Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2021

4

Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2021

5

Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2020

6

Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2019

7

Pro Forma Condensed Consolidated Statement of Operations for the Period from July 1, 2018 to December 31, 2018

8

Pro Forma Condensed Consolidated Statement of Operations for the Period from January 1, 2018 to June 30, 2018

9

Notes to Condensed Consolidated Pro Forma Financial Statements

10

Property Name

City

Company-Owned

GLA

(000's)

Plaza Isabela

Isabela

259

Plaza Fajardo

Fajardo

274

Plaza Walmart

Guayama

164

Plaza del Atlántico

Arecibo

223

Plaza del Sol

Bayamon

598

Plaza Río Hondo

Bayamon

556

Plaza Escorial

Carolina

525

Plaza Cayey

Cayey

313

Plaza del Norte

Hatillo

626

3,538

Date Sold

Property Name

City

Company-Owned

GLA

(000's)

Gross

Sales Price

(000's)

December 22, 2020

Plaza Palma Real

Humacao

448

$

50,000

April 14, 2021

Plaza Vega Baja

Vega Baja

185

4,500

June 3, 2021

Señorial Plaza

Rio Piedras

202

20,350

835

$

74,850

•

The consummation of the Puerto Rico Disposition;

•

The repayment of the outstanding balance of the mortgage loan using a portion of the net proceeds received in connection with the Puerto Rico Disposition and the related release of restricted cash;

•

The termination of the Revolving Credit Agreement (no amounts outstanding at June 30, 2021) and

•

Elimination of the historical information of the Sold Puerto Rico Assets.

Transaction Accounting Adjustments

Company

Historical

Puerto Rico

Disposition

Mortgage Repayment

Company

Pro Forma

Assets

Land

$

337,869

$

(239,540

)

(A)

$

—

$

98,329

Buildings

918,294

(543,171

)

(A)

—

375,123

Fixtures and tenant improvements

114,580

(62,061

)

(A)

—

52,519

1,370,743

(844,772

)

—

525,971

Less: Accumulated depreciation

(554,434

)

332,964

(A)

—

(221,470

)

816,309

(511,808

)

—

304,501

Construction in progress

2,489

(1,392

)

(A)

—

1,097

Total real estate assets, net

818,798

(513,200

)

—

305,598

Cash and cash equivalents

67,185

539,000

(B)

(155,922

)

(C)

450,263

Restricted cash

59,048

—

(59,048

)

(C)

—

Accounts receivable

17,501

(9,530

)

(A)

—

7,971

Other assets, net

17,960

(794

)

(A)

(38

)

(D)

17,128

$

980,492

$

15,476

$

(215,008

)

$

780,960

Liabilities and Equity

Mortgage indebtedness, net

$

207,243

$

—

$

(207,243

)

(E)

—

Accounts payable and other liabilities

30,420

(9,049

)

(A)

(425

)

(F)

20,946

Total liabilities

237,663

(9,049

)

(207,668

)

20,946

Commitments and contingencies

Redeemable preferred equity

190,000

—

—

190,000

Retail Value Inc. shareholders' equity

Common shares, with par value, $0.10 stated value;

   200,000,000 shares authorized; 21,104,840 shares

   issued at June 30, 2021

2,110

—

—

2,110

Additional paid-in capital

740,548

—

—

740,548

Accumulated distributions in excess of net loss

(189,800

)

24,525

(B)

(7,340

)

(G)

(172,615

)

Less: Common shares in treasury at cost:

   1,620 shares at June 30, 2021

(29

)

—

—

(29

)

Total equity

552,829

24,525

(7,340

)

570,014

$

980,492

$

15,476

$

(215,008

)

$

780,960

Transaction Accounting Adjustments

Company

Historical

Sold

Puerto Rico

Assets (H)

Puerto Rico Disposition (I)

Mortgage Repayment (J)

Company

Pro Forma

Revenues from operations:

Rental income

$

83,279

$

(1,611

)

$

(46,109

)

$

—

$

35,559

Other income

91

(5

)

(14

)

—

72

83,370

(1,616

)

(46,123

)

—

35,631

Rental operation expenses:

Operating and maintenance

18,776

(856

)

(13,356

)

—

4,564

Real estate taxes

8,023

(171

)

(1,952

)

—

5,900

Property and asset management fees

8,069

(442

)

(4,532

)

—

3,095

Impairment charges

81,060

(2,010

)

(79,050

)

—

—

General and administrative

2,123

—

—

—

2,123

Depreciation and amortization

24,562

(454

)

(12,420

)

—

11,688

142,613

(3,933

)

(111,310

)

—

27,370

Other income (expense):

Interest expense, net

(7,428

)

—

—

7,397

(31

)

Debt extinguishment costs

(1,242

)

—

—

1,242

—

Other income, net

197

—

(127

)

—

70

Gain on disposition of real estate, net

1,541

304

—

—

1,845

(6,932

)

304

(127

)

8,639

1,884

(Loss) income before tax expense

(66,175

)

2,621

65,060

8,639

10,145

Tax expense

(197

)

7

46

—

(144

)

Net (loss) income

$

(66,372

)

$

2,628

$

65,106

$

8,639

$

10,001

Comprehensive (loss) income

$

(66,372

)

$

2,628

$

65,106

$

8,639

$

10,001

Per share data:

   Basic and diluted

$

(3.16

)

$

0.48

   Basic and diluted - average shares

   outstanding

21,006

21,006

Transaction Accounting Adjustments

Company

Historical

Sold

Puerto Rico

Assets (H)

Puerto Rico Disposition (I)

Mortgage Repayment (J)

Company

Pro Forma

Revenues from operations:

Rental income

$

169,725

$

(9,909

)

$

(79,125

)

$

—

$

80,691

Other income

83

(1

)

(36

)

—

46

169,808

(9,910

)

(79,161

)

—

80,737

Rental operation expenses:

Operating and maintenance

40,803

(4,246

)

(25,097

)

—

11,460

Real estate taxes

20,752

(886

)

(3,909

)

—

15,957

Property and asset management fees

18,612

(1,168

)

(8,915

)

—

8,529

Impairment charges

115,525

(15,165

)

(45,990

)

—

54,370

General and administrative

3,612

—

—

—

3,612

Depreciation and amortization

57,053

(3,983

)

(24,675

)

—

28,395

256,357

(25,448

)

(108,586

)

—

122,323

Other income (expense):

Interest expense, net

(22,742

)

—

—

20,543

(2,199

)

Debt extinguishment costs

(5,922

)

—

—

(12,793

)

(18,715

)

Other income, net

251

(42

)

(209

)

—

—

Gain on disposition of real estate, net

22,800

910

—

—

23,710

(5,613

)

868

(209

)

7,750

2,796

Loss before tax expense

(92,162

)

16,406

29,216

7,750

(38,790

)

Tax expense

(1,392

)

63

472

—

(857

)

Net loss

$

(93,554

)

$

16,469

$

29,688

$

7,750

$

(39,647

)

Comprehensive loss

$

(93,554

)

$

16,469

$

29,688

$

7,750

$

(39,647

)

Per share data:

   Basic and diluted

$

(4.72

)

$

(2.00

)

   Basic and diluted - average shares

   outstanding

19,806

19,806

Transaction Accounting Adjustments

Company

Historical

Hurricane Insurance Claim (K)

Sold

Puerto Rico

Assets (H)

Puerto Rico

Disposition (I)

Company

Pro Forma

Revenues from operations:

Rental income

$

230,328

$

—

$

(8,911

)

$

(89,609

)

$

131,808

Business interruption income

7,675

—

(1,916

)

(5,759

)

—

Other income

1,092

—

(818

)

(158

)

116

239,095

—

(11,645

)

(95,526

)

131,924

Rental operation expenses:

Operating and maintenance

41,604

—

(3,522

)

(22,075

)

16,007

Real estate taxes

27,693

—

(916

)

(4,014

)

22,763

Property and asset management fees

21,857

—

(1,241

)

(8,852

)

11,764

Impairment charges

80,070

—

(4,480

)

—

75,590

Hurricane property insurance

   income, net

(79,391

)

72,016

1,913

5,462

—

General and administrative

3,953

—

—

—

3,953

Depreciation and amortization

74,598

—

(3,544

)

(26,216

)

44,838

170,384

72,016

(11,790

)

(55,695

)

174,915

Other income (expense):

Interest expense, net

(42,674

)

(357

)

—

3,735

(39,296

)

Debt extinguishment costs

(19,379

)

—

—

1,143

(18,236

)

Transaction costs

(37

)

—

—

—

(37

)

Other expense, net

(850

)

—

—

—

(850

)

Gain on disposition of real estate, net

41,482

—

—

—

41,482

(21,458

)

(357

)

—

4,878

(16,937

)

Income (loss) before tax expense

47,253

(72,373

)

145

(34,953

)

(59,928

)

Tax expense

(504

)

—

1

109

(394

)

Net income (loss)

$

46,749

$

(72,373

)

$

146

$

(34,844

)

$

(60,322

)

Comprehensive income (loss)

$

46,749

$

(72,373

)

$

146

$

(34,844

)

$

(60,322

)

Per share data:

   Basic and diluted

$

2.46

$

(3.18

)

   Basic and diluted - average shares

   outstanding

19,008

19,008

Transaction Accounting Adjustments

Company

Historical

Sold

Puerto Rico

Assets (H)

Puerto Rico

Disposition (I)

Company

Pro Forma

Revenues from operations:

Rental income

$

132,875

$

(3,870

)

$

(43,732

)

$

85,273

Business interruption income

4,404

(2,774

)

(1,630

)

—

Other income

68

(1

)

9

76

137,347

(6,645

)

(45,353

)

85,349

Rental operation expenses:

Operating and maintenance

21,655

(1,384

)

(10,433

)

9,838

Real estate taxes

17,597

(393

)

(1,993

)

15,211

Property and asset management fees

13,075

(563

)

(4,650

)

7,862

Impairment charges

6,390

—

—

6,390

Hurricane property insurance loss, net

366

(37

)

(329

)

—

General and administrative

2,147

—

—

2,147

Depreciation and amortization

42,471

(1,160

)

(10,988

)

30,323

103,701

(3,537

)

(28,393

)

71,771

Other income (expense):

Interest expense, net

(32,249

)

—

—

(32,249

)

Debt extinguishment costs

(6,431

)

—

—

(6,431

)

Transaction costs

(186

)

—

—

(186

)

Other expense, net

(2,590

)

—

—

(2,590

)

Gain on disposition of real estate, net

16,813

—

—

16,813

(24,643

)

—

—

(24,643

)

Income (loss) before tax expense

9,003

(3,108

)

(16,960

)

(11,065

)

Tax expense

(151

)

—

—

(151

)

Net income (loss)

$

8,852

$

(3,108

)

$

(16,960

)

$

(11,216

)

Comprehensive income (loss)

$

8,852

$

(3,108

)

$

(16,960

)

$

(11,216

)

Per share data:

   Basic and diluted

$

0.48

$

(0.61

)

   Basic and diluted - average shares

   outstanding

18,464

18,464

Transaction Accounting Adjustments

Predecessor

Historical

Sold

Puerto Rico

Assets (H)

Puerto Rico

Disposition (I)

Predecessor

Pro Forma

Revenues from operations:

Rental income

$

149,825

$

(3,846

)

$

(42,989

)

$

102,990

Business interruption income

5,100

(1,802

)

(3,298

)

—

Other income

309

(5

)

(30

)

274

155,234

(5,653

)

(46,317

)

103,264

Rental operation expenses:

Operating and maintenance

24,608

(1,647

)

(9,904

)

13,057

Real estate taxes

19,571

(397

)

(2,003

)

17,171

Property and asset management fees

6,819

(333

)

(2,897

)

3,589

Impairment charges

48,680

—

—

48,680

Hurricane property insurance loss, net

868

(10

)

(858

)

—

General and administrative

7,638

—

—

7,638

Depreciation and amortization

50,144

(1,371

)

(11,434

)

37,339

158,328

(3,758

)

(27,096

)

127,474

Other income (expense):

Interest expense, net

(37,584

)

—

—

(37,584

)

Debt extinguishment costs

(109,036

)

790

14,576

(93,670

)

Transaction costs

(33,325

)

—

—

(33,325

)

Other expense, net

(3

)

—

—

(3

)

Gain on disposition of real estate, net

13,096

—

—

13,096

(166,852

)

790

14,576

(151,486

)

Loss before tax expense

(169,946

)

(1,105

)

(4,645

)

(175,696

)

Tax expense

(4,210

)

2,081

1,916

(213

)

Net (loss) income

$

(174,156

)

$

976

$

(2,729

)

$

(175,909

)

Comprehensive (loss) income

$

(174,156

)

$

976

$

(2,729

)

$

(175,909

)

Per share data:

   Basic and diluted

N/A

N/A

(A)

Reflects the removal of the assets and liabilities disposed in connection with the Puerto Rico Disposition from the historical information presented.  

(B)

The interests in the limited liability companies that own the assets sold in connection with the Puerto Rico Disposition had a gross sales price of $550.0 million.  The pro forma net gain on disposition of real estate is based on the Company’s historical balance sheet information as of June 30, 2021 and is subject to changes based upon the actual balance sheet on the closing date of the Puerto Rico Disposition, finalization of working capital adjustments and the Company’s financial closing procedures, among other things and may differ significantly from the actual net gain on disposition of real estate that the Company recognizes.  The pro forma net gain on disposition of real estate presented below has not been reflected in the unaudited pro forma condensed consolidated statements of operations as this amount pertains to discontinued operations and does not reflect the impact on income from continuing operations:  

Gross sales price

$

550,000

Estimated transaction costs

(10,300

)

Net proceeds

539,700

Less:  Prorations

(700

)

Net cash received

$

539,000

Net assets written-off

(514,475

)

Pro forma gain on disposition of real estate, net

$

24,525

(C)

Reflects the reduction of cash ($214,545) from proceeds of the Puerto Rico Disposition utilized to repay the mortgage loan as the Company’s equity in these properties were pledged to the mortgage lender, as well as the payment of accrued interest ($425). Amount is offset by release of restricted cash on deposit with the lender ($59,048) upon repayment of the mortgage loan, pursuant to the mortgage loan agreement.

(D)

Reflects the write-off of the unamortized loan costs on the Revolving Credit Agreement, which was terminated as a result of the repayment of the mortgage loan pursuant to the terms of the Revolving Credit Agreement.

(E)

Reflects the repayment of the mortgage loan ($214,545) net of the write-off of related unamortized loan costs ($7,302).

(F)

Reflects the removal of accrued interest paid in connection with the repayment of the mortgage loan.

(G)

Reflects the write-off of the unamortized loan costs on the mortgage loan ($7,302) and the termination of the Revolving Credit Agreement ($38). As of June 30, 2021, there were no borrowings outstanding under the Revolving Credit Agreement.

(H)

Reflects the removal of the revenues and expenses for the six months ended June 30, 2021 and for the years ended December 31, 2020 and 2019 and the period from July 1, 2018 to December 31, 2018 and the period from January 1, 2018 to June 30, 2018 for the Sold Puerto Rico Assets, from the historical information presented.  

(I)

Reflects the removal of the revenues and expenses for the six months ended June 30, 2021 and for the years ended December 31, 2020 and 2019 and the period from July 1, 2018 to December 31, 2018 and the period from January 1, 2018 to June 30, 2018 for the assets sold in connection with the Puerto Rico Disposition from the historical information presented.  

(J)

Reflects the elimination of interest expense and related amortization to reflect the amounts repaid on the mortgage loan as if the proceeds from the Puerto Rico Disposition had been received and applied to repay a portion of the mortgage loan on January 1, 2020, as well as other repayments made due to asset sales during the first quarter of 2020, thus resulting in the full repayment of the loan. This column also reflects the adjustment of debt extinguishment costs assuming the mortgage loan was repaid in the first quarter of 2020. During the predecessor period from January 1, 2018 to June 30, 2018, there was Parent Company unsecured debt which was repaid in conjunction with the Company entering into a new mortgage loan in February 2018. This mortgage loan was subsequently refinanced in March 2019, resulting in changes to the terms of the debt. As a result, adjustments to interest expense are not reflected for the year ended December 31, 2019, the period from July 1, 2018 to December 31, 2018 or the period from January 1, 2018 to June 30, 2018, as the current debt structure of the Company was not in place until March 2019, and interest expense for these periods would not be reflected in discontinued operations. The adjustments that are reflected to interest expense and debt extinguishment costs for the year ended December 31, 2019 and the period from January 1, 2018 to June 30, 2018, are related to the elimination of the write-offs of the prior debt structure during those historical periods. 

(K)

Adjustments for the income recorded for the settlement of an insurance claim related to property damage incurred on the Sold Puerto Rico Assets and the Puerto Rico Disposition assets in 2017 as a result of Hurricane Maria.  In addition, the Company recorded interest income from the cash on deposit.