up agreement provided by the Company, managing underwriter or underwriters, or initial purchaser or initial purchasers, as the case may be).

14. Conformity to Securities Laws . The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all applicable federal and state laws, rules and regulations (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 of the Exchange Act) and to such approvals by any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan, this Agreement and the RSUs shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

15. Code Section 409A . To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this Agreement. Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date of this Agreement, the Company determines that the RSUs may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the effective date of this Agreement ), the Company may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect ), or take any other actions, that the Company determines are necessary or appropriate to (a) exempt the RSUs from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the RSUs, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however , that this Section 15 shall not create any obligation on the part of the Company or any Subsidiary to adopt any such amendment, policy or procedure or take any such other action. For purposes of Section 409A of the Code, any right to a series of payments pursuant to this Agreement shall be treated as a right to a series of separate payments.

16. No Right to Continued Service . Nothing in this Agreement shall confer upon the Participant any right to continue as a Service Provider of the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company or any Subsidiary, which rights are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without cause.
17. Miscellaneous .

(a)      Incorporation of the Plan . This Agreement is made under and subject to and governed by all of the terms and conditions of the Plan. In the event of any discrepancy or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control. By signing this Agreement, the Participant confirms that he or she has received access to a copy of the Plan and has had an opportunity to review the contents thereof.

(b)      Clawback . This award, the RSUs and the Shares issuable with respect to the RSUs shall be subject to any clawback or recoupment policy currently in effect or as may be adopted by the Company, as may be amended from time to time.

(c)      Successors and Assigns . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and assigns of the parties hereto, including, without limitation, any business entity that succeeds to the business of the Company.

(d)      Entire Agreement; Amendments and Waivers. This Agreement, together with the Plan, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. In the event that the provisions of such other agreement conflict or are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall control. Except as set forth in Section 15 above, this Agreement may not be amended except in an instrument in writing signed on behalf of each of the parties hereto and approved by the Administrator. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

(e)      Severability . If for any reason one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.

(f)      Titles . The titles, captions or headings of the Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

(g)      Counterparts . This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile (including, without limitation, transfer by .pdf), and each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.

(h)      Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland applicable to contracts entered into and wholly to be performed within the State of Maryland by Maryland residents, without regard to any otherwise governing principles of conflicts of law that would choose the law of any state other than the State of Maryland.

(i)      Notices . Any notice to be given by the Participant under the terms of this Agreement shall be addressed to the Legal Department of the Company at the Company’s address set forth in Exhibit A attached hereto. Any notice to be given to the Participant shall be addressed to him or her at the Participant’s then current address on the books and records of the Company. By a notice given pursuant to this Section 17(i), either party may hereafter designate a different address for notices to be given to him or her. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 17(i) (and the Company shall be entitled to rely on any such notice provided to it that it in good faith believes to be true and correct, with no duty of inquiry). Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed as set forth above or upon confirmation of delivery by a nationally recognized overnight delivery service.


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


INVENTRUST PROPERTIES CORP.,
a Maryland corporation



By: __________________________________
Name:    _______________________________
Title: _________________________________


The Participant hereby accepts and agrees to be bound by all of the terms and conditions of this Agreement.

____________________________
<PARTC_NAME>


Exhibit A
Vesting Schedule and Notice Address
Vesting Commencement Date : December 31, 2016

Vesting Schedule

Vesting Dates
(Anniversaries of Vesting Commencement Date)*
 
Percentage of Total Award Vesting
First Anniversary
 
33%
Second Anniversary
 
33%
Third Anniversary
 
34%

* In the event that any vesting date is not a regular business day, then the vesting date shall instead be the last business day immediately preceding such date.

Company Address

2809 Butterfield Road
Suite 200
Oak Brook, IL 60523

1











Exhibit 31.1


Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


I, Thomas P. McGuinness, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of InvenTrust Properties Corp.;
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.


Date:
August 10, 2017
By:
/s/ Thomas P. McGuinness
 
 
Name:
Thomas P. McGuinness
Title:
President and Chief Executive Officer (Principal Executive Officer)





Exhibit 31.2


Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


I, Michael E. Podboy, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of InvenTrust Properties Corp.;
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.


Date:
August 10, 2017
By:
/s/ Michael E. Podboy
 
 
Name:
Michael E. Podboy
Title:
Executive Vice President, Chief Financial Officer, Chief Investment Officer and Treasurer (Principal Financial Officer)






Exhibit 32.1
Certification of Principal Executive Officer
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 InvenTrust Properties Corp. (the “Company”) for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s 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.
Date:
August 10, 2017
By:
/s/ Thomas P. McGuinness
 
 
Name:
Thomas P. McGuinness
Title:
President and Chief Executive Officer (Principal Executive Officer)
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as a part of the Report or on a separate disclosure document.




Exhibit 32.2
Certification of Principal Financial Officer
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 InvenTrust Properties Corp. (the “Company”) for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s 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.
Date:
August 10, 2017
By:
/s/ Michael E. Podboy
 
 
Name:
Michael E. Podboy
Title:
Executive Vice President, Chief Financial Officer, Chief Investment Officer and Treasurer (Principal Financial Officer)
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as a part of the Report or on a separate disclosure document.