Attached files

file filename
EX-10.6 - EXHIBIT 10.6 - InvenTrust Properties Corp.formofdirectorrestrictedst.htm
EX-32.2 - EXHIBIT 32.2 - InvenTrust Properties Corp.ivtp9302015exhibit322.htm
EX-3.2 - EXHIBIT 3.2 - InvenTrust Properties Corp.amendedandrestatedbylawsof.htm
EX-10.8 - EXHIBIT 10.8 - InvenTrust Properties Corp.inventrustpropertiescorpdi.htm
EX-10.7 - EXHIBIT 10.7 - InvenTrust Properties Corp.formofuniversityhousecommu.htm
EX-31.1 - EXHIBIT 31.1 - InvenTrust Properties Corp.ivtp9302015exhibit311.htm
EX-32.1 - EXHIBIT 32.1 - InvenTrust Properties Corp.ivtp9302015exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - InvenTrust Properties Corp.ivtp9302015exhibit312.htm

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2015
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM            TO
COMMISSION FILE NUMBER: 000-51609
INVENTRUST PROPERTIES CORP.
(Exact name of registrant as specified in its charter)

Maryland
 
34-2019608
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
2809 Butterfield Road, Suite 360, Oak Brook, Illinois
 
60523
(Address of principal executive offices)
 
(Zip Code)
855-377-0510
(Registrant’s telephone number, including area code)

_______________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
Yes x   No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x   No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one)
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer  x
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ¨   No x
As of November 6, 2015 there were 861,824,777 shares of the registrant’s common stock outstanding.

 




InvenTrust Properties Corp.

Quarterly Report on Form 10-Q
For the quarter ended September 30, 2015
Table of Contents

 
Part I - Financial Information
Page
Item 1.
Financial Statements (unaudited)
 
 
Consolidated Balance Sheets at September 30, 2015 and December 31, 2014
 
Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2015 and 2014
 
Consolidated Statements of Changes in Equity for the nine months ended September 30, 2015 and 2014
 
Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014
 
Notes to Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
 
Part II - Other Information
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
 
Signatures



- i-

INVENTRUST PROPERTIES CORP.


Consolidated Balance Sheets
(unaudited)
(Dollar amounts in thousands, except share amounts)


 
 
September 30, 2015
 
December 31, 2014
Assets
 
 
 
Investment properties:
 
 
 
Land
$
784,522

 
$
770,220

Building and other improvements
3,229,318

 
3,030,645

Construction in progress
60,411

 
265,303

Total
4,074,251

 
4,066,168

Less accumulated depreciation
(686,475
)
 
(598,440
)
Net investment properties
3,387,776

 
3,467,728

Cash and cash equivalents
253,247

 
598,904

Restricted cash and escrows
19,174

 
32,950

Investment in marketable securities
184,375

 
154,753

Investment in unconsolidated entities
183,766

 
122,203

Intangible assets, net
70,307

 
89,705

Accounts and rents receivable (net of allowance of $3,772 and $5,658)
41,089

 
40,798

Deferred costs and other assets
50,405

 
59,476

Assets of discontinued operations
3,716

 
2,930,799

Total assets
$
4,193,855

 
$
7,497,316

Liabilities
 
 
 
Debt
$
1,849,557

 
$
1,991,608

Accounts payable and accrued expenses
95,669

 
79,368

Distributions payable
28,009

 
35,909

Intangible liabilities, net
46,458

 
43,258

Other liabilities
22,577

 
24,595

Liabilities of discontinued operations
64

 
1,325,749

Total liabilities
2,042,334

 
3,500,487

Commitments and contingencies


 


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

 

Common stock, $.001 par value, 1,460,000,000 shares authorized,
861,824,777 and 861,824,777 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively
861

 
861

Additional paid in capital
6,066,262

 
7,755,471

Accumulated distributions in excess of net loss
(3,959,240
)
 
(3,820,882
)
Accumulated other comprehensive income
43,513

 
57,599

Total Company stockholders’ equity
2,151,396

 
3,993,049

Noncontrolling interests
125

 
3,780

Total equity
2,151,521

 
3,996,829

Total liabilities and equity
$
4,193,855

 
$
7,497,316

See accompanying notes to the consolidated financial statements.

1

INVENTRUST PROPERTIES CORP.

Consolidated Statements of Operations and Comprehensive Income
(unaudited)
(Dollar amounts in thousands, except per share amounts)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Income:
 
 
 
 
 
 
 
  Rental income
$
93,093

 
$
93,858

 
$
272,797

 
$
286,158

  Tenant recovery income
16,819

 
15,055

 
51,765

 
50,396

  Other property income
2,827

 
1,819

 
6,905

 
6,766

Total income
112,739

 
110,732

 
331,467

 
343,320

Expenses:
 
 
 
 
 
 
 
  General and administrative expenses
18,443

 
21,301

 
57,072

 
51,005

  Property operating expenses
20,750

 
24,921

 
56,779

 
69,230

  Real estate taxes
12,673

 
11,968

 
38,727

 
35,270

  Depreciation and amortization
37,314

 
38,895

 
110,927

 
116,564

  Business management fee

 

 

 
2,605

  Provision for asset impairment
92,167

 
670

 
92,167

 
75,616

Total expenses
181,347

 
97,755

 
355,672

 
350,290

Operating income (loss)
(68,608
)
 
12,977

 
(24,205
)
 
(6,970
)
Interest and dividend income
2,671

 
2,474

 
9,169

 
10,424

Gain on sale of investment properties
729

 
6,629

 
7,957

 
18,253

Gain on extinguishment of debt
13

 
12,125

 
1,395

 
12,517

Other income
1,451

 
577

 
6,107

 
4,125

Interest expense
(23,772
)
 
(31,888
)
 
(69,642
)
 
(96,531
)
Loss on contribution to unconsolidated joint venture
(12,919
)
 

 
(12,919
)
 

Equity in earnings (loss) of unconsolidated entities
5,358

 
(2,089
)
 
33,341

 
627

Realized gain on sale of marketable securities, net
304

 
27,852

 
20,459

 
42,998

Income (loss) before income taxes
(94,773
)
 
28,657

 
(28,338
)
 
(14,557
)
Income tax expense
(1,579
)
 
(454
)
 
(2,445
)
 
(1,196
)
Net income (loss) from continuing operations
(96,352
)
 
28,203

 
(30,783
)
 
(15,753
)
Net income from discontinued operations
713

 
24,357

 
3,042

 
208,292

Net income (loss)
(95,639
)
 
52,560

 
(27,741
)
 
192,539

Less: Net income attributable to noncontrolling interests
(8
)
 
(8
)
 
(16
)
 
(16
)
Net income (loss) attributable to Company
$
(95,647
)
 
$
52,552

 
$
(27,757
)
 
$
192,523

Net income (loss) per common share,
from continuing operations, basic and diluted
$
(0.11
)
 
$
0.03

 
$
(0.04
)
 
$
(0.02
)
Net income per common share,
from discontinued operations, basic and diluted
$
0.00

 
$
0.03

 
$
0.00

 
$
0.24

Net income (loss) per common share, basic and diluted
$
(0.11
)
 
$
0.06

 
$
(0.04
)
 
$
0.22

Weighted average number of common shares outstanding, basic and diluted
861,824,777

 
861,627,855

 
861,824,777

 
883,537,865

Comprehensive income:
 
 
 
 
 
 
 
Net income (loss) attributable to Company
$
(95,647
)
 
$
52,552

 
$
(27,757
)
 
$
192,523

  Unrealized gain (loss) on investment securities
(26,113
)
 
(6,927
)
 
7,242

 
13,508

  Unrealized gain (loss) on derivatives
(671
)
 
60

 
(76
)
 
(1,659
)
    Reclassification adjustment for amounts recognized in net
income
(570
)
 
(27,495
)
 
(21,252
)
 
(42,068
)
Comprehensive income (loss) attributable to the Company
$
(123,001
)
 
$
18,190

 
$
(41,843
)
 
$
162,304

See accompanying notes to the consolidated financial statements.

2


INVENTRUST PROPERTIES CORP.


Consolidated Statements of Changes in Equity
(unaudited)
(Dollar amounts in thousands)


For the nine months ended September 30, 2015


 
Number of Shares
 
Common
Stock
 
Additional Paid-in
Capital
 
Accumulated
Distributions in excess of Net Loss
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling Interests
 
Total
Balance at January 1, 2015
861,824,777

 
$
861

 
$
7,755,471

 
$
(3,820,882
)
 
$
57,599

 
$
3,780

 
$
3,996,829

Net income (loss)

 

 

 
(27,757
)
 

 
16

 
(27,741
)
Unrealized gain on investment securities

 

 

 

 
7,242

 

 
7,242

Unrealized loss on derivatives

 

 

 

 
(76
)
 

 
(76
)
Reclassification adjustment for amounts recognized in net income

 

 

 

 
(21,252
)
 

 
(21,252
)
Distributions declared

 

 

 
(110,601
)
 

 

 
(110,601
)
Contributions from noncontrolling interests, net

 

 

 

 

 
152

 
152

Restricted share units

 

 
1,202

 

 

 

 
1,202

Equity effect of Spin-Off of Xenia Hotels & Resorts, Inc.

 

 
(1,690,411
)
 

 

 
(3,823
)
 
(1,694,234
)
Balance at September 30, 2015
861,824,777
 
$
861

 
$
6,066,262

 
$
(3,959,240
)
 
$
43,513

 
$
125

 
$
2,151,521

See accompanying notes to the consolidated financial statements.

3


INVENTRUST PROPERTIES CORP.


Consolidated Statements of Changes in Equity
(unaudited)
(Dollar amounts in thousands)


For the nine months ended September 30, 2014


 
Number of Shares
 
Common
Stock
 
Additional Paid-in
Capital
 
Accumulated
Distributions in excess of Net Loss
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling Interests
 
Total
Balance at January 1, 2014
909,855,173

 
$
909

 
$
8,063,517

 
$
(3,870,649
)
 
$
71,128

 
$
1,736

 
$
4,266,641

Net income

 

 

 
192,523

 

 
16

 
192,539

Unrealized gain on investment securities

 

 

 

 
13,508

 

 
13,508

Unrealized loss on derivatives

 

 

 

 
(1,659
)
 

 
(1,659
)
Reclassification adjustment for amounts recognized in net income

 

 

 

 
(42,068
)
 

 
(42,068
)
Distributions declared

 

 

 
(329,144
)
 

 

 
(329,144
)
Contributions from noncontrolling interests

 

 

 

 

 
1,502

 
1,502

Proceeds from distribution reinvestment program
13,808,589

 
14

 
95,818

 

 

 

 
95,832

Share repurchase program
(1,077,829
)
 
(1
)
 
(7,480
)
 

 

 

 
(7,481
)
Repurchase of common stock
(60,761,166
)
 
(61
)
 
(396,369
)
 
 
 

 

 
(396,430
)
Balance at September 30, 2014
861,824,767

 
$
861

 
$
7,755,486

 
$
(4,007,270
)
 
$
40,909

 
$
3,254

 
$
3,793,240

See accompanying notes to the consolidated financial statements.


4

INVENTRUST PROPERTIES CORP.


Consolidated Statements of Cash Flows
(unaudited)
(Dollar amounts in thousands)

 
Nine months ended September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
(27,741
)
 
$
192,539

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
  Depreciation and amortization
122,914

 
259,566

  Amortization of above and below market leases, net
(1,241
)
 
(359
)
  Amortization of debt premiums, discounts and financing costs
5,829

 
10,118

  Straight-line rental income
901

 
(3,115
)
  Provision for asset impairment
92,167

 
80,281

  Gain on sale of investment properties, net
(7,957
)
 
(171,148
)
  Gain on extinguishment of debt
(1,395
)
 
(1,931
)
  Loss on contribution to unconsolidated joint venture
12,919

 

  Equity in earnings of unconsolidated entities
(33,341
)
 
(334
)
  Distributions from unconsolidated entities
3,883

 
6,206

  (Gain), loss and impairment of investment in unconsolidated entities, net

 
(4,509
)
  Realized gain on sale of marketable securities
(20,459
)
 
(42,998
)
Non-cash share based compensation
1,311

 

Changes in assets and liabilities:
 
 
 
  Accounts and rents receivable
(4,559
)
 
(11,357
)
  Deferred costs and other assets
15,533

 
5,182

  Accounts payable and accrued expenses
(8,335
)
 
25,712

  Other liabilities
(6,673
)
 
(19,023
)
Prepayment penalties and defeasance

 
(1,255
)
Net cash flows provided by operating activities
$
143,756

 
$
323,575

Cash flows from investing activities:
 
 
 
  Purchase of investment properties
(98,122
)
 
(194,900
)
  Acquired in-place and market lease intangibles, net
(4,645
)
 
(14,797
)
  Capital expenditures and tenant improvements
(21,768
)
 
(41,124
)
  Investment in development projects
(85,744
)
 
(73,470
)
  Proceeds from sale of investment properties, net
53,989

 
775,695

  Proceeds from sale of marketable securities
58,369

 
117,170

  Consolidation of joint venture

 
(2,944
)
Proceeds from the sale of and return of capital from unconsolidated entities
31,134

 
20,047

  Contributions to unconsolidated entities
(25,030
)
 
(38,909
)
  Distributions from unconsolidated entities
7,964

 
26,569

  Payment of leasing fees
(3,838
)
 
(3,055
)
  Restricted escrows and other assets
19,246

 
(22,144
)
  Payment of notes receivable

 
4

    Other liabilities
2,350

 
12,566

Net cash flows (used in) provided by investing activities
$
(66,095
)
 
$
560,708

 
 
 
 
 
 
 
 

5

INVENTRUST PROPERTIES CORP.


Consolidated Statements of Cash Flows
(unaudited)
(Dollar amounts in thousands)

 
Nine months ended September 30,
 
2015
 
2014
Cash flows from financing activities:
 
 
 
  Proceeds from distribution reinvestment program
$

 
$
95,832

  Shares repurchased

 
(403,911
)
  Distributions paid
(118,501
)
 
(331,147
)
  Proceeds from debt and notes payable
172,507

 
297,515

  Payoffs of debt
(293,404
)
 
(367,285
)
  Principal payments of mortgage debt
(20,384
)
 
(31,266
)
  Payoff of margin securities debt, net

 
(59,681
)
  Settlement of put/call arrangement

 
(47,762
)
  Payment of loan fees and deposits
(1,970
)
 
(636
)
  Contributions from noncontrolling interests, net
152

 
1,502

Payments for contingent consideration

 
(7,891
)
Cash contribution to Xenia Hotels & Resorts, Inc.
(165,884
)
 

Property level cash contributed to Xenia Hotels & Resorts, Inc.
(130,080
)
 

Net cash flows used in financing activities
$
(557,564
)
 
$
(854,730
)
Net (decrease) increase in cash and cash equivalents
(479,903
)
 
29,553

Cash and cash equivalents, at beginning of period
733,150

 
319,237

Cash and cash equivalents, at end of period
$
253,247

 
$
348,790




See accompanying notes to the consolidated financial statements.



6

INVENTRUST PROPERTIES CORP.


Consolidated Statements of Cash Flows
(unaudited)
(Dollar amounts in thousands)

 
Nine months ended September 30,
 
2015
 
2014
Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest, net capitalized interest of $6,569 and $3,022
$
72,332

 
$
159,193

 
 
 
 
Supplemental schedule of non-cash investing and financing activities:
 
 
 
Net equity distributed to Xenia Hotels & Resorts, Inc. (net of cash contributed)
$
1,484,872

 
$

Property surrendered in extinguishment of debt
$

 
$
11,000

Mortgage assumed by buyer upon disposal of property
$

 
$
657,339

Land contributed to an unconsolidated entity
$
46,174

 
$

Consolidation of assets from joint venture
$

 
$
21,833

Assumption of mortgage debt at consolidation of joint venture
$

 
$
11,967

Liabilities assumed at consolidation of joint venture
$

 
$
446






See accompanying notes to the consolidated financial statements.





7

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited consolidated financial statements of InvenTrust Properties Corp. (the "Company", and formerly known as Inland American Real Estate Trust, Inc.) for the year ended December 31, 2014, which are included in the Company’s 2014 Annual Report on Form 10-K, as certain note disclosures contained in such audited consolidated financial statements have been omitted from this Report. In the opinion of management, all adjustments (consisting of normal recurring accruals, except as otherwise noted) necessary for a fair presentation have been included in these financial statements.
1. Organization
Inland American Real Estate Trust, Inc., which on April 16, 2015, changed its name to InvenTrust Properties Corp., was formed on October 4, 2004 (inception) to acquire and manage a diversified portfolio of commercial real estate, primarily retail, office, industrial, multi-family (both conventional apartments and student housing), and lodging properties, located in the United States. The Company was party to a business management agreement with Inland American Business Manager and Advisor, Inc. (the "Business Manager") pursuant to which it served as the Company's business manager, with responsibility for overseeing and managing its day-to-day operations, under the supervision of the Company's board of directors. The Company was also party to property management agreements with each of its property managers (the "Property Managers").
On March 12, 2014, the Company began the process of becoming fully self-managed by terminating its business management agreement, hiring all of the employees of the Business Manager and acquiring the assets of its Business Manager necessary to perform the functions previously performed by the Business Manager. Similarly, as of March 12, 2014, certain functions performed by the Property Managers, such as property-level accounting, lease administration, leasing, marketing and construction functions, were transitioned to the Company. The self-management transactions were completed on December 31, 2014 when the Company acquired the assets of its property managers and hired substantially all of its employees and the remaining property management functions were transitioned to the Company.
On February 3, 2015, the Company completed the spin-off (the "Spin-Off") of its lodging subsidiary, Xenia Hotels & Resorts, Inc. ("Xenia"), through a taxable pro-rata distribution by the Company of 95% of the outstanding common stock of Xenia to holders of record of the Company’s common stock as of the close of business on January 20, 2015 (the “Record Date”). Each holder of record of the Company’s common stock received one share of Xenia’s common stock for every eight shares of the Company’s common stock held at the close of business on the Record Date. In lieu of fractional shares, stockholders of the Company received cash. On February 4, 2015, Xenia's common stock began trading on the New York Stock Exchange ("NYSE") under the ticker symbol "XHR". In connection with the Spin-Off, the Company entered into certain agreements that, among other things, provide a framework for the Company’s relationship with Xenia after the Spin-Off, including a Transition Services Agreement, an Employee Matters Agreement and an Indemnity Agreement. Following the Spin-Off, the Company no longer has a lodging segment. Therefore, the 46 lodging assets included in the Spin-Off have been classified as discontinued operations as the Spin-Off represents a strategic shift that has had a major effect on the Company's operations and financial results. The assets and liabilities of these 46 lodging assets are classified as assets and liabilities of discontinued operations on the consolidated balance sheet at September 30, 2015 and December 31, 2014. The operations of these 46 lodging assets have been classified as income from discontinued operations on the consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014.
The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries and consolidated joint venture investments. Wholly-owned subsidiaries generally consist of limited liability companies (LLCs) and limited partnerships (LPs). The effects of all significant intercompany transactions have been eliminated.
Each property is owned by a separate legal entity which maintains its own books and financial records and each entity's assets are not available to satisfy the liabilities of other affiliated entities, except as otherwise disclosed in "Note 8. Debt".
At September 30, 2015, the Company owned 142 properties, in which the operating activity is reflected in continuing operations on the consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014. At December 31, 2014, the Company owned 188 properties, of which 46 lodging assets were

8

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

included in the Spin-Off and classified as assets of discontinued operations. At September 30, 2014, the Company owned 268 properties.
The breakdown, by segment, of the 142 owned properties at September 30, 2015 is as follows:
Segment
 
Property Count
 
Square Feet / Beds
Retail
 
110
 
15,876,103
Square feet
Student Housing
 
16
 
9,600
Beds
Non-core
 
16
 
5,844,751
Square feet
2. Summary of Significant Accounting Policies
The accompanying consolidated financial statements have been prepared in accordance with GAAP and 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. Actual results could differ from those estimates.
Refer to the Company's audited financial statements for the year ended December 31, 2014, as certain note disclosures contained in such audited financial statements have been omitted from these interim consolidated financial statements.
Stock-Based Compensation
In accordance with FASB ASC Topic 718, Accounting for Share Based Compensation, companies are required to recognize in the income statement the grant-date fair value of stock options and other equity based compensation issued to employees. Under Topic 718, the way an award is classified will affect the measurement of compensation cost. Equity classified awards are measured at grant date fair value, and amortized on a straight-line basis over the vesting period of the stock and are not subsequently re-measured. Liability classified awards are measured at the grant date and are subsequently re-measured at the end of each period. The fair value of the non-vested stock awards for the purposes of recognizing stock-based compensation expense is the estimated market price of the Company's common stock on the grant date. At September 30, 2015, the Company had two stock based compensation plans, which are discussed in "Note 13. Stock-Based Compensation". The compensation cost is based on awards that are expected to vest and has been reduced for estimated forfeitures.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective, although it will not affect the accounting for rental related revenues. ASU No. 2014-09, as issued, was to be effective for financial statements issued for fiscal years and interim periods beginning after December 31, 2016. In April 2015, the FASB approved an amendment to the ASU, deferring the effective date one year to annual reporting periods beginning after December 15, 2017 for public entities. The standard permits the use of either the retrospective or cumulative effect transition method. Early adoption is prohibited. The Company is evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
In February 2015, the FASB issued ASU 2015-02, Consolidation.  This update includes amendments that change the requirements for evaluating limited partnerships and similar entities for consolidation.  Under the new guidance, limited partnerships and similar entities will be considered variable interest entities ("VIEs") unless a scope exception applies.  As such, entities that consolidate limited partnerships and similar entities that are considered to be VIEs will be subject to VIE primary beneficiary disclosure requirements, and entities that do not consolidate a VIE will be subject to the disclosure requirements that apply to variable interest holders other than the primary beneficiary.  The new guidance also eliminates three of the six criteria for determining if fees paid to a decision maker or service provider are considered to be variable interest in a VIE and changes the criteria used to determine if variable interests in a VIE held by related parties of a reporting entity require the reporting entity to consolidate the VIE.  This standard will be effective for financial statements issued by public companies for

9

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

annual and interim reporting periods beginning after December 15, 2015.  The Company is continuing to evaluate this guidance; however, the Company does not expect its adoption to have a significant impact on the consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Company will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance is effective for the Company beginning January 1, 2016. The Company is continuing to evaluate this guidance; however, the Company does not expect its adoption to have a significant impact on the consolidated financial statements.
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which requires that if the initial accounting for a business combination is incomplete as of the end of the reporting period in which the acquisition occurs, the acquirer records provisional amounts based on information available at the acquisition date. This guidance is effective for the Company beginning January 1, 2016. The Company is continuing to evaluate this guidance; however, the Company does not expect its adoption to have a significant impact on the consolidated financial statements.

10

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

3. Acquired Properties
The Company records identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination at fair value. The Company acquired two retail properties and one student housing property during the nine months ended September 30, 2015, for an aggregate gross acquisition price of $103,000. None were acquired during the three months ended September 30, 2015. The student housing property acquired, Bishops Landing, has been demolished and the land will be used for a new student housing development. The table below reflects acquisition activity during the nine months ended September 30, 2015.
Segment
 
Property
 
Date
 
Gross Acquisition Price
 
Square Feet
Retail
 
The Shops at Walnut Creek
 
4/10/2015
 
$
57,100

 
216,334

Square Feet
Retail
 
Westpark Shopping Center
 
5/12/2015
 
33,400

 
176,935

Square Feet
Retail, Subtotal
 
 
 
 
 
$
90,500

 
 
 
 
 
 
 
 
 
 
 
 
 
Student Housing
 
Bishops Landing (a)
 
4/27/2015
 
$
12,500

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
$
103,000

 
 
 
(a) The Company has recorded the assets of the Bishops Landing acquisition as construction in progress on the consolidated balance sheet as of September 30, 2015.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for the nine months ended September 30, 2015, as listed above.
 
2015 Acquisitions
Land
$
17,594

Building
70,138

Construction in progress
12,500

Total fixed assets
100,232

Net other assets and liabilities
2,768

Total
$
103,000

The Company placed in service two student housing properties and completed an addition on a third student housing property during the three and nine months ended September 30, 2015. The following table summarizes the assets placed in service during the nine months ended September 30, 2015:
 
2015 Assets
Placed In Service
Land
$
17,745

Building and other improvements
130,767

Total fixed assets
148,512

For properties acquired and assets placed in service during the nine months ended September 30, 2015, the Company recorded revenue of $4,489 and $6,137 for the three and nine months ended September 30, 2015, respectively. The Company recorded property net income of $2,924 and $4,083, excluding related expensed acquisition costs, for the three and nine months ended September 30, 2015. The Company incurred $155 and $577 of acquisition and transaction costs during the three and nine months ended September 30, 2015, respectively, that were recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income.

11

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

The Company acquired three properties, including two retail properties and one lodging property for the nine months ended September 30, 2014, for an aggregate gross acquisition price of $209,150. The table below reflects acquisition activity during the nine months ended September 30, 2014.
Segment
 
Property
 
Date
 
Gross Acquisition Price
 
Square Feet / Rooms
Retail
 
Suncrest Village
 
2/13/2014
 
$
14,050

 
93,358

Square Feet
Retail
 
Plantation Grove
 
2/13/2014
 
12,100

 
73,655

Square Feet
Retail, Subtotal
 
 
 
 
 
26,150

 
 
 
 
 
 
 
 
 
 
 
 
 
Lodging
 
Aston Waikiki Beach (a)
 
2/28/2014
 
183,000

 
645

Rooms
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
$
209,150

 
 
 
(a) Aston is the registered trademark of Aston Hotels & Resorts LLC and is the exclusive property of its owner.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for the nine months ended September 30, 2014, as listed above.
 
2014 Acquisitions
Land
$
10,446

Building
154,343

Furniture, fixtures, and equipment
27,087

Total fixed assets
$
191,876

Below market ground lease
9,516

Net other assets and liabilities
7,758

Total
$
209,150

For properties acquired as of September 30, 2014, the Company recorded revenue of $12,399 and $26,601 for the three and nine months ended September 30, 2014, respectively. The Company recorded property net income of $5,634 and $11,510, excluding related expensed acquisition costs for the three and nine months ended September 30, 2014. The Company incurred $27 and $1,337 of acquisition and transaction costs during the three and nine months ended September 30, 2014, respectively, that were recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income.

12

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

4. Disposed Properties
The Company sold four operating properties and one land parcel during the nine months ended September 30, 2015 for an aggregate gross disposition price of $53,275. The Company sold 249 properties, one parcel of land, and surrendered one property to the lender for the nine months ended September 30, 2014 for an aggregate gross disposition price of $1,476,500. For the nine months ended September 30, 2015 and 2014, the Company had generated net proceeds from the sale of properties of $53,989 and $775,695, respectively.
The following properties were sold during the nine months ended September 30, 2015. These properties have been included in continuing operations on the consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2015. A parcel of land was also sold during the nine months ended September 30, 2015 for a gross disposition price of $1,410.
Segment
 
Property
 
Date
 
Gross Disposition Price
 
Square Feet
Non-core
 
Las Plumas
 
4/1/2015
 
$
27,500

 
240,000

Square Feet
Non-core
 
Citizens - Manchester
 
7/9/2015
 
8,175

 
148,000

Square Feet
Non-core
 
SunTrust - Winston Salem
 
7/30/2015
 
1,875

 
10,188

Square Feet
Non-core
 
Tech II
 
7/31/2015
 
14,315

 
166,758

Square Feet
Total
 
 
 
 
 
$
51,865

 
 
 
For the three months ended September 30, 2015 and 2014, the Company recorded a gain on sale of investment properties of $729 and $6,629, respectively, in continuing operations. For the nine months ended September 30, 2015 and 2014, the Company recorded a gain on sale of investment properties of $7,957 and $18,253, respectively, in continuing operations.

13

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

In line with the Company's adoption of the new accounting standard governing discontinued operations during the year ended December 31, 2014, only disposals representing a strategic shift that have (or will have) a major effect on results and operations would qualify as discontinued operations. On February 3, 2015, the Company completed the spin-off of its lodging subsidiary, Xenia Hotels & Resorts, Inc. The 46 assets included in the Spin-Off have been classified as discontinued operations as the Spin-Off represents a strategic shift that has had a major effect on the Company's operations and financial results. The assets and liabilities of these 46 assets are classified as assets and liabilities of discontinued operations on the consolidated balance sheet at December 31, 2014. The operations of these 46 assets have been classified as income from discontinued operations on the consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014. The major classes of assets and liabilities of discontinued operations as of September 30, 2015 and December 31, 2014 were as follows:
 
As of
 
September 30, 2015
 
December 31, 2014
Assets
 
 
 
Investment properties:
 
 
 
Land
$

 
$
338,313

Building and other improvements

 
2,710,647

Construction in progress

 
39,736

Total

 
3,088,696

Less accumulated depreciation

 
(505,986
)
Net investment properties

 
2,582,710

Cash and cash equivalents

 
134,245

Restricted cash and escrows

 
87,296

Accounts and rents receivable (net of allowance of $0 and $251)

 
26,502

Intangible assets, net

 
64,541

Deferred costs and other assets (a)
3,716

 
35,505

Total assets
$
3,716

 
$
2,930,799

Liabilities
 
 
 
Debt

 
1,199,027

Accounts payable and accrued expenses

 
88,356

Intangible liabilities, net

 
4,212

Other liabilities (b)
64

 
34,154

Total liabilities
$
64

 
$
1,325,749

(a) Deferred costs and other assets at September 30, 2015 primarily include receivables from Xenia related to hotel reserve escrows.
(b) Other liabilities at September 30, 2015 include tax liabilities related to hotel properties payable by the Company.

14

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

For the three and nine months ended September 30, 2015, the operations reflected in discontinued operations, shown in the table below, reflect the operations of the 46 lodging properties associated with the Spin-Off. For the three and nine months ended September 30, 2014, the operations reflected in discontinued operations, shown in the table below, reflect the operations of the 46 lodging properties associated with the Spin-Off, the 52 select service lodging properties sold on November 17, 2014, the 3 stand-alone lodging properties sold in 2014, and the portfolio of 223 net lease properties sold in 2014. All other property disposals are now included as a component of income from continuing operations, consistent with the Company's adoption of ASU No. 2014-08.
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015

September 30, 2014
Revenues
$

 
$
298,151

 
$
68,682

 
$
904,789

Depreciation and amortization expense

 
47,222

 
11,934

 
142,966

Other expenses

 
207,838

 
55,429

 
616,820

Provision for asset impairment

 
1,667

 

 
4,665

Operating income from discontinued operations
$

 
$
41,424

 
$
1,319

 
$
140,338

Interest expense, income taxes, and other miscellaneous income
713

 
(23,509
)
 
1,723

 
(74,355
)
Gain on sale of properties, net

 
6,557

 

 
152,895

Loss on extinguishment of debt

 
(115
)
 

 
(10,586
)
Net income from discontinued operations
$
713

 
$
24,357

 
$
3,042

 
$
208,292

Net cash (used in) provided by operating activities from the properties classified as discontinued operations was $(6,712) and $213,571 for the nine months ended September 30, 2015 and 2014, respectively. Net cash (used in) provided by investing activities from the properties classified as discontinued operations was $(4,344) and $312,615 for the nine months ended September 30, 2015 and 2014, respectively.

15

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

5. Investment in Partially Owned Entities
Consolidated Entities
During the fourth quarter 2013, the Company entered into two joint ventures to each develop a lodging property. The Company had ownership interests of 75% in each joint venture. These entities were considered VIEs as defined in FASB ASC 810 because the entities did not have enough equity to finance their activities without additional subordinated financial support. The Company determined it had the power to direct the activities of the VIEs that most significantly impacted the VIEs' economic performance, as well as the obligation to absorb losses of the VIEs that could have potentially been significant to the VIEs or the right to receive benefits from the VIEs that could have potentially been significant to the VIEs. As such, the Company had a controlling financial interest and was considered the primary beneficiary of each of these entities. Therefore, these entities were consolidated by the Company and are included as a part of assets and liabilities of discontinued operations on the consolidated balance sheet at December 31, 2014. These entities were included in the Spin-Off on February 3, 2015 and are no longer part of the Company.
For the VIEs where the Company was the primary beneficiary, the following are the liabilities of the consolidated VIEs which were not recourse to the Company, and the assets that could only have been used to settle those obligations.
 
September 30, 2015
 
December 31, 2014
Net investment properties
$

 
$
39,736

Other assets

 
1,318

Total assets


41,054

Mortgages, notes and margins payable

 
(21,214
)
Other liabilities

 
(6,465
)
Total liabilities


(27,679
)
Net assets
$


$
13,375


16

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

Unconsolidated Entities
The entities listed below are owned by the Company and other unaffiliated parties in joint ventures. Net income, distributions and capital transactions for these properties are allocated to the Company and its joint venture partners in accordance with the respective partnership agreements. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 for details of each unconsolidated entity.
These entities are not consolidated by the Company and the equity method of accounting is used to account for these investments. Under the equity method of accounting, the net equity investment of the Company and the Company’s share of net income or loss from the unconsolidated entity are reflected in the consolidated balance sheets and the consolidated statements of operations and comprehensive income.
Entity
Description
Ownership %
Carrying Value of Investment at
Sept. 30, 2015
 
Carrying Value of Investment at
 December 31, 2014
IAGM Retail Fund I, LLC
Retail shopping centers
55%
$
126,694


$
109,273

Downtown Railyard Venture, LLC (a)
Land development
(a)
46,174

 

15th & Walnut Owner, LLC (b)
Student housing
62%
4,384

 
4,740

Cobalt Industrial REIT II (c)
Industrial portfolio
36%
4,716


7,486

Other Unconsolidated Entities
Various real estate investments
Various
1,798


704




$
183,766

 
$
122,203

(a) On September 30, 2015, the Company was admitted as a member to Downtown Railyard Venture, LLC ("DRV"), which is a joint venture established in order to develop and sell a land development. Simultaneously, the Company structured and closed the sale of a non-core land development to DRV, which for accounting purposes is treated as a contribution of the land development to DRV in exchange for an equity interest of $46,174 in DRV (the foregoing transaction is referred to as the “Railyards Transaction”). The Company recorded a loss of $12,919 on the Railyards Transaction during the three and nine months ended September 30, 2015 due to the difference between the carrying value of the land and the fair value of the equity interest. The Company's ownership percentage in DRV is based upon a waterfall calculation outlined in the operating agreement. The joint venture partner is the developer and managing member of DRV, responsible for the day-to-day activities and earns fees for managing the venture. The Company analyzed the joint venture agreement and determined that DRV is not a variable interest entity. The Company also considered the participating rights under the joint venture agreement and determined that both partners have the ability to participate in major decisions, which equates to shared decision making ability. As such, both partners have significant influence but do not control DRV. Therefore, the Company does not consolidate this entity and accounts for its investment in the entity under the equity method of accounting. As of September 30, 2015, the carrying amount of the Company's investment in this entity was $46,174.
(b) On February 4, 2013, the Company entered into a joint venture agreement with Gerding Edlen Investors, LLC ("GE") in order to develop, construct and manage a student housing community on the campus of the University of Oregon in Eugene, Oregon, which was completed later in 2013 and is now fully operational. The joint venture is known as 15th & Walnut Owner, LLC ("Eugene"). The Company contributed $5,200 for an equity stake of 62%. The Company analyzed the joint venture and determined it is a VIE because the entity did not have enough equity to finance its activities without additional subordinated financial support. The Company also considered its participating rights under the joint venture agreement and determined that such participating rights also required the agreement of GE, which equates to shared decision making ability, and therefore the Company did not have the power to direct the activities of the VIE that most significantly impacted the VIE's economic performance. As such, the Company has significant influence but does not control Eugene. Therefore, the Company does not consolidate this entity and accounts for its investment in the entity under the equity method of accounting.
(c) On December 18, 2014, Cobalt Industrial REIT II ("Cobalt") sold all of its real estate assets, and the Company recognized its share of the gain on the sale of the assets in equity in earnings for the year ended December 31, 2014. During the three months ended September 30, 2015, the Company recorded receipt of a cash dividend from the joint venture. The balance of this joint venture at September 30, 2015 reflects the Company's expected return of the joint venture's remaining cash assets.

17

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

On February 21, 2014, the Company purchased its partners' interest in one joint venture, which resulted in the Company obtaining control of the venture. Therefore, as of September 30, 2014, the Company consolidated this entity, recorded the assets and liabilities of the joint venture at fair value, and recorded a gain of $4,509 on the purchase of this investment during the nine months ended September 30, 2014. This gain is included as a discontinued operation on the consolidated statement of operations and comprehensive income for the nine months ended September 30, 2014. This asset was included in the select service lodging portfolio sold on November 17, 2014.
During the three and nine months ended September 30, 2015 and 2014, the Company recorded no impairment on its unconsolidated entities.
Combined Financial Information
The following tables present the combined condensed financial information for the Company’s investment in unconsolidated entities.
 
September 30, 2015
 
December 31, 2014
Assets:
 
 
 
Real estate assets, net of accumulated depreciation
$
633,018

 
$
606,053

Other assets
119,209

 
186,220

Total assets
$
752,227

 
$
792,273

Liabilities and equity:
 
 
 
Mortgage debt
303,043

 
416,374

Other liabilities
77,453

 
72,994

Equity
371,731

 
302,905

Total liabilities and equity
$
752,227

 
$
792,273

Company’s share of equity
$
197,891

 
$
136,743

Net excess of the net book value of underlying assets over the cost of investments (net of accumulated amortization of $1,500 and $1,085, respectively)
(14,125
)
 
(14,540
)
Carrying value of investments in unconsolidated entities
$
183,766

 
$
122,203

 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
Revenues
$
17,120

 
$
48,036

 
$
85,836

 
$
148,760

Expenses:
 
 
 
 
 
 
 
Interest expense and loan cost amortization
5,257

 
6,713

 
13,075

 
31,718

Depreciation and amortization
4,849

 
23,215

 
17,465

 
56,978

Operating expenses, ground rent and general and administrative expenses
5,799

 
22,602

 
16,159

 
60,678

Total expenses
15,905

 
52,530

 
46,699


149,374

Net income (loss)
$
1,215

 
$
(4,494
)
 
$
39,137


$
(614
)
Company’s share of:
 
 
 
 
 
 
 
Net income (loss), net of excess basis depreciation of $130 and $129, and $390 and $385, respectively
$
794

 
$
(2,089
)
 
$
15,710

 
$
627


18

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

Equity in earnings of unconsolidated entities on the consolidated statement of operations and comprehensive income of $5,358 and $33,341 for the three and nine months ended September 30, 2015, respectively, include nonrecurring distributions from the sale of assets within two joint ventures that are in excess of the investments' carrying value by $4,564 and $17,631 for the three and nine months ended September 30, 2015, respectively.
The unconsolidated entities had total third party debt of $303,043 at September 30, 2015 that matures as follows:
Year
Amount
2015
$

2016
31,490

2017

2018
204,028

2019
16,250

Thereafter
51,275

 
$
303,043

Of the total outstanding debt, approximately $24,000 is recourse to the Company. It is anticipated that the joint ventures will be able to repay or refinance all of their debt on a timely basis.

19

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

6. Transactions with Related Parties
As of January 1, 2015, the Company is no longer a related party to The Inland Group, Inc. (the "Inland Group") as described below.
On March 12, 2014, the Company entered into a series of agreements and amendments to existing agreements with affiliates of the Inland Group pursuant to which the Company began the process of becoming entirely self-managed (collectively, the "Self-Management Transactions"). On March 12, 2014, as part of the Self-Management Transactions, the Company, the Business Manager, Inland American Lodging Advisor, Inc., a wholly owned subsidiary of the Business Manager ("ILodge"), the Property Managers, Inland American Industrial Management LLC ("Inland Industrial"), Inland American Office Management LLC ("Inland Office") and Inland American Retail Management LLC ("Inland Retail"), their parent, Inland American Holdco Management LLC (“Holdco”) and collectively with Inland Industrial, Inland Office and Inland Retail, and Eagle I Financial Corp. ("Eagle") entered into a Master Modification Agreement (the "Master Modification Agreement") pursuant to which the Company agreed with the Business Manager to terminate the management agreement with the Business Manager, hired all of the Business Manager’s employees and acquired the assets or rights necessary to conduct the functions previously performed for the Company by the Business Manager. The Company also hired certain Property Manager employees and assumed responsibility for performing significant property management activities. The Company assumed certain limited liabilities of the Business Manager and the Property Managers, including accrued liabilities for employee holiday, sick and vacation time for those Business Manager and Property Manager employees who became employees of the Company and liabilities arising after the closing of the Master Modification Agreement under leases and contracts assigned to the Company. The Company did not assume, and the Business Manager is obligated to indemnify the Company against, any liabilities related to the pre-closing operations of the Business Manager. Eagle, an indirect wholly owned subsidiary of the Inland Group, guaranteed the Business Manager’s indemnity and other obligations under the Master Modification Agreement. The Company did not pay an internalization fee or self-management fee in connection with the Master Modification Agreement but reimbursed the Business Manager and Property Managers for specified transaction related expenses and employee payroll costs. The Company entered into a consulting agreement with Inland Group affiliates for a term of three months at $200 per month, which the Company elected not to renew pursuant to its terms.
Concurrently, as part of the Self-Management Transactions, the Company entered into an Asset Acquisition Agreement (the "Asset Acquisition Agreement") with the Property Managers and Eagle, pursuant to which the Company agreed to terminate the management agreements with the Property Managers at the end of 2014, hire certain of the remaining Property Manager employees and acquire the assets or rights necessary to conduct the remaining functions performed for the Company by the Property Managers. The Company agreed to assume certain limited liabilities, including accrued liabilities for employee holiday, sick and vacation time for Property Manager employees that became Company employees and liabilities arising after the closing of the Asset Acquisition Agreement under leases and other contracts that the Company assumed in the transaction. The Company did not assume any liabilities related to the pre-closing operations of the Property Managers, and it did not pay an internalization fee or self-management fee in connection with the Asset Acquisition Agreement. The Company consummated the transactions contemplated thereby on December 31, 2014.
Also on March 12, 2014, as part of the Self-Management Transactions, the Company entered into separate Amended and Restated Master Management Agreements (collectively, the "Amended Property Management Agreements") with each of the Property Managers (excluding Holdco), pursuant to which the Property Managers continued to provide property management services to the Company through December 31, 2014, other than the property-level accounting, lease administration, leasing, marketing and construction functions that the Company began performing pursuant to the Master Modification Agreement. The Company transitioned the remaining property management functions on December 31, 2014. Many of the employees of the Company's former Business Manager and former Property Managers are now directly employed by the Company. The Amended Property Management Agreements terminated on December 31, 2014 pursuant to their terms.

20

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

The following table summarizes the Company’s related party transactions for the three and nine months ended September 30, 2015 and 2014.
 
Three Months Ended
 
Nine Months Ended
 
Unpaid amounts as of
 
September 30, 2015
September 30, 2014
 
September 30, 2015
September 30, 2014
 
September 30, 2015
December 31, 2014
General and administrative:
 
 
 
 
 
 
 
 
General and administrative reimbursement (a)
$

$
1,202

 
$

$
6,089

 
$

$
331

Investment advisor fee (b)

237

 

922

 

80

Total general and administrative to related parties
$

$
1,439

 
$

$
7,011

 
$

$
411

Property management
fees (c)
$

$
2,773

 
$

$
9,496

 
$

$
75

Business management
fee (d)
$

$

 
$

$
2,605

 
$

$

Loan placement fees (e)
$

$
1

 
$

$
224

 
$

$

(a)
In connection with the closing of the Master Modification Agreement and termination of the business management agreement on March 12, 2014, the Company reimbursed the Business Manager for compensation and other ordinary course out-of-pocket expenses, which totaled approximately $3,401. In addition, the Company reimbursed the Property Managers approximately $249 for compensation and out-of-pocket expenses incurred between January 1, 2014 and March 12, 2014 for the Property Manager employees the Company hired at closing to approximate the economics as though the Company had hired such employees on January 1, 2014. These costs are reflected in general and administrative reimbursements above.
In addition, the Company has directly retained affiliates of the Business Manager to provide back-office services that were provided to the Company through the Business Manager prior to the termination of the business management agreement. These service agreements are generally terminable without penalty by either party upon 60 days’ notice. These costs are reflected in general and administrative reimbursements above. During the year ended December 31, 2014, the Company sent termination notices for agreements with those affiliates of the Business Manager which provided information technology and investor services to the Company. During the nine months ended September 30, 2015, the Company sent a termination notice for the agreement with those affiliates of the Business Manager which provided human resource services to the Company. The Business Manager and its related parties are entitled to reimbursement for general and administrative expenses of the Business Manager and its related parties relating to the Company's administration.
Unpaid amounts of $411 as of December 31, 2014 are included in accounts payable and accrued expenses on the consolidated balance sheet.
(b)
The Company paid a related party of the Business Manager to purchase and monitor its investment in marketable securities. The Company terminated this agreement during the nine months ended September 30, 2015.
(c)
As part of the Self-Management Transactions, select Property Management fees charged to the Company were reduced effective January 1, 2014 to reflect, among other things, the hiring of the Property Manager employees and the services that were no longer being performed by the Property Managers. The Amended Property Management Agreements reduced the property management fees charged in respect of most of the Company’s multi-tenant retail properties to 3.50% of gross income generated by the applicable property for the first six months of 2014, and reduced fees charged in respect of the Company’s multi-tenant office properties to 3.50% of gross income generated by the applicable property for the first six months of 2014. The Company also agreed to assume responsibility for the compensation-related expenses of the Property Manager employees hired by the Company effective March 1, 2014.

21

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

Unpaid amounts of $75 as of December 31, 2014 are included in other liabilities on the consolidated balance sheet.
In addition to these fees, the Property Managers received reimbursements of payroll costs for property level employees. The Company reimbursed the Property Managers and other affiliates $1,274 and $4,569 for the three and nine months ended September 30, 2014, respectively.
(d)
In connection with the closing of the Master Modification Agreement and termination of the business management agreement, the Company paid a business management fee for January 2014, which totaled approximately $3,333. The Company did not pay a business management fee subsequent to January 31, 2014. Pursuant to the letter agreement dated May 4, 2012, the business management fee was reduced for investigation costs exclusive of legal fees incurred in conjunction with the SEC matter. The Master Modification Agreement contained a ninety-day reconciliation of certain payments and reimbursements, including the January 2014 business management fee. The reconciliation was completed during the nine months ended September 30, 2014, which resulted in $728 of SEC-related investigation costs and an adjusted January 2014 business management fee expense of $2,605. Pursuant to the March 12, 2014 Self-Management Transactions, the May 4, 2012 letter agreement by the Business Manager has been terminated.
(e)
The Company pays a related party of the Business Manager 0.2% of the principal amount of each loan placed for the Company. Such costs are capitalized as loan fees and amortized over the respective loan term.
As of September 30, 2015 and December 31, 2014, the Company had deposited $377 and $376, respectively, in Inland Bank and Trust, a subsidiary of Inland Bancorp, Inc., an affiliate of The Inland Real Estate Group, Inc.
7. Investment in Marketable Securities
Investment in marketable securities of $184,375 and $154,753 at September 30, 2015 and December 31, 2014, respectively, consists primarily of preferred and common stock investments in other REITs and certain real estate related bonds which are classified as available-for-sale securities and recorded at fair value. The cost basis net of impairments of available-for-sale securities was $138,318 and $95,480 as of September 30, 2015 and December 31, 2014, respectively. The Company's investment in marketable securities includes a 5% ownership of the outstanding common stock of Xenia. The Company held an investment in Xenia securities reported at its fair value of $98,996 as of September 30, 2015. The cost basis of the Xenia securities held by the Company was $80,748 as of September 30, 2015, which is equal to 5% of the net equity, at historical cost basis, contributed to Xenia at the time of the Spin-Off.
Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported as a separate component of comprehensive income until realized. The Company has net accumulated other comprehensive income related to its marketable securities portfolio of $46,057 and $59,273, which includes gross unrealized losses of $1,723 and $1,328 related to its marketable securities as of September 30, 2015 and December 31, 2014, respectively. Securities with gross unrealized losses have a related fair value of $7,842 and $11,502 as of September 30, 2015 and December 31, 2014, respectively. The unrealized gain on the Xenia securities held by the Company was $18,248 as of September 30, 2015.
The Company’s policy for assessing recoverability of its available-for-sale securities is to record a charge against net earnings when the Company determines that a decline in the fair value of a security drops below the cost basis and believes that decline to be other-than-temporary. Factors in the assessment of other-than-temporary impairment include determining whether (1) the Company has the ability and intent to hold the security until it recovers, and (2) the length of time and degree to which the security’s price has declined. No impairment to available-for-sale securities was recorded for the three and nine months ended September 30, 2015 and 2014.
Dividend income is recognized when earned. During the three months ended September 30, 2015 and 2014, dividend income of $2,390 and $2,193, respectively, was recognized and is included in interest and dividend income on the consolidated statements of operations and comprehensive income. During the nine months ended September 30, 2015 and 2014, dividend income of $7,853 and $9,581, respectively, was recognized and is included in interest and dividend income on the consolidated statements of operations and comprehensive income.

22

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

8. Debt
Mortgages Payable
Mortgage loans outstanding as of September 30, 2015 and December 31, 2014 were $1,856,346 and $2,999,968, respectively, and had a weighted average interest rate of 4.96% and 4.63% per annum, respectively. Of the mortgage loans outstanding at December 31, 2014, approximately $1,200,688 related to liabilities of discontinued operations. Mortgage premium and discount, net, was a discount of $6,826 and $9,332 as of September 30, 2015 and December 31, 2014, respectively. Of this net mortgage discount, $1,661 related to liabilities of discontinued operations at December 31, 2014. As of September 30, 2015, scheduled maturities for the Company’s outstanding mortgage indebtedness had various due dates through December 2041, as follows:
Maturity Date
 
As of September 30, 2015
 
Weighted average interest rate
2015
 
$
11,400

 
10.04%
2016
 
265,172

 
4.85%
2017
 
788,801

 
5.43%
2018
 
186,261

 
2.82%
2019
 

 
—%
Thereafter
 
604,712

 
4.95%
Total
 
$
1,856,346

 
4.96%
The Company is negotiating refinancing debt maturing in 2015. It is anticipated that the Company will be able to repay, refinance or extend the debt maturing in 2015, and the Company believes it has adequate sources of funds to meet short term cash needs related to these refinancings. Of the total outstanding debt for all years, approximately $41,629 is recourse to the Company at September 30, 2015.
Some of the mortgage loans require compliance with certain covenants, such as debt coverage service ratios, investment restrictions and distribution limitations. As of September 30, 2015, the Company was in compliance with all mortgage loan requirements except two loans with a carrying value of $14,087. These loans are not cross collateralized with any other mortgage loans or recourse to the Company. The stated maturities of the mortgage loans in default at September 30, 2015 were reflected as follows: $11,400 in 2015 and $2,687 in 2016. Subsequent to September 30, 2015, the 2015 maturity of $11,400 was extinguished using proceeds from the sale of the underlying asset. As of December 31, 2014, the Company was in compliance with all such covenants, with the exception of one lodging property which was closed for business during the fourth quarter of 2014 due to earthquake damage. This property was included in the Spin-Off.
Line of Credit
On February 3, 2015, the Company entered into an amended and restated credit agreement for a $300,000 unsecured revolving line of credit with KeyBank National Association, JP Morgan Chase Bank National Association and other financial institutions. The accordion feature allows the Company to increase the size of its unsecured line of credit up to $600,000, subject to certain conditions. The unsecured revolving line of credit matures on February 2, 2019 and contains one twelve-month extension option that the Company may exercise upon payment of an extension fee equal to 0.15% of the commitment amount on the maturity date and subject to certain other conditions. The unsecured revolving line of credit bears interest at a rate equal to LIBOR plus 1.40% and requires the maintenance of certain financial covenants. As of September 30, 2015, the Company was in compliance with all of the covenants and default provisions under the credit agreement. The Company had $299,963 available under the revolving line of credit as of September 30, 2015. As of September 30, 2015, the interest rate of the revolving line of credit was 1.40%.
In 2013, the Company entered into a credit agreement with KeyBank National Association, JP Morgan Chase Bank National Association and other financial institutions to provide for a senior unsecured credit facility in the aggregate amount of $500,000. The credit facility consisted of a $300,000 senior unsecured revolving line of credit and a total outstanding term loan of $200,000. As of December 31, 2014, the interest rates of the revolving line of credit and unsecured term loan were 1.60% and 1.67%, respectively. Upon closing the credit agreement, the Company borrowed the full amount of the term loan which remained outstanding as of December 31, 2014 and was repaid during the nine months ended September 30, 2015. As of December 31, 2014, the Company had $300,000 available under the revolving line of credit. This credit agreement was refinanced on February 3, 2015, as described above.

23

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

9. Fair Value Measurements
In accordance with ASC 820, Fair Value Measurement and Disclosures, the Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition.
Recurring Measurements
For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of the fair value for each major category of assets and liabilities is presented below:
 
 
Fair Value Measurements at September 30, 2015
 
 
Using Quoted Prices in Active Markets for Identical Assets
 
Using Significant
Other Observable Inputs
 
Using Significant
Other Unobservable Inputs
 
 
(Level 1)
 
(Level 2)
 
(Level 3)
Available-for-sale real estate equity securities
 
$
182,058

 
$

 
$

Real estate related bonds
 

 
2,317

 

    Total assets
 
$
182,058

 
$
2,317

 
$

Derivative interest rate instruments
 

 
(2,607
)
 

     Total liabilities
 
$

 
$
(2,607
)
 
$

 
 
Fair Value Measurements at December 31, 2014
 
 
Using Quoted Prices in Active Markets for Identical Assets
 
Using Significant
 Other Observable Inputs
 
Using Significant
 Other Unobservable Inputs
 
 
(Level 1)
 
(Level 2)
 
(Level 3)
Available-for-sale real estate equity securities
 
$
151,062


$


$

Real estate related bonds
 


3,691



    Total assets
 
$
151,062


$
3,691


$

Derivative interest rate instruments
 


(1,744
)


     Total liabilities
 
$


$
(1,744
)

$


24

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

Level 1
At September 30, 2015 and December 31, 2014, the fair value of the available-for-sale real estate equity securities have been valued based upon quoted market prices for the same or similar issues when current quoted market prices were available. Unrealized gains or losses on investment are reflected in unrealized gain (loss) on investment securities in comprehensive income on the consolidated statements of operations and comprehensive income.
Level 2
To calculate the fair value of the real estate related bonds and the derivative interest rate instruments, the Company primarily uses quoted prices for similar securities and contracts. For the real estate related bonds, the Company reviews price histories for similar market transactions. For the derivative interest rate instruments, the Company uses inputs based on data that is observed in the forward yield curve which is widely observable in the marketplace.  The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements which utilizes Level 3 inputs, such as estimates of current credit spreads. However, as of September 30, 2015 and December 31, 2014, the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. As of September 30, 2015 and December 31, 2014, the Company had outstanding interest rate swap agreements with a notional value of $47,000 and $51,283, respectively.
Level 3
At September 30, 2015 and December 31, 2014, the Company had no Level 3 recurring fair value measurements.
Nonrecurring Measurements
The following table summarizes activity for the Company’s assets measured at fair value on a nonrecurring basis. The Company recognized certain impairment charges to reflect the investments at their fair values for the three and nine months ended September 30, 2015 and 2014. The asset groups that were reflected at fair value through this evaluation are:
 
For the three months ended
 
September 30, 2015
 
September 30, 2014
 
Fair Value Measurements Using Significant Unobservable Inputs
 (Level 3)
 
Total
Impairment
Losses
 
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
 
Total
 Impairment
Losses
Investment properties
$
59,092

 
$
92,167

 
$
7,343

 
$
670

Total
$
59,092


$
92,167


$
7,343


$
670

 
For the nine months ended
 
September 30, 2015
 
September 30, 2014
 
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
 
Total
Impairment
Losses
 
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
 
Total
Impairment
Losses
Investment properties
$
59,092

 
$
92,167

 
$
137,723

 
$
75,616

Total
$
59,092

 
$
92,167

 
$
137,723

 
$
75,616

Investment Properties
During the three and nine months ended September 30, 2015, the Company completed the Railyards Transaction. See joint venture disclosure in "Note 5. Investment in Partially Owned Entities". The Company’s estimated fair value relating to the investment property's impairment analysis was based on a third party independent appraisal obtained as of September 30, 2015. The appraisal utilized a twelve-year discounted cash flow model, which includes inflows and outflows over a specific holding

25

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

period. The cash flows consist of unobservable inputs such as forecasted revenues and expenses. These unobservable inputs are based on market conditions and expected growth rates. A discount rate of 14% was utilized in the model and is based upon observable rates within a reasonable range of current market rates. It was determined the property was impaired and therefore was written down to fair value. The Company recorded an impairment charge of $92,167 for this property for the three and nine months ended September 30, 2015.
During the three and nine months ended September 30, 2014, the Company identified certain properties which may have a reduction in the expected holding period and reviewed the probability of these assets' dispositions. The Company's estimated fair value relating to the investment properties' impairment analysis was based on a comparison of letters of intent or purchase contracts, broker opinions of value and ten-year discounted cash flow models, which includes contractual inflows and outflows over a specific holding period. The cash flows consist of observable inputs such as contractual revenues and unobservable inputs such as forecasted revenues and expenses. These unobservable inputs are based on market conditions and the Company's expected growth rates. During the three and nine months ended September 30, 2014, capitalization rates ranging from 6.00% to 9.00% and discount rates ranging from 6.75% to 9.25% were utilized in the model. These rates are based upon observable rates that the Company believes to be within a reasonable range of current market rates. Additionally, during the nine months ended September 30, 2014, one asset previously classified as held for sale was re-classified as held and used and was re-measured at the lesser of the carrying value or fair value as of May 8, 2014, resulting in an impairment charge to this asset of $67,647.
For the three months ended September 30, 2015 and 2014, the Company recorded an impairment of investment properties of $92,167 and $670, respectively, in continuing operations. For the nine months ended September 30, 2015 and 2014, the Company recorded an impairment of investment properties of $92,167 and $75,616, respectively, in continuing operations.
Certain properties were impaired prior to disposal. There were no related impairment charges for those properties included in discontinued operations for the three and nine months ended September 30, 2015. There were $1,667 and $4,665 related impairment charges for those properties included in discontinued operations for the three and nine months ended September 30, 2014, respectively.
Financial Instruments Not Measured at Fair Value
The table below represents the fair value of financial instruments presented at carrying values in the Company's consolidated financial statements as of September 30, 2015 and December 31, 2014.
 
September 30, 2015

December 31, 2014
 
Carrying Value
Estimated 
Fair Value

Carrying Value
Estimated 
Fair Value
Mortgages payable
$
1,856,346

$
1,870,328


$
2,999,968

$
3,022,002

Line of credit
$
37

$
37

 
$
200,000

$
200,000

The Company estimates the fair value of its mortgages payable using a weighted average effective interest rate of 4.45% per annum. The fair value estimate of the line of credit approximates the carrying value. The assumptions reflect the terms currently available on similar borrowing terms to borrowers with credit profiles similar to the Company's. The Company has determined that its debt instrument valuations are classified in Level 2 of the fair value hierarchy.

26

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

10. Income Taxes
The Company has elected and has operated so as to qualify to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with the tax year ended December 31, 2005. So long as it qualifies as a REIT, the Company generally will not be subject to federal income tax on taxable income that is distributed currently to stockholders. A REIT is subject to a number of organizational and operational requirements including a requirement that it currently distribute at least 90% of its REIT taxable income (subject to certain adjustments) to its stockholders each year. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates and would not be able to re-elect REIT during the four years following the year of the failure. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income. In addition, the Company owns substantially all of the outstanding stock of a subsidiary REIT, MB REIT (Florida), Inc. ("MB REIT"), which the Company consolidates for financial reporting purposes but which is treated as a separate REIT for federal income tax purposes.
The Company has elected to treat certain of its consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries pursuant to the Code. Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates. The Company's hotels were leased to certain of the Company's taxable REIT subsidiaries. Lease revenue from these taxable REIT subsidiaries and the Company's wholly-owned subsidiaries is eliminated in consolidation.
For the three months ended September 30, 2015 and 2014, an income tax expense of $1,579 and $454, respectively, was included in continuing operations on the consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2015 and 2014, an income tax expense of $2,445 and $1,196, respectively, was included in continuing operations on the consolidated statements of operations and comprehensive income.
For the three months ended September 30, 2015 and 2014 income tax benefit of $1,182 and expense of $1,862, respectively, was included in net income from discontinued operations on the consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2015 and 2014, income tax expense of $988 and $5,786, respectively, was included in net income from discontinued operations on the consolidated statements of operations and comprehensive income.

27

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

11. Segment Reporting
The Company's current portfolio strategy is to tailor and grow the retail and student housing segments and dispose of the remaining non-core assets. The Company's objective has been, and will continue to be, maximizing stockholder value over the long-term. The non-core segment includes multi-tenant office and triple-net properties. Net operating income of the segments excludes interest expense, depreciation and amortization, general and administrative expenses, net income of noncontrolling interest and other investment income from corporate investments. The non-segmented assets primarily include the Company’s cash and cash equivalents, investments in marketable securities, construction in progress, investment in unconsolidated entities and notes receivable.
For the nine months ended September 30, 2015, approximately 13% of the Company’s retail and non-core revenue from continuing operations was generated by three properties leased to AT&T, Inc. As a result of the concentration of revenue generated from these properties, if AT&T, Inc. were to cease paying rent or fulfilling its other monetary obligations, the Company would have significantly reduced revenues and/or higher expenses until the defaults were cured or the properties were leased to a new tenant or tenants, if at all. The student housing segment was not considered in this analysis as leases are on a per bed basis, for a year or less, and are immaterial when evaluated individually.
The following table summarizes net property operations income by segment as of and for the three months ended September 30, 2015.
 
Total
 
Retail
 
Student Housing
 
Non-core
Rental income
$
92,877

 
$
51,637

 
$
20,342

 
$
20,898

Straight line adjustment
216

 
815

 
35

 
(634
)
Tenant recovery income
16,819

 
15,473

 
162

 
1,184

Other property income
2,827

 
684

 
1,273

 
870

Total income
112,739

 
68,609

 
21,812

 
22,318

Operating expenses
33,423

 
21,198

 
9,198

 
3,027

Net operating income
$
79,316

 
47,411

 
12,614

 
19,291

Non-allocated expenses (a)
(55,757
)
 
 
 
 
 
 
Other income and expenses (b)
(33,102
)
 
 
 
 
 
 
Equity in earnings of unconsolidated entities
5,358

 
 
 
 
 
 
Provision for asset impairment (c)
(92,167
)
 
 
 
 
 
 
Net loss from continuing operations
$
(96,352
)
 
 
 
 
 
 
Net income from discontinued operations (d)
713

 
 
 
 
 
 
Less: net income attributable to noncontrolling interests
(8
)
 
 
 
 
 
 
Net loss attributable to Company
$
(95,647
)
 
 
 
 
 
 
(a) 
Non-allocated expenses consists of general and administrative expenses and depreciation and amortization.
(b) 
Other income and expenses consists of gain on sale of investment properties, gain on extinguishment of debt, loss on contribution to joint venture, dividend income, interest expense, other income, realized gain on sale of marketable securities, net, and income tax expense.
(c) 
Total provision for asset impairment included $92,167 related to one non-core development.
(d) 
Net income from discontinued operations primarily relates to activity resulting from the Spin-Off of Xenia.

28

INVENTRUST PROPERTIES CORP.


Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share amounts)
September 30, 2015
(unaudited)

The following table summarizes net property operations income by segment as of and for the three months ended September 30, 2014.
 
Total
 
Retail
 
Student Housing
 
Non-core
Rental income
$
92,983

 
$
50,672

 
$
17,586

 
$
24,725

Straight line adjustment
875

 
1,524

 
17

 
(666
)
Tenant recovery income
15,055

 
14,063

 
134

 
858

Other property income
1,819

 
663

 
1,119

 
37

Total income
110,732

 
66,922

 
18,856

 
24,954

Operating expenses
36,889

 
21,631

 
11,563

 
3,695

Net operating income
$
73,843

 
45,291

 
7,293

 
21,259

Non-allocated expenses (a)
(60,196
)
 
 
 
 
 
 
Other income and expenses (b)
17,315

 
 
 
 
 
 
Equity in loss of unconsolidated entities
(2,089
)
 
 
 
 
 
 
Provision for asset impairment (c)
(670
)
 
 
 
 
 
 
Net income from continuing operations
$
28,203

 
 
 
 
 
 
Net income from discontinued operations (d)
24,357

 
 
 
 
 
 
Less: net income attributable to noncontrolling interests
(8
)
 
 
 
 
 
 
Net income attributable to Company
$
52,552