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Press release from Business Wire

Retail Properties of America, Inc. Reports Fourth Quarter Results

Tuesday, February 19, 2013

Retail Properties of America, Inc. Reports Fourth Quarter Results16:01 EST Tuesday, February 19, 2013 OAK BROOK, Ill. (Business Wire) -- Retail Properties of America, Inc. (NYSE: RPAI) today reported financial and operating results for the quarter and year ended December 31, 2012. FINANCIAL RESULTS For the quarter ended December 31, 2012, Retail Properties of America reported: Operating Funds From Operations (Operating FFO) of $51.2 million, or $0.22 per share, compared to $46.8 million, or $0.24 per share for the same period in 2011; Funds From Operations (FFO) of $60.0 million, or $0.26 per share, compared to $48.5 million, or $0.25 per share for the same period in 2011; Net income available to common shareholders of $13.9 million, or $0.06 per share, compared to net loss available to common shareholders of $(13.8) million, or $(0.07) per share for the same period in 2011. For the year ended December 31, 2012, the Company reported: Operating FFO of $202.1 million, or $0.92 per share, compared to $173.6 million, or $0.90 per share for the same period in 2011; FFO of $235.8 million, or $1.07 per share, compared to $195.1 million, or $1.01 per share for the same period in 2011; Net loss available to common shareholders of $(0.7) million, or $(0.00) per share, compared to net loss available to common shareholders of $(72.6) million, or $(0.38) per share for the same period in 2011. OPERATING RESULTS For the quarter ended December 31, 2012, the Company's results for its consolidated portfolio were as follows: 0.6% increase in total same store net operating income (NOI) over the comparable period in 2011, based on same-store occupancy of 91.2% at December 31, 2012, up 90 basis points from 90.3% at December 31, 2011; Total portfolio percent leased, including leases signed but not commenced: 92.9% at December 31, 2012, up 110 basis points from 91.8% at September 30, 2012 and up 170 basis points from 91.2% at December 31, 2011; Retail portfolio percent leased, including leases signed but not commenced: 92.4% at December 31, 2012, up 130 basis points from 91.1% at September 30, 2012 and up 200 basis points from 90.4% at December 31, 2011; 1,094,000 square feet of retail leasing transactions comprised of 178 new and renewal leases, including the Company's pro rata share of unconsolidated joint ventures; and, Positive comparable leasing spreads, including the Company's pro rata share of joint ventures, on a cash basis, of 5.5%. For the year ended December 31, 2012, the Company's results for its consolidated portfolio were as follows: 1.7% increase in total same store NOI over the comparable period in 2011; 3,573,000 square feet of retail leasing transactions comprised of 672 new and renewal leases, including the Company's pro rata share of unconsolidated joint ventures; and, Positive comparable leasing spreads, including the Company's pro rata share of joint ventures, on a cash basis, of 4.5%. “We are pleased with the substantial progress we have made repositioning RPAI's portfolio and balance sheet during 2012. This year has been representative of our ability to consistently deliver on the ambitious goals we set out to achieve. We look forward to building on this positive momentum as we execute on our 2013 operational and financial objectives,” stated Steve Grimes, president and chief executive officer. INVESTMENT ACTIVITY During the quarter, asset dispositions totaled $258.0 million, and included the sale of two non-core office assets for $153.5 million, eight single-tenant retail assets for $67.7 million, and two non-strategic retail assets for $36.8 million. Net proceeds from asset sales in the fourth quarter, before transaction expenses, were $139.6 million. For the full year 2012, the Company reached its stated asset disposition objective, selling 36 properties for gross proceeds of $492.2 million, including its pro rata share of joint ventures. Sales for the year included $240.1 million of non-core office and industrial assets, including a deed-in-lieu transaction. In addition, the Company culled its portfolio of $187.4 million of single-tenant retail properties, which included 18 of the 23 former Mervyns assets for $134.3 million. The remainder of dispositions for the year included $59.2 million of non-strategic retail assets and $5.5 million from earnouts and an outlot sale. Net proceeds from asset sales in 2012, before transaction expenses, including the Company's pro rata share of joint ventures, were $232.3 million. As a result of the 2012 disposition program, the Company successfully reduced its exposure to non-retail assets from 9.6% to 5.5% of total portfolio annualized base rent (ABR) and single-tenant retail assets from 8.7% to 6.6% of ABR. CAPITAL MARKETS During the fourth quarter 2012, the Company closed on its first preferred equity offering, with the issuance of 5,400,000 shares of 7.00% Series A Cumulative Redeemable Preferred Stock at $25 per share, resulting in proceeds of $130.3 million, net of underwriters discount and offering costs. On February 1, 2013, the Company used the net proceeds from the issuance to repay outstanding borrowings under two mezzanine loans, scheduled to mature on December 1, 2019, with outstanding principal balances as of December 31, 2012 of $85.0 million and $40.0 million and fixed interest rates of 12.24% and 14.00%, respectively. As a result, the Company incurred a 5% prepayment fee. BALANCE SHEET ACTIVITY As of December 31, 2012, the Company had $2.6 billion of consolidated indebtedness, which resulted in a net debt to adjusted EBITDA ratio of 6.6x, or a net debt and preferred stock to adjusted EBITDA ratio of 7.0x, down from 8.2x as of December 31, 2011. Consolidated indebtedness, as of December 31, 2012, had a weighted average contractual interest rate of 5.98% and a weighted average maturity of 5.2 years. During the quarter, the Company repaid $214.5 million of mortgage loans, excluding amortization. The mortgages repaid during the quarter had a weighted average interest rate of 5.23%. The Company also completed one $37.6 million mortgage financing, with a term of 10 years and a rate of 4.14%. OPERATIONAL PLATFORM During the quarter, the Company completed the planned enhancements to its operating platform. Included in these plans was the move of the Company's headquarters to a new open and collaborative space in Oak Brook, IL. In addition, during the quarter, the Company internalized the remaining shared services and successfully migrated to an independent IT platform. “Our ability to make such a large transition in a relatively short period of time speaks to the discipline and high quality nature of our team,” stated Steve Grimes, president and chief executive officer. “We are pleased with the positive response we have received from our shareholders regarding these changes and believe that we will reap the rewards of these efforts in 2013 and beyond.” GUIDANCE The Company is providing initial guidance for 2013 as follows: Operating FFO per share:       $0.88- $0.92 FFO per share: $0.82- $0.86 Net income available to common shareholders per share: $0.02- $0.06 Same-store NOI growth: 2.0% - 2.5% Disposition Activity: $400 - $450 million Acquisition Activity: $100 - $200 million B-1 SHARE CONVERSION On October 5, 2012, each share of Class B-1 common stock automatically converted into one share of Class A common stock. The Class B-2 and B-3 common shares are set to automatically convert on April 5, 2013 and October 7, 2013, respectively. DIVIDEND On Februrary 13, 2013, the Company's Board of Directors declared the first quarter 2013 Series A preferred distribution of $0.4861 per preferred share, for the period beginning December 20, 2012, which will be paid on April 1, 2013, to shareholders of record on March 21, 2013. On February 13,2013, the Company's Board of Directors also declared the first quarter 2013 quarterly cash dividend of $0.165625 per share on all classes of outstanding common shares of RPAI. The common dividend will be paid on April 10, 2013, to common shareholders of record on March 29, 2013. The effective record date will be March 28, 2013, as March 29, 2013 is a NYSE holiday. WEBCAST AND SUPPLEMENTAL INFORMATION Retail Properties of America's management team will hold a webcast, on Wednesday, February 20, 2013 at 11:00 AM EST, to discuss its quarterly financial results and operating performance, business highlights and outlook. In addition, the Company may discuss business and financial developments and trends and other matters affecting the Company, some of which may not have been previously disclosed. A live webcast will be available online on the Company's website at www.rpai.com in the Investor Relations section. The conference call can be accessed by dialing (877) 705-6003 or (201) 493-6725 for international participants. Please dial in at least ten minutes prior to the start of the call to register. A replay of the webcast will be available. To listen to the replay, please go to www.rpai.com in the Investor Relations section of the website and follow the instructions. A replay of the call will be available from 2:00 PM EST on February 20, 2013, until midnight EST on May 31, 2013. The replay can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers, and enter pin number 407373. The Company has also posted supplemental financial and operating information and other data in the Investor Relations section of its website. ABOUT RPAI Retail Properties of America, Inc. is a fully integrated, self-administered and self-managed real estate investment trust that owns and operates high quality, strategically located shopping centers across 35 states. The Company is one of the largest owners and operators of shopping centers in the United States. The Company is publicly traded on the New York Stock Exchange under the ticker symbol RPAI. Additional information about the Company is available at www.rpai.com. SAFE HARBOR LANGUAGE The statements and certain other information contained in this press release, which can be identified by the use of forward-looking terminology such as “may,” “expect,” “continue,” “remains,” “intend,” “aim,” “should,” “prospects,” “could,” “future,” “potential,” “believes,” “plans,” “likely,” “anticipate,” and “probable,” or the negative thereof or other variations thereon or comparable terminology, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that such plans, intentions, expectations or strategies will be attained or achieved. Furthermore, these forward-looking statements should be considered as subject to the many risks and uncertainties that exist in the Company's operations and business environment. Such risks and uncertainties could cause actual results to differ materially from those projected. These uncertainties include, but are not limited to, general economic, business and financial conditions, changes in the Company's industry and changes in the real estate markets in particular, market demand for and pricing of the Company's common and preferred stock, general volatility of the capital and credit markets, competitive and cost factors, the ability of the Company to enter into new leases or renew leases on favorable terms, defaults on, early terminations of or non-renewal of leases by tenants, bankruptcy or insolvency of a major tenant or a significant number of smaller tenants, the effects of declining real estate valuations and impairment charges on the Company's operating results, increased interest rates and operating costs, decreased rental rates or increased vacancy rates, the uncertainties of real estate acquisitions, dispositions and redevelopment activity, the Company's failure to successfully execute its non-core disposition program and capital recycling efforts, the Company's ability to create long-term shareholder value, the Company's ability to manage its growth effectively, the availability, terms and deployment of capital, regulatory changes and other risk factors, including those detailed in the sections of the Company's most recent Form 10-K and Form 10-Qs filed with the SEC titled “Risk Factors”. We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. NON-GAAP FINANCIAL MEASURES As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, FFO means net (loss) income computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable investment properties, plus depreciation and amortization and impairment charges on depreciable investment properties, including amounts from continuing and discontinued operations, as well as adjustments for unconsolidated joint ventures in which the Company holds an interest. The Company has adopted the NAREIT definition in its computation of FFO and believes that, subject to the following limitations, FFO, which is a non-GAAP performance measure, provides a basis for comparing the Company's performance and operations to those of other REITs. Depreciation and amortization related to investment properties for purposes of calculating FFO includes a portion of loss on lease terminations encompassing the write-off of tenant-related assets, including tenant improvements and in-place lease values, as a result of early lease terminations. The Company also reports Operating FFO, which is defined as FFO excluding the impact to earnings from the early extinguishment of debt and other items as denoted within the calculation that management does not believe are representative of the operating results of the Company's core business platform. Management considers Operating FFO a meaningful, additional measure of operating performance primarily because it excludes the effects of transactions and other events which management does not consider representative of the operating results of the Company's core business platform. Neither FFO nor Operating FFO represent alternatives to "Net Income" as an indicator of the Company's performance, and "Cash Flows from Operating Activities" as determined by GAAP as a measure of the Company's capacity to fund cash needs, including the payment of dividends. Further, comparison of the Company's presentation of Operating FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs. The Company also reports same store NOI. The Company defines NOI as operating revenues (rental income, tenant recovery income, other property income, excluding straight-line rental income, amortization of lease inducements and amortization of acquired above and below market lease intangibles) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense and straight-line bad debt expense). Same store NOI represents NOI from the Company's same store portfolio consisting of 239 operating properties acquired or placed in service prior to January 1, 2011, except for the three operating properties that were classified as held for sale as of December 31, 2012, which are accounted for as discontinued operations. In addition, University Square, the property for which the Company has ceased making the monthly debt service payment and for which the Company has attempted to negotiate with the lender, is excluded, due to the uncertainty of the timing of transfer of ownership of this property. Management believes that NOI and same store NOI are useful measures of the Company's operating performance. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs. Management believes that NOI and same store NOI provide an operating perspective not immediately apparent from GAAP operating income or net (loss) income. Management uses NOI and same store NOI to evaluate the Company's performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company's operating results. However, these measures should only be used as an alternative measure of the Company's financial performance. Adjusted EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing performance. Management believes that Adjusted EBITDA is useful because it allows investors and management to evaluate and compare the Company's performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income, as an indicator of operating performance or any measure of performance derived in accordance with GAAP. The Company's calculation of Adjusted EBITDA may be different from the calculation used by other companies and, accordingly, comparability may be limited. Net Debt to Adjusted EBITDA represents (i) total debt less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior 3 months, annualized. Net Debt and Preferred Stock to Adjusted EBITDA represents (i) total debt, plus preferred stock, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior 3 months, annualized. The Company believes that these ratios are useful because they provide investors with information regarding total debt net of cash and cash equivalents, and total debt and preferred stock, net of cash and cash equivalents, which could be used to repay debt, compared to the Company's performance as measured using Adjusted EBITDA. Retail Properties of America, Inc.Consolidated Balance Sheets (amounts in thousands, except par value amounts) (unaudited)           December 31,   December 31,20122011Assets Investment properties: Land $ 1,209,523 $ 1,334,363 Building and other improvements 4,703,859 5,057,252 Developments in progress 49,496 49,940 5,962,878 6,441,555 Less accumulated depreciation (1,275,787) (1,180,767) Net investment properties 4,687,091 5,260,788   Cash and cash equivalents 138,069 136,009 Investment in marketable securities, net - 30,385 Investment in unconsolidated joint ventures 56,872 81,168 Accounts and notes receivable (net of allowances of $6,452 and $8,231, respectively) 85,431 94,922 Acquired lease intangibles, net 125,706 174,404 Assets associated with investment properties held for sale 8,922 - Other assets, net 135,336 164,218 Total assets$ 5,237,427$ 5,941,894   Liabilities and Equity Liabilities: Mortgages and notes payable, net (includes unamortized premium of $0 and $10,858, respectively, and unamortized discount of $(1,492) and $(2,003), respectively) $ 2,212,089 $ 2,926,218 Credit facility 380,000 555,000 Accounts payable and accrued expenses 73,983 83,012 Distributions payable 38,200 31,448 Acquired below market lease intangibles, net 74,648 81,321 Other financings - 8,477 Co-venture obligation - 52,431 Liabilities associated with investment properties held for sale 60 - Other liabilities 82,694 66,944 Total liabilities2,861,6743,804,851   Redeemable noncontrolling interests - 525   Commitments and contingencies   Equity (a): Preferred stock, $0.001 par value, 10,000 shares authorized 7.00% Series A cumulative redeemable preferred stock, 5,400 and 0 shares issued and outstanding at December 31, 2012 and 2011, respectively; liquidation preference $135,000 5 - Class A common stock, $0.001 par value, 475,000 shares authorized, 133,606 and 48,382 shares issued and outstanding at December 31, 2012 and 2011, respectively 133 48 Class B-1 common stock, $0.001 par value, 55,000 shares authorized, 0 and 48,382 shares issued and outstanding at December 31, 2012 and 2011, respectively - 48 Class B-2 common stock, $0.001 par value, 55,000 shares authorized, 48,518 and 48,382 shares issued and outstanding at December 31, 2012 and 2011, respectively 49 49 Class B-3 common stock, $0.001 par value, 55,000 shares authorized, 48,519 and 48,383 shares issued and outstanding at December 31, 2012 and 2011, respectively 49 49 Additional paid-in capital 4,835,370 4,427,977 Accumulated distributions in excess of earnings (2,460,093) (2,312,877) Accumulated other comprehensive (loss) income (1,254) 19,730 Total shareholders' equity 2,374,259 2,135,024 Noncontrolling interests 1,494 1,494 Total equity2,375,7532,136,518Total liabilities and equity$ 5,237,427$ 5,941,894 (a) On March 20, 2012, we effectuated a ten-to-one reverse stock split of our then outstanding common stock. Immediately following the reverse stock split, we redesignated all of our common stock as Class A common stock. On March 21, 2012, we paid a stock dividend pursuant to which each then outstanding share of our Class A common stock received one share of Class B-1 common stock, one share of Class B-2 common stock and one share of Class B-3 common stock. These transactions are referred to as the Recapitalization. All common stock share amounts and related dollar amounts give retroactive effect to the Recapitalization. Retail Properties of America, Inc.Consolidated Statements of Operations (amounts in thousands, except per share amounts) (unaudited)         Three Months Ended   Year EndedDecember 31,December 31,   2012       2011     2012       2011   Revenues: Rental income $ 113,416 $ 112,631 $ 450,629 $ 449,401 Tenant recovery income 27,923 27,993 106,696 106,939 Other property income   2,194     2,261     9,698     10,095   Total revenues   143,533     142,885     567,023     566,435     Expenses: Property operating expenses 25,517 25,220 95,812 99,114 Real estate taxes 18,952 20,189 76,193 76,580 Depreciation and amortization 54,447 54,266 217,303 218,833 Provision for impairment of investment properties - 7,650 1,323 7,650 Loss on lease terminations 322 520 6,872 8,590 General and administrative expenses   8,187     4,223     26,878     20,605   Total expenses   107,425     112,068     424,381     431,372     Operating income 36,108 30,817 142,642 135,063   Dividend income 98 762 1,880 2,538 Interest income 16 156 72 663 (Loss) gain on extinguishment of debt - (84 ) 3,879 15,345 Equity in loss of unconsolidated joint ventures, net (840 ) (409 ) (6,307 ) (6,437 ) Interest expense (43,414 ) (53,245 ) (179,237 ) (216,423 ) Co-venture obligation expense - (1,792 ) (3,300 ) (7,167 ) Recognized gain on marketable securities, net 9,467 - 25,840 277 Other income, net   635     709     296     2,032   Income (loss) from continuing operations   2,070     (23,086 )   (14,235 )   (74,109 )   Discontinued operations: (Loss) income, net (2,767 ) 1,691 (24,196 ) (28,884 ) Gain on sales of investment properties, net   13,623     5,831     30,141     24,509   Income (loss) from discontinued operations 10,856 7,522 5,945 (4,375 ) Gain on sales of investment properties, net   1,191     1,735     7,843     5,906   Net income (loss) 14,117 (13,829 ) (447 ) (72,578 ) Net income attributable to noncontrolling interests   -     (8 )   -     (31 ) Net income (loss) attributable to the Company 14,117 (13,837 ) (447 ) (72,609 ) Preferred stock dividends   (263 )   -     (263 )   -   Net income (loss) available to common shareholders $ 13,854   $ (13,837 ) $ (710 ) $ (72,609 )   Earnings (loss) per common share - basic and diluted (a): Continuing operations $ 0.01 $ (0.11 ) $ (0.03 ) $ (0.35 ) Discontinued operations   0.05     0.04     0.03     (0.03 ) Net income (loss) per common share available to common shareholders $ 0.06   $ (0.07 ) $ -   $ (0.38 )   Weighted average number of common shares outstanding - basic and diluted (a)   230,597     193,444     220,464     192,456       (a) All common stock share amounts and per share amounts give retroactive effect to the Recapitalization. Retail Properties of America, Inc.Funds From Operations (FFO) and Operating FFO (a) (amounts in thousands, except per share amounts) (unaudited)         Three Months Ended   Year EndedDecember 31,December 31,   2012       2011     2012       2011     Net income (loss) available to common shareholders $ 13,854 $ (13,837 ) $ (710 ) $ (72,609 ) Depreciation and amortization 58,508 61,797 247,108 255,182 Provision for impairment of investment properties 2,439 8,288 27,369 43,937 Gain on sales of investment properties (14,814 ) (7,566 ) (37,984 ) (30,415 ) Noncontrolling interests' share of depreciation related to consolidated joint ventures   -     (178 )   -     (990 ) FFO$59,987   $48,504   $235,783   $195,105     FFO per common share outstanding $ 0.26 $ 0.25 $ 1.07 $ 1.01     FFO $ 59,987 $ 48,504 $ 235,783 $ 195,105 Impact on earnings from the early extinguishment of debt, net 641 (1,276 ) (10,860 ) (20,813 ) Excise tax accrual - - 4,594 - Recognized gain on marketable securities (9,467 ) - (25,840 ) (277 ) Other   -     (453 )   (1,627 )   (453 ) Operating FFO$51,161   $46,775   $202,050   $173,562     Operating FFO per common share outstanding $ 0.22 $ 0.24 $ 0.92 $ 0.90     (a) Includes amounts from discontinued operations and our pro rata share from our investment property unconsolidated joint ventures. Retail Properties of America, Inc.Reconciliation of Non-GAAP Financial Measures (amounts in thousands)             Reconciliation of Net Income (Loss) to NOI   Three Months EndedYear EndedDecember 31,December 31,   2012     2011     2012     2011   Revenues: Same store investment properties (239 properties): Rental income $ 111,235 $ 109,945 $ 439,021 $ 434,680 Tenant recovery income 27,374 26,801 104,711 103,317 Other property income 2,124 2,198 9,239 9,776 Other investment properties: Rental income 2,047 1,923 9,455 13,296 Tenant recovery income 549 1,192 1,985 3,622 Other property income 70 63 459 319 Expenses: Same store investment properties (239 properties): Property operating expenses (23,785 ) (23,261 ) (89,198 ) (90,766 ) Real estate taxes (18,408 ) (17,711 ) (71,622 ) (71,404 ) Other investment properties: Property operating expenses (810 ) (866 ) (2,830 ) (4,595 ) Real estate taxes (544 ) (2,478 ) (4,571 ) (5,176 )   Net operating income: Same store investment properties 98,540 97,972 392,151 385,603 Other investment properties   1,312     (166 )   4,498     7,466   Total net operating income   99,852     97,806     396,649     393,069     Other (expense) income: Straight-line rental income, net (106 ) 201 809 (109 ) Amortization of acquired above and below market lease intangibles, net 269 446 1,415 1,611 Amortization of lease inducements (29 ) (29 ) (71 ) (29 ) Straight-line ground rent expense (922 ) (948 ) (3,784 ) (3,801 ) Depreciation and amortization (54,447 ) (54,266 ) (217,303 ) (218,833 ) Provision for impairment of investment properties - (7,650 ) (1,323 ) (7,650 ) Loss on lease terminations (322 ) (520 ) (6,872 ) (8,590 ) General and administrative expenses (8,187 ) (4,223 ) (26,878 ) (20,605 ) Dividend income 98 762 1,880 2,538 Interest income 16 156 72 663 (Loss) gain on extinguishment of debt - (84 ) 3,879 15,345 Equity in loss of unconsolidated joint ventures, net (840 ) (409 ) (6,307 ) (6,437 ) Interest expense (43,414 ) (53,245 ) (179,237 ) (216,423 ) Co-venture obligation expense - (1,792 ) (3,300 ) (7,167 ) Recognized gain on marketable securities 9,467 - 25,840 277 Other income, net   635     709     296     2,032   Total other expense   (97,782 )   (120,892 )   (410,884 )   (467,178 )   Income (loss) from continuing operations 2,070 (23,086 ) (14,235 ) (74,109 )   Discontinued operations: (Loss) income, net (2,767 ) 1,691 (24,196 ) (28,884 ) Gain on sales of investment properties, net   13,623     5,831     30,141     24,509   Income (loss) from discontinued operations 10,856 7,522 5,945 (4,375 ) Gain on sales of investment properties, net   1,191     1,735     7,843     5,906   Net income (loss) 14,117 (13,829 ) (447 ) (72,578 ) Net income attributable to noncontrolling interests   -     (8 )   -     (31 ) Net income (loss) attributable to the Company 14,117 (13,837 ) (447 ) (72,609 ) Preferred stock dividends   (263 )   -     (263 )   -   Net income (loss) available to common shareholders $ 13,854   $ (13,837 ) $ (710 ) $ (72,609 ) Retail Properties of America, Inc.Reconciliation of Non-GAAP Financial Measures (amounts in thousands)       Reconciliation of Net Income (Loss) to Adjusted EBITDA   Three Months EndedDecember 31, 2012December 31, 2011   Net income (loss) $ 14,117 $ (13,829 ) Interest expense 43,414 53,245 Interest expense (discontinued operations) 1,430 3,789 Depreciation and amortization 54,447 54,266 Depreciation and amortization (discontinued operations) 969 4,301 Gain on sales of investment properties (1,191 ) (1,735 ) Gain on sales of investment properties, net (discontinued operations) (13,623 ) (5,831 ) Loss on extinguishment of debt, net - 84 Gain on extinguishment of debt, net (discontinued operations) - (1,360 ) Loss on lease terminations (a) 458 555 Loss on lease terminations (a) (discontinued operations) - 22 Provision for impairment of investment properties - 7,650 Provision for impairment of investment properties (discontinued operations) 2,352 579 Recognized gain on marketable securities   (9,467 )   -   Adjusted EBITDA$92,906   $101,736   Annualized$371,624   $406,944       Reconciliation of Debt to Total Net Debt and Net Debt and Preferred Stock   December 31,December 31,   2012     2011     Total debt $ 2,592,089 $ 3,481,218 Less: cash and cash equivalents   (138,069 )   (136,009 ) Net debt 2,454,020 3,345,209 Preferred stock   135,000     n/a   Net debt and preferred stock 2,589,020 3,345,209 Net Debt to Adjusted EBITDA6.6x   8.2xNet Debt and Preferred Stock to Adjusted EBITDA7.0x   8.2x     FFO and Operating FFO Guidance (b)   Per Share Guidance RangeFull Year 2013LowHigh   Net income available to common shareholders $ 0.02 $ 0.06 Depreciation and amortization 0.98 0.98 Provision for impairment of investment properties - - Gain on sales of investment properties (0.18 ) (0.18 ) Noncontrolling interests' share of depreciation related to consolidated joint ventures   -     -   FFO$0.82   $0.86     Impact on earnings from the early extinguishment of debt, net 0.06 0.06 Other   -     -   Operating FFO$0.88   $0.92   (a) Loss on lease terminations in the reconciliation of Net Income (Loss) to Adjusted EBITDA above excludes the write-off of tenant-related above and below market lease intangibles and lease inducements that are otherwise included in "Loss on lease terminations" in the Consolidated Statements of Operations.   (b) Includes amounts from discontinued operations and our pro rata share from our investment property unconsolidated joint ventures. Retail Properties of America, Inc.Sarah Byrnes, VP Investor Relations630-634-4243