<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 9, 1997
----------------------------
PAN PACIFIC RETAIL PROPERTIES, INC.
-----------------------------------
(Exact Name of Registrant as Specified in its Charter)
Maryland 001-13243 33-0752457
- ------------------------------- ----------- -------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1631-B South Melrose Drive
Vista, California 92083
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (760) 727-1002
---------------
N.A.
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements Under Rule 3-14 of Regulation S-X.
Rainbow Promenade
Independent Auditors' Report
Statement of Revenue and Certain Expenses for
the period from September 18, 1996 (inception)
through December 31, 1996
Notes to Statement of Revenue and Certain Expenses
(b) Pro Forma Financial Information.
Pro Forma Condensed Combined Statement of Operations for the
nine months ended September 30, 1997 (unaudited)
Pro Forma Condensed Combined Statement of Operations for the
year ended December 31, 1996 (unaudited)
Notes to the Pro Forma Condensed Combined Statements of
Operations
Combining Schedule of Revenue and Certain Expenses of the
Acquisition Properties and Notes Receivable
(c) Exhibits.
The Exhibits to this report are listed on the Exhibit Index set
forth elsewhere herein.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pan Pacific Retail Properties, Inc.:
We have audited the accompanying statement of revenue and certain expenses of
Rainbow Promenade for the period from September 18, 1996 (inception) through
December 31, 1996. This statement is the responsibility of management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the statement.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and for inclusion in the Current Report on Form 8-K/A, which
amends the previously filed Form 8-K, of Pan Pacific Retail Properties, Inc. as
described in Note 1 to the statement of revenue and certain expenses. It is
not intended to be a complete presentation of Rainbow Promenade's revenue and
expenses.
In our opinion, the statement referred to above presents fairly, in all material
respects, the revenue and certain expenses, as described in Note 1, of Rainbow
Promenade for the period from September 18, 1996 (inception) through
December 31, 1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
San Diego, California
September 13, 1997
<PAGE>
RAINBOW PROMENADE
Statement of Revenue and Certain Expenses
For the period from September 18, 1996 (inception) through December 31, 1996
Revenue:
Rent (notes 3 and 4) $ 268,424
Recoveries from tenants 3,749
Other 51
----------
272,224
----------
Certain expenses:
Property taxes (note 5) 11,653
Repairs and maintenance 10,009
Management fees 7,500
Utilities 3,351
Other 52
----------
32,565
----------
Revenue in excess of certain expenses $ 239,659
----------
----------
See accompanying notes to statement of revenue and certain expenses.
<PAGE>
RAINBOW PROMENADE
Notes to Statement of Revenue and Certain Expenses
For the period from September 18, 1996 (inception) through December 31, 1996
(1) BASIS OF PRESENTATION
The accompanying statement of revenue and certain expenses relates to the
operations of Rainbow Promenade (the "Property"), a community shopping
center located in Las Vegas, Nevada. The Property was purchased by Pan
Pacific Retail Properties, Inc. (the "Company") for $31,300,000 on
September 9, 1997.
The accompanying statement of revenue and certain expenses has been
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and accordingly, is not representative
of the actual results of operations of Rainbow Promenade for the period
from September 18, 1996 (inception) through December 31, 1996 due to the
exclusion of the following expenses, which may not be comparable to the
proposed future operations of the Property:
- Depreciation and amortization
- Interest on mortgages which were not assumed by the Company
- Federal and state income taxes
- Other costs not directly related to the proposed future
operations of the Property
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Rent revenue is recognized on a straight-line basis over the term of the
individual leases.
USE OF ESTIMATES
Management has made a number of estimates and assumptions relating to the
reporting and disclosure of revenue and certain expenses during the
reporting period to prepare the statement of revenue and certain expenses
in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
1
<PAGE>
(3) RENT REVENUE
Retail space is leased to tenants under various operating leases with terms
ranging from 5 to 15 years. The leases generally provide for minimum rent
and reimbursement of real estate taxes, common area maintenance and certain
other expenses. Certain leases also contain provisions for percentage
rent. No percentage rent was earned for the period from September 18, 1996
(inception) through December 31, 1996.
Future minimum rentals to be received under noncancelable operating leases
in effect at December 31, 1996 are as follows:
YEARS ENDING DECEMBER 31,
-------------------------
1997 $ 1,485,122
1998 1,485,122
1999 1,485,122
2000 1,485,122
2001 1,477,153
Thereafter 11,854,344
-----------
$ 19,271,985
------------
------------
(4) CONCENTRATION OF CREDIT RISK
At December 31, 1996, four tenants individually accounted for more than 10%
of total revenue. Rent revenue earned, including recoveries from these
tenants for the period from September 18, 1996 (inception) through
December 31, 1996 were as follows:
Linens `N Things $ 72,377
Barnes & Noble $ 71,112
Cost Plus $ 67,025
Petco $ 42,483
(5) PROPERTY TAXES
In January 1997, the Property's value was re-assessed for property tax
purposes. Based on the re-assessed value of the Property, property taxes
for the fiscal year July 1, 1997 through June 30, 1998 will be $226,183.
This re-assessment of the Property's property tax value is primarily the
result of the completion of construction on the Property.
<PAGE>
PAN PACIFIC RETAIL PROPERTIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
The following unaudited pro forma condensed combined statements of
operations for the nine months ended September 30, 1997 and the year ended
December 31, 1996 are presented as if: (i) the consummation of the initial
public offering of common stock in August 1997 (the "IPO"), and related
formation transactions in connection with the IPO; (ii) the acquisition of
the properties acquired during 1997 as identified in the prospectus dated
August 7, 1997 (Chico Crossroads, Monterey Plaza, Fairmont Shopping Center,
Lakewood Shopping Center, Green Valley Town & Country and certain secured
notes receivable); (iii) the acquisition of the property described in Item 2
of the related Form 8-K filed on September 23, 1997, (the "Rainbow Promenade
Acquisition") and (iv) the repayment of notes payable with the net proceeds
of the IPO all had occurred on January 1, 1996.
The pro forma condensed balance sheet of Pan Pacific Retail Properties,
Inc. as of September 30, 1997 has been excluded from this filing on Form
8-K/A as the transactions that were given pro forma effect in the pro forma
condensed combined statements of operations occurred prior to September 30,
1997, and therefore are included in Pan Pacific Retail Properties, Inc.'s
September 30, 1997 unaudited consolidated balance sheet included in the
registrants Form 10-Q filing on November 12, 1997.
The pro forma condensed combined statements of operations should be read
in conjunction with the combined financial statements of Pan Pacific
Development Properties, including the notes thereto, that were filed with and
as part of Pan Pacific Retail Properties, Inc.'s prospectus, dated August 7,
1997. The pro forma condensed combined statements of operations do not
purport to represent Pan Pacific Retail Properties, Inc.'s results of
operations for the nine months ended September 30, 1997 or for the year ended
December 31, 1996 that would actually have occurred had the Company completed
the transactions described above nor do they purport to represent the results
of operations as of any future date or for any future period.
<PAGE>
PAN PACIFIC RETAIL PROPERTIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------
PAN PACIFIC ACQUISITION
RETAIL PROPERTIES
PROPERTIES AND NOTES OTHER COMPANY
HISTORICAL RECEIVABLE ADJUSTMENTS PRO FORMA
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE:
Rent $25,442 $ 4,236 (A) $ - $ 29,678
Recoveries from tenants 5,558 632 (A) - 6,190
Income from uncombined partnerships 218 - 297 (D) 515
Other 718 151 (A) - 869
------- ------- ------- -----------
31,936 5,019 297 37,252
------- ------- ------- -----------
EXPENSES:
Property operating 4,175 462 (A) - 4,637
Property taxes 2,311 450 (A) - 2,761
Property management fees 102 145 (A) (145)(C) 102
Depreciation and amortization 6,303 930 (B) - 7,233
Interest 11,253 1,159 (A) (6,649)(D) 6,734
378 (E)
593 (J)
General and administrative 2,839 - 147 (F) 2,505
(481)(G)
Other expenses, net 576 29 (A) (529)(H) 76
------- ------- ------- -----------
27,559 3,175 (6,686) 24,048
------- ------- ------- -----------
INCOME BEFORE INCOME TAX EXPENSE
AND MINORITY INTEREST 4,377 1,844 6,983 13,204
Income tax expense (65) - 65 (I) -
Minority interest (106) - (96)(D) (202)
------- ------- ------- -----------
NET INCOME $ 4,206 $ 1,844 $ 6,952 $ 13,002
------- ------- ------- -----------
------- ------- ------- -----------
Pro forma weighted average common shares
outstanding (K) 16,852,662
-----------
-----------
Pro forma net income per share (K) $ 0.77
-----------
-----------
</TABLE>
See accompanying notes to pro forma condensed combined financial statements.
<PAGE>
PAN PACIFIC RETAIL PROPERTIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------
PAN PACIFIC ACQUISITION
RETAIL PROPERTIES
PROPERTIES AND NOTES OTHER COMPANY
HISTORICAL RECEIVABLE ADJUSTMENTS PRO FORMA
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE:
Rent $28,350 $ 8,327 (A) $ - $ 36,677
Recoveries from tenants 6,214 1,402 (A) - 7,616
Income from uncombined partnerships 109 - 554 (D) 663
Other 432 443 (A) - 875
------- ------- ------- -----------
35,105 10,172 554 45,831
------- ------- ------- -----------
EXPENSES:
Property operating 5,070 967 (A) - 6,037
Property taxes 2,244 900 (A) - 3,144
Property management fees 51 305 (A) (305)(C) 51
Depreciation and amortization 7,245 1,716 (B) - 8,961
Interest 14,671 2,908 (A) (10,559)(D) 7,772
504 (E)
248 (J)
General and administrative 3,228 - 892 (F) 3,340
(780)(G)
Other expenses, net 1,981 100 (A) (1,878)(H) 203
------- ------- ------- -----------
34,490 6,896 (11,878) 29,508
------- ------- ------- -----------
INCOME BEFORE INCOME TAX EXPENSE
AND MINORITY INTEREST 615 3,276 12,432 16,323
Income tax expense (122) - 122 (I) -
Minority interest (44) - (143)(D) (187)
------- ------- ------- -----------
NET INCOME $ 449 $ 3,276 $12,411 $ 16,136
------- ------- ------- -----------
------- ------- ------- -----------
Pro forma weighted average common shares
outstanding (K) 16,814,012
-----------
-----------
Pro forma net income per share (K) $ 0.96
-----------
-----------
</TABLE>
See accompanying notes to pro forma condensed combined financial statements.
<PAGE>
PAN PACIFIC RETAIL PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS)
1. ADJUSTMENTS TO THE PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
The pro forma adjustments to the Pro Forma Condensed Combined Statements
of Operations for the nine months ended September 30, 1997 and the year
ended December 31, 1996 are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
(A) Acquisition of Chico Crossroads, Monterey Plaza, Fairmont Shopping
Center, Lakewood Shopping Center, Green Valley Town & Country, and
Rainbow Promenade and the secured notes receivable (refer to the Combining
Schedule for detailed information by property).
Rental revenue $ 4,236 $ 8,327
Recoveries from tenants $ 632 $ 1,402
Other revenue $ 151 $ 443
Property operating expenses $ 462 $ 967
Property taxes $ 394 $ 900
Property management fees $ 145 $ 305
Interest expense $ 1,159 $ 2,908
Other expenses $ 29 $ 100
(B) Increase in depreciation for properties acquired as
follows:
Chico Crossroads $ 71 $ 426
Monterey Plaza $ 141 $ 452
Fairmont Shopping Center $ 69 $ 200
Lakewood Shopping Center $ 86 $ 179
Green Valley Town & Country $ 189 $ 305
Rainbow Promenade $ 374 $ 154
-------- --------
$ 930 $ 1,716
-------- --------
-------- --------
(C) Elimination of property management fees paid to third parties related
to the properties acquired $ (145) $ (305)
(D) Decrease in interest expense, including the amortization of deferred loan
fees, resulting from the repayment of notes payable as follows:
Income from uncombined partnerships $ 297 $ 554
Interest expense $ (6,649) $(10,559)
Minority expense $ (96) $ (143)
(E) Increase in interest expense for the effect of the amortization of
unsecured credit facility fees $ 378 $ 504
(F) Increase in general and administrative expenses for the incremental
costs of operating as a public REIT $ 147 $ 892
(G) Decrease in general and administrative expenses for management fees
charged by a related party $ (481) $ (780)
(H) Decrease in other expenses for loan guarantee fees charged by
a related party $ (529) $ (1,878)
(I) Elimination of income tax expense as the Company expects to elect to
be taxed as a REIT $ 65 $ 122
(J) Increase in interest expense on borrowings under the unsecured credit
facility to purchase Rainbow Promenade. $ 593 $ 248
(K) Pro forma weighted average common shares outstanding and pro forma net income per share are presented as if the formation
transactions (including the issuance of 900,000 stock options, 130,000 shares of restricted stock and the full
exercise of the underwriters over-allotment option) occurred on January 1, 1996. The incremental effect on pro forma
net income per share from the repayment of debt was $.86 and $1.37 for the nine months ended September 30, 1997 and
the year ended December 31, 1996, respectively. The incremental effect was calculated by dividing the pro forma
reduction in interest expense by the number of shares that would have to be issued at $18.18 (the assumed offering
price of $20 per share less the underwriting discounts and commissions) to repay $145.3 million of debt.
</TABLE>
<PAGE>
PAN PACIFIC RETAIL PROPERTIES, INC.
COMBINING SCHEDULE OF REVENUE AND CERTAIN EXPENSES OF THE ACQUISITION
PROPERTIES AND NOTES RECEIVABLE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997(1)
(UNAUDITED)
<TABLE>
<CAPTION>
GREEN
FAIRMONT VALLEY LAKEWOOD
CHICO MONTEREY SHOPPING TOWN & SHOPPING RAINBOW NOTES
CROSSROADS PLAZA CENTER COUNTRY CENTER PROMENADE RECEIVABLE TOTAL
----------- ---------- ---------- ---------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rent.......................... $ 349,208 $ 746,219 $ 404,174 $ 881,614 $ 404,375 $ 1,450,319 $ -- $ 4,235,909
Recoveries from tenants....... 25,458 121,354 82,779 92,389 80,302 230,031 -- 632,313
Other......................... -- -- 1,986 71 1,213 3,992 143,492 150,754
--------- ---------- ---------- ---------- ---------- ----------- ---------- ------------
374,666 867,573 488,939 974,074 485,890 1,684,342 143,492 5,018,976
--------- ---------- ---------- ---------- ---------- ----------- ---------- ------------
Certain expenses:
Interest...................... -- 565,001 -- 593,557 -- -- -- 1,158,558
Property taxes................ 46,964 110,578 29,366 49,134 44,435 169,637 -- 450,114
Property operating............ 23,634 82,744 42,323 106,493 80,585 126,684 -- 462,463
Management fees............... 6,500 29,047 16,643 38,961 19,850 34,527 -- 145,528
Other......................... 2,934 -- 1,312 4,301 5,958 14,313 -- 28,818
--------- ---------- ---------- ---------- ---------- ----------- ---------- ------------
80,032 787,370 89,644 792,446 150,828 345,161 -- 2,245,481
--------- ---------- ---------- ---------- ---------- ----------- ---------- ------------
Revenue in excess of certain
expenses...................... $ 294,634 $ 80,203 $ 399,295 $ 181,628 $ 335,062 $ 1,339,181 $ 143,492 $ 2,773,495
--------- ---------- ---------- ---------- ---------- ----------- ---------- ------------
--------- ---------- ---------- ---------- ---------- ----------- ---------- ------------
</TABLE>
- ------------------------
(1) With respect to Chico Crossroads, operations are included for the period
prior to its being acquired by the Company (January 1, 1997 through February
27, 1997).
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
GREEN
FAIRMONT VALLEY LAKEWOOD
CHICO MONTEREY SHOPPING TOWN & SHOPPING RAINBOW NOTES
CROSSROADS PLAZA CENTER COUNTRY CENTER PROMENADE RECEIVABLE TOTAL
------------ ------------ ------------ ------------ ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rent.................... $ 2,103,771 $ 2,433,276 $ 1,141,744 $ 1,555,036 $ 824,816 $ 268,424 $ -- $ 8,327,067
Recoveries from tenants. 325,144 471,830 222,152 171,582 207,874 3,749 -- 1,402,331
Other................... -- -- 6,110 424 2,898 51 432,865 442,348
------------ ------------ ------------ ------------ ---------- ---------- --------- -----------
2,428,915 2,905,106 1,370,006 1,727,042 1,035,588 272,224 432,865 10,171,746
------------ ------------ ------------ ------------ ---------- ---------- --------- -----------
Certain expenses:
Interest............... -- 1,798,012 -- 1,109,676 -- -- -- 2,907,688
Property taxes......... 281,782 339,747 84,166 89,571 93,065 11,653 -- 899,984
Property operating..... 81,109 339,445 139,170 222,131 171,636 13,360 -- 966,851
Management fees........ 39,000 97,638 47,950 70,205 43,225 7,500 -- 305,518
Other.................. 37,909 13,691 10,743 8,213 29,607 52 -- 100,215
------------ ------------ ------------ ------------ ---------- ---------- ---------- ----------
439,800 2,588,533 282,029 1,499,796 337,533 32,565 -- 5,180,256
------------ ------------ ------------ ------------ ---------- ---------- ---------- ----------
Revenue in excess of
certain expenses........ $ 1,989,115 $ 316,573 $ 1,087,977 $ 227,246 $ 698,055 $ 239,659 $ 432,865 $ 4,991,490
------------ ------------ ------------ ------------ ---------- ---------- --------- -----------
------------ ------------ ------------ ------------ ---------- ---------- ---------- -----------
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on November 20, 1997.
PAN PACIFIC RETAIL PROPERTIES, INC.
By: /s/ Stuart A. Tanz
----------------------------------------
Stuart A. Tanz
President and Chief Executive Officer
By : /s/ David L. Adlard
---------------------------------------
David L. Adlard
Executive Vice President and
Chief Financial Officer
By : /s/ Laurie A. Sneve
--------------------------------------
Laurie A. Sneve, CPA
Vice President and Controller
<PAGE>
PAN PACIFIC RETAIL PROPERTIES, INC.
EXHIBIT INDEX
Number and Description of Exhibit
- ---------------------------------
99.1 Purchase and Sale Agreement between Rainbow Promenade Partners, L.L.C. and
Pan Pacific Retail Properties, Inc. dated August 18, 1997 (previously filed
as Exhibit 10.9 to the Registrant's Quarterly Report on form 10-Q relating
to the six months ended June 30, 1997 and incorporated herein by this
reference).
