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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020

OR

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

Commission file number     001-36252 (Washington Prime Group Inc.)
333-205859 (Washington Prime Group, L.P.)

WASHINGTON PRIME GROUP INC.
Washington Prime Group, L.P.
(Exact name of Registrant as specified in its charter)

Indiana (Both Registrants)            46-4323686 (Washington Prime Group Inc.)
(State of incorporation or organization)            46-4674640 (Washington Prime Group, L.P.)
(I.R.S. Employer Identification No.)

180 East Broad Street
Columbus
Ohio
43215
(Address of principal executive offices)

(614621-9000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Washington Prime Group Inc.:
Title of each class
 
Trading Symbols
 
Name of each exchange on which registered
Common Stock, $0.0001 par value per share
 
WPG
 
New York Stock Exchange
7.5% Series H Cumulative Redeemable Preferred Stock, par value $0.0001 per share
 
WPGPRH
 
New York Stock Exchange
6.875% Series I Cumulative Redeemable Preferred Stock, par value $0.0001 per share
 
WPGPRI
 
New York Stock Exchange

Washington Prime Group, L.P.: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Washington Prime Group Inc. Yes x  No o Washington Prime Group, L.P. Yes x  No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Washington Prime Group Inc. Yes x  No o Washington Prime Group, L.P. Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Washington Prime Group Inc. (Check One):
 
Large accelerated filer
x 
Accelerated filer
Emerging growth company
 
 
Non-accelerated filer
Smaller reporting company
 
 
 
 
 
 
 
 
 
 
Washington Prime Group, L.P.   (Check One):
 
Large accelerated filer
Accelerated filer
Emerging growth company
 
 
Non-accelerated filer
x 
Smaller reporting 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.

Washington Prime Group Inc. o Washington Prime Group, L.P. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Washington Prime Group Inc. Yes   No x Washington Prime Group, L.P. Yes   No x

As of August 7, 2020, Washington Prime Group Inc. had 187,432,335 shares of common stock outstanding. Washington Prime Group, L.P. has no publicly traded equity and no common stock outstanding.

1



EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2020 of Washington Prime Group® Inc. and Washington Prime Group®, L.P. Unless stated otherwise or the context requires otherwise, references to "WPG Inc." mean Washington Prime Group® Inc., an Indiana corporation, and references to "WPG L.P." mean Washington Prime Group®, L.P., an Indiana limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between WPG Inc. and WPG L.P. We use the terms "WPG," the "Company," "we," "us," and "our" to refer to WPG Inc., WPG L.P., and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material interest on a consolidated basis, unless the context indicates otherwise.

WPG Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). WPG Inc. owns properties and conducts operations through WPG L.P., of which WPG Inc. is the sole general partner and of which it held approximately 84.7% of the partnership interests ("OP units") at June 30, 2020. The remaining OP units are owned by various limited partners. As the sole general partner of WPG L.P., WPG Inc. has the exclusive and complete responsibility for WPG L.P.’s day-to-day management and control. Management operates WPG Inc. and WPG L.P. as one enterprise. The management of WPG Inc. consists of the same persons who direct the management of WPG L.P. As general partner with control of WPG L.P., WPG Inc. consolidates WPG L.P. for financial reporting purposes, and WPG Inc. does not have significant assets other than its investment in WPG L.P. Therefore, the assets and liabilities of WPG Inc. and WPG L.P. are substantially the same on their respective consolidated financial statements and the disclosures of WPG Inc. and WPG L.P. also are substantially similar.
The Company believes, therefore, that the combination into a single report of the quarterly reports on Form 10-Q of WPG Inc. and WPG L.P. provides the following benefits:
enhances investors' understanding of the operations of WPG Inc. and WPG L.P. by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both WPG Inc. and WPG L.P.; and
creates time and cost efficiencies through the preparation of one set of disclosures instead of two separate sets of disclosures.
The substantive difference between WPG Inc.’s and WPG L.P.’s filings is the fact that WPG Inc. is a REIT with shares traded on a public stock exchange, while WPG L.P. is a limited partnership with no publicly traded equity. Moreover, the interests in WPG L.P. held by third parties are classified differently by the two entities (i.e., noncontrolling interests for WPG Inc. and partners' equity for WPG L.P.). In the consolidated financial statements, these differences are primarily reflected in the equity section of the consolidated balance sheets and in the consolidated statements of equity. Apart from the different equity presentation, the consolidated financial statements of WPG Inc. and WPG L.P. are nearly identical.
This combined Form 10-Q for WPG Inc. and WPG L.P. includes, for each entity, separate interim financial statements (but combined footnotes), separate reports on disclosure controls and procedures and internal control over financial reporting, and separate CEO/CFO certifications. In addition, if there were any material differences between WPG Inc. and WPG L.P. with respect to any other financial and non-financial disclosure items required by Form 10-Q, they would be discussed separately herein.

2



WASHINGTON PRIME GROUP INC. AND WASHINGTON PRIME GROUP, L.P.
FORM 10-Q

INDEX
PART I:
FINANCIAL INFORMATION
PAGE
 
 
 
Item 1.
Consolidated Financial Statements (unaudited)
 
 
 
 
 
Financial Statements for Washington Prime Group Inc.:
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019
 
 
 
 
Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2020 and 2019
 
 
 
 
Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019
 
 
 
 
Consolidated Statements of Equity for the three and six months ended June 30, 2020 and 2019
 
 
 
 
Financial Statements for Washington Prime Group, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019
 
 
 
 
Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2020 and 2019
 
 
 
 
Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019
 
 
 
 
Consolidated Statements of Equity for the three and six months ended June 30, 2020 and 2019
 
 
 
 
Condensed 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

3



PART I
FINANCIAL INFORMATION

Item 1.
Financial Statements
Washington Prime Group Inc.
Unaudited Consolidated Balance Sheets
(dollars in thousands, except share and par value amounts)
 
 
June 30, 2020
 
December 31, 2019
ASSETS:
 
 
 
 
Investment properties at cost
 
$
5,924,349

 
$
5,902,406

Less: accumulated depreciation
 
2,458,488

 
2,397,736


 
3,465,861

 
3,504,670

Cash and cash equivalents
 
127,019

 
41,421

Tenant receivables and accrued revenue, net
 
125,153

 
82,762

Investment in and advances to unconsolidated entities, at equity
 
415,174

 
417,092

Deferred costs and other assets
 
138,423

 
205,034

Total assets
 
$
4,271,630

 
$
4,250,979

LIABILITIES:
 
 
 
 
Mortgage notes payable
 
$
1,107,947

 
$
1,115,608

Notes payable
 
709,100

 
957,566

Unsecured term loans
 
687,209

 
686,642

Revolving credit facility
 
644,716

 
204,145

Other indebtedness
 
84,355

 
97,601

Accounts payable, accrued expenses, intangibles, and deferred revenues
 
257,634

 
260,904

Distributions payable
 
3,323

 
3,252

Cash distributions and losses in unconsolidated entities, at equity
 

 
15,421

Total liabilities
 
3,494,284

 
3,341,139

Redeemable noncontrolling interests
 
3,265

 
3,265

EQUITY:
 
 
 
 
Stockholders' Equity:
 
 
 
 
Series H Cumulative Redeemable Preferred Stock, $0.0001 par value, 4,000,000 shares issued and outstanding as of June 30, 2020 and December 31, 2019
 
104,251

 
104,251

Series I Cumulative Redeemable Preferred Stock, $0.0001 par value, 3,800,000 shares issued and outstanding as of June 30, 2020 and December 31, 2019
 
98,325

 
98,325

Common stock, $0.0001 par value, 350,000,000 shares authorized;
187,432,335 and 186,884,276 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 
19

 
19

Capital in excess of par value
 
1,259,130

 
1,254,771

Accumulated deficit
 
(757,985
)
 
(655,492
)
Accumulated other comprehensive loss
 
(17,809
)
 
(5,525
)
Total stockholders' equity
 
685,931

 
796,349

Noncontrolling interests
 
88,150

 
110,226

Total equity
 
774,081

 
906,575

Total liabilities, redeemable noncontrolling interests and equity
 
$
4,271,630

 
$
4,250,979


The accompanying notes are an integral part of these statements.

4



Washington Prime Group Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(dollars in thousands, except per share amounts)
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
REVENUE:
 
 
 
 
 
 
 
Rental income
$
96,050

 
$
156,230

 
$
243,283

 
$
319,503

Other income
2,714

 
5,204

 
8,081

 
10,754

Total revenues
98,764

 
161,434

 
251,364

 
330,257

EXPENSES:

 

 
 
 
 
Property operating
28,109

 
36,432

 
65,389

 
75,861

Depreciation and amortization
55,380

 
71,816

 
115,084

 
138,194

Real estate taxes
18,437

 
19,878

 
38,689

 
41,992

Advertising and promotion
1,300

 
2,025

 
3,104

 
3,918

General and administrative
11,350

 
13,124

 
23,614

 
27,249

Ground rent
209

 
195

 
331

 
398

Impairment loss
23,800

 

 
25,119

 

Total operating expenses
138,585

 
143,470

 
271,330

 
287,612

 


 


 


 


Interest expense, net
(37,445
)
 
(39,143
)
 
(76,080
)
 
(75,973
)
Impairment on note receivable
(11,237
)
 

 
(11,237
)
 

Gain on disposition of interests in properties, net
437

 
6,241

 
27,192

 
16,231

Income and other taxes
(593
)
 
(229
)
 
24

 
(585
)
Loss from unconsolidated entities, net
(4,754
)
 
(1,713
)
 
(5,786
)
 
(1,761
)
NET LOSS
(93,413
)
 
(16,880
)
 
(85,853
)
 
(19,443
)
Net loss attributable to noncontrolling interests
(14,871
)
 
(3,126
)
 
(14,194
)
 
(4,022
)
NET LOSS ATTRIBUTABLE TO THE COMPANY
(78,542
)
 
(13,754
)
 
(71,659
)
 
(15,421
)
Less: Preferred share dividends
(3,508
)
 
(3,508
)
 
(7,016
)
 
(7,016
)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
 
 
 
 
 
 
 
 
LOSS PER COMMON SHARE, BASIC & DILUTED
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)
 
 
 
 
 
 
 
 
COMPREHENSIVE LOSS:
 
 
 
 
 
 
 
Net loss
$
(93,413
)
 
$
(16,880
)
 
$
(85,853
)
 
$
(19,443
)
Unrealized income (loss) on interest rate derivative instruments, net
920

 
(9,485
)
 
(14,526
)
 
(14,595
)
Comprehensive loss
(92,493
)
 
(26,365
)
 
(100,379
)
 
(34,038
)
Comprehensive loss attributable to noncontrolling interests
(14,730
)
 
(4,597
)
 
(16,436
)
 
(6,285
)
Comprehensive loss attributable to common shareholders
$
(77,763
)
 
$
(21,768
)
 
$
(83,943
)
 
$
(27,753
)

The accompanying notes are an integral part of these statements.

5



Washington Prime Group Inc.
Unaudited Consolidated Statements of Cash Flows
(dollars in thousands)
 
For the Six Months Ended June 30,
 
2020
 
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net loss
$
(85,853
)
 
$
(19,443
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:


 

Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation
116,827

 
137,404

Impairment on note receivable
11,237

 

Gain on disposition of interests in properties and outparcels, net
(27,192
)
 
(16,231
)
Impairment loss
25,119

 

Change in estimate of collectibility of rental income
27,630

 
4,027

Loss from unconsolidated entities, net
5,786

 
1,761

Distributions of income from unconsolidated entities
1,087

 
912

Changes in assets and liabilities:


 

Tenant receivables and accrued revenue, net
(68,811
)
 
6,142

Deferred costs and other assets
(1,027
)
 
(3,780
)
Accounts payable, accrued expenses, deferred revenues and other liabilities
(6,887
)
 
(17,236
)
Net cash (used in) provided by operating activities
(2,084
)
 
93,556

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures, net
(99,807
)
 
(81,131
)
Net proceeds from disposition of interests in properties and outparcels
17,987

 
20,492

Investments in unconsolidated entities
(6,744
)
 
(5,870
)
Distributions of capital from unconsolidated entities
1,764

 
14,747

Net cash used in investing activities
(86,800
)
 
(51,762
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Distributions to noncontrolling interest holders in properties
(51
)
 
(66
)
Redemption of limited partner units
(543
)
 
(19
)
Net proceeds from issuance of common shares, including common stock plans

 
1

Distributions on common and preferred shares/units
(35,196
)
 
(118,754
)
Proceeds from issuance of debt, net of transaction costs
500,849

 
303,088

Repayments of debt
(287,999
)
 
(206,702
)
Other financing activities

 
(150
)
Net cash provided by (used in) financing activities
177,060

 
(22,602
)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
88,176

 
19,192

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
75,475

 
61,084

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
163,651

 
$
80,276


The accompanying notes are an integral part of these statements.

6



Washington Prime Group Inc.
Unaudited Consolidated Statements of Equity
(dollars in thousands, except per share/unit amounts)
 
 
For the Three Months Ended June 30, 2020
 
 
Preferred Series H
 
Preferred Series I
 
Common
Stock
 
Capital in
Excess of
Par Value
 
Accumulated Deficit
 
Accumulated Other Comprehensive Loss
 
Total
Stockholders'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, March 31, 2020
 
$
104,251

 
$
98,325

 
$
19

 
$
1,257,040

 
$
(675,935
)
 
$
(18,588
)
 
$
765,112

 
$
103,163

 
$
868,275

 
$
3,265

Redemption of limited partner units
 

 

 

 

 

 

 

 
(22
)
 
(22
)
 

Other
 

 

 

 
(9
)
 

 

 
(9
)
 

 
(9
)
 

Equity-based compensation
 

 

 

 
1,898

 

 

 
1,898

 

 
1,898

 

Adjustments to noncontrolling interests
 

 

 

 
201

 

 

 
201

 
(201
)
 

 

Distributions declared on preferred shares
 

 

 

 

 
(3,508
)
 

 
(3,508
)
 

 
(3,508
)
 

Other comprehensive income
 

 

 

 

 

 
779

 
779

 
141

 
920

 

Net loss, excluding $60 of distributions to preferred unitholders
 

 

 

 

 
(78,542
)
 

 
(78,542
)
 
(14,931
)
 
(93,473
)
 

Balance, June 30, 2020
 
$
104,251

 
$
98,325

 
$
19

 
$
1,259,130

 
$
(757,985
)
 
$
(17,809
)
 
$
685,931

 
$
88,150

 
$
774,081

 
$
3,265

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2020
 
 
Preferred Series H
 
Preferred Series I
 
Common
Stock
 
Capital in
Excess of
Par Value
 
Accumulated Deficit
 
Accumulated Other Comprehensive Loss
 
Total
Stockholders'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, December 31, 2019
 
$
104,251

 
$
98,325

 
$
19

 
$
1,254,771

 
$
(655,492
)
 
$
(5,525
)
 
$
796,349

 
$
110,226

 
$
906,575

 
$
3,265

Redemption of limited partner units
 

 

 

 

 

 

 

 
(543
)
 
(543
)
 

Other
 

 

 

 
(18
)
 

 

 
(18
)
 

 
(18
)
 

Equity-based compensation
 

 

 

 
3,764

 

 

 
3,764

 

 
3,764

 

Adjustments to noncontrolling interests
 

 

 

 
613

 

 

 
613

 
(613
)
 

 

Distributions on common shares/units ($0.125 per common share/unit)
 

 

 

 

 
(23,818
)
 

 
(23,818
)
 
(4,364
)
 
(28,182
)
 

Distributions declared on preferred shares
 

 

 

 

 
(7,016
)
 

 
(7,016
)
 

 
(7,016
)
 

Other comprehensive loss
 

 

 

 

 

 
(12,284
)
 
(12,284
)
 
(2,242
)
 
(14,526
)
 

Net loss, excluding $120 of distributions to preferred unitholders
 

 

 

 

 
(71,659
)
 

 
(71,659
)
 
(14,314
)
 
(85,973
)
 

Balance, June 30, 2020
 
$
104,251

 
$
98,325

 
$
19

 
$
1,259,130

 
$
(757,985
)
 
$
(17,809
)
 
$
685,931

 
$
88,150

 
$
774,081

 
$
3,265

The accompanying notes are an integral part of this statement.

7



Washington Prime Group Inc.
Unaudited Consolidated Statements of Equity (Continued)
(dollars in thousands, except per share/unit amounts)
 
 
For the Three Months Ended June 30, 2019
 
 
Preferred Series H
 
Preferred Series I
 
Common
Stock
 
Capital in
Excess of
Par Value
 
Accumulated Deficit
 
Accumulated Other Comprehensive Income (Loss)
 
Total
Stockholders'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, March 31, 2019
 
$
104,251

 
$
98,325

 
$
19

 
$
1,249,490

 
$
(509,187
)
 
$
2,082

 
$
944,980

 
$
138,025

 
$
1,083,005

 
$
3,265

Redemption of limited partner units
 

 

 

 

 

 

 

 
(19
)
 
(19
)
 

Other
 

 

 

 
(7
)
 

 

 
(7
)
 

 
(7
)
 

Equity-based compensation
 

 

 

 
1,965

 

 

 
1,965

 

 
1,965

 

Adjustments to noncontrolling interests
 

 

 

 
(129
)
 

 

 
(129
)
 
129

 

 

Distributions on common shares/units ($0.25 per common share/unit)
 

 

 

 

 
(47,162
)
 

 
(47,162
)
 
(8,688
)
 
(55,850
)
 

Distributions declared on preferred shares
 

 

 

 

 
(3,508
)
 

 
(3,508
)
 

 
(3,508
)
 

Other comprehensive loss
 

 

 

 

 

 
(8,014
)
 
(8,014
)
 
(1,471
)
 
(9,485
)
 

Net loss, excluding $60 of distributions to preferred unitholders
 

 

 

 

 
(13,754
)
 

 
(13,754
)
 
(3,186
)
 
(16,940
)
 

Balance, June 30, 2019
 
$
104,251

 
$
98,325

 
$
19

 
$
1,251,319

 
$
(573,611
)
 
$
(5,932
)
 
$
874,371

 
$
124,790

 
$
999,161

 
$
3,265

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2019
 
 
Preferred Series H
 
Preferred Series I
 
Common
Stock
 
Capital in
Excess of
Par Value
 
Accumulated Deficit
 
Accumulated Other Comprehensive Income (Loss)
 
Total
Stockholders'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, December 31, 2018
 
$
104,251

 
$
98,325

 
$
19

 
$
1,247,639

 
$
(456,924
)
 
$
6,400

 
$
999,710

 
$
148,561

 
$
1,148,271

 
$
3,265

Redemption of limited partner units
 

 

 

 

 

 

 

 
(19
)
 
(19
)
 

Other
 

 

 

 
(14
)
 

 

 
(14
)
 

 
(14
)
 

Exercise of stock options
 

 

 

 
1

 

 

 
1

 

 
1

 

Equity-based compensation
 

 

 

 
3,743

 

 

 
3,743

 
37

 
3,780

 

Adjustments to noncontrolling interests
 

 

 

 
(50
)
 

 

 
(50
)
 
50

 

 

Distributions on common shares/units ($0.50 per common share/unit)
 

 

 

 

 
(94,250
)
 

 
(94,250
)
 
(17,434
)
 
(111,684
)
 

Distributions declared on preferred shares
 

 

 

 

 
(7,016
)
 

 
(7,016
)
 

 
(7,016
)
 

Other comprehensive loss
 

 

 

 

 

 
(12,332
)
 
(12,332
)
 
(2,263
)
 
(14,595
)
 

Net loss, excluding $120 of distributions to preferred unitholders
 

 

 

 

 
(15,421
)
 

 
(15,421
)
 
(4,142
)
 
(19,563
)
 

Balance, June 30, 2019
 
$
104,251

 
$
98,325

 
$
19

 
$
1,251,319

 
$
(573,611
)
 
$
(5,932
)
 
$
874,371

 
$
124,790

 
$
999,161

 
$
3,265


The accompanying notes are an integral part of this statement.

8



Washington Prime Group, L.P.
Unaudited Consolidated Balance Sheets
(dollars in thousands, except unit amounts)
 
 
June 30, 2020
 
December 31, 2019
ASSETS:
 
 
 
 
Investment properties at cost
 
$
5,924,349

 
$
5,902,406

Less: accumulated depreciation
 
2,458,488

 
2,397,736


 
3,465,861

 
3,504,670

Cash and cash equivalents
 
127,019

 
41,421

Tenant receivables and accrued revenue, net
 
125,153

 
82,762

Investment in and advances to unconsolidated entities, at equity
 
415,174

 
417,092

Deferred costs and other assets
 
138,423

 
205,034

Total assets
 
$
4,271,630

 
$
4,250,979

LIABILITIES:
 
 
 
 
Mortgage notes payable
 
$
1,107,947

 
$
1,115,608

Notes payable
 
709,100

 
957,566

Unsecured term loans
 
687,209

 
686,642

Revolving credit facility
 
644,716

 
204,145

Other indebtedness
 
84,355

 
97,601

Accounts payable, accrued expenses, intangibles, and deferred revenues
 
257,634

 
260,904

Distributions payable
 
3,323

 
3,252

Cash distributions and losses in unconsolidated entities, at equity
 

 
15,421

Total liabilities
 
3,494,284

 
3,341,139

Redeemable noncontrolling interests
 
3,265

 
3,265

EQUITY:
 
 
 
 
Partners' Equity:
 
 
 
 
General partner
 
 
 
 
Preferred equity, 7,800,000 units issued and outstanding as of June 30, 2020 and December 31, 2019
 
202,576

 
202,576

Common equity, 187,432,335 and 186,884,276 units issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 
483,355

 
593,773

Total general partners' equity
 
685,931

 
796,349

Limited partners, 34,479,892 and 34,682,956 units issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 
87,168

 
109,193

Total partners' equity
 
773,099

 
905,542

Noncontrolling interests
 
982

 
1,033

Total equity
 
774,081

 
906,575

Total liabilities, redeemable noncontrolling interests and equity
 
$
4,271,630

 
$
4,250,979


The accompanying notes are an integral part of these statements.


9



Washington Prime Group, L.P.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(dollars in thousands, except per unit amounts)
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
REVENUE:
 
 
 
 
 
 
 
Rental income
$
96,050

 
$
156,230

 
$
243,283

 
$
319,503

Other income
2,714

 
5,204

 
8,081

 
10,754

Total revenues
98,764

 
161,434

 
251,364

 
330,257

EXPENSES:
 
 
 
 
 
 
 
Property operating
28,109

 
36,432

 
65,389

 
75,861

Depreciation and amortization
55,380

 
71,816

 
115,084

 
138,194

Real estate taxes
18,437

 
19,878

 
38,689

 
41,992

Advertising and promotion
1,300

 
2,025

 
3,104

 
3,918

General and administrative
11,350

 
13,124

 
23,614

 
27,249

Ground rent
209

 
195

 
331

 
398

Impairment loss
23,800

 

 
25,119

 

Total operating expenses
138,585

 
143,470

 
271,330

 
287,612

 
 
 
 
 
 
 
 
Interest expense, net
(37,445
)
 
(39,143
)
 
(76,080
)
 
(75,973
)
Impairment on note receivable
(11,237
)
 

 
(11,237
)
 

Gain on disposition of interests in properties, net
437

 
6,241

 
27,192

 
16,231

Income and other taxes
(593
)
 
(229
)
 
24

 
(585
)
Loss from unconsolidated entities, net
(4,754
)
 
(1,713
)
 
(5,786
)
 
(1,761
)
NET LOSS ATTRIBUTABLE TO UNITHOLDERS
(93,413
)
 
(16,880
)
 
(85,853
)
 
(19,443
)
Less: Preferred unit distributions
(3,568
)
 
(3,568
)
 
(7,136
)
 
(7,136
)
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
 
 
 
 
 
 
 
 
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS:
 
 
 
 
 
 
 
General partner
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
Limited partners
(14,931
)
 
(3,186
)
 
(14,314
)
 
(4,142
)
Net loss attributable to common unitholders
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
 
 
 
 
 
 
 
 
LOSS PER COMMON UNIT, BASIC & DILUTED
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)
 
 
 
 
 
 
 
 
COMPREHENSIVE LOSS:
 
 
 
 
 
 
 
Net loss
$
(93,413
)
 
$
(16,880
)
 
$
(85,853
)
 
$
(19,443
)
Unrealized income (loss) on interest rate derivative instruments, net
920

 
(9,485
)
 
(14,526
)
 
(14,595
)
Comprehensive loss
$
(92,493
)
 
$
(26,365
)
 
$
(100,379
)
 
$
(34,038
)

The accompanying notes are an integral part of these statements.

10



Washington Prime Group, L.P.
Unaudited Consolidated Statements of Cash Flows
(dollars in thousands)
 
For the Six Months Ended June 30,
 
2020
 
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net loss
$
(85,853
)
 
$
(19,443
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation
116,827

 
137,404

Impairment on note receivable
11,237

 

Gain on disposition of interests in properties and outparcels, net
(27,192
)
 
(16,231
)
Impairment loss
25,119

 

Change in estimate of collectibility of rental income
27,630

 
4,027

Loss from unconsolidated entities, net
5,786

 
1,761

Distributions of income from unconsolidated entities
1,087

 
912

Changes in assets and liabilities:
 
 
 
Tenant receivables and accrued revenue, net
(68,811
)
 
6,142

Deferred costs and other assets
(1,027
)
 
(3,780
)
Accounts payable, accrued expenses, deferred revenues and other liabilities
(6,887
)
 
(17,236
)
Net cash (used in) provided by operating activities
(2,084
)
 
93,556

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures, net
(99,807
)
 
(81,131
)
Net proceeds from disposition of interests in properties and outparcels
17,987

 
20,492

Investments in unconsolidated entities
(6,744
)
 
(5,870
)
Distributions of capital from unconsolidated entities
1,764

 
14,747

Net cash used in investing activities
(86,800
)
 
(51,762
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Distributions to noncontrolling interest holders in properties
(51
)
 
(66
)
Redemption of limited partner units
(543
)
 
(19
)
Net proceeds from issuance of common units, including equity-based compensation plans

 
1

Distributions to unitholders
(35,196
)
 
(118,754
)
Proceeds from issuance of debt, net of transaction costs
500,849

 
303,088

Repayments of debt
(287,999
)
 
(206,702
)
Other financing activities

 
(150
)
Net cash provided by (used in) financing activities
177,060

 
(22,602
)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
88,176

 
19,192

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
75,475

 
61,084

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
163,651

 
$
80,276


The accompanying notes are an integral part of these statements.

11



Washington Prime Group, L.P.
Unaudited Consolidated Statements of Equity
(dollars in thousands, except per unit amounts)
 
 
For the Three Months Ended June 30, 2020
 
 
General Partner
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
 
Common
 
Total
 
Limited Partners
 
Total
Partners'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, March 31, 2020
 
$
202,576

 
$
562,536

 
$
765,112

 
$
102,181

 
$
867,293

 
$
982

 
$
868,275

 
$
3,265

Redemption of limited partner units
 

 

 

 
(22
)
 
(22
)
 

 
(22
)
 

Other
 

 
(9
)
 
(9
)
 

 
(9
)
 

 
(9
)
 

Equity-based compensation
 

 
1,898

 
1,898

 

 
1,898

 

 
1,898

 

Adjustments to limited partners' interests
 

 
201

 
201

 
(201
)
 

 

 

 

Distributions declared on preferred units
 
(3,508
)
 

 
(3,508
)
 

 
(3,508
)
 

 
(3,508
)
 
(60
)
Other comprehensive income
 

 
779

 
779

 
141

 
920

 

 
920

 

Net income (loss)
 
3,508

 
(82,050
)
 
(78,542
)
 
(14,931
)
 
(93,473
)
 

 
(93,473
)
 
60

Balance, June 30, 2020
 
$
202,576

 
$
483,355

 
$
685,931

 
$
87,168

 
$
773,099

 
$
982

 
$
774,081

 
$
3,265

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2020
 
 
General Partner
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
 
Common
 
Total
 
Limited Partners
 
Total
Partners'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, December 31, 2019
 
$
202,576

 
$
593,773

 
$
796,349

 
$
109,193

 
$
905,542

 
$
1,033

 
$
906,575

 
$
3,265

Redemption of limited partner units
 

 

 

 
(543
)
 
(543
)
 

 
(543
)
 

Other
 

 
(18
)
 
(18
)
 

 
(18
)
 

 
(18
)
 

Equity-based compensation
 

 
3,764

 
3,764

 

 
3,764

 

 
3,764

 

Adjustments to limited partners' interests
 

 
613

 
613

 
(613
)
 

 

 

 

Distributions on common units ($0.125 per common unit)
 

 
(23,818
)
 
(23,818
)
 
(4,313
)
 
(28,131
)
 
(51
)
 
(28,182
)
 

Distributions declared on preferred units
 
(7,016
)
 

 
(7,016
)
 

 
(7,016
)
 

 
(7,016
)
 
(120
)
Other comprehensive loss
 

 
(12,284
)
 
(12,284
)
 
(2,242
)
 
(14,526
)
 

 
(14,526
)
 

Net income (loss)
 
7,016

 
(78,675
)
 
(71,659
)
 
(14,314
)
 
(85,973
)
 

 
(85,973
)
 
120

Balance, June 30, 2020
 
$
202,576

 
$
483,355

 
$
685,931

 
$
87,168

 
$
773,099

 
$
982

 
$
774,081

 
$
3,265

The accompanying notes are an integral part of this statement.

12



Washington Prime Group, L.P.
Unaudited Consolidated Statements of Equity (Continued)
(dollars in thousands, except per unit amounts)
 
 
For the Three Months Ended June 30, 2019
 
 
General Partner
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
 
Common
 
Total
 
Limited Partners
 
Total
Partners'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, March 31, 2019
 
$
202,576

 
$
742,404

 
$
944,980

 
$
137,019

 
$
1,081,999

 
$
1,006

 
$
1,083,005

 
$
3,265

Redemption of limited partner units
 

 

 

 
(19
)
 
(19
)
 

 
(19
)
 

Other
 

 
(7
)
 
(7
)
 

 
(7
)
 

 
(7
)
 

Equity-based compensation
 

 
1,965

 
1,965

 

 
1,965

 

 
1,965

 

Adjustments to limited partners' interests
 

 
(129
)
 
(129
)
 
129

 

 

 

 

Distributions on common units ($0.25 per common unit)
 

 
(47,162
)
 
(47,162
)
 
(8,688
)
 
(55,850
)
 

 
(55,850
)
 

Distributions declared on preferred units
 
(3,508
)
 

 
(3,508
)
 

 
(3,508
)
 

 
(3,508
)
 
(60
)
Other comprehensive loss
 

 
(8,014
)
 
(8,014
)
 
(1,471
)
 
(9,485
)
 

 
(9,485
)
 

Net income (loss)
 
3,508

 
(17,262
)
 
(13,754
)
 
(3,186
)
 
(16,940
)
 

 
(16,940
)
 
60

Balance, June 30, 2019
 
$
202,576

 
$
671,795

 
$
874,371

 
$
123,784

 
$
998,155

 
$
1,006

 
$
999,161

 
$
3,265

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2019
 
 
General Partner
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
 
Common
 
Total
 
Limited Partners
 
Total
Partners'
Equity
 
Non-
Controlling
Interests
 
Total
Equity
 
Redeemable Non-Controlling Interests
Balance, December 31, 2018
 
$
202,576

 
$
797,134

 
$
999,710

 
$
147,493

 
$
1,147,203

 
$
1,068

 
$
1,148,271

 
$
3,265

Redemption of limited partner units
 

 

 

 
(19
)
 
(19
)
 

 
(19
)
 

Other
 

 
(14
)
 
(14
)
 

 
(14
)
 

 
(14
)
 

Exercise of stock options
 

 
1

 
1

 

 
1

 

 
1

 

Equity-based compensation
 

 
3,743

 
3,743

 
37

 
3,780

 

 
3,780

 

Adjustments to limited partners' interests
 

 
(50
)
 
(50
)
 
50

 

 

 

 

Distributions on common units ($0.50 per common unit)
 

 
(94,250
)
 
(94,250
)
 
(17,372
)
 
(111,622
)
 
(62
)
 
(111,684
)
 

Distributions declared on preferred units
 
(7,016
)
 

 
(7,016
)
 

 
(7,016
)
 

 
(7,016
)
 
(120
)
Other comprehensive loss
 

 
(12,332
)
 
(12,332
)
 
(2,263
)
 
(14,595
)
 

 
(14,595
)
 

Net income (loss)
 
7,016

 
(22,437
)
 
(15,421
)
 
(4,142
)
 
(19,563
)
 

 
(19,563
)
 
120

Balance, June 30, 2019
 
$
202,576

 
$
671,795

 
$
874,371

 
$
123,784

 
$
998,155

 
$
1,006

 
$
999,161

 
$
3,265


The accompanying notes are an integral part of this statement.

13

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


1.
Organization
Washington Prime Group Inc. ("WPG Inc.") is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Code"). WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. Washington Prime Group, L.P. ("WPG L.P.") is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of June 30, 2020, our assets consisted of material interests in 101 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 53 million square feet of managed gross leasable area.
Unless the context otherwise requires, references to "WPG," the "Company," "we," "us" or "our" refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated basis.
We derive our revenues primarily from retail tenant leases, including fixed minimum rent leases, overage and percentage rent leases based on tenants’ sales volumes, rent payments pursuant to the terms of offering property operating services to our tenants and others, including energy, waste handling and facility services, and reimbursements from tenants for certain recoverable costs such as property operating, real estate taxes, repair and maintenance, and advertising and promotional expenses.
We seek to enhance the performance of our properties and increase our revenues by, among other things, securing leases of anchor and inline tenant spaces, re‑developing or renovating existing properties to increase the leasable square footage, and increasing the productivity of occupied locations through aesthetic upgrades, re‑merchandising and/or changes to the retail use of the space.
Severance
During the six months ended June 30, 2020, and in response to the COVID-19 pandemic (as discussed in Note 2 - "Basis of Presentation and Principles of Consolidation"), the Company recorded aggregate severance costs of $0.1 million related to workforce reductions, which costs are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss for period then ended.
On February 5, 2019, the Company's then Executive Vice President, Head of Open Air Centers was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated, without cause, additional non-executive personnel in the Property Management department as part of an effort to reduce overhead costs. In connection with and as part of these management changes, the Company recorded aggregate severance charges of $1.9 million, including $0.1 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards, which costs are included in general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss for the six months ended June 30, 2019.
2.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of June 30, 2020 and December 31, 2019 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The accompanying consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. Due to the seasonal nature of certain operational activities and the fiscal impact of the COVID-19 pandemic, the results for the interim period ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year.

14

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by GAAP for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading. These consolidated unaudited financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the combined 2019 Annual Report on Form 10-K for WPG Inc. and WPG L.P. (the "2019 Form 10-K").
COVID-19
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects since March 2020 as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. During a portion of the second quarter of 2020, and in the interest of public health and safety, jurisdictions (national, state and local) where our shopping centers are located, required mandatory closures or capacity limitations or other restrictions for those that continue to operate, which impacted our tenants' ability to operate as well as pay rent and other related charges or otherwise fulfill their obligations of their respective leases. As of June 30, 2020, all of our enclosed retail properties were open in some capacity and our open air properties have remained open to the extent permitted by applicable law. In response to requests from tenants, we have granted rent relief to certain of our tenants in a combination of rent deferrals and rent abatements. We continue to assess requests from our tenants as they are received. As a result of these developments, the Company has experienced, and expects to continue to experience, a material adverse impact on its revenues, results of operations and cash flows for the year ending December 31, 2020. The situation continues to evolve as certain geographic regions across the United States have experienced a surge in new cases, which could result in shoppers limiting their in-store purchases in exchange for curbside or on-line purchases. Additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change, including the timing of possible additional closure requirements or the subsequent lifting of any said restrictions.
As described in Note 8 - "Rental Income", we derive almost all of our income from rental payments and other tenant charges. Our revenues and cash flow have been adversely affected as a significant number of our tenants have been unable to meet their obligations to us. Additionally, certain of our tenants have sought the protection of the bankruptcy laws as a result of the COVID-19 pandemic during the second quarter of 2020, which could result in the modification or termination of its lease, causing a further reduction in our revenues and cash flow. Furthermore, certain of our tenants, including anchor tenants, hold the right under their lease(s) to terminate their lease(s) or reduce their rental rate if certain occupancy conditions are not met, if certain anchor tenants close, if certain sales levels or profit margins are not achieved, all of which could be triggered in the event of one or more tenant bankruptcies and resulting lease terminations.
While the full outcome of the COVID-19 pandemic is unknown, it has and continues to negatively impact the revenues and business of our tenants. Many of our tenants have requested some form of rent relief, and relief provided thus far has reduced our second quarter revenues by $22.0 million due to rent abatements, while additional relief in the form of rent deferrals to future periods has impacted our second quarter operating cash flows. Additionally, as part of our continual assessment of the future collectibility of rents, we recorded an adjustment to rental income of $22.3 million, including the write-off of accrued (straight-line) rent. A further worsening of the financial condition of our tenants may impact our continual assessment of future collectibility of rents, which could cause us to write-off additional straight-line rent that has not yet been billed. We continue to assess rent relief requests from our tenants as they are received but are unable to predict the resolution or impact of these discussions.
We evaluate our real estate assets and other assets for impairment indicators whenever events or changes in circumstances indicate that recoverability of our investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. The prolonged outbreak of the COVID-19 pandemic has resulted in sustained closure of our centers as well as the cessation or reduction of the operations of certain of our tenants, which has resulted in a reduction in our revenues, due to the impaired financial stability of our tenants, and ultimately our cash flows for many of our centers as well as other sources of income generated by our properties. In addition to reduced revenues generated by our centers as a result of the COVID-19 outbreak, our ability to obtain sufficient financing for such properties may be impaired as well as our ability to lease or re-lease centers as a result of worsening market and economic conditions produced by the persistence of the COVID-19 pandemic.

15

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


As of June 30, 2020, our evaluation of impairment considered our estimate of cash flow declines caused by the COVID-19 pandemic, but our other assumptions, including estimated hold period, were generally unchanged given the highly uncertain environment. The worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our properties adversely impacted by the COVID-19 outbreak could result in the recognition of substantial impairment charges imposed on our assets which could adversely impact our financial results. See Note 4 - "Investment in Real Estate" for discussion of impairment charges recognized as of June 30, 2020.
We continuously project our cash flow sources and needs. In accordance with Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period, including interim periods. In evaluating the Company’s ability to continue as a going concern, management evaluated the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements were issued (August 10, 2020). Management considered the Company’s current projections of future cash flows, current financial condition, sources of liquidity and debt obligations due on or before August 10, 2021 in considering whether it has the ability to meet its obligations for at least one year from the date of issuance of this Form 10-Q.
Our ability to meet our obligations as they come due may be impacted by our ability to remain compliant with financial covenants in our unsecured debt arrangements or to obtain waivers or amendments that impact the related covenants. We have received requisite lender consents and expect to close, within the next week, on amendments to our Facility and December 2015 Term Loan (as defined in Note 6 - "Indebtedness") that will provide certain covenant relief through the third quarter of 2021. Based upon these modified covenant requirements, we project that we would remain in compliance with these revised financial covenants along with other unsecured debt covenants through at least August 10, 2021. However, with the continued uncertainty caused by the COVID-19 pandemic, significant risks remain with respect to these projections and any material adverse effect on our income and expenses could impact our ability to maintain compliance with our credit facility and bond covenants. Additionally, if we are unable to close on the amendments within a timely fashion, we could end up in default with such arrangements, impacting our ability to continue as a going concern.
General
These consolidated financial statements reflect the consolidation of properties that are wholly owned or properties in which we own less than a 100% interest but that we control. Control of a property is demonstrated by, among other factors, our ability, without the consent of any other unaffiliated partner or owner, to refinance debt or sell the property and the inability of any other unaffiliated partner or owner to replace us.
We consolidate a variable interest entity ("VIE") when we are determined to be the primary beneficiary. Determination of the primary beneficiary of a VIE is based on whether an entity has (1) the power to direct activities that most significantly impact the economic performance of the VIE and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our determination of the primary beneficiary of a VIE considers all relationships between us and the VIE, including management agreements and other contractual arrangements.
There have been no changes during the six months ended June 30, 2020 to any of our previous conclusions about whether an entity qualifies as a VIE or whether we are the primary beneficiary of any previously identified VIE. During the six months ended June 30, 2020, we did not provide financial or other support to a previously identified VIE that we were not previously contractually obligated to provide.
Investments in partnerships and joint ventures represent our noncontrolling ownership interests in properties. We account for these investments using the equity method of accounting. We initially record these investments at cost and we subsequently adjust for net equity in income or loss, which we allocate in accordance with the provisions of the applicable partnership or joint venture agreement and cash contributions and distributions, if applicable. The allocation provisions in the partnership or joint venture agreements are not always consistent with the legal ownership interests held by each general or limited partner or joint venture investee primarily due to partner preferences. We separately report investments in joint ventures for which accumulated distributions have exceeded investments in and our share of net income from the joint ventures within cash distributions and losses in unconsolidated entities, at equity in the consolidated balance sheets. The net equity of certain joint ventures is less than zero because of financing or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization, and WPG has historically committed to or intends to fund the venture.

16

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


As of June 30, 2020, our assets consisted of material interests in 101 shopping centers. The consolidated financial statements as of that date reflect the consolidation of 85 wholly owned properties and four additional properties that are less than wholly owned, but which we control or for which we are the primary beneficiary. We account for our interests in the remaining 12 properties, or the joint venture properties, using the equity method of accounting. While we manage the day-to-day operations of the joint venture properties, we do not control the operations as we have determined that our partner or partners have substantive participating rights with respect to the assets and operations of these joint venture properties (see Note 5 - "Investment in Unconsolidated Entities, at Equity" for further details).
We allocate net operating results of WPG L.P. to third parties and to WPG Inc. based on the partners' respective weighted average ownership interests in WPG L.P. Net operating results of WPG L.P. attributable to third parties are reflected in net loss attributable to noncontrolling interests. WPG Inc.'s weighted average ownership interest in WPG L.P. was 84.7% and 84.4% for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 and December 31, 2019, WPG Inc.'s ownership interest in WPG L.P. was 84.7% and 84.5%, respectively. We adjust the noncontrolling limited partners' interests at the end of each period to reflect their interest in WPG L.P.
3.
Summary of Significant Accounting Policies
Fair Value Measurements
The Company measures and discloses its fair value measurements in accordance with Accounting Standards Codification ("ASC") Topic 820 - “Fair Value Measurement” (“Topic 820”). The fair value hierarchy, as defined by Topic 820, contains three levels of inputs that may be used to measure fair value as follows:
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as interest rates, foreign exchange rates, and yield curves, that are observable at commonly quoted intervals.
Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity's own assumptions, as there is little, if any, related market activity.
The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under Topic 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions.
Use of Estimates
We prepared the accompanying consolidated financial statements in accordance with GAAP. This requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Our actual results could differ from these estimates.
Segment Disclosure
Our primary business is the ownership, development and management of retail real estate. We have aggregated our operations, including enclosed retail properties and open air properties, into one reportable segment because they have similar economic characteristics and we provide similar products and services to similar types of, and in many cases, the same tenants.

17

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


New Accounting Pronouncements
Adoption of New Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. We adopted this ASU on January 1, 2020, noting our seller-provided bridge financing associated with our other indebtedness (see Note 6 - "Indebtedness" for further details) and certain other miscellaneous accounts are in scope of ASU 2016-13. However, there was no impact to our consolidated financial statements at adoption.
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, "Leases." Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can account for the concession as though enforceable rights and obligations for those concessions existed (regardless of whether these enforceable rights and obligations for the concessions explicitly exist in the contract). Both lessees and lessors may make this election. For all concessions that did not result in a substantial increase in the rights of the lessor or the obligations of the lessees, the Company elected to adopt this optional relief in the second quarter of 2020, resulting in abatements granted in the period being recognized as negative variable revenue during the period of abatement. Concessions in the form of rent deferrals were effectively accounted for as if the lease was unchanged, though in all cases receivables were evaluated under the collectibility guidance in Topic 842.
New Standards Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Inter-Bank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. If elected, an entity would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities electing relief would need to apply it consistently for all eligible modified contracts accounted for under a particular codification topic or industry subtopic. Additionally, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Entities electing relief related to hedging relationships can generally elect to apply the optional expedients on a hedge-by-hedge basis.
The guidance is effective upon issuance and can be applied to modifications of existing contracts made after January 1, 2020 and can be applied to eligible hedging relationships existing as of or entered into after the same date. The relief is temporary and cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. As of June 30, 2020, we had approximately $812.0 million (excluding debt issuance costs of $5.1 million) of our aggregate consolidated indebtedness that was indexed to LIBOR. In addition, as of June 30, 2020, we had approximately $640.8 million of consolidated indebtedness swapped to LIBOR plus a fixed spread under hedging relationships. We expect that upon modification, these contracts will generally qualify for the temporary relief upon meeting the certain criteria and we are currently assessing our plans for adoption.

18

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


Reconciliation of Cash, Cash Equivalents, and Restricted Cash
The following is a summary of our beginning and ending cash, cash equivalents and restricted cash totals as presented in our statements of cash flows for the six months ended June 30, 2020 and 2019:
 
Balance at June 30,
 
Balance at December 31,
 
2020
 
2019
 
2019
 
2018
Cash and cash equivalents
$
127,019

 
$
30,683

 
$
41,421

 
$
42,542

Restricted cash
36,632

 
49,593

 
34,054

 
18,542

Total cash, cash equivalents and restricted cash
$
163,651

 
$
80,276

 
$
75,475

 
$
61,084


Restricted cash primarily relates to cash held in escrow for payment of real estate taxes and property reserves for maintenance, expansion or leasehold improvements as required by our mortgage loans. Restricted cash is included in "Deferred costs and other assets" in the accompanying balance sheets as of June 30, 2020 and December 31, 2019.
4.
Investment in Real Estate
2020 Dispositions
On March 13, 2020, Seminole Towne Center, located in Sanford, Florida, was transitioned to the lender pursuant to the terms within a deed-in-lieu of foreclosure agreement. This property was held in an unconsolidated joint venture and all operational involvement between us and the related property ceased in connection with this transition (see Note 5 - "Investment in Unconsolidated Entities, at Equity" for additional details).
On January 14, 2020, we completed the sale of Matteson Plaza, located in Matteson, Illinois, to an unaffiliated private real estate investor for a purchase price of $1.1 million. The net proceeds of $0.4 million was used for general corporate purposes.
On January 31, 2020, we completed the sale of Dekalb Plaza, located in King of Prussia, Pennsylvania, to an unaffiliated private real estate investor for a purchase price of $13.6 million. The net proceeds of $13.4 million was used to fund ongoing redevelopment efforts and general corporate purposes.
We are party to two separate purchase and sale agreements to sell certain outparcels to FCPT Acquisitions, LLC ("Four Corners"). The following table summarizes the key terms of each of the closings that occurred during the six months ended June 30, 2020:
Sales Date
 
Parcels Sold
 
Purchase Price
 
Sales Proceeds
February 13, 2020
 
2

 
$
1,961

 
$
1,945

Excluding any subsequent amendments thereto, the Company has approximately $4.6 million of remaining outparcels from the first purchase and sale agreement and approximately $26.9 million from the second purchase and sale agreement to close, subject to due diligence and closing conditions. Additionally, during the six months ended June 30, 2020, the Company sold certain undeveloped land parcels and developed outparcels for an aggregate purchase price of approximately $2.4 million, receiving net proceeds of approximately $2.2 million. The net proceeds from the disposition activities were generally used to fund ongoing redevelopment efforts and for general corporate purposes. In connection with the 2020 disposition activities, the Company recorded net gains of $0.4 million and $27.2 million for the three and six months ended June 30, 2020, which are included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive loss.
2019 Dispositions
The following table summarizes the key terms of each of the closings with Four Corners that occurred during the three and six months ended June 30, 2019:
Sales Date
 
Parcels Sold
 
Purchase Price
 
Sales Proceeds
January 18, 2019
 
8

 
$
9,435

 
$
9,364

February 11, 2019
 
1

 
2,766

 
2,720

April 3, 2019
 
1

 
2,048

 
2,016

June 28, 2019
 
3

 
3,050

 
3,031

 
 
13

 
$
17,299

 
$
17,131

 
 
 
 
 
 
 


19

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The net proceeds were used to fund ongoing redevelopment efforts and for general corporate purposes. Additionally, during the three and six months ended June 30, 2019, the Company sold certain undeveloped land parcels for an aggregate purchase price of $3.6 million, receiving net proceeds of $3.4 million. In connection with the 2019 disposition activities, the Company recorded gains of $6.2 million and $16.2 million for the three and six months ended June 30, 2019, which is included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive loss.
Impairment
During the quarter ended June 30, 2020, and in connection with the preparation of the financial statements included in this report, we recorded an impairment charge of approximately $23.8 million related to two enclosed retail properties based on the total estimated fair value of $12.6 million and the related carrying value. The impairment charge was attributed to declines in the estimated undiscounted cash flows which resulted in the carrying value not being recoverable. The fair value of each property was based on the respective discounted future cash flows of each property, using a discount rate range of 18.8% to 19.3% and a terminal capitalization rate range of 16.8% to 17.3%, which were determined using management's assessment of the property operating performance and general market conditions (Level 3 inputs).
During the quarter ended March 31, 2020, we recorded an impairment charge of approximately $1.3 million related to vacant land at Georgesville Square, located in Columbus, Ohio and a single tenant outparcel located in Topeka, Kansas. The impairment charges in both instances were due to changes in facts and circumstances when we decided to hold the assets for a shorter period which resulted in the carrying value not being recoverable from the projected cash flows. In the case of the vacant land at Georgesville Square, which was sold during the second quarter of 2020, the fair value was based on the sales price (Level 1 input). In the case of the single tenant outparcel, the fair value was based on general market conditions (Level 3 inputs).
Except as described above, the Company recorded no additional impairment charges during the three and six months ended June 30, 2020. No impairment charges were recorded during the three and six months ended June 30, 2019.
5.
Investment in Unconsolidated Entities, at Equity
The Company's investment activity in unconsolidated real estate entities during the six months ended June 30, 2020 and June 30, 2019 consisted of investments in the following material joint ventures:
The O'Connor Joint Venture I
This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of five enclosed retail properties and related outparcels, consisting of the following: The Mall at Johnson City located in Johnson City, Tennessee; Pearlridge Center located in Aiea, Hawaii; Polaris Fashion Place, located in Columbus, Ohio; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retain management, leasing, legal, construction, and development responsibilities for the O'Connor Joint Venture I.
On December 20, 2019, the O'Connor Joint Venture I closed on the extension of the mortgage loan secured by The Mall at Johnson City. The extension was effective May 6, 2020 and extended the maturity of the mortgage loan to May 6, 2023, with two additional one-year extension options available to the joint venture. The extension required a $5.0 million principal prepayment on May 6, 2020, in addition to funding certain reserve accounts of $10.0 million for future redevelopment and property improvements. On June 11, 2020, and in response to the COVID-19 pandemic, the O'Connor Joint Venture I executed a standstill agreement with the lender that extended the effective date of the extension to December 2020, at which time the O'Connor Joint Venture I may extend the maturity of the mortgage loan pursuant to the terms and payment requirements noted above (see additional details within the forbearance table below).
The O'Connor Joint Venture II
This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of seven retail properties and certain related outparcels, consisting of the following: The Arboretum, located in Austin, Texas; Arbor Hills, located in Ann Arbor, Michigan; Classen Curve and The Triangle at Classen Curve, each located in Oklahoma City, Oklahoma and Nichols Hills Plaza, located in Nichols Hills, Oklahoma (the "Oklahoma City Properties"); Gateway Centers, located in Austin, Texas; Malibu Lumber Yard, located in Malibu, California; Palms Crossing I and II, located in McAllen, Texas; and The Shops at Arbor Walk, located in Austin, Texas (the "O'Connor Joint Venture II"). We retain management, leasing, legal, construction, and development responsibilities for the O'Connor Joint Venture II.

20

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The Seminole Joint Venture
This investment consisted of a 45% legal interest held by the Company in Seminole Towne Center, an approximate 1.1 million square foot enclosed regional retail property. The Company had no effective financial interest in this property due to preferences. On March 13, 2020, the property held through this venture was transitioned to the lender pursuant to the terms within a deed-in-lieu of foreclosure agreement and all involvement between us and the related property ceased in connection with this transition. We recorded a gain of $15.4 million related to our cash distributions and losses in the Seminole Joint Venture, which is included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive loss.
Individual agreements specify which services the Company is to provide to each joint venture. The Company, through its affiliates, provides management, leasing, legal, construction and development services for a fee to the joint ventures as noted above. We recorded fee income of $1.2 million and $3.4 million for the three and six months ended June 30, 2020, respectively, and $2.7 million and $5.4 million for the three and six months ended June 30, 2019, respectively, which are included in other income in the accompanying consolidated statements of operations and comprehensive loss. Advances to the joint ventures totaled $0.7 million and $0.5 million as of June 30, 2020 and December 31, 2019, respectively, which are included in investment in and advances to unconsolidated entities, at equity in the accompanying consolidated balance sheets. Management deems this balance to be collectible and anticipates repayment within one year.
The following table presents the combined statements of operations for our joint ventures for the three and six months ended June 30, 2020 and 2019:
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Total revenues
$
44,342

 
$
63,617

 
$
107,565

 
$
129,639

Operating expenses
20,869

 
26,995

 
47,769

 
53,823

Depreciation and amortization
20,916

 
25,579

 
46,305

 
51,336

Operating income
2,557

 
11,043

 
13,491

 
24,480

Gain (loss) on sale of interests in properties
2,039

 
(1,289
)
 
2,039

 
(1,289
)
Gain on extinguishment of debt

 

 
15,605

 

Interest expense, taxes, and other, net
(12,142
)
 
(12,918
)
 
(24,569
)
 
(25,983
)
Net (loss) income of the Company's unconsolidated real estate entities
$
(7,546
)
 
$
(3,164
)
 
$
6,566

 
$
(2,792
)
 
 
 
 
 
 
 
 
Our share of loss from the Company's unconsolidated real estate entities
$
(4,754
)
 
$
(1,713
)
 
$
(5,786
)
 
$
(1,761
)


21

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The following table presents the combined balance sheets of our joint ventures as of June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
 
December 31, 2019
Assets:
 
 
 
 
Investment properties at cost, net
 
$
1,850,156

 
$
1,905,336

Construction in progress
 
42,179

 
38,280

Cash and cash equivalents
 
37,263

 
43,137

Tenant receivables and accrued revenue, net
 
46,684

 
31,238

Deferred costs and other assets (1)
 
287,669

 
301,133

Total assets
 
$
2,263,951

 
$
2,319,124

Liabilities and Members’ Equity:
 
 

 
 

Mortgage notes payable
 
$
1,225,547

 
$
1,282,307

Accounts payable, accrued expenses, intangibles, and deferred revenues(2)
 
288,407

 
297,163

Total liabilities
 
1,513,954

 
1,579,470

Members’ equity
 
749,997

 
739,654

Total liabilities and members’ equity
 
$
2,263,951

 
$
2,319,124

Our share of members’ equity, net
 
$
394,785

 
$
384,332

 
 
 
 
 
Our share of members’ equity, net
 
$
394,785

 
$
384,332

Advances and excess investment
 
20,389

 
17,339

Net investment in and advances to unconsolidated entities, at equity(3)
 
$
415,174

 
$
401,671


(1)
Includes value of acquired in-place leases and acquired above-market leases with a net book value of $73,053 and $79,457 as of June 30, 2020 and December 31, 2019, respectively. Additionally, includes right-of-use assets of $173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of June 30, 2020 and December 31, 2019, respectively.
(2)
Includes the net book value of below market leases of $40,174 and $45,757 as of June 30, 2020 and December 31, 2019, respectively. Additionally, includes lease liabilities of $173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of June 30, 2020 and December 31, 2019, respectively.
(3)
Includes $415,174 and $417,092 of investment in and advances to unconsolidated entities, at equity as of June 30, 2020 and December 31, 2019, respectively, and $0 and $15,421 of cash distributions and losses in unconsolidated entities, at equity as of June 30, 2020 and December 31, 2019, respectively.

22

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


In response to the COVID-19 pandemic, the Company, on behalf of the O'Connor Joint Venture I and O'Connor Joint Venture II, has executed the following forbearance agreements related to various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Arbor Hills
 
$
24,035

 
4.27
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Arboretum, The
 
$
59,400

 
4.13
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve
 
$
52,779

 
3.90
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Gateway Centers
 
$
112,500

 
4.03
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Mall at Johnson City, The
 
$
47,768

 
6.76
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Nichols Hills Plaza
 
$
12,571

 
2.66
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
Due at maturity (Jan. 1, 2023)
Polaris Fashion Place
 
$
240,170

 
3.94
%
 
Interest and principal
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Town Center Crossing
 
$
32,534

 
4.25
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Town Center Plaza
 
$
65,830

 
5.00
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Scottsdale Quarter (Blocks K & M)
 
$
55,000

 
4.36
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Commencing August 2020 with payments made from excess property cash flow until repaid in full
1 Maturity dates noted include any applicable extension options available to the borrower.
In addition, the Company is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations. Certain other mortgage notes may be placed into special servicing during the forbearance negotiation and repayment periods.
6.
Indebtedness
Mortgage Debt
Total mortgage indebtedness at June 30, 2020 and December 31, 2019 was as follows:
 
 
June 30,
2020
 
December 31,
2019
Face amount of mortgage loans
 
$
1,110,243

 
$
1,117,242

Fair value adjustments, net
 
2,312

 
3,463

Debt issuance cost, net
 
(4,608
)
 
(5,097
)
Carrying value of mortgage loans
 
$
1,107,947

 
$
1,115,608



23

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


A roll forward of mortgage indebtedness from December 31, 2019 to June 30, 2020 is summarized as follows:
Balance at December 31, 2019
$
1,115,608

Debt amortization payments
(6,999
)
Issuance costs incurred upon debt modifications
(151
)
Amortization of fair value and other adjustments
(1,151
)
Amortization of debt issuance costs
640

Balance at June 30, 2020
$
1,107,947


In response to the COVID-19 pandemic, the Company has executed the following forbearance agreements on its various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza
 
$
117,000

 
3.67
%
 
Interest only
 
Interest
 
6 months commencing May 2020
 
6 months commencing November 2020
Southgate Mall
 
$
35,000

 
4.48
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Due at maturity (Sept. 27, 2023)
Town Center at Aurora
 
$
51,000

 
4.92
%
 
Interest and principal
 
Interest and principal
 
6 months commencing May 2020
 
Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall
 
$
76,086

 
4.65
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020, paid from escrows
 
Not applicable
1 Maturity dates noted include any applicable extension options available to the borrower.
In addition, the Company is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations (see Note 12 - "Subsequent Events" for additional detail). Certain other mortgage notes payable may be in formal default (see "Covenants" for further details) or placed into special servicing during the forbearance negotiation and repayment periods.
On April 3, 2020, the Company exercised the third of three options to extend the maturity of the $65.0 million term loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2021.
On February 14, 2020, the Company exercised the second of two options to extend the maturity of the $51.0 million mortgage note payable secured by Town Center at Aurora, located in Aurora, Colorado, for one year. The extended maturity is April 1, 2021. Additionally, as part of the aforementioned forbearance agreement, the Company was granted an additional one year extension option, which would extend the maturity to April 1, 2022. The extension option is subject to continued compliance with the terms of the mortgage agreement.

24

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


Corporate Debt
The following table identifies our total corporate debt outstanding at June 30, 2020 and December 31, 2019:
 
 
June 30,
2020
 
December 31,
2019
Notes payable:
 
 
 
 
Face amount - the Exchange Notes(1)
 
$

 
$
250,000

Face amount - Senior Notes due 2024(2)
 
720,900

 
720,900

Debt discount, net
 
(7,111
)
 
(7,864
)
Debt issuance costs, net
 
(4,689
)
 
(5,470
)
Total carrying value of notes payable
 
$
709,100

 
$
957,566

 
 
 
 
 
Unsecured term loans:(7)
 
 
 
 
Face amount - Term Loan(3)(4)
 
$
350,000

 
$
350,000

Face amount - December 2015 Term Loan(5)
 
340,000

 
340,000

Debt issuance costs, net
 
(2,791
)
 
(3,358
)
Total carrying value of unsecured term loans
 
$
687,209

 
$
686,642

 
 
 
 
 
Revolving credit facility:(3)(6)
 
 
 
 
Face amount
 
$
647,000

 
$
207,000

Debt issuance costs, net
 
(2,284
)
 
(2,855
)
Total carrying value of revolving credit facility
 
$
644,716

 
$
204,145

 
 
 
 
 
Other indebtedness:(8)
 
 
 
 
Face amount
 
$
98,900

 
$
98,900

Debt issuance costs, net
 
(1,535
)
 
(1,561
)
Accretion adjustment, net
 
(13,010
)
 
262

Total carrying value of other indebtedness
 
$
84,355

 
$
97,601

(1) The Exchange Notes were issued at a 0.028% discount and bore interest at 3.850% per annum.
(2) The Senior Notes due 2024 were issued at a 1.533% discount, bore interest at 5.950% per annum through August 14, 2019, at which time the interest rate increased to 6.450% per annum. The Senior Notes due 2024 mature on August 15, 2024.
(3) The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."
(4) The Term Loan bears interest at one-month LIBOR plus 2.10% per annum and will mature on December 30, 2022. We have interest rate swap agreements totaling $250.0 million, which effectively fix the interest rate on a portion of the Term Loan at 4.86% through June 30, 2021. At June 30, 2020, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 2.10% or 2.26%.
(5) The December 2015 Term Loan bears interest at one-month LIBOR plus 2.35% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 4.06% per annum through maturity.
(6) The Revolver provides borrowings on a revolving basis up to $650.0 million, bears interest at one-month LIBOR plus 1.80%, and will initially mature on December 30, 2021, subject to two six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. At June 30, 2020, we had an aggregate available borrowing capacity of $2.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At June 30, 2020, the applicable interest rate on the Revolver was one-month LIBOR plus 1.80% or 1.96%. The interest rate on the Revolver may vary in the future based upon the Company's credit rating and leveraged levels.
(7) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings and leveraged levels.
(8) Represents the financial liability associated with our failed sale and leaseback of land at Edison Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas; and Jefferson Valley Mall, located in Yorktown Heights, New York (collectively, the "Properties"). The face amount represents the sales price of the fee interest in the land at the Properties. The master ground lease has a 99-year term and includes fixed annual payments at an initial annualized rate of 7.4%, with annual rent escalators over the aforementioned term. The agreement also includes an option to repurchase the fee interest in the land at $109.3 million in year 30 of the master ground lease, to which the financial liability is being accreted to during the repurchase period. Proceeds received at closing were net of $55.0 million in bridge financing provided by the Company. Expense is being recognized utilizing an effective interest rate of 8.52% during the repurchase period.

25

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


On June 22, 2020, in order to accelerate repayment and bolster liquidity, the Company accepted the terms of a reduced payoff of the $55.0 million bridge financing provided in connection with the failed sale and leaseback noted above. In exchange for settling the bridge financing, the Company received $30.0 million in cash and the buyer/lessor reduced monthly payments that we owe under the leases totaling approximately $15.7 million over 27 months, commencing July 1, 2020. The present value of the reduced rent payments was reclassified from note receivable to other indebtedness, which is presented net of the accretion adjustment in the table above, and the Company recorded an impairment on the note receivable of approximately $11.2 million in connection with the extinguishment. The proceeds were used for general corporate purposes.
On February 28, 2020, the Company redeemed the Exchange Notes in advance of the April 1, 2020 maturity date. The repayment was funded utilizing borrowings on the Revolver.
Covenants
Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of June 30, 2020, based on the amendments to our Facility and December 2015 Term Loan that we expect to close within the next week, as discussed in Note 2 - "Basis of Presentation and Principles of Consolidation," management believes the Company would be in compliance with all covenants of its unsecured debt.
The total balance of mortgages was approximately $1.1 billion as of June 30, 2020. At June 30, 2020, certain of our consolidated subsidiaries were the borrowers under 20 non-recourse loans and two full-recourse loans secured by mortgages encumbering 24 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the debt and enforce its right against its collateral.
On May 26, 2020, we received a notice of default letter, dated May 14, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $40.9 million mortgage loan secured by Port Charlotte Town Center, located in Port Charlotte, Florida. The notice was issued by the special servicer because the borrower elected to not pay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On May 22, 2020, we received a notice of default letter, dated May 21, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $47.3 million mortgage loan secured by Lincolnwood Town Center, located in Lincolnwood, Illinois. The notice was issued by the special servicer because the borrower elected to not pay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On February 21, 2020, we received a letter, dated that same date, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $33.1 million mortgage loan secured by Muncie Mall, located in Muncie, Indiana, was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. On April 14, 2020, the Company received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company continues to hold title to the property.

26

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


On November 5, 2019, we received a letter dated October 30, 2019, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $45.1 million mortgage loan secured by Charlottesville Fashion Square, located in Charlottesville, Virginia, was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. On March 17, 2020, we received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company still holds title to the property.
At June 30, 2020, management believes the applicable borrowers under our other non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows. The Company has assessed each of the defaulted properties for impairment indicators and have concluded no impairment charges were warranted as of June 30, 2020.
Fair Value of Debt
The carrying values of our variable-rate loans approximate their fair values. We estimate the fair values of fixed-rate mortgages and fixed-rate corporate debt (including variable-rate unsecured debt swapped to fixed-rate and our other indebtedness, as discussed above) using cash flows discounted at current borrowing rates or Level 2 inputs. We estimate the fair values of consolidated fixed-rate unsecured notes payable using Level 1 quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms and maturities or Level 2 inputs.
The book value and fair value of these financial instruments and the related discount rate assumptions as of June 30, 2020 and December 31, 2019 are summarized as follows:
 
 
June 30, 2020
 
December 31, 2019
Book value of fixed-rate mortgages(1)
 
$1,045,243
 
$1,052,242
Fair value of fixed-rate mortgages
 
$1,073,408
 
$1,062,205
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages
 
3.81
%
 
4.24
%
 
 
 
 
 
Book value of fixed-rate corporate debt(1)
 
$1,396,790
 
$1,660,062
Fair value of fixed-rate corporate debt
 
$1,156,446
 
$1,673,105
Weighted average discount rates assumed in calculation of fair value for fixed-rate corporate debt
 
9.52
%
 
6.03
%
(1) Excludes debt issuance costs and applicable debt discounts.

27

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


7.
Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash payments related to the Company's borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives the Company primarily uses interest rate swaps or caps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in other comprehensive income ("OCI") or other comprehensive loss (“OCL”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed-rate financings or refinancings continue to be included in accumulated other comprehensive income or loss ("AOCI" or "AOCL") during the term of the hedged debt transaction.
Amounts reported in AOCL relate to derivatives that will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Realized gains or losses on settled derivative instruments included in AOCL are recognized as an adjustment to income over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional $12.7 million will be reclassified as an increase to interest expense. As of June 30, 2020, the Company had 11 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a current notional value of $640.8 million.
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2020 and December 31, 2019:
Derivatives designated as hedging instruments:
Balance Sheet
Location
 
June 30, 2020
 
December 31, 2019
Interest rate products
Liability derivatives
Accounts payable, accrued expenses, intangibles, and deferred revenue
 
$
21,089

 
$
6,592


There were no asset derivative instruments at June 30, 2020 and December 31, 2019. The liability derivative instruments were reported at their fair value of $21,089 and $6,592 at June 30, 2020 and December 31, 2019, respectively, with a corresponding adjustment to OCL for the unrealized gains and losses (net of noncontrolling interest allocation). Over time, the unrealized gains and losses held in AOCL will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.

28

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of comprehensive loss for the three and six months ended June 30, 2020 and 2019:
Derivatives in Cash Flow Hedging Relationships
(Interest rate products)
 
Location of Gain or Loss Recognized in Income on Derivatives
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Amount of Loss Recognized in OCL on Derivative
 
Interest expense
 
$
(1,760
)
 
$
(8,955
)
 
$
(17,969
)
 
$
(13,520
)
 
 
 
 
 
 
 
 
 
 
 
Amount of Loss or (Gain) Reclassified from AOCL into Income
 
Interest expense
 
$
2,680

 
$
(530
)
 
$
3,443

 
$
(1,075
)
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the three and six months ended June 30, 2020 and 2019:
Effect of Cash Flow Hedges on Consolidated Statements of Operations
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded
 
$
(37,445
)
 
$
(39,143
)
 
$
(76,080
)
 
$
(75,973
)
 
 
 
 
 
 
 
 
 
Amount of loss or (gain) reclassified from accumulated other comprehensive loss into interest expense
 
$
2,680

 
$
(530
)
 
$
3,443

 
$
(1,075
)
 
 
 
 
 
 
 
 
 

Credit Risk-Related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision that if the Company either defaults or is capable of being declared in default on any of its consolidated indebtedness, then the Company could also be declared in default on its derivative obligations.
The Company has agreements with its derivative counterparties that incorporate the loan covenant provisions of the Company's indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.
As of June 30, 2020, the fair value of the derivatives in a net liability position, plus accrued interest but excluding any adjustment for nonperformance risk, related to these agreements was $21,089. As of June 30, 2020, the Company has not posted any collateral related to these agreements. The Company is not in default with any of these provisions as of June 30, 2020. If the Company had breached any of these provisions at June 30, 2020, it would have been required to settle its obligation under these agreements at their termination value of $21,089.
Fair Value Considerations
Currently, the Company uses interest rate swaps and caps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. Based on these inputs the Company has determined that its interest rate swap and cap valuations are classified within Level 2 of the fair value hierarchy.
To comply with the provisions of Topic 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2020 and December 31, 2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

29

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The tables below presents the Company’s net assets and (liabilities) measured at fair value as of June 30, 2020 and December 31, 2019 aggregated by the level in the fair value hierarchy within which those measurements fall:
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Balance at June 30, 2020
Derivative instruments, net
$

 
$
(21,089
)
 
$

 
$
(21,089
)
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Balance at December 31, 2019
Derivative instruments, net
$

 
$
(6,592
)
 
$

 
$
(6,592
)

8.
Rental Income
We receive rental income from the leasing of retail and other space under operating leases, as we retain substantially all of the risks and benefits of ownership of the investment properties. The majority of these leases contain extension options, typically at the lessee's election, and/or early termination provisions. Further, our leases do not contain any provisions that would allow the lessee to purchase the underlying assets throughout the lease term. In most cases, consideration received typically includes a fixed minimum rent component, reimbursement of a fixed portion of our property operating expenses, including utility, security, janitorial, landscaping, food court and other administrative expenses included in common area maintenance, or CAM, and reimbursement of lessor costs such as real estate taxes and insurance, computed based upon a formula in accordance with the lease terms. When not reimbursed by the fixed CAM component, CAM expense reimbursements and lessor costs are based on the tenant's proportionate share of the allocable operating expenses and CAM capital expenditures for the property. We accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year. Additionally, a large number of our tenants are also required to pay overage rents based on sales during the applicable lease year over a base amount stated in the lease agreement. We recognize overage rents only when each tenant's sales exceed the applicable sales threshold as defined in their lease. We also collect lease termination income from tenants to allow for the tenant to vacate their space prior to their scheduled lease termination date. We recognize lease termination income in the period when a termination agreement is signed, collectability is assured, and we are no longer obligated to provide space to the tenant. In the event that a tenant is in bankruptcy when the termination agreement is signed, termination fee income is deferred and recognized when, and if, it is received. We record an adjustment to rental income in the period there is a change in our assessment of whether the collectibility of operating lease payments is probable.
We have elected the practical expedient in ASU 2016-02 to not separate non-lease components from lease components as our underlying leases qualify as operating leases and the timing and pattern of transfer of the lease and non-lease components are the same. We note that the predominant component of our leases is the lease component and thus account for the combined lease and non-lease (CAM) component of the non-cancelable lease term on a straight-line basis in accordance with ASC 842.
Rental income also includes accretion related to above-market and below-market lease intangibles related to the acquisition of operating properties. We amortize any tenant inducements as a reduction of rental income utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.

30

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The following table summarizes our rental income for the three and six months ended June 30, 2020 and 2019:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease payments, fixed
 
$
125,366

 
$
138,173

 
$
256,871

 
$
282,349

Operating lease payments, variable
 
12,897

 
16,397

 
32,001

 
34,459

Amortization of straight-line rent, inducements, and rent abatements
 
(21,586
)
 
1,163

 
(20,777
)
 
2,272

Net amortization/accretion of above and below-market leases
 
1,712

 
1,544

 
2,818

 
4,450

Change in estimate of collectibility of rental income
 
(22,339
)
 
(1,047
)
 
(27,630
)
 
(4,027
)
Total rental income
 
$
96,050

 
$
156,230

 
$
243,283

 
$
319,503


Included in the amounts presented for the three and six months ended June 30, 2020 are rent abatements of $22.0 million and a change in our estimate of collectibility of rental income of $22.3 million, including the write-off of accrued (straight-line) rent, in response to the COVID-19 pandemic.
Future payments to be received under non-cancelable operating leases for each of the next five years and thereafter, excluding variable payments of tenant reimbursements, percentage or overage rents, and lease termination payments as of June 30, 2020 are as follows:
2020 (July - December)
 
$
234,763

2021
 
403,817

2022
 
338,531

2023
 
276,796

2024
 
216,380

Thereafter
 
655,045

 
 
$
2,125,332


9.
Equity
Exchange Rights
Subject to the terms of the limited partnership agreement of WPG L.P., limited partners in WPG L.P. have, at their option, the right to exchange all or any portion of their units for shares of WPG Inc. common stock on a one‑for‑one basis or cash, as determined by WPG Inc. Therefore, the common units held by limited partners are considered by WPG Inc. to be share equivalents and classified as noncontrolling interests within permanent equity, and classified by WPG L.P. as permanent equity. The amount of cash to be paid if the exchange right is exercised and the cash option is selected will be based on the market value of WPG Inc.'s common stock as determined pursuant to the terms of the WPG L.P. Partnership Agreement. At June 30, 2020, WPG Inc. had reserved 34,479,892 shares of common stock for possible issuance upon the exchange of units held by WPG L.P. limited partners.
The holders of the Series I-1 Preferred Units have, at their option, the right to have their units purchased by WPG L.P. subject to the satisfaction of certain conditions. Therefore, the Series I-1 Preferred Units are classified as redeemable noncontrolling interests outside of permanent equity.

31

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


Stock Based Compensation
On May 28, 2014, the WPG Inc. Board of Directors (the "Board") adopted the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the "2014 Plan"), which permitted the Company to grant awards to current and prospective directors, officers, employees and consultants of the Company or any affiliate. An aggregate of 10,000,000 shares of common stock were reserved for issuance, with a maximum number of awards to be granted to a participant in any calendar year of 500,000 shares/units. On May 16, 2019, the common shareholders of WPG Inc. approved the Washington Prime Group, L.P. 2019 Stock Incentive Plan (the "2019 Plan"), which replaced the 2014 Plan with respect to the issuance of new awards. The Board and its Compensation Committee (the "Committee") previously approved and adopted the 2019 Plan, subject to WPG Inc. common shareholder approval, during the Board and Committee's regular meetings in February 2019. An aggregate of 7,290,000 shares of common stock are reserved for issuance, excluding carryover shares from the 2014 Plan. Awards may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs") or other stock-based awards in WPG Inc., long term incentive units ("LTIP units" or "LTIPs") or performance units ("Performance LTIP Units") in WPG L.P. The 2019 Plan terminates on May 16, 2029.
The following is a summary by type of the awards that the Company issued during the six months ended June 30, 2020 and June 30, 2019 under the 2014 Plan and 2019 Plan.
Annual Long-Term Incentive Awards
During the six months ended June 30, 2020 and 2019, the Company approved the terms and conditions of the 2020 and 2019 annual awards (the "2020 Annual Long-Term Incentive Awards" and "2019 Long-Term Incentive Awards," respectively) for certain executive officers and employees of the Company. Under the terms of the awards program, each participant is provided the opportunity to receive (i) time-based RSUs and (ii) performance-based stock units ("PSUs"). RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. RSUs will vest in one-third installments on each annual anniversary of the respective Grant Date (as referenced below), subject to the participant's continued employment with the Company through each vesting date and the participant's continued compliance with certain applicable covenants. During the service period, dividend equivalents will be paid in cash accruals or under some circumstances, common shares, with respect to the RSUs corresponding to the amount of any cash dividends paid by the Company to the Company's common shareholders for the applicable dividend payment dates. Compensation expense is recognized on a straight-line basis over the three year vesting term. Actual PSUs earned may range from 0%-150% of the PSUs allocated to the award recipient, based on the Company's total shareholder return ("TSR") compared to a peer group based on companies with similar assets and revenue over a three-year performance period that commenced on the respective Grant Date (as referenced below). During the performance period, dividend equivalents corresponding to the amount of any regular cash dividends paid by the Company to the Company’s common shareholders for the applicable dividend payment dates will accrue and be deemed reinvested in additional PSUs, which will be settled in common shares at the same time and only to the extent that the underlying PSU is earned and settled in common shares. Payout of the PSUs is also subject to the participant’s continued employment with the Company through the end of the performance period. The PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the three-year performance period.
The following table summarizes the issuance of the 2020 Annual Long-Term Incentive Awards and 2019 Annual Long-Term Incentive Awards, respectively:
 
 
2020 Annual Long-Term Incentive Awards
 
2019 Annual Long-Term Incentive Awards
Grant Date
 
February 25, 2020
 
February 20, 2019
 
 
 
 
 
RSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$2.41
 
$5.77
 
 
 
 
 
PSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$1.74
 
$4.98

During the six months ended June 30, 2020, the performance period related to PSUs awarded in conjunction with the 2017 annual awards ended. There was no payout as the Company's TSR rank did not exceed the minimum required threshold for payout and 262,787 PSUs were forfeited.

32

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


WPG Restricted Stock Units
During the six months ended June 30, 2020 and 2019, the Company awarded 1,231,188 RSUs, with a grant date fair value of $0.8 million, and 331,792 RSUs, with a grant-date fair value of $1.5 million, respectively, to certain employees and non-employee members of the Board. The RSUs are service-based awards and the related fair value is expensed over the applicable service periods, except in instances that result in accelerated vesting due to severance arrangements or retirement of Board members.
Stock Options
During the six months ended June 30, 2020, no stock options were granted to employees, no stock options were exercised by employees and 31,434 stock options were canceled, forfeited or expired. As of June 30, 2020, there were 569,855 stock options outstanding. During the six months ended June 30, 2019, no stock options were granted to employees, 391 stock options were exercised by employees and 52,152 stock options were canceled, forfeited or expired.
Share Award Related Compensation Expense
During the three and six months ended June 30, 2020, the Company recorded compensation expense pertaining to the awards granted of $1.9 million and $3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive loss. During the three and six months ended June 30, 2019, the Company recorded compensation expense pertaining to the awards granted of $2.0 million and $3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive loss. In certain instances, employment agreements and stock compensation programs provide for accelerated vesting when executives are terminated without cause. Additionally, the Committee may, in its discretion, accelerate the vesting for retiring Board members.
Distributions
For the three months ended June 30, 2020, no common share/unit dividends were declared by the Board as common share/unit dividends were suspended in response to the COVID-19 pandemic. For the six months ended June 30, 2020, the Board declared common share/unit dividends of $0.125. During the three and six months ended June 30, 2019, the Board declared common share/unit dividends of $0.25 and $0.50 per common share/unit, respectively.
10.
Commitments and Contingencies
Litigation
We are involved from time-to-time in various legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such litigation, claims and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.
Concentration of Credit Risk
Our properties rely heavily upon anchor or major tenants to attract customers; however, these retailers do not constitute a material portion of our financial results. Additionally, many anchor retailers in the enclosed retail properties own their spaces further reducing their contribution to our operating results. All operations are within the United States and no customer or tenant accounts for 5% or more of our consolidated revenues.
Lease Commitments
As of June 30, 2020, a total of four consolidated properties are subject to ground leases. The termination dates of these ground leases range from 2026 to 2076. These ground leases generally require us to make fixed annual rental payments, or a fixed annual rental plus a percentage rent component based upon the revenues or total sales of the property. Some of these leases also include escalation clauses and renewal options. For the three and six months ended June 30, 2020, we incurred ground lease expense of $209 and $331, respectively, of which $5 and $10, respectively, related to straight-line rent expense, which is included in ground rent in the accompanying consolidated statements of operations and comprehensive loss. For the three and six months ended June 30, 2019, we incurred ground lease expense of $195 and $398, respectively, of which $5 and $10, respectively, related to straight-line rent expense. Additionally, the Company has two material office leases and one material garage lease. The termination dates of these leases range from 2023 to 2026. These leases generally require us to make fixed annual rental payments, plus our share of CAM expense and real estate taxes and insurance. For the three and six months ended June 30, 2020, we incurred lease expense of $612 and $1,261, respectively, which is included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. For the three and six months ended June 30, 2019, we incurred lease expense of $663 and $1,294, respectively.

33

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


Future minimum lease payments due under these leases for each of the next five years and thereafter, excluding applicable extension options, as of June 30, 2020 are as follows:
2020 (July - December)
 
$
1,026

2021
 
2,069

2022
 
2,099

2023
 
1,427

2024
 
999

Thereafter
 
20,378

Total lease payments
 
27,998

Less: Discount
 
15,919

Present value of lease liabilities
 
$
12,079


The weighted average remaining lease term for our consolidated operating leases was 19.8 years and the weighted average discount rate for determining the lease liabilities was 8.8% at June 30, 2020. The discount rates utilized in calculating the lease liabilities represents our estimate of the Company's incremental borrowing rate over the terms that correspond to the leases. We had no financing leases as of June 30, 2020.
11.
Loss Per Common Share/Unit
WPG Inc. Loss Per Common Share
We determine WPG Inc.'s basic loss per common share based on the weighted average number of shares of common stock outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG Inc.'s diluted loss per share based on the weighted average number of shares of common stock outstanding combined with the incremental weighted average shares that would have been outstanding assuming all potentially dilutive securities were converted into common shares at the earliest date possible.

34

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


The following table sets forth the computation of WPG Inc.'s basic and diluted loss per common share:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Loss Per Common Share, Basic:
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic
 
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
Weighted average shares outstanding - basic
 
190,541,074

 
188,486,685

 
189,842,197

 
188,285,604

Loss per common share, basic
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)
 
 
 
 
 
 
 
 
 
Loss Per Common Share, Diluted:
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic
 
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
Net loss attributable to limited partner unitholders
 
(14,931
)
 
(3,186
)
 
(14,314
)
 
(4,142
)
Net loss attributable to common shareholders - diluted
 
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
Weighted average common shares outstanding - basic
 
190,541,074

 
188,486,685

 
189,842,197

 
188,285,604

Weighted average operating partnership units outstanding
 
34,485,545

 
34,752,540

 
34,539,716

 
34,741,867

Weighted average common shares outstanding - diluted
 
225,026,619

 
223,239,225

 
224,381,913

 
223,027,471

Loss per common share, diluted
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)

For the three and six months ended June 30, 2020 and 2019, additional potentially dilutive securities include contingently-issuable outstanding stock options, restricted stock units, and performance based components of annual or special arrangement awards. For the three and six months ended June 30, 2020, the potential dilutive effect of 569,855 contingently-issuable outstanding stock options, 601,711 restricted stock units and 1,305,005 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2019, the potential dilutive effect of 627,198 contingently-issuable outstanding stock options and 1,269,427 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. We accrue distributions when they are declared.
WPG L.P. Loss Per Common Unit
We determine WPG L.P.'s basic loss per common unit based on the weighted average number of common units outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG L.P.'s diluted loss per unit based on the weighted average number of common units outstanding combined with the incremental weighted average units that would have been outstanding assuming all potentially dilutive securities were converted into common units at the earliest date possible.
The following table sets forth the computation of WPG L.P.'s basic and diluted loss per common unit:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Loss Per Common Unit, Basic & Diluted:
 
 
 
 
 
 
 
 
Net loss attributable to common unitholders - basic and diluted
 
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
Weighted average common units outstanding - basic & diluted
 
225,026,619

 
223,239,225

 
224,381,913

 
223,027,471

Loss per common unit, basic & diluted
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)

For the three and six months ended June 30, 2020 and 2019, additional potentially dilutive securities include contingently-issuable units related to WPG Inc.'s outstanding stock options, restricted stock units, and WPG Inc.'s performance based components of annual or special arrangement awards. For the three and six months ended June 30, 2020, the potential dilutive effect of 569,855 contingently-issuable outstanding stock options, 601,711 restricted stock units and 1,305,005 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2019, the potential dilutive effect of 627,198 contingently-issuable outstanding stock options and 1,269,427 performance based components of annual awards were excluded as their inclusion would be anti-dilutive. We accrue distributions when they are declared.

35

Washington Prime Group Inc. and Washington Prime Group, L.P.
Condensed Notes to Unaudited Consolidated Financial Statements (Continued)
(dollars in thousands, except share, unit and per share amounts and where indicated as in millions or billions)


12.
Subsequent Events
COVID-19 Updates
Subsequent to June 30, 2020, we executed the following forbearance agreements:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms
Canyon View Marketplace
 
$
5,087

 
5.47
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
6 months commencing August 2020
Grand Central Mall
 
$
38,378

 
6.05
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020
 
12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)

In connection with the forbearance agreement executed on the mortgage note payable secured by Grand Central Mall, located in Parkersburg, West Virginia, the maturity date of the mortgage note payable was extended one year to July 6, 2021.
On August 6, 2020, the Board authorized a one-for-nine reverse share split of the Company’s common shares and WPG L.P. operating units, subject to shareholder approval. Upon shareholder approval and as a result of the reverse share split, each nine shares of the Company's issued and outstanding common shares/units will be automatically combined and converted into one issued and outstanding common share/unit. The Company plans to hold a special meeting of shareholders to vote on the recommendation before the end of 2020. The implementation of the reverse share split is intended to increase the per share trading price of the Company’s common shares in order to satisfy the continued listing criteria set forth in Section 802.01C of the Listed Company Manual of the New York Stock Exchange and cure the noncompliance notification received by the Company on April 28, 2020.

36



Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this report.
Overview - Basis of Presentation
Washington Prime Group Inc. ("WPG Inc.") is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Code"). WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. Washington Prime Group, L.P. ("WPG L.P.") is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of June 30, 2020, our assets consisted of material interests in 101 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 53 million square feet of managed gross leasable area.
Unless the context otherwise requires, references to "WPG," the "Company," "we," "us" and "our" refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated basis.
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of June 30, 2020 and December 31, 2019 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading.
COVID-19
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects since March 2020 as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. During a portion of the second quarter of 2020, and in the interest of public health and safety, jurisdictions (national, state and local) where our shopping centers are located, required mandatory closures or capacity limitations or other restrictions for those that continue to operate, which impacted our tenants' ability to operate as well as pay rent and other related charges or otherwise fulfill their obligations of their respective leases. As of June 30, 2020, all of our enclosed retail properties were open in some capacity and our open air properties have remained open to the extent permitted by applicable law. In response to the mandatory shutdowns, we have granted rent relief to certain of our tenants through a combination of rent deferrals and rent abatements, which have resulted in a reduction to our second quarter 2020 rental income by $22.0 million due to the rent abatements, with additional impact to our second quarter operating cash flows due to the rent deferrals. Additionally, as part of our continual assessment of the future collectibility of rents, we recorded an adjustment to rental income of $22.3 million, including the write-off of accrued (straight-line) rent. We continue to assess requests from our tenants as they are received. As a result of these developments, the Company has experienced, and expects to continue to experience, a material adverse impact on its revenues, results of operations and cash flows for the year ending December 31, 2020. The situation continues to evolve as certain geographic regions across the United States have experienced a surge in new cases, which could result in shoppers limiting their in-store purchases in exchange for curbside or on-line purchases. Additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change, including the timing of potential additional closure requirements or the subsequent lifting of any said restrictions.
In response to this pandemic, we took the following cost saving and capital preservations steps, effective April 2020:
Furloughed or laid off approximately 20% of our workforce, with gradual rehiring occurring as property operations resumed. Additionally, we implemented a hiring freeze and terminated third party vendor contracts when applicable;
Temporarily reduced senior management base compensation ranging from 5% to 25%;
Drew an additional $120.0 million under the Revolver to increase liquidity and preserve financial flexibility; and

37



Temporarily suspended the quarterly common share and operating partnership unit cash dividend for the remainder of 2020 (with a potential true up of the fourth quarter 2020 dividend payment which could be paid in 2021 in order to address the Company's REIT taxable income distribution requirements), which will result in cash savings in excess of $80.0 million for the remainder of the year, exclusive of any potential true up payments.
Additionally, the Company has executed the following forbearance agreements on its various consolidated and unconsolidated mortgage notes outstanding as of and subsequent to June 30, 2020 (dollars in thousands; unconsolidated mortgages shown non pro-rata):
Consolidated Mortgages
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza
 
$
117,000

 
3.67
%
 
Interest only
 
Interest
 
6 months commencing May 2020
 
6 months commencing November 2020
Southgate Mall
 
$
35,000

 
4.48
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Due at maturity (Sept. 27, 2023)
Town Center at Aurora
 
$
51,000

 
4.92
%
 
Interest and principal
 
Interest and principal
 
6 months commencing May 2020
 
Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall
 
$
76,086

 
4.65
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020, paid from escrows
 
Not applicable
Canyon View Marketplace
 
$
5,087

 
5.47
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
6 months commencing August 2020
Grand Central Mall
 
$
38,378

 
6.05
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020
 
12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated Mortgages
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Arbor Hills
 
$
24,035

 
4.27
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Arboretum, The
 
$
59,400

 
4.13
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve
 
$
52,779

 
3.90
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Gateway Centers
 
$
112,500

 
4.03
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Mall at Johnson City, The
 
$
47,768

 
6.76
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020

38



Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Nichols Hills Plaza
 
$
12,571

 
2.66
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
Due at maturity (Jan. 1, 2023)
Polaris Fashion Place
 
$
240,170

 
3.94
%
 
Interest and principal
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Town Center Crossing
 
$
32,534

 
4.25
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Town Center Plaza
 
$
65,830

 
5.00
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Scottsdale Quarter (Blocks K & M)
 
$
55,000

 
4.36
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Commencing August 2020 with payments made from excess property cash flow until repaid in full
1 Maturity dates noted include any applicable extension options available to the borrower.
While these forbearance agreements will not reduce the Company’s debt obligations, they will enhance cash flow during the period of lower rent collections from tenants. The Company estimates approximately $10 million to $15 million of delayed payments from these arrangements during the forbearance period. In addition, the Company is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations from lenders. Certain other mortgage notes payable may be in formal default (see "Covenants" for further details) or placed into special servicing during the forbearance negotiation and repayment periods.
Our ability to meet our obligations as they come due may be impacted by our ability to remain compliant with financial covenants in our unsecured debt arrangements or to obtain waivers or amendments that impact the related covenants. We have received requisite lender consents and expect to close, within the next week, on amendments to our Facility and December 2015 Term Loan (as defined in "Financing and Debt") that will provide certain covenant relief through the third quarter of 2021. Based upon these modified covenant requirements, we project that we would remain in compliance with these revised financial covenants along with other unsecured debt covenants through at least August 10, 2021. However, with the continued uncertainty caused by the COVID-19 pandemic, significant risks remain with respect to these projections and any material adverse effect on our income and expenses could impact our ability to maintain compliance with our credit facility and bond covenants. Additionally, if we are unable to close on the amendments within a timely fashion, we could end up in default with such arrangements, impacting our ability to continue as a going concern.
Impairment
During the quarter ended June 30, 2020, and in connection with the preparation of the financial statements included in this report, we recorded an impairment charge of approximately $23.8 million related to two Tier 2 properties based on the total estimated fair value of $12.6 million and the related carrying value. The impairment charge was attributed to declines in the estimated undiscounted cash flows which resulted in the carrying value not being recoverable. The fair value of each property was based on the respective discounted future cash flows of each property, using a discount rate range of 18.8% to 19.3% and a terminal capitalization rate range of 16.8% to 17.3%, which were determined using management's assessment of the property operating performance and general market conditions (Level 3 inputs).
During the quarter ended March 31, 2020, we recorded an impairment charge of approximately $1.3 million related to vacant land at Georgesville Square, located in Columbus, Ohio and a single tenant outparcel located in Topeka, Kansas. The impairment charges in both instances were due to changes in facts and circumstances when we decided to hold the assets for a shorter period which resulted in the carrying value not being recoverable from the projected cash flows. In the case of the vacant land at Georgesville Square, which was sold during the second quarter of 2020, the fair value was based on the sales price (Level 1 input). In the case of the single tenant outparcel, the fair value was based on general market conditions (Level 3 inputs).

39



New Accounting Pronouncements
Adoption of New Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. We adopted this ASU on January 1, 2020, noting our seller-provided bridge financing associated with our other indebtedness (see "Financing and Debt" for further details) and certain other miscellaneous accounts are in scope of ASU 2016-13. However, there was no impact to our consolidated financial statements at adoption.
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, "Leases." Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can account for the concession as though enforceable rights and obligations for those concessions existed (regardless of whether these enforceable rights and obligations for the concessions explicitly exist in the contract). Both lessees and lessors may make this election. For all concessions that did not result in a substantial increase in the rights of the lessor or the obligations of the lessees, the Company elected to adopt this optional relief in the second quarter of 2020, resulting in abatements granted in the period being recognized as negative variable revenue during the period of abatement. Concessions in the form of rent deferrals were effectively accounted for as if the lease was unchanged, though in all cases receivables were evaluated under the collectibility guidance in Topic 842.
New Standards Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Inter-Bank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. If elected, an entity would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities electing relief would need to apply it consistently for all eligible modified contracts accounted for under a particular codification topic or industry subtopic. Additionally, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Entities electing relief related to hedging relationships can generally elect to apply the optional expedients on a hedge-by-hedge basis.
The guidance is effective upon issuance and can be applied to modifications of existing contracts made after January 1, 2020 and can be applied to eligible hedging relationships existing as of or entered into after the same date. The relief is temporary and cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. As of June 30, 2020, we had approximately $812.0 million (excluding debt issuance costs of $5.1 million) of our aggregate consolidated indebtedness that was indexed to LIBOR. In addition, as of June 30, 2020, we had approximately $640.8 million of consolidated indebtedness swapped to LIBOR plus a fixed spread under hedging relationships. We expect that upon modification, these contracts will generally qualify for the temporary relief upon meeting the certain criteria and we are currently assessing our plans for adoption.

40



Four Corners Outparcel Sales
We are party to two separate purchase and sale agreements to sell certain outparcels to FCPT Acquisitions, LLC ("Four Corners"). The following table summarizes the key terms of each of the closings that occurred during the six months ended June 30, 2020 (dollars in thousands):
Sales Date
 
Parcels Sold
 
Purchase Price
 
Sales Proceeds
February 13, 2020
 
2

 
$
1,961

 
$
1,945

The net proceeds were generally used to fund ongoing redevelopment efforts and for general corporate purposes. Excluding any subsequent amendments thereto, the Company expects to close on the approximately $4.6 million of remaining outparcels from the first purchase and sale agreement and the majority of the remaining $26.9 million from the second purchase and sale agreement in 2020, subject to due diligence and closing conditions.
Business Opportunities
We derive our revenues primarily from retail tenant leases, including fixed minimum rent leases, percentage rent leases based on tenants' sales volumes and reimbursements from tenants for certain expenses. We seek to re-lease our spaces at higher rents and increase our occupancy rates, and to enhance the performance of our properties and increase our revenues by, among other things, adding or replacing anchors or big-box tenants, re-developing or renovating existing properties to increase the leasable square footage, and increasing the productivity of occupied locations through aesthetic upgrades, re-merchandising and/or changes to the retail use of the space. We seek growth in earnings, funds from operations ("FFO") and cash flows by enhancing the profitability and operation of our properties and investments.
Additionally, we feel there are opportunities to enhance our portfolio and balance sheet through active portfolio management. We believe that there are opportunities for us to acquire additional shopping centers that match our investment and strategic criteria. We invest in real estate properties to maximize total financial return which includes both operating cash flows and capital appreciation. We also seek to dispose of assets that no longer meet our strategic criteria. These dispositions will be a combination of asset sales and transitions of over-levered properties to lenders.
We consider FFO, net operating income, or NOI, and comparable NOI (NOI for properties owned and operating in both periods under comparison) to be key measures of operating performance that are not specifically defined by GAAP. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Reconciliations of these measures to the most comparable GAAP measure are included elsewhere in this report.
Portfolio Data
The portfolio data discussed in this overview includes key operating statistics for the Company including period ending occupancy, average base minimum rent per square foot and comparable NOI for the core properties owned and managed at June 30, 2020. The Company generates approximately 93% of the NOI from our Tier 1 and open air properties. As these properties are core to our future growth and receive the majority of our capital allocation, we disclose our operating metrics for this portion of our portfolio and exclude our noncore properties as well as our Tier 2 properties. Refer to Item 7 of Part II of the 2019 Form 10-K for our property listing.
Ending occupancy for the Tier 1 and open air properties was 91.9% as of June 30, 2020, as compared to 93.0% as of June 30, 2019. Average base minimum rent per square foot for the core portfolio decreased 0.6% when comparing June 30, 2020 to June 30, 2019. Comparable NOI for the Tier 1 and open air properties decreased 44.6% in the second quarter of 2020 when compared to the second quarter of 2019. The Tier 1 properties had a decrease in comparable NOI of 53.1%, and the open air properties had a decrease in comparable NOI of 24.5% in the second quarter of 2020 as compared to the same period in 2019. This year-over-year decrease in NOI of $47.5 million for the Tier 1 and open air properties primarily relates to the large number of our tenants that temporarily closed for business as a result of COVID-19 global pandemic as well as the impact of national tenant bankruptcies. NOI was impacted by $28.5 million during the second quarter 2020 from rent abatements and deferrals deemed uncollectible in response to the pandemic. Additionally, bad debt expense increased by $10.9 million primarily due to unpaid pre-petition bankruptcy rents. Through July 23, 2020, 17 national retailers, totaling 5.3 million square feet in our portfolio, filed for bankruptcy protection. Filings included retailers such as JCPenney, Ascena Brands, GNC, Pier 1 and New York & Company. Other revenue impacts resulting from the temporary tenant closures were declines of revenues from percentage rent and short-term tenants for a combined $9.2 million.

41



The following table sets forth key operating statistics for the combined portfolio of the Tier 1 and open air properties:
 
 
June 30, 2020
 
June 30, 2019
 
% Change
Ending occupancy(1)
 
91.9%
 
93.0%
 
(1.1)%
Average base minimum rent per square foot(2)
 
$21.39
 
$21.52
 
(0.6)%
(1)
Ending occupancy is the percentage of managed gross leasable area, or GLA, which is leased as of the last day of the reporting period. We include all Company-owned space except for anchors, majors, freestanding office and outlots at our enclosed retail properties in the calculation of ending occupancy. Open air property GLA included in the calculation relates to all Company-owned space other than office space.
(2)
Average base minimum rent per square foot is the average base minimum rent charge in effect for the reporting period for all tenants that would qualify to be included in ending occupancy.
Current Leasing Activities
During the six months ended June 30, 2020, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the Tier 1 and open air portfolio, comprising approximately 905,300 square feet. The average annual initial base minimum rent for new leases was $21.10 per square foot ("psf") and for renewed leases was $17.53 psf. For these leases, the average for tenant allowances was $27.89 psf for new leases and $4.46 psf for renewals. During the six months ended June 30, 2019, we signed new leases and renewal leases with terms in excess of a year (excluding enclosed retail property anchors, majors, offices, and in-line spaces in excess of 10,000 square feet) across the Tier 1 and open air portfolio, comprising approximately 998,300 square feet. The average annual initial base minimum rent for new leases was $24.31 psf and for renewed leases was $29.75 psf. For these leases, the average for tenant allowances was $38.09 psf for new leases and $9.17 psf for renewals. The leasing activity for the first six months of 2020 compared to the same period in 2019, when including all leases, increased 7% to 2.2 million square feet.
Results of Operations
Activities Affecting Results
The COVID-19 pandemic had a material impact on our 2020 results and is discussed throughout. In addition, the following property related transactions affected our results in the comparative periods:
On January 31, 2020, we completed the sale of Dekalb Plaza, located in King of Prussia, Pennsylvania, to an unaffiliated private real estate investor.
On January 14, 2020, we completed the sale of Matteson Plaza, located in Matteson, Illinois, to an unaffiliated private real estate investor.
During 2020, we completed the sale of 2 outparcels to Four Corners (see further details in Note 4 of the Condensed Notes to the Unaudited Consolidated Financial Statements in Part I, Item 1).
On December 19, 2019, we completed the sale of Charles Towne Square, located in Charleston, South Carolina, to an unaffiliated private real estate investor.
On December 18, 2019, we transitioned West Ridge Mall and Plaza ("West Ridge," collectively), located in Topeka, Kansas, to the lender.
On July 1, 2019, we transitioned Towne West Square, located in Wichita, Kansas, to the lender.
During 2019, we completed the sale of 25 outparcels to Four Corners (see further details in Note 4 of the Condensed Notes to the Unaudited Consolidated Financial Statements in Part I, Item 1).
For the purposes of the following comparisons, the transactions listed above are referred to as the "Property Transactions," and "comparable properties" refers to the remaining properties we owned and operated throughout both of the periods under comparison.

42



Three Months Ended June 30, 2020 vs. Three Months Ended June 30, 2019
Rental income decreased $60.2 million due to a $56.2 million decrease attributable to the comparable properties, the majority of which was driven by the temporary cessation of property operations, rent relief provided to tenants, and changes in our assessment of collectibility of tenant receivables as a result of the COVID-19 pandemic as well as specific bankruptcy activity during the period. A further decrease of $4.0 million was attributable to the Property Transactions. Other income decreased $2.5 million due to a $1.5 million decrease related to fee income and a $1.0 million decrease related to less property ancillary income, both of which were impacted by closures mandated by the COVID-19 pandemic.
Property operating expenses decreased $8.3 million, of which $6.8 million was due to reduced operating expenses at the comparable properties as a result of temporary property closures due to the COVID-19 pandemic and $1.5 million was attributable to the Property Transactions. Depreciation and amortization decreased $16.4 million, primarily due to a $1.6 million decrease attributable to the Property Transactions, and a $14.8 million decrease in the comparable properties related to the accelerated depreciation of certain building and land improvement assets and tenant related improvements and intangibles that occurred during the second quarter of 2019. Real estate taxes decreased $1.4 million, primarily due to a $0.7 million decrease in the comparable properties due to reduced tax assessments and capitalization of real estate taxes associated with redevelopment efforts and a $0.7 million decrease attributable to the Property Transactions. General and administrative expenses decreased $1.8 million, which was primarily attributable to reduced compensation costs and less corporate travel as a result of the COVID-19 pandemic. The $23.8 million impairment charge recorded in the 2020 period related to the write down of two Tier 2 enclosed retail properties.
Interest expense, net, decreased $1.7 million, which was primarily attributable to the transitions to the lenders of Towne West Square and West Ridge. The $11.2 million impairment on note receivable recorded in the 2020 period was attributed to the discounted payoff of the seller financing provided in conjunction with our other indebtedness (see "Financing and Debt" for further details).
Gain on disposition of interests in properties, net decreased $5.8 million which is primarily attributable to the timing of closings associated with the Four Corners transactions in the comparable periods.
Loss from unconsolidated entities increased $3.0 million which was primarily attributable to the temporary cessation of property operations, rent relief provided to tenants, and changes in our assessment of collectibility of tenant receivables as a result of the COVID-19 pandemic.
For WPG Inc., net loss attributable to noncontrolling interests primarily relates to the allocation of loss to third parties based on their respective weighted average ownership of limited partnership interest in WPG L.P., which percentage remained consistent over the periods.
Six Months Ended June 30, 2020 vs. Six Months Ended June 30, 2019
Rental income decreased $76.2 million due to a $67.9 million decrease attributable to the comparable properties, the majority of which was driven by the temporary cessation of property operations, rent relief provided to tenants, and changes in our assessment of collectibility of tenant receivables as a result of the COVID-19 pandemic as well as specific bankruptcy activity during the period. A further decrease of $8.3 million was attributable to the Property Transactions. Other income decreased $2.7 million due to a $2.0 million decrease related to fee income and a $0.7 million decrease related to less property ancillary income, both of which were impacted by closures mandated by the COVID-19 pandemic.
Property operating expenses decreased $10.5 million, of which $7.2 million was due to reduced operating expenses at the comparable properties as a result of temporary property closures due to the COVID-19 pandemic and $3.3 million was attributable to the Property Transactions. Depreciation and amortization decreased $23.1 million, primarily due to a $4.2 million decrease attributable to the Property Transactions, and an $18.9 million decrease in the comparable properties related to the accelerated depreciation of certain building and land improvement assets and tenant related improvements and intangibles during 2019. Real estate taxes decreased $3.3 million, primarily due to a $1.7 million decrease in the comparable properties due to reduced tax assessments and capitalization of real estate taxes associated with redevelopment efforts and a $1.6 million decrease attributable to the Property Transactions. General and administrative expenses decreased $3.6 million, of which $1.8 million was primarily attributable to reduced compensation costs and less corporate travel as a result of the COVID-19 pandemic in addition to a reduction in severance costs of $1.8 million, which were incurred during the first quarter of 2019. The $25.1 million impairment charge recorded in the 2020 period related to the write down of two Tier 2 enclosed retail properties, vacant land at Georgesville Square, located in Columbus, Ohio, and a single tenant outparcel located in Topeka, Kansas.

43



Interest expense, net, increased $0.1 million, of which a net $1.9 million increase was attributable to corporate debt activity primarily related to our other indebtedness (see "Financing and Debt" for further details) and a $1.2 million increase primarily attributable to the April 2019 financing of Waterford Lakes Town Center, located in Orlando, Florida. Offsetting these increases was a decrease of $3.0 million attributable to the transitions to the lenders of Towne West Square and West Ridge. The $11.2 million impairment on note receivable recorded in the 2020 period was attributed to the discounted payoff of the seller financing provided in conjunction with our other indebtedness (see "Financing and Debt" for further details).
Gain on disposition of interests in properties, net increased $11.0 million which is primarily attributed to the recording of a $15.4 million gain related to our disposition of interests in Seminole Towne Center, located in Sanford, Florida, in 2020 as this property, which was held in an unconsolidated joint venture, was transitioned to the lender pursuant to the terms of a deed-in-lieu of foreclosure agreement and our obligations related to this property ceased in connection with this transition. Offsetting this increase is a net decrease of $4.4 million which is primarily attributable to the timing of closings associated with the Four Corners transactions in the comparable periods.
Loss from unconsolidated entities increased $4.0 million which was primarily attributable to the temporary cessation of property operations, rent relief provided to tenants, and changes in our assessment of collectibility of tenant receivables as a result of the COVID-19 pandemic.
For WPG Inc., net loss attributable to noncontrolling interests primarily relates to the allocation of loss to third parties based on their respective weighted average ownership of limited partnership interest in WPG L.P., which percentage remained consistent over the periods.
Liquidity and Capital Resources
Our primary uses of cash include payment of operating expenses, working capital, debt repayment, including principal and interest, reinvestment in properties, development and redevelopment of properties, tenant allowance and dividends. Our primary sources of cash are operating cash flow and borrowings under our debt arrangements, including our Revolver (as defined in "Financing and Debt"), unsecured notes payable and senior unsecured term loans as further discussed below.
Annually, we derive most of our liquidity from leases that generate positive net cash flow from operations. However, total cash flows used in operations during the six months ended June 30, 2020 was $2.1 million as compared to cash flows from operations of $93.6 million during the six months ended June 30, 2019, which was a direct result of the temporary closing of our properties, rent relief provided to our tenants, and higher tenant receivable balances as a result of the COVID-19 pandemic. Due to the seasonal nature of certain operational activities as well as the ongoing impact of COVID-19 pandemic, the cash flows from operations for the six months ended June 30, 2020 are not necessarily indicative of the cash flows from operations expected for rest of 2020.
Our balance of cash and cash equivalents increased $85.6 million the six months ended June 30, 2020 to $127.0 million as of June 30, 2020. The increase was primarily due to net proceeds from the issuance of debt and the net proceeds from the disposition of properties, partially offset by capital expenditures, dividend distributions, net contributions to our joint ventures, and cash flow used to fund operating activities. See "Cash Flows" below for more information.
Because we own primarily long-lived income-producing assets, our financing strategy relies on a combination of long-term mortgage debt as well as unsecured debt supported by a quality unencumbered asset pool, providing us with ample flexibility from a liquidity perspective. Our strategy is to have the majority of our debt fixed either through fixed rate mortgages or interest rate swaps that effectively fix the interest rate. At June 30, 2020, floating rate debt (excluding loans hedged to fixed interest) comprised 25.6% of our total consolidated debt. We will continue to monitor our borrowing mix to limit market risk.
On June 30, 2020, we had an aggregate available borrowing capacity of $2.8 million under the Revolver, net of outstanding borrowings of $647.0 million and $0.2 million reserved for outstanding letters of credit. The weighted average interest rate on the Revolver was 2.3% and 2.7% during the three and six months ended June 30, 2020. The decrease in our borrowing capacity is primarily attributed to utilizing our Revolver to complete the payoff of the $250.0 million Exchange Notes on February 28, 2020 (capitalized terms as defined in "Financing and Debt"), and borrowings to enhance our liquidity as a result of lower cash receipts due to the COVID-19 global pandemic (refer to "COVID-19" for additional details on our response to enhance short-term liquidity).
The consolidated indebtedness of our business was approximately $3.2 billion as of June 30, 2020, or an increase of approximately $171.8 million from December 31, 2019. The change in consolidated indebtedness from December 31, 2019 is described in greater detail under "Financing and Debt."

44



Outlook
Our business model and WPG Inc.'s status as a REIT require us to regularly access the debt markets to raise funds for acquisition, development and redevelopment activity, and to refinance maturing debt. We may also, from time to time, access the equity capital markets to accomplish our business objectives. We believe we have sufficient cash on hand and cash flow from operations to address our debt maturities, distributions and capital needs throughout 2020.
The successful execution of our business strategy will require the availability of substantial amounts of operating and development capital both currently and over time. Sources of such capital could include additional bank borrowings, public and private offerings of debt or equity, including rights offerings, sale of certain assets and joint ventures.
Cash Flows
Our net cash flow used in operating activities totaled $2.1 million during the six months ended June 30, 2020, as compared to $93.6 million of cash flow provided by operating activities during the six months ended June 30, 2019. This decrease was directly attributable to the temporary closing of our properties, rent relief provided to our tenants, and higher tenant receivable balances as a result of the COVID-19 pandemic. During this period we also:
funded capital expenditures and redevelopment projects of $99.8 million;
received net proceeds from the sale of interests in properties and outparcels of $18.0 million;
funded investments in unconsolidated entities of $6.7 million;
received distributions of capital from unconsolidated entities of $1.8 million;
received net proceeds from our debt financing, refinancing and repayment activities of $212.9 million; and
funded distributions to common and preferred shareholders and unitholders of $35.2 million.
Prior to the COVID-19 global pandemic, we anticipated that cash generated from operations would have been sufficient in 2020 to meet operating expenses, monthly debt service, recurring capital expenditures, and cover the majority of distributions to shareholders necessary to maintain WPG Inc.'s status as a REIT on a long-term basis. In addition, we expected to be able to generate or obtain capital for nonrecurring capital expenditures, such as acquisitions, major building renovations and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from:
excess cash generated from operating performance and working capital reserves;
borrowings on our debt arrangements;
opportunistic asset sales;
additional secured or unsecured debt financing; or
additional equity raised in the public or private markets.
However, due to the COVID-19 global pandemic, we have experienced a significant deterioration in projected cash flows from operations which has caused us to increase our reliance on available funds from our debt arrangements, curtail planned capital expenditures due to tenant-related delays, temporarily suspend common dividend distributions, and seek other additional sources of financing as discussed above. Based on our current projections that have been stress tested for various COVID-19 scenario outcomes, we anticipate that the $127.0 million of consolidated cash on hand, along with our pro-rata share of joint venture cash, will provide us with sufficient liquidity to meet our financial obligations for the remainder of 2020.

45



Financing and Debt
Mortgage Debt
Total mortgage indebtedness at June 30, 2020 and December 31, 2019 was as follows (in thousands):
 
 
June 30,
2020
 
December 31,
2019
Face amount of mortgage loans
 
$
1,110,243

 
$
1,117,242

Fair value adjustments, net
 
2,312

 
3,463

Debt issuance cost, net
 
(4,608
)
 
(5,097
)
Carrying value of mortgage loans
 
$
1,107,947

 
$
1,115,608

A roll forward of mortgage indebtedness from December 31, 2019 to June 30, 2020 is summarized as follows (in thousands):
Balance at December 31, 2019
$
1,115,608

Debt amortization payments
(6,999
)
Issuance costs incurred upon debt modifications
(151
)
Amortization of fair value and other adjustments
(1,151
)
Amortization of debt issuance costs
640

Balance at June 30, 2020
$
1,107,947

In connection with the forbearance agreement executed on the mortgage note payable secured by Grand Central Mall, located in Parkersburg, West Virginia, the maturity date of the mortgage note payable was extended one year to July 6, 2021 (see "COVID-19" for additional details).
On April 3, 2020, the Company exercised the third of three options to extend the maturity of the $65.0 million term loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2021.
On February 14, 2020, the Company exercised the second of two options to extend the maturity of the $51.0 million mortgage note payable secured by Town Center at Aurora, located in Aurora, Colorado, for one year. The extended maturity is April 1, 2021. Additionally, as part of the forbearance agreement executed in conjunction with our COVID-19 relief efforts (see "COVID-19" for additional details), the Company was granted an additional one year extension option, which would extend the maturity to April 1, 2022. The extension option is subject to continued compliance with the terms of the mortgage agreement.
Highly-levered Assets
As of June 30, 2020, we have identified two consolidated mortgage loans that have leverage levels in excess of our targeted leverage and are working with the special servicers on these non-recourse mortgages. These mortgage loans total $78.2 million and encumber Charlottesville Fashion Square, located in Charlottesville, Virginia and Muncie Mall, located in Muncie, Indiana, both of which have been identified as noncore properties. We expect to improve our leverage once both, or a portion of them, are transitioned to the lenders, with minimal impact to net cash flows. See "Covenants" below for further discussion on these highly-levered assets as of June 30, 2020.

46



Corporate Debt
The following table identifies our total corporate debt outstanding at June 30, 2020 and December 31, 2019 (in thousands):
 
 
June 30,
2020
 
December 31,
2019
Notes payable:
 
 
 
 
Face amount - the Exchange Notes(1)
 
$

 
$
250,000

Face amount - Senior Notes due 2024(2)
 
720,900

 
720,900

Debt discount, net
 
(7,111
)
 
(7,864
)
Debt issuance costs, net
 
(4,689
)
 
(5,470
)
Total carrying value of notes payable
 
$
709,100

 
$
957,566

 
 
 
 
 
Unsecured term loans:(7)
 
 
 
 
Face amount - Term Loan(3)(4)
 
$
350,000

 
$
350,000

Face amount - December 2015 Term Loan(5)
 
340,000

 
340,000

Debt issuance costs, net
 
(2,791
)
 
(3,358
)
Total carrying value of unsecured term loans
 
$
687,209

 
$
686,642

 
 
 
 
 
Revolving credit facility:(3)(6)
 
 
 
 
Face amount
 
$
647,000

 
$
207,000

Debt issuance costs, net
 
(2,284
)
 
(2,855
)
Total carrying value of revolving credit facility
 
$
644,716

 
$
204,145

 
 
 
 
 
Other indebtedness:(8)
 
 
 
 
Face amount
 
$
98,900

 
$
98,900

Debt issuance costs, net
 
(1,535
)
 
(1,561
)
Accretion adjustment, net
 
(13,010
)
 
262

Total carrying value of other indebtedness
 
$
84,355

 
$
97,601

(1) The Exchange Notes were issued at a 0.028% discount and bore interest at 3.850% per annum.
(2) The Senior Notes due 2024 were issued at a 1.533% discount, bore interest at 5.950% per annum through August 14, 2019, at which time the interest rate increased to 6.450% per annum. The Senior Notes due 2024 mature on August 15, 2024.
(3) The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."
(4) The Term Loan bears interest at one-month LIBOR plus 2.10% per annum and will mature on December 30, 2022. We have interest rate swap agreements totaling $250.0 million, which effectively fix the interest rate on a portion of the Term Loan at 4.86% through June 30, 2021. At June 30, 2020, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 2.10% or 2.26%.
(5) The December 2015 Term Loan bears interest at one-month LIBOR plus 2.35% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 4.06% per annum through maturity.
(6) The Revolver provides borrowings on a revolving basis up to $650.0 million, bears interest at one-month LIBOR plus 1.80%, and will initially mature on December 30, 2021, subject to two six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. At June 30, 2020, we had an aggregate available borrowing capacity of $2.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At June 30, 2020, the applicable interest rate on the Revolver was one-month LIBOR plus 1.80% or 1.96%. The interest rate on the Revolver may vary in the future based upon the Company's credit rating and leveraged levels.
(7) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings and leveraged levels.
(8) Represents the financial liability associated with our failed sale and leaseback of land at Edison Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas; and Jefferson Valley Mall, located in Yorktown Heights, New York (collectively, the "Properties"). The face amount represents the sales price of the fee interest in the land at the Properties. The master ground lease has a 99-year term and includes fixed annual payments at an initial annualized rate of 7.4%, with annual rent escalators over the aforementioned term. The agreement also includes an option to repurchase the fee interest in the land at $109.3 million in year 30 of the master ground lease, to which the financial liability is being accreted to during the repurchase period. Proceeds received at closing were net of $55.0 million in bridge financing provided by the Company, which was included in "Deferred costs and other assets" on the consolidated balance sheet at December 31, 2019. Expense is being recognized utilizing an effective interest rate of 8.52% during the repurchase period.

47



On June 22, 2020, in order to accelerate repayment and bolster liquidity, the Company accepted the terms of a reduced payoff of the $55.0 million bridge financing provided in connection with the failed sale and leaseback noted above. In exchange for settling the bridge financing, the Company received $30.0 million in cash and the buyer/lessor reduced monthly rent payments totaling approximately $15.7 million over 27 months, commencing July 1, 2020. The present value of the reduced rent payments was reclassified from note receivable to other indebtedness, which is presented net of the accretion adjustment in the table above, and the Company recorded an impairment on the note receivable of approximately $11.2 million in connection with the extinguishment. The proceeds were used for general corporate purposes.
Covenants
Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of June 30, 2020, based on the amendments to our Facility and December 2015 Term Loan that we expect to close within the next week, as discussed in "COVID-19," management believes the Company would be in compliance with all covenants of its unsecured debt.
The total balance of mortgages was approximately $1.1 billion as of June 30, 2020. At June 30, 2020, certain of our consolidated subsidiaries were the borrowers under 20 non-recourse loans and two full-recourse loans secured by mortgages encumbering 24 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. If the borrower fails to comply with these covenants, the lender could accelerate the maturity for the debt and enforce its right against their collateral. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the maturity for the debt and enforce its right against its collateral.
On May 26, 2020, we received a notice of default letter, dated May 14, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $40.9 million mortgage loan secured by Port Charlotte Town Center, located in Port Charlotte, Florida. The notice was issued by the special servicer because the borrower elected to not pay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On May 22, 2020, we received a notice of default letter, dated May 21, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $47.3 million mortgage loan secured by Lincolnwood Town Center, located in Lincolnwood, Illinois. The notice was issued by the special servicer because the borrower elected to not pay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On February 21, 2020, we received a letter, dated that same date, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $33.1 million mortgage loan secured by Muncie Mall, located in Muncie, Indiana was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. On April 14, 2020, the Company received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company continues to hold title to the property.
On November 5, 2019, we received a notice of default letter, dated October 30, 2019, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $45.1 million mortgage loan secured by Charlottesville Fashion Square, located in Charlottesville, Virginia was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. On March 17, 2020, we received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company still holds title to the property.
At June 30, 2020, management believes the applicable borrowers under our other non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.

48



Summary of Financing
Our consolidated debt and the effective weighted average interest rates as of June 30, 2020 and December 31, 2019, consisted of the following (dollars in thousands):
 
 
June 30, 2020
 
Weighted
Average
Interest Rate
 
December 31, 2019
 
Weighted
Average
Interest Rate
Fixed-rate debt, face amount (1)
 
$
2,442,033

 
5.43
%
 
$
2,712,304

 
5.17
%
Variable-rate debt, face amount
 
812,000

 
2.04
%
 
372,000

 
3.73
%
Total face amount of debt
 
3,254,033

 
4.58
%
 
3,084,304

 
5.00
%
Note discount
 
(7,111
)
 
 
 
(7,864
)
 
 
Fair value adjustments, net
 
2,312

 
 
 
3,463

 
 
Debt issuance costs, net
 
(15,907
)
 
 
 
(18,341
)
 
 
Total carrying value of debt
 
$
3,233,327

 
 
 
$
3,061,562

 
 
(1) Includes variable rate debt whose interest rates have been fixed via swap agreements.
Contractual Obligations
The following table summarizes the material aspects of the Company's future obligations for consolidated entities as of June 30, 2020, for the remainder of 2020 and for subsequent years thereafter assuming the obligations remain outstanding through maturities noted below (in thousands):
 
 
2020
 
2021 - 2022
 
2023 - 2024
 
Thereafter
 
Total
Long term debt(1)
 
$
50,507

 
$
1,446,229

 
$
1,390,559

 
$
390,133

 
$
3,277,428

Interest payments(2)
 
68,931

 
255,705

 
136,440

 
291,405

 
752,481

Distributions(3)
 
3,568

 

 

 

 
3,568

Ground rent/operating leases(4)
 
1,105

 
4,321

 
2,470

 
20,378

 
28,274

Purchase/tenant obligations(5)
 
67,549

 
67,549

 

 

 
135,098

Total
 
$
191,660

 
$
1,773,804

 
$
1,529,469

 
$
701,916

 
$
4,196,849

(1) Represents principal maturities only and therefore excludes net fair value adjustments of $2,312, debt issuance costs of $(15,907) and note discount of $(7,111) as of June 30, 2020. The principal maturities reflect any available extension options within the control of the Company. Additionally, includes the difference between our carrying value of the financial liability of $85.9 million and the repurchase option payment of $109.3 million related to our failed sale and leaseback transaction (see "Financing and Debt - Corporate Debt" for additional details).
(2) Variable rate interest payments are estimated based on the LIBOR rate at June 30, 2020.
(3) Since there is no required redemption, distributions on the Series H Preferred Shares/Units, Series I Preferred Shares/Units and Series I-1 Preferred Units may be paid in perpetuity; for purposes of this table, such distributions are included upon declaration by the Board as the preferred shares/units are callable at the Company's discretion.
(4) Represents minimum future lease payments due through the end of the initial lease term under executed leases.
(5) Includes amounts due under executed leases and commitments to vendors for development and other matters.

49



The following table summarizes the material aspects of the Company's proportionate share of future obligations for unconsolidated entities as of June 30, 2020, for the remainder of 2020 and for subsequent years thereafter assuming the obligations remain outstanding through maturities noted below (in thousands):
 
 
2020
 
2021 - 2022
 
2023 - 2024
 
Thereafter
 
Total
Long term debt(1)
 
$
5,618

 
$
48,354

 
$
21,374

 
$
541,178

 
$
616,524

Interest payments(2)
 
15,779

 
47,984

 
44,393

 
22,652

 
130,808

Ground rent/operating leases(3)
 
1,992

 
8,058

 
8,470

 
185,327

 
203,847

Purchase/tenant obligations(4)
 
16,054

 
16,054

 

 

 
32,108

Total
 
$
39,443

 
$
120,450

 
$
74,237

 
$
749,157

 
$
983,287

(1) Represents principal maturities only and therefore excludes net fair value adjustments of $3,414 and debt issuance costs of $(2,102) as of June 30, 2020. In addition, the principal maturities reflect any available extension options.
(2) Variable rate interest payments are estimated based on the LIBOR rate at June 30, 2020.
(3) Represents minimum future lease payments due through the end of the initial lease term under executed leases.
(4) Includes amounts due under executed leases and commitments to vendors for development and other matters.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements consist primarily of investments in joint ventures which are common in the real estate industry. Joint ventures typically fund their cash needs through secured debt financings obtained by and in the name of the joint venture entity. The joint venture debt is secured by a first mortgage, is without recourse to the joint venture partners, and does not represent a liability of the partners, except to the extent the partners or their affiliates expressly guarantee the joint venture debt. As of June 30, 2020, there were no guarantees of joint venture related mortgage indebtedness. In addition to obligations under mortgage indebtedness, our joint ventures have obligations under ground leases and purchase/tenant obligations. Our share of obligations under joint venture debt, ground leases and purchase/tenant obligations is quantified in the unconsolidated entities table within "Contractual Obligations" above. WPG may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not required contractually or otherwise.
Equity Activity
Exchange Rights
Subject to the terms of the limited partnership agreement of WPG L.P., limited partners in WPG L.P. have, at their option, the right to exchange all or any portion of their units for shares of WPG Inc. common stock on a one‑for‑one basis or cash, as determined by WPG Inc. Therefore, the common units held by limited partners are considered by WPG Inc. to be share equivalents and classified as noncontrolling interests within permanent equity, and classified by WPG L.P. as permanent equity. The amount of cash to be paid if the exchange right is exercised and the cash option is selected will be based on the market value of WPG Inc.'s common stock as determined pursuant to the terms of the WPG L.P. Partnership Agreement. At June 30, 2020, WPG Inc. had reserved 34,479,892 shares of common stock for possible issuance upon the exchange of units held by WPG L.P. limited partners.
Stock Based Compensation
On May 28, 2014, the WPG Inc. Board of Directors (the "Board") adopted the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the "2014 Plan"), which permitted the Company to grant awards to current and prospective directors, officers, employees and consultants of the Company or any affiliate. An aggregate of 10,000,000 shares of common stock were reserved for issuance, with a maximum number of awards to be granted to a participant in any calendar year of 500,000 shares/units. On May 16, 2019, the common shareholders of WPG Inc. approved the Washington Prime Group, L.P. 2019 Stock Incentive Plan (the "2019 Plan"), which replaced the 2014 Plan with respect to the issuance of new awards. The Board and its Compensation Committee (the "Committee") previously approved and adopted the 2019 Plan, subject to WPG Inc. common shareholder approval, during the Board and Committee's regular meetings in February 2019. An aggregate of 7,290,000 shares of common stock are reserved for issuance, excluding carryover shares from the 2014 Plan. Awards may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs") or other stock-based awards in WPG Inc., long term incentive units ("LTIP units" or "LTIPs") or performance units ("Performance LTIP Units") in WPG L.P. The 2019 Plan terminates on May 16, 2029.
The following is a summary by type of the awards that the Company issued during the six months ended June 30, 2020 and June 30, 2019 under the 2014 Plan and 2019 Plan.

50



Annual Long-Term Incentive Awards
During the six months ended June 30, 2020 and 2019, the Company approved the terms and conditions of the 2020 and 2019 annual awards (the "2020 Annual Long-Term Incentive Awards" and "2019 Long-Term Incentive Awards," respectively) for certain executive officers and employees of the Company. Under the terms of the awards program, each participant is provided the opportunity to receive (i) time-based RSUs and (ii) performance-based stock units ("PSUs"). RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. RSUs will vest in one-third installments on each annual anniversary of the respective Grant Date (as referenced below), subject to the participant's continued employment with the Company through each vesting date and the participant's continued compliance with certain applicable covenants. During the service period, dividend equivalents will be paid in cash accruals or under some circumstances, common shares, with respect to the RSUs corresponding to the amount of any dividends paid by the Company to the Company's common shareholders for the applicable dividend payment dates. Compensation expense is recognized on a straight-line basis over the three year vesting term. Actual PSUs earned may range from 0%-150% of the PSUs allocated to the award recipient, based on the Company's total shareholder return ("TSR") compared to a peer group based on companies with similar assets and revenue over a three-year performance period that commenced on the respective Grant Date (as referenced below). During the performance period, dividend equivalents corresponding to the amount of any regular cash dividends paid by the Company to the Company’s common shareholders for the applicable dividend payment dates will accrue and be deemed reinvested in additional PSUs, which will be settled in common shares at the same time and only to the extent that the underlying PSU is earned and settled in common shares. Payout of the PSUs is also subject to the participant’s continued employment with the Company through the end of the performance period. The PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the three-year performance period.
The following table summarizes the issuance of the 2020 Annual Long-Term Incentive Awards and 2019 Annual Long-Term Incentive Awards, respectively:
 
 
2020 Annual Long-Term Incentive Awards
 
2019 Annual Long-Term Incentive Awards
Grant Date
 
February 25, 2020
 
February 20, 2019
 
 
 
 
 
RSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$2.41
 
$5.77
 
 
 
 
 
PSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$1.74
 
$4.98
During the six months ended June 30, 2020, the performance period related to PSUs awarded in conjunction with the 2017 annual award ended. There was no payout as the Company's TSR rank did not exceed the minimum required threshold for payout and 262,787 PSUs were forfeited.
WPG Restricted Stock Units
During the six months ended June 30, 2020 and 2019, the Company awarded 1,231,188 RSUs, with a grant date fair value of $0.8 million, and 331,792 RSUs, with a grant-date fair value of $1.5 million, respectively, to certain employees and non-employee members of the Board. The RSUs are service-based awards and the related fair value is expensed over the applicable service periods, except in instances that result in accelerated vesting due to severance arrangements or retirement of Board members.
Stock Options
During the six months ended June 30, 2020, no stock options were granted to employees, no stock options were exercised by employees and 31,434 stock options were canceled, forfeited or expired. As of June 30, 2020, there were 569,855 stock options outstanding. During the six months ended June 30, 2019, no stock options were granted to employees, 391 stock options were exercised by employees and 52,152 stock options were canceled, forfeited or expired.
Share Award Related Compensation Expense
During the three and six months ended June 30, 2020, the Company recorded compensation expense pertaining to the awards granted of $1.9 million and $3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive loss. During the three and six months ended June 30, 2019, the Company recorded compensation expense pertaining to the awards granted of $2.0 million and $3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive loss. In certain instances, employment agreements and stock compensation programs provide for accelerated vesting when executives are terminated without cause. Additionally, the Committee may, in its discretion, accelerate the vesting for retiring Board members.

51



Distributions
For the three months ended June 30, 2020, no common share/unit dividends were declared by the Board as common share/unit dividends were suspended in response to the COVID-19 pandemic. For the six months ended June 30, 2020, the Board declared common share/unit dividends of $0.125. During the three and six months ended June 30, 2019, the Board declared common share/unit dividends of $0.25 and $0.50 per common share/unit, respectively.
Reverse Share Split
On August 6, 2020, the Board authorized a one-for-nine reverse share split of the Company’s common shares and WPG L.P. operating units, subject to shareholder approval. Upon shareholder approval and as a result of the reverse share split, each nine shares of the Company's issued and outstanding common shares/units will be automatically combined and converted into one issued and outstanding common share/unit. The Company plans to hold a special meeting of shareholders to vote on the recommendation before the end of 2020. The implementation of the reverse share split is intended to increase the per share trading price of the Company’s common shares in order to satisfy the continued listing criteria set forth in Section 802.01C of the Listed Company Manual of the New York Stock Exchange and cure the noncompliance notification received by the Company on April 28, 2020.
Acquisitions and Dispositions
Buy-sell, marketing rights, and other exit mechanisms are common in real estate partnership agreements. Most of our partners are institutional investors who have a history of direct investment in retail real estate. We and our partners in our joint venture properties may initiate these provisions (subject to any applicable lock up or similar restrictions). If we determine it is in our shareholders' best interests for us to purchase the joint venture interest and we believe we have adequate liquidity to execute the purchase without hindering our cash flows, then we may initiate these provisions or elect to buy. If we decide to sell any of our joint venture interests, we expect to use the net proceeds to reduce outstanding indebtedness or to reinvest in development, redevelopment, or expansion opportunities.
Acquisitions.    We pursue the acquisition of properties that meet our strategic criteria. No acquisitions were completed during the six months ended June 30, 2020.
Dispositions.    We pursue the disposition of properties that no longer meet our strategic criteria or interests in properties to generate proceeds for alternate business uses.
On March 13, 2020, Seminole Towne Center, located in Sanford, Florida, was transitioned to the lender pursuant to the terms within a deed-in-lieu of foreclosure agreement. This property was held in an unconsolidated joint venture and all involvement between us and the related property ceased in connection with this transition.
On January 31, 2020, we completed the sale of Dekalb Plaza, located in King of Prussia, Pennsylvania, to an unaffiliated private real estate investor for a purchase price of $13.6 million. The net proceeds of $13.4 million was used to fund ongoing redevelopment efforts and general corporate purposes.
On January 14, 2020, we completed the sale of Matteson Plaza, located in Matteson, Illinois, to an unaffiliated private real estate investor for a purchase price of $1.1 million. The net proceeds of $0.4 million was used for general corporate purposes.
During the six months ended June 30, 2020, we completed the sale of 2 outparcels to Four Corners. The allocated purchase price was $2.0 million (see details under "Overview - Basis of Presentation - Four Corners Outparcel Sales").
Additionally, during the six months ended June 30, 2020, the Company sold certain undeveloped and developed land parcels for an aggregate purchase price of $2.4 million.
In connection with the sales noted above, the Company recorded net gains of $0.4 million and $27.2 million for the three and six months ended June 30, 2020, respectively, which are included in gain on disposition of interests in properties, net in the consolidated statements of operations and comprehensive loss. The net proceeds were used to fund ongoing redevelopment efforts and for general corporate purposes.
Development Activity
New Development, Expansions and Redevelopments.  We routinely incur costs related to construction for significant redevelopment and expansion projects at our properties. Prior to the COVID-19 pandemic, we planned to invest approximately $90 million to $110 million for our pro-rata share of development costs for fiscal year 2020. While we maintain our commitment to complete our redevelopment projects, we have deferred some of the capital spend to 2021 as some of our retailers plan to open later than originally planned. We now anticipate our share of development costs to be approximately $50 million for the remainder of fiscal year 2020. Our estimated stabilized return or yield, on invested capital typically ranges in the high single digits.

52



We have identified 30 department stores (Sears, The Bon-Ton Stores, and one former Belk store) in our Tier 1 and open air portfolio that we plan to redevelop and we are actively working on repositioning. Of these locations, two are operating Sears locations, resulting in 28 that we can currently develop. At the end of the second quarter 2020, 18 of these former department store locations have been addressed with signed letters of intent (LOIs), fully executed leases, or replacement tenant openings. Many projects are actively under construction and three replacement stores opened in 2019. Three additional replacement tenants opened recently, one each in April, June and July of 2020. These former department store locations represent an opportunity to enhance the experience at the property by bringing in offerings such as dining, grocery, entertainment, home furnishings, and mixed-use components as well as dynamic retail offerings. These stores are in our Tier 1 and open air properties and exclude department stores that are owned by third parties, such as Seritage. With $50 million already incurred as of the end of 2019, we plan to spend up to an additional $300 million over the next three to four years to complete the redevelopment of these former department stores. The progress on some of these repositioning projects are discussed below:
At Grand Central Mall in Parkersburg, West Virginia, we replaced an Elder-Beerman with a new 20,000 square foot H&M store, their first store in West Virginia, which opened in October 2018. Additionally, we added a new Five Below and Ulta Beauty, which opened in September 2018, in the former hhgregg store, and we added a Big Lots, which opened in July 2019, in the former Toys R' Us location. Lastly, we have commenced construction on the former Sears space which will add an exciting exterior facing element to the center featuring dynamic first-to-market retailers, including Home Goods, PetSmart, Ross Dress for Less, and TJ Maxx. This new open air component will complete the transformation of Grand Central Mall from a traditional enclosed regional center into a hybrid town center and the new stores are expected to open in the spring of 2021. We will invest between $31 million and $33 million in this redevelopment with an expected yield of approximately 6% - 8%.
We proactively terminated a lease with Sears at Southern Park Mall in Youngstown, Ohio and the store closed during the third quarter of 2018. In 2019, we completed the demolition of the former Sears store and plans include an exciting line up of outward facing retail stores and restaurants, as well as green space that can be used for community events. The planned additions include fitness, dining and shopping offerings that will diversify the mix at the property.
At The Mall at Fairfield Commons, in Beavercreek, Ohio, the Sears store closed in December 2018. We have repositioned the former department store with a Morris Home Furniture and a first to market Round 1 Entertainment. Morris Home Furniture opened in June 2020, and occupies the upper level and Round 1 Entertainment opened in November 2019 and occupies the lower level.
At WestShore Plaza, in Tampa, Florida, we terminated the Sears lease during the first quarter of 2019, and we are currently in the entitlement process to bring a mixed use component to the center. In addition to gaining control of the former Sears location, we purchased a parcel that is currently leased to office tenants. Acquiring this high-visibility corner allows a more strategic approach as we add our exciting mixed-use component to the property. We are actively working on redevelopment plans, and additional details will be announced in the future.
Dillard’s has agreed to open and/or expand within two Tier 1 assets. Mesa Mall, located in Grand Junction, Colorado, will receive a newly constructed Dillard’s which will be their first location within the catchment area and will replace Sears, which formerly occupied the site. The store at Mesa Mall is expected to open in the fall of 2021. In addition, Dillard’s added a second location within Southgate Mall, replacing a former Herberger’s (former Bon-Ton, Inc. Stores) further illustrating robust demand within the catchment area. The Dillard’s store at Southgate Mall opened in June 2019. Our combined investment in these two department store repositioning efforts is expected to be approximately $8 million.
At Morgantown Mall in Morgantown, West Virginia, we added a 70,000 square foot Dunham’s Sports store, which opened in April 2020, to replace a former Elder-Beerman (former Bon-Ton, Inc. Stores). In addition, at Morgantown Mall, WVU Medicine repurposed the former Sears location as a logistics, distribution and fulfillment center serving the broader WVU Medicine network, and opened in July 2020. Finally, we have plans to add an Ollie's Bargain Outlet and entertainment user in the former Belk location and are working on the final lease negotiations with the entertainment user.
At Port Charlotte Town Center in Port Charlotte, Florida, we have a signed LOI to add a new-to-market entertainment venue to replace a former Sears store. This premier entertainment and dining destination will offer food, family activities and the newest arcade games in the 88,000 square foot location.
FieldhouseUSA (see below for information on FieldhouseUSA) will replace the former Sears department store locations at both Polaris Fashion Place® in Columbus, Ohio and Town Center at Aurora® in Aurora, Colorado. The Company proactively gained control of both Sears spaces in 2018 for redevelopment efforts. New retail and complementary mixed uses are planned for both projects with additional details being announced in the future.

53



At The Mall at Johnson City in Johnson City, Tennessee, we plan to replace the former Sears with a first-to-market Home Goods. We proactively negotiated an early termination with Sears in January 2020 to gain control to bring this tenant to the market. We are also adding a new multi-tenant building in the location of the former Sears Auto Center to add new dining options including Chipotle Mexican Grill and Chicken Salad Chick. In addition to these new retail additions, we will complete an extensive renovation of the property.
We continue construction on the final phase of Fairfield Town Center, located in the Houston, Texas metropolitan area. This final phase will add an additional 130,000 square feet of new GLA to accommodate strong demand, resulting in close to 500,000 square feet of GLA upon completion. Leasing for this new phase is over 97% committed, including deals with a national theater and a national value fashion apparel retailer. The estimated investment in this development will be approximately $28 million, and we expect tenants to begin opening in late 2020 and throughout 2021.
At The Outlet Collection® | Seattle, in Auburn, Washington, we have plans to add a FieldhouseUSA to the property in a former Sam’s Club store. FieldhouseUSA specializes in sporting leagues, events and tournaments by offering year-round league and tournament play in team sports such as basketball, soccer, volleyball and flag football in addition to programs such as birthday parties, corporate events, performance training and skills training. This use will greatly complement the recently added Dave & Buster’s at the property and we anticipate announcing further details about this exciting redevelopment in the near future. The estimated investment in the redevelopment will be between $11 million and $13 million and the yield is anticipated to be approximately 9% - 10%.
At Dayton Mall in Dayton, Ohio, Ross Dress for Less opened in October of 2019 and replaced a former hhgregg store and Morris Furniture recently opened in a newly combined larger store from previous small shop space. Additionally, during the fourth quarter of 2019, we purchased the former Elder-Beerman store from a third party in order to gain control of the redevelopment. Our plans involve adding new uses to the center to compliment the strong retail offerings at the property.
Capital Expenditures
The following table summarizes total consolidated capital expenditures on a cash basis for the six months ended June 30, 2020 (in thousands):
Redevelopments and expansions
 
$
70,245

Tenant allowances
 
10,528

Operational capital expenditures
 
11,018

Total(1)
 
$
91,791

(1)Excludes capitalized interest, wages and real estate taxes, as well as expenditures for certain equipment and fixtures, commissions, and project costs, which are included in capital expenditures, net on the consolidated statement of cash flows.

54



Forward-Looking Statements
Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and it is possible that our actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such factors include, but are not limited to: changes in asset quality and credit risk; ability to sustain revenue and earnings growth; changes in political, economic or market conditions generally and the real estate and capital markets specifically; the impact of increased competition; the availability of capital and financing; tenant or joint venture partner(s) bankruptcies; the failure to increase enclosed retail store occupancy and same-store operating income; risks associated with acquisitions, dispositions, development, expansion, leasing and management of properties; changes in market rental rates; trends in the retail industry; relationships with anchor tenants; risks relating to joint venture properties; costs of common area maintenance; competitive market forces; the level and volatility of interest rates; the rate of revenue increases as compared to expense increases; the financial stability of tenants within the retail industry; the restrictions in current financing arrangements or the failure to comply with such arrangements; the liquidity of real estate investments; the impact of changes to tax legislation and our tax positions; losses associated with closures, failures and stoppages associated with the spread and proliferation of the COVID-19 (coronavirus) outbreak; failure to qualify as a real estate investment trust; the failure to refinance debt at favorable terms and conditions; loss of key personnel; material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities; possible restrictions on the ability to operate or dispose of any partially-owned properties; the failure to achieve earnings/funds from operations targets or estimates; the failure to achieve projected returns or yields on (re)development and investment properties (including joint ventures); expected gains on debt extinguishment; changes in generally accepted accounting principles or interpretations thereof; terrorist activities and international hostilities; the unfavorable resolution of legal or regulatory proceedings; the impact of future acquisitions and divestitures; assets that may be subject to impairment charges; and significant costs related to environmental issues; and changes in LIBOR reporting practices or the method in which LIBOR is determined. We discussed these and other risks and uncertainties under Part I, "Item 1A. Risk Factors" in the combined Annual Report on Form 10-K for WPG Inc. and WPG L.P. for the year ended December 31, 2019 and other reports filed with the Securities and Exchange Commission. We undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.
Non-GAAP Financial Measures
Industry practice is to evaluate real estate properties in part based on FFO, NOI and comparable NOI. We believe that these non-GAAP measures are helpful to investors because they are widely recognized measures of the performance of REITs and provide a relevant basis for our comparison among REITs. We also use these measures internally to measure the operating performance of our portfolio.
We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts, or NAREIT, as net income (loss) computed in accordance with GAAP:
excluding real estate related depreciation and amortization;
excluding gains and losses from extraordinary items and cumulative effects of accounting changes;
excluding gains and losses from the sales or disposals of previously depreciated retail operating properties;
excluding gains and losses upon acquisition of controlling interests in properties;
excluding impairment charges of depreciable real estate;
plus the allocable portion of FFO of unconsolidated entities accounted for under the equity method of accounting based upon economic ownership interest.
We include in FFO gains and losses realized from the sale of land, marketable and non-marketable securities, and investment holdings of non-retail real estate.
You should understand that our computation of these non-GAAP measures might not be comparable to similar measures reported by other REITs and that these non-GAAP measures:
do not represent cash flow from operations as defined by GAAP;
should not be considered as alternatives to net (loss) income determined in accordance with GAAP as a measure of operating performance; and
are not alternatives to cash flows as a measure of liquidity.

55



The following schedule reconciles total FFO to net loss for the three and six months ended June 30, 2020 and 2019 (in thousands, except share/unit amounts):
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net loss
 
$
(93,413
)
 
$
(16,880
)
 
$
(85,853
)
 
$
(19,443
)
Less: Preferred dividends and distributions on preferred operating partnership units
 
(3,568
)
 
(3,568
)
 
(7,136
)
 
(7,136
)
Adjustments to Arrive at FFO:
 
 
 
 
 
 
 
 
Real estate depreciation and amortization, including joint venture impact
 
63,732

 
81,691

 
133,501

 
157,905

Impairment loss, including (gain) on disposition of interests in properties, net
 
23,817

 

 
(293
)
 

FFO of the Operating Partnership (1)
 
(9,432
)
 
61,243

 
40,219

 
131,326

FFO allocable to limited partners
 
(1,467
)
 
9,529

 
6,258

 
20,433

FFO allocable to common shareholders/unitholders
 
$
(7,965
)
 
$
51,714

 
$
33,961

 
$
110,893

 
 
 
 
 
 
 
 
 
Diluted loss per share/unit
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)
Adjustments to arrive at FFO per share/unit:
 
 
 
 
 
 
 
 
Real estate depreciation and amortization, including joint venture impact
 
0.28

 
0.36

 
0.59

 
0.71

Impairment loss, including (gain) on disposition of interests in properties, net
 
0.11

 
0.00

 
0.00

 
0.00

Diluted FFO per share/unit
 
$
(0.04
)
 
$
0.27

 
$
0.18

 
$
0.59

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
 
190,541,074

 
188,486,685

 
189,842,197

 
188,285,604

Weighted average limited partnership units outstanding
 
34,485,545

 
34,752,540

 
34,539,716

 
34,741,867

Weighted average additional dilutive securities outstanding (2)
 

 

 

 
12,790

Weighted average shares/units outstanding - diluted
 
225,026,619

 
223,239,225

 
224,381,913

 
223,040,261


(1)
FFO of the operating partnership decreased $91.1 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. During the six months ended June 30, 2020, comparable NOI, inclusive of sold centers, decreased $56.6 million, which can be primarily attributed to the economic impact of the COVID-19 pandemic. Additionally, during the quarter ended June 30, 2020 we recorded an $11.2 million impairment on a note receivable that related to seller bridge financing that the Company provided in connection with a failed sale-leaseback transaction that occurred during the fourth quarter of 2019. Also, we received $17.5 million less in FFO from the sale of outparcels and properties when comparing the six months ending June 30, 2020 to 2019. Lastly, we experienced a decrease of $4.9 million in mark-to-market lease revenue, fee income, and lease termination income.

(2)
The weighted average additional dilutive securities for the six months ended June 30, 2019 are excluded for purposes of calculating diluted loss per share/unit because their effect would have been anti-dilutive.

56



We deem NOI and comparable NOI to be important measures for investors and management to use in assessing our operating performance, as these measures enable us to present the core operating results from our portfolio, excluding certain non-cash, corporate-level and nonrecurring items. Specifically, we exclude from operating income the following items in our calculations of comparable NOI:
straight-line rents and fair value rent amortization;
management fee allocation to promote comparability across periods; and
termination income, out-parcel sales and material insurance proceeds, which are deemed to be outside of normal operating results.
The following schedule reconciles comparable NOI for our Tier 1 and open air properties to net loss and presents comparable NOI percent change for the three and six months ended June 30, 2020 and 2019 (in thousands):
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net loss
 
$
(93,413
)
 
$
(16,880
)
 
$
(85,853
)
 
$
(19,443
)
Loss from unconsolidated entities
 
4,754

 
1,713

 
5,786

 
1,761

Income and other taxes
 
593

 
229

 
(24
)
 
585

Impairment on note receivable
 
11,237

 

 
11,237

 

Gain on disposition of interests in properties, net
 
(437
)
 
(6,241
)
 
(27,192
)
 
(16,231
)
Interest expense, net
 
37,445

 
39,143

 
76,080

 
75,973

Operating (loss) income
 
(39,821
)
 
17,964

 
(19,966
)
 
42,645

 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
55,380

 
71,816

 
115,084

 
138,194

Impairment loss
 
23,800

 

 
25,119

 

General and administrative
 
11,350

 
13,124

 
23,614

 
27,249

Fee income
 
(1,230
)
 
(2,680
)
 
(3,417
)
 
(5,427
)
Management fee allocation
 
36

 
80

 
36

 
84

Pro-rata share of unconsolidated joint ventures in comp NOI
 
10,577

 
17,372

 
27,979

 
34,824

Property allocated corporate expense
 
4,192

 
4,209

 
8,947

 
8,333

Non-comparable properties and other (1)
 
1,221

 
(248
)
 
1,221

 
(1,214
)
NOI from sold properties
 
(28
)
 
(1,295
)
 
(75
)
 
(1,700
)
Termination income
 
(27
)
 
(626
)
 
(106
)
 
(1,412
)
Straight-line rents
 
(128
)
 
(1,165
)
 
1,493

 
(1,907
)
Ground lease adjustments for straight-line and fair market value
 
5

 
5

 
10

 
10

Fair market value and inducement adjustments to base rents
 
(1,647
)
 
(1,487
)
 
(2,631
)
 
(4,387
)
Less: Tier 2 and noncore properties (2)
 
(4,661
)
 
(10,522
)
 
(14,904
)
 
(22,212
)
 
 
 
 
 
 
 
 
 
Comparable NOI - Tier 1 and open air properties
 
$
59,019

 
$
106,547

 
$
162,404

 
$
213,080

   Comparable NOI percentage change - Tier 1 and open air properties
 
(44.6)%
 

 
(23.8)%
 


(1)
Represents an adjustment to remove the NOI amounts from properties not owned and operated in all periods presented, certain non-recurring expenses (such as hurricane related expenses), as well as material insurance proceeds and other non-recurring income received in the periods presented. This also includes adjustments related to the rents from the outparcels sold to Four Corners.

(2)
NOI from the Tier 2 and noncore properties held in each period presented.

57



Item 3.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in interest rates, primarily LIBOR. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower the overall borrowing costs by closely monitoring our variable rate debt and converting such debt to fixed rates when we deem such conversion advantageous. From time to time, we may enter into interest rate swap agreements or other interest rate hedging contracts. While these agreements are intended to lessen the impact of rising interest rates, they also expose us to the risks that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly effective cash flow hedges under GAAP guidance. As of June 30, 2020, $812.0 million (excluding debt issuance costs of $5.1 million) of our aggregate consolidated indebtedness (25.6% of total consolidated indebtedness) was subject to variable interest rates, excluding amounts outstanding under variable rate loans that have been hedged to fixed interest rates.
If LIBOR rates of interest on our variable rate debt fluctuated, our future earnings and cash flows would be impacted, depending upon the current LIBOR rates and the existence of any derivative contracts currently in effect.  Based upon our variable rate debt balance as of June 30, 2020, a 50 basis point increase in LIBOR rates would result in a decrease in earnings and cash flow of $4.1 million annually and a 50 basis point decrease in LIBOR rates (or to 0% for LIBOR rates that are below 0.50%) would result in an increase in earnings and cash flow of $1.3 million annually.  This assumes that the amount outstanding under our variable rate debt remains at $812.0 million, the balance as of June 30, 2020.
Item 4.
Controls and Procedures
Controls and Procedures of Washington Prime Group Inc.
Evaluation of Disclosure Controls and Procedures. WPG Inc. maintains disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) that are designed to provide reasonable assurance that information required to be disclosed in the reports that WPG Inc. files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.
Management of WPG Inc., with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of WPG Inc.'s disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the disclosure controls and procedures of WPG Inc. were effective.
Changes in Internal Control Over Financial Reporting.  There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Controls and Procedures of Washington Prime Group, L.P.
Evaluation of Disclosure Controls and Procedures. WPG L.P. maintains disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports that WPG L.P. files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer of WPG Inc., WPG L.P.'s general partner, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.
Management of WPG L.P., with the participation of the Chief Executive Officer and Chief Financial Officer of WPG Inc., WPG L.P.'s general partner, evaluated the effectiveness of the design and operation of WPG L.P.'s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of WPG Inc., WPG L.P.'s general partner, concluded that, as of the end of the period covered by this report, WPG L.P.'s disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting.  There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

58



PART II
OTHER INFORMATION

Item 1.
Legal Proceedings
We are involved from time-to-time in various legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such litigation, claims, and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable, and the amount can be reasonably estimated.
Item 1A.
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the combined Annual Report on Form 10-K for WPG Inc. and WPG L.P. for the year ended December 31, 2019 (the “2019 Form 10-K”). Except for additional risk factors as noted below, there have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A, of the 2019 Form 10-K. In addition to the Company, WPG Inc., WPG L.P. and each of its affiliates, may, on a collective basis, be referred to in this Item as “we,” “us” or “our.”
The COVID-19 global pandemic has caused a significant disruption in non-essential retail commerce and may have a material adverse impact upon the Company’s financial condition and results of operations.
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of COVID-19. The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects since March 2020, as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. During our second 2020 fiscal quarter, in the interest of public health and safety, jurisdictions (national, state and local) where our shopping centers are located, required mandatory closures, capacity limitations or other restrictions for those that continue to operate which impacted our tenants' ability to operate as well as pay rent and other related lease charges or otherwise fulfill the obligations of their respective leases. As a result of these developments, the Company expects a material adverse impact on its revenues, results of operations and cash flows for the year ending December 31, 2020 despite the fact that as of the filing date of this Form 10-Q, the majority of our enclosed retail properties were open in some capacity and our open air properties operated throughout much of the period of mandatory closures to extent permitted by applicable law. However, this situation is ever evolving and additional impacts to the business may arise of which we are not currently aware. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or relaxation of closure requirements, when our enclosed shopping centers and tenants will reopen at full capacity, and when shoppers will fully re-engage with our brand.
In addition to the impacts and uncertainties listed above, the outbreak of COVID-19 has caused the Company to significantly modify and alter the working environment and practices of its employees at its corporate offices and properties which could adversely impact the efficiency and effectiveness of the Company’s personnel in managing and operating its properties as well as completing other operating and administrative functions that are important to its business. Continued efforts by large numbers of the Company’s employees to work extensively and, in some cases, exclusive remotely could also expose the Company to additional risks, such as increased cybersecurity risk.
Our revenues are dependent on the level of revenues realized by our tenants, and a decline in their revenues could materially and adversely affect our business, results of operations and financial condition.
We are subject to various risks that affect the retail environment generally, including levels of consumer spending, seasonality, changes in economic conditions, unemployment rates, an increase in the use of the Internet by retailers and consumers, and natural disasters. Levels of consumer spending could be adversely affected by, for example, increases in consumer savings rates, increases in tax rates, reduced levels of income, interest rate increases, other declines in consumer net worth, unemployment levels, and a strengthening of the U.S. dollar as compared to non-U.S. currencies.

59



The existence and persistence of the COVID-19 pandemic and related mitigation efforts have resulted in travel restrictions and plant shutdowns, all of which have impacted, and could continue to impact, our tenants’ supply chains and, ultimately, retail product availability. State and local stay at home orders, occupancy restrictions, masking/face covering requirements and social distancing as a result of the COVID-19 outbreak have impacted and continue to impact customer traffic at our properties. Even though such orders have been lifted in places, customer traffic may continue to be adversely impacted. The COVID-19 outbreak has resulted in property shutdowns, and may result in additional shutdowns of our retail properties, particularly in certain geographies reporting increasing diagnoses of the virus or related illnesses. The extent of the outbreak and its impact on our tenants and our operations is uncertain, but a prolonged outbreak as well as related mitigation efforts could continue to have a material impact on our revenues and could materially and adversely affect our business, results of operations and financial condition.
As a result of these and other economic and market-based factors, our tenants might be unable to pay their existing minimum rents or pay landlord recovery charges. Because substantially all of our income is derived from rentals of commercial real property, our income and cash flow would be adversely affected if a significant number of tenants are unable to meet their obligations or their revenues decline, especially if they were tenants with a significant number of locations within our portfolio. Some of our tenants have not re-opened after the closure restrictions were lifted and operating limitations eased, which will likely have a material impact on occupancy at our properties which could result in an increase in the number of co-tenancy claims because required occupancy thresholds were not satisfied. Additionally, a further or continued decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates.
Many of the Company’s properties depend on anchor stores or major tenants to attract shoppers and drive customer traffic and the existence and persistence of the COVID-19 pandemic and related mitigation efforts could adversely impact in a material way the viability of a respective center or property as well as its tenants.
Our open air properties and enclosed retail properties are typically anchored by department stores and other large nationally or regionally recognized tenants. The existence and persistence of the COVID-19 pandemic and related mitigation efforts may result in department store or major tenant closing or reducing operations for a significant period of time which might result in decreased customer traffic, which could lead to decreased sales at our properties and adversely impact our ability to successfully execute our leasing strategy and operational objectives. Department store or major tenants may seek, and have sought, concessions from us for paying lease charges as a result of such mandatory closures or reduced hours. There are no assurances that customer traffic will return as high as pre-COVID-19 rates.
If the sales of stores operating in our properties decline significantly due to the closing or limited operation of anchor stores or other national retailers because of the existence and persistence of the COVID-19 pandemic and related mitigation efforts, tenants might be unable to pay their minimum rents or expense recovery charges, which would likely negatively impact our financial results.
The existence and persistence of the COVID-19 pandemic and related mitigation efforts may adversely impact the Company’s ability to successfully and timely complete its various redevelopment projects as budgeted.
The onset of the COVID-19 pandemic may cause, as a result of governmental imposed closures or work stoppages, interrupted supply chains, reduced personnel due to closures or illnesses, unforeseen delays in the planning, execution and completion of construction projects associated with our redevelopment plans. Additionally, related permitting, inspections and reviews by jurisdictional planning commissions and authorities is also likely to be delayed or postponed which will materially impact the timeline and budgets for completing such projects.
As a result of such conditions and other factors, projects in our redevelopment pipeline may not be pursued or may be completed later or with higher costs than anticipated. In the event of an unsuccessful or delayed redevelopment project, our loss could exceed our investment in the project. Redevelopment activities involve significant risks, including: the expenditure of funds on and devotion of time to projects which may not come to fruition; increased construction costs that may make the project economically unattractive; an inability to obtain construction financing and permanent financing on favorable terms; and occupancy rates and rents not sufficient to make a project profitable.

60



The existence and persistence of the COVID-19 pandemic and related mitigation efforts may result in increased and more frequent bankruptcy filings of a number of our tenants or downturns in our tenants’ businesses that may reduce our cash flow.
Because the Company derives almost all of our income from rental payments and other tenant charges, our cash available for distribution would be adversely affected if a significant number of our tenants were unable to meet their obligations to us, or if we were unable to lease vacant space in our properties on economically favorable terms. One or more of our tenants may seek the protection of the federal bankruptcy laws, or similar proceedings on the state level or in a foreign jurisdiction, as a result of the prolonged impact of the COVID-19 pandemic which could result in the termination of its lease causing a reduction in our cash available for distribution. Furthermore, certain of our tenants, including anchor tenants, hold the right under their lease(s) to terminate their lease(s) or reduce their rental rate if certain occupancy conditions are not met, if certain anchor tenants close, if certain sales levels or profit margins are not achieved, or if an exclusive use provision is violated, which all could be triggered in the event of one or more tenant bankruptcies. A significant increase in the number of tenant bankruptcies, particularly amongst anchor tenants, may make it more difficult for us to lease the remainder of the property or properties in which the bankrupt tenant operates and adversely impact our ability to successfully execute our re-leasing strategy.
The existence and persistence of the COVID-19 pandemic and related mitigation efforts may result in increased and more substantial impairment charges that may materially affect our financial results.
We evaluate our real estate assets and other assets for impairment indicators whenever events or changes in circumstances indicate that recoverability of our investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. Our determination of whether a particular held-for-use asset is impaired is based upon the undiscounted projected cash flows used for the impairment analysis and our determination of the asset's estimated fair value, that in turn are based upon our plans for the respective asset and our views of market and economic conditions. With respect to assets held-for-sale, our determination of whether such an asset is impaired is based upon market and economic conditions. If we determine that an impairment has occurred, then we would be required under Generally Accepted Accounting Principles in the United States (GAAP) to make an adjustment to the net carrying value of the asset, which could have a material adverse effect on our results of operations in the accounting period in which the adjustment is made. Furthermore, changes in estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions could result in the recognition of additional impairment losses for already impaired assets, which, under the applicable accounting guidance, could be substantial.
The outbreak of the COVID-19 pandemic resulted in the sustained closure of our centers as well as the cessation of the operations of certain of our tenants which caused a reduction in our revenues due to the impaired financial stability of our tenants and ultimately our cash flows for many of our centers as well as other sources of income generated by our properties. In addition to reduced revenues generated by our centers as a result of the COVID-19 outbreak, our ability to obtain sufficient financing in the future for such properties may be impaired as well as our ability in the future to lease or re-lease centers as a result of worsening market and economic conditions produced by the persistence of the COVID-19 pandemic. The worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our properties adversely impacted by the COVID-19 outbreak as well as its persistence could result in the recognition of substantial impairment charges imposed on our assets which could adversely impact our financial results.
The existence and persistence of the COVID-19 pandemic and related mitigation efforts may promote prolonged instability or volatility in the U.S. economy that may adversely impact consumer spending and therefore our operating results.
A sustained downturn in the U.S. economy and reduced consumer spending as well as consumer activity at brick-and-mortar commercial establishments due to the prolonged existence, persistence and threat of the COVID-19 pandemic could impose a prolonged economic recession in the U.S. which could impact our tenants’ ability to meet their lease obligations due to poor operating results, lack of liquidity or other reasons and therefore decrease the revenue generated by our properties or the value of our properties. Our ability to lease space and negotiate and maintain favorable rents could also be negatively impacted by a prolonged recession in the U.S. economy. Moreover, the demand for leasing space in our existing shopping centers as well as our redevelopment properties could also substantially decline during a significant downturn in the U.S. economy which could result in a decline in our occupancy percentage and reduction in rental revenues.

61



The existence and persistence of the COVID-19 pandemic could result in further significant reduction of our workforce due to continued mitigation efforts, medically related absences or quarantines.
The Company’s workforce is maintained at two corporate offices and at certain of its shopping centers. Reductions in personnel either due to budgetary reasons or further mitigation efforts in response to the existence and persistence of the COVID-19 pandemic would hamper the Company’s ability to effectively achieve its fiscal, operational, and strategic objectives. Certain of the Company’s personnel, including its executive officers, have substantial experience in owning, operating, managing, acquiring and developing shopping centers. The Company’s success depends in large part upon the efforts of these executives and other personnel, and we cannot guarantee that they will remain with us throughout this pandemic. The Company already reduced approximately 20% of its workforce for budgetary reasons related to the COVID-19 pandemic and, although some personnel have since been rehired, the loss of key management personnel in leasing, finance, legal, construction, development, or operations could have a negative impact on the Company’s operations. In addition, except for isolated examples amongst our senior executive personnel, there are generally no restrictions on the ability of terminated personnel to compete with us after the termination of their employment.
The continuing spread of COVID-19 may have a material adverse effect on our ability to make distributions to our common shareholders.
The impact of the COVID-19 pandemic on the U.S. and world economies is uncertain and could result in a prolonged world-wide economic downturn that may lead to corporate bankruptcies in the most affected industries and an increase in unemployment. As a result of the real estate assets in our real estate portfolio being comprised entirely of retail properties located in the United States, the COVID-19 pandemic will impact our tenants’ ability to pay rent, and therefore impact the income received by us, to the extent that its continued spread within the United States reduces occupancy, decreases customer traffic or results in quarantines where our properties are located, increases the cost of operation, results in reduced hours or necessitates the further closure or re-closure of our properties. Since the onset of the COVID-19 pandemic, certain owners of shopping center properties located in the United States have announced temporary closures of such properties and even re-closures of properties as a result of the persistence of the COVID-19 pandemic. During a portion of our second 2020 fiscal quarter, our enclosed shopping centers were required to close and, upon reopening, then operated at reduced hours and enforced occupancy restrictions which materially impacted our revenues and adversely affect our results of operations and financial condition. Additionally, customer traffic at our properties has been reduced because of COVID-19 related concerns.
As a result of the adverse impact of the COVID-19 pandemic on the Company’s fiscal condition and in an effort to preserve its cash position, the Company announced in April 2020 the temporary suspension of its quarterly common share and operating partnership unit cash dividend for the remainder of 2020 (with a potential true up of the fourth quarter 2020 dividend payment in 2021 in order to comply with the Company's REIT taxable income distribution requirements). The extent to which COVID-19 further impacts our income, our expenses and ability to pay distributions to our common shareholders and unitholders of WPG’s affiliate will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, new information that may emerge concerning the severity of the COVID-19 pandemic, consumer acceptance of the safety of retail center shopping and the actions taken to contain COVID-19 or treat its impact, among others.
The continuing spread of COVID-19 may have a material adverse effect on our ability to maintain compliance with our debt covenants and, under certain circumstances, remain a going concern.
As a result of the related events due to the COVID-19 pandemic, we may experience a material adverse effect on our income and expenses. COVID-19’s impact on our income and expenses may also impact our ability to maintain compliance with our credit facility and bond covenants. We are engaged in discussions with our unsecured creditors and based upon these discussions we believe, to the extent that the impact of COVID-19 results in potential non-compliance with financial covenants, it is probable that we will remain compliant with such covenants through some combination of waivers, modifications or other amendments to the related agreements. However, no assurances can be made in this regard, and if we are unable to agree on the terms of such waivers and changes, this could create substantial doubt about our ability to continue as a going concern through August 10, 2021.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3.    Defaults Upon Senior Securities
Not applicable.
Item 4.
Mine Safety Disclosures
Not applicable.

62



Item 5.    Other Information
Not applicable.

63



Item 6.    Exhibits
Exhibit
Number
Exhibit
Descriptions
10.1+
31.1*
31.2*
31.3*
31.4*
32.1*
32.2*
101.INS*
XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document

* Filed electronically herewith.
+ Represents management contract or compensatory plan or arrangement.

64



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.


 
 
Washington Prime Group Inc.
 
 
Washington Prime Group, L.P.
 
 
 
by: Washington Prime Group Inc., its sole general partner
 
 
 
 
Date:
August 10, 2020
By:
/s/ Mark E. Yale
 
 
 
Mark E. Yale
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Date:
August 10, 2020
By:
/s/ Melissa A. Indest
 
 
 
Melissa A. Indest
Executive Vice President, Finance and Chief Accounting Officer
(Principal Accounting Officer)

65
Exhibit


EXHIBIT 10.1

WASHINGTON PRIME GROUP INC.

NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT AWARD AGREEMENT

This Restricted Stock Unit Award Agreement (“Agreement”) made as of <DATE> (the “Award Date”) among Washington Prime Group Inc., an Indiana corporation (the “Company”), its subsidiary, Washington Prime Group, L.P., an Indiana limited partnership and the entity through which the Company conducts substantially all of its operations (the “Partnership”), and the individual listed as participant on the signature page hereto (the “Participant”).


Recitals

A.    The Participant is a non-employee director on the Company's Board.

B.    The Partnership has adopted the 2019 Washington Prime Group, L.P. Stock Incentive Plan (as further amended, restated or supplemented from time to time hereafter, the “Plan”) to provide, among others, directors of the Partnership or an Affiliate (including the Company) with equity­based incentives to maintain and enhance the performance and profitability of the Partnership and the Company. Capitalized terms used herein without definitions shall have the meanings given to those terms in the Plan unless otherwise indicated

C.    This Agreement evidences an award (the “Award”) of the number of Restricted Stock Units specified in Section 2 of this Agreement, as approved by the Committee.

NOW, THEREFORE, the Company, the Partnership and the Participant agree as follows:

1.Administration; Incorporation of the Plan. This Award shall be administered by the Committee which has the powers and authority as set forth in the Plan. The Committee will make the determinations and certifications required by this Award as promptly as reasonably practicable following the occurrence of the event or events necessitating such determinations or certifications. The provisions of the Plan are hereby incorporated by reference as if set forth herein. Should there be any conflict between the terms of this Agreement on the one hand, and the Plan on the other hand, the terms of this Agreement shall prevail.

2.
Award.

(a)Grant of RSUs. Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Participant is hereby granted ______________ (______) Restricted Stock Units as of the Award Date, which amount is inclusive of a number of Restricted Stock Units granted pursuant to an election by the Participant to receive all or a portion of the Participant’s Board service fees otherwise payable in cash in the form of additional Restricted Stock Units. Each Restricted Stock Unit represents a conditional right to receive one share of Common Stock.

(b)Vesting. The Restricted Stock Units granted hereunder will vest and become nonforfeitable in full on <DATE> (the “Vesting Date”), provided that the Participant does not incur a Termination of Employment (which, for purposes of this Agreement, shall mean cessation of membership on the Board for any reason) prior to the Vesting Date. Except as otherwise provided herein or otherwise determined by the Board or the Committee, upon the Participant's Termination





of Employment for any reason prior to the Vesting Date the Award, and all of the Restricted Stock Units granted hereunder, shall be forfeited without any consideration, and the Participant shall have no further rights thereto. Notwithstanding the foregoing, in the event of the Participant’s Termination of Employment prior to the Vesting Date due solely to a failure to be re-elected to the Company’s Board when the Participant was otherwise willing and able to serve on the Company’s Board, then a prorated portion of the Restricted Stock Units shall vest as of the date of such Termination of Employment. Such proration shall be determined by multiplying the Restricted Stock Units by a fraction, the numerator of which is the number of days from the Award Date to the date of the Participant’s Termination of Employment and the denominator of which is the number of days from the Award Date to the Vesting Date.

(c)Settlement. As soon as practicable following the date of the Participant's Termination of Employment (but in no event later than the end of the calendar year in which such Termination of Employment occurs), the Company shall deliver to the Participant one share of Common Stock in respect of each of the Restricted Stock Units free of any restrictions; provided, that, such Termination of Employment constitutes a “separation from service” under Section 409A of the Code.

3.Restrictions. Subject to any exceptions set forth in the Plan, no Restricted Stock Unit granted hereunder may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged, in any manner (including through the use of any cash-settled instrument), whether voluntarily or involuntarily and whether by operation of law or otherwise, other than by will or by the laws of descent and distribution. Any sale, exchange, transfer, assignment, pledge, hypothecation, or other disposition in violation of the provisions of this Section 3 will be null and void and any Restricted Stock Unit which is hedged in any manner will immediately be forfeited. All of the terms and conditions of the Plan and this Agreement will be binding upon any permitted successors and assigns. Except as provided in Section 5 of this Agreement, a Restricted Stock Unit shall not entitle the Participant to any incidents of ownership (including, without limitation, dividend and voting rights) in any Share until the Participant is issued the Share to which such Restricted Stock Unit relates pursuant to Section 2(c) hereof.

4.Tax Representations. The Participant hereby represents and warrants to the Company as follows:
(a)    The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and foreign tax consequences of this Award and the transactions contemplated by this Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its employees or agents.

(b)    The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of this Award or the transactions contemplated by this Agreement.

5.Dividend Equivalent Rights. So long as the Award is outstanding, the Participant shall be paid dividend equivalent payments equal to the regular cash dividends paid on the shares of Common Stock covered by this Award as if such Shares had been delivered pursuant to such Award, irrespective of whether the Award has vested, provided such Award shall not theretofore have been forfeited pursuant to the terms of this Agreement. Such amounts will be paid in cash at the same time as the applicable dividends are paid on shares of Common Stock. For avoidance of doubt, the provisions of this Section 5 shall not apply to any extraordinary dividends or distributions. The Participant will have only the rights of a general unsecured creditor of the Company in respect of such dividend equivalent payments until paid as specified herein.






6.Amendment. No amendment of this Agreement shall materially adversely impair the rights of the Participant without the Participant's consent, except such an amendment made to comply with applicable law (including Applicable Exchange listing standards or accounting rules) or avoid the incurrence of tax penalties under Section 409A of the Code.

7.Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Participant and the Participant's beneficiary, if applicable.

8.Captions. Captions provided herein are for convenience only and shall not affect the scope, meaning, intent or interpretation of the provisions of this Agreement.

9.Severability; Entire Agreement. If any provision of the Plan or this Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision will be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby; provided that if any of such provision is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and this Agreement contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof.

10.Governing Law; Choice of Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without regard to the principles of conflict of laws. Venue for a dispute in respect of this Agreement shall be the federal courts located in Columbus, Ohio.

11.Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions thereof, and accepts the Restricted Stock Units subject to all of the terms and conditions of the Plan and this Agreement.

12.Section 409A. The amounts payable under this Agreement are intended to avoid the incurrence of tax penalties under Section 409A of the Code. This Agreement shall in all respects be administered in accordance with Section 409A of the Code. Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Code. In no event may the Participant, directly or indirectly, designate the calendar year of any payment to be made under this Agreement. Notwithstanding anything herein to the contrary, in the event that the Participant is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Company as in effect on the Date of Termination), amounts that constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code that would otherwise be payable and benefits that would otherwise be provided hereunder during the six-month period immediately following the Participant's separation from service shall instead be paid, with interest in the case of cash payments (calculated at the applicable federal rate) determined as of the separation from service, or provided on the first business day after the date that is six months following the Participant's separation from service; provided that, if the Participant dies following the Participant's separation from service and prior to the payment of the any amounts delayed on account of Section 409A of the Code hereunder, such amounts shall be paid to the personal representative of the Participant's estate within thirty (30) days after the date of the Participant's death.

[SIGNATURES ON THE FOLLOWING PAGE]





IN W ITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the _____ day of _______, _______.

WASHINGTON PRIME GROUP INC., an Indiana corporation


By:____________________________
Name: ______________________
Title: ______________________

WASHINGTON PRIME GROUP, L.P., an Indiana limited partnership


By: Washington Prime Group Inc., an Indiana corporation, its sole general partner



By:____________________________
Name: ______________________
Title: ______________________

PARTICIPANT:


Signature:______________________________

Print Name: ____________________________



Exhibit


EXHIBIT 31.1

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Louis G. Conforti, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Washington Prime Group Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer 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 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, 2020
 
/s/ Louis G. Conforti
 
 
 
Louis G. Conforti
Chief Executive Officer and Director



Exhibit


EXHIBIT 31.2

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Mark E. Yale, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Washington Prime Group Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer 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 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, 2020
 
/s/ Mark E. Yale
 
 
 
Mark E. Yale
Executive Vice President and Chief Financial Officer



Exhibit


EXHIBIT 31.3

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Louis G. Conforti, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Washington Prime Group, L.P.;
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 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 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, 2020
 
/s/ Louis G. Conforti
 
 
 
Louis G. Conforti
Chief Executive Officer and Director of Washington Prime Group Inc., general partner of Washington Prime Group, L.P.



Exhibit


EXHIBIT 31.4

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Mark E. Yale, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Washington Prime Group, L.P.;
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 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 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, 2020
 
/s/ Mark E. Yale
 
 
 
Mark E. Yale
Executive Vice President and Chief Financial Officer of Washington Prime Group Inc., general partner of Washington Prime Group, L.P.


Exhibit


EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT of 2002

In connection with the Quarterly Report of Washington Prime Group Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:
August 10, 2020
 
/s/ Louis G. Conforti
 
 
 
Louis G. Conforti
Chief Executive Officer and Director
Date:
August 10, 2020
 
/s/ Mark E. Yale
 
 
 
Mark E. Yale
Executive Vice President and Chief Financial Officer



Exhibit


EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT of 2002

In connection with the Quarterly Report of Washington Prime Group, L.P. (the “Partnership”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date:
August 10, 2020
 
/s/ Louis G. Conforti
 
 
 
Louis G. Conforti
Chief Executive Officer and Director of Washington Prime Group Inc., general partner of Washington Prime Group, L.P.
Date:
August 10, 2020
 
/s/ Mark E. Yale
 
 
 
Mark E. Yale
Executive Vice President and Chief Financial Officer of Washington Prime Group Inc., general partner of Washington Prime Group, L.P.



v3.20.2
Cover page - shares
6 Months Ended
Jun. 30, 2020
Aug. 07, 2020
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2020  
Document Transition Report false  
Entity File Number 001-36252  
Entity Registrant Name WASHINGTON PRIME GROUP INC.  
Entity Incorporation, State or Country Code IN  
Entity Tax Identification Number 46-4323686  
Entity Address, Address Line One 180 East Broad Street  
Entity Address, City or Town Columbus  
Entity Address, State or Province OH  
Entity Address, Postal Zip Code 43215  
City Area Code 614  
Local Phone Number 621-9000  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   187,432,335
Entity Central Index Key 0001594686  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Washington Prime Group, L.P.    
Document Information [Line Items]    
Entity File Number 333-205859  
Entity Registrant Name Washington Prime Group, L.P.  
Entity Incorporation, State or Country Code IN  
Entity Tax Identification Number 46-4674640  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   0
Entity Central Index Key 0001610911  
Current Fiscal Year End Date --12-31  
Common Stock, $0.0001 par value per share    
Document Information [Line Items]    
Title of 12(b) Security Common Stock, $0.0001 par value per share  
Trading Symbol WPG  
Security Exchange Name NYSE  
7.5% Series H Cumulative Redeemable Preferred Stock, par value $0.0001 per share    
Document Information [Line Items]    
Title of 12(b) Security 7.5% Series H Cumulative Redeemable Preferred Stock, par value $0.0001 per share  
Trading Symbol WPGPRH  
Security Exchange Name NYSE  
6.875% Series I Cumulative Redeemable Preferred Stock, par value $0.0001 per share    
Document Information [Line Items]    
Title of 12(b) Security 6.875% Series I Cumulative Redeemable Preferred Stock, par value $0.0001 per share  
Trading Symbol WPGPRI  
Security Exchange Name NYSE  
v3.20.2
Unaudited Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Assets:    
Investment properties at cost $ 5,924,349 $ 5,902,406
Less: accumulated depreciation 2,458,488 2,397,736
Investment properties, net 3,465,861 3,504,670
Cash and cash equivalents 127,019 41,421
Tenant receivables and accrued revenue, net 125,153 82,762
Investment in and advances to unconsolidated entities, at equity 415,174 417,092
Deferred costs and other assets 138,423 205,034
Total assets 4,271,630 4,250,979
LIABILITIES:    
Mortgage notes payable 1,107,947 1,115,608
Notes payable 709,100 957,566
Unsecured term loans 687,209 686,642
Revolving credit facility 644,716 204,145
Other indebtedness 84,355 97,601
Accounts payable, accrued expenses, intangibles, and deferred revenues 257,634 260,904
Distributions payable 3,323 3,252
Cash distributions and losses in unconsolidated entities, at equity   15,421
Total liabilities 3,494,284 3,341,139
Redeemable noncontrolling interests 3,265 3,265
Stockholders' Equity:    
Common stock, $0.0001 par value, 350,000,000 shares authorized; 187,432,335 and 186,884,276 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 19 19
Capital in excess of par value 1,259,130 1,254,771
Accumulated deficit (757,985) (655,492)
Accumulated other comprehensive loss (17,809) (5,525)
Total stockholders' equity 685,931 796,349
Members’ equity 88,150 110,226
Total equity 774,081 906,575
Total liabilities, redeemable noncontrolling interests and equity 4,271,630 4,250,979
EQUITY:    
Total liabilities, redeemable noncontrolling interests and equity 4,271,630 4,250,979
Series H Cumulative Redeemable Preferred Stock, $0.0001 par value, 4,000,000 shares issued and outstanding as of June 30, 2020 and December 31, 2019    
Stockholders' Equity:    
Preferred stock 104,251 104,251
Series I Cumulative Redeemable Preferred Stock, $0.0001 par value, 3,800,000 shares issued and outstanding as of June 30, 2020 and December 31, 2019    
Stockholders' Equity:    
Preferred stock 98,325 98,325
Washington Prime Group, L.P.    
Assets:    
Investment properties at cost 5,924,349 5,902,406
Less: accumulated depreciation 2,458,488 2,397,736
Investment properties, net 3,465,861 3,504,670
Cash and cash equivalents 127,019 41,421
Tenant receivables and accrued revenue, net 125,153 82,762
Investment in and advances to unconsolidated entities, at equity 415,174 417,092
Deferred costs and other assets 138,423 205,034
Total assets 4,271,630 4,250,979
LIABILITIES:    
Mortgage notes payable 1,107,947 1,115,608
Notes payable 709,100 957,566
Unsecured term loans 687,209 686,642
Revolving credit facility 644,716 204,145
Other indebtedness 84,355 97,601
Accounts payable, accrued expenses, intangibles, and deferred revenues 257,634 260,904
Distributions payable 3,323 3,252
Cash distributions and losses in unconsolidated entities, at equity 0 15,421
Total liabilities 3,494,284 3,341,139
Redeemable noncontrolling interests 3,265 3,265
Stockholders' Equity:    
Total liabilities, redeemable noncontrolling interests and equity 4,271,630 4,250,979
EQUITY:    
General partner 685,931 796,349
Limited partners, 34,479,892 and 34,682,956 units issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 87,168 109,193
Total partners' equity 773,099 905,542
Noncontrolling interests 982 1,033
Total equity 774,081 906,575
Total liabilities, redeemable noncontrolling interests and equity 4,271,630 4,250,979
Washington Prime Group, L.P. | General Partner Preferred Equity    
EQUITY:    
General partner 202,576 202,576
Washington Prime Group, L.P. | General Partner Common Equity    
EQUITY:    
General partner $ 483,355 $ 593,773
v3.20.2
Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2020
Dec. 31, 2019
Common stock, par value (usd per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in shares) 350,000,000 350,000,000
Common stock, shares issued (in shares) 187,432,335 186,884,276
Common stock, shares outstanding (in shares) 187,432,335 186,884,276
Washington Prime Group, L.P.    
Limited Partner, common equity, shares issued (in shares) 34,479,892 34,682,956
Limited Partner, common equity, shares outstanding (in shares) 34,479,892 34,682,956
Washington Prime Group, L.P. | General Partner Preferred Equity    
General Partner, preferred equity, shares issued (in shares) 7,800,000 7,800,000
General Partner, preferred equity, shares outstanding (in shares) 7,800,000 7,800,000
Washington Prime Group, L.P. | General Partner Common Equity    
General Partner, preferred equity, shares issued (in shares) 187,432,335 186,884,276
General Partner, preferred equity, shares outstanding (in shares) 187,432,335 186,884,276
Preferred Series H    
Preferred stock, par value (usd per share) $ 0.0001 $ 0.0001
Preferred shares issued (in shares) 4,000,000 4,000,000
Preferred shares outstanding (in shares) 4,000,000 4,000,000
Preferred Series I    
Preferred stock, par value (usd per share) $ 0.0001 $ 0.0001
Preferred shares issued (in shares) 3,800,000 3,800,000
Preferred shares outstanding (in shares) 3,800,000 3,800,000
v3.20.2
Unaudited Consolidated Statements of Operations and Comprehensive Loss - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
REVENUE:        
Rental income $ 96,050 $ 156,230 $ 243,283 $ 319,503
Other income 2,714 5,204 8,081 10,754
Total revenues 98,764 161,434 251,364 330,257
EXPENSES:        
Property operating 28,109 36,432 65,389 75,861
Depreciation and amortization 55,380 71,816 115,084 138,194
Real estate taxes 18,437 19,878 38,689 41,992
Advertising and promotion 1,300 2,025 3,104 3,918
General and administrative 11,350 13,124 23,614 27,249
Ground rent 209 195 331 398
Impairment loss 23,800 0 25,119 0
Total operating expenses 138,585 143,470 271,330 287,612
Interest expense, net (37,445) (39,143) (76,080) (75,973)
Impairment on note receivable (11,237) 0 (11,237) 0
Gain on disposition of interests in properties, net 437 6,241 27,192 16,231
Income and other taxes (593) (229) 24 (585)
Loss from unconsolidated entities, net (4,754) (1,713) (5,786) (1,761)
NET LOSS (93,413) (16,880) (85,853) (19,443)
Net loss attributable to noncontrolling interests (14,871) (3,126) (14,194) (4,022)
NET LOSS ATTRIBUTABLE TO THE COMPANY (78,542) (13,754) (71,659) (15,421)
Less: Preferred share dividends (3,508) (3,508) (7,016) (7,016)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (82,050) $ (17,262) $ (78,675) $ (22,437)
LOSS PER COMMON SHARE/UNIT, BASIC & DILUTED (usd per share) $ (0.43) $ (0.09) $ (0.41) $ (0.12)
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS:        
Limited partners $ (14,931) $ (3,186) $ (14,314) $ (4,142)
COMPREHENSIVE LOSS:        
Net loss (93,413) (16,880) (85,853) (19,443)
Unrealized income (loss) on interest rate derivative instruments, net 920 (9,485) (14,526) (14,595)
Comprehensive loss (92,493) (26,365) (100,379) (34,038)
Comprehensive loss attributable to noncontrolling interests (14,730) (4,597) (16,436) (6,285)
Comprehensive loss attributable to common shareholders (77,763) (21,768) (83,943) (27,753)
Washington Prime Group, L.P.        
REVENUE:        
Rental income 96,050 156,230 243,283 319,503
Other income 2,714 5,204 8,081 10,754
Total revenues 98,764 161,434 251,364 330,257
EXPENSES:        
Property operating 28,109 36,432 65,389 75,861
Depreciation and amortization 55,380 71,816 115,084 138,194
Real estate taxes 18,437 19,878 38,689 41,992
Advertising and promotion 1,300 2,025 3,104 3,918
General and administrative 11,350 13,124 23,614 27,249
Ground rent 209 195 331 398
Impairment loss 23,800 0 25,119 0
Total operating expenses 138,585 143,470 271,330 287,612
Interest expense, net (37,445) (39,143) (76,080) (75,973)
Impairment on note receivable (11,237) 0 (11,237) 0
Gain on disposition of interests in properties, net 437 6,241 27,192 16,231
Income and other taxes (593) (229) 24 (585)
Loss from unconsolidated entities, net (4,754) (1,713) (5,786) (1,761)
NET LOSS (93,413) (16,880) (85,853) (19,443)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (96,981) $ (20,448) $ (92,989) $ (26,579)
LOSS PER COMMON SHARE/UNIT, BASIC & DILUTED (usd per share) $ (0.43) $ (0.09) $ (0.41) $ (0.12)
NET LOSS ATTRIBUTABLE TO UNITHOLDERS $ (93,413) $ (16,880) $ (85,853) $ (19,443)
Less: Preferred unit distributions (3,568) (3,568) (7,136) (7,136)
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS (96,981) (20,448) (92,989) (26,579)
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS:        
General partner (82,050) (17,262) (78,675) (22,437)
Limited partners (14,931) (3,186) (14,314) (4,142)
NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS (96,981) (20,448) (92,989) (26,579)
COMPREHENSIVE LOSS:        
Net loss (93,413) (16,880) (85,853) (19,443)
Unrealized income (loss) on interest rate derivative instruments, net 920 (9,485) (14,526) (14,595)
Comprehensive loss $ (92,493) $ (26,365) $ (100,379) $ (34,038)
v3.20.2
Unaudited Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (85,853) $ (19,443)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation 116,827 137,404
Impairment on note receivable 11,237 0
Gain on disposition of interests in properties and outparcels, net (27,192) (16,231)
Impairment loss 25,119 0
Change in estimate of collectibility of rental income 27,630 4,027
Loss from unconsolidated entities, net 5,786 1,761
Distributions of income from unconsolidated entities 1,087 912
Changes in assets and liabilities:    
Tenant receivables and accrued revenue, net (68,811) 6,142
Deferred costs and other assets (1,027) (3,780)
Accounts payable, accrued expenses, deferred revenues and other liabilities (6,887) (17,236)
Net cash (used in) provided by operating activities (2,084) 93,556
CASH FLOWS FROM INVESTING ACTIVITIES:    
Capital expenditures, net (99,807) (81,131)
Net proceeds from disposition of interests in properties and outparcels 17,987 20,492
Investments in unconsolidated entities (6,744) (5,870)
Distributions of capital from unconsolidated entities 1,764 14,747
Net cash used in investing activities (86,800) (51,762)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Distributions to noncontrolling interest holders in properties (51) (66)
Redemption of limited partner units (543) (19)
Net proceeds from issuance of common shares, including common stock plans 0 1
Distributions on common and preferred shares/units (35,196) (118,754)
Proceeds from issuance of debt, net of transaction costs 500,849 303,088
Repayments of debt (287,999) (206,702)
Other financing activities 0 (150)
Net cash provided by (used in) financing activities 177,060 (22,602)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 88,176 19,192
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 75,475 61,084
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period 163,651 80,276
Washington Prime Group, L.P.    
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss (85,853) (19,443)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    
Depreciation and amortization, including fair value rent, fair value debt, deferred financing costs and equity-based compensation 116,827 137,404
Impairment on note receivable 11,237 0
Gain on disposition of interests in properties and outparcels, net (27,192) (16,231)
Impairment loss 25,119 0
Change in estimate of collectibility of rental income 27,630 4,027
Loss from unconsolidated entities, net 5,786 1,761
Distributions of income from unconsolidated entities 1,087 912
Changes in assets and liabilities:    
Tenant receivables and accrued revenue, net (68,811) 6,142
Deferred costs and other assets (1,027) (3,780)
Accounts payable, accrued expenses, deferred revenues and other liabilities (6,887) (17,236)
Net cash (used in) provided by operating activities (2,084) 93,556
CASH FLOWS FROM INVESTING ACTIVITIES:    
Capital expenditures, net (99,807) (81,131)
Net proceeds from disposition of interests in properties and outparcels 17,987 20,492
Investments in unconsolidated entities (6,744) (5,870)
Distributions of capital from unconsolidated entities 1,764 14,747
Net cash used in investing activities (86,800) (51,762)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Distributions to noncontrolling interest holders in properties (51) (66)
Redemption of limited partner units (543) (19)
Net proceeds from issuance of common units, including equity-based compensation plans 0 1
Distributions to unitholders (35,196) (118,754)
Proceeds from issuance of debt, net of transaction costs 500,849 303,088
Repayments of debt (287,999) (206,702)
Other financing activities 0 (150)
Net cash provided by (used in) financing activities 177,060 (22,602)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 88,176 19,192
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 75,475 61,084
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 163,651 $ 80,276
v3.20.2
Unaudited Consolidated Statements of Equity - USD ($)
$ in Thousands
Total
Total Stockholders' Equity
Preferred Stock
Preferred Series H
Preferred Stock
Preferred Series I
Common Stock
Capital in Excess of Par Value
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Redeemable Non-Controlling Interests
Non- Controlling Interests
Beginning balance at Dec. 31, 2018 $ 1,148,271 $ 999,710 $ 104,251 $ 98,325 $ 19 $ 1,247,639 $ (456,924) $ 6,400 $ 3,265 $ 148,561
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Redemption of limited partner units (19)                 (19)
Other (14) (14)       (14)        
Exercise of stock options 1 1       1        
Equity-based compensation 3,780 3,743       3,743       37
Adjustments to noncontrolling interests   (50)       (50)       50
Distributions on common shares/units (111,684) (94,250)         (94,250)     (17,434)
Distributions declared on preferred shares (7,016) (7,016)         (7,016)      
Other comprehensive income (loss) (14,595) (12,332)           (12,332)   (2,263)
Net loss, excluding distributions to preferred unitholders (19,563) (15,421)         (15,421)     (4,142)
Ending balance at Jun. 30, 2019 999,161 874,371 104,251 98,325 19 1,251,319 (573,611) (5,932) 3,265 124,790
Beginning balance at Mar. 31, 2019 1,083,005 944,980 104,251 98,325 19 1,249,490 (509,187) 2,082 3,265 138,025
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Redemption of limited partner units (19)                 (19)
Other (7) (7)       (7)        
Equity-based compensation 1,965 1,965       1,965       0
Adjustments to noncontrolling interests   (129)       (129)       129
Distributions on common shares/units (55,850) (47,162)         (47,162)     (8,688)
Distributions declared on preferred shares (3,508) (3,508)         (3,508)      
Other comprehensive income (loss) (9,485) (8,014)           (8,014)   (1,471)
Net loss, excluding distributions to preferred unitholders (16,940) (13,754)         (13,754)     (3,186)
Ending balance at Jun. 30, 2019 999,161 874,371 104,251 98,325 19 1,251,319 (573,611) (5,932) 3,265 124,790
Beginning balance at Dec. 31, 2019 906,575 796,349 104,251 98,325 19 1,254,771 (655,492) (5,525) 3,265 110,226
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Redemption of limited partner units (543)                 (543)
Other (18) (18)       (18)        
Equity-based compensation 3,764 3,764       3,764        
Adjustments to noncontrolling interests   613       613       (613)
Distributions on common shares/units (28,182) (23,818)         (23,818)     (4,364)
Distributions declared on preferred shares (7,016) (7,016)         (7,016)      
Other comprehensive income (loss) (14,526) (12,284)           (12,284)   (2,242)
Net loss, excluding distributions to preferred unitholders (85,973) (71,659)         (71,659)     (14,314)
Ending balance at Jun. 30, 2020 774,081 685,931 104,251 98,325 19 1,259,130 (757,985) (17,809) 3,265 88,150
Beginning balance at Mar. 31, 2020 868,275 765,112 104,251 98,325 19 1,257,040 (675,935) (18,588) 3,265 103,163
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Redemption of limited partner units (22)                 (22)
Other (9) (9)       (9)        
Equity-based compensation 1,898 1,898       1,898        
Adjustments to noncontrolling interests   201       201       (201)
Distributions declared on preferred shares (3,508) (3,508)         (3,508)      
Other comprehensive income (loss) 920 779           779   141
Net loss, excluding distributions to preferred unitholders (93,473) (78,542)         (78,542)     (14,931)
Ending balance at Jun. 30, 2020 $ 774,081 $ 685,931 $ 104,251 $ 98,325 $ 19 $ 1,259,130 $ (757,985) $ (17,809) $ 3,265 $ 88,150
v3.20.2
Unaudited Consolidated Statements of Equity (Parentheticals) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Stockholders' Equity [Abstract]        
Distributions per common share (usd per share)   $ 0.25 $ 0.125 $ 0.50
Distributions to preferred unitholders $ 60 $ 60 $ 120 $ 120
v3.20.2
Unaudited Consolidated Statement of Equity - LP - USD ($)
$ in Thousands
Total
Washington Prime Group, L.P.
Washington Prime Group, L.P.
Partners' Equity
Washington Prime Group, L.P.
Non- Controlling Interests
Washington Prime Group, L.P.
Redeemable Non-Controlling Interests
Washington Prime Group, L.P.
General Partner
Partners' Equity
Washington Prime Group, L.P.
General Partner Preferred
Partners' Equity
Washington Prime Group, L.P.
General Partner Common
Partners' Equity
Washington Prime Group, L.P.
Limited Partners
Partners' Equity
Beginning balance at Dec. 31, 2018   $ 1,148,271 $ 1,147,203 $ 1,068 $ 3,265 $ 999,710 $ 202,576 $ 797,134 $ 147,493
Increase (Decrease) in Partners' Capital [Roll Forward]                  
Redemption of limited partner units $ (19) (19) (19)           (19)
Other   (14) (14)     (14)   (14)  
Exercise of stock options 1 1 1     1   1  
Equity-based compensation   3,780 3,780     3,743   3,743 37
Adjustments to limited partners' interests           (50)   (50) 50
Distributions on common units   (111,684) (111,622) (62)   (94,250)   (94,250) (17,372)
Distributions declared on preferred units   (7,016) (7,016)   (120) (7,016) (7,016)    
Other comprehensive income (loss) (14,595) (14,595) (14,595)     (12,332)   (12,332) (2,263)
Net income (loss) (19,563) (19,563) (19,563)   120 (15,421) 7,016 (22,437) (4,142)
Ending balance at Jun. 30, 2019   999,161 998,155 1,006 3,265 874,371 202,576 671,795 123,784
Beginning balance at Mar. 31, 2019   1,083,005 1,081,999 1,006 3,265 944,980 202,576 742,404 137,019
Increase (Decrease) in Partners' Capital [Roll Forward]                  
Redemption of limited partner units (19) (19) (19)           (19)
Other   (7) (7)     (7)   (7)  
Equity-based compensation   1,965 1,965     1,965   1,965  
Adjustments to limited partners' interests           (129)   (129) 129
Distributions on common units   (55,850) (55,850) 0   (47,162)   (47,162) (8,688)
Distributions declared on preferred units   (3,508) (3,508)   (60) (3,508) (3,508)    
Other comprehensive income (loss) (9,485) (9,485) (9,485)     (8,014)   (8,014) (1,471)
Net income (loss) (16,940) (16,940) (16,940)   60 (13,754) 3,508 (17,262) (3,186)
Ending balance at Jun. 30, 2019   999,161 998,155 1,006 3,265 874,371 202,576 671,795 123,784
Beginning balance at Dec. 31, 2019   906,575 905,542 1,033 3,265 796,349 202,576 593,773 109,193
Increase (Decrease) in Partners' Capital [Roll Forward]                  
Redemption of limited partner units (543) (543) (543)           (543)
Other   (18) (18)     (18)   (18)  
Equity-based compensation   3,764 3,764     3,764   3,764  
Adjustments to limited partners' interests           613   613 (613)
Distributions on common units   (28,182) (28,131) (51)   (23,818)   (23,818) (4,313)
Distributions declared on preferred units   (7,016) (7,016)   (120) (7,016) (7,016)    
Other comprehensive income (loss) (14,526) (14,526) (14,526)     (12,284)   (12,284) (2,242)
Net income (loss) (85,973) (85,973) (85,973)   120 (71,659) 7,016 (78,675) (14,314)
Ending balance at Jun. 30, 2020   774,081 773,099 982 3,265 685,931 202,576 483,355 87,168
Beginning balance at Mar. 31, 2020   868,275 867,293 982 3,265 765,112 202,576 562,536 102,181
Increase (Decrease) in Partners' Capital [Roll Forward]                  
Redemption of limited partner units (22) (22) (22)           (22)
Other   (9) (9)     (9)   (9)  
Equity-based compensation   1,898 1,898     1,898   1,898  
Adjustments to limited partners' interests           201   201 (201)
Distributions declared on preferred units   (3,508) (3,508)   (60) (3,508) (3,508)    
Other comprehensive income (loss) 920 920 920     779   779 141
Net income (loss) $ (93,473) (93,473) (93,473)   60 (78,542) 3,508 (82,050) (14,931)
Ending balance at Jun. 30, 2020   $ 774,081 $ 773,099 $ 982 $ 3,265 $ 685,931 $ 202,576 $ 483,355 $ 87,168
v3.20.2
Unaudited Consolidated Statement of Equity - LP (Parentheticals) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Partners' Capital [Abstract]      
Distribution on common units (usd per unit) $ 0.25 $ 0.125 $ 0.50
v3.20.2
Organization
6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization
Organization
Washington Prime Group Inc. ("WPG Inc.") is an Indiana corporation that operates as a fully integrated, self‑administered and self‑managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Code"). WPG Inc. will generally qualify as a REIT for U.S. federal income tax purposes as long as it continues to distribute at least 90% of its REIT taxable income, exclusive of net capital gains, and satisfy certain other requirements. WPG Inc. will generally be allowed a deduction against its U.S. federal income tax liability for dividends paid by it to REIT shareholders, thereby reducing or eliminating any corporate level taxation to WPG Inc. Washington Prime Group, L.P. ("WPG L.P.") is WPG Inc.'s majority‑owned limited partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.'s real estate properties and other assets. WPG Inc. is the sole general partner of WPG L.P. As of June 30, 2020, our assets consisted of material interests in 101 shopping centers in the United States, consisting of open air properties and enclosed retail properties, comprised of approximately 53 million square feet of managed gross leasable area.
Unless the context otherwise requires, references to "WPG," the "Company," "we," "us" or "our" refer to WPG Inc., WPG L.P. and entities in which WPG Inc. or WPG L.P. (or any affiliate) has a material ownership or financial interest, on a consolidated basis.
We derive our revenues primarily from retail tenant leases, including fixed minimum rent leases, overage and percentage rent leases based on tenants’ sales volumes, rent payments pursuant to the terms of offering property operating services to our tenants and others, including energy, waste handling and facility services, and reimbursements from tenants for certain recoverable costs such as property operating, real estate taxes, repair and maintenance, and advertising and promotional expenses.
We seek to enhance the performance of our properties and increase our revenues by, among other things, securing leases of anchor and inline tenant spaces, re‑developing or renovating existing properties to increase the leasable square footage, and increasing the productivity of occupied locations through aesthetic upgrades, re‑merchandising and/or changes to the retail use of the space.
Severance
During the six months ended June 30, 2020, and in response to the COVID-19 pandemic (as discussed in Note 2 - "Basis of Presentation and Principles of Consolidation"), the Company recorded aggregate severance costs of $0.1 million related to workforce reductions, which costs are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss for period then ended.
On February 5, 2019, the Company's then Executive Vice President, Head of Open Air Centers was terminated without cause from his position and received severance payments and other benefits pursuant to the terms and conditions of his employment agreement. In addition, the Company terminated, without cause, additional non-executive personnel in the Property Management department as part of an effort to reduce overhead costs. In connection with and as part of these management changes, the Company recorded aggregate severance charges of $1.9 million, including $0.1 million of non-cash stock compensation in the form of accelerated vesting of equity incentive awards, which costs are included in general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss for the six months ended June 30, 2019.
v3.20.2
Basis of Presentation and Principles of Consolidation
6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation and Principles of Consolidation
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated balance sheets as of June 30, 2020 and December 31, 2019 include the accounts of WPG Inc. and WPG L.P., as well as their majority owned and controlled subsidiaries. The accompanying consolidated statements of operations include the consolidated accounts of the Company. All intercompany transactions have been eliminated in consolidation. Due to the seasonal nature of certain operational activities and the fiscal impact of the COVID-19 pandemic, the results for the interim period ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year.
These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by GAAP for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. The Company believes that the disclosures made are adequate to prevent the information presented from being misleading. These consolidated unaudited financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the combined 2019 Annual Report on Form 10-K for WPG Inc. and WPG L.P. (the "2019 Form 10-K").
COVID-19
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects since March 2020 as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. During a portion of the second quarter of 2020, and in the interest of public health and safety, jurisdictions (national, state and local) where our shopping centers are located, required mandatory closures or capacity limitations or other restrictions for those that continue to operate, which impacted our tenants' ability to operate as well as pay rent and other related charges or otherwise fulfill their obligations of their respective leases. As of June 30, 2020, all of our enclosed retail properties were open in some capacity and our open air properties have remained open to the extent permitted by applicable law. In response to requests from tenants, we have granted rent relief to certain of our tenants in a combination of rent deferrals and rent abatements. We continue to assess requests from our tenants as they are received. As a result of these developments, the Company has experienced, and expects to continue to experience, a material adverse impact on its revenues, results of operations and cash flows for the year ending December 31, 2020. The situation continues to evolve as certain geographic regions across the United States have experienced a surge in new cases, which could result in shoppers limiting their in-store purchases in exchange for curbside or on-line purchases. Additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change, including the timing of possible additional closure requirements or the subsequent lifting of any said restrictions.
As described in Note 8 - "Rental Income", we derive almost all of our income from rental payments and other tenant charges. Our revenues and cash flow have been adversely affected as a significant number of our tenants have been unable to meet their obligations to us. Additionally, certain of our tenants have sought the protection of the bankruptcy laws as a result of the COVID-19 pandemic during the second quarter of 2020, which could result in the modification or termination of its lease, causing a further reduction in our revenues and cash flow. Furthermore, certain of our tenants, including anchor tenants, hold the right under their lease(s) to terminate their lease(s) or reduce their rental rate if certain occupancy conditions are not met, if certain anchor tenants close, if certain sales levels or profit margins are not achieved, all of which could be triggered in the event of one or more tenant bankruptcies and resulting lease terminations.
While the full outcome of the COVID-19 pandemic is unknown, it has and continues to negatively impact the revenues and business of our tenants. Many of our tenants have requested some form of rent relief, and relief provided thus far has reduced our second quarter revenues by $22.0 million due to rent abatements, while additional relief in the form of rent deferrals to future periods has impacted our second quarter operating cash flows. Additionally, as part of our continual assessment of the future collectibility of rents, we recorded an adjustment to rental income of $22.3 million, including the write-off of accrued (straight-line) rent. A further worsening of the financial condition of our tenants may impact our continual assessment of future collectibility of rents, which could cause us to write-off additional straight-line rent that has not yet been billed. We continue to assess rent relief requests from our tenants as they are received but are unable to predict the resolution or impact of these discussions.
We evaluate our real estate assets and other assets for impairment indicators whenever events or changes in circumstances indicate that recoverability of our investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. The prolonged outbreak of the COVID-19 pandemic has resulted in sustained closure of our centers as well as the cessation or reduction of the operations of certain of our tenants, which has resulted in a reduction in our revenues, due to the impaired financial stability of our tenants, and ultimately our cash flows for many of our centers as well as other sources of income generated by our properties. In addition to reduced revenues generated by our centers as a result of the COVID-19 outbreak, our ability to obtain sufficient financing for such properties may be impaired as well as our ability to lease or re-lease centers as a result of worsening market and economic conditions produced by the persistence of the COVID-19 pandemic.
As of June 30, 2020, our evaluation of impairment considered our estimate of cash flow declines caused by the COVID-19 pandemic, but our other assumptions, including estimated hold period, were generally unchanged given the highly uncertain environment. The worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our properties adversely impacted by the COVID-19 outbreak could result in the recognition of substantial impairment charges imposed on our assets which could adversely impact our financial results. See Note 4 - "Investment in Real Estate" for discussion of impairment charges recognized as of June 30, 2020.
We continuously project our cash flow sources and needs. In accordance with Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period, including interim periods. In evaluating the Company’s ability to continue as a going concern, management evaluated the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements were issued (August 10, 2020). Management considered the Company’s current projections of future cash flows, current financial condition, sources of liquidity and debt obligations due on or before August 10, 2021 in considering whether it has the ability to meet its obligations for at least one year from the date of issuance of this Form 10-Q.
Our ability to meet our obligations as they come due may be impacted by our ability to remain compliant with financial covenants in our unsecured debt arrangements or to obtain waivers or amendments that impact the related covenants. We have received requisite lender consents and expect to close, within the next week, on amendments to our Facility and December 2015 Term Loan (as defined in Note 6 - "Indebtedness") that will provide certain covenant relief through the third quarter of 2021. Based upon these modified covenant requirements, we project that we would remain in compliance with these revised financial covenants along with other unsecured debt covenants through at least August 10, 2021. However, with the continued uncertainty caused by the COVID-19 pandemic, significant risks remain with respect to these projections and any material adverse effect on our income and expenses could impact our ability to maintain compliance with our credit facility and bond covenants. Additionally, if we are unable to close on the amendments within a timely fashion, we could end up in default with such arrangements, impacting our ability to continue as a going concern.
General
These consolidated financial statements reflect the consolidation of properties that are wholly owned or properties in which we own less than a 100% interest but that we control. Control of a property is demonstrated by, among other factors, our ability, without the consent of any other unaffiliated partner or owner, to refinance debt or sell the property and the inability of any other unaffiliated partner or owner to replace us.
We consolidate a variable interest entity ("VIE") when we are determined to be the primary beneficiary. Determination of the primary beneficiary of a VIE is based on whether an entity has (1) the power to direct activities that most significantly impact the economic performance of the VIE and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our determination of the primary beneficiary of a VIE considers all relationships between us and the VIE, including management agreements and other contractual arrangements.
There have been no changes during the six months ended June 30, 2020 to any of our previous conclusions about whether an entity qualifies as a VIE or whether we are the primary beneficiary of any previously identified VIE. During the six months ended June 30, 2020, we did not provide financial or other support to a previously identified VIE that we were not previously contractually obligated to provide.
Investments in partnerships and joint ventures represent our noncontrolling ownership interests in properties. We account for these investments using the equity method of accounting. We initially record these investments at cost and we subsequently adjust for net equity in income or loss, which we allocate in accordance with the provisions of the applicable partnership or joint venture agreement and cash contributions and distributions, if applicable. The allocation provisions in the partnership or joint venture agreements are not always consistent with the legal ownership interests held by each general or limited partner or joint venture investee primarily due to partner preferences. We separately report investments in joint ventures for which accumulated distributions have exceeded investments in and our share of net income from the joint ventures within cash distributions and losses in unconsolidated entities, at equity in the consolidated balance sheets. The net equity of certain joint ventures is less than zero because of financing or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization, and WPG has historically committed to or intends to fund the venture.
As of June 30, 2020, our assets consisted of material interests in 101 shopping centers. The consolidated financial statements as of that date reflect the consolidation of 85 wholly owned properties and four additional properties that are less than wholly owned, but which we control or for which we are the primary beneficiary. We account for our interests in the remaining 12 properties, or the joint venture properties, using the equity method of accounting. While we manage the day-to-day operations of the joint venture properties, we do not control the operations as we have determined that our partner or partners have substantive participating rights with respect to the assets and operations of these joint venture properties (see Note 5 - "Investment in Unconsolidated Entities, at Equity" for further details).
We allocate net operating results of WPG L.P. to third parties and to WPG Inc. based on the partners' respective weighted average ownership interests in WPG L.P. Net operating results of WPG L.P. attributable to third parties are reflected in net loss attributable to noncontrolling interests. WPG Inc.'s weighted average ownership interest in WPG L.P. was 84.7% and 84.4% for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 and December 31, 2019, WPG Inc.'s ownership interest in WPG L.P. was 84.7% and 84.5%, respectively. We adjust the noncontrolling limited partners' interests at the end of each period to reflect their interest in WPG L.P.
v3.20.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Fair Value Measurements
The Company measures and discloses its fair value measurements in accordance with Accounting Standards Codification ("ASC") Topic 820 - “Fair Value Measurement” (“Topic 820”). The fair value hierarchy, as defined by Topic 820, contains three levels of inputs that may be used to measure fair value as follows:
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as interest rates, foreign exchange rates, and yield curves, that are observable at commonly quoted intervals.
Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity's own assumptions, as there is little, if any, related market activity.
The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under Topic 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions.
Use of Estimates
We prepared the accompanying consolidated financial statements in accordance with GAAP. This requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Our actual results could differ from these estimates.
Segment Disclosure
Our primary business is the ownership, development and management of retail real estate. We have aggregated our operations, including enclosed retail properties and open air properties, into one reportable segment because they have similar economic characteristics and we provide similar products and services to similar types of, and in many cases, the same tenants.
New Accounting Pronouncements
Adoption of New Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. We adopted this ASU on January 1, 2020, noting our seller-provided bridge financing associated with our other indebtedness (see Note 6 - "Indebtedness" for further details) and certain other miscellaneous accounts are in scope of ASU 2016-13. However, there was no impact to our consolidated financial statements at adoption.
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, "Leases." Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can account for the concession as though enforceable rights and obligations for those concessions existed (regardless of whether these enforceable rights and obligations for the concessions explicitly exist in the contract). Both lessees and lessors may make this election. For all concessions that did not result in a substantial increase in the rights of the lessor or the obligations of the lessees, the Company elected to adopt this optional relief in the second quarter of 2020, resulting in abatements granted in the period being recognized as negative variable revenue during the period of abatement. Concessions in the form of rent deferrals were effectively accounted for as if the lease was unchanged, though in all cases receivables were evaluated under the collectibility guidance in Topic 842.
New Standards Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Inter-Bank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. If elected, an entity would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities electing relief would need to apply it consistently for all eligible modified contracts accounted for under a particular codification topic or industry subtopic. Additionally, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Entities electing relief related to hedging relationships can generally elect to apply the optional expedients on a hedge-by-hedge basis.
The guidance is effective upon issuance and can be applied to modifications of existing contracts made after January 1, 2020 and can be applied to eligible hedging relationships existing as of or entered into after the same date. The relief is temporary and cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. As of June 30, 2020, we had approximately $812.0 million (excluding debt issuance costs of $5.1 million) of our aggregate consolidated indebtedness that was indexed to LIBOR. In addition, as of June 30, 2020, we had approximately $640.8 million of consolidated indebtedness swapped to LIBOR plus a fixed spread under hedging relationships. We expect that upon modification, these contracts will generally qualify for the temporary relief upon meeting the certain criteria and we are currently assessing our plans for adoption.
Reconciliation of Cash, Cash Equivalents, and Restricted Cash
The following is a summary of our beginning and ending cash, cash equivalents and restricted cash totals as presented in our statements of cash flows for the six months ended June 30, 2020 and 2019:
 
Balance at June 30,
 
Balance at December 31,
 
2020
 
2019
 
2019
 
2018
Cash and cash equivalents
$
127,019

 
$
30,683

 
$
41,421

 
$
42,542

Restricted cash
36,632

 
49,593

 
34,054

 
18,542

Total cash, cash equivalents and restricted cash
$
163,651

 
$
80,276

 
$
75,475

 
$
61,084


Restricted cash primarily relates to cash held in escrow for payment of real estate taxes and property reserves for maintenance, expansion or leasehold improvements as required by our mortgage loans. Restricted cash is included in "Deferred costs and other assets" in the accompanying balance sheets as of June 30, 2020 and December 31, 2019.
v3.20.2
Investment in Real Estate
6 Months Ended
Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Investment in Real Estate
Investment in Real Estate
2020 Dispositions
On March 13, 2020, Seminole Towne Center, located in Sanford, Florida, was transitioned to the lender pursuant to the terms within a deed-in-lieu of foreclosure agreement. This property was held in an unconsolidated joint venture and all operational involvement between us and the related property ceased in connection with this transition (see Note 5 - "Investment in Unconsolidated Entities, at Equity" for additional details).
On January 14, 2020, we completed the sale of Matteson Plaza, located in Matteson, Illinois, to an unaffiliated private real estate investor for a purchase price of $1.1 million. The net proceeds of $0.4 million was used for general corporate purposes.
On January 31, 2020, we completed the sale of Dekalb Plaza, located in King of Prussia, Pennsylvania, to an unaffiliated private real estate investor for a purchase price of $13.6 million. The net proceeds of $13.4 million was used to fund ongoing redevelopment efforts and general corporate purposes.
We are party to two separate purchase and sale agreements to sell certain outparcels to FCPT Acquisitions, LLC ("Four Corners"). The following table summarizes the key terms of each of the closings that occurred during the six months ended June 30, 2020:
Sales Date
 
Parcels Sold
 
Purchase Price
 
Sales Proceeds
February 13, 2020
 
2

 
$
1,961

 
$
1,945

Excluding any subsequent amendments thereto, the Company has approximately $4.6 million of remaining outparcels from the first purchase and sale agreement and approximately $26.9 million from the second purchase and sale agreement to close, subject to due diligence and closing conditions. Additionally, during the six months ended June 30, 2020, the Company sold certain undeveloped land parcels and developed outparcels for an aggregate purchase price of approximately $2.4 million, receiving net proceeds of approximately $2.2 million. The net proceeds from the disposition activities were generally used to fund ongoing redevelopment efforts and for general corporate purposes. In connection with the 2020 disposition activities, the Company recorded net gains of $0.4 million and $27.2 million for the three and six months ended June 30, 2020, which are included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive loss.
2019 Dispositions
The following table summarizes the key terms of each of the closings with Four Corners that occurred during the three and six months ended June 30, 2019:
Sales Date
 
Parcels Sold
 
Purchase Price
 
Sales Proceeds
January 18, 2019
 
8

 
$
9,435

 
$
9,364

February 11, 2019
 
1

 
2,766

 
2,720

April 3, 2019
 
1

 
2,048

 
2,016

June 28, 2019
 
3

 
3,050

 
3,031

 
 
13

 
$
17,299

 
$
17,131

 
 
 
 
 
 
 

The net proceeds were used to fund ongoing redevelopment efforts and for general corporate purposes. Additionally, during the three and six months ended June 30, 2019, the Company sold certain undeveloped land parcels for an aggregate purchase price of $3.6 million, receiving net proceeds of $3.4 million. In connection with the 2019 disposition activities, the Company recorded gains of $6.2 million and $16.2 million for the three and six months ended June 30, 2019, which is included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive loss.
Impairment
During the quarter ended June 30, 2020, and in connection with the preparation of the financial statements included in this report, we recorded an impairment charge of approximately $23.8 million related to two enclosed retail properties based on the total estimated fair value of $12.6 million and the related carrying value. The impairment charge was attributed to declines in the estimated undiscounted cash flows which resulted in the carrying value not being recoverable. The fair value of each property was based on the respective discounted future cash flows of each property, using a discount rate range of 18.8% to 19.3% and a terminal capitalization rate range of 16.8% to 17.3%, which were determined using management's assessment of the property operating performance and general market conditions (Level 3 inputs).
During the quarter ended March 31, 2020, we recorded an impairment charge of approximately $1.3 million related to vacant land at Georgesville Square, located in Columbus, Ohio and a single tenant outparcel located in Topeka, Kansas. The impairment charges in both instances were due to changes in facts and circumstances when we decided to hold the assets for a shorter period which resulted in the carrying value not being recoverable from the projected cash flows. In the case of the vacant land at Georgesville Square, which was sold during the second quarter of 2020, the fair value was based on the sales price (Level 1 input). In the case of the single tenant outparcel, the fair value was based on general market conditions (Level 3 inputs).
Except as described above, the Company recorded no additional impairment charges during the three and six months ended June 30, 2020. No impairment charges were recorded during the three and six months ended June 30, 2019.
v3.20.2
Investment in Unconsolidated Entities, at Equity
6 Months Ended
Jun. 30, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Unconsolidated Entities, at Equity
Investment in Unconsolidated Entities, at Equity
The Company's investment activity in unconsolidated real estate entities during the six months ended June 30, 2020 and June 30, 2019 consisted of investments in the following material joint ventures:
The O'Connor Joint Venture I
This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of five enclosed retail properties and related outparcels, consisting of the following: The Mall at Johnson City located in Johnson City, Tennessee; Pearlridge Center located in Aiea, Hawaii; Polaris Fashion Place, located in Columbus, Ohio; Scottsdale Quarter® located in Scottsdale, Arizona; and Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing) located in Leawood, Kansas. We retain management, leasing, legal, construction, and development responsibilities for the O'Connor Joint Venture I.
On December 20, 2019, the O'Connor Joint Venture I closed on the extension of the mortgage loan secured by The Mall at Johnson City. The extension was effective May 6, 2020 and extended the maturity of the mortgage loan to May 6, 2023, with two additional one-year extension options available to the joint venture. The extension required a $5.0 million principal prepayment on May 6, 2020, in addition to funding certain reserve accounts of $10.0 million for future redevelopment and property improvements. On June 11, 2020, and in response to the COVID-19 pandemic, the O'Connor Joint Venture I executed a standstill agreement with the lender that extended the effective date of the extension to December 2020, at which time the O'Connor Joint Venture I may extend the maturity of the mortgage loan pursuant to the terms and payment requirements noted above (see additional details within the forbearance table below).
The O'Connor Joint Venture II
This investment consists of a 51% noncontrolling interest held by the Company in a portfolio of seven retail properties and certain related outparcels, consisting of the following: The Arboretum, located in Austin, Texas; Arbor Hills, located in Ann Arbor, Michigan; Classen Curve and The Triangle at Classen Curve, each located in Oklahoma City, Oklahoma and Nichols Hills Plaza, located in Nichols Hills, Oklahoma (the "Oklahoma City Properties"); Gateway Centers, located in Austin, Texas; Malibu Lumber Yard, located in Malibu, California; Palms Crossing I and II, located in McAllen, Texas; and The Shops at Arbor Walk, located in Austin, Texas (the "O'Connor Joint Venture II"). We retain management, leasing, legal, construction, and development responsibilities for the O'Connor Joint Venture II.
The Seminole Joint Venture
This investment consisted of a 45% legal interest held by the Company in Seminole Towne Center, an approximate 1.1 million square foot enclosed regional retail property. The Company had no effective financial interest in this property due to preferences. On March 13, 2020, the property held through this venture was transitioned to the lender pursuant to the terms within a deed-in-lieu of foreclosure agreement and all involvement between us and the related property ceased in connection with this transition. We recorded a gain of $15.4 million related to our cash distributions and losses in the Seminole Joint Venture, which is included in gain on disposition of interests in properties, net in the accompanying consolidated statements of operations and comprehensive loss.
Individual agreements specify which services the Company is to provide to each joint venture. The Company, through its affiliates, provides management, leasing, legal, construction and development services for a fee to the joint ventures as noted above. We recorded fee income of $1.2 million and $3.4 million for the three and six months ended June 30, 2020, respectively, and $2.7 million and $5.4 million for the three and six months ended June 30, 2019, respectively, which are included in other income in the accompanying consolidated statements of operations and comprehensive loss. Advances to the joint ventures totaled $0.7 million and $0.5 million as of June 30, 2020 and December 31, 2019, respectively, which are included in investment in and advances to unconsolidated entities, at equity in the accompanying consolidated balance sheets. Management deems this balance to be collectible and anticipates repayment within one year.
The following table presents the combined statements of operations for our joint ventures for the three and six months ended June 30, 2020 and 2019:
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Total revenues
$
44,342

 
$
63,617

 
$
107,565

 
$
129,639

Operating expenses
20,869

 
26,995

 
47,769

 
53,823

Depreciation and amortization
20,916

 
25,579

 
46,305

 
51,336

Operating income
2,557

 
11,043

 
13,491

 
24,480

Gain (loss) on sale of interests in properties
2,039

 
(1,289
)
 
2,039

 
(1,289
)
Gain on extinguishment of debt

 

 
15,605

 

Interest expense, taxes, and other, net
(12,142
)
 
(12,918
)
 
(24,569
)
 
(25,983
)
Net (loss) income of the Company's unconsolidated real estate entities
$
(7,546
)
 
$
(3,164
)
 
$
6,566

 
$
(2,792
)
 
 
 
 
 
 
 
 
Our share of loss from the Company's unconsolidated real estate entities
$
(4,754
)
 
$
(1,713
)
 
$
(5,786
)
 
$
(1,761
)

The following table presents the combined balance sheets of our joint ventures as of June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
 
December 31, 2019
Assets:
 
 
 
 
Investment properties at cost, net
 
$
1,850,156

 
$
1,905,336

Construction in progress
 
42,179

 
38,280

Cash and cash equivalents
 
37,263

 
43,137

Tenant receivables and accrued revenue, net
 
46,684

 
31,238

Deferred costs and other assets (1)
 
287,669

 
301,133

Total assets
 
$
2,263,951

 
$
2,319,124

Liabilities and Members’ Equity:
 
 

 
 

Mortgage notes payable
 
$
1,225,547

 
$
1,282,307

Accounts payable, accrued expenses, intangibles, and deferred revenues(2)
 
288,407

 
297,163

Total liabilities
 
1,513,954

 
1,579,470

Members’ equity
 
749,997

 
739,654

Total liabilities and members’ equity
 
$
2,263,951

 
$
2,319,124

Our share of members’ equity, net
 
$
394,785

 
$
384,332

 
 
 
 
 
Our share of members’ equity, net
 
$
394,785

 
$
384,332

Advances and excess investment
 
20,389

 
17,339

Net investment in and advances to unconsolidated entities, at equity(3)
 
$
415,174

 
$
401,671


(1)
Includes value of acquired in-place leases and acquired above-market leases with a net book value of $73,053 and $79,457 as of June 30, 2020 and December 31, 2019, respectively. Additionally, includes right-of-use assets of $173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of June 30, 2020 and December 31, 2019, respectively.
(2)
Includes the net book value of below market leases of $40,174 and $45,757 as of June 30, 2020 and December 31, 2019, respectively. Additionally, includes lease liabilities of $173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of June 30, 2020 and December 31, 2019, respectively.
(3)
Includes $415,174 and $417,092 of investment in and advances to unconsolidated entities, at equity as of June 30, 2020 and December 31, 2019, respectively, and $0 and $15,421 of cash distributions and losses in unconsolidated entities, at equity as of June 30, 2020 and December 31, 2019, respectively.
In response to the COVID-19 pandemic, the Company, on behalf of the O'Connor Joint Venture I and O'Connor Joint Venture II, has executed the following forbearance agreements related to various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Arbor Hills
 
$
24,035

 
4.27
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Arboretum, The
 
$
59,400

 
4.13
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve
 
$
52,779

 
3.90
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Gateway Centers
 
$
112,500

 
4.03
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Mall at Johnson City, The
 
$
47,768

 
6.76
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Nichols Hills Plaza
 
$
12,571

 
2.66
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
Due at maturity (Jan. 1, 2023)
Polaris Fashion Place
 
$
240,170

 
3.94
%
 
Interest and principal
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Town Center Crossing
 
$
32,534

 
4.25
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Town Center Plaza
 
$
65,830

 
5.00
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Scottsdale Quarter (Blocks K & M)
 
$
55,000

 
4.36
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Commencing August 2020 with payments made from excess property cash flow until repaid in full
1 Maturity dates noted include any applicable extension options available to the borrower.
In addition, the Company is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations. Certain other mortgage notes may be placed into special servicing during the forbearance negotiation and repayment periods.
v3.20.2
Indebtedness
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Indebtedness
Indebtedness
Mortgage Debt
Total mortgage indebtedness at June 30, 2020 and December 31, 2019 was as follows:
 
 
June 30,
2020
 
December 31,
2019
Face amount of mortgage loans
 
$
1,110,243

 
$
1,117,242

Fair value adjustments, net
 
2,312

 
3,463

Debt issuance cost, net
 
(4,608
)
 
(5,097
)
Carrying value of mortgage loans
 
$
1,107,947

 
$
1,115,608


A roll forward of mortgage indebtedness from December 31, 2019 to June 30, 2020 is summarized as follows:
Balance at December 31, 2019
$
1,115,608

Debt amortization payments
(6,999
)
Issuance costs incurred upon debt modifications
(151
)
Amortization of fair value and other adjustments
(1,151
)
Amortization of debt issuance costs
640

Balance at June 30, 2020
$
1,107,947


In response to the COVID-19 pandemic, the Company has executed the following forbearance agreements on its various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza
 
$
117,000

 
3.67
%
 
Interest only
 
Interest
 
6 months commencing May 2020
 
6 months commencing November 2020
Southgate Mall
 
$
35,000

 
4.48
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Due at maturity (Sept. 27, 2023)
Town Center at Aurora
 
$
51,000

 
4.92
%
 
Interest and principal
 
Interest and principal
 
6 months commencing May 2020
 
Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall
 
$
76,086

 
4.65
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020, paid from escrows
 
Not applicable
1 Maturity dates noted include any applicable extension options available to the borrower.
In addition, the Company is in various stages of discussions relating to additional forbearance agreements for other mortgage obligations (see Note 12 - "Subsequent Events" for additional detail). Certain other mortgage notes payable may be in formal default (see "Covenants" for further details) or placed into special servicing during the forbearance negotiation and repayment periods.
On April 3, 2020, the Company exercised the third of three options to extend the maturity of the $65.0 million term loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2021.
On February 14, 2020, the Company exercised the second of two options to extend the maturity of the $51.0 million mortgage note payable secured by Town Center at Aurora, located in Aurora, Colorado, for one year. The extended maturity is April 1, 2021. Additionally, as part of the aforementioned forbearance agreement, the Company was granted an additional one year extension option, which would extend the maturity to April 1, 2022. The extension option is subject to continued compliance with the terms of the mortgage agreement.
Corporate Debt
The following table identifies our total corporate debt outstanding at June 30, 2020 and December 31, 2019:
 
 
June 30,
2020
 
December 31,
2019
Notes payable:
 
 
 
 
Face amount - the Exchange Notes(1)
 
$

 
$
250,000

Face amount - Senior Notes due 2024(2)
 
720,900

 
720,900

Debt discount, net
 
(7,111
)
 
(7,864
)
Debt issuance costs, net
 
(4,689
)
 
(5,470
)
Total carrying value of notes payable
 
$
709,100

 
$
957,566

 
 
 
 
 
Unsecured term loans:(7)
 
 
 
 
Face amount - Term Loan(3)(4)
 
$
350,000

 
$
350,000

Face amount - December 2015 Term Loan(5)
 
340,000

 
340,000

Debt issuance costs, net
 
(2,791
)
 
(3,358
)
Total carrying value of unsecured term loans
 
$
687,209

 
$
686,642

 
 
 
 
 
Revolving credit facility:(3)(6)
 
 
 
 
Face amount
 
$
647,000

 
$
207,000

Debt issuance costs, net
 
(2,284
)
 
(2,855
)
Total carrying value of revolving credit facility
 
$
644,716

 
$
204,145

 
 
 
 
 
Other indebtedness:(8)
 
 
 
 
Face amount
 
$
98,900

 
$
98,900

Debt issuance costs, net
 
(1,535
)
 
(1,561
)
Accretion adjustment, net
 
(13,010
)
 
262

Total carrying value of other indebtedness
 
$
84,355

 
$
97,601

(1) The Exchange Notes were issued at a 0.028% discount and bore interest at 3.850% per annum.
(2) The Senior Notes due 2024 were issued at a 1.533% discount, bore interest at 5.950% per annum through August 14, 2019, at which time the interest rate increased to 6.450% per annum. The Senior Notes due 2024 mature on August 15, 2024.
(3) The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."
(4) The Term Loan bears interest at one-month LIBOR plus 2.10% per annum and will mature on December 30, 2022. We have interest rate swap agreements totaling $250.0 million, which effectively fix the interest rate on a portion of the Term Loan at 4.86% through June 30, 2021. At June 30, 2020, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 2.10% or 2.26%.
(5) The December 2015 Term Loan bears interest at one-month LIBOR plus 2.35% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 4.06% per annum through maturity.
(6) The Revolver provides borrowings on a revolving basis up to $650.0 million, bears interest at one-month LIBOR plus 1.80%, and will initially mature on December 30, 2021, subject to two six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. At June 30, 2020, we had an aggregate available borrowing capacity of $2.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At June 30, 2020, the applicable interest rate on the Revolver was one-month LIBOR plus 1.80% or 1.96%. The interest rate on the Revolver may vary in the future based upon the Company's credit rating and leveraged levels.
(7) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings and leveraged levels.
(8) Represents the financial liability associated with our failed sale and leaseback of land at Edison Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas; and Jefferson Valley Mall, located in Yorktown Heights, New York (collectively, the "Properties"). The face amount represents the sales price of the fee interest in the land at the Properties. The master ground lease has a 99-year term and includes fixed annual payments at an initial annualized rate of 7.4%, with annual rent escalators over the aforementioned term. The agreement also includes an option to repurchase the fee interest in the land at $109.3 million in year 30 of the master ground lease, to which the financial liability is being accreted to during the repurchase period. Proceeds received at closing were net of $55.0 million in bridge financing provided by the Company. Expense is being recognized utilizing an effective interest rate of 8.52% during the repurchase period.
On June 22, 2020, in order to accelerate repayment and bolster liquidity, the Company accepted the terms of a reduced payoff of the $55.0 million bridge financing provided in connection with the failed sale and leaseback noted above. In exchange for settling the bridge financing, the Company received $30.0 million in cash and the buyer/lessor reduced monthly payments that we owe under the leases totaling approximately $15.7 million over 27 months, commencing July 1, 2020. The present value of the reduced rent payments was reclassified from note receivable to other indebtedness, which is presented net of the accretion adjustment in the table above, and the Company recorded an impairment on the note receivable of approximately $11.2 million in connection with the extinguishment. The proceeds were used for general corporate purposes.
On February 28, 2020, the Company redeemed the Exchange Notes in advance of the April 1, 2020 maturity date. The repayment was funded utilizing borrowings on the Revolver.
Covenants
Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of June 30, 2020, based on the amendments to our Facility and December 2015 Term Loan that we expect to close within the next week, as discussed in Note 2 - "Basis of Presentation and Principles of Consolidation," management believes the Company would be in compliance with all covenants of its unsecured debt.
The total balance of mortgages was approximately $1.1 billion as of June 30, 2020. At June 30, 2020, certain of our consolidated subsidiaries were the borrowers under 20 non-recourse loans and two full-recourse loans secured by mortgages encumbering 24 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the debt and enforce its right against its collateral.
On May 26, 2020, we received a notice of default letter, dated May 14, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $40.9 million mortgage loan secured by Port Charlotte Town Center, located in Port Charlotte, Florida. The notice was issued by the special servicer because the borrower elected to not pay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On May 22, 2020, we received a notice of default letter, dated May 21, 2020, from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $47.3 million mortgage loan secured by Lincolnwood Town Center, located in Lincolnwood, Illinois. The notice was issued by the special servicer because the borrower elected to not pay the May 2020 mortgage payment due to disruption caused by COVID-19. The borrower has initiated short-term forbearance discussions with the special servicer regarding this non-recourse loan in an effort to cure the default. The Company continues to manage and lease the property.
On February 21, 2020, we received a letter, dated that same date, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $33.1 million mortgage loan secured by Muncie Mall, located in Muncie, Indiana, was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. On April 14, 2020, the Company received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company continues to hold title to the property.
On November 5, 2019, we received a letter dated October 30, 2019, from the lender notifying the borrower, a consolidated subsidiary of WPG L.P., that the $45.1 million mortgage loan secured by Charlottesville Fashion Square, located in Charlottesville, Virginia, was transferred to special servicing because the borrower notified the lender that future projected cash flows will be insufficient to ensure future compliance with the mortgage loan due to the loss of certain tenants. The borrower has initiated discussions with the special servicer regarding this non-recourse loan and is considering various options. On March 17, 2020, we received notification that a receiver had been appointed to manage and lease the property. An affiliate of the Company still holds title to the property.
At June 30, 2020, management believes the applicable borrowers under our other non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows. The Company has assessed each of the defaulted properties for impairment indicators and have concluded no impairment charges were warranted as of June 30, 2020.
Fair Value of Debt
The carrying values of our variable-rate loans approximate their fair values. We estimate the fair values of fixed-rate mortgages and fixed-rate corporate debt (including variable-rate unsecured debt swapped to fixed-rate and our other indebtedness, as discussed above) using cash flows discounted at current borrowing rates or Level 2 inputs. We estimate the fair values of consolidated fixed-rate unsecured notes payable using Level 1 quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms and maturities or Level 2 inputs.
The book value and fair value of these financial instruments and the related discount rate assumptions as of June 30, 2020 and December 31, 2019 are summarized as follows:
 
 
June 30, 2020
 
December 31, 2019
Book value of fixed-rate mortgages(1)
 
$1,045,243
 
$1,052,242
Fair value of fixed-rate mortgages
 
$1,073,408
 
$1,062,205
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages
 
3.81
%
 
4.24
%
 
 
 
 
 
Book value of fixed-rate corporate debt(1)
 
$1,396,790
 
$1,660,062
Fair value of fixed-rate corporate debt
 
$1,156,446
 
$1,673,105
Weighted average discount rates assumed in calculation of fair value for fixed-rate corporate debt
 
9.52
%
 
6.03
%
(1) Excludes debt issuance costs and applicable debt discounts.
v3.20.2
Derivative Financial Instruments
6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash payments related to the Company's borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives the Company primarily uses interest rate swaps or caps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in other comprehensive income ("OCI") or other comprehensive loss (“OCL”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed-rate financings or refinancings continue to be included in accumulated other comprehensive income or loss ("AOCI" or "AOCL") during the term of the hedged debt transaction.
Amounts reported in AOCL relate to derivatives that will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Realized gains or losses on settled derivative instruments included in AOCL are recognized as an adjustment to income over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional $12.7 million will be reclassified as an increase to interest expense. As of June 30, 2020, the Company had 11 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a current notional value of $640.8 million.
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2020 and December 31, 2019:
Derivatives designated as hedging instruments:
Balance Sheet
Location
 
June 30, 2020
 
December 31, 2019
Interest rate products
Liability derivatives
Accounts payable, accrued expenses, intangibles, and deferred revenue
 
$
21,089

 
$
6,592


There were no asset derivative instruments at June 30, 2020 and December 31, 2019. The liability derivative instruments were reported at their fair value of $21,089 and $6,592 at June 30, 2020 and December 31, 2019, respectively, with a corresponding adjustment to OCL for the unrealized gains and losses (net of noncontrolling interest allocation). Over time, the unrealized gains and losses held in AOCL will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of comprehensive loss for the three and six months ended June 30, 2020 and 2019:
Derivatives in Cash Flow Hedging Relationships
(Interest rate products)
 
Location of Gain or Loss Recognized in Income on Derivatives
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Amount of Loss Recognized in OCL on Derivative
 
Interest expense
 
$
(1,760
)
 
$
(8,955
)
 
$
(17,969
)
 
$
(13,520
)
 
 
 
 
 
 
 
 
 
 
 
Amount of Loss or (Gain) Reclassified from AOCL into Income
 
Interest expense
 
$
2,680

 
$
(530
)
 
$
3,443

 
$
(1,075
)
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the three and six months ended June 30, 2020 and 2019:
Effect of Cash Flow Hedges on Consolidated Statements of Operations
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded
 
$
(37,445
)
 
$
(39,143
)
 
$
(76,080
)
 
$
(75,973
)
 
 
 
 
 
 
 
 
 
Amount of loss or (gain) reclassified from accumulated other comprehensive loss into interest expense
 
$
2,680

 
$
(530
)
 
$
3,443

 
$
(1,075
)
 
 
 
 
 
 
 
 
 

Credit Risk-Related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision that if the Company either defaults or is capable of being declared in default on any of its consolidated indebtedness, then the Company could also be declared in default on its derivative obligations.
The Company has agreements with its derivative counterparties that incorporate the loan covenant provisions of the Company's indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.
As of June 30, 2020, the fair value of the derivatives in a net liability position, plus accrued interest but excluding any adjustment for nonperformance risk, related to these agreements was $21,089. As of June 30, 2020, the Company has not posted any collateral related to these agreements. The Company is not in default with any of these provisions as of June 30, 2020. If the Company had breached any of these provisions at June 30, 2020, it would have been required to settle its obligation under these agreements at their termination value of $21,089.
Fair Value Considerations
Currently, the Company uses interest rate swaps and caps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. Based on these inputs the Company has determined that its interest rate swap and cap valuations are classified within Level 2 of the fair value hierarchy.
To comply with the provisions of Topic 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2020 and December 31, 2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The tables below presents the Company’s net assets and (liabilities) measured at fair value as of June 30, 2020 and December 31, 2019 aggregated by the level in the fair value hierarchy within which those measurements fall:
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Balance at June 30, 2020
Derivative instruments, net
$

 
$
(21,089
)
 
$

 
$
(21,089
)
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Balance at December 31, 2019
Derivative instruments, net
$

 
$
(6,592
)
 
$

 
$
(6,592
)

v3.20.2
Rental Income
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Rental Income
Rental Income
We receive rental income from the leasing of retail and other space under operating leases, as we retain substantially all of the risks and benefits of ownership of the investment properties. The majority of these leases contain extension options, typically at the lessee's election, and/or early termination provisions. Further, our leases do not contain any provisions that would allow the lessee to purchase the underlying assets throughout the lease term. In most cases, consideration received typically includes a fixed minimum rent component, reimbursement of a fixed portion of our property operating expenses, including utility, security, janitorial, landscaping, food court and other administrative expenses included in common area maintenance, or CAM, and reimbursement of lessor costs such as real estate taxes and insurance, computed based upon a formula in accordance with the lease terms. When not reimbursed by the fixed CAM component, CAM expense reimbursements and lessor costs are based on the tenant's proportionate share of the allocable operating expenses and CAM capital expenditures for the property. We accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year. Additionally, a large number of our tenants are also required to pay overage rents based on sales during the applicable lease year over a base amount stated in the lease agreement. We recognize overage rents only when each tenant's sales exceed the applicable sales threshold as defined in their lease. We also collect lease termination income from tenants to allow for the tenant to vacate their space prior to their scheduled lease termination date. We recognize lease termination income in the period when a termination agreement is signed, collectability is assured, and we are no longer obligated to provide space to the tenant. In the event that a tenant is in bankruptcy when the termination agreement is signed, termination fee income is deferred and recognized when, and if, it is received. We record an adjustment to rental income in the period there is a change in our assessment of whether the collectibility of operating lease payments is probable.
We have elected the practical expedient in ASU 2016-02 to not separate non-lease components from lease components as our underlying leases qualify as operating leases and the timing and pattern of transfer of the lease and non-lease components are the same. We note that the predominant component of our leases is the lease component and thus account for the combined lease and non-lease (CAM) component of the non-cancelable lease term on a straight-line basis in accordance with ASC 842.
Rental income also includes accretion related to above-market and below-market lease intangibles related to the acquisition of operating properties. We amortize any tenant inducements as a reduction of rental income utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.
The following table summarizes our rental income for the three and six months ended June 30, 2020 and 2019:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease payments, fixed
 
$
125,366

 
$
138,173

 
$
256,871

 
$
282,349

Operating lease payments, variable
 
12,897

 
16,397

 
32,001

 
34,459

Amortization of straight-line rent, inducements, and rent abatements
 
(21,586
)
 
1,163

 
(20,777
)
 
2,272

Net amortization/accretion of above and below-market leases
 
1,712

 
1,544

 
2,818

 
4,450

Change in estimate of collectibility of rental income
 
(22,339
)
 
(1,047
)
 
(27,630
)
 
(4,027
)
Total rental income
 
$
96,050

 
$
156,230

 
$
243,283

 
$
319,503


Included in the amounts presented for the three and six months ended June 30, 2020 are rent abatements of $22.0 million and a change in our estimate of collectibility of rental income of $22.3 million, including the write-off of accrued (straight-line) rent, in response to the COVID-19 pandemic.
Future payments to be received under non-cancelable operating leases for each of the next five years and thereafter, excluding variable payments of tenant reimbursements, percentage or overage rents, and lease termination payments as of June 30, 2020 are as follows:
2020 (July - December)
 
$
234,763

2021
 
403,817

2022
 
338,531

2023
 
276,796

2024
 
216,380

Thereafter
 
655,045

 
 
$
2,125,332


v3.20.2
Equity
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Equity
Equity
Exchange Rights
Subject to the terms of the limited partnership agreement of WPG L.P., limited partners in WPG L.P. have, at their option, the right to exchange all or any portion of their units for shares of WPG Inc. common stock on a one‑for‑one basis or cash, as determined by WPG Inc. Therefore, the common units held by limited partners are considered by WPG Inc. to be share equivalents and classified as noncontrolling interests within permanent equity, and classified by WPG L.P. as permanent equity. The amount of cash to be paid if the exchange right is exercised and the cash option is selected will be based on the market value of WPG Inc.'s common stock as determined pursuant to the terms of the WPG L.P. Partnership Agreement. At June 30, 2020, WPG Inc. had reserved 34,479,892 shares of common stock for possible issuance upon the exchange of units held by WPG L.P. limited partners.
The holders of the Series I-1 Preferred Units have, at their option, the right to have their units purchased by WPG L.P. subject to the satisfaction of certain conditions. Therefore, the Series I-1 Preferred Units are classified as redeemable noncontrolling interests outside of permanent equity.
Stock Based Compensation
On May 28, 2014, the WPG Inc. Board of Directors (the "Board") adopted the Washington Prime Group, L.P. 2014 Stock Incentive Plan (the "2014 Plan"), which permitted the Company to grant awards to current and prospective directors, officers, employees and consultants of the Company or any affiliate. An aggregate of 10,000,000 shares of common stock were reserved for issuance, with a maximum number of awards to be granted to a participant in any calendar year of 500,000 shares/units. On May 16, 2019, the common shareholders of WPG Inc. approved the Washington Prime Group, L.P. 2019 Stock Incentive Plan (the "2019 Plan"), which replaced the 2014 Plan with respect to the issuance of new awards. The Board and its Compensation Committee (the "Committee") previously approved and adopted the 2019 Plan, subject to WPG Inc. common shareholder approval, during the Board and Committee's regular meetings in February 2019. An aggregate of 7,290,000 shares of common stock are reserved for issuance, excluding carryover shares from the 2014 Plan. Awards may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs") or other stock-based awards in WPG Inc., long term incentive units ("LTIP units" or "LTIPs") or performance units ("Performance LTIP Units") in WPG L.P. The 2019 Plan terminates on May 16, 2029.
The following is a summary by type of the awards that the Company issued during the six months ended June 30, 2020 and June 30, 2019 under the 2014 Plan and 2019 Plan.
Annual Long-Term Incentive Awards
During the six months ended June 30, 2020 and 2019, the Company approved the terms and conditions of the 2020 and 2019 annual awards (the "2020 Annual Long-Term Incentive Awards" and "2019 Long-Term Incentive Awards," respectively) for certain executive officers and employees of the Company. Under the terms of the awards program, each participant is provided the opportunity to receive (i) time-based RSUs and (ii) performance-based stock units ("PSUs"). RSUs represent a contingent right to receive one WPG Inc. common share for each vested RSU. RSUs will vest in one-third installments on each annual anniversary of the respective Grant Date (as referenced below), subject to the participant's continued employment with the Company through each vesting date and the participant's continued compliance with certain applicable covenants. During the service period, dividend equivalents will be paid in cash accruals or under some circumstances, common shares, with respect to the RSUs corresponding to the amount of any cash dividends paid by the Company to the Company's common shareholders for the applicable dividend payment dates. Compensation expense is recognized on a straight-line basis over the three year vesting term. Actual PSUs earned may range from 0%-150% of the PSUs allocated to the award recipient, based on the Company's total shareholder return ("TSR") compared to a peer group based on companies with similar assets and revenue over a three-year performance period that commenced on the respective Grant Date (as referenced below). During the performance period, dividend equivalents corresponding to the amount of any regular cash dividends paid by the Company to the Company’s common shareholders for the applicable dividend payment dates will accrue and be deemed reinvested in additional PSUs, which will be settled in common shares at the same time and only to the extent that the underlying PSU is earned and settled in common shares. Payout of the PSUs is also subject to the participant’s continued employment with the Company through the end of the performance period. The PSUs were valued through the use of a Monte Carlo model and the related compensation expense is recognized over the three-year performance period.
The following table summarizes the issuance of the 2020 Annual Long-Term Incentive Awards and 2019 Annual Long-Term Incentive Awards, respectively:
 
 
2020 Annual Long-Term Incentive Awards
 
2019 Annual Long-Term Incentive Awards
Grant Date
 
February 25, 2020
 
February 20, 2019
 
 
 
 
 
RSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$2.41
 
$5.77
 
 
 
 
 
PSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$1.74
 
$4.98

During the six months ended June 30, 2020, the performance period related to PSUs awarded in conjunction with the 2017 annual awards ended. There was no payout as the Company's TSR rank did not exceed the minimum required threshold for payout and 262,787 PSUs were forfeited.
WPG Restricted Stock Units
During the six months ended June 30, 2020 and 2019, the Company awarded 1,231,188 RSUs, with a grant date fair value of $0.8 million, and 331,792 RSUs, with a grant-date fair value of $1.5 million, respectively, to certain employees and non-employee members of the Board. The RSUs are service-based awards and the related fair value is expensed over the applicable service periods, except in instances that result in accelerated vesting due to severance arrangements or retirement of Board members.
Stock Options
During the six months ended June 30, 2020, no stock options were granted to employees, no stock options were exercised by employees and 31,434 stock options were canceled, forfeited or expired. As of June 30, 2020, there were 569,855 stock options outstanding. During the six months ended June 30, 2019, no stock options were granted to employees, 391 stock options were exercised by employees and 52,152 stock options were canceled, forfeited or expired.
Share Award Related Compensation Expense
During the three and six months ended June 30, 2020, the Company recorded compensation expense pertaining to the awards granted of $1.9 million and $3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive loss. During the three and six months ended June 30, 2019, the Company recorded compensation expense pertaining to the awards granted of $2.0 million and $3.8 million, respectively, in general and administrative and property operating expense within the consolidated statements of operations and comprehensive loss. In certain instances, employment agreements and stock compensation programs provide for accelerated vesting when executives are terminated without cause. Additionally, the Committee may, in its discretion, accelerate the vesting for retiring Board members.
Distributions
For the three months ended June 30, 2020, no common share/unit dividends were declared by the Board as common share/unit dividends were suspended in response to the COVID-19 pandemic. For the six months ended June 30, 2020, the Board declared common share/unit dividends of $0.125. During the three and six months ended June 30, 2019, the Board declared common share/unit dividends of $0.25 and $0.50 per common share/unit, respectively.
v3.20.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Litigation
We are involved from time-to-time in various legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such litigation, claims and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.
Concentration of Credit Risk
Our properties rely heavily upon anchor or major tenants to attract customers; however, these retailers do not constitute a material portion of our financial results. Additionally, many anchor retailers in the enclosed retail properties own their spaces further reducing their contribution to our operating results. All operations are within the United States and no customer or tenant accounts for 5% or more of our consolidated revenues.
Lease Commitments
As of June 30, 2020, a total of four consolidated properties are subject to ground leases. The termination dates of these ground leases range from 2026 to 2076. These ground leases generally require us to make fixed annual rental payments, or a fixed annual rental plus a percentage rent component based upon the revenues or total sales of the property. Some of these leases also include escalation clauses and renewal options. For the three and six months ended June 30, 2020, we incurred ground lease expense of $209 and $331, respectively, of which $5 and $10, respectively, related to straight-line rent expense, which is included in ground rent in the accompanying consolidated statements of operations and comprehensive loss. For the three and six months ended June 30, 2019, we incurred ground lease expense of $195 and $398, respectively, of which $5 and $10, respectively, related to straight-line rent expense. Additionally, the Company has two material office leases and one material garage lease. The termination dates of these leases range from 2023 to 2026. These leases generally require us to make fixed annual rental payments, plus our share of CAM expense and real estate taxes and insurance. For the three and six months ended June 30, 2020, we incurred lease expense of $612 and $1,261, respectively, which is included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. For the three and six months ended June 30, 2019, we incurred lease expense of $663 and $1,294, respectively.
Future minimum lease payments due under these leases for each of the next five years and thereafter, excluding applicable extension options, as of June 30, 2020 are as follows:
2020 (July - December)
 
$
1,026

2021
 
2,069

2022
 
2,099

2023
 
1,427

2024
 
999

Thereafter
 
20,378

Total lease payments
 
27,998

Less: Discount
 
15,919

Present value of lease liabilities
 
$
12,079


The weighted average remaining lease term for our consolidated operating leases was 19.8 years and the weighted average discount rate for determining the lease liabilities was 8.8% at June 30, 2020. The discount rates utilized in calculating the lease liabilities represents our estimate of the Company's incremental borrowing rate over the terms that correspond to the leases. We had no financing leases as of June 30, 2020.
v3.20.2
Loss Per Common Share/Unit
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Loss Per Common Share/Unit
Loss Per Common Share/Unit
WPG Inc. Loss Per Common Share
We determine WPG Inc.'s basic loss per common share based on the weighted average number of shares of common stock outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG Inc.'s diluted loss per share based on the weighted average number of shares of common stock outstanding combined with the incremental weighted average shares that would have been outstanding assuming all potentially dilutive securities were converted into common shares at the earliest date possible.
The following table sets forth the computation of WPG Inc.'s basic and diluted loss per common share:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Loss Per Common Share, Basic:
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic
 
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
Weighted average shares outstanding - basic
 
190,541,074

 
188,486,685

 
189,842,197

 
188,285,604

Loss per common share, basic
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)
 
 
 
 
 
 
 
 
 
Loss Per Common Share, Diluted:
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic
 
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
Net loss attributable to limited partner unitholders
 
(14,931
)
 
(3,186
)
 
(14,314
)
 
(4,142
)
Net loss attributable to common shareholders - diluted
 
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
Weighted average common shares outstanding - basic
 
190,541,074

 
188,486,685

 
189,842,197

 
188,285,604

Weighted average operating partnership units outstanding
 
34,485,545

 
34,752,540

 
34,539,716

 
34,741,867

Weighted average common shares outstanding - diluted
 
225,026,619

 
223,239,225

 
224,381,913

 
223,027,471

Loss per common share, diluted
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)

For the three and six months ended June 30, 2020 and 2019, additional potentially dilutive securities include contingently-issuable outstanding stock options, restricted stock units, and performance based components of annual or special arrangement awards. For the three and six months ended June 30, 2020, the potential dilutive effect of 569,855 contingently-issuable outstanding stock options, 601,711 restricted stock units and 1,305,005 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2019, the potential dilutive effect of 627,198 contingently-issuable outstanding stock options and 1,269,427 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. We accrue distributions when they are declared.
WPG L.P. Loss Per Common Unit
We determine WPG L.P.'s basic loss per common unit based on the weighted average number of common units outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine WPG L.P.'s diluted loss per unit based on the weighted average number of common units outstanding combined with the incremental weighted average units that would have been outstanding assuming all potentially dilutive securities were converted into common units at the earliest date possible.
The following table sets forth the computation of WPG L.P.'s basic and diluted loss per common unit:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Loss Per Common Unit, Basic & Diluted:
 
 
 
 
 
 
 
 
Net loss attributable to common unitholders - basic and diluted
 
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
Weighted average common units outstanding - basic & diluted
 
225,026,619

 
223,239,225

 
224,381,913

 
223,027,471

Loss per common unit, basic & diluted
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)

For the three and six months ended June 30, 2020 and 2019, additional potentially dilutive securities include contingently-issuable units related to WPG Inc.'s outstanding stock options, restricted stock units, and WPG Inc.'s performance based components of annual or special arrangement awards. For the three and six months ended June 30, 2020, the potential dilutive effect of 569,855 contingently-issuable outstanding stock options, 601,711 restricted stock units and 1,305,005 performance based components of annual or special arrangement awards were excluded as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2019, the potential dilutive effect of 627,198 contingently-issuable outstanding stock options and 1,269,427 performance based components of annual awards were excluded as their inclusion would be anti-dilutive. We accrue distributions when they are declared.
v3.20.2
Subsequent Events
6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events
COVID-19 Updates
Subsequent to June 30, 2020, we executed the following forbearance agreements:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms
Canyon View Marketplace
 
$
5,087

 
5.47
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
6 months commencing August 2020
Grand Central Mall
 
$
38,378

 
6.05
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020
 
12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)

In connection with the forbearance agreement executed on the mortgage note payable secured by Grand Central Mall, located in Parkersburg, West Virginia, the maturity date of the mortgage note payable was extended one year to July 6, 2021.
On August 6, 2020, the Board authorized a one-for-nine reverse share split of the Company’s common shares and WPG L.P. operating units, subject to shareholder approval. Upon shareholder approval and as a result of the reverse share split, each nine shares of the Company's issued and outstanding common shares/units will be automatically combined and converted into one issued and outstanding common share/unit. The Company plans to hold a special meeting of shareholders to vote on the recommendation before the end of 2020. The implementation of the reverse share split is intended to increase the per share trading price of the Company’s common shares in order to satisfy the continued listing criteria set forth in Section 802.01C of the Listed Company Manual of the New York Stock Exchange and cure the noncompliance notification received by the Company on April 28, 2020.
v3.20.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Fair Value Measurements
Fair Value Measurements
The Company measures and discloses its fair value measurements in accordance with Accounting Standards Codification ("ASC") Topic 820 - “Fair Value Measurement” (“Topic 820”). The fair value hierarchy, as defined by Topic 820, contains three levels of inputs that may be used to measure fair value as follows:
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as interest rates, foreign exchange rates, and yield curves, that are observable at commonly quoted intervals.
Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity's own assumptions, as there is little, if any, related market activity.
The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under Topic 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions.
Use of Estimates
Use of Estimates
We prepared the accompanying consolidated financial statements in accordance with GAAP. This requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Our actual results could differ from these estimates.
Segment Disclosure
Segment Disclosure
Our primary business is the ownership, development and management of retail real estate. We have aggregated our operations, including enclosed retail properties and open air properties, into one reportable segment because they have similar economic characteristics and we provide similar products and services to similar types of, and in many cases, the same tenants.
New Accounting Pronouncements
New Accounting Pronouncements
Adoption of New Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. We adopted this ASU on January 1, 2020, noting our seller-provided bridge financing associated with our other indebtedness (see Note 6 - "Indebtedness" for further details) and certain other miscellaneous accounts are in scope of ASU 2016-13. However, there was no impact to our consolidated financial statements at adoption.
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, "Leases." Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can account for the concession as though enforceable rights and obligations for those concessions existed (regardless of whether these enforceable rights and obligations for the concessions explicitly exist in the contract). Both lessees and lessors may make this election. For all concessions that did not result in a substantial increase in the rights of the lessor or the obligations of the lessees, the Company elected to adopt this optional relief in the second quarter of 2020, resulting in abatements granted in the period being recognized as negative variable revenue during the period of abatement. Concessions in the form of rent deferrals were effectively accounted for as if the lease was unchanged, though in all cases receivables were evaluated under the collectibility guidance in Topic 842.
New Standards Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Inter-Bank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. If elected, an entity would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities electing relief would need to apply it consistently for all eligible modified contracts accounted for under a particular codification topic or industry subtopic. Additionally, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Entities electing relief related to hedging relationships can generally elect to apply the optional expedients on a hedge-by-hedge basis.
The guidance is effective upon issuance and can be applied to modifications of existing contracts made after January 1, 2020 and can be applied to eligible hedging relationships existing as of or entered into after the same date. The relief is temporary and cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. As of June 30, 2020, we had approximately $812.0 million (excluding debt issuance costs of $5.1 million) of our aggregate consolidated indebtedness that was indexed to LIBOR. In addition, as of June 30, 2020, we had approximately $640.8 million of consolidated indebtedness swapped to LIBOR plus a fixed spread under hedging relationships. We expect that upon modification, these contracts will generally qualify for the temporary relief upon meeting the certain criteria and we are currently assessing our plans for adoption.
Lessor, Leases
We receive rental income from the leasing of retail and other space under operating leases, as we retain substantially all of the risks and benefits of ownership of the investment properties. The majority of these leases contain extension options, typically at the lessee's election, and/or early termination provisions. Further, our leases do not contain any provisions that would allow the lessee to purchase the underlying assets throughout the lease term. In most cases, consideration received typically includes a fixed minimum rent component, reimbursement of a fixed portion of our property operating expenses, including utility, security, janitorial, landscaping, food court and other administrative expenses included in common area maintenance, or CAM, and reimbursement of lessor costs such as real estate taxes and insurance, computed based upon a formula in accordance with the lease terms. When not reimbursed by the fixed CAM component, CAM expense reimbursements and lessor costs are based on the tenant's proportionate share of the allocable operating expenses and CAM capital expenditures for the property. We accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year. Additionally, a large number of our tenants are also required to pay overage rents based on sales during the applicable lease year over a base amount stated in the lease agreement. We recognize overage rents only when each tenant's sales exceed the applicable sales threshold as defined in their lease. We also collect lease termination income from tenants to allow for the tenant to vacate their space prior to their scheduled lease termination date. We recognize lease termination income in the period when a termination agreement is signed, collectability is assured, and we are no longer obligated to provide space to the tenant. In the event that a tenant is in bankruptcy when the termination agreement is signed, termination fee income is deferred and recognized when, and if, it is received. We record an adjustment to rental income in the period there is a change in our assessment of whether the collectibility of operating lease payments is probable.
We have elected the practical expedient in ASU 2016-02 to not separate non-lease components from lease components as our underlying leases qualify as operating leases and the timing and pattern of transfer of the lease and non-lease components are the same. We note that the predominant component of our leases is the lease component and thus account for the combined lease and non-lease (CAM) component of the non-cancelable lease term on a straight-line basis in accordance with ASC 842.
Rental income also includes accretion related to above-market and below-market lease intangibles related to the acquisition of operating properties. We amortize any tenant inducements as a reduction of rental income utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.
v3.20.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Schedule of Cash and Cash Equivalents
The following is a summary of our beginning and ending cash, cash equivalents and restricted cash totals as presented in our statements of cash flows for the six months ended June 30, 2020 and 2019:
 
Balance at June 30,
 
Balance at December 31,
 
2020
 
2019
 
2019
 
2018
Cash and cash equivalents
$
127,019

 
$
30,683

 
$
41,421

 
$
42,542

Restricted cash
36,632

 
49,593

 
34,054

 
18,542

Total cash, cash equivalents and restricted cash
$
163,651

 
$
80,276

 
$
75,475

 
$
61,084


v3.20.2
Investment in Real Estate (Tables)
6 Months Ended
Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Summary of Key Terms of Each of the Closings
The following table summarizes the key terms of each of the closings with Four Corners that occurred during the three and six months ended June 30, 2019:
Sales Date
 
Parcels Sold
 
Purchase Price
 
Sales Proceeds
January 18, 2019
 
8

 
$
9,435

 
$
9,364

February 11, 2019
 
1

 
2,766

 
2,720

April 3, 2019
 
1

 
2,048

 
2,016

June 28, 2019
 
3

 
3,050

 
3,031

 
 
13

 
$
17,299

 
$
17,131

 
 
 
 
 
 
 

The following table summarizes the key terms of each of the closings that occurred during the six months ended June 30, 2020:
Sales Date
 
Parcels Sold
 
Purchase Price
 
Sales Proceeds
February 13, 2020
 
2

 
$
1,961

 
$
1,945

v3.20.2
Investment in Unconsolidated Entities, at Equity (Tables)
6 Months Ended
Jun. 30, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Unconsolidated Entities, at Equity
The following table presents the combined statements of operations for our joint ventures for the three and six months ended June 30, 2020 and 2019:
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Total revenues
$
44,342

 
$
63,617

 
$
107,565

 
$
129,639

Operating expenses
20,869

 
26,995

 
47,769

 
53,823

Depreciation and amortization
20,916

 
25,579

 
46,305

 
51,336

Operating income
2,557

 
11,043

 
13,491

 
24,480

Gain (loss) on sale of interests in properties
2,039

 
(1,289
)
 
2,039

 
(1,289
)
Gain on extinguishment of debt

 

 
15,605

 

Interest expense, taxes, and other, net
(12,142
)
 
(12,918
)
 
(24,569
)
 
(25,983
)
Net (loss) income of the Company's unconsolidated real estate entities
$
(7,546
)
 
$
(3,164
)
 
$
6,566

 
$
(2,792
)
 
 
 
 
 
 
 
 
Our share of loss from the Company's unconsolidated real estate entities
$
(4,754
)
 
$
(1,713
)
 
$
(5,786
)
 
$
(1,761
)

Schedule of Combined Balance Sheets for Unconsolidated Venture Properties
The following table presents the combined balance sheets of our joint ventures as of June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
 
December 31, 2019
Assets:
 
 
 
 
Investment properties at cost, net
 
$
1,850,156

 
$
1,905,336

Construction in progress
 
42,179

 
38,280

Cash and cash equivalents
 
37,263

 
43,137

Tenant receivables and accrued revenue, net
 
46,684

 
31,238

Deferred costs and other assets (1)
 
287,669

 
301,133

Total assets
 
$
2,263,951

 
$
2,319,124

Liabilities and Members’ Equity:
 
 

 
 

Mortgage notes payable
 
$
1,225,547

 
$
1,282,307

Accounts payable, accrued expenses, intangibles, and deferred revenues(2)
 
288,407

 
297,163

Total liabilities
 
1,513,954

 
1,579,470

Members’ equity
 
749,997

 
739,654

Total liabilities and members’ equity
 
$
2,263,951

 
$
2,319,124

Our share of members’ equity, net
 
$
394,785

 
$
384,332

 
 
 
 
 
Our share of members’ equity, net
 
$
394,785

 
$
384,332

Advances and excess investment
 
20,389

 
17,339

Net investment in and advances to unconsolidated entities, at equity(3)
 
$
415,174

 
$
401,671


(1)
Includes value of acquired in-place leases and acquired above-market leases with a net book value of $73,053 and $79,457 as of June 30, 2020 and December 31, 2019, respectively. Additionally, includes right-of-use assets of $173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of June 30, 2020 and December 31, 2019, respectively.
(2)
Includes the net book value of below market leases of $40,174 and $45,757 as of June 30, 2020 and December 31, 2019, respectively. Additionally, includes lease liabilities of $173,148 and $172,991 related to ground leases for which our joint ventures are the lessees as of June 30, 2020 and December 31, 2019, respectively.
(3)
Includes $415,174 and $417,092 of investment in and advances to unconsolidated entities, at equity as of June 30, 2020 and December 31, 2019, respectively, and $0 and $15,421 of cash distributions and losses in unconsolidated entities, at equity as of June 30, 2020 and December 31, 2019, respectively.
Schedule of Forbearance Agreements
In response to the COVID-19 pandemic, the Company, on behalf of the O'Connor Joint Venture I and O'Connor Joint Venture II, has executed the following forbearance agreements related to various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Arbor Hills
 
$
24,035

 
4.27
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Arboretum, The
 
$
59,400

 
4.13
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve
 
$
52,779

 
3.90
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Gateway Centers
 
$
112,500

 
4.03
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Mall at Johnson City, The
 
$
47,768

 
6.76
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Nichols Hills Plaza
 
$
12,571

 
2.66
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
Due at maturity (Jan. 1, 2023)
Polaris Fashion Place
 
$
240,170

 
3.94
%
 
Interest and principal
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Town Center Crossing
 
$
32,534

 
4.25
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Town Center Plaza
 
$
65,830

 
5.00
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Scottsdale Quarter (Blocks K & M)
 
$
55,000

 
4.36
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Commencing August 2020 with payments made from excess property cash flow until repaid in full
1 Maturity dates noted include any applicable extension options available to the borrower.
In response to the COVID-19 pandemic, the Company has executed the following forbearance agreements on its various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza
 
$
117,000

 
3.67
%
 
Interest only
 
Interest
 
6 months commencing May 2020
 
6 months commencing November 2020
Southgate Mall
 
$
35,000

 
4.48
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Due at maturity (Sept. 27, 2023)
Town Center at Aurora
 
$
51,000

 
4.92
%
 
Interest and principal
 
Interest and principal
 
6 months commencing May 2020
 
Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall
 
$
76,086

 
4.65
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020, paid from escrows
 
Not applicable
1 Maturity dates noted include any applicable extension options available to the borrower.
Subsequent to June 30, 2020, we executed the following forbearance agreements:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms
Canyon View Marketplace
 
$
5,087

 
5.47
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
6 months commencing August 2020
Grand Central Mall
 
$
38,378

 
6.05
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020
 
12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)

v3.20.2
Indebtedness (Tables)
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Schedule of Long-term Debt Instruments
Total mortgage indebtedness at June 30, 2020 and December 31, 2019 was as follows:
 
 
June 30,
2020
 
December 31,
2019
Face amount of mortgage loans
 
$
1,110,243

 
$
1,117,242

Fair value adjustments, net
 
2,312

 
3,463

Debt issuance cost, net
 
(4,608
)
 
(5,097
)
Carrying value of mortgage loans
 
$
1,107,947

 
$
1,115,608


Roll Forward of Mortgage Indebtedness
A roll forward of mortgage indebtedness from December 31, 2019 to June 30, 2020 is summarized as follows:
Balance at December 31, 2019
$
1,115,608

Debt amortization payments
(6,999
)
Issuance costs incurred upon debt modifications
(151
)
Amortization of fair value and other adjustments
(1,151
)
Amortization of debt issuance costs
640

Balance at June 30, 2020
$
1,107,947


Schedule of Forbearance Agreements
In response to the COVID-19 pandemic, the Company, on behalf of the O'Connor Joint Venture I and O'Connor Joint Venture II, has executed the following forbearance agreements related to various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Arbor Hills
 
$
24,035

 
4.27
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Arboretum, The
 
$
59,400

 
4.13
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve
 
$
52,779

 
3.90
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Gateway Centers
 
$
112,500

 
4.03
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Mall at Johnson City, The
 
$
47,768

 
6.76
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Nichols Hills Plaza
 
$
12,571

 
2.66
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
Due at maturity (Jan. 1, 2023)
Polaris Fashion Place
 
$
240,170

 
3.94
%
 
Interest and principal
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Town Center Crossing
 
$
32,534

 
4.25
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Town Center Plaza
 
$
65,830

 
5.00
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Scottsdale Quarter (Blocks K & M)
 
$
55,000

 
4.36
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Commencing August 2020 with payments made from excess property cash flow until repaid in full
1 Maturity dates noted include any applicable extension options available to the borrower.
In response to the COVID-19 pandemic, the Company has executed the following forbearance agreements on its various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza
 
$
117,000

 
3.67
%
 
Interest only
 
Interest
 
6 months commencing May 2020
 
6 months commencing November 2020
Southgate Mall
 
$
35,000

 
4.48
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Due at maturity (Sept. 27, 2023)
Town Center at Aurora
 
$
51,000

 
4.92
%
 
Interest and principal
 
Interest and principal
 
6 months commencing May 2020
 
Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall
 
$
76,086

 
4.65
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020, paid from escrows
 
Not applicable
1 Maturity dates noted include any applicable extension options available to the borrower.
Subsequent to June 30, 2020, we executed the following forbearance agreements:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms
Canyon View Marketplace
 
$
5,087

 
5.47
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
6 months commencing August 2020
Grand Central Mall
 
$
38,378

 
6.05
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020
 
12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)

Schedule of Debt
The following table identifies our total corporate debt outstanding at June 30, 2020 and December 31, 2019:
 
 
June 30,
2020
 
December 31,
2019
Notes payable:
 
 
 
 
Face amount - the Exchange Notes(1)
 
$

 
$
250,000

Face amount - Senior Notes due 2024(2)
 
720,900

 
720,900

Debt discount, net
 
(7,111
)
 
(7,864
)
Debt issuance costs, net
 
(4,689
)
 
(5,470
)
Total carrying value of notes payable
 
$
709,100

 
$
957,566

 
 
 
 
 
Unsecured term loans:(7)
 
 
 
 
Face amount - Term Loan(3)(4)
 
$
350,000

 
$
350,000

Face amount - December 2015 Term Loan(5)
 
340,000

 
340,000

Debt issuance costs, net
 
(2,791
)
 
(3,358
)
Total carrying value of unsecured term loans
 
$
687,209

 
$
686,642

 
 
 
 
 
Revolving credit facility:(3)(6)
 
 
 
 
Face amount
 
$
647,000

 
$
207,000

Debt issuance costs, net
 
(2,284
)
 
(2,855
)
Total carrying value of revolving credit facility
 
$
644,716

 
$
204,145

 
 
 
 
 
Other indebtedness:(8)
 
 
 
 
Face amount
 
$
98,900

 
$
98,900

Debt issuance costs, net
 
(1,535
)
 
(1,561
)
Accretion adjustment, net
 
(13,010
)
 
262

Total carrying value of other indebtedness
 
$
84,355

 
$
97,601

(1) The Exchange Notes were issued at a 0.028% discount and bore interest at 3.850% per annum.
(2) The Senior Notes due 2024 were issued at a 1.533% discount, bore interest at 5.950% per annum through August 14, 2019, at which time the interest rate increased to 6.450% per annum. The Senior Notes due 2024 mature on August 15, 2024.
(3) The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility."
(4) The Term Loan bears interest at one-month LIBOR plus 2.10% per annum and will mature on December 30, 2022. We have interest rate swap agreements totaling $250.0 million, which effectively fix the interest rate on a portion of the Term Loan at 4.86% through June 30, 2021. At June 30, 2020, the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 2.10% or 2.26%.
(5) The December 2015 Term Loan bears interest at one-month LIBOR plus 2.35% per annum and will mature on January 10, 2023. We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 4.06% per annum through maturity.
(6) The Revolver provides borrowings on a revolving basis up to $650.0 million, bears interest at one-month LIBOR plus 1.80%, and will initially mature on December 30, 2021, subject to two six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. At June 30, 2020, we had an aggregate available borrowing capacity of $2.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At June 30, 2020, the applicable interest rate on the Revolver was one-month LIBOR plus 1.80% or 1.96%. The interest rate on the Revolver may vary in the future based upon the Company's credit rating and leveraged levels.
(7) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings and leveraged levels.
(8) Represents the financial liability associated with our failed sale and leaseback of land at Edison Mall, located in Fort Myers, Florida; Great Lakes Mall, located in Mentor, Ohio; Irving Mall, located in Irving, Texas; and Jefferson Valley Mall, located in Yorktown Heights, New York (collectively, the "Properties"). The face amount represents the sales price of the fee interest in the land at the Properties. The master ground lease has a 99-year term and includes fixed annual payments at an initial annualized rate of 7.4%, with annual rent escalators over the aforementioned term. The agreement also includes an option to repurchase the fee interest in the land at $109.3 million in year 30 of the master ground lease, to which the financial liability is being accreted to during the repurchase period. Proceeds received at closing were net of $55.0 million in bridge financing provided by the Company. Expense is being recognized utilizing an effective interest rate of 8.52% during the repurchase period.
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments
The book value and fair value of these financial instruments and the related discount rate assumptions as of June 30, 2020 and December 31, 2019 are summarized as follows:
 
 
June 30, 2020
 
December 31, 2019
Book value of fixed-rate mortgages(1)
 
$1,045,243
 
$1,052,242
Fair value of fixed-rate mortgages
 
$1,073,408
 
$1,062,205
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages
 
3.81
%
 
4.24
%
 
 
 
 
 
Book value of fixed-rate corporate debt(1)
 
$1,396,790
 
$1,660,062
Fair value of fixed-rate corporate debt
 
$1,156,446
 
$1,673,105
Weighted average discount rates assumed in calculation of fair value for fixed-rate corporate debt
 
9.52
%
 
6.03
%
(1) Excludes debt issuance costs and applicable debt discounts.
v3.20.2
Derivative Financial Instruments (Tables)
6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2020 and December 31, 2019:
Derivatives designated as hedging instruments:
Balance Sheet
Location
 
June 30, 2020
 
December 31, 2019
Interest rate products
Liability derivatives
Accounts payable, accrued expenses, intangibles, and deferred revenue
 
$
21,089

 
$
6,592


Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss)
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of comprehensive loss for the three and six months ended June 30, 2020 and 2019:
Derivatives in Cash Flow Hedging Relationships
(Interest rate products)
 
Location of Gain or Loss Recognized in Income on Derivatives
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Amount of Loss Recognized in OCL on Derivative
 
Interest expense
 
$
(1,760
)
 
$
(8,955
)
 
$
(17,969
)
 
$
(13,520
)
 
 
 
 
 
 
 
 
 
 
 
Amount of Loss or (Gain) Reclassified from AOCL into Income
 
Interest expense
 
$
2,680

 
$
(530
)
 
$
3,443

 
$
(1,075
)
The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the three and six months ended June 30, 2020 and 2019:
Effect of Cash Flow Hedges on Consolidated Statements of Operations
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded
 
$
(37,445
)
 
$
(39,143
)
 
$
(76,080
)
 
$
(75,973
)
 
 
 
 
 
 
 
 
 
Amount of loss or (gain) reclassified from accumulated other comprehensive loss into interest expense
 
$
2,680

 
$
(530
)
 
$
3,443

 
$
(1,075
)
 
 
 
 
 
 
 
 
 

Fair Value Measurements, Recurring and Nonrecurring
The tables below presents the Company’s net assets and (liabilities) measured at fair value as of June 30, 2020 and December 31, 2019 aggregated by the level in the fair value hierarchy within which those measurements fall:
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Balance at June 30, 2020
Derivative instruments, net
$

 
$
(21,089
)
 
$

 
$
(21,089
)
 
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Balance at December 31, 2019
Derivative instruments, net
$

 
$
(6,592
)
 
$

 
$
(6,592
)

v3.20.2
Rental Income (Tables)
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Schedule of Our Rental Income
The following table summarizes our rental income for the three and six months ended June 30, 2020 and 2019:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease payments, fixed
 
$
125,366

 
$
138,173

 
$
256,871

 
$
282,349

Operating lease payments, variable
 
12,897

 
16,397

 
32,001

 
34,459

Amortization of straight-line rent, inducements, and rent abatements
 
(21,586
)
 
1,163

 
(20,777
)
 
2,272

Net amortization/accretion of above and below-market leases
 
1,712

 
1,544

 
2,818

 
4,450

Change in estimate of collectibility of rental income
 
(22,339
)
 
(1,047
)
 
(27,630
)
 
(4,027
)
Total rental income
 
$
96,050

 
$
156,230

 
$
243,283

 
$
319,503


Schedule of Future Payments Received Under Non-Cancelable Operating Leases
Future payments to be received under non-cancelable operating leases for each of the next five years and thereafter, excluding variable payments of tenant reimbursements, percentage or overage rents, and lease termination payments as of June 30, 2020 are as follows:
2020 (July - December)
 
$
234,763

2021
 
403,817

2022
 
338,531

2023
 
276,796

2024
 
216,380

Thereafter
 
655,045

 
 
$
2,125,332


v3.20.2
Equity (Tables)
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Summary of Issuance of the 2020 and 2019 Annual Long-Term Incentive Awards
The following table summarizes the issuance of the 2020 Annual Long-Term Incentive Awards and 2019 Annual Long-Term Incentive Awards, respectively:
 
 
2020 Annual Long-Term Incentive Awards
 
2019 Annual Long-Term Incentive Awards
Grant Date
 
February 25, 2020
 
February 20, 2019
 
 
 
 
 
RSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$2.41
 
$5.77
 
 
 
 
 
PSUs issued
 
1,373,422
 
572,163
Grant date fair value per unit
 
$1.74
 
$4.98

v3.20.2
Commitments and Contingencies (Tables)
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Minimum Lease Payments
Future minimum lease payments due under these leases for each of the next five years and thereafter, excluding applicable extension options, as of June 30, 2020 are as follows:
2020 (July - December)
 
$
1,026

2021
 
2,069

2022
 
2,099

2023
 
1,427

2024
 
999

Thereafter
 
20,378

Total lease payments
 
27,998

Less: Discount
 
15,919

Present value of lease liabilities
 
$
12,079


v3.20.2
Loss Per Common Share/Unit (Tables)
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share/Unit
The following table sets forth the computation of WPG Inc.'s basic and diluted loss per common share:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Loss Per Common Share, Basic:
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic
 
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
Weighted average shares outstanding - basic
 
190,541,074

 
188,486,685

 
189,842,197

 
188,285,604

Loss per common share, basic
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)
 
 
 
 
 
 
 
 
 
Loss Per Common Share, Diluted:
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic
 
$
(82,050
)
 
$
(17,262
)
 
$
(78,675
)
 
$
(22,437
)
Net loss attributable to limited partner unitholders
 
(14,931
)
 
(3,186
)
 
(14,314
)
 
(4,142
)
Net loss attributable to common shareholders - diluted
 
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
Weighted average common shares outstanding - basic
 
190,541,074

 
188,486,685

 
189,842,197

 
188,285,604

Weighted average operating partnership units outstanding
 
34,485,545

 
34,752,540

 
34,539,716

 
34,741,867

Weighted average common shares outstanding - diluted
 
225,026,619

 
223,239,225

 
224,381,913

 
223,027,471

Loss per common share, diluted
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)

The following table sets forth the computation of WPG L.P.'s basic and diluted loss per common unit:
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Loss Per Common Unit, Basic & Diluted:
 
 
 
 
 
 
 
 
Net loss attributable to common unitholders - basic and diluted
 
$
(96,981
)
 
$
(20,448
)
 
$
(92,989
)
 
$
(26,579
)
Weighted average common units outstanding - basic & diluted
 
225,026,619

 
223,239,225

 
224,381,913

 
223,027,471

Loss per common unit, basic & diluted
 
$
(0.43
)
 
$
(0.09
)
 
$
(0.41
)
 
$
(0.12
)

v3.20.2
Subsequent Events (Tables)
6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Schedule of Forbearance Agreements
In response to the COVID-19 pandemic, the Company, on behalf of the O'Connor Joint Venture I and O'Connor Joint Venture II, has executed the following forbearance agreements related to various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Arbor Hills
 
$
24,035

 
4.27
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Arboretum, The
 
$
59,400

 
4.13
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Classen Curve & The Triangle at Classen Curve
 
$
52,779

 
3.90
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Gateway Centers
 
$
112,500

 
4.03
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Mall at Johnson City, The
 
$
47,768

 
6.76
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Nichols Hills Plaza
 
$
12,571

 
2.66
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
Due at maturity (Jan. 1, 2023)
Polaris Fashion Place
 
$
240,170

 
3.94
%
 
Interest and principal
 
Interest
 
3 months commencing May 2020
 
5 months commencing August 2020
Town Center Crossing
 
$
32,534

 
4.25
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Town Center Plaza
 
$
65,830

 
5.00
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
12 months commencing August 2020
Scottsdale Quarter (Blocks K & M)
 
$
55,000

 
4.36
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Commencing August 2020 with payments made from excess property cash flow until repaid in full
1 Maturity dates noted include any applicable extension options available to the borrower.
In response to the COVID-19 pandemic, the Company has executed the following forbearance agreements on its various mortgage notes outstanding as of June 30, 2020:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms1
Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza
 
$
117,000

 
3.67
%
 
Interest only
 
Interest
 
6 months commencing May 2020
 
6 months commencing November 2020
Southgate Mall
 
$
35,000

 
4.48
%
 
Interest only
 
Interest
 
3 months commencing May 2020
 
Due at maturity (Sept. 27, 2023)
Town Center at Aurora
 
$
51,000

 
4.92
%
 
Interest and principal
 
Interest and principal
 
6 months commencing May 2020
 
Commencing November 2020 with payments made from excess property cash flow until repaid in full
Westminster Mall
 
$
76,086

 
4.65
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020, paid from escrows
 
Not applicable
1 Maturity dates noted include any applicable extension options available to the borrower.
Subsequent to June 30, 2020, we executed the following forbearance agreements:
Property
 
Principal Outstanding
 
Interest Rate
 
Monthly Service Terms
 
Description of Relief
 
Duration
 
Repayment Terms
Canyon View Marketplace
 
$
5,087

 
5.47
%
 
Interest and principal
 
Interest and principal
 
3 months commencing May 2020
 
6 months commencing August 2020
Grand Central Mall
 
$
38,378

 
6.05
%
 
Interest and principal
 
Interest and principal
 
3 months commencing June 2020
 
12 months commencing September 2020, but outstanding payments due at maturity (July 6, 2021)

v3.20.2
Organization (Details)
ft² in Millions, $ in Millions
6 Months Ended
Jun. 30, 2020
USD ($)
ft²
shopping_center
Jun. 30, 2019
USD ($)
Real Estate Properties [Line Items]    
Severance charges, including non-cash stock compensation $ 0.1 $ 1.9
General and Administrative Expense    
Real Estate Properties [Line Items]    
Severance charges, including non-cash stock compensation   $ 0.1
Shopping Centers    
Real Estate Properties [Line Items]    
Number of real estate properties | shopping_center 101  
Area of real estate property | ft² 53  
v3.20.2
Basis of Presentation and Principles of Consolidation (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
property
shopping_center
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
property
shopping_center
Jun. 30, 2019
USD ($)
Dec. 31, 2019
Real Estate Properties [Line Items]          
Rent abatement | $ $ 22,000   $ 22,000    
Change in estimate of collectibility of rental income | $ $ 22,339 $ 1,047 $ 27,630 $ 4,027  
Minimum threshold ownership interest for properties included in financial statement     100.00%    
Washington Prime Inc | Washington Prime Group, L.P.          
Real Estate Properties [Line Items]          
Ownership interest percentage 84.70%   84.70%   84.50%
Washington Prime Inc | Weighted Average | Washington Prime Group, L.P.          
Real Estate Properties [Line Items]          
Ownership interest percentage 84.70% 84.40% 84.70% 84.40%  
Wholly Owned Properties          
Real Estate Properties [Line Items]          
Number of real estate properties 85   85    
Partially Owned Properties          
Real Estate Properties [Line Items]          
Number of real estate properties 4   4    
Corporate Joint Venture          
Real Estate Properties [Line Items]          
Number of real estate properties 12   12    
Shopping Centers          
Real Estate Properties [Line Items]          
Number of real estate properties | shopping_center 101   101    
v3.20.2
Summary of Significant Accounting Policies (Narrative) (Details)
$ in Millions
6 Months Ended
Jun. 30, 2020
USD ($)
segment
Accounting Policies [Abstract]  
Number of reportable segments | segment 1
ASU 2020-04  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
Long-term debt indexed to LIBOR $ 812.0
Debt issuance costs 5.1
Long-term debt swapped To LIBOR plus fixed spread $ 640.8
v3.20.2
Summary of Significant Accounting Policies (Summary of Cash and Cash Equivalents) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Jun. 30, 2019
Dec. 31, 2018
Accounting Policies [Abstract]        
Cash and cash equivalents $ 127,019 $ 41,421 $ 30,683 $ 42,542
Restricted cash 36,632 34,054 49,593 18,542
Total cash, cash equivalents and restricted cash $ 163,651 $ 75,475 $ 80,276 $ 61,084
v3.20.2
Investment in Real Estate (2020 Disposition) (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Jan. 31, 2020
USD ($)
Jan. 14, 2020
USD ($)
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
purchase_and_sale_agreement
Jun. 30, 2019
USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]            
Gain on disposition of interests in properties, net     $ 437 $ 6,241 $ 27,192 $ 16,231
Undeveloped Land Parcels            
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]            
Sales proceeds       3,400 2,200  
Aggregate sales price       $ 3,600 $ 2,400  
Four Corners            
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]            
Number of purchase and sale agreements | purchase_and_sale_agreement         2  
Real estate deal amount remaining to close, first purchase agreement     4,600   $ 4,600  
Real estate deal amount remaining to close, second purchase agreement     $ 26,900   $ 26,900  
Matteson Plaza | Disposed of by Sale            
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]            
Purchase price   $ 1,100        
Sales proceeds   $ 400        
DeKalb Plaza | Disposed of by Sale            
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]            
Purchase price $ 13,600          
Sales proceeds $ 13,400          
v3.20.2
Investment in Real Estate (Key Terms of Each of the Closings) (Details) - Restaurant Outparcels
$ in Thousands
6 Months Ended
Feb. 13, 2020
USD ($)
outparcel
Jun. 28, 2019
USD ($)
outparcel
Apr. 03, 2019
USD ($)
outparcel
Feb. 11, 2019
USD ($)
outparcel
Jan. 18, 2019
USD ($)
outparcel
Jun. 30, 2019
USD ($)
outparcel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]            
Parcels Sold | outparcel 2 3 1 1 8 13
Purchase Price $ 1,961 $ 3,050 $ 2,048 $ 2,766 $ 9,435 $ 17,299
Sales Proceeds $ 1,945 $ 3,031 $ 2,016 $ 2,720 $ 9,364 $ 17,131
v3.20.2
Investment in Real Estate (2019 Dispositions) (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Four Corners    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Gain on disposition of assets $ 6.2 $ 16.2
Undeveloped Land Parcels    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Aggregate sales price   3.6
Sales proceeds   $ 3.4
v3.20.2
Investment in Real Estate (Impairment) (Details)
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Mar. 31, 2020
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2019
USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Asset impairment charges     $ 0 $ 0
Two Enclosed Retail Properties        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Asset impairment charges $ 23,800,000      
Fair value of properties $ 12,600,000      
Two Enclosed Retail Properties | Measurement Input, Discount Rate | Minimum | Valuation Technique, Discounted Cash Flow        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Measurement input 0.188      
Two Enclosed Retail Properties | Measurement Input, Discount Rate | Maximum | Valuation Technique, Discounted Cash Flow        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Measurement input 0.193      
Two Enclosed Retail Properties | Measurement Input, Cap Rate | Valuation Technique, Discounted Cash Flow        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Measurement input 0.168      
Two Enclosed Retail Properties | Measurement Input, Cap Rate | Maximum | Valuation Technique, Discounted Cash Flow        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Measurement input 0.173      
Georgesville Square and Single Tenant Outparcel in Topeka, KS        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Asset impairment charges   $ 1,300,000    
v3.20.2
Investment in Unconsolidated Entities, at Equity (Narrative) (Details)
ft² in Millions, $ in Millions
3 Months Ended 6 Months Ended
May 06, 2020
USD ($)
extension
Mar. 13, 2020
USD ($)
Jun. 30, 2020
USD ($)
ft²
property
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
ft²
property
Jun. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
O'Connor Mall Partners LP | O'Connor Joint Venture I              
Schedule of Equity Method Investments [Line Items]              
Period of extension option 1 year            
Equity Method Investment, Nonconsolidated Investee or Group of Investees              
Schedule of Equity Method Investments [Line Items]              
Other income     $ 1.2 $ 2.7 $ 3.4 $ 5.4  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | O'Connor Joint Venture II              
Schedule of Equity Method Investments [Line Items]              
Equity method investment, ownership percentage     51.00%   51.00%    
Number of real estate properties | property     7   7    
Equity Method Investment, Nonconsolidated Investee or Group of Investees | The Seminole Joint Venture              
Schedule of Equity Method Investments [Line Items]              
Equity method investment, ownership percentage     45.00%   45.00%    
Effective financial interest     0.00%   0.00%    
Gain related to cash distributions and losses in joint venture   $ 15.4          
Equity Method Investment, Nonconsolidated Investee or Group of Investees | The Seminole Joint Venture | Seminole Town Center              
Schedule of Equity Method Investments [Line Items]              
Area of real estate property | ft²     1.1   1.1    
Equity Method Investment, Nonconsolidated Investee or Group of Investees | O'Connor Joint Venture I and O'Connor Joint Venture II              
Schedule of Equity Method Investments [Line Items]              
Advances to affiliate     $ 0.7   $ 0.7   $ 0.5
Equity Method Investment, Nonconsolidated Investee or Group of Investees | O'Connor Mall Partners LP | O'Connor Joint Venture I              
Schedule of Equity Method Investments [Line Items]              
Equity method investment, ownership percentage     51.00%   51.00%    
Number of real estate properties | property     5   5    
Number of extension options | extension 2            
Required principal prepayment upon maturity extension $ 5.0            
Required reserve accounts funded for future redevelopment and property improvements $ 10.0            
v3.20.2
Investment in Unconsolidated Entities, at Equity (Combined Statements of Operations) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Schedule of Equity Method Investments [Line Items]        
Total revenues $ 98,764 $ 161,434 $ 251,364 $ 330,257
Operating expenses 138,585 143,470 271,330 287,612
Depreciation and amortization 55,380 71,816 115,084 138,194
Gain (loss) on sale of interests in properties 437 6,241 27,192 16,231
NET LOSS (93,413) (16,880) (85,853) (19,443)
Our share of loss from the Company's unconsolidated real estate entities (4,754) (1,713) (5,786) (1,761)
Equity Method Investment, Nonconsolidated Investee or Group of Investees        
Schedule of Equity Method Investments [Line Items]        
Total revenues 44,342 63,617 107,565 129,639
Operating expenses 20,869 26,995 47,769 53,823
Depreciation and amortization 20,916 25,579 46,305 51,336
Operating income 2,557 11,043 13,491 24,480
Gain (loss) on sale of interests in properties 2,039 (1,289) 2,039 (1,289)
Gain on extinguishment of debt 0 0 15,605 0
Interest expense, taxes, and other, net (12,142) (12,918) (24,569) (25,983)
NET LOSS $ (7,546) $ (3,164) $ 6,566 $ (2,792)
v3.20.2
Investment in Unconsolidated Entities, at Equity (Combined Balance Sheets) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Jun. 30, 2019
Dec. 31, 2018
Assets:        
Investment properties at cost, net $ 3,465,861 $ 3,504,670    
Cash and cash equivalents 127,019 41,421 $ 30,683 $ 42,542
Tenant receivables and accrued revenue, net 125,153 82,762    
Deferred costs and other assets 138,423 205,034    
Total assets 4,271,630 4,250,979    
Liabilities and Members’ Equity        
Mortgage notes payable 1,107,947 1,115,608    
Accounts payable, accrued expenses, intangibles, and deferred revenues 257,634 260,904    
Total liabilities 3,494,284 3,341,139    
Members’ equity 88,150 110,226    
Total liabilities, redeemable noncontrolling interests and equity 4,271,630 4,250,979    
Our share of members’ equity, net 415,174 417,092    
Operating lease liability 12,079      
Cash distributions and losses in unconsolidated entities, at equity   15,421    
Lease liabilities related to ground leases for joint ventures        
Liabilities and Members’ Equity        
Net investment in and advances to unconsolidated entities, at equity 415,174 401,671    
Equity Method Investment, Nonconsolidated Investee or Group of Investees        
Liabilities and Members’ Equity        
Acquired in-place leases and acquired above-market leases 73,053 79,457    
Below market leases, net book value 40,174 45,757    
Cash distributions and losses in unconsolidated entities, at equity 0 15,421    
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Lease liabilities related to ground leases for joint ventures        
Assets:        
Investment properties at cost, net 1,850,156 1,905,336    
Construction in progress 42,179 38,280    
Cash and cash equivalents 37,263 43,137    
Tenant receivables and accrued revenue, net 46,684 31,238    
Deferred costs and other assets 287,669 301,133    
Total assets 2,263,951 2,319,124    
Liabilities and Members’ Equity        
Mortgage notes payable 1,225,547 1,282,307    
Accounts payable, accrued expenses, intangibles, and deferred revenues 288,407 297,163    
Total liabilities 1,513,954 1,579,470    
Members’ equity 749,997 739,654    
Total liabilities, redeemable noncontrolling interests and equity 2,263,951 2,319,124    
Our share of members’ equity, net 394,785 384,332    
Advances and excess investment 20,389 17,339    
ROU assets 173,148 172,991    
Operating lease liability 173,148 172,991    
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Unconsolidated Entities        
Liabilities and Members’ Equity        
Our share of members’ equity, net $ 415,174 $ 417,092    
v3.20.2
Investment in Unconsolidated Entities, at Equity (Forbearance Agreements of Debt Related to Various Mortgage Notes Outstanding) (Details) - Mortgages - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 1,110,243 $ 1,117,242
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Arbor Hills    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 12 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Arboretum, The    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 5 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Classen Curve & The Triangle at Classen Curve    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 5 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Gateway Centers    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 5 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Mall at Johnson City, The    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 12 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Nichols Hills Plaza    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Polaris Fashion Place    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 5 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Town Center Crossing    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 12 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Town Center Plaza    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Repayment Terms 12 months  
Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Scottsdale Quarter (Blocks K & M)    
Schedule of Equity Method Investments [Line Items]    
Duration 3 months  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Arbor Hills    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 24,035  
Interest Rate 4.27%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Arboretum, The    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 59,400  
Interest Rate 4.13%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Classen Curve & The Triangle at Classen Curve    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 52,779  
Interest Rate 3.90%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Gateway Centers    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 112,500  
Interest Rate 4.03%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Mall at Johnson City, The    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 47,768  
Interest Rate 6.76%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Nichols Hills Plaza    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 12,571  
Interest Rate 2.66%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Polaris Fashion Place    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 240,170  
Interest Rate 3.94%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Town Center Crossing    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 32,534  
Interest Rate 4.25%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Town Center Plaza    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 65,830  
Interest Rate 5.00%  
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Forbearance | O'Connor Joint Venture I and O'Connor Joint Venture II | Scottsdale Quarter (Blocks K & M)    
Schedule of Equity Method Investments [Line Items]    
Face amount of mortgage loans $ 55,000  
Interest Rate 4.36%  
v3.20.2
Indebtedness (Mortgage Indebtedness) (Details) - Mortgages - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Debt Instrument [Line Items]    
Face amount of mortgage loans $ 1,110,243 $ 1,117,242
Fair value adjustments, net 2,312 3,463
Debt issuance cost, net (4,608) (5,097)
Carrying value of mortgage loans $ 1,107,947 $ 1,115,608
v3.20.2
Indebtedness (Roll Forward of Mortgage Indebtedness) (Details) - Mortgages
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Debt [Roll Forward]  
Balance at December 31, 2019 $ 1,115,608
Debt amortization payments (6,999)
Issuance costs incurred upon debt modifications (151)
Amortization of fair value and other adjustments (1,151)
Amortization of debt issuance costs 640
Balance at June 30, 2020 $ 1,107,947
v3.20.2
Indebtedness (Forbearance Agreements on Various Mortgage Notes Outstanding (Details) - Mortgages - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Debt Instrument [Line Items]    
Face amount $ 1,110,243 $ 1,117,242
Forbearance | Forest Plaza, Lakeline Plaza, Muncie Towne Plaza, and White Oaks Plaza    
Debt Instrument [Line Items]    
Face amount $ 117,000  
Interest Rate 3.67%  
Duration 6 months  
Repayment Terms 6 months  
Forbearance | Southgate Mall    
Debt Instrument [Line Items]    
Face amount $ 35,000  
Interest Rate 4.48%  
Duration 3 months  
Forbearance | Town Center at Aurora    
Debt Instrument [Line Items]    
Face amount $ 51,000  
Interest Rate 4.92%  
Duration 6 months  
Forbearance | Westminster Mall    
Debt Instrument [Line Items]    
Face amount $ 76,086  
Interest Rate 4.65%  
Duration 3 months  
v3.20.2
Indebtedness (Mortgage Debt - Narrative) (Details)
Apr. 03, 2020
USD ($)
extension
Feb. 14, 2020
USD ($)
extension
Weberstown Mall    
Debt Instrument [Line Items]    
Number of extension options | extension 3  
Face amount | $ $ 65,000,000.0  
Period of extension option 1 year  
Town Center at Aurora    
Debt Instrument [Line Items]    
Number of extension options | extension   2
Face amount | $   $ 51,000,000.0
Period of extension option   1 year
v3.20.2
Indebtedness (Corporate Debt Outstanding) (Details)
6 Months Ended 12 Months Ended
Jun. 30, 2020
USD ($)
extension
Dec. 31, 2019
USD ($)
Debt Instrument [Line Items]    
Interest rate effective percentage 8.52%  
Ground lease term 99 years  
Ground lease, fixed payments, annualized rate 7.40%  
Repurchase option $ 109,300,000  
Year for option to repurchase 30 years  
Revolving Credit Facility    
Debt Instrument [Line Items]    
Face amount $ 647,000,000 $ 207,000,000
Debt issuance costs, net (2,284,000) (2,855,000)
Carrying value of mortgage loans $ 644,716,000 204,145,000
Interest rate effective percentage 1.96%  
Line of credit, maximum borrowing capacity $ 650,000,000.0  
Number of extension options | extension 2  
Period of extension option 6 months  
Remaining borrowing capacity $ 2,800,000  
Revolving Credit Facility | LIBOR    
Debt Instrument [Line Items]    
Basis spread rate 1.80%  
Letter of Credit    
Debt Instrument [Line Items]    
Remaining borrowing capacity $ 200,000  
Bridge Loan    
Debt Instrument [Line Items]    
Face amount 55,000,000.0 55,000,000
Notes payable    
Debt Instrument [Line Items]    
Debt discount, net (7,111,000) (7,864,000)
Debt issuance costs, net (4,689,000) (5,470,000)
Carrying value of mortgage loans 709,100,000 957,566,000
Notes payable | Exchange Notes    
Debt Instrument [Line Items]    
Face amount $ 0 250,000,000
Discount rate 0.028%  
Interest Rate 3.85%  
Notes payable | Senior Notes due 2024    
Debt Instrument [Line Items]    
Face amount $ 720,900,000 720,900,000
Discount rate 1.533%  
Notes payable | Senior Notes due 2024 | Through August 14, 2019    
Debt Instrument [Line Items]    
Interest Rate 5.95%  
Notes payable | Senior Notes due 2024 | After August 14, 2019    
Debt Instrument [Line Items]    
Interest Rate 6.45%  
Unsecured term loans    
Debt Instrument [Line Items]    
Debt issuance costs, net $ (2,791,000) (3,358,000)
Carrying value of mortgage loans 687,209,000 686,642,000
Unsecured term loans | Term Loan    
Debt Instrument [Line Items]    
Face amount 350,000,000 350,000,000
Notional amount $ 250,000,000.0  
Derivative, fixed interest rate 4.86%  
Interest rate effective percentage 2.26%  
Unsecured term loans | Term Loan | LIBOR    
Debt Instrument [Line Items]    
Basis spread rate 2.10%  
Unsecured term loans | December 2015 Term Loan    
Debt Instrument [Line Items]    
Face amount $ 340,000,000 340,000,000
Notional amount $ 340,000,000.0  
Derivative, fixed interest rate 4.06%  
Unsecured term loans | December 2015 Term Loan | LIBOR    
Debt Instrument [Line Items]    
Basis spread rate 2.35%  
Other indebtedness    
Debt Instrument [Line Items]    
Face amount $ 98,900,000 98,900,000
Debt issuance costs, net (1,535,000) (1,561,000)
Accretion adjustment, net (13,010,000) 262,000
Carrying value of mortgage loans $ 84,355,000 $ 97,601,000
v3.20.2
Indebtedness (Corporate Debt - Narrative) (Details) - USD ($)
$ in Millions
6 Months Ended
Jun. 22, 2020
Jun. 30, 2020
Debt Instrument [Line Items]    
Bridge loan   $ 30.0
Debt instrument payment method   15.7
Debt instrument payment terms P27M  
Impairment on the note receivable   $ 11.2
v3.20.2
Indebtedness (Covenants and Gain on Extinguishment - Narrative) (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
property
pool
loan
quarter
May 26, 2020
USD ($)
May 22, 2020
USD ($)
Feb. 21, 2020
USD ($)
Dec. 31, 2019
USD ($)
Nov. 05, 2019
USD ($)
Port Charlotte Town Center            
Debt Instrument [Line Items]            
Debt default amount   $ 40,900        
Town Center Plaza            
Debt Instrument [Line Items]            
Debt default amount     $ 47,300      
Mortgage Loan Secured by Rushmore Mall            
Debt Instrument [Line Items]            
Debt default amount       $ 33,100    
Mortgage Loan Secured by Charlottesville Fashion Square            
Debt Instrument [Line Items]            
Debt default amount           $ 45,100
Mortgages            
Debt Instrument [Line Items]            
Mortgage notes payable $ 1,110,243       $ 1,117,242  
Secured Debt            
Debt Instrument [Line Items]            
Number of non-recourse loans | loan 20          
Number of full recourse loans | loan 2          
Number of mortgage pools | property 24          
Pool of cross-defaulted and cross-collateralized mortgages | pool 1          
Number of properties encumbered | property 4          
Minimum quarters for cash benchmark | quarter 2          
v3.20.2
Indebtedness (Book Value and Fair Value of Debt) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Fixed Rate Mortgages    
Debt Instrument [Line Items]    
Book value of debt $ 1,045,243 $ 1,052,242
Fair value of debt $ 1,073,408 $ 1,062,205
Fixed Rate Mortgages | Weighted Average    
Debt Instrument [Line Items]    
Weighted average discount rates assumed in calculation of fair value for debt 3.81% 4.24%
Fixed Rate Unsecured Debt    
Debt Instrument [Line Items]    
Book value of debt $ 1,396,790 $ 1,660,062
Fair value of debt $ 1,156,446 $ 1,673,105
Fixed Rate Unsecured Debt | Weighted Average    
Debt Instrument [Line Items]    
Weighted average discount rates assumed in calculation of fair value for debt 9.52% 6.03%
v3.20.2
Derivative Financial Instruments (Narrative) (Details)
6 Months Ended 12 Months Ended
Jun. 30, 2020
USD ($)
derivative
Dec. 31, 2019
USD ($)
Derivative Instruments, Gain (Loss) [Line Items]    
Amount estimated to be reclassified as an increase to interest expense $ 12,700,000  
Amount of loss or gain reclassified from AOCI $ 0 $ 0
Interest Rate Swap    
Derivative Instruments, Gain (Loss) [Line Items]    
Number of derivatives outstanding | derivative 11  
Notional value of interest rate risk $ 640,800,000  
Interest Rate Products | Designated as Hedging Instruments | Accounts Payable, Accrued Expenses, Intangibles, and Deferred Revenue    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value of liability derivative instruments $ 21,089,000 $ 6,592,000
v3.20.2
Derivative Financial Instruments (Fair Value of Derivative Financial Instruments) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Interest rate products | Designated as Hedging Instruments | Accounts payable, accrued expenses, intangibles, and deferred revenue    
Derivatives, Fair Value [Line Items]    
Liability derivatives $ 21,089 $ 6,592
v3.20.2
Derivative Financial Instruments (Effect of Derivative Financial Instruments) (Details) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]          
Amount of loss or (gain) reclassified from accumulated other comprehensive loss into interest expense     $ 0   $ 0
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded $ (37,445,000) $ (39,143,000) (76,080,000) $ (75,973,000)  
Cash Flow Hedging          
Derivative Instruments, Gain (Loss) [Line Items]          
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded (37,445,000) (39,143,000) (76,080,000) (75,973,000)  
Interest rate products | Interest expense          
Derivative Instruments, Gain (Loss) [Line Items]          
Amount of Loss Recognized in OCL on Derivative (1,760,000) (8,955,000) (17,969,000) (13,520,000)  
Interest rate products | Interest expense | Cash Flow Hedging          
Derivative Instruments, Gain (Loss) [Line Items]          
Amount of loss or (gain) reclassified from accumulated other comprehensive loss into interest expense $ 2,680,000 $ (530,000) $ 3,443,000 $ (1,075,000)  
v3.20.2
Derivative Financial Instruments (Liabilities Measured on a Nonrecurring Basis) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Derivative [Line Items]    
Derivative instruments, net $ (21,089) $ (6,592)
Quoted Prices in Active Markets for Identical Liabilities (Level 1)    
Derivative [Line Items]    
Derivative instruments, net 0 0
Significant Other Observable Inputs (Level 2)    
Derivative [Line Items]    
Derivative instruments, net (21,089) (6,592)
Significant Unobservable Inputs (Level 3)    
Derivative [Line Items]    
Derivative instruments, net $ 0 $ 0
v3.20.2
Rental Income (Operating Lease, Lease Income) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Leases [Abstract]        
Operating lease payments, fixed $ 125,366 $ 138,173 $ 256,871 $ 282,349
Operating lease payments, variable 12,897 16,397 32,001 34,459
Amortization of straight-line rent, inducements, and rent abatements (21,586) 1,163 (20,777) 2,272
Net amortization/accretion of above and below-market leases 1,712 1,544 2,818 4,450
Change in estimate of collectibility of rental income (22,339) (1,047) (27,630) (4,027)
Total rental income $ 96,050 $ 156,230 $ 243,283 $ 319,503
v3.20.2
Rental Income (Lessor, Operating Lease, Payments to be Received, Maturity) (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Leases [Abstract]  
2020 (July - December) $ 234,763
2021 403,817
2022 338,531
2023 276,796
2024 216,380
Thereafter 655,045
Operating lease payments to be received $ 2,125,332
v3.20.2
Rental Income - (Narrative) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Lessor, Lease, Description [Line Items]        
Rent abatement $ 22,000   $ 22,000  
Change in estimate of collectibility of rental income 22,339 $ 1,047 27,630 $ 4,027
COVID-19 Pandemic        
Lessor, Lease, Description [Line Items]        
Change in estimate of collectibility of rental income $ 22,300   $ 22,300  
v3.20.2
Equity (Narrative) (Details) - USD ($)
3 Months Ended 6 Months Ended
Aug. 02, 2019
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
May 28, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Common stock for possible future issuance (in shares)   34,479,892   34,479,892    
Number of shares authorized (in shares)           7,290,000
Dividends declared (usd per share/unit)   $ 0 $ 0.25 $ 0.125 $ 0.50  
General and Administrative Expense            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Allocated share based compensation expense   $ 1,900,000 $ 2,000,000.0 $ 3,800,000 $ 3,800,000  
Restricted Stock Units (RSUs)            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Award vesting period       3 years    
Award requisite service period       3 years    
RSUs issued (in shares)       1,231,188 331,792  
Fair value of restricted stock awarded       $ 800,000 $ 1,500,000  
Performance Shares | Minimum            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Range of awards earned based on goals       0.00%    
Performance Shares | Maximum            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Range of awards earned based on goals       150.00%    
Employee Stock Option            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Grants in period (in shares)       0 0  
Exercises in period (in shares)       0 391  
Canceled, forfeited or expired (in shares)       31,434 52,152  
Outstanding number (in shares)   569,855   569,855    
Chief Executive Officer | Restricted Stock Units (RSUs)            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Contingent rights (in shares)       1    
Chief Executive Officer | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche One            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights 33.33%          
Chief Executive Officer | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche Two            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights 33.33%          
Chief Executive Officer | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche Three            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights 33.33%          
Washington Prime Group, L.P. 2014 Stock Incentive Plan            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Number of shares authorized (in shares)           10,000,000
Maximum number of grants per participant (in shares)           500,000
2020 Annual Long-Term Incentive Awards | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche One            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights       33.33%    
2020 Annual Long-Term Incentive Awards | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche Two            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights       33.33%    
2020 Annual Long-Term Incentive Awards | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche Three            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights       33.33%    
2020 Annual Long-Term Incentive Awards | Performance Shares            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Value of shares granted       $ 0    
PSUs forfeited (in shares)       262,787    
2019 Annual Long-Term Incentive Awards | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche One            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights         33.33%  
2019 Annual Long-Term Incentive Awards | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche Two            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights         33.33%  
2019 Annual Long-Term Incentive Awards | Restricted Stock Units (RSUs) | Share-based Compensation Award, Tranche Three            
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]            
Vesting rights         33.33%  
v3.20.2
Equity (Summary of Annual Long-term Incentive Awards) (Details) - $ / shares
Feb. 25, 2020
Feb. 20, 2019
Restricted Stock Units (RSUs) | 2020 Annual Long-Term Incentive Awards    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued (in shares) 1,373,422,000  
Grant date fair value per unit (usd per share) $ 2.41  
Restricted Stock Units (RSUs) | 2019 Annual Long-Term Incentive Awards    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued (in shares)   572,163,000
Grant date fair value per unit (usd per share)   $ 5.77
Performance Shares | 2020 Annual Long-Term Incentive Awards    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued (in shares) 1,373,422,000  
Grant date fair value per unit (usd per share) $ 1.74  
Performance Shares | 2019 Annual Long-Term Incentive Awards    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued (in shares)   572,163,000
Grant date fair value per unit (usd per share)   $ 4.98
v3.20.2
Commitments and Contingencies (Concentration Risk) (Details)
6 Months Ended
Jun. 30, 2020
Customer Concentration Risk | Sales Revenue, Net  
Concentration Risk [Line Items]  
Concentration risk 5.00%
v3.20.2
Commitments and Contingencies (Lease Commitments) (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Lessee, Lease, Description [Line Items]        
Number of ground leases 4   4  
Ground rent $ 209 $ 195 $ 331 $ 398
Number of properties subject to office leases 2   2  
Number of garage leases 1   1  
Weighted average remaining lease term 19 years 9 months 18 days   19 years 9 months 18 days  
Weighted average discount rate 8.80%   8.80%  
General and Administrative Expense        
Lessee, Lease, Description [Line Items]        
Ground rent $ 612 663 $ 1,261 1,294
Ground Leases        
Lessee, Lease, Description [Line Items]        
Ground rent $ 5 $ 5 $ 10 $ 10
v3.20.2
Commitments and Contingencies (Lessee, Operating Lease, Liability, Maturity) (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
2020 (July - December) $ 1,026
2021 2,069
2022 2,099
2023 1,427
2024 999
Thereafter 20,378
Total lease payments 27,998
Less: Discount 15,919
Present value of lease liabilities $ 12,079
v3.20.2
Loss Per Common Share/Unit (Basic and Diluted Earnings Per Share Per Unit) (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Loss Per Common Share, Basic:        
Net loss attributable to common shareholders - basic $ (82,050) $ (17,262) $ (78,675) $ (22,437)
Weighted average common shares outstanding - basic (in shares) 190,541,074 188,486,685 189,842,197 188,285,604
Loss per common share, basic (usd per share) $ (0.43) $ (0.09) $ (0.41) $ (0.12)
Loss Per Common Share, Diluted:        
Net loss attributable to common shareholders - basic $ (82,050) $ (17,262) $ (78,675) $ (22,437)
Net loss attributable to limited partner unitholders (14,931) (3,186) (14,314) (4,142)
Net loss attributable to common shareholders - diluted $ (96,981) $ (20,448) $ (92,989) $ (26,579)
Weighted average common shares outstanding - basic (in shares) 190,541,074 188,486,685 189,842,197 188,285,604
Weighted average operating partnership units outstanding (in shares) 34,485,545 34,752,540 34,539,716 34,741,867
Weighted average common shares outstanding - diluted (in shares) 225,026,619 223,239,225 224,381,913 223,027,471
Loss per common share, diluted (usd per share) $ (0.43) $ (0.09) $ (0.41) $ (0.12)
v3.20.2
Loss Per Common Share/Unit (Narrative) (Details) - shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Restricted Stock        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities excluded (in shares) 601,711   601,711  
Restricted Stock | Washington Prime Group, L.P.        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities excluded (in shares) 601,711   601,711  
Contingently-Issuable Outstanding Stock Options        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities excluded (in shares) 569,855 627,198 569,855 627,198
Contingently-Issuable Outstanding Stock Options | Washington Prime Group, L.P.        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities excluded (in shares) 569,855   569,855 627,198
Performance Based Components        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities excluded (in shares) 1,305,005 1,269,427 1,305,005 1,269,427
Performance Based Components | Washington Prime Group, L.P.        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities excluded (in shares) 1,305,005 1,269,427 1,305,005  
v3.20.2
Loss Per Common Share/Unit (Earnings Per Unit) (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Loss Per Common Unit, Basic & Diluted:        
Net loss attributable to common unitholders - basic and diluted $ (82,050) $ (17,262) $ (78,675) $ (22,437)
Loss Earnings per common unit, basic & diluted (usd per share) $ (0.43) $ (0.09) $ (0.41) $ (0.12)
Washington Prime Group, L.P.        
Loss Per Common Unit, Basic & Diluted:        
Net loss attributable to common unitholders - basic and diluted $ (96,981) $ (20,448) $ (92,989) $ (26,579)
Weighted average common units outstanding - basic and diluted (in shares) 225,026,619 223,239,225 224,381,913 223,027,471
Loss Earnings per common unit, basic & diluted (usd per share) $ (0.43) $ (0.09) $ (0.41) $ (0.12)
v3.20.2
Subsequent Events (Forbearance Agreements) (Details) - Mortgages - USD ($)
$ in Thousands
1 Months Ended
Aug. 10, 2020
Jun. 30, 2020
Dec. 31, 2019
Subsequent Event [Line Items]      
Face amount   $ 1,110,243 $ 1,117,242
Subsequent Event | Forbearance | Canyon View Marketplace      
Subsequent Event [Line Items]      
Face amount $ 5,087    
Interest Rate 5.47%    
Duration 3 months    
Repayment Terms 6 months    
Subsequent Event | Forbearance | Grand Central Mall      
Subsequent Event [Line Items]      
Face amount $ 38,378    
Interest Rate 6.05%    
Duration 3 months    
Repayment Terms 12 months    
v3.20.2
Subsequent Events (Narratives) (Details) - Subsequent Event
1 Months Ended
Aug. 06, 2020
Aug. 10, 2020
Subsequent Event [Line Items]    
Common stock share split ratio 0.1111  
Grand Central Mall | Forbearance | Mortgages    
Subsequent Event [Line Items]    
Period of extension option   1 year