<PAGE> 1
EXHIBIT 99.1
The following communication contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Forward-looking statements are those
that do not state historical facts and are inherently subject to risks and
uncertainties, and include statements contained under the headings
"Re-Deployment Strategy," "Internal Growth Rate," "Re-Leasing Potential,"
"Development in Progress," "Financial Capacity to Grow," "Projected Balance
Sheet Data," "Financial Ratio Analysis" and "Dividend & Payout Ratio Summary."
These forward-looking statements are based on current expectations and entail
various risks and uncertainties that could cause actual results to differ
materially from those projected in the forward-looking statements. Such risks
and uncertainties include, among others: risks associated with completion of the
proposed merger; legislative, regulatory, or other changes in the real estate
industry which increase the costs of, or otherwise affect the operations of, Pan
Pacific, Western Properties or the combined company following the merger;
competition for tenants with respect to new leases and the renewal or rollover
of existing leases; changes in national or regional economic conditions,
including changes in interest rates and the availability and cost of capital to
Pan Pacific, Western Properties or the combined company; risks associated with
shopping centers, such as lower than expected occupancy levels, a downturn in
market lease rates for retail shopping center space or higher than expected
costs associated with the maintenance and operation of such facilities;
potential liability under, and change in, environmental, zoning, tax and other
laws; risks associated with the market valuations of Pan Pacific's and Western
Properties' stock; Pan Pacific's ability to sell non-core properties at
acceptable prices after the merger; Pan Pacific's ability to renegotiate its
primary credit facility; execution of shopping center development programs;
completion of pending acquisitions including the completion of customary due
diligence and closing conditions; and other factors discussed in Pan Pacific's
Annual Report on Form 10-K and Pan Pacific's Registration Statement on Form S-4
(File No. 333-45944).
With regard to the financial projections set forth in the
communication below, we cannot assure you that actual results will not be
significantly better or worse than the projected results. The inclusion of these
projections should not be regarded as a representation by Pan Pacific or Western
Properties or any of their affiliates or representatives that the projected
results will be achieved. In addition, the financial projections were not
prepared in compliance with the published guidelines established by the
Securities and Exchange Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections.
Pan Pacific and Western Properties do not, as a matter of course,
publicly disclose internal budgets, plans, estimates, forecasts or projections
as to future revenues, earnings or other financial information. Accordingly,
neither Pan Pacific nor Western Properties intends to, and each specifically
declines any obligation to, update or otherwise revise the financial projections
to reflect circumstances existing since their preparation or to reflect the
occurrence of unanticipated events. In addition, neither Pan Pacific nor Western
Properties intends to, and each specifically declines any obligation to, update
or revise the financial projections to reflect changes in general economic or
industry conditions.
Neither Pan Pacific's nor Western Properties' independent
accountants have compiled, examined or applied any procedures to the financial
projections in the communication below, nor have they expressed any opinion or
other form of assurance on this information or its achievability and assume no
responsibility for, and disclaim any association with, this information.
1
<PAGE> 2
Investors and security holders of Pan Pacific and Western
Properties are urged to read the joint proxy statement/prospectus which was
filed with the Securities and Exchange Commission as part of Pan Pacific's
Registration Statement on Form S-4 (File No. 333-45944) regarding the proposed
merger, because it contains important information. Pan Pacific's and Western
Properties' security holders may obtain a free copy of the joint proxy
statement/prospectus and other documents filed by Pan Pacific and Western
Properties with the Commission at the Commission's Web site at www.sec.gov. The
joint proxy statement/prospectus and these other documents may also be obtained
free of charge from Pan Pacific by directing a request to Pan Pacific Retail
Properties, Inc., 1631-B Melrose Drive, Vista, California 92083, Attention:
Joseph B. Tyson, Executive Vice President and Chief Financial Officer,
telephone: (760) 727-1002; or from Western Properties by directing a request to
Western Properties Trust, 2200 Powell Street, Suite 600, Emeryville, California
94608, Attention: Dennis Ryan, Chief Financial Officer, telephone (888)
831-5770.
------------------------------
------------------------------
The following communication contains certain information prepared
by Pan Pacific's management relating to the proposed merger of WPT, Inc. (which
will succeed Western Properties immediately prior to the merger) with Pan
Pacific:
2
<PAGE> 3
STRATEGIC BENEFITS
--------------------------------------------------------------------------------
- Significantly increases presence in key West Coast growth markets
- Enhances dominant grocery anchor focus in high barrier to entry markets
- Opportunity to accelerate FFO growth rate
- Strengthens financial position and ability to grow
3
<PAGE> 4
GOING-IN CAP RATE ANALYSIS
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
2Q '00 Net operating income (annualized) $ 45,288
Incremental income from Kienow's portfolio $ 1,384
Incremental income from Plaza Escuela loan $ 1,348
Other property operating expense reductions $ 2,496
ADJUSTED GOING-IN NOI $ 50,516
Equity Value (PNP at $20.00, 0.62 exchange ratio) $233,343
Debt assumed (including transaction expenses) $205,000
TOTAL GROSS VALUE $438,343
IMPLIED GOING-IN CAP RATE 11.5%
</TABLE>
4
<PAGE> 5
NET ASSET VALUE ANALYSIS
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Adjusted Going-In NOI $ 50,516
CAP RATE 9.75% 10.00% 10.25%
Implied gross value $518,112 $505,160 $492,839
Debt outstanding $205,000 $205,000 $205,000
Net asset value $313,112 $300,160 $287,839
NAV PER SHARE $ 16.63 $ 15.95 $ 15.30
</TABLE>
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<PAGE> 6
CONCENTRATED IN KEY GROWTH MARKETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
San Francisco Sacramento Portland
------------- ---------- --------
<S> <C> <C> <C>
# of Shopping Centers 12 7 10
% of Total NOI 31% 20% 10%
Average grocery sales psf $ 462 $ 481 NA
Population* 69,000 54,000 125,000
Household income* $ 68,000 $ 72,000 $ 50,000
</TABLE>
*3-mile weighted by net operating income
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<PAGE> 7
GEOGRAPHIC DIVERSIFICATION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pan Pacific Western Combined
--------------------- --------------------- ---------------------
Sq. Ft. % of Total Sq. Ft. % of Total Sq. Ft. % of Total
------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Northern California 1,717 18% 4,224 78% 5,941 40%
Southern California 1,944 21% 0 0% 1,944 13%
Oregon 1,985 21% 463 8% 2,448 17%
Washington 1,776 19% 127 2% 1,903 13%
Nevada 1,458 16% 630 12% 2,088 14%
Other 481 5% 0 0% 481 3%
</TABLE>
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<PAGE> 8
TENANT DIVERSIFICATION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pan Pacific Western Combined
-------------------- ------------------- -------------------
Rent % of Rent % of Rent % of
($000s) Total ($000s) Total ($000s) Total
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Raley's Supermarket $ 339 0.4% $7,359 16.2% $7,698 5.8%
Wal-Mart 2,836 3.3% 775 1.7% 3,611 2.7%
Safeway/Pak N Save/Vons 2,084 2.4% 2,007 4.4% 4,091 3.1%
Albertson's/Sav-on 3,457 4.0% 0 0.0% 3,457 2.6%
Rite Aid 1,576 1.8% 1,211 2.7% 2,787 2.1%
Ross Stores 1,073 1.2% 705 1.6% 1,778 1.3%
Hollywood Video 1,188 1.4% 465 1.2% 1,653 1.3%
Save Mart 512 0.6% 1,121 2.5% 1,633 1.2%
QFC 541 0.6% 1,090 2.4% 1,631 1.2%
24 Hour Fitness 1,246 1.4% 243 0.6% 1,489 1.1%
Office Max 1,481 1.7% 0 0.0% 1,481 1.1%
Blockbuster Video $ 654 0.7% $ 777 1.7% $1,431 1.1%
</TABLE>
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<PAGE> 9
WESTERN INVESTMENT ACTIVITY '98 - `00
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dispositions # of Properties Sq. Ft. Price
------------ --------------- ------- -----
<S> <C> <C> <C>
Non-core asset type 11 209,000 $23.3 MM
Non-core markets 11 639,000 $48.7 MM
TOTAL DISPOSITIONS 22 848,000 $72.0 MM
</TABLE>
<TABLE>
<CAPTION>
Acquisitions Location Sq. Ft. Price
------------ -------- ------- -----
<S> <C> <C> <C>
Century Center Modesto CA 215,000 $17.5 MM
Lakewood Village Windsor CA 127,000 $20.9 MM
Pine Creek Center Grass Valley CA 213,000 $10.0 MM
Blaine International Blaine WA 127,000 $ 7.6 MM
Tacoma Shopping Center Portland OR 13,000 $ 2.3 MM
Kienow's Portfolio Portland OR 545,000 $54.7 MM
TOTAL ACQUISITIONS 1,240,000 $113 MM
</TABLE>
9
<PAGE> 10
RE-DEPLOYMENT STRATEGY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dispositions: Non-Core Markets Projected Price Projected Cap Rate
------------------------------ --------------- ------------------
<S> <C> <C>
Centennial Plaza $12.3 MM 10.0%
Dodge Center $ 2.5 MM 11.5%
Eastridge Plaza $ 5.3 MM 10.3%
Elko Junction $16.6 MM 10.0%
Heritage Park $ 9.9 MM 10.0%
Victorian Walk Shopping Center $ 7.7 MM 10.3%
West Town $ 5.4 MM 8.5%
Dispositions: Non-Core Asset Type
---------------------------------
Raley's Center (single tenant - Fallon) $ 4.7 MM 8.5%
Viking Freight (industrial) $ 9.0 MM 6.3%
Wal-Mart (single tenant - Napa) $ 9.0 MM 8.5%
Washington Mutual (office buildings) $ 5.0 MM --
TOTAL DISPOSITIONS $87.4 MM 9.3%
</TABLE>
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<PAGE> 11
INTEGRATION PLAN
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Week Beginning
----------------------------------------------------------------------------------------
Responsibility 4-Sep 11-Sep 18-Sep 25-Sep 2-Oct 9-Oct 16-Oct 23-Oct 30-Oct 6-Nov 13-Nov
-------------- ----- ------ ------ ------ ----- ----- ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HUMAN RESOURCES
Close out WIR 401k LM O
G & A budget JT O
Hire Acctg. Staff A/P, A/R, & Accountants LS O
Interview WIR accounting staff LS X
Identify WIR transition team JT/JS O
Select two independent board members ST O
Complete cobra insurance transition LM O
Severance-legal release form for
non-retained JT O
D & O policy extention and verify
prepayment DS X
Complete Organizational Chart JS/ST/JT O
Implement Org Chart/finalize comp/
responsibilities PPRP JS/JT O
Implement Org Chart/finalize comp/
responsibilities WIR JS/JT O
Hire Paralegal JS/JT O
Hire Oregon Leasing Rep (Sacramento
Office) TB/JS O O
Hire Admin Assistant - Portland RS O O
Hire Washington Property Manager RS/JS O O
Hire Leasing Rep SoCAL/Nevada JS/SE O O
ACCOUNTING
Dublin finalize ground lease structure JT O
Proforma for stub period Nov. - Dec. JT O
Windsor-Lincoln National debt - transfer
of mortgage JT O
Recalculate FAS 13 upon conversion
completion LS O
Finalize capitalized interest
Rocklin, Menlo, Broadway, Olympic LS O
Calculate FFO for Olympic office building JT X O
Complete legal structure for Kienows -
Ron Prins MH X O
Finalize transaction cost JT X O
Q-3 WIR to accrue vacation, sick, 401k
and bonus LS O
Collection of prior dev. fees Bay Meadows
& Plaza Escuela LS O
Other assets/liabilities write-off &
collect LS O
Declare Q-3 dividend 9/25 MH X
Set-up payments for former Directors 5k x
3 per month MH O
Review and approve budget assumptions JS O
Complete & distribute 2001 and 2002 Prop
Level Budgets JS O
TECHNOLOGY
Inventory of existing systems PB X
Merge data from Yardi to MRI LS O
Server set-up in San Diego PB O
ISDN or T-1 line for Sacramento office PB O
Training MRI for new employees LS O
Website and Property Overview CM O
Database Conversion CM/RM O
Scan PPRP Leases to Shared Drive EB O
Scan WIR Leases to Shared Drive EB O
INVENTORY/OFFICE SET-UP
Close existing PNP Sacramento Office JS O
Disposition of WIR Emeryville office
furniture DS O
Expand existing Vista phone system DS O
Transfer existing PNP employees to new
offices DS O
Clean out vacant offices (Vista) DS O
</TABLE>
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<PAGE> 12
INTEGRATION PLAN
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Week Beginning
----------------------------------------------------------------------------------------
Responsibility 4-Sep 11-Sep 18-Sep 25-Sep 2-Oct 9-Oct 16-Oct 23-Oct 30-Oct 6-Nov 13-Nov
-------------- ----- ------ ------ ------ ----- ----- ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Order furniture for vacant offices (Vista) DS O
Terminate Emeryville office lease JT O
Close WIR Emeryville Office DS O
Terminate office contracts - copier DS O
New copier for Acctg. Staff DS O
Draft Filing policies & procedures EB/DC/RM/KB O
Approval & Implementation of Filing
policies & procedures ST/JT/JS O
Email system coordination of all
Regionals/Employees LS O
Letterhead, Business Cards DS O
Updated Phone List DS O
Portland Expansion RS O
PROXY/MEETING/BOARD
Pick solicitation firm for WIR CM/ST X
Review Prelim. Proxy JT/LS/MH X
Review & update proxy before printer JT/LS/MH X
Printer JT/LS/MH X
Mailing JT/LS/MH X
BANK GROUP/CREDIT FACILITY
Schedule meeting with bank group JT X
Bank group property tour & meeting JT/ST/JS O
Bank facility term sheet JT/ST X
Select additional banks for credit
facility JT/ST X
Agree on structure (i.e. Mini revolver,
term loan, increase) JT/ST X
DEVELOPMENT
Finalize joint venture Olympic /Broadway JT/ST O
Development agreement Plaza Escuela JT/ST O
Finalize budgets JT/ST/MS/DC O
Finalize draw procedures JT/ST O
Tax parcel map for office building ST O
Lease 3rd floor of Cal Fed Building ST O
Pursue sale of Plaza Escuela JT/ST O
PROPERTY
Strategic plan for each property JS/ST/JT O
Property tax impact allocation based upon
purchase price JS /ST O
Viking Freight sale ST O
Environmental phase 1 complete (need 200
million) JS/ST O
Washington Mutual sale ST O
North Hills, North Hills parcels, Dinuba,
Coalinga ST O
Cancel Blaine management agreement ST O
Leasing update weekly (update Argus) JS O
Finalize property insurance DS O
Update Kienows capital expense JT O
Environmental insurance terminate or
adjust DS O
Notice to Tenants DC/JS O
Tenant meetings DC/JS O
Unit owners/other special ownership
structures ST/JT O
Title clean-up JS O
Demographics CM/JS
Notice to Suppliers DC/JS O
</TABLE>
12
<PAGE> 13
INTEGRATION PLAN
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Week Beginning
----------------------------------------------------------------------------------------
Responsibility 4-Sep 11-Sep 18-Sep 25-Sep 2-Oct 9-Oct 16-Oct 23-Oct 30-Oct 6-Nov 13-Nov
-------------- ----- ------ ------ ------ ----- ----- ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT
Transfer ownership of existing lock boxes JT O
Close all bank accounts - date of merger LM O
</TABLE>
13
<PAGE> 14
INTERNAL GROWTH RATE
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
2001E NET OPERATING INCOME $50,516
Re-leasing activity $571
Lease-up activity $1,050
Improving recoveries $275
Expense reductions $159
2002E NET OPERATING INCOME $52,571
INTERNAL GROWTH RATE 4.1%
</TABLE>
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<PAGE> 15
RE-LEASING POTENTIAL
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pan Pacific Historical Leasing Activity 1998 -- 1999
--------------------------------------- ------------
<S> <C>
# of leases scheduled to expire 247
Total square feet scheduled to expire 762,000
Actual # of leases executed 490
Actual square feet leased 1,761,000
Expiring base rent per sq. ft. $10.52
Re-leasing base rent per sq. ft. $12.28
Percent increase in base rent per sq. ft. 17%
</TABLE>
<TABLE>
<CAPTION>
Western Portfolio 2001 -- 2002
----------------- ------------
<S> <C>
# of leases scheduled to expire 224
Total square feet scheduled to expire 603,000
Expiring base rent per sq. ft. $11.40
Pan Pacific estimated market rent per sq. ft. $12.85
Percent increase in base rent per sq. ft. 13%
Incremental base rent (annualized) $878,000
</TABLE>
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<PAGE> 16
DEVELOPMENT IN PROGRESS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Plaza Escuela Olympic Place On Broadway
Walnut Creek, CA Walnut Creek, CA Redwood City, CA
---------------- ---------------- ----------------
<S> <C> <C> <C>
Ownership Lender 94/6 JV 50/50 JV
Square feet 156,000 146,000 160,000
Start Date 1Q `00 4Q `00 1Q `01
Completion Date 3Q `01 1Q `02 3Q `02
Total Project Costs $44.0 MM $34.7 MM $35.8 MM
Costs Funded To Date $11.8 MM $9.0 MM $0.6 MM
Major Tenants Andronico's Market Century Theater Century Theater
The Container Store Cost Plus Imports Pier 1 Imports
The Men's Warehouse Cal Fed Barnes & Noble
Prudential Staples Elm Street
Projected Yield 10% 12% 10%
</TABLE>
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<PAGE> 17
TRANSACTION FINANCING
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Equity
------
Western shares & units outstanding 18,818
Exchange ratio X 0.62
Newly issued Pan Pacific shares 11,667
Implied equity value (Pan Pacific at $20.00 per share) $233 MM
</TABLE>
<TABLE>
<S> <C> <C>
Debt
----
Investment grade bonds assumed $125 MM
Weighted average interest rate 7.5%
Weighted average maturity 7 years
Mortgage note assumed $10 MM
Interest rate 7.6%
Maturity 4 years
Bank line retired including transaction expenses $70 MM
(borrowed under Pan Pacific's line)
Total Debt $205 MM
TOTAL TRANSACTION VALUE $438 MM
</TABLE>
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<PAGE> 18
FINANCIAL CAPACITY TO GROW
--------------------------------------------------------------------------------
- Increasing bank line capacity from $200 MM to $400 MM
- Bank line average spread dropping from 115 bps to 108 bps
- Bank line maturity extending from 12/02 to 01/04
- $160 MM available after deal to fund future acquisitions
- No preferred stock or convertible debt outstanding
- Investment grade rating from both S&P and Moody's
- 91 of the 111 properties are unencumbered
- No additional equity needed to achieve business plan through 2002
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<PAGE> 19
PROJECTED BALANCE SHEET DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets 12/31/00
------ --------------------------
<S> <C> <C>
Operating Properties $1,206 MM 93%
Development $25 MM 2%
Other assets $59 MM 5%
TOTAL ASSETS $1,290 MM 100%
Debt
----
Unsecured debt - fixed $125 MM 20%
Secured debt - fixed $237 MM 38%
Unsecured debt - floating $259 MM 42%
TOTAL DEBT $621 MM 100%
</TABLE>
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<PAGE> 20
FINANCIAL RATIO ANALYSIS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Projected Year Ending 12/31/01
------------------------------
Pan Pacific Pan Pacific
Stand Alone Pro Forma
----------- -----------
<S> <C> <C>
Interest Coverage 2.9x 3.0x
Debt-to-Total Market Cap 43% 42%
Unsecured Debt/Total Debt 49% 64%
Secured Debt/Total Debt 51% 36%
Fixed Rate Debt/Total Debt 51% 57%
Floating Rate Debt/Total Debt 49% 43%
Unencumbered NOI 61% 73%
</TABLE>
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<PAGE> 21
DIVIDEND & PAYOUT RATIO SUMMARY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pan Pacific 2000 Dividends Dividend FFO Payout Ratio
-------------------------- -------- ----------------
<S> <C> <C>
January 21 $0.400 71%
April 14 $0.420 69%
July 21 $0.420 67%
October 20 $0.420 65%
November special dividend $0.280
TOTAL 2000 DIVIDENDS $1.94 78%
Pan Pacific 2001E Dividends
---------------------------
Mid March $0.455 68%
Mid June $0.455 68%
Mid September $0.455 65%
Mid December $0.455 65%
TOTAL 2001E DIVIDENDS $1.82 67%
</TABLE>
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<PAGE> 22
OWNERSHIP ANALYSIS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pan Pacific Western Combined
----------- ------- --------
<S> <C> <C> <C>
Revenue Properties 48.3% 0.0% 31.8%
Other Institutional Investors 41.3% 13.2% 31.7%
Retail 2.7% 75.2% 28.7%
Management & Directors 2.6% 3.5% 1.7%
DownREIT Units 5.1% 8.1% 6.1%
Public Float (total shares)
(including Revenue Properties) 21.3 MM 17.3 MM 32.0 MM
</TABLE>
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<PAGE> 23
VALUE ENHANCEMENT TRACK RECORD
--------------------------------------------------------------------------------
Acquisitions Since 1997 IPO
<TABLE>
<S> <C>
Number of Properties(1) 34
Total Square Feet 4,701,224
Total Investment $384,075,000
Going-in Unleveraged Yield(2) 9.7%
Current Unleveraged Yield(3) 10.9%
BASIS POINT INCREASE IN YIELD 120 BPS
</TABLE>
----------
(1) Does not include the last two properties acquired.
(2) Based on net operating income during initial quarter of operation (pro
forma adjusted for full quarter).
(3) Based on net operating income for Q1 2000.
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<PAGE> 24
SUMMARY
--------------------------------------------------------------------------------
- Leading public REIT - pure play West Coast grocery-anchored retail
- Strong, in-fill, growth markets and tenant diversity
- Proven ability to acquire shopping centers in core markets and enhance value
quickly
- Market presence, market know-how and financial capacity to grow
24
