What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-19 compared with 2020-02-21 · 558 added, 695 removed, 800 unchanged (61% of the section changed)

12 unchanged sentences

Information regarding our executive officers is included under the heading "Executive Officers of the Registrant" in Item 1 of this Annual Report.

Information regarding our directors and corporate governance under the following captions in our Proxy Statement for our annual meeting of stockholders to be held on May 7, 2020 , is incorporated by reference herein.

Information regarding our directors and corporate governance under the following captions in our Proxy Statement for our annual meeting of stockholders expected to be held on May 6, 2021, is incorporated by reference herein.

"Proposal No.

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Equity compensation plans not approved by security holders:

Number of Shares or Share Units Issuable Upon Vesting of Outstanding RSU Awards

and Share Unit Awards (a)

Number of Securities Remaining Available for Future Issuance

Number of Shares Issuable Upon Vesting of Outstanding RSU Awards (a) Number of Securities Remaining Available for Future Issuance

Under Equity Compensation Plans

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2015 Incentive Award Plan (c) 4,424,770 18,329,901

Represents RSU Awards outstanding under the Incentive Award Plan and Annual Share Unit Awards and Contingency Share Unit Awards outstanding under the Inland American Real Estate Trust, Inc.

2014 Share Unit Plan, which we refer to as the Retail Plan, as of December 31, 2019 .

The number of share units subject to each share unit award reflects the value of the award and does not necessarily correspond to an equivalent number of shares of common stock of the Company.

Includes shares of common stock available for future grants under the Incentive Award Plan as of December 31, 2019 .

The weighted average grant date price per share of common stock underlying the unvested restricted stock units based on total outstanding restricted stock units as of December 31, 2019 , was $3.14 .

(a) Represents restricted share unit ("RSU") awards outstanding under the Incentive Award Plan as of December 31, 2020.

(b) Includes shares of common stock available for future grants under the Incentive Award Plan as of December 31, 2020.

(c) The weighted average grant date price per share of common stock underlying the unvested restricted stock units based on total outstanding restricted stock units as of December 31, 2020, was $3.14.

Certain Relationships and Related Transactions, and Director Independence

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Consolidated Balance Sheets as of December 31, 20 20 and 20 19

Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Equity for the years ended December 31, 20 20 , 20 19 and 20 18

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333-172862) filed November 1, 2019)

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

Amended and Restated Master Management Agreement, dated as of March 12, 2014, by and between Inland American Real Estate Trust, Inc.

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(incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, as filed by the Registrant with the SEC on September 22, 2014)

The Inland American Real Estate Trust, Inc.

2014 Share Unit Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K, as filed by the Registrant with the SEC on September 22, 2014)

Form of Inland American Real Estate Trust, Inc.

Share Unit Award Agreement (Annual Award) (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 8-K, as filed by the Registrant with the SEC on September 22, 2014)

Form of Inland American Real Estate Trust, Inc.

Share Unit Award Agreement (Contingency) (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 8-K, as filed by the Registrant with the SEC on September 22, 2014)

InvenTrust Properties Corp.

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and Wells Fargo Securities, LLC, as Joint Book Managers, KeyBanc Capital Markets Inc., Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Bank of America, N.A., PNC Bank, National Association, and BMO Harris Bank, N.A., as Joint Lead Arrangers, Wells Fargo Bank, National Association, and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Bank of America, N.A., PNC Bank, National Association, and BMO Harris Bank, N.A., as Co-Documentation Agents, and the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K, as filed by the Registrant with the SEC on December 31, 2018)

Form of Director Restricted Stock Unit Agreement for Annual Awards (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q, as filed by the Registrant with the SEC on August 7, 2020)

Subsidiaries of the Registrant

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101 The following financial information from our Annual Report for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 19, 2021, is formatted in Extensible Business Reporting Language ("XBRL"):

(i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows (v) Notes to Consolidated Financial Statements (tagged as blocks of text).

(i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive (Loss) Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows (v) Notes to Consolidated Financial Statements (tagged as blocks of text).

* Filed as part of this Annual Report

^ Management contract or compensatory plan or arrangement.

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INVENTRUST PROPERTIES CORP.

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Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Thomas P.

President and Chief Executive Officer (Principal Executive Officer)

February 21, 2020

McGuinness President and Chief Executive Officer (Principal Executive Officer) February 19, 2021

/s/ Daniel J.

Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

February 21, 2020

Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

February 21, 2020

/s/ Stuart Aitken

February 21, 2020

Busch Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) February 19, 2021

/s/ Michael D.

Phillips Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) February 19, 2021

/s/ Stuart Aitken Director February 19, 2021

Stuart Aitken

/s/ Amanda Black

February 21, 2020

/s/ Amanda Black Director February 19, 2021

/s/ Thomas F.

February 21, 2020

Glavin Director February 19, 2021

Nelson Director February 19, 2021

Saban Director February 19, 2021

/s/ Michael A.

February 21, 2020

Stein Director February 19, 2021

/s/ Julian E.

February 21, 2020

Whitehurst Director February 19, 2021

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Equity for the years ended December 31, 2020, 2019 and 2018

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We have audited the accompanying consolidated balance sheets of InvenTrust Properties Corp.

and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive (loss) income, equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedule III (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Expected hold period of investment properties

As discussed in Note 2 to the consolidated financial statements, the Company assesses the carrying values of its investment properties (including any related intangible assets or liabilities) on an individual basis when events or changes in circumstances, including changes in the expected holding period, indicate their carrying value may not be fully recoverable.

If it is determined that the carrying value of the investment property is not recoverable because the expected undiscounted cash flows do not exceed that carrying value of the property, the Company records an impairment loss to the extent that the carrying value exceeds the estimated fair value.

Changes in the expected hold period could have a material impact on the projected operating cash flows.

Net investment properties as of December 31, 2020 was $1,929 million, or 80% of total assets.

We identified the assessment of the expected hold period for the investment properties evaluated for impairment as a critical audit matter because of the significance of the estimate to the evaluation of the recoverability of the investment properties.

Changes in the expected hold period could have a material impact on the projected operating cash flows utilized

in the recoverability analysis for the investment property, which could lead to the Company recording an impairment loss if the carrying value is not fully recoverable.

Subjective and challenging auditor judgment was required to evaluate the reasonableness of management’s assessment of expected hold period.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the Company’s consideration of individual investment properties for potential reductions in expected hold period by:

• Inquiring of Company officials to evaluate the likelihood that an investment property will be sold before the end of its expected hold period.

• Inspecting meeting minutes of the board of directors and the investment committee to evaluate the likelihood that an investment property will be sold before the end of its expected hold period.

• Inquiring and obtaining representations from the Company regarding the status and evaluation of any potential disposal of properties.

We corroborated that information with others in the organization who are responsible for, and have authority over, disposition activities and compared with the Company’s documented investment plans.

• Reading external communications with investors in order to identify information regarding potential sales of the Company’s properties, or other indicators of a reduction in an investment property’s expected hold period.

We have served as the Company’s auditor since 2005.

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Investment properties

Land $ 577,750 $ 572,353

Building and other improvements 1,640,693 1,628,486

Construction in progress 3,246 4,052

Total 2,221,689 2,204,891

Less accumulated depreciation ( 292,248 ) ( 246,702 )

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Intangible assets, net 95,722 116,360

Accounts and rents receivable, net

Accounts and rents receivable 28,983 30,194

Deferred costs and other assets, net 20,372 22,836

Total assets $ 2,407,339 $ 2,507,188

Debt, net $ 555,109 $ 572,850

Accounts payable and accrued expenses 28,284 29,804

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Stockholders' Equity

Preferred stock, $.001 par value per share, 40,000,000 shares authorized, none outstanding

Common stock, $.001 par value per share, 1,460,000,000 shares authorized,

Preferred stock, $ 0.001 par value, 40,000,000 shares authorized, none outstanding.

Common stock, $ 0.001 par value, 1,460,000,000 shares authorized,

719,462,786 shares issued and outstanding as of December 31, 2020 and

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Distributions in excess of accumulated net income ( 3,815,662 ) ( 3,750,884 )

Accumulated comprehensive income

Accumulated comprehensive (loss) income ( 12,449 ) 1,057

Total stockholders' equity 1,738,863 1,819,601

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INVENTRUST PROPERTIES CORP.

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations and Comprehensive (Loss) Income

(in thousands, except share and per share amounts)

Year Ended December 31,

2020 2019 2018

Lease income, net $ 192,957 $ 220,653 $ 236,560

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Other fee income 3,647 3,856 4,390

Total income 197,833 226,490 242,674

Operating expenses

Depreciation and amortization 87,755 97,429 100,593

Property operating expenses

Property operating 27,909 31,944 34,822

Real estate taxes 30,845 34,232 35,205

General and administrative expenses

General and administrative 33,141 35,361 35,267

Total operating expenses 179,650 198,966 205,887

Other income (expense)

Interest, dividend and other income

Other (expense) income

Interest expense, net ( 18,749 ) ( 22,717 ) ( 24,943 )

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Gain on sale and transfer of investment properties, net 1,752 62,011 95,097

Equity in earnings (losses) and (impairment), net, of unconsolidated entities

Realized and unrealized gains on marketable securities, net

Total other income

Income before income taxes

Income tax expense

Net income from continuing operations

Net (loss) income from discontinued operations

Equity in (losses) earnings and (impairment), net, of unconsolidated entities ( 3,141 ) 957 ( 31,393 )

Other income and expense, net 3,326 1,384 2,708

Total other (expense) income, net ( 28,357 ) 36,375 47,062

Net (loss) income from continuing operations ( 10,174 ) 63,899 83,849

Net loss from discontinued operations — ( 25,500 ) —

Net (loss) income $ ( 10,174 ) $ 38,399 $ 83,849

Weighted average number of common shares outstanding, basic 719,882,476 728,620,309 761,139,011

Weighted average number of common shares outstanding, diluted 719,882,476 729,384,149 762,065,474

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

Net (loss) income per common share, from continuing operations, basic and diluted $ ( 0.01 ) $ 0.09 $ 0.11

Net loss per common share, from discontinued operations, basic and diluted $ — $ ( 0.04 ) $ —

Net income per common share, basic and diluted

Net (loss) income per common share, basic and diluted $ ( 0.01 ) $ 0.05 $ 0.11

Distributions declared per common share outstanding $ 0.08 $ 0.07 $ 0.07

Distributions paid per common share outstanding $ 0.08 $ 0.07 $ 0.07

Comprehensive income

Unrealized loss on marketable securities

Unrealized gain on derivatives

Reclassification for amounts recognized in net income

Comprehensive income

Comprehensive (loss) income

Net (loss) income $ ( 10,174 ) $ 38,399 $ 83,849

Unrealized (loss) gain on derivatives ( 16,199 ) 816 923

Reclassification for amounts recognized in net (loss) income 2,693 ( 1,396 ) ( 956 )

Comprehensive (loss) income $ ( 23,680 ) $ 37,819 $ 83,816

See accompanying notes to the consolidated financial statements.

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(in thousands, except share amounts)

Distributions

Shares Common

Stock Additional

Capital Distributions

in Excess of Accumulated

Net Income Accumulated

Comprehensive

(Loss) Income Total

Beginning balance, January 1, 2018 774,293,197 $ 773 $ 5,681,912 $ ( 3,778,908 ) $ 1,945 $ 1,905,722

Unrealized gain on investment securities

Unrealized gain on derivatives

Reclassification for amounts recognized in net income

Distributions declared

Stock-based compensation, net

Refund of excess funds associated with 2016 tender offer

Ending balance, December 31, 2017

Impact of Accounting Standards Update ("ASU") No.

2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities

2016-01 — — — 275 ( 275 ) —

Impact of ASU No.

2017-05 (a) — — — 12,756 — 12,756

Adjusted balance at January 1, 2018 774,293,197 773 5,681,912 ( 3,765,877 ) 1,670 1,918,478

Net income — — — 83,849 — 83,849

Unrealized gain on derivatives — — — — 923 923

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Ending balance, December 31, 2018 728,558,989 729 5,585,758 ( 3,735,810 ) 1,637 1,852,314

Net income — — — 38,399 — 38,399

Unrealized gain on derivatives — — — — 816 816

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Ending balance, December 31, 2019 720,807,884 721 5,568,707 ( 3,750,884 ) 1,057 1,819,601

Net loss — — — ( 10,174 ) — ( 10,174 )

Unrealized loss on derivatives — — — — ( 16,199 ) ( 16,199 )

Reclassification to interest expense, net — — — — 2,634 2,634

Reclassification to equity in losses of unconsolidated entities — — — — 59 59

Distributions declared — — — ( 54,604 ) — ( 54,604 )

Stock-based compensation, net 711,981 — 2,840 — — 2,840

Repurchase of common stock under share repurchase plan ( 2,136,119 ) ( 2 ) ( 5,199 ) — — ( 5,201 )

Common stock issuance costs in excess of proceeds from distribution reinvestment plan 79,040 — ( 93 ) — — ( 93 )

Ending balance, December 31, 2020 719,462,786 $ 719 $ 5,566,255 $ ( 3,815,662 ) $ ( 12,449 ) $ 1,738,863

(a) See Note 6.

Investments in Consolidated and Unconsolidated Entities.

Investments in Unconsolidated Entities.

See accompanying notes to the consolidated financial statements.

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Consolidated Statements of Cash Flows

(Amounts in thousands)

(in thousands)

Year Ended December 31,

2020 2019 2018

Cash flows from operating activities:

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

Net (loss) income $ ( 10,174 ) $ 38,399 $ 83,849

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 87,755 97,429 100,593

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Provision for asset impairment 9,002 2,359 3,510

Provision for estimated credit losses 11,119 1,557 1,360

Gain on sale and transfer of investment properties, net ( 1,752 ) ( 62,011 ) ( 95,097 )

Loss (gain) on extinguishment of debt, net 2,543 2,901 ( 9,103 )

Equity in (earnings) losses and impairment, net,

Equity in losses (earnings) and impairment, net,

of unconsolidated entities 3,141 ( 957 ) 31,393

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Changes in operating assets and liabilities:

Accounts and rents receivable, net

Deferred costs and other assets

Accounts and rents receivable ( 7,451 ) ( 4,922 ) ( 1,578 )

Deferred costs and other assets, net 192 ( 1,624 ) 1,426

Accounts payable and accrued expenses ( 1,888 ) ( 66 ) 2,499

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Lease commissions and other leasing costs ( 1,391 ) ( 5,621 ) ( 6,029 )

Other assets 3,096 333 ( 127 )

Other liabilities ( 2,239 ) 736 257

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Consolidated Statements of Cash Flows

(Amounts in thousands)

(in thousands)

Year Ended December 31,

2020 2019 2018

Cash flows from financing activities:

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Repurchase of common stock through tender offer — — ( 98,447 )

Proceeds from distribution reinvestment plan 185 — —

Distributions to shareholders ( 54,214 ) ( 53,250 ) ( 54,194 )

Refund received of excess funds associated with 2016 tender offer

Proceeds from debt 150,000 118,000 179,333

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Debt prepayment penalties ( 2,504 ) ( 1,834 ) ( 3,088 )

Principal payments of mortgage debt

Principal payments on mortgage debt ( 1,441 ) ( 2,692 ) ( 1,924 )

Payment of loan fees and deposits ( 100 ) ( 446 ) ( 5,544 )

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Cash flow disclosure, including non-cash investing and financing activities:

Cash paid for interest, net of capitalized interest of $101, $0, and $0 for 2019, 2018 and 2017, respectively

Cash paid for income taxes, net of refunds of $498, $1,703, and $918 for 2019, 2018 and 2017, respectively

Cash paid for interest, net of capitalized interest $ 17,256 $ 21,259 $ 24,096

Cash paid for income taxes, net of refunds $ 833 $ 446 $ 463

Distributions payable to shareholders $ 13,642 $ 13,252 $ 13,029

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Accrued capital expenditures and tenant improvements $ 1,404 $ 1,180 $ 1,679

Accrued investment in re-development projects

Accrued lease commissions and other leasing costs

Capitalized costs placed in service $ 8,213 $ 29,027 $ 17,786

Gross issuance of shares for share-based compensation $ 3,593 $ 4,051 $ 4,319

INVENTRUST PROPERTIES CORP.

Consolidated Statements of Cash Flows

(Amounts in thousands)

Year Ended December 31,

Reclassification of registration statement costs incurred to equity issuance costs $ 278 $ — $ —

Purchase of investment properties:

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other liabilities ( 1,949 ) ( 10,156 ) ( 7,563 )

Assumption of mortgage debt

Cash outflow for purchase of investment properties, net 41,446 359,095 220,831

Assumption of mortgage principal

Capitalized acquisition costs ( 121 ) ( 2,334 ) ( 430 )

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Gross acquisition price of investment properties $ 42,247 $ 365,764 $ 222,600

INVENTRUST PROPERTIES CORP.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2020 2019 2018

Sale and transfer of investment properties:

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(Loss) gain on extinguishment of debt, net — ( 2,092 ) 9,157

Debt prepayment penalties and defeasance costs

Debt prepayment penalties — — 3,088

Proceeds from sale and transfer of investment properties, net 8,027 346,707 430,514

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in April of 2015 and is focused on owning, managing, acquiring and developing a multi-tenant retail platform.

Unless otherwise noted, all amounts are stated in thousands, except share, per share and per square foot data.

Number of properties and square feet are unaudited.

The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries and any consolidated variable interest entities ("VIEs").

The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries.

Subsidiaries generally consist of limited liability companies ("LLCs") and limited partnerships ("LPs").

All significant intercompany balances and transactions have been eliminated.

Each retail property is owned by a separate legal entity that maintains its own books and financial records, and each separate legal entity's assets are not available to satisfy the liabilities of other affiliated entities, except as otherwise disclosed in " Note 8.

The Company believes it has a single reportable segment, multi-tenant retail, for disclosure purposes in accordance with U.S.

generally accepted accounting principles ("GAAP").

As of December 31, 2019 , the Company's wholly-owned investment properties consisted of 54 retail properties, with a gross leasable area ("GLA") of approximately 8.3 million square feet.

As of December 31, 2018, the Company's wholly-owned or consolidated investment properties consisted of 58 retail properties, with a GLA of approximately 9.5 million square feet, which includes one retail property classified as a consolidated VIE, with a GLA of approximately 125,000 square feet.

As of December 31, 2017, the Company's wholly-owned or consolidated investment properties consisted of 71 retail properties, with a GLA of approximately 12.4 million square feet, which includes two retail properties classified as consolidated VIEs, with a GLA of approximately 501,000 square feet.

In addition, as of December 31, 2019, the Company had an investment in one unconsolidated real estate joint venture which owned an interest in 11 retail properties with GLA of approximately 2.6 million square feet managed by the Company.

As of December 31, 2018 and 2017, the Company had an investment in two unconsolidated real estate joint ventures, one of which owned an interest in 13 and 15 operating retail properties, respectively, with a GLA of approximately 2.6 million and 3.0 million square feet, respectively, managed by the Company.

The other unconsolidated real estate joint venture owned development land in Sacramento, California.

The Company has since liquidated its interest in that venture as disclosed in "Note 6.

Investment in Consolidated and Unconsolidated Entities."

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Each retail property is owned by a separate legal entity that maintains its own books and financial records.

Each separate legal entity's assets are not available to satisfy the liabilities of other affiliated entities, except as otherwise disclosed in " Note 6.

Investment in Unconsolidated Entities ".

As of December 31, 2020 and 2019, the Company had an investment in one unconsolidated real estate joint venture, as disclosed in " Note 6.

Investment in Unconsolidated Entities ".

The Company determined it has a single reportable segment, multi-tenant retail, for disclosure purposes in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP").

Unless otherwise noted, all dollar amounts are stated in thousands, except share, per share and per square foot data.

Number of properties and square feet are unaudited.

The following table summarizes the Company's retail portfolio as of December 31, 2020 and 2019:

Retail Properties Unconsolidated

Retail Properties

2020 2019 2020 2019

of properties 55 54 10 11

Gross Leasable Area (square feet) 8,392,572 8,311,521 2,470,193 2,580,414

Impact of the COVID-19 Pandemic on the Company's Consolidated Financial Statements

The Company's business has been, and continues to be, disrupted by the coronavirus disease 2019 ("COVID-19") pandemic.

The Company continues to assess the ongoing impact of the COVID-19 pandemic on all aspects of its business, including the impact on its tenants and their ability to make future rental payments in a timely fashion or at all and the possible impairment in value of our investment properties.

During the year ended December 31, 2020, deferred rental payments of $ 1,583 became due and payable;

the Company has collected $ 1,379 as of December 31, 2020.

During the year ended December 31, 2020, the Company had granted approximately $ 5,791 of rental payment deferrals, with contractual payment terms through the year ended December 31, 2023.

Basis of Presentation and Summary of Significant Accounting Policies

Estimates, Risks, and Uncertainties

The accompanying consolidated financial statements have been prepared in accordance with GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

The accompanying consolidated financial statements have been prepared in accordance with GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates, judgments and assumptions are required in a number of areas, including, but not limited to, evaluating the impairment of long-lived assets, allocating the purchase price of acquired retail properties, determining the fair value of debt and evaluating the collectability of accounts receivable.

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Reclassifications

As a result of the Company's adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 842, Leases, ("Topic 842"), lease income is presented on a combined basis.

The Company has chosen to apply the combined presentation retrospectively to the years ended December 31, 2018 and 2017 by combining amounts previously reported as rental income and tenant recovery income and making certain other reclassifications to the consolidated statements of operations and comprehensive income.

The Company has made certain reclassifications to the consolidated statements of cash flows for the years ended December 31, 2018 and 2017 to conform to the 2019 presentation, including a $ 4,500 reclassification of the provision for indemnification claims recognized during the year ended December 31, 2017, as disclosed in "Note 12.

Commitments and Contingencies," previously presented within the change in other operating liabilities.

The Company has made certain reclassifications to the consolidated statements of operations and comprehensive (loss) income for the years ended December 31, 2019 and 2018 to conform to the 2020 presentation, including amounts previously reported as realized and unrealized gains on marketable securities and income tax expense now reported as other income and expense, net.

The Company has made certain reclassifications to the consolidated statements of cash flows for the years ended December 31, 2019 and 2018 to conform to the 2020 presentation, including amounts previously reported as accounts and rents receivable, net, now reported as provision for estimated credit losses.

These reclassifications to the consolidated statements of cash flows for the years ended December 31, 2019 and 2018 are limited to changes in presentation and did not result in any change to overall cash flows from operating activities.

Consolidation

The Company evaluates its investments in LLCs and LPs to determine whether each such entity may be a VIE.

Variable Interest Entities

The Company evaluates its investments in LLCs and LPs to determine whether each such entity may be a variable interest entity ("VIE").

The accounting standards related to the consolidation of VIEs require qualitative assessments to determine whether the Company is the primary beneficiary.

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The Company consolidates a VIE if it is deemed to be the primary beneficiary.

The equity method of accounting is applied to entities in which the Company is not the primary beneficiary, or the entity is not a VIE and the Company does not have control, but can exercise significant influence over the entity with respect to its operations and major decisions.

The Company's ability to correctly assess control over an entity affects the presentation of these investments in the Company’s consolidated financial statements.

From time to time, the Company may enter into purchase agreements structured as a reverse like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code") ("Reverse 1031 Exchange") in order to acquire retail properties.

For a Reverse 1031 Exchange in which the Company purchases a new asset that is similar in nature, character, or class prior to selling the asset to be matched in the like-kind exchange (the Company refers to a new asset being acquired in the Reverse 1031 Exchange prior to the sale of the related asset as a "Parked Asset"), legal title to the Parked Asset is held by a wholly-owned subsidiary (the "EAT Subsidiary") of an Exchange Accommodation Titleholder ("EAT") engaged to execute the Reverse 1031 Exchange until the sale transaction and the Reverse 1031 Exchange is completed.

The Company, through a subsidiary, enters into a master lease agreement with the EAT Subsidiary whereby the EAT Subsidiary leases the Parked Asset and all other rights in connection with the acquisition to the Company.

The master lease terminates on the earlier of (i) the date that the Parked Asset is transferred to the Company, or an affiliate, (ii) the date that the EAT transfers to the Company, or an affiliate of the Company, its ownership in the EAT Subsidiary, or (iii) 180 days from the date that legal title to the Parked Asset was transferred to the EAT Subsidiary.

The EAT is classified as a VIE, as it does not have sufficient equity investment at risk to finance its activities without additional subordinated financial support.

The Company generally structures the purchase agreements in a manner which results in the Company being deemed the primary beneficiary as it has the ability to direct the activities of the entities that most significantly impact economic performance and has all of the risks and rewards of ownership.

Accordingly, the Company consolidates properties acquired through active Reverse 1031 Exchanges.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

The equity method of accounting is applied to entities in which the Company is not the primary beneficiary, or if the entity is not a VIE and the Company does not have control, but can exercise significant influence over the entity with respect to its operations and major decisions.

As of December 31, 2020 and 2019, the Company had no VIEs.

Revenue Recognition

Adoption of Topic 842

In conjunction with the adoption of Topic 842 on January 1, 2019, the Company elected the package of practical expedients which permitted the Company to not reassess:

In conjunction with the adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 842, Leases , ("Topic 842") on January 1, 2019, the Company elected the package of practical expedients which permitted the Company to not reassess:

(1) whether any expired or existing contracts are, or contain leases;

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In effect, this generally relieves the Company from the requirement to account for certain consideration under FASB ASC 606, Revenue from Contracts with Customers ("Topic 606").

As a result of the accounting policy election, all income arising from leases is presented on a combined basis as lease income, net on the consolidated statements of operations and comprehensive income.

Beginning on January 1, 2019, the provision for estimated credit losses resulting from changes in the collectability of lease payments, including variable payments, is recognized as a direct adjustment to lease income on the consolidated statements of operations and comprehensive income, and a direct write-off of the operating lease receivable on the consolidated balance sheets.

Changes in collectability occur when the Company no longer believes it is probable that substantially all the lease payments will be collected under the term of the lease.

If collection is not probable, the lease payments will be accounted for on a cash basis, and revenue will be recorded as received.

If reassessed, and the collection of substantially all the lease payments from the tenant becomes probable, the accrual basis of revenue recognition is reestablished.

As a result of the narrowed definition of initial direct costs under Topic 842, the Company expenses as incurred certain lease origination costs previously capitalized and amortized to expense over the lease term.

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The Company commences revenue recognition on its leases when the lessee takes possession of, or controls the physical use of, the leased asset, unless the lessee is constructing improvements for which the Company is deemed to be the owner for accounting purposes.

If the Company is deemed the owner for accounting purposes, the leased asset is the finished space and revenue recognition commences when the lessee takes possession of it, typically when the improvements are substantially complete.

Alternatively, if the lessee is deemed to be the owner of the improvements for accounting purposes, then the leased asset is the unimproved space, and any tenant improvement allowances funded under the lease are treated as lease incentives, which reduce lease income recognized over the lease term, and the Company commences revenue recognition when the lessee takes possession of the unimproved space.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

The determination of who owns the tenant improvements, for accounting purposes, is based on contractual rights and subject to judgment.

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• who constructs or directs the construction of the improvements.

Staff Q&A, Topic 842 and Topic 840:

Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic

In April 2020, the FASB issued a document titled Staff Q&A, Topic 842 and Topic 840:

Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic ("FASB Q&A document").

The FASB Q&A document permits an election whereby an entity is not required to evaluate whether certain relief provided by a lessor in response to the COVID-19 pandemic is a lease modification (the "COVID-19 election").

An entity that makes this election can then either apply the modification guidance to that relief or account for the concession as if it were contemplated as part of the existing contract.

This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

In response to receiving numerous rent relief requests, the Company has adopted the COVID-19 election, under which lease amendments providing tenants with COVID-19 related rent relief are not treated as lease modifications unless:

• the total payments required by the amended lease are not substantially equal to or less than the total payments required by the original lease;

• the amended lease results in an increase to the lease term.

Rent relief has most frequently been requested in the form of deferral of rental payments.

A deferral affects the timing of cash receipts, but the amount of consideration is substantially the same as that required by the original lease.

Under the Company's COVID-19 election, deferrals are accounted for as if no changes to the lease contract were made.

The Company continues to recognize rental income and increase lease receivables during the deferral period.

Rent abatements or other reductions in total payments are treated as negative variable rent in the period to which the rent relates.

Credit Losses

The Company reviews the collectability of amounts due from its tenants on a regular basis.

Such reviews consider the tenant's financial condition and payment history and other economic conditions impacting the tenant.

Changes in collectability occur when the Company no longer believes it is probable that substantially all the lease payments will be collected over the term of the lease.

If collection is not probable, regardless of whether the Company has entered into an amendment to provide the tenant with COVID-19 related rent relief, the lease payments will be accounted for on a cash basis, and revenue will be recorded as cash is received.

If reassessed, and the collection of substantially all of the lease payments from the tenant becomes probable, the accrual basis of revenue recognition is reestablished.

Beginning on January 1, 2019, the provision for estimated credit losses resulting from changes in the expected collectability of lease payments, including variable payments, is recognized as a direct adjustment to lease income on the consolidated statements of operations and comprehensive (loss) income, and a direct write-off of the operating lease receivables, including straight-line rent receivable, on the consolidated balance sheets.

The Company continues to evaluate the impact of the COVID-19 pandemic on its ability to collect future lease payments under the terms of the respective leases.

As the duration and severity of the COVID-19 pandemic are still uncertain and continue to evolve, uncertainty exists regarding the Company's provision for estimated credit losses for deferred rental payments receivable, billed rent and straight-line rent receivables.

Other Fee Income

The adoption of Topic 606 on January 1, 2018, generally did not change the timing or pattern of revenue recognition for other fee income.

The Company recognizes revenue when it satisfies a performance obligation.

These rights to consideration most often result in receivables that are settled through recurring monthly customer payments for the services provided over the term of the contract.

The Company generally does not receive prepayments for services or recognize revenue prior to being legally entitled to payment from the customer.

As a result, the Company does not record material contract assets or contract liabilities.

The Company earns property management and asset management fees from services provided to its joint venture partnerships.

Property management and asset management fees are recognized over time as services are rendered.

The Company recognizes other fee income when it satisfies a performance obligation relating to services provided to its joint venture partnership.

The resulting receivables are settled through recurring monthly payments for the services provided over the term of the contract.

The Company generally does not receive prepayments for services or recognize revenue prior to being legally entitled to payment.

As a result, the Company does not generally record contract assets or contract liabilities.

Property management and asset management fees are recognized over time as services are rendered to the joint venture partnership.

The bundled services of the property management performance obligation and asset management performance obligation each qualify as a series of distinct services satisfied over time.

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Based on the Company's judgment, both the underlying asset management service activities and the underlying property management service activities are not distinct but are inputs (or fulfillment activities) to provide the combined output (either the overall asset management service or the overall property management service).

The Company earns leasing commissions and other fees from services provided to its joint venture partnerships.

Leasing commissions and other fees are recognized at a point in time consistent with the underlying service.

Leasing commissions and other fees are recognized at a point in time consistent with the underlying service rendered to the joint venture partnership.

The leasing performance obligation and other performance obligations are satisfied at the point in which the customer is transferred control over and consumes the benefit of the service.

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Control of the property, including controlling financial interest, is generally considered to transfer upon closing through transfer of the legal title and possession of the property, at which point the Company recognizes a gain or loss equal to the difference between the transaction price and the carrying amount of the property.

Prior to January 1, 2018, based on historical accounting guidance, the Company derecognized real estate and recognized a gain or loss according to the full accrual method when:

(i) a sale was consummated;

(ii) the buyer's initial and continuing investment were adequate to demonstrate a commitment to pay for the property;

(iii) the Company's receivable, if applicable, was not subject to future subordination;

(iv) the Company had transferred to the buyer the usual risks and rewards of ownership;

and (v) the Company did not have substantial continuing involvement with the property.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Acquisition of Real Estate

The Company evaluates the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition.

If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive income.

If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive (loss) income.

If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and amortized over the useful life of the acquired assets.

Generally, acquisition of real estate qualifies as an asset acquisition.

The Company allocates the purchase price of real estate to land, building, other building improvements, tenant improvements, intangible assets and liabilities (such as the value of above- and below-market leases, in-place leases and origination costs associated with in-place leases).

The values of above- and below-market leases are recorded as intangible assets, net, and intangible liabilities, net, respectively, on the consolidated balance sheets, and are amortized as either a decrease (in the case of above-market leases) or an increase (in the case of below-market leases) to lease income over the remaining term of the associated tenant lease.

The values, if any, associated with in-place leases are recorded in intangible assets, net, on the consolidated balance sheets and are amortized to depreciation and amortization expense on the consolidated statements of operations and comprehensive income over the remaining lease term.

The difference between the contractual rental rates and the Company's estimate of market rental rates is measured over a period equal to the remaining non-cancelable term of the leases plus the term of any below-market renewal options.

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When all criteria are met, the property is classified as held for sale and carried at the lower of cost or estimated fair value less costs to sell.

Additionally, if the sale represents a strategic shift that has (or will have) a major effect on the Company's results and operations, the income and expenses for the period are classified as discontinued on the consolidated statements of operations and comprehensive income for all periods presented.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Additionally, if the sale represents a strategic shift that has (or will have) a major effect on the Company's results and operations, the income and expenses for the period are classified as discontinued operations on the consolidated statements of operations and comprehensive (loss) income for all periods presented.

Impairment of Long Lived Assets

The Company assesses the carrying values of long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable, such as a reduction in the expected holding period of the asset.

The Company assesses the carrying values of long-lived tangible and intangible assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable, such as a reduction in the expected holding period of a property.

If it is determined that the carrying value is not recoverable because the expected undiscounted cash flows do not exceed that carrying value, the Company records an impairment loss to the extent that the carrying value exceeds the estimated fair value.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on the Company's continuous process of analyzing each property's economic condition at a point in time and reviewing assumptions about uncertain inherent factors, including observable inputs such as contractual revenues and unobservable inputs such as forecasted revenues and expenses, estimated net disposition proceeds, and discount rate.

These unobservable inputs are based on market conditions and the Company's expected growth rates.

These unobservable inputs are based on a property's market conditions and expected growth rates.

However, assumptions and estimates about future cash flows and capitalization rates are complex and subjective.

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Depreciation expense is computed using the straight-line method.

Buildings are depreciated based upon an estimated useful life of 30 years and 5 - 15 years for furniture, fixtures and equipment and site improvements.

Finance lease assets are generally amortized using the straight-line method over the lease term.

Finance lease asset amortization is included in depreciation and amortization on the consolidated statements of operations and comprehensive income.

Tenant improvements are amortized on a straight-line basis over the lesser of the life of the tenant improvement or the lease term and is included in depreciation and amortization on the consolidated statements of operations and comprehensive income.

Deferred leasing costs are recognized as a part of deferred costs and other assets, net, on the consolidated balance sheets and are amortized to depreciation and amortization on the consolidated statements of operations and comprehensive income over the remaining term of the associated tenant lease.

A range of estimated useful lives of 15 - 30 years is used for buildings and other improvements, and a range of 5 - 20 years is used for furniture, fixtures and equipment.

Finance lease asset

amortization is computed using the straight-line method over the lease term and included in depreciation and amortization on the consolidated statements of operations and comprehensive (loss) income.

Tenant improvements not of use to subsequent tenants are amortized on a straight-line basis over the lesser of the life of the tenant improvement or the lease term.

Amortization is included in depreciation and amortization on the consolidated statements of operations and comprehensive (loss) income.

Deferred leasing costs are recognized as a part of deferred costs and other assets, net, on the consolidated balance sheets and are amortized to depreciation and amortization on the consolidated statements of operations and comprehensive (loss) income over the remaining term of the associated tenant lease.

Direct and indirect costs that are clearly related to the construction and improvements of investment properties are capitalized.

Costs incurred for property taxes and insurance are capitalized during periods in which activities necessary to prepare the property for its intended use are in progress.

Interest costs are also capitalized during such periods.

Costs incurred for interest, property taxes and insurance are capitalized during periods in which activities necessary to prepare the property for its intended use are in progress.

Cash and Cash Equivalents

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Restricted Cash

Restricted cash consists of lenders’ escrows, operating real estate escrows for taxes, insurance, capital expenditures and payments required under certain lease agreements, and funds restricted through lender or other agreements, including funds held in escrow for future acquisitions and potential like-kind exchanges under Section 1031 of the Code.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Derivative Instruments

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When the underlying transaction is terminated or completed, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income each period until the instrument matures.

Any derivative instrument used for risk management that does not meet the criteria for hedge accounting is marked-to-market each period on the consolidated statements of operations and comprehensive income.

The Company does not use derivatives for trading or speculative purposes.

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Fair Value Measurements" .

The Company is qualified and has elected to be taxed as a REIT under the Code for federal income tax purposes commencing with the tax year ended December 31, 2005.

The Company is qualified and has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code") for federal income tax purposes commencing with the tax year ended December 31, 2005.

Since the Company qualifies for taxation as a REIT, the Company generally is not subject to federal income tax on taxable income distributed to stockholders.

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Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

For federal income tax purposes, distributions may consist of ordinary income, qualifying dividends, return of capital, capital gains or a combination thereof.

Distributions to the extent of the Company’s current and accumulated earnings and profits for federal income tax purposes are taxable to the recipient as ordinary dividends, qualified dividends or capital gain distributions.

Distributions in excess of these earnings and profits will constitute a non-taxable return of capital and will reduce the recipient’s basis in the shares.

Distributions in excess of the Company's current and accumulated earnings and profits and in excess of the recipient’s basis in the shares will be taxable as capital gains.

The Company has elected to treat certain of its consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries ("TRSs") pursuant to the Code.

From time to time, the Company may elect to treat certain of its consolidated subsidiaries as taxable REIT subsidiaries ("TRSs") pursuant to the Code.

Among other activities, TRSs may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates.

During 2020, the Company either revoked the TRS elections or dissolved the legal entities for any of its consolidated subsidiaries that were TRSs.

The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the estimated future tax consequences attributed to differences between the GAAP carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversal of existing taxable temporary differences, future projected taxable income, and tax-planning strategies.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The Company's analysis in determining the deferred tax asset valuation allowance involves management judgment and assumptions.

As of December 31, 2019 and 2018, Management determined it is more likely than not that the Company will not realize the benefits of these deductible differences of $ 26,427 and $ 27,351 , respectively.

Accordingly, a valuation allowance has been recognized to reduce the deferred tax assets to zero as of December 31, 2019 and 2018.

The Company had no unrecognized tax benefits as of or during the three year period ended December 31, 2019 .

The Company expects no significant changes in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2019 .

In assessing the realizability of the resulting deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

As of December 31, 2019, Management determined it was more likely than not that the Company would not have realized $ 26,427 of benefits relating to deductible differences.

Accordingly, a valuation allowance was recognized to reduce the deferred tax assets to zero.

At the time of revocation or liquidation in 2020, the TRSs had approximately $ 26,153 of gross deferred tax asset and a corresponding valuation allowance of $ 26,153 .

As a result, both the gross deferred tax asset and valuation allowance were reversed resulting in a net zero impact to both the net deferred tax asset and income tax expense.

As of December 31, 2020, the Company has no significant deferred tax assets/liabilities.

Income tax expense for the years ended December 31, 2020, 2019 and 2018 is generally comprised of federal and state taxes paid by consolidated TRSs and certain state taxes paid by the Company.

The Company has accrued no material interest or penalties relating to income taxes recognized in the consolidated statements of operations and comprehensive income for the years ended December 31, 2019, 2018 and 2017 or in the consolidated balance sheets as of December 31, 2019 and 2018 .

Under the federal legislation enacted on March 27, 2020, known as the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), certain limitations on the deductibility of net operating losses ("NOLs") enacted under prior federal tax legislation have been temporarily rolled back.

In particular, the CARES Act permits businesses to carryback NOLs generated in taxable years beginning after December 31, 2017 and before January 1, 2021 to the previous five years and temporarily suspends, until taxable years beginning after December 31, 2020, the annual limit of 80% on the amount of taxable income that NOLs generated in taxable years beginning after December 31, 2017 may offset.

As a result of the anticipated NOL carryback claims for the Company's TRSs, total additional tax benefits of $ 1,172 have been recognized as part of other income and expense, net, on the consolidated statement of operations and comprehensive (loss) income for the year ended December 31, 2020.

The Company has accrued no material interest or penalties relating to income taxes.

As of December 31, 2020, the Company's 2019, 2018, and 2017 tax years remain subject to examination by U.S.

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As of December 31, 2020, the Company has one share-based compensation plan under which time-based restricted stock units ("RSUs") and performance-based RSUs have been issued with tandem dividend equivalents.

Compensation expense related to these awards, which are generally equity classified, and the tandem dividend equivalent cash payments are recognized as a part of general and administrative expenses on the consolidated statements of operations and comprehensive income.

Time-based awards are generally measured at grant date fair value and not subsequently re-measured.

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During the service period, a cumulative catch-up approach is used to account for changes in the assessment of which outcome is most likely to occur.

Generally, compensation expense related to these awards is recognized on a straight-line basis from the grant date through the vesting date.

Absent a change in the determination of the most likely outcome, compensation expense related to these awards would be recognized on a straight-line basis from the grant date through the vesting date.

Forfeitures of awards are recognized as they occur.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Recently Issued Accounting Pronouncements Adopted

Date of adoption

Effect on the financial statements or other significant matters

Leases, (Topic 842)

and related updates

2016-02 amends the existing

guidance for lease accounting for both parties

to a lease contract (i.e., lessees and lessors).

The new standard requires a modified

retrospective transition method for all leases

existing at the date of initial application, with

an option to use certain practical expedients

The Company adopted ASU No.

2016-02 and the

related updates on a modified retrospective basis

and applied the effective date method in which

the elected practical expedients were applied

consistently to all leases commenced before the

ASU effective date of January 1, 2019.

The incremental policies and disclosures pertaining to the Company as a lessor and lessee have been included in " Note 2.

Basis of Presentation and Summary of Significant Accounting Policies ", " Note 3.

Revenue Recognition " and " Note 12.

Commitments and Contingencies ," respectively.

Recently Issued Accounting Pronouncements Not Yet Adopted

Date of adoption

Effect on the financial statements or other significant matters

Standard Description Date of adoption Effect on the financial statements or other significant matters

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

2018-13 is intended to improve the effectiveness of the disclosures required by Topic 820, Fair Value Measurement by eliminating, amending, or adding certain disclosures.

Certain amendments require a prospective transition method, while others require a retrospective transition method.

The guidance is effective for all entities for fiscal years beginning after December 15, 2019, and early adoption is permitted.

The Company has evaluated this guidance and determined that it will only impact fair value measurement disclosures and will not have an impact on the Company's financial position, results of operations, or cash flows.

2018-13 is intended to improve the

effectiveness of the disclosures required by

Topic 820, Fair Value Measurement by

eliminating, amending, or adding certain

Certain amendments require a

prospective transition method, while others

require a retrospective transition method.

January 2020 The Company adopted the amendments of ASU

2018-13 on the applicable basis required,

either prospective or retrospective.

only impacts fair value measurement disclosures,

and therefore did not have an impact on the

Company's consolidated financial

position, results of operations, or cash flows.

Reference Rate

Reform (Topic 848):

Facilitation of the

Effects of Reference

Rate Reform on

Financial Reporting and related updates

ASU 2020-04 is intended to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

Application of these expedients, which may be elected over time as reference rate reform activities occur, preserves the presentation of derivatives consistent with past presentation.

January 2020 The Company adopted ASU No.

2020-04 and the related updates.

The relevant guidance and practical expedients of Topic 848 have been elected as of January 1, 2020.

Most prominently, the Company has elected the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

The Company is continuing to evaluate this guidance and may apply other elections as applicable as additional changes in the market occur.

The Company expects the application of Topic 848 to assist in preserving the Company's presentation of derivatives as cash flow hedges.

Other recently issued accounting standards or pronouncements not disclosed in the foregoing tables have been excluded because they are either not relevant to the Company, or are not expected to have, or did not have, a material effect on the consolidated financial statements of the Company.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Revenue Recognition

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Minimum lease payments to be received under long-term operating leases and short-term specialty leases, excluding additional percentage rent based on tenants' sales volume and tenant reimbursements of certain operating expenses, and assuming no exercise of renewal options or early termination rights, are as follows:

For the year ending December 31,

As of December 31, 2019

For the year ending December 31,

As of December 31, 2018

The remaining lease terms range from one year to forty-one years .

For the year ending December 31, As of December 31, 2020

2021 $ 142,003

Thereafter 263,438

Total $ 813,535

The table above includes payments from tenants who have taken possession of their space and tenants who have been moved to the cash basis of accounting for revenue recognition purposes.

The remaining lease terms range from less than one year to seventy-eight years .

The following table reflects the disaggregation of lease income, net:

Year Ended December 31,

2020 2019 2018

Minimum lease payments $ 143,073 $ 157,041 $ 170,379

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Short-term, termination fee and other lease income 4,081 3,311 2,840

Estimated credit losses

Uncollectible straight-line rent ( 3,214 ) ( 145 ) —

Uncollectible billed rent and recoveries ( 7,905 ) ( 1,412 ) —

Lease income, net $ 192,957 $ 220,653 $ 236,560

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Other Fee Income

During the years ended December 31, 2019, 2018 and 2017 , the Company earned other fee income of $ 3,856 , $ 4,390 , and $ 4,222 , respectively, which are fees derived from services provided to IAGM Retail Fund I, LLC ("IAGM"), an unconsolidated retail joint venture partnership between the Company as 55 % owner and PGGM Private Real Estate Fund ("PGGM"), as disclosed in "Note 6.

Investment in Consolidated and Unconsolidated Entities" , and therefore deemed to be related party transactions.

Other fee income is derived from services provided to the Company's unconsolidated real estate joint venture and therefore deemed to be related party transactions.

The property management, asset management, leasing and other services are provided over the term of the contract which has a remaining original duration through 2023.

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The following table reflects the disaggregation of other fee income:

Year Ended December 31,

Property management fee

Asset management fee

Leasing commissions and other fees

Timing of Satisfaction of

Performance Obligations Year Ended December 31,

2020 2019 2018

Property management fee Over time $ 2,093 $ 2,421 $ 2,626

Asset management fee Over time 1,098 1,074 1,080

Leasing commissions and other fees Point in time 456 361 684

Other fee income $ 3,647 $ 3,856 $ 4,390

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Acquired Properties

The following table reflects the retail properties acquired, accounted for as asset acquisitions, during the year ended December 31, 2020:

Acquisition Date

Metropolitan Area

Acquisition Price

January 31, 2019

Commons at University Place

March 20, 2019

Lakeside Winter Park and Lakeside Crossings

April 30, 2019

Scofield Crossing (a)

Tomball Town Center Kroger

June 14, 2019

Sandy Plains Outparcel (b)

June 28, 2019

Shops at Fairview Town Center

July 11, 2019

Southern Palm Crossing (c)

September 9, 2019

Travilah Square

Washington, D.C.

September 13, 2019

Eldorado Marketplace

September 27, 2019

Garden Village Outparcel (b)

The building and tenant improvements acquired were subject to an existing ground lease at the property.

The assets, liabilities and operations of the outparcels acquired are combined for presentation purposes with retail properties already owned by the Company.

This acquisition was made through a consolidated VIE and was used to facilitate a Reverse 1031 Exchange.

During the third quarter of 2019, the title of Southern Palm Crossing transferred to the Company through the completion of an exchange with the dispositions of West Creek and Boynton Commons.

Acquisition Date Property Metropolitan Area Gross

Acquisition Price Square Feet

February 25, 2020 Trowbridge Crossing Atlanta, GA $ 10,950 62,600

March 10, 2020 Antoine Town Center (a) Houston, TX 22,254 110,500

November 6, 2020 Eldridge Town Center Kroger (b) Houston, TX 9,043 64,722

$ 42,247 237,822

(a) This retail property was acquired from the Company's unconsolidated joint venture, as disclosed in "Note 6.

Investment in Unconsolidated Entities" .

(b) The assets, liabilities and operations of the underlying real estate acquired are combined for presentation purposes with the retail property already owned by the Company.

The following table reflects the retail properties acquired, accounted for as asset acquisitions, during the year ended December 31, 2019:

Acquisition Date

Metropolitan Area

Acquisition Price

PGA Plaza (a)

Kennesaw Marketplace (a)

September 13, 2018

Kennesaw Marketplace, Phase 3

December 13, 2018

Peachland Promenade, Phase 2

December 21, 2018

Sandy Plains Centre (a)

These acquisitions were made through three consolidated VIEs and were used to facilitate Reverse 1031 Exchanges.

During the fourth quarter of 2018, the title of PGA Plaza and Kennesaw Marketplace transferred to the Company through the completion of an exchange and expiration of the 180-day waiting period, respectively.

During the second quarter of 2019, the title of Sandy Plains Centre transferred to the Company through the expiration of the 180-day waiting period.

The Company incurred transaction costs of $ 2,334 and $ 430 during the years ended December 31, 2019 and 2018, which were capitalized and included in building and other improvements on the Company's consolidated balance sheets.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Acquisition Date Property Metropolitan Area Gross

Acquisition Price Square Feet

January 31, 2019 Commons at University Place Raleigh $ 23,250 92,000

March 20, 2019 Lakeside Winter Park and Lakeside Crossings Orlando 63,500 76,000

April 30, 2019 Scofield Crossing (a) Austin 3,000 64,000

May 7, 2019 Tomball Town Center Kroger Houston 13,992 74,000

June 14, 2019 Sandy Plains Outparcel (b) Atlanta 2,900 6,000

June 28, 2019 Shops at Fairview Town Center Dallas 36,000 67,500

July 11, 2019 Southern Palm Crossing Miami 96,750 346,200

September 9, 2019 Travilah Square Washington, D.C.

52,272 58,300

September 13, 2019 Eldorado Marketplace Dallas 70,850 189,500

September 27, 2019 Garden Village Outparcel (b) Los Angeles 3,250 3,900

$ 365,764 977,400

(a) The building and tenant improvements acquired were subject to an existing ground lease at the property.

(b) The assets, liabilities and operations of the outparcels acquired are combined for presentation purposes with retail properties already owned by the Company.

Transaction costs of $ 121 and $ 2,334 were capitalized during the years ended December 31, 2020 and 2019, respectively.

Disposed Properties

Continuing operations

The following table reflects the real property disposed of during the year ended December 31, 2020:

Date Property Metropolitan Area Square Feet Gross

Disposition Price Gain (Loss) on Sale, net

February 10, 2020 University Oaks Shopping Center (a) Round Rock, TX N/A $ 527 $ 357

February 12, 2020 Centerplace of Greeley (a) Greeley, CO N/A 123 100

May 1, 2020 Woodlake Crossing San Antonio, TX 160,000 5,500 ( 213 )

September 30, 2020 Eldridge Town Center (a) Houston, TX N/A 451 424

November 25, 2020 Antoine Town Center (b) Houston, TX 1,610 800 66

December 31, 2020 Eldridge Town Center (a) Houston, TX N/A 1,055 1,018

161,610 $ 8,456 $ 1,752

(a) The Company recognized a gain on sale related to the completion of partial condemnations at these retail properties.

(b) The Company recognized a gain on sale related to the disposition of an outparcel at this retail property.

The following table reflects the retail properties disposed of during the year ended December 31, 2019:

Metropolitan Area

Disposition Price

Gain (Loss) on Sale of Investment Properties, net

Disposition Date Property Metropolitan Area Square Feet Gross

Disposition Price Gain (Loss) on Sale, net Loss on

Extinguishment

April 3, 2019

Brooks Corner

August 15, 2019

Promenade Fultondale

Birmingham, AL

August 21, 2019

Crossroads at Chesapeake Square and Chesapeake Commons

Virginia Beach

September 10, 2019

September 13, 2019

Boynton Commons

September 25, 2019

Quebec Square

October 11, 2019

Northwest Marketplace

November 14, 2019

White Oak Crossing

November 20, 2019

Woodbridge Crossing

In aggregate, the Company recognized net proceeds of $ 346,707 from the sales of these retail properties on the consolidated statement of cash flows during the year ended December 31, 2019 .

The following table reflects the retail properties disposed of during the year ended December 31, 2018 :

Metropolitan Area

Disposition Price

Gain (Loss) on Sale and Transfer of Investment Properties, net

Gain (Loss) on Extinguishment of Debt

January 9, 2018

Sherman Town Center I & II

January 25, 2018

Grafton Commons

March 8, 2018

Lakeport Commons

Sioux City, IA

March 21, 2018

Stonecrest Marketplace (a)

March 31, 2018

Northwest Marketplace (b)

April 17, 2018

Market at Morse/Hamilton

June 20, 2018

Tomball Town Center

June 26, 2018

Bellerive Plaza (c)

Lexington, KY

June 28, 2018

Parkway Centre North

September 14, 2018

October 5, 2018

McKinney Town Center

October 5, 2018

Riverstone Shopping Center

October 23, 2018

Hiram Pavilion

November 19, 2018

Charlotte, NC

November 20, 2018

December 20, 2018

Streets of Cranberry

On March 21, 2018, the Company surrendered Stonecrest Marketplace, with a carrying value of $ 23,932 , to the lender in satisfaction of non-recourse debt with an initial maturity date of March 1, 2017, and recognized a gain on transfer of assets, net, of $ 1,777 .

The Company is not aware of any material outstanding commitments and contingencies related to Stonecrest Marketplace.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

The Company recognized a gain on sale of $ 248 related to the completion of a partial condemnation at this retail property.

On June 26, 2018, the Company surrendered Bellerive Plaza, with a carrying value of $ 4,771 , to the lender in satisfaction of non-recourse debt with an initial maturity date of June 1, 2017.

The Company recognized a loss on transfer of assets, net, of $ 22 .

The Company is not aware of any material outstanding commitments and contingencies related to Bellerive Plaza.

In aggregate, the Company recognized net proceeds of $ 430,514 from the sales, surrender, and condemnation of these retail properties on the consolidated statement of cash flows during the year ended December 31, 2018 .

Discontinued operations

The item reflected as discontinued operations on the consolidated statement of operations and comprehensive income for the year ended December 31, 2019 is the settlement of indemnity claims arising from the sale of University House Communities Group, Inc.

("University House"), the Company's former student housing platform, as disclosed in "Note 12.

Commitments and Contingencies." The item reflected as discontinued operations on the consolidated statement of operations and comprehensive income for the year ended December 31, 2017, is the disposition of Worldgate Plaza, a non-core office property.

On August 30, 2017, the Company sold Worldgate Plaza for a gross disposition price of $ 53,500 , and recognized a gain on the sale of this property of $ 10,115 as part of income from discontinued operations.

The following table summarizes the Company's discontinued operations during the year ended December 31, 2017:

December 31, 2017

Depreciation and amortization

Other operating expenses

Interest expense, income taxes, and other miscellaneous income

Gain on sale of investment property

Loss on extinguishment of debt

Net income from discontinued operations

Investment in Consolidated and Unconsolidated Entities

Consolidated Entities

As of December 31, 2019 , the Company had no VIEs.

At December 31, 2018, Sandy Plains Centre was the Company's only VIE through an active Reverse 1031 Exchange.

The liabilities of the VIE are not recourse to the Company, and the assets must be used first to settle obligations of the VIE.

The following table reflects the assets, liabilities and net assets of the Company's VIE as of December 31, 2018.

December 31, 2018

Net investment properties

Unconsolidated Entities

The entities listed in the table below are or were owned by the Company and other unaffiliated parties in joint ventures.

Net income, distributions and capital transactions for these entities are or was allocated to the Company and its joint venture partners in accordance with the respective partnership agreements.

The Company analyzed the joint venture agreements and determined that the joint ventures were not VIEs.

The Company also considered the joint venture partners' participating rights under the joint venture agreements and determined that the joint venture partners have the ability to participate in major decisions, which equates to shared decision making.

Accordingly, the Company has significant influence but does not control the joint ventures.

Therefore, these joint ventures were not consolidated

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

by the Company, and the equity method of accounting was used to account for these investments.

Under the equity method of accounting, the net equity investment of the Company and the Company's share of net income or loss from the unconsolidated entity are reflected in the consolidated balance sheets and the consolidated statements of operations and comprehensive income.

Current Ownership %

Carrying Value of

Investment as of December 31,

IAGM Retail Fund I, LLC

Multi-tenant retail shopping centers

Downtown Railyard Venture, LLC

Land development

Other unconsolidated entities

Various real estate investments

On April 17, 2013 , the Company entered into a joint venture, IAGM, with PGGM for the purpose of acquiring, owning, managing, supervising and disposing of retail properties and sharing in the profits and losses from those retail properties and their activities.

April 3, 2019 Brooks Corner San Antonio 173,000 $ 26,300 $ 5,531 $ ( 809 )

May 31, 2019 Silverlake Cincinnati 101,000 6,650 131 —

August 15, 2019 Promenade Fultondale Birmingham, AL 207,600 23,200 1,861 —

August 21, 2019 Crossroads at Chesapeake Square and Chesapeake Commons Virginia Beach 198,700 23,100 1,353 —

September 10, 2019 West Creek Austin 53,300 18,700 5,962 —

September 13, 2019 Boynton Commons Miami 210,300 50,000 18,405 —

September 25, 2019 Quebec Square Denver 207,600 42,250 ( 800 ) ( 2,092 )

October 11, 2019 Northwest Marketplace Houston 185,200 29,500 7,037 —

November 14, 2019 White Oak Crossing Raleigh 564,700 92,500 21,737 —

November 20, 2019 Woodbridge Crossing Dallas 197,000 45,600 794 —

2,098,400 $ 357,800 $ 62,011 $ ( 2,901 )

Investment in Unconsolidated Entities

Joint Venture Interests

As of December 31, 2020 and 2019, the Company owned a 55 % interest in one unconsolidated entity, IAGM Retail Fund I, LLC ("IAGM"), a joint venture partnership between the Company and PGGM Private Real Estate Fund ("PGGM").

As of December 31, 2020 and 2019, the carrying value of the Company's investment in IAGM was $ 109,051 and $ 118,861 , respectively.

IAGM was formed on April 17, 2013 for the purpose of acquiring, owning, managing, supervising and disposing of retail properties and sharing in the profits and losses from those retail properties and their activities.

The Company contributed 14 properties to IAGM during the year ended December 31, 2013, and treated the contributions as partial sales under FASB Topic 360-20, "Property, Plant and Equipment - Real Estate Sales." The resulting deferred aggregate gain of $ 15,625 was reflected as a basis adjustment and subsequently amortized over 30 years, consistent with the depreciation period of the investee's underlying assets.

1 unchanged sentence

2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets on January 1, 2018, resulted in the remaining $ 12,756 of the aforementioned deferred gain being recognized through beginning distributions in excess of accumulated net income.

The Company analyzed the joint venture agreement and determined that IAGM was not a VIE.

The Company also considered the joint venture partners' participating rights under the joint venture agreement and determined that the joint venture partners have the ability to participate in major decisions, which equates to shared decision making.

Accordingly, the Company has significant influence but does not control IAGM.

Therefore, IAGM was not consolidated by the Company, and the equity method of accounting was applied.

During the year ended December 31, 2020, the Company acquired Antoine Town Center from IAGM for $ 22,254 , an estimated fair value determined by independent appraisal, which resulted in IAGM recognizing a gain on sale of $ 1,741 .

The Company deferred its share of IAGM's gain on sale of $ 958 and began amortizing the gain over 30 years as an increase to equity in earnings.

Subsequent to purchasing Antoine Town Center, the Company completed a sale of an outparcel at this retail property to an unrelated third party which resulted in recognizing $ 54 of previously deferred gain.

During the year ended December 31, 2020, IAGM recognized a provision for asset impairment of $ 11,015 on one retail property, of which the Company's share of this provision for asset impairment was $ 6,059 , as disclosed in "Note 9.

Fair Value Measurements" .

During the year ended December 31, 2020, IAGM prepaid a $ 14,872 mortgage payable with cash on hand.

During the year ended December 31, 2019, IAGM disposed of Rockwell Plaza, a 255,000 square foot retail property, for a gross disposition price of $ 20,500 and recognized a provision for asset impairment of $ 1,443 and a loss on sale of $ 559 .

3 unchanged sentences

For the year ended December 31, 2018, the Company's share of IAGM's provision for asset impairment and loss on sale was $ 2,020 and $ 2,274 , respectively.

During the year ended December 31, 2020, IAGM entered into two interest rate swap agreements to achieve fixed interest rates on its senior secured term loan facility previously subject to variability in the London Inter-bank Offered Rate ("LIBOR").

Each of the interest rate swaps have an effective date of April 1, 2020 and a termination date of November 2, 2023.

One interest rate swap has a notional amount of $ 45,000 and achieves a fixed interest rate of 1.979 %.

The other interest rate swap has a notional amount of $ 30,000 and achieves a fixed interest rate of 1.956 %.

The Company recognizes its share of gains or losses resulting from IAGM's interest rate swaps as an adjustment to the Company's investment in IAGM and an increase or decrease in comprehensive income.

As of December 31, 2020, the interest rate swaps were recorded as a liability with a fair value of $ 525 on IAGM's consolidated balance sheet, of which the Company's share was $ 289 .

Downtown Railyard Ventures, LLC

On September 30, 2015, the Company was admitted as a member to Downtown Railyard Venture, LLC ("DRV"), which was a joint venture established for the purpose of developing and selling a land development in Sacramento, California.

The joint venture partner was the developer and managing member of DRV, responsible for the day-to-day activities and earned fees for managing the venture.

During the year ended December 31, 2018, the Company recorded an other-than-temporary impairment of $ 29,933 on DRV due to a reduction in the expected hold period, thereby reducing the investment to an estimated fair value that the Company believed would be most probable of realization if the investment was liquidated.

On June 24, 2019, the Company liquidated all interests in DRV in exchange for $ 30,000 of cash consideration.

As a result of the other-than-temporary impairment recorded in 2018, the liquidation of interests resulted in no gain or loss being recognized on the transaction.

Upon liquidation, the Company has no continuing involvement with DRV.

During the year ended December 31, 2017, the Company received a final distribution from one unconsolidated entity of $ 366 , which reduced the Company's investment in the unconsolidated entity to zero .

No gain or loss was recognized as part of the transaction.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Combined Financial Information

The following tables present the combined financial information for the Company’s investments in unconsolidated entities.

December 31, 2019

December 31, 2018

Real estate assets, net of accumulated depreciation

As a result of the other-than-temporary impairment recorded in 2018, the liquidation of interests resulted in no gain or loss being recognized in 2019.

The Company has no continuing involvement with DRV.

Condensed Financial Information

The following table presents condensed balance sheet information for IAGM.

December 31, 2020 December 31, 2019

Net investment properties $ 387,394 $ 425,585

Other assets 72,453 66,437

Total assets 459,847 492,022

Liabilities and equity:

1 unchanged sentence

Other liabilities 19,144 20,765

Equity 198,315 214,525

Total liabilities and equity 459,847 492,022

Company's share of equity 109,928 118,861

Outside basis difference (a)

Outside basis difference, net (a) ( 877 ) —

Carrying value of investments in unconsolidated entities $ 109,051 $ 118,861

The outside basis difference principally related to the DRV impairment recorded in 2018.

(a) The outside basis difference relates to the unamortized deferred gain on sale of Antoine Town Center.

The following table presents condensed income statement information of IAGM and disposed joint ventures.

Year ended December 31,

Interest expense and loan cost amortization

IAGM 2020 2019 2018

Total income $ 46,259 $ 53,396 $ 57,649

Depreciation and amortization ( 16,303 ) ( 20,135 ) ( 21,001 )

Operating, general and administrative expenses

Provision for asset impairment

Total expenses

Income (loss) before sale of real estate and debt extinguishments

(Loss) gain on sale of real estate

Property operating ( 7,143 ) ( 8,372 ) ( 8,898 )

Real estate taxes ( 8,687 ) ( 9,426 ) ( 9,891 )

Asset management fees ( 1,098 ) ( 1,073 ) ( 1,080 )

Interest expense, net ( 7,455 ) ( 10,882 ) ( 13,193 )

Other (expense) and income, net ( 307 ) 157 237

Loss on debt extinguishment ( 8 ) — ( 20 )

Company's share of net loss, net of excess basis depreciation of $0, $0, and $520, respectively

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

Impairment of investment in unconsolidated entity

Outside basis adjustment for investee's sale of real estate

Equity in earnings (losses) and (impairment), net, of unconsolidated entities

The following table presents the scheduled maturities of IAGM's total third party mortgage debt of $ 258,827 as of December 31, 2019 , for each of the next five years, and thereafter:

Maturities during the year ending December 31,

Mortgages payable

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

As of December 31, 2019 and 2018, none of IAGM's mortgages payable are recourse to the Company.

Gain (loss) on sale of real estate, net 1,741 ( 559 ) ( 4,135 )

Provision for asset impairment ( 11,016 ) ( 1,443 ) ( 3,673 )

Net (loss) income ( 4,017 ) 1,663 ( 4,005 )

Disposed joint venture activity

Net (loss) income — ( 4,869 ) 573

Total net (loss) income of unconsolidated entities $ ( 4,017 ) $ ( 3,206 ) $ ( 3,432 )

Company's share of net loss $ ( 2,264 ) $ ( 3,446 ) $ ( 1,870 )

Outside basis adjustment for investee's sale of real estate, net ( 877 ) 4,403 —

Impairment of DRV — — ( 29,933 )

Distributions in excess of the investments' carrying value — — 410

Equity in (losses) earnings and (impairment), net, of unconsolidated entities $ ( 3,141 ) $ 957 $ ( 31,393 )

The following table summarizes the scheduled maturities of IAGM's mortgages payable as of December 31, 2020:

Scheduled maturities by year:

As of December 31, 2020

2021 $ 23,150

Thereafter 17,800

Total $ 243,955

As of December 31, 2020, none of IAGM's mortgages payable are recourse to the Company.

It is anticipated that the joint venture will be able to repay, refinance or extend all of its debt on a timely basis.

On January 22, 2020, IAGM prepaid a $ 14,872 mortgage payable.

On November 2, 2018, IAGM entered into a senior secured term loan facility of $ 152,000 to refinance its mortgages payable maturing in 2018.

The senior secured term loan facility matures in November 2023 and contains two twelve-month extension options that IAGM may exercise upon payment of an extension fee equal to 0.10 % of the total commitment amount on the first day of the extension term and subject to certain other conditions.

The senior secured term loan facility bears interest at a rate equal to the London Inter-bank Offered Rate ("LIBOR") daily floating rate plus 1.55 % and requires the maintenance of certain financial covenants.

Intangible Assets, Liabilities, and Deferred Leasing Costs

20 unchanged sentences

Year ended December 31,

2020 2019 2018

Intangible assets:

6 unchanged sentences

Amortization of deferred leasing costs $ 1,913 $ 2,311 $ 2,036

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

The following table provides a summary of the amortization during the next five years and thereafter related to deferred costs and intangible assets and liabilities as of December 31, 2020:

Year ending December 31,

In-place leases

Above market leases

Deferred leasing costs

Below market leases

As of December 31, 2019 , the Company's total debt, net, was $ 572,850 , which consists of mortgages payable, net, of $ 175,321 and credit agreements, net, of $ 397,529 .

The Company believes that it has the ability to repay, refinance or extend any of its debt, and that it has adequate sources of funds to meet short-term cash needs related to its mortgages payable and credit agreements.

Year ending December 31, In-place leases Above market leases Deferred leasing costs Below market leases

2021 $ 17,054 $ 1,804 $ 2,842 $ 6,276

2022 13,151 1,304 1,619 4,798

2023 11,124 1,079 1,389 3,697

2024 9,551 834 1,114 2,993

2025 8,331 627 978 2,558

Thereafter 28,702 2,161 2,789 14,550

Total $ 87,913 $ 7,809 $ 10,731 $ 34,872

As of December 31, 2020, the Company's total debt, net, was $ 555,109 , which consists of mortgages payable, net, of $ 106,728 , credit agreements, net, of $ 50,000 , and unsecured term loans, net, of $ 398,381 .

The Company believes that it has the ability to repay, refinance or extend any of its debt, and that it has adequate sources of funds to meet short-term cash needs related to its mortgages payable.

It is anticipated that the Company will use proceeds from property sales, cash on hand, and available capacity on credit agreements, if any, to repay, refinance or extend the mortgages payable maturing in the near term.

The Company's credit agreements and mortgage loans require compliance with certain covenants, such as debt service coverage ratios, investment restrictions and distribution limitations.

As of December 31, 2020 and 2019, the Company was in compliance with all loan covenants.

Mortgages payable

As of December 31, 2020 and 2019, the Company had the following mortgages payable outstanding:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Mortgages payable (a) $ 107,261 $ 176,051

Premium, net of accumulated amortization

Discount, net of accumulated amortization ( 84 ) ( 121 )

1 unchanged sentence

Total mortgages payable, net $ 106,728 $ 175,321

Mortgages payable had fixed interest rates ranging from 3.49 % to 5.49 % as of December 31, 2019 and 2018, with a weighted average interest rate of 4.34 % and 4.33 % as of December 31, 2019 and 2018, respectively.

Some of the mortgage loans require compliance with certain covenants, such as debt service coverage ratios, investment restrictions and distribution limitations.

As of December 31, 2019 and 2018, the Company was in compliance with all mortgage loan requirements.

The following table shows the scheduled maturities of the Company's mortgages payable as of December 31, 2019 , for each of the next five years, and thereafter:

Maturities during the year ending December 31,

Mortgages payable

(a) Mortgages payable had fixed interest rates ranging from 3.49 % to 4.58 %, with a weighted average interest rate of 4.07 % as of December 31, 2020, and 3.49 % to 5.49 %, with a weighted average interest rate of 4.34 % as of December 31, 2019.

The following table shows the scheduled maturities of the Company's mortgages payable as of December 31, 2020:

Scheduled maturities by year:

As of December 31, 2020

Total $ 107,261

During the year ended December 31, 2020, the Company repaid $ 67,349 of mortgages payable on three retail properties with cash on hand.

Credit Agreements

Unsecured revolving line of credit

Revolving line of credit

On December 21, 2018, the Company entered into an unsecured revolving credit agreement, which amended and restated the Company’s prior unsecured revolving credit agreement in its entirety, and provides for a $ 350,000 unsecured revolving line of credit (the "Revolving Credit Agreement").

For general corporate purposes and to increase its financial flexibility in light of the COVID-19 pandemic, the Company drew $ 150,000 on the Revolving Credit Agreement at an interest rate reflecting 1-Month LIBOR plus 1.05 % during the second quarter of 2020.

The Company subsequently repaid $ 100,000 of that draw during the fourth quarter of 2020.

The Revolving Credit Agreement has a 4-year term maturing on December 21, 2022, with two six month extension options.

Interest rates are based on the Company's total leverage ratio or, at the Company's one-time irrevocable option, upon achievement of an investment-grade credit rating.

A facility fee accrues on the aggregate commitments at a rate ranging from 0.15 % to 0.30 % depending on the Company’s total leverage ratio, and as of December 31, 2019 and 2018, the facility fee was 0.15 %.

As of December 31, 2019, the Company had no outstanding borrowings under the unsecured revolving credit agreements.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

As of December 31, 2020 and 2019, the Company had borrowed a total of $ 50,000 at an interest rate of 1.19 % and no outstanding borrowings, respectively, under the Revolving Credit Agreement, and a facility fee of 0.15 % based on the Company's total leverage ratio.

As of December 31, 2020, $ 300,000 of the facility was undrawn.

Unsecured term loans

On December 21, 2018, the Company entered into an unsecured term loan credit agreement, which amended and restated the Company’s prior unsecured term loan credit agreement in its entirety, and provides for $ 400,000 in unsecured term loans (the "Term Loan Agreement").

The Company has $ 400,000 in unsecured term loans (the "Term Loan Agreement").

The Term Loan Agreement consists of two tranches:

1 unchanged sentence

Interest rates are based on the Company's total leverage ratio or, at the Company's one-time irrevocable option, upon achievement of an investment-grade credit rating.

The term loan credit facility is subject to maintenance of certain financial covenants.

As of December 31, 2019 and 2018, the Company was in compliance with all of the covenants and default provisions under the credit agreements.

As of December 31, 2020 and 2019, the Company had the following borrowings outstanding under its unsecured term loans:

December 31, 2019

December 31, 2018

Principal Balance

Interest Rate

Principal Balance

Interest Rate

Maturity Date

December 31, 2020 December 31, 2019

Principal Balance Interest Rate Principal Balance Interest Rate Maturity Date

$ 250.0 million 5 year - swapped to fixed rate

December 21, 2023

$ 100,000 2.6795 % (a) $ 100,000 2.6795 % (a) December 21, 2023

$ 250.0 million 5 year - swapped to fixed rate

December 21, 2023

$250.0 million 5 year - variable rate

December 21, 2023

100,000 2.6795 % (a) 100,000 2.6795 % (a) December 21, 2023

$ 250.0 million 5 year - variable rate

December 21, 2023

50,000 1.3548 % (b) 50,000 2.8911 % (c) December 21, 2023

$ 150.0 million 5.5 year - swapped to fixed rate

June 21, 2024

50,000 2.6915 % (a) 50,000 2.6915 % (a) June 21, 2024

$ 150.0 million 5.5 year - swapped to fixed rate

June 21, 2024

50,000 2.6990 % (a) 50,000 2.6690 % (a) June 21, 2024

$ 150.0 million 5.5 year - variable rate

June 21, 2024

50,000 1.3548 % (b) 50,000 2.8911 % (c) June 21, 2024

Total unsecured term loans 400,000 400,000

1 unchanged sentence

Total outstanding credit agreements, net $ 398,381 $ 397,529

During the third quarter of 2019, the Company entered into four interest rate swap agreements which effectively replaced the two previous interest rate swaps which terminated on December 1, 2019.

Of the four new interest rate swap agreements, two have a notional amount of $ 100,000 , an effective date of December 2, 2019, a termination date of December 21, 2023, and achieve a fixed interest rate of 2.6795 % .

(a) As of December 31, 2020, the Company has four interest rate swap agreements, of which two each have a notional amount of $ 100,000 , an effective date of December 2, 2019, a termination date of December 21, 2023, and achieve a fixed interest rate of 2.68 %.

The other two interest rate swap agreements each have a notional amount of $ 50,000 , an effective date of December 2, 2019, a termination date of June 21, 2024, and achieve fixed interest rates of 2.69 % and 2.70 %.

As of December 31, 2018, the Company swapped $ 90,000 (notional amount of $ 90,000 ) and $ 60,000 (notional amount of $ 60,000 ) of variable-rate debt at an interest rate of 1-Month LIBOR plus 1.20 % to a fixed rate of 2.5510 % and 2.5525 % , respectively.

The swaps had an effective date of December 10, 2015, and a termination date of December 1, 2019.

Interest rate reflects 1-Month LIBOR plus 1.20 % effective December 2, 2019.

Interest rate reflects 1-Month LIBOR plus 1.20 % as of December 3, 2018.

Interest rate reflects 1-Month LIBOR plus 1.20 % as of December 21, 2018.

For the years ending December 31, 2019 and 2018, each of the Company's interest rate swaps are in an asset position and included within deferred costs and other assets, net on the consolidated balance sheets.

(b) Interest rate reflects 1-Month LIBOR plus 1.20 % effective December 1, 2020.

As of December 31, 2020, each of the Company's interest rate swaps are in a liability position and included within other liabilities on the consolidated balance sheets.

As of December 31, 2019, each of the Company's interest rate swaps were in an asset position and included within deferred costs and other assets, net on the consolidated balance sheets.

The Company has designated these interest rate swaps as cash flow hedges.

The following table represents the effect of the derivative financial instruments on the consolidated financial statements:

Location and amount of gain recognized in accumulated

comprehensive income

Location and amount of gain (loss)

Location and amount of (loss) gain recognized in accumulated

comprehensive income Location and amount of (loss) gain

reclassified from accumulated

comprehensive income into net income

Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded

Unrealized gain on derivatives

Interest expense, net

As of December 31, 2019, the Company expects $ 379 of deferred amounts in accumulated comprehensive income to be reclassified into earnings during the next 12 months.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

comprehensive income into net (loss) income Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded

2020 2019 2018 2020 2019 2018 2020 2019 2018

Unrealized (loss) gain on derivatives $ ( 16,199 ) 816 923 Interest expense, net $ ( 2,693 ) $ 1,396 956 Interest expense, net $ 18,749 $ 22,717 24,943

Fair Value Measurements

Recurring Measurements

The following financial instruments are re-measured at fair value on a recurring basis:

The following financial instruments are remeasured at fair value on a recurring basis:

Fair Value Measurements as of

December 31, 2019

December 31, 2018

Derivative interest rate assets

Cash Flow Hedges:

December 31, 2020 December 31, 2019

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Derivative interest rate assets (b) $ — $ — $ — $ — $ 1,057 $ —

Derivative interest rate liabilities (c) — $ ( 12,449 ) — — — —

(a) During the twelve months subsequent to December 31, 2020, an estimated $ 4,221 of derivative interest rate liabilities recognized in accumulated comprehensive (loss) income will be reclassified into earnings.

(b) Recognized as a part of deferred costs and other assets, net, on the consolidated balance sheets.

At December 31, 2020 and 2019, the Company had no level one recurring fair value measurements.

1 unchanged sentence

The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements that utilize Level 3 inputs, such as estimates of current credit spreads.

As of December 31, 2019 and 2018 , the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

As of December 31, 2020 and 2019, the Company determined that the credit valuation adjustments associated with nonperformance risk are not significant to the overall valuation of its derivatives.

As a result, the Company's derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

2 unchanged sentences

Investment Properties

During the year ended December 31, 2019, the Company identified one retail property that had a reduction in its expected holding period and recorded a provision for asset impairment of $ 2,359 on the consolidated statement of operations and comprehensive income as a result of the fair value being lower than the property's carrying value.

During the year ended December 31, 2020, the Company identified one retail property that had a reduction in its expected holding period and recorded a provision for asset impairment of $ 9,002 on the consolidated statement of operations and comprehensive (loss) income as a result of the fair value being lower than the property's carrying value.

The Company's fair value was based on an executed sales contract.

During the year ended December 31, 2018, the Company identified three retail properties that had reductions in the expected holding period and recorded an aggregate provision for asset impairment of $ 3,510 on the consolidated statement of operations and comprehensive income as a result of the fair values being lower than the properties' carrying values.

This property was disposed of on May 1, 2020.

During the year ended December 31, 2019, the Company identified one retail property that had a reduction in its expected holding period and recorded a provision for asset impairment of $ 2,359 on the consolidated statement of operations and comprehensive (loss) income as a result of the fair value being lower than the property's carrying value.

The Company's fair value was based on an executed sales contract.

This property was disposed of on September 25, 2019.

During the year ended December 31, 2018, the Company identified three retail properties that had reductions in the expected holding period and recorded an aggregate provision for asset impairment of $ 3,510 on the consolidated statement of operations and comprehensive (loss) income as a result of the fair values being lower than the properties' carrying values.

The Company's fair values were based on executed sales contracts.

During the year ended December 31, 2017, the Company identified certain retail properties that had reductions in the expected holding periods and reviewed the probability of these properties' disposition.

The Company's estimated fair value relating to the investment retail properties' impairment analyses were based on, as applicable to the particular retail property, purchase contracts, broker opinions of value, letters of intent and 10 -year discounted cash flow models, which include estimated inflows and outflows over a specific holding period and estimated net disposition proceeds at the end of the 10 -year period.

The discounted cash flow models consist of observable inputs, such as contractual revenues, and unobservable inputs, such as forecasted revenues, and expenses and estimated net disposition proceeds at the end of the 10 -year period.

These unobservable inputs are based on market conditions and the Company’s expected growth rates.

Capitalization rates ranging from 7.00 % to 8.00 % , and discount rates ranging from 8.00 % to 9.00 % were utilized in the 10 -year discounted cash flow model and were based upon observable rates that the Company believed to be within a reasonable range of current market rates.

As a result of these analyses, the Company recorded a provision for asset impairment of $ 27,754 on six retail properties on the consolidated statement of operations and comprehensive income for the year ended December 31, 2017.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Investment in Unconsolidated Entities

Assets Held by Unconsolidated Entities

During the year ended December 31, 2020, the Company identified one retail property within the IAGM joint venture that had a reduction in its expected holding period by the joint venture and recorded a provision for asset impairment of $ 11,015 .

A discounted cash flow model was utilized to estimate the fair value of this retail property.

This cash flow model consisted of unobservable inputs such as forecasted revenues and expenses and estimated net disposition proceeds at the end of the hold period, based on market conditions and expected growth rates.

A 8.50 % terminal capitalization rate and a discount rate of 9.50 % was utilized in the model based upon observable rates that the Company believed to be within a reasonable range of then current market rates, based on the nature of the underlying investment and associated risks.

The Company recognized its' share of this provision for asset impairment of $ 6,059 on its consolidated statement of operations and comprehensive (loss) income as part of equity in (losses) earnings and (impairment), net, for the year ended December 31, 2020.

Unconsolidated Entities

During the year ended December 31, 2018, the Company evaluated its investment in DRV for potential other-than-temporary impairment due to a reduction in expected holding period.

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Capitalization rates ranging from 5.00 % to 8.00 % and discount rates ranging from 10.00 % to 35.00 % were utilized in the model based upon observable rates that the Company believed to be within a reasonable range of then current market rates, based on the nature of the underlying investment and associated risks.

As a result of the third party independent appraisal, the Company recorded an other-than-temporary impairment of $ 29,933 related to DRV on the consolidated statement of operations and comprehensive income for the year ended December 31, 2018.

The following table summarizes activity for the Company’s assets measured at fair value on a non-recurring basis and the related impairment charges for the years ended December 31, 2020, 2019, and 2018:

As of December 31, 2019

As of December 31, 2018

As of December 31, 2017

Impairment Loss

December 31, 2020 December 31, 2019 December 31, 2018

Level 3 Impairment Loss Level 3 Impairment Loss Level 3 Impairment Loss

Investment properties $ 5,500 $ 9,002 $ 42,250 $ 2,359 $ 64,075 $ 3,510

Investment in unconsolidated entities — — — — 30,049 29,933

Total $ 9,002 $ 2,359 $ 33,443

Financial Instruments Not Measured at Fair Value

The table below represents the estimated fair value of financial instruments presented at carrying values in the Company's consolidated financial statements as of December 31, 2020 and 2019:

December 31, 2019

December 31, 2018

Carrying Value

Estimated Fair Value

Carrying Value

Estimated Fair Value

December 31, 2020 December 31, 2019

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

Mortgages payable $ 107,261 $ 106,494 $ 176,051 $ 178,937

The Company estimated the fair value of its mortgages payable using a weighted-average effective market interest rate of

3.71 % and 4.38 % as of December 31, 2019 and 2018, respectively.

Term loans $ 400,000 $ 400,055 $ 400,000 $ 400,020

Revolving line of credit $ 50,000 $ 50,032 $ — $ —

The Company estimated the fair value of its mortgages payable using a weighted-average effective market interest rate of 4.25 % and 3.71 % as of December 31, 2020 and 2019, respectively.

The fair value estimate of the term loans approximate the carrying value due to limited market volatility in pricing.

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The Company has determined that its debt instrument valuations are classified in Level 2 of the fair value hierarchy.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Earnings Per Share and Equity Transactions

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Diluted EPS is generally computed using the treasury-stock method by dividing net income by the common shares plus potential common shares resulting from restricted share awards.

The following table reconciles the amounts used in calculating basic and diluted income per share:

The following table reconciles the amounts used in calculating basic and diluted earnings per share:

Year ended December 31,

Net income from continuing operations

2020 2019 2018

Net (loss) income from continuing operations $ ( 10,174 ) $ 63,899 $ 83,849

Earnings allocated to unvested restricted shares — ( 29 ) ( 95 )

Net income from continuing operations attributable to common shareholders

Net (loss) income from continuing operations attributable to common shareholders $ ( 10,174 ) $ 63,870 $ 83,754

Net (loss) income from discontinued operations attributable to common shareholders $ — $ ( 25,500 ) $ —

Weighted average number of common shares outstanding - basic 719,882,476 728,620,309 761,139,011

Effect of unvested restricted shares

Effect of unvested restricted shares (a) — 763,840 926,463

Weighted average number of common shares outstanding - diluted 719,882,476 729,384,149 762,065,474

Basic and diluted income per common share:

Net income from continuing operations per share

Net (loss) income from discontinued operations per share

Net income per share

On November 1, 2019, the Company adopted a Second Amended and Restated Share Repurchase Program ("Share Repurchase Program"), authorizing redemption of the Company's shares of common stock, subject to certain conditions and limitations, to provide limited liquidity to stockholders.

The Company's obligation to repurchase any shares under the Share Repurchase Program was conditioned upon having sufficient funds available to complete the repurchase.

Basic and diluted earnings per common share:

Net (loss) income from continuing operations per share $ ( 0.01 ) $ 0.09 $ 0.11

Net loss from discontinued operations per share — ( 0.04 ) —

Net (loss) income per share $ ( 0.01 ) $ 0.05 $ 0.11

(a) For the year ended December 31, 2020, the Company has excluded the anti-dilutive effect of unvested restricted shares.

On November 1, 2019, the Company adopted a Second Amended and Restated Share Repurchase Program ("SRP"), authorizing redemption of the Company's shares of common stock, subject to certain conditions and limitations, to provide limited liquidity to stockholders.

The Company's obligation to repurchase any shares under the SRP was conditioned upon having sufficient funds available to complete the repurchase.

The repurchase price per share for all stockholders is equal to a 25 % discount to the most recent estimated NAV per share of the Company's common stock established by the Company's board of directors, which was $ 3.14 per share as of May 1, 2019.

During the year ended December 31, 2019, 8,517,605 shares were repurchased in connection with the Share Repurchase Program.

The price per share for all shares repurchased was $ 2.355 .

During the year ended December 31, 2019, 8,517,605 shares were repurchased in connection with the SRP at a price per share of $ 2.355 .

During the year ended December 31, 2020, 2,136,119 shares were repurchased in connection with the SRP.

On November 1, 2019, the Company began offering shares of the Company's common stock to existing stockholders pursuant to the Company's amended and restated distribution reinvestment plan ("DRP").

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During the year ended December 31, 2019, the Company did not issue shares pursuant to the DRP.

During the year ended December 31, 2020 the Company sold a total of 79,040 shares in connection with the DRP at a price per share of $ 2.355 .

Effective July 11, 2020, the Company suspended the SRP and the DRP.

On August 15, 2018, the Company announced and commenced a modified "Dutch Auction" tender offer (the "Offer") to purchase for cash up to $ 75,000 in value of shares of the Company's common stock, par value $ 0.001 per share (the "Shares"), subject to its ability to increase the number of Shares accepted for payment by up to 2 % of the Company's outstanding Shares.

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Aggregate costs of $ 98,491 were recorded as reductions to common stock and additional paid-in capital on the consolidated statements of equity for the year ended December 31, 2018.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Stock-Based Compensation

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Effective as of June 19, 2015, the Company's Board adopted the Incentive Award Plan, under which the Company may grant cash and equity incentive awards to eligible employees, directors, and consultants.

Time-based awards granted to employees vest equally on each of three anniversaries subsequent to the grant date, and annually for those awards granted to directors, subject to the recipients' continued service to the Company.

Performance-based awards granted to employees vest on the third anniversary subsequent to the grant date, subject to the recipients' continued service to the Company and achievement of the specified performance levels.

Under the Incentive Award Plan, the Company is authorized to grant up to 30,000,000 shares of the Company's common stock pursuant to awards under the plan.

Time-based RSU awards granted to employees vest equally on each of the first three anniversaries of the applicable vesting commencement date, and time-based RSU awards granted to directors vest on the earlier of the one-year anniversary of the applicable grant date or the date of the Company's next annual meeting of its shareholders following the grant date, subject to the recipients' continued service to the Company.

Performance-based RSU awards granted to employees vest on the third anniversary subsequent to the grant date, subject to the recipients' continued service to the Company and achievement of the specified performance levels.

Under the Incentive Award Plan, the Company is authorized to grant up to 30,000,000 shares of the Company's common stock pursuant to awards under the Incentive Award Plan.

As of December 31, 2020, 18,329,901 shares were available for future issuance under the Incentive Award Plan.

The following table summarizes the Company's RSU activity under the Incentive Award Plan during the years ended December 31, 2020, 2019 and 2018:

RSUs Unvested

Performance-Based

Weighted Average

RSUs Weighted Average

Grant Date Value

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Shares vested ( 1,349,852 ) — $ 3.20

( 1,750,773 )

Shares forfeited ( 587,810 ) — $ 3.19

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Shares vested ( 1,275,188 ) — $ 3.18

( 1,349,852 )

Shares forfeited ( 202,441 ) ( 61,169 ) $ 3.17

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Shares vested ( 1,144,343 ) — $ 3.14

( 1,275,188 )

Shares forfeited ( 303,325 ) ( 553,034 ) $ 3.14

Outstanding as of December 31, 2020 1,103,816 3,320,954 $ 3.14

On an annual basis, the Company engages an independent third-party valuation advisory consulting firm to estimate the value per share of the Company's common stock.

(a) On May 8, 2020, the board of directors approved a grant of time-based and performance-based RSUs under the Incentive Award Plan at the most recent estimated net asset value per share of $ 3.14 as of May 1, 2019.

Periodically, the Company engages an independent third-party valuation advisory consulting firm to estimate the per share value of the Company's common stock.

As of December 31, 2020, there was $ 5,221 of total unrecognized compensation expense related to unvested stock-based compensation arrangements that will vest through December 2022.

The Company recognized stock-based compensation expense of $ 5,541 , $ 4,330 and $ 5,782 for the years ended December 31, 2019 , 2018 and 2017, respectively, as a part of general and administrative expenses on the consolidated statements of operations and comprehensive income.

Retail Share Unit Plan

During 2014, the Company adopted the Inland American Real Estate Trust, Inc., 2014 Share Unit Plan (the "Retail Share Unit Plan"), with respect to the Company's retail business.

Vesting of the share units was conditioned upon the occurrence of a triggering event, such as a listing or a change in control.

As of June 19, 2015, in connection with the adoption of the Incentive Award Plan, the Company terminated the Retail Share Unit Plan.

As no triggering event occurred within five years following the applicable grant dates, all share units have been forfeited as of March 12, 2019, and no share-based compensation expense has been recognized for the years ended December 31, 2019, 2018 or 2017.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

The Company recognized stock-based compensation expense of $ 4,449 , $ 5,541 and $ 4,330 for the years ended December 31, 2020, 2019 and 2018, respectively, as a part of general and administrative expenses on the consolidated statements of operations and comprehensive (loss) income.

Commitments and Contingencies

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The Company accrues for legal costs associated with loss contingencies when these costs are probable and reasonably estimable.

While the resolution of these matters cannot be predicted with certainty, management does not expect, based on currently available information, that the final outcome of any pending claims or legal proceedings will have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

While the resolution of these matters cannot be predicted with certainty, based on currently available information, management does not expect that the final outcome of any pending claims or legal proceedings will have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

University House Communities Group, Inc., Indemnity Claims

The Company received an indemnity notice from UHC Acquisition Sub LLC ("UHC") regarding certain matters under the Stock Purchase Agreement, dated January 3, 2016, for University House, which was sold in June 2016.

The notice set forth various items for which UHC believed they were entitled to indemnification from the Company.

In the normal course of property dispositions, pursuant to the purchase and sale agreements, certain indemnification claims can be made against the Company by the purchaser.

Based on the facts and circumstances of the indemnification claims made, guidance provided by third-party specialists and external counsel, and management’s ongoing assessment of the UHC claims, the Company accrued a potential loss contingency representing their best estimate of the potential loss related to these claims.

On June 14, 2019, UHC and the Company, through various negotiations, reached a final settlement for the claims in the amount of $ 30,000 , which was paid by the Company on June 24, 2019.

During the years ended December 31, 2019, 2018 and 2017 the Company recognized losses from discontinued operations of $ 25,500 , $ 0 , and $ 4,500 , respectively, related to these claims.

Legacy Corner Apartments

As previously disclosed in the Annual Report for the year ended December 31, 2017, the Company recorded $ 553 of other expenses on the consolidated statements of operations and comprehensive income related to its portion of the final settlement of this matter.

The Company recognized losses from discontinued operations related to these claims of $ 25,500 during the year ended December 31, 2019.

Operating and Finance Lease Commitments

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• to exclude variable lease payments from initial recognition of the lease liabilities and all lease options from the determination of minimum lease terms.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

The following table reflects the Company's operating, finance and capital lease arrangements as of December 31, 2019 and 2018:

December 31, 2019

December 31, 2018

Operating lease ROU assets (a)

Operating lease ROU accumulated amortization (a)

Operating lease liabilities (b)

Finance lease ROU assets (c)

Finance lease ROU accumulated amortization (d)

Finance lease liabilities (b)

Capital lease assets (c)

Capital lease accumulated amortization (d)

Capital lease liabilities (b)

Recognized as a part of deferred costs and other assets, net, on the consolidated balance sheets.

Recognized as a part of other liabilities on the consolidated balance sheets.

Recognized as a part of building and other improvements on the consolidated balance sheets.

Recognized as a part of accumulated depreciation on the consolidated balance sheets.

The following table reflects the Company's total lease cost, weighted-average lease terms and weighted-average discount rates for the year ended December 31, 2019 :

December 31, 2019

Minimum operating lease payments (a)

Variable operating lease payments (a)

Short-term operating lease payments (a)

ROU amortization of finance leases (b)

Interest expense of finance leases (c)

The following table reflects the Company's operating and finance lease arrangements as of December 31, 2020 and 2019:

Balance Sheet Caption December 31, 2020 December 31, 2019

Operating lease ROU assets Deferred costs and other assets, net $ 2,696 $ 2,515

Operating lease ROU accumulated amortization Deferred costs and other assets, net $ ( 896 ) $ ( 539 )

Operating lease liabilities Other liabilities $ 1,976 $ 2,169

Finance lease ROU assets Building and other improvements $ 1,641 $ 1,641

Finance lease ROU accumulated amortization Accumulated depreciation $ ( 297 ) $ ( 187 )

Finance lease liabilities Other liabilities $ 673 $ 1,050

The following table reflects the Company's total lease cost, weighted-average lease terms and weighted-average discount rates for the years ended December 31, 2020 and 2019:

Statement of Operations and

Comprehensive (Loss) Income Caption Year ended December 31,

Minimum operating lease payments General and administrative $ 663 $ 672

Variable operating lease payments General and administrative 276 122

Short-term operating lease payments General and administrative 124 313

ROU amortization of finance leases Depreciation and amortization 109 133

Interest expense of finance leases Interest expense, net 37 60

Total lease cost $ 1,209 $ 1,300

Weighted-average remaining lease term of operating leases

Weighted-average remaining lease term of finance leases

Weighted-average remaining lease term of operating leases 4.0 years 4.7 years

Weighted-average remaining lease term of finance leases 1.8 years 2.8 years

Weighted-average discount rate of operating leases 4.44 % 4.44 %

Weighted-average discount rate of finance leases 3.50 % 3.50 %

Recognized as a part of general and administrative expenses on the consolidated statements of operations and comprehensive income.

Recognized as a part of depreciation and amortization on the consolidated statements of operations and comprehensive income.

Recognized as a part of interest expense, net, on the consolidated statements of operations and comprehensive income.

The following table reflects the Company's future minimum lease obligations as of December 31, 2020:

Future Minimum Lease Payments

Operating Leases

Finance Leases

Total expected minimum lease obligation

Amount representing interest (a)

Present value of net minimum lease payments

Interest includes the amount necessary to reduce the total expected minimum lease obligations to present value calculated at the Company's incremental borrowing rate.

INVENTRUST PROPERTIES CORP.

Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

The following table reflects the Company's future minimum lease obligations as of December 31, 2018:

Future Minimum Lease Payments

Operating Leases

Capital Leases

Scheduled minimum payments by year:

Operating Leases Finance Leases

2021 $ 547 $ 408

Thereafter — —

Total expected minimum lease obligation 2,208 708

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Present value of net minimum lease payments $ 1,976 $ 673

Interest includes the amount necessary to reduce the total expected minimum lease obligations to present value calculated at the Company's incremental borrowing rate.

(a) Interest includes the amount necessary to reduce the total expected minimum lease obligations to present value calculated at the Company's incremental borrowing rate.

Subsequent Events

In preparing its consolidated financial statements, the Company evaluated events and transactions occurring after December 31, 2020 through the date the financial statements were issued for recognition and disclosure purposes.

On January 15, 2020, the Company sold a total of 21,249 shares and generated $ 50 in gross offering proceeds under the DRP.

On January 3, 2020, the Company extinguished the $ 41,000 mortgage payable of Campus Marketplace with cash on hand.

Quarterly Supplemental Financial Information (unaudited)

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For the quarter ended

December 31, 2019

September 30, 2019

June 30, 2019

March 31, 2019

Net income from continuing operations

December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020

Total income $ 51,211 $ 52,545 $ 41,639 $ 52,438

Net income (loss) from continuing operations 1,246 1,677 ( 9,611 ) ( 3,486 )

Net loss from discontinued operations — — — —

Net income (loss) 1,246 1,677 ( 9,611 ) ( 3,486 )

Net loss per common share, from discontinued operations, basic and diluted (a)

Net income (loss) per common share,

Net loss per common share,

basic and diluted (a) — — ($ 0.01 ) —

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For the quarter ended

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

Net income per common share, basic and diluted (a)

December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019

Total income $ 54,740 $ 58,169 $ 57,190 $ 56,391

Net income from continuing operations 28,694 24,926 6,278 4,001

Net loss from discontinued operations — — ( 12,000 ) ( 13,500 )

Net income (loss) 28,694 24,926 ( 5,722 ) ( 9,499 )

Net loss per common share, from discontinued operations, basic and diluted (a) — — ($ 0.02 ) ($ 0.02 )

Net income (loss) per common share, basic and diluted (a) $ 0.04 $ 0.03 ($ 0.01 ) ($ 0.01 )

Weighted average number of common shares outstanding, basic (a) 728,544,149 728,722,763 728,654,374 728,558,989

Weighted average number of common shares outstanding, diluted (a) 729,536,570 729,456,722 729,287,663 728,827,861

Quarterly net income per common share amounts may not total to the annual amounts due to rounding and the changes in the number of weighted average common shares outstanding .

(a) Quarterly net income (loss) per common share amounts may not total to the annual amounts due to rounding and the changes in the number of weighted average common shares outstanding.

INVENTRUST PROPERTIES CORP.

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(amounts stated in thousands)

Initial Cost (A)

Gross amount at which carried at end of period

Initial Cost (A) Gross amount at which carried at end of period

PROPERTY NAME

Buildings and Improvements

Adjustments to Land Basis (B)

Adjustments to Basis (B)

Land and Improvements

Buildings and Improvements

Accumulated Depreciation (D,E)

Date Acquired

Location Encumbrance Land Buildings and Improvements Adjustments to Land Basis (B) Adjustments to Basis (B) Land and Improvements Buildings and Improvements Total (C) Accumulated Depreciation (D,E) Date Acquired

ANTOINE TOWN CENTER

Houston, TX $ — $ 5,327 $ 14,333 $ — $ — $ 5,327 $ 14,333 $ 19,660 $ 549 2020

BEAR CREEK VILLAGE CENTER

Wildomar, CA — 3,523 12,384 — 349 3,523 12,733 16,256 5,391 2009

BENT TREE PLAZA

Raleigh, NC — 1,983 7,093 — 1,880 1,983 8,973 10,956 3,489 2009

BUCKHEAD CROSSING

Atlanta, GA — 7,565 27,104 — 1,075 7,565 28,179 35,744 12,128 2009

CAMPUS MARKETPLACE

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CARY PARK TOWN CENTER

Cary, NC — 5,555 17,280 — 6 5,555 17,286 22,841 2,169 2017

CENTERPLACE OF GREELEY

Greeley, CO — 3,904 14,715 ( 23 ) 638 3,881 15,353 19,234 6,512 2009

CHEYENNE MEADOWS

1 unchanged sentence

COMMONS AT UNIVERSITY PLACE

Raleigh, NC — 3,198 17,909 — — 3,198 17,909 21,107 1,194 2019

COWETA CROSSING

Newnan, GA — 1,143 4,590 — 8 1,143 4,597 5,740 2,091 2009

CUSTER CREEK VILLAGE

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ELDORADO MARKETPLACE

Dallas, TX — 15,732 49,311 — ( 60 ) 15,732 49,251 64,983 2,328 2019

ELDRIDGE TOWN CENTER

Houston, TX — 5,380 22,994 2,062 4,869 7,442 27,863 35,305 11,216 2005

GARDEN VILLAGE

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GATEWAY MARKET CENTER

Initial Cost (A)

Gross amount at which carried at end of period

PROPERTY NAME

Buildings and Improvements

Adjustments to Land Basis (B)

Adjustments to Basis (B)

Land and Improvements

Buildings and Improvements

Accumulated Depreciation (D,E)

Date Acquired

Tampa, FL — 13,600 4,992 — 4,145 13,600 9,137 22,737 2,622 2010

KENNESAW MARKETPLACE

Kennesaw, GA — 12,587 51,860 — 362 12,587 52,222 64,809 4,684 2018

KROGER TOMBALL

Tomball, TX — 1,104 10,223 — — 1,104 10,223 11,327 604 2019

Initial Cost (A) Gross amount at which carried at end of period

PROPERTY NAME

KYLE MARKETPLACE

LAKESIDE WINTER PARK AND LAKESIDE CROSSINGS

Kyle, TX $ — $ 6,076 $ 48,220 $ — $ 331 $ 6,076 $ 48,551 $ 54,627 $ 5,652 2017

LAKESIDE WINTER PARK AND CROSSINGS

Orland, FL — 16,594 41,085 — ( 283 ) 16,594 40,801 57,395 2,557 2019

MARKET AT WESTLAKE

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PAVILION AT LAQUINTA

LaQuinta, CA 22,834 15,200 20,947 — 1,244 15,200 22,192 37,392 9,253 2009

PEACHLAND PROMENADE

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PLANTATION GROVE

Ocoee, FL 7,300 3,705 6,300 — 648 3,705 6,948 10,653 1,688 2014

PLAZA MIDTOWN

Initial Cost (A)

Gross amount at which carried at end of period

PROPERTY NAME

Buildings and Improvements

Adjustments to Land Basis (B)

Adjustments to Basis (B)

Land and Improvements

Buildings and Improvements

Accumulated Depreciation (D,E)

Date Acquired

Atlanta, GL — 5,295 23,946 — 242 5,295 24,188 29,483 2,686 2017

RENAISSANCE CENTER

Durham, NC 14,468 26,713 96,141 — 4,693 26,713 100,834 127,547 17,495 2016

RIO PINOR PLAZA

Orlando, FL — 5,171 26,903 — 444 5,171 27,347 32,518 5,094 2015

RIVER OAKS SHOPPING CENTER

Valencia, CA — 24,598 88,418 — 205 24,598 88,623 113,221 10,224 2017

RIVERVIEW VILLAGE

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SANDY PLAINS CENTRE

Marietta, GA — 12,364 27,270 652 2,170 13,016 29,440 42,456 2,050 2018

Initial Cost (A) Gross amount at which carried at end of period

PROPERTY NAME

SARASOTA PAVILION

Sarasota, FL $ — $ 12,000 $ 25,823 $ — $ 4,423 $ 12,000 $ 30,246 $ 42,246 $ 10,720 2010

SCOFIELD CROSSING

Austin, TX — 8,100 4,992 ( 576 ) 3,453 7,524 8,445 15,969 2,783 2007

SHOPS AT FAIRVIEW TOWN CENTER

Dallas, TX — 7,299 25,233 — 43 7,299 25,276 32,575 1,330 2019

SHOPS AT THE GALLERIA

Austin, TX — 52,104 75,651 — 798 52,104 76,449 128,553 13,309 2016

SONTERRA VILLAGE

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SOUTHERN PALM CROSSING

Miami, FL — 37,735 49,843 ( 745 ) ( 1,045 ) 36,990 48,797 85,787 2,815 2019

STEVENSON RANCH

Stevenson Ranch, CA — 29,519 39,190 — 135 29,519 39,324 68,843 6,637 2016

Initial Cost (A)

Gross amount at which carried at end of period

PROPERTY NAME

Buildings and Improvements

Adjustments to Land Basis (B)

Adjustments to Basis (B)

Land and Improvements

Buildings and Improvements

Accumulated Depreciation (D,E)

Date Acquired

SUNCREST VILLAGE

Orlando, FL 8,400 6,742 6,403 — 920 6,742 7,323 14,065 1,799 2014

SYCAMORE COMMONS

Matthews, NC — 12,500 31,265 — 1,885 12,500 33,150 45,650 12,873 2010

THE CENTER AT HUGH HOWELL

Tucker, GA — 2,250 11,091 — 1,017 2,250 12,108 14,358 6,125 2007

Cedar Park, TX — 9,271 83,078 — 781 9,271 83,859 93,130 10,072 2017

THE POINTE AT CREEDMOOR

Raleigh, NC — 7,507 5,454 — 55 7,507 5,509 13,016 998 2016

THE SHOPS AT TOWN CENTER

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THOMAS CROSSROADS

Newnan, GA — 1,622 8,322 — 1,027 1,622 9,349 10,971 3,770 2009

TRAVILAH SQUARE

Washington, D.C.

— 8,964 39,836 — 136 8,964 39,972 48,936 1,803 2019

TROWBRIDGE CROSSING

Sandy Springs, GA — 2,366 7,808 — — 2,366 7,808 10,174 272 2020

UNIVERSITY OAKS SHOPPING CENTER

Round Rock, TX 25,629 7,250 25,326 ( 170 ) 8,189 7,080 33,515 40,595 12,973 2010

Initial Cost (A) Gross amount at which carried at end of period

PROPERTY NAME

WESTPARK SHOPPING CENTER

2 unchanged sentences

Alpharetta, GA — 12,823 13,779 — 629 12,823 14,408 27,231 2,308 2016

WOODLAKE CROSSING

San Antonio, TX

Total corporate assets — — — — 3,996 — 3,996 3,996 2,455 -

INVENTRUST PROPERTIES CORP.

Schedule III - Real Estate and Accumulated Depreciation

(amounts stated in thousands)

Total $ 107,261 $ 569,133 $ 1,561,370 $ 8,617 $ 79,323 $ 577,750 $ 1,640,693 $ 2,218,443 $ 292,248

Construction in progress — — — 3,246 — 3,246 3,246 —

Total investment properties $ 569,133 $ 1,561,370 $ 8,617 $ 82,569 $ 577,750 $ 1,643,939 $ 2,221,689 $ 292,248

Notes to Schedule III

The Company had $ 4,052 of assets included in construction in progress at December 31, 2019, which have been omitted from the prior table.

The aggregate cost of real estate owned at December 31, 2020 for federal income tax purposes was approximately $ 2,441,661 (unaudited).

The initial cost to the Company represents the original purchase price of the asset, including amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.

Cost capitalized subsequent to acquisition includes additional tangible costs associated with investment properties, including any earnout of tenant space.

(A) The initial cost to the Company represents the original purchase price of the asset, including amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.

(B) Cost capitalized subsequent to acquisition includes additional tangible costs associated with investment properties.

Amount also includes impairment charges recorded subsequent to acquisition to reduce basis.

Reconciliation of real estate owned:

2020 2019 2018

Balance at January 1, $ 2,204,891 $ 2,242,283 $ 2,521,060

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Balance at December 31 $ 2,221,689 $ 2,204,891 $ 2,242,283

Reconciliation of accumulated depreciation:

(D) Reconciliation of accumulated depreciation:

2020 2019 2018

Balance at January 1, $ 246,702 $ 286,330 $ 348,337

Depreciation expense, continuing operations 61,897 66,808 73,021

Depreciation expense, properties classified as discontinued operations

Disposal and write-offs ( 16,351 ) ( 106,436 ) ( 135,028 )

Balance at December 31, $ 292,248 $ 246,702 $ 286,330

Depreciation is computed based upon the following estimated lives:

Buildings and improvements

Tenant improvements

Life of the lease

Furniture, fixtures and equipment

(E) Depreciation is computed based upon the following estimated lives:

Buildings and other improvements 15 - 30 years

Tenant improvements Life of the lease

Furniture, fixtures and equipment 5 - 20 years

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures