RETAIL OPPORTUNITY INVESTMENTS CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

The following discussion should be read in conjunction with the Retail
Opportunity Investments Corp. Consolidated Financial Statements and Notes
thereto appearing elsewhere in this Annual Report on Form 10-K. The Company
makes statements in this section that are forward-looking statements within the
meaning of the federal securities laws. For a complete discussion of
forward-looking statements, see the section in this Annual Report on Form 10-K
entitled "Statements Regarding Forward-Looking Information." Certain risk
factors may cause actual results, performance or achievements to differ
materially from those expressed or implied by the following discussion. For a
discussion of such risk factors, see the section in this Annual Report on
Form 10-K entitled "Risk Factors."

Overview

The Company is organized in an UpREIT format pursuant to which Retail
Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as the
general partner of, and ROIC conducts substantially all of its business through,
its operating partnership, Retail Opportunity Investments Partnership, LP, a
Delaware limited partnership (the "Operating Partnership"), together with its
subsidiaries.

ROIC commenced operations in October 2009 as a fully integrated and self-managed
REIT, and as of December 31, 2021, ROIC owned an approximate 93.5% partnership
interest and other limited partners owned the remaining approximate 6.5%
partnership interest in the Operating Partnership. ROIC specializes in the
acquisition, ownership and management of necessity-based community and
neighborhood shopping centers on the west coast of the United States, anchored
by supermarkets and drugstores.

As of December 31, 2021, the Company's portfolio consisted of 90 properties (89
retail and one office) totaling approximately 10.2 million square feet of GLA.
As of December 31, 2021, the Company's retail portfolio was approximately 97.5%
leased. During the year ended December 31, 2021, the Company leased and renewed
approximately 448,000 and 979,000 square feet, respectively, in its portfolio.

The table below provides a reconciliation of year-end vacancies and year-end vacancies for its retail portfolio at December 31, 2021:

                                       Vacant Space Square Footage
Vacant space at December 31, 2020                322,538
Square footage vacated                           145,294
Vacant space in acquired properties               12,211
Vacant space in sold properties                  (29,599)
Square footage leased                           (201,336)
Vacant space at December 31, 2021                249,108



The Company has committed approximately $21.5 million, or $47.93 per square
foot, in tenant improvements, including building and site improvements, for new
leases that occurred during the year ended December 31, 2021. The Company has
committed approximately $1.5 million, or $3.25 per square foot, in leasing
commissions for the new leases that occurred during the year ended December 31,
2021. Additionally, the Company has committed approximately $766,000, or $0.78
per square foot, in tenant improvements, including building and site
improvements, for the renewed leases that occurred during the year ended
December 31, 2021. Leasing commission commitments for renewed leases were not
material for the year ended December 31, 2021.

Impact of COVID-19

The spread of COVID-19 has had a significant impact on the global economy, the
U.S. economy, the economies of the local markets throughout the west coast in
which the Company's properties are located, and the broader financial markets.
Local, state and federal authorities have taken preventative measures to
alleviate the public health crisis and these preventative measures have affected
the operations of the Company's tenant base to varying degrees depending on the
category and location of the tenant. For example, following the COVID-19
outbreak, grocery stores, pharmacies and retail stores were generally permitted
to remain open and operational (with capacity limitations in the case of certain
retail stores), restaurants in certain states such as California, Washington,
and Oregon were generally limited to take-out and delivery services and
outdoor-dining
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only or subject to capacity limitations when indoor dining was permitted, and
bars, movie theaters, gyms and salons in certain states and counties were
generally forced to close indoor operations for periods of time. Even as efforts
to contain the pandemic, including vaccinations, have made progress, there is
substantial uncertainty about the nature and degree of the continued effects of
COVID-19 over time, including whether customers will re-engage with tenants to
the extent they have in the past.

The Company derives revenues primarily from rents and reimbursement payments
received from tenants under leases at the Company's properties. The Company's
operating results therefore depend materially on the ability of its tenants to
make required rental payments. The extent to which the COVID-19 pandemic impacts
the businesses of the Company's tenants, and the Company's operations and
financial condition, will depend on future developments which are still
uncertain and cannot be predicted with confidence. In addition, the trend toward
online shopping for goods and services that accelerated during the COVID-19
pandemic may continue and could result in a permanent decrease in spending
levels at brick-and-mortar commercial establishments. The factors described
above, as well as additional factors that the Company may not currently be aware
of, could materially negatively impact the Company's ability to collect rent and
could lead to increases in rent relief requests from tenants, termination of
leases by tenants, tenant bankruptcies, decreases in demand for retail space at
the Company's properties, difficulties in accessing capital, impairment of the
Company's long-lived assets and other impacts that could materially and
adversely affect the Company's business, results of operations, financial
condition and ability to pay distributions to stockholders.

As is believed to be the case with retail landlords across the U.S., the Company
has received a number of rent relief requests from tenants, most often in the
form of rent deferral requests. Since the onset of the COVID-19 pandemic, the
Company has entered into lease concessions that deferred approximately
$11.1 million of contractual amounts billed. As of December 31, 2021,
approximately $5.6 million of such deferral amounts have been rebilled in
accordance with the underlying agreements, of which approximately $4.8 million,
or approximately 85.4%, has been collected. The Company has evaluated and
continues to evaluate rent relief requests on a case-by-case basis. Not all
tenant requests have resulted or will ultimately result in concession
agreements, nor is the Company foregoing its contractual rights under its lease
agreements. See Note 1 of the accompanying consolidated financial statements for
a discussion on how the Company accounts for COVID-19 related rent concessions.

The Company's financial results for the year ended December 31, 2021 have been
impacted by the COVID-19 pandemic resulting in reductions in property operating
income and its non-GAAP performance measures from changes in projected
uncollectible rental revenue. The comparability of the Company's results of
operations for the year ended December 31, 2021 to future periods may be
impacted by the effects of the outbreak of the COVID-19 pandemic.

Operating results

At December 31, 2021, the Company had 90 properties (89 retail and one office),
all of which are consolidated in the accompanying financial statements. The
Company believes, because the properties are located in densely populated areas
and are leased to retailers that provide necessity-based, non-discretionary
goods and services, the nature of its investments provides for relatively stable
revenue flows. The Company has a strong capital structure with manageable debt
as of December 31, 2021. The Company expects to continue to actively explore
acquisition opportunities consistent with its business strategy.

Property operating income is a non-GAAP financial measure of performance. The
Company defines property operating income as operating revenues (rental revenue
and other income), less property and related expenses (property operating
expenses and property taxes). Property operating income excludes general and
administrative expenses, mortgage interest income, depreciation and
amortization, acquisition transaction costs, other expense, interest expense,
gains and losses from property acquisitions and dispositions, equity in earnings
from unconsolidated joint ventures, and extraordinary items. Other REITs may use
different methodologies for calculating property operating income, and
accordingly, the Company's property operating income may not be comparable to
other REITs.

Property operating income is used by management to evaluate and compare the
operating performance of the Company's properties, to determine trends in
earnings and to compute the fair value of the Company's properties as this
measure is not affected by the cost of our funding, the impact of depreciation
and amortization expenses, gains or losses from the acquisition and sale of
operating real estate assets, general and administrative expenses or other gains
and losses that relate to our ownership of our properties. The Company believes
the exclusion of these items from net income is useful because the resulting
measure captures the actual revenue generated and actual expenses incurred in
operating the Company's properties as well as trends in occupancy rates, rental
rates and operating costs.

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Property operating income is a measure of the operating performance of the Company’s properties, but does not measure the performance of the Company as a whole. Property operating income is therefore not a substitute for net income or operating income calculated in accordance with GAAP.

For the Company's discussion related to the results of operations and liquidity
and capital resources for fiscal year 2019, including certain comparisons of
results for fiscal year 2020 to fiscal year 2019, please refer to Part II, Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations in its fiscal 2020 Form 10-K, filed with the Securities and Exchange
Commission on February 24, 2021.

Results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Property Operating Income

The table below provides a reconciliation of consolidated operating income in
accordance with GAAP to consolidated property operating income for the years
ended December 31, 2021 and 2020 (in thousands):

                                                                                            Year Ended December 31,
                                                                                            2021                   2020
Operating income per GAAP                                                           $     114,895              $  94,447
Plus:           Depreciation and amortization                                              92,929                 97,731
                General and administrative expenses                                        19,654                 16,755

                Other expense                                                                 860                    843
Less:           Gain on sale of real estate                                               (22,340)                     -
Property operating income                                                           $     205,998              $ 209,776



The following comparison for the year ended December 31, 2021 compared to the
year ended December 31, 2020, makes reference to the effect of the same-center
properties. Same-center properties, which totaled 85 of the Company's 90
properties as of December 31, 2021, represent all operating properties owned by
the Company during the entirety of both periods presented and consolidated into
the Company's financial statements during such periods, except for the Company's
corporate office headquarters.

The table below provides a reconciliation of consolidated operating income in
accordance with GAAP to property operating income for the year ended
December 31, 2021 related to the 85 same-center properties owned by the Company
during the entirety of both the years ended December 31, 2021 and 2020 and
consolidated into the Company's financial statements during such periods (in
thousands):
                                                                                         Year Ended December 31, 2021
                                                                           Same-Center            Non Same-Center            Total
Operating income per GAAP                                               $    110,599            $          4,296          $ 114,895
Plus:           Depreciation and amortization                                 89,063                       3,866             92,929
                General and administrative expenses (1)                            -                      19,654             19,654

                Other expense (1)                                                  -                         860                860
Less:           Gain on sale of real estate                                        -                     (22,340)           (22,340)
Property operating income                                               $    199,662            $          6,336          $ 205,998


______________________

(1) For illustrative purposes, general and administrative and other expenses are included in non-same-center properties as the Company does not allocate these types of expenses between same-center and non-same-center properties .

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The table below provides a reconciliation of consolidated operating income in
accordance with GAAP to property operating income for the year ended
December 31, 2020 related to the 85 same-center properties owned by the Company
during the entirety of both the years ended December 31, 2021 and 2020 and
consolidated into the Company's financial statements during such periods (in
thousands):

                                                                                         Year Ended December 31, 2020
                                                                           Same-Center            Non Same-Center            Total
Operating income (loss) per GAAP                                         $     109,344          $        (14,897)         $  94,447
Plus:           Depreciation and amortization                                   93,735                     3,996             97,731
                General and administrative expenses (1)                              -                    16,755             16,755

                Other expense (1)                                                    -                       843                843

Property operating income                                                $     203,079          $          6,697          $ 209,776


______________________

(1) For illustrative purposes, general and administrative and other expenses are included in non-same-center properties as the Company does not allocate these types of expenses between same-center and non-same-center properties .

During the year ended December 31, 2021, the Company generated property
operating income of approximately $206.0 million compared to property operating
income of $209.8 million generated during the year ended December 31, 2020,
representing a decrease of approximately $3.8 million. The property operating
income for the 85 same-center properties decreased approximately $3.4 million
primarily due to the accelerated recognition of below-market lease intangible
liabilities resulting from two lease terminations in the year ended December 31,
2020 of approximately $7.4 million offset by a decrease in estimated
uncollectible rental revenue in the year ended December 31, 2021.

Depreciation and amortization

The Company incurred depreciation and amortization expenses of approximately
$92.9 million during the year ended December 31, 2021 compared to $97.7 million
incurred during the year ended December 31, 2020. Depreciation expense decreased
approximately $4.8 million primarily as a result of tenant turnover during the
year ended December 31, 2020 where values ascribed to leases in place upon
acquisition of properties in prior years were disposed of.

General and administrative expenses

The Company incurred general and administrative expenses of approximately $19.7
million during the year ended December 31, 2021 compared to $16.8 million
incurred during the year ended December 31, 2020. General and administrative
expenses increased approximately $2.9 million primarily as a result of an
increase in compensation-related expenses during the year ended December 31,
2021.

Gain on sale of real estate

On April 21, 2021, the Company sold Euclid Shopping Center, a shopping center
located in San Diego, California. The sales price of $25.8 million, less costs
to sell, resulted in net proceeds of approximately $25.3 million. The Company
recorded a gain on sale of real estate of approximately $9.5 million during the
year ended December 31, 2021 related to this property disposition. On August 12,
2021, the Company sold Green Valley Station, a shopping center located in
Sacramento, California. The sales price of $15.1 million, less costs to sell,
resulted in net proceeds of approximately $14.4 million. The Company recorded a
gain on sale of real estate of approximately $5.5 million during the year ended
December 31, 2021 related to this property disposition. Additionally, on
September 28, 2021, the Company sold Mills Shopping Center, a shopping center
located in Sacramento, California. The sales price of $28.8 million, less costs
to sell, resulted in net proceeds of approximately $28.4 million. The Company
recorded a gain on sale of real estate of approximately $7.4 million during the
year ended December 31, 2021 related to this property disposition. The Company
recorded no such gains on sale during the year ended December 31, 2020.

Interest charges and other financial charges

The Company incurred approximately $57.5 million of interest expense and other
finance expenses during the year ended December 31, 2021 compared to
approximately $59.7 million incurred during the year ended December 31, 2020.
Interest
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expenses and other financial expenses decreased by approximately $2.2 million
primarily due to a decrease in amounts outstanding under the credit facility during the year ended December 31, 2021.

Funds from operations

Funds from operations ("FFO"), is a widely-recognized non-GAAP financial measure
for REITs that the Company believes when considered with financial statements
presented in accordance with GAAP, provides additional and useful means to
assess its financial performance. FFO is frequently used by securities analysts,
investors and other interested parties to evaluate the performance of REITs,
most of which present FFO along with net income as calculated in accordance with
GAAP.

The Company computes FFO in accordance with the "White Paper" on FFO published
by the National Association of Real Estate Investment Trusts ("NAREIT"), which
defines FFO as net income attributable to common stockholders (determined in
accordance with GAAP) excluding gains or losses from debt restructuring, sales
of depreciable property, and impairments, plus real estate related depreciation
and amortization, and after adjustments for partnerships and unconsolidated
joint ventures.

However, FFO:

• does not represent cash flow from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in determining net income); and

• should not be considered an alternative to net income as an indicator of our performance.

FFO as defined by the Company may not be comparable to similarly titled items
reported by other REITs due to possible differences in the application of the
NAREIT definition used by such REITs.

The table below provides a reconciliation of net income applicable to
stockholders in accordance with GAAP to FFO for the years ended December 31,
2021 and 2020 (in thousands):

                                                             Year Ended December 31,
                                                               2021               2020
Net income attributable to ROIC                        $      53,508           $  32,014
Plus: Depreciation and amortization                           92,929        

97,731

Less: Gain on sale of real estate                            (22,340)                  -
Funds from operations - basic                                124,097        

129,745

Net income attributable to non-controlling interests           3,852        

2,707

Funds from operations - diluted                        $     127,949        

$132,452

Net cash operating income (“NOI”)

Cash NOI is a non-GAAP financial measure of the Company's performance. The most
directly comparable GAAP financial measure is operating income. The Company
defines cash NOI as operating revenues (rental revenue and other income), less
property and related expenses (property operating expenses and property taxes),
adjusted for non-cash revenue and operating expense items such as straight-line
rent and amortization of lease intangibles, debt-related expenses, and other
adjustments. Cash NOI also excludes general and administrative expenses,
depreciation and amortization, acquisition transaction costs, other expense,
interest expense, gains and losses from property acquisitions and dispositions,
and extraordinary items. Other REITs may use different methodologies for
calculating cash NOI, and accordingly, the Company's cash NOI may not be
comparable to other REITs.

Cash NOI is used by management internally to evaluate and compare the operating
performance of the Company's properties. The Company believes cash NOI provides
useful information to investors regarding the Company's financial condition and
results of operations because it reflects only those cash income and expense
items that are incurred at the property level, and when compared across periods,
can be used to determine trends in earnings of the Company's properties as this
measure is not affected by non-cash revenue and expense recognition items, the
cost of the Company's funding, the impact of depreciation and amortization
expenses, gains or losses from the acquisition and sale of operating real estate
assets, general and administrative expenses or other gains and losses that
relate to the Company's ownership of properties. The Company believes the
exclusion of these items from operating income is useful because the resulting
measure captures the actual revenue generated and actual expenses incurred in
operating the Company's properties as well as trends in occupancy rates, rental
rates and operating costs.
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Cash NOI is a measure of the operating performance of the Company's properties
but does not measure the Company's performance as a whole and is therefore not a
substitute for net income or operating income as computed in accordance with
GAAP.

Same-Center Cash NOI

The table below provides a reconciliation of same-center cash NOI to
consolidated operating income in accordance with GAAP for the years ended
December 31, 2021 and 2020. The table makes reference to the effect of the
same-center properties. Same-center properties, which totaled 85 of the
Company's 90 properties as of December 31, 2021, represent all operating
properties owned by the Company during the entirety of both periods presented
and consolidated into the Company's financial statements during such periods,
except for the Company's corporate office headquarters (in thousands):

                                                     Year Ended December 31,
                                                       2021               2020
GAAP operating income                          $     114,895           $  94,447
Depreciation and amortization                         92,929              97,731
General and administrative expenses                   19,654              16,755

Other expense                                            860                 843
Gain on sale of real estate                          (22,340)                  -
Straight-line rent                                      (959)             (1,079)
Amortization of above- and below-market rent          (8,795)            

(17,654)

Property revenues and other expenses (1)                (768)               (484)
Total Company cash NOI                               195,476             190,559
Non same-center cash NOI                              (6,089)             (6,736)
Same-center cash NOI                           $     189,387           $ 183,823


______________________

(1) Includes head lease termination fees, net of contract amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments.

During the year ended December 31, 2021, the Company generated same-center cash
NOI of approximately $189.4 million compared to same-center cash NOI of
approximately $183.8 million generated during the year ended December 31, 2020,
representing a 3.0% increase. This increase is primarily due to a decrease in
projected uncollectible rental revenue, offset by an increase in operating
expenses.

Critical accounting estimates

Critical accounting estimates are those that are both important to the
presentation of the Company's financial condition and results of operations and
require management's most difficult, complex or subjective judgments. Set forth
below is a summary of the accounting estimates that management believes are
critical to the preparation of the consolidated financial statements. This
summary should be read in conjunction with the more complete discussion of the
Company's accounting policies included in Note 1 to the Company's consolidated
financial statements.

Revenue Recognition

The Company records base rents on a straight-line basis over the term of each
lease. The excess of rents recognized over amounts contractually due pursuant to
the underlying leases is included in Tenant and other receivables in the
accompanying consolidated balance sheets. Most leases contain provisions that
require tenants to reimburse a pro-rata share of real estate taxes and certain
common area expenses. Adjustments are also made throughout the year to tenant
and other receivables and the related cost recovery income based upon the
Company's best estimate of the final amounts to be billed and collected. In
addition, the Company also provides an allowance for future credit losses in
connection with the deferred straight-line rent receivable.

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Allowance for doubtful accounts

The allowance for doubtful accounts is established based on a quarterly analysis
of the risk of loss on specific accounts. The analysis places particular
emphasis on past-due accounts and considers information such as the nature and
age of the receivables, tenant creditworthiness, current economic trends,
including the impact of the COVID-19 pandemic on tenants' businesses, the
payment history of the tenants or other debtors, the financial condition of the
tenants and any guarantors and management's assessment of their ability to meet
their lease obligations, the basis for any disputes and the status of related
negotiations, among other things. Management's estimates of the required
allowance are subject to revision as these factors change and are sensitive to
the effects of economic and market conditions on tenants, particularly those at
retail properties. Estimates are used to establish reimbursements from tenants
for common area maintenance, real estate tax and insurance costs. The Company
analyzes the balance of its estimated accounts receivable for real estate taxes,
common area maintenance and insurance for each of its properties by comparing
actual recoveries versus actual expenses and any actual write-offs. Based on its
analysis, the Company may record an additional amount in its allowance for
doubtful accounts related to these items. In addition, the Company also provides
an allowance for future credit losses in connection with the deferred
straight-line rent receivable.

As discussed above, the COVID-19 pandemic has impacted states and cities where
the Company's tenants operate their businesses and where the Company's
properties are located, and accordingly, our tenants may be unable to operate
their businesses, maintain profitability and make timely rental payments to the
Company under their leases.

Real Estate Investments

Land, buildings, property improvements, furniture/fixtures and tenant
improvements are recorded at cost. Expenditures for maintenance and repairs are
charged to operations as incurred. Renovations and/or replacements, which
improve or extend the life of the asset, are capitalized and depreciated over
their estimated useful lives.

The Company recognizes the acquisition of real estate properties, including
acquired tangible (consisting of land, buildings and improvements), and acquired
intangible assets and liabilities (consisting of above-market and below-market
leases and acquired in-place leases) at their fair value (for acquisitions
meeting the definition of a business) and relative fair value (for acquisitions
not meeting the definition of a business). Acquired lease intangible assets
include above-market leases and acquired in-place leases, and Acquired lease
intangible liabilities represent below-market leases in the accompanying
consolidated balance sheets. The fair value of the tangible assets of an
acquired property is determined by valuing the property as if it were vacant,
which value is then allocated to land, buildings and improvements based on
management's determination of the relative fair values of these assets. In
valuing an acquired property's intangibles, factors considered by management
include an estimate of carrying costs during the expected lease-up periods, and
estimates of lost rental revenue during the expected lease-up periods based on
its evaluation of current market demand. Management also estimates costs to
execute similar leases, including leasing commissions, tenant improvements,
legal and other related costs.

The value of in-place leases is measured by the excess of (i) the purchase price
paid for a property after adjusting existing in-place leases to market rental
rates, over (ii) the estimated fair value of the property as if
vacant. Above-market and below-market lease values are recorded based on the
present value (using a discount rate which reflects the risks associated with
the leases acquired) of the difference between the contractual amounts to be
received and management's estimate of market lease rates, measured over the
terms of the respective leases that management deemed appropriate at the time of
acquisition. Such valuations include a consideration of the non-cancellable
terms of the respective leases as well as any applicable renewal periods. The
fair values associated with below-market rental renewal options are determined
based on the Company's experience and the relevant facts and circumstances that
existed at the time of the acquisitions. The value of the above-market and
below-market leases associated with the original lease term is amortized to
rental income, over the terms of the respective leases. The value of in-place
leases are amortized to expense over the remaining non-cancellable terms of the
respective leases. If a lease were to be terminated prior to its stated
expiration, all unamortized amounts relating to that lease would be recognized
in operations at that time.

The Company is required to make subjective assessments as to the useful life of
its properties for purposes of determining the amount of depreciation. These
assessments have a direct impact on the Company's net income.

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Buildings are depreciated using the straight-line method over the estimated useful life of the assets. The estimated useful lives are as follows:

Buildings               39-40 years
Property Improvements   10-20 years
Furniture/Fixtures      3-10 years
Tenant Improvements     Shorter of lease term or their useful life



Asset Impairment

The Company reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the asset to aggregate future net cash
flows (undiscounted and without interest) expected to be generated by the asset.
The judgments regarding the existence of impairment indicators are based on
factors such as operational performance, market conditions, legal and
environmental concerns, the Company's intent and ability to hold the related
asset, as well as any significant cost overruns on development properties. If
such assets are considered impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceed the fair value.
For example, as a result of the COVID-19 pandemic, certain of the Company's
tenants may be unable to make timely rental payments to the Company under their
leases which could impact our cash flows. The worsening of estimated future cash
flows could result in the recognition of an impairment charge on certain of the
Company's long-lived assets. Management does not believe that the value of any
of the Company's real estate investments was impaired at December 31, 2021.

REIT qualification requirements

The Company has elected and qualified to be taxed as a REIT under the Code, and
believes that it has been organized and has operated in a manner that will allow
it to continue to qualify for taxation as a REIT under the Code.

The Company is subject to a number of operational and organizational
requirements to qualify and then maintain qualification as a REIT. If the
Company does not qualify as a REIT, its income would become subject to U.S.
federal, state and local income taxes at regular corporate rates that would be
substantial and the Company may not be permitted to re-elect to qualify as a
REIT for four taxable years following the year that it failed to qualify as a
REIT. The Company's results of operations, liquidity and amounts distributable
to stockholders would be significantly reduced if it failed to qualify as a
REIT.

Liquidity and capital resources of the Company

In this section “Cash and capital of the Company” and in the section “Cash and capital of the Operational partnership“, the term “the Company” refers to Retail Opportunity Investments Corp. on a non-consolidated basis, excluding Operational partnership.

The Company's business is operated primarily through the Operating Partnership,
of which the Company is the parent company, and which it consolidates for
financial reporting purposes. Because the Company operates on a consolidated
basis with the Operating Partnership, the section entitled "Liquidity and
Capital Resources of the Operating Partnership" should be read in conjunction
with this section to understand the liquidity and capital resources of the
Company on a consolidated basis and how the Company is operated as a whole.

The Company issues public equity from time to time, but does not otherwise
generate any capital itself or conduct any business itself, other than incurring
certain expenses in operating as a public company. The Company itself does not
hold any indebtedness other than guarantees of indebtedness of the Operating
Partnership, and its only material assets are its ownership of direct or
indirect partnership interests in the Operating Partnership and membership
interest in Retail Opportunity Investments GP, LLC, the sole general partner of
the Operating Partnership. Therefore, the consolidated assets and liabilities
and the consolidated revenues and expenses of the Company and the Operating
Partnership are the same on their respective financial statements. However, all
debt is held directly or indirectly by the Operating Partnership. The Company's
principal funding requirement is the payment of dividends on its common stock.
The Company's principal source of funding for its dividend payments is
distributions it receives from the Operating Partnership.

As the parent company of the Operating Partnership, the Company, indirectly, has
the full, exclusive and complete responsibility for the Operating Partnership's
day-to-day management and control. The Company causes the Operating
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Partnership to distribute such portion of its available cash as the Partnership may, in its discretion, determine, in the manner provided in the Operating partnership Partnership Agreement.

The Company is a well-known seasoned issuer with an effective shelf registration
statement filed in April 2019 that allows the Company to register unspecified
various classes of debt and equity securities. As circumstances warrant, the
Company may issue equity from time to time on an opportunistic basis, dependent
upon market conditions and available pricing. Any proceeds from such equity
issuances would be contributed to the Operating Partnership. The Operating
Partnership may use the proceeds to acquire additional properties, pay down
debt, and for general working capital purposes.

Liquidity is a measure of the Company's ability to meet potential cash
requirements, including ongoing commitments to repay borrowings, fund and
maintain its assets and operations, make distributions to its stockholders and
meet other general business needs. The liquidity of the Company is dependent on
the Operating Partnership's ability to make sufficient distributions to the
Company. The primary cash requirement of the Company is its payment of dividends
to its stockholders.

During the year ended December 31, 2021, the Company's primary sources of cash
were distributions from the Operating Partnership and proceeds from the issuance
of common stock. As of December 31, 2021, the Company has determined that it has
adequate working capital to meet its dividend funding obligations for the next
twelve months.

On February 20, 2020, the ROIC entered into an "at the market" sales agreement
(the "Sales Agreement") with each of (i) KeyBanc Capital Markets Inc., BTIG,
LLC, BMO Capital Markets Corp., BofA Securities, Inc., Capital One Securities,
Inc., Citigroup Global Markets Inc., Jefferies LLC, J.P. Morgan Securities LLC,
Raymond James & Associates, Inc., Regions Securities LLC, Robert W. Baird & Co.
Incorporated and Wells Fargo Securities, LLC (collectively, the "Agents") and
(ii) the Forward Purchasers (as defined below), pursuant to which ROIC may sell,
from time to time, shares (any such shares, the "Primary Shares") of ROIC's
common stock, par value $0.0001 per share ("Common Stock"), to or through the
Agents and instruct certain of the Agents, acting as forward sellers (the
"Forward Sellers"), to offer and sell borrowed shares (any such shares, "Forward
Hedge Shares," and collectively with the Primary Shares, the "Shares") with the
Shares to be sold under the Sales Agreement having an aggregate offering price
of up to $500.0 million.

The Sales Agreement contemplates that, in addition to the issuance and sale of
Primary Shares to or through the Agents as principal or its sales agents, ROIC
may enter into separate forward sale agreements with any of KeyBanc Capital
Markets Inc., BMO Capital Markets Corp., BofA Securities, Inc., Citigroup Global
Markets Inc., Jefferies LLC, J.P. Morgan Securities LLC, Raymond James &
Associates, Inc. and Wells Fargo Securities, LLC or their respective affiliates
(in such capacity, the "Forward Purchasers"). If ROIC enters into a forward sale
agreement with any Forward Purchaser, ROIC expects that such Forward Purchaser
or its affiliate will borrow from third parties and, through the relevant
Forward Seller, sell a number of Forward Hedge Shares equal to the number of
shares of Common Stock underlying the particular forward sale agreement, in
accordance with the mutually accepted instructions related to such forward sale
agreement. ROIC will not initially receive any proceeds from any sale of Forward
Hedge Shares through a Forward Seller. ROIC expects to fully physically settle
each particular forward sale agreement with the relevant Forward Purchaser on
one or more dates specified by ROIC on or prior to the maturity date of that
particular forward sale agreement by issuing shares of Common Stock (the
"Confirmation Shares"), in which case ROIC expects to receive aggregate net cash
proceeds at settlement equal to the number of shares of Common Stock underlying
the particular forward sale agreement multiplied by the relevant forward sale
price. However, ROIC may also elect to cash settle or net share settle a
particular forward sale agreement, in which case ROIC may not receive any
proceeds from the issuance of shares of Common Stock, and ROIC will instead
receive or pay cash (in the case of cash settlement) or receive or deliver
shares of Common Stock (in the case of net share settlement).

During the year ended December 31, 2021, ROIC sold a total of 3,788,035 shares
under the Sales Agreements, which resulted in gross proceeds of approximately
$69.6 million and commissions of approximately $696,000 paid to the Agents. The
Company intends to use the net proceeds for general corporate purposes, which
may include, among other things, the funding of acquisitions and additions to
working capital.

For the year ended December 31, 2021, dividends paid and payable to stockholders
totaled approximately $61.8 million. Additionally, for the year ended
December 31, 2021, distributions paid and payable from the Operating Partnership
to the non-controlling interest OP Unitholders totaled approximately $4.4
million. On a consolidated basis, cash flows from operations for the same period
totaled approximately $136.3 million. For the year ended December 31, 2020,
dividends paid to stockholders totaled approximately $23.4
million. Additionally, for the year ended December 31, 2020, the Operating
Partnership made distributions of approximately $2.2 million to the
non-controlling interest OP Unitholders. On a consolidated basis, cash flows
from operations for the same period totaled approximately $106.7 million.

Potential future sources of capital include equity issues and distributions from Operational partnership.

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Liquidity and capital resources of the Operational partnership

In this “Liquidity and capital resources of the Operational partnership“, the terms “Operator Partnership”, “we”, “us” and “our” refer to the
Operational partnership with its consolidated subsidiaries or
Operational partnership and the Company and their respective consolidated subsidiaries, as the context requires.

During the year ended December 31, 2021, the Operating Partnership's primary
source of cash was cash flow from operations, proceeds from the sale of real
estate and cash contributed by ROIC from the issuance of common stock. As of
December 31, 2021, the Operating Partnership has determined that it has adequate
working capital to meet its debt obligations and operating expenses for the next
twelve months.

The Operating Partnership has an unsecured term loan agreement with several
banks under which the lenders agreed to provide a $300.0 million unsecured term
loan facility. Effective December 20, 2019, the Operating Partnership entered
into the First Amendment to First Amended and Restated Term Loan Agreement (as
amended, the "Term Loan Agreement") pursuant to which the maturity date of the
term loan was extended from September 8, 2022 to January 20, 2025, without
further options for extension. The Term Loan Agreement also provides that the
Operating Partnership may from time to time request increased aggregate
commitments of $200.0 million under certain conditions set forth in the Term
Loan Agreement, including the consent of the lenders for the additional
commitments. Borrowings under the Term Loan Agreement accrue interest on the
outstanding principal amount at a rate equal to an applicable rate based on the
credit rating level of the Operating Partnership, plus, as applicable, (i) a
LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits
for the relevant period (the "Eurodollar Rate"), or (ii) a base rate determined
by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the
rate of interest announced by the Administrative Agent as its "prime rate," and
(c) the Eurodollar Rate plus 1.00%.

The Operating Partnership has an unsecured revolving credit facility with
several banks. Effective December 20, 2019, the Operating Partnership entered
into the First Amendment to Second Amended and Restated Credit Agreement (as
amended, the "Credit Facility Agreement") pursuant to which the borrowing
capacity under the credit facility is $600.0 million and the maturity date of
the credit facility was extended from September 8, 2021 to February 20, 2024,
with two six-month extension options, which may be exercised by the Operating
Partnership upon satisfaction of certain conditions including the payment of
extension fees. Additionally, the Credit Facility Agreement contains an
accordion feature, which allows the Operating Partnership to increase the
borrowing capacity under the credit facility up to an aggregate of $1.2 billion,
subject to lender consents and other conditions. Borrowings under the Credit
Facility Agreement accrue interest on the outstanding principal amount at a rate
equal to an applicable rate based on the credit rating level of the Operating
Partnership, plus, as applicable, (i) the Eurodollar Rate, or (ii) a base rate
determined by reference to the highest of (a) the federal funds rate plus 0.50%,
(b) the rate of interest announced by KeyBank, National Association as its
"prime rate," and (c) the Eurodollar Rate plus 0.90%. Additionally, the
Operating Partnership is obligated to pay a facility fee at a rate based on the
credit rating level of the Operating Partnership, currently 0.20%, and a
fronting fee at a rate of 0.125% per year with respect to each letter of credit
issued under the Credit Facility Agreement.

As of December 31, 2021, $300.0 million was outstanding under the term loan and
there were no borrowings outstanding under the credit facility. The weighted
average interest rates on the term loan and the credit facility during the year
ended December 31, 2021 were 1.1% and 1.0%, respectively. As discussed in Note
11 of the accompanying financial statements, the Operating Partnership uses
interest rate swaps to manage its interest rate risk and accordingly, the
swapped interest rate on the term loan is 3.0%. The Company had no available
borrowings under the term loan at December 31, 2021. The Company had $600.0
million available to borrow under the credit facility at December 31, 2021.

Further, the Operating Partnership issued $250.0 million aggregate principal
amount of unsecured senior notes in each of December 2017, December 2014 and
December 2013 and $200.0 million aggregate principal amount of unsecured senior
notes in September 2016, (collectively, the "Senior Notes") each of which were
fully and unconditionally guaranteed by the Company.

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The key terms of the Operating partnership The Senior Notes are as follows:

                                    Aggregate              Issue Date and
                                 Principal Amount         Interest Accrual                                           Contractual
       Senior Notes               (in thousands)                Date                    Maturity Date               Interest Rate            First

Interest payment Interest payments due

                                                                                                                                                                            June 15 and December
Senior Notes Due 2027            $     250,000             December 15, 2017             December 15, 2027                   4.19  %                

June 15, 2018 15

                                                                                                                                                                            March 22 and
Senior Notes Due 2026            $     200,000            September 22, 2016            September 22, 2026                   3.95  %                

March 22, 2017 September 22

                                                                                                                                                                            June 15 and December
Senior Notes Due 2024            $     250,000              December 3, 2014             December 15, 2024                   4.00  %                

June 15, 2015 15

                                                                                                                                                                            June 15 and December
Senior Notes Due 2023            $     250,000              December 9, 2013             December 15, 2023                   5.00  %                

June 15, 2014 15

The operating partnership significant short-term and long-term cash requirements are described in more detail below.

The Operating Partnership's debt agreements contain customary representations,
financial and other covenants, and its ability to borrow under these agreements
is subject to its compliance with financial covenants and other restrictions on
an ongoing basis. As a result of the COVID-19 pandemic's impact on the Company's
business, in 2020 the Operating Partnership entered into temporary waiver
amendments for one of the covenants contained in its debt agreements. The
amendments adjusted the criteria for properties eligible to be included in the
unencumbered asset pool used for purposes of calculating the consolidated
unencumbered leverage ratio. The temporary waiver period expired April 1, 2021
and the Company was in compliance with such covenants at December 31, 2021.

While the Operating Partnership generally intends to hold its assets as
long-term investments, certain of its investments may be sold in order to manage
the Operating Partnership's interest rate risk and liquidity needs, meet other
operating objectives and adapt to market conditions. The timing and impact of
future sales of its investments, if any, cannot be predicted with any certainty.

The Company has investment grade credit ratings from Moody's Investors Service
(Baa2) and S&P Global Ratings (BBB-) and the Company's investment grade rating
from Fitch Ratings was upgraded to BBB from BBB- in January 2022.

As discussed above, many of the Company's tenants and their operations have
been, and may continue to be, adversely impacted by the COVID-19 pandemic. As a
result, certain tenants may be unable to meet their obligations to the Company
in full or at all, which could reduce the Company's cash flows and impact the
Company's ability to continue paying dividends to its stockholders at expected
levels. The Company intends to continue to operate its business in a manner that
will allow it to qualify as a REIT, including maintaining compliance with
taxable income distribution requirements.

Cash flow

The following table summarizes, for the periods indicated, certain elements of our consolidated statements of cash flows (in thousands):

                                       Year Ended December 31,
                                         2021               2020
Net Cash Provided by (Used in):
Operating activities              $     136,332          $ 106,660
Investing activities              $    (103,645)         $ (28,474)
Financing activities              $     (23,960)         $ (77,008)



                                       46
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Net cash flows from:

Operational activities

Increase in cash flow from operating activities from 2020 to 2021:

Net cash flows provided by operating activities amounted to approximately $136.3
million during the year ended December 31, 2021, compared to approximately
$106.7 million in the comparable period in 2020. This increase of approximately
$29.7 million during the year ended December 31, 2021 is primarily due to the
decrease in accounts receivable and related timing of collections and payments
of working capital accounts, offset by a decrease in property operating income
of approximately $3.8 million.

Investing activities

Increase in cash flows used in investing activities from 2020 to 2021:

Net cash flows used in investing activities amounted to approximately $103.6
million during the year ended December 31, 2021, compared to approximately $28.5
million in the comparable period in 2020. This increase of approximately $75.2
million during the year ended December 31, 2021 is primarily due to the increase
in investments in real estate of approximately $125.5 million, the increase in
payments for improvements to properties of approximately $9.7 million and the
decrease in repayments on mortgage notes of approximately $8.0 million, offset
by an increase in proceeds from the sale of real estate of approximately $68.0
million.

Financing Activities

Decrease in cash flows used in financing activities from 2020 to 2021:

Net cash flows used in financing activities amounted to approximately $24.0
million during the year ended December 31, 2021, compared to approximately $77.0
million in the comparable period in 2020. This decrease of approximately $53.0
million for the year ended December 31, 2021 is primarily due to the increase in
proceeds from the sale of common stock of approximately $69.6 million and the
decrease in repurchase of common stock of approximately $8.8 million, offset by
the increase in dividend and distribution payments of approximately $17.0
million and the net increase in payments on the credit facility of $12.0
million.

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Material cash needs

The following table represents the contractual obligations and other known obligations of the Company in the short term (i.e. the next twelve months) and in the long term (i.e. beyond the next twelve months) to December 31, 2021 (in thousands):

                                        Short-Term                                      Long-Term          Total
Material cash requirements:
Mortgage Notes Payable Principal (1)   $    24,133                                    $    60,731      $    84,864
Mortgage Notes Payable Interest              3,170                                          5,100            8,270
Term loan (2)                                    -                                        300,000          300,000

Senior Notes Due 2027 (3)                   10,475                                        302,375          312,850
Senior Notes Due 2026 (3)                    7,900                                        231,600          239,500
Senior Notes Due 2024 (3)                   10,000                                        270,000          280,000
Senior Notes Due 2023 (3)                   12,500                                        262,500          275,000
Operating lease obligations                  1,320                                         35,704           37,024
Total                                  $    69,498                                    $ 1,468,010      $ 1,537,508


__________________

(1)Does not include unamortized mortgage premium of approximately $632,000 as of
December 31, 2021.
(2)For the purpose of the above table, the Company has assumed that borrowings
under the term loan accrue interest at the interest rate on the term loan as of
December 31, 2021 which was 3.0%, inclusive of the swap agreements the Company
has entered into.
(3)Represents payments of interest only in the short-term and payments of both
principal and interest in the long-term.

The short-term and long-term liquidity requirements of the Company, including
the Operating Partnership and its subsidiaries, consist primarily of the
material cash requirements set forth above, dividends expected to be paid to the
Company's stockholders, capital expenditures and capital required for
acquisitions.

The Company, including the Operational partnership and its subsidiaries, expects to meet its short-term liquidity needs, including its significant cash requirements, through cash flow from operations and borrowings under its credit facility.

Historically, the Company, including the Operating Partnership and its
subsidiaries, has financed its long-term liquidity requirements through
operating cash flows, borrowings under its credit facility and term loan, debt
refinancings, new debt, equity offerings and other capital market transactions,
and/or the disposition of assets. The Company expects to continue doing so in
the future. However, there can be no assurance that these sources will always be
available to the Company when needed, or on terms the Company desires or that
the future requirements of the Company will not be materially higher than the
Company currently expects.

The Company has committed approximately $22.3 million and $1.5 million in tenant
improvements (including building and site improvements) and leasing commissions,
respectively, for the new leases and renewals that occurred during the year
ended December 31, 2021.

The Company has entered into several lease agreements with an officer of the
Company. Pursuant to the lease agreements, the Company is provided the use of
storage space.

Real Estate Taxes

The Company’s leases generally require tenants to be responsible for a prorated portion of property taxes.

Inflation

The Company's long-term leases contain provisions to mitigate the adverse impact
of inflation on its operating results. Such provisions include clauses entitling
the Company to receive (a) scheduled base rent increases and (b) percentage
rents based upon tenants' gross sales which generally increase as prices
rise. In addition, many of the Company's non-anchor leases are for terms of less
than ten years, which permits the Company to seek increases in rents upon
renewal at then-current market rates if
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rents provided in the expiring leases are below then-existing market rates. Most
of the Company's leases require tenants to pay a share of operating expenses,
including common area maintenance, real estate taxes, insurance and utilities,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation.

Leverage policies

The Company employs prudent leverage and uses debt as a means of providing additional funds for the acquisition of its properties and the diversification of its portfolio. The Company seeks to use primarily unsecured debt in order to maintain the liquidity and flexibility of its capital structure.

The Company has an unsecured term loan agreement with several banks under which
the lenders agreed to provide a $300.0 million unsecured term loan facility.
Effective December 20, 2019, the Company entered into the First Amendment to
First Amended and Restated Term Loan Agreement (as amended, the "Term Loan
Agreement") pursuant to which the maturity date of the term loan was extended
from September 8, 2022 to January 20, 2025, without further options for
extension. The Term Loan Agreement also provides that the Company may from time
to time request increased aggregate commitments of $200.0 million under certain
conditions set forth in the Term Loan Agreement, including the consent of the
lenders for the additional commitments. The Operating Partnership has an
unsecured revolving credit facility with several banks. Effective December 20,
2019, the Company entered into the First Amendment to Second Amended and
Restated Credit Agreement (as amended, the "Credit Facility Agreement") pursuant
to which the borrowing capacity under the credit facility is $600.0 million and
the maturity date of the credit facility was extended from September 8, 2021 to
February 20, 2024, with two six-month extension options, which may be exercised
by the Operating Partnership upon satisfaction of certain conditions including
the payment of extension fees. Additionally, the Credit Facility Agreement
contains an accordion feature, which allows the Operating Partnership to
increase the borrowing capacity under the credit facility up to an aggregate of
$1.2 billion, subject to lender consents and other conditions.

Further, the Operating Partnership issued $250.0 million aggregate principal
amount of unsecured senior notes in each of December 2017, December 2014 and
December 2013 and $200.0 million aggregate principal amount of unsecured senior
notes in September 2016, each of which were fully and unconditionally guaranteed
by the Company.

The Company may borrow on a non-recourse basis at the corporate level or
Operating Partnership level. Non-recourse indebtedness means the indebtedness of
the borrower or its subsidiaries is secured only by specific assets without
recourse to other assets of the borrower or any of its subsidiaries. Even with
non-recourse indebtedness, however, a borrower or its subsidiaries will likely
be required to guarantee against certain breaches of representations and
warranties such as those relating to the absence of fraud, misappropriation,
misapplication of funds, environmental conditions and material
misrepresentations. Because non-recourse financing generally restricts the
lender's claim on the assets of the borrower, the lender generally may only
proceed against the asset securing the debt. This may protect the Company's
other assets.

The Company plans to evaluate each investment opportunity and determine the
appropriate leverage on a case-by-case basis and also on a Company-wide basis.
The Company may seek to refinance indebtedness, such as when a decline in
interest rates makes it beneficial to prepay an existing mortgage, when an
existing mortgage matures or if an attractive investment becomes available and
the proceeds from the refinancing can be used to purchase the investment.

The Company plans to finance future acquisitions through a combination of cash
from operations, borrowings under its credit facility, the assumption of
existing mortgage debt, the issuance of OP Units, equity and debt offerings, and
the potential sale of existing assets. In addition, the Company may acquire
retail properties indirectly through joint ventures with third parties as a
means of increasing the funds available for the acquisition of properties.

Distributions

The Operating Partnership and ROIC intend to make regular quarterly
distributions to holders of their OP Units and common stock, respectively. The
Operating Partnership pays distributions to ROIC directly as a holder of units
of the Operating Partnership, and indirectly to ROIC through distributions to
Retail Opportunity Investments GP, LLC, a wholly owned subsidiary of ROIC. U.S.
federal income tax law generally requires that a REIT distribute annually at
least 90% of its REIT taxable income, without regard to the deduction for
dividends paid and excluding net capital gains, and that it pay U.S. federal
income tax at regular corporate rates to the extent that it annually distributes
less than 100% of its net taxable income. ROIC intends to pay regular quarterly
dividends to its stockholders in an amount not less than its net taxable income,
if and to the extent authorized by its board of directors. If ROIC's cash
available for distribution is less than its net taxable income, ROIC could be
required to sell assets or borrow funds to make cash distributions or ROIC may
make a portion of the required distribution in the form of a taxable stock
distribution or distribution of debt securities.
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