SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________ to __________
Commission file number 333-34835-01
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its organizational documents)
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MARYLAND 87-0516235
--------------------- ---------------
(State of organization) (I.R.S. Employer
Identification No.)
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115 (801) 486-3911
-------------------------- -----------------------------
(Address of principal executive offices) (Registrant's telephone number,
including area code)
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No
/x/ / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of JP Realty Inc.'s proxy statement for its 1999 Annual
Meeting of Stockholders scheduled to be held on May 5, 1999 are incorporated
by reference into Part III of this Annual Report on Form 10-K.
<PAGE> 1
Certain matters discussed under the captions "Business and Properties",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Quantitative and Qualitative Disclosures About Market Risk" and
elsewhere in this Annual Report on Form 10-K and the information incorporated
by reference herein may constitute forward-looking statements and as such may
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance and achievements of Price Development
Company, Limited Partnership to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements.
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
JP Realty, Inc., a Maryland corporation (together with its subsidiaries,
the "Company"), is the sole general partner of Price Development Company,
Limited Partnership, a Maryland Limited partnership (the "Operating
Partnership"). The Company is a fully integrated, self-administered and self-
managed real estate investment trust ("REIT") primarily engaged in the business
of owning, leasing, managing, operating, developing, redeveloping and acquiring
malls, community centers and other commercial and retail properties in Utah,
Idaho, Colorado, Arizona, Nevada, New Mexico and Wyoming (the "Intermountain
Region"), as well as in Oregon, Washington and California (together with the
Intermountain Region the "Western States"). The Company was formed on
September 8, 1993 to continue and expand the business, commenced in 1957, of
certain companies (the "Predecessor Companies") affiliated with John Price,
Chairman of the Board and Chief Executive Officer of the Company. The Company
conducts all of its business operations through, and as of December 31, 1998
held an 83% controlling general partner interest in, the Operating Partnership.
As of December 31, 1998 the Operating Partnership, on behalf of the Company,
held a portfolio consisting of 50 properties ("Properties"), including 17
enclosed regional malls, 25 community centers with two free-standing retail
properties located in ten states and six mixed-use commercial properties
located primarily in the Salt Lake City, Utah metropolitan area. Since 1976,
the Company and the Predecessor Companies have been responsible for developing
more retail malls in the region covered by Utah, Idaho, Colorado, Nevada, New
Mexico and Wyoming than any other developer having constructed, developed or
redeveloped 12 malls in the region (as well as three other malls in Oregon and
Washington).
Based on total gross leasable area (Company-owned leasable area plus any
tenant-owned leasable area within the Company's Properties or "Total GLA"), the
Company owns and operates the largest retail property portfolio in each of the
states of Utah, Idaho and Wyoming, and is one of the leading owners and
operators of retail shopping center properties throughout the Intermountain
Region. As of December 31, 1998, the Company's retail portfolio contained an
aggregate of 13,000,760 square feet of Total GLA and its commercial portfolio
contained an aggregate of 1,353,576 square feet of gross leasable area
(Company-owned leasable area within the Company's Properties or "GLA"). Based
on Total GLA, the Company's retail properties were approximately 94% leased as
of December 31, 1998, and, based on GLA, its commercial properties were
approximately 86% leased as of that date. For the year ended December 31,
1998, the regional malls, community centers and the commercial properties
contributed approximately 74.3%, 17.3% and 8.4%, respectively, to the Company's
consolidated net operating income.
The Company's strategy is to expand its dominant market position in the
Intermountain Region, and to continue to achieve cash flow growth and enhance
the value of the Properties by increasing their rental income and net operating
income over time. The Company expects to achieve rental income and net
operating income growth through (i) contractual rent increases, which are
included in substantially all existing leases for the Properties, (ii) re-
leasing available space at higher rent levels and (iii) selectively renovating,
expanding and redeveloping the Properties. In order to expand its market
position, the Company expects to concentrate its acquisition and other
development activities in the Western States.
In January, 1994, the Company completed a series of transactions intended
to allow it to reorganize and continue the business of the Predecessor
Companies through the Operating Partnership. As part of these transactions,
the Company issued 13,029,500 shares of common stock ("Common Stock") in a
public offering, issued 200,000 shares of Price Group Stock to Fairfax Realty,
Inc. ("Fairfax"), a company controlled by John Price, and incurred $95 million
in fixed rate mortgage debt (the "Mortgage Debt") together with $9 million in
additional mortgage debt (the "Additional Mortgage Debt"). Net proceeds of the
sale of Common Stock were used by the Company to purchase its general partner
interest in the Operating Partnership, which
in turn utilized such proceeds, together with the net proceeds from the
Mortgage Debt and the Additional Mortgage Debt, to
<PAGE> 2
(i) retire substantially all
of the then existing mortgage debt encumbering 38 of the Properties and other
borrowings relating to such Properties, (ii) purchase the equity interests held
by two partners in Cottonwood Mall and (iii) invest an additional $4 million in
the development project for the regional mall being developed in Spokane,
Washington.
On March 11, 1998, the Operating Partnership issued $100,000,000 in ten
year senior notes bearing annual interest at a rate of 7.29% with interest
payments due semi-annually. Principal payments of $25,000,000 are due annually
beginning March 2005. The Operating Partnership entered into an interest rate
protection agreement in anticipation of issuing these notes and received
$270,000 as a result of terminating this agreement. As a result of the interest
rate protection agreement, the effective rate of interest on these notes is
7.24%. Proceeds from the notes were used to partially repay outstanding
borrowings under the Operating Partnership's $200,000,000 unsecured credit
facility.
On August 6, 1998, the Company through a consolidated partnership, which
has a wholly-owned subsidiary of the Company as a 1% general partner and the
Operating Partnership as a 99% limited partner bought NorthTown Mall in
Spokane, Washington. NorthTown Mall is an enclosed regional mall containing
949,880 square feet of Total GLA. The major anchor department stores at
NorthTown Mall are: The Bon March<e'>, JCPenney, Sears, Mervyn's and Emporium.
The purchase price paid for NorthTown Mall was $128.0 million of which $84.5
million was financed utilizing a first mortgage and $43.5 million was funded
out of the Operating Partnership's $200,000,000 credit facility.
The Grand Opening of Provo Towne Centre, a 723,000 square foot enclosed
regional mall, developed by the Operating Partnership and located in Provo,
Utah, was October 28, 1998. Provo Towne Centre is anchored by JCPenney, Sears,
and Dillard's and includes space for more than 80 mall shops. The mall is
currently developing a sixteen screen Cinemark Theater which will add
approximately 74,000 square feet of additional GLA.
In August 1998, the Operating Partnership completed a 294,804 square foot
expansion at the Boise Towne Square in Boise Idaho. The project added 186,500
square feet of Total GLA for Dillard's (a new anchor tenant), approximately
44,900 square feet of GLA for the expansion of the Bon March<e'> (an existing
anchor tenant) and approximately 63,000 square feet of GLA for additional mall
shops.
In October 1998, the Operating Partnership added Sears as a forth anchor
tenant at Red Cliffs Mall in St. George, Utah. The Sears store added
approximately 70,400 square feet of GLA to Red Cliffs Mall and a Sears Tire and
Battery shop added approximately 9,600 square feet of GLA at Red Cliffs Plaza.
Each of the Company's regional malls is the premier and dominant mall
and, in some cases, the only mall within its trade area and is generally
considered to be the financial, economic and social center for a given
geographic area. The trade areas surrounding the Company's malls have a
drawing radius, depending on the mall, ranging from five to over 150 miles.
The malls have attracted as anchor tenants some of the leading national and
regional retail companies such as JCPenney, Nordstrom, Wal-Mart, The Bon
March<e'>, Sears, Dillard's, Mervyn's and ZCMI. The 17 regional malls in the
portfolio contain an aggregate of approximately 9,810,000 square feet of Total
GLA and range in size from approximately 296,000 to 1,171,000 square feet of
Total GLA. The community center portfolio consists of 25 Properties in seven
states containing over 3,186,000 square feet of Total GLA. The two free-
standing retail properties contain a total of approximately 5,000 square feet
of GLA. The commercial portfolio, which includes 38 commercial buildings
containing approximately 1,354,000 square feet of GLA, is primarily located in
the Salt Lake City, Utah area where the Company's headquarters are located.
<PAGE> 3
PROPERTIES
The following tables set forth certain information relating to the
Properties, all of which (except as otherwise indicated) are 100% owned by the
Operating Partnership. The Company believes that all such Properties are
adequately covered by insurance.
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RETAIL PROPERTIES
OCCUPANCY AS OF
12/31/98
----------------------
FREE
STANDING TENANT TOTAL TENANT BASED BASED TENANT OWNER-
PROPERTY STORES(2) SHOPS(3) ANCHORS GLA(4) GLA(5) OWNED ON TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE(1) (SQ. FT.)(SQ. FT.)(SQ. FT.)(SQ. FT.)(SQ. FT.)(SQ. FT.) GLA GLA SPACE TYPE(6) ANCHORS
- --------------- -------- -------- --------- -------- -------- --------- -------- --------- -------- ------ ------- ------ --------
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REGIONAL MALLS
Utah
- -----
Cache Valley
Mall(7) Logan RM 30,120 96,551 182,889 309,560 307,060 2,500 92.2% 92.2% 75.1% Fee JCPenney,
ZCMI,
Lamonts,
C-A-L
Ranch
Cottonwood Mall Salt RM 53,300 320,382 379,508 753,190 753,190 -- 91.6% 91.6% 80.3% Fee/ JCPenney,
(7) Lake GL(8)ZCMI
City
Provo Towne Provo RM 9,564 238,149 475,653 723,366 387,847 335,519(9) 92.7% 86.5% 77.9% Fee Dillard's,
centre JCPenney,
Sears
Red Cliffs Mall St. RM 12,500 90,872 277,057 380,429 266,158 114,271(10) 97.9% 97.0% 91.3% Fee JCPenney,
(7) George Sears,
ZCMI,
Wal-
Mart
IDAHO
- ------
Boise Town
Square (7) Boise RM 84,418 392,422 694,382 1,171,222 589,585 581,637(11) 98.0% 95.9% 93.9% Fee/ JCPenney,
GL(12)Dillard's,
Sears,
The
Bon
March<e'>,
Mervyn's
Grand Teton Mall Idaho RM 29,089 172,047 323,925 525,061 519,441 5,620 95.3% 95.3% 85.7% Fee JCPenney,
Falls Sears,
ZCMI,
The
Bon
March<e'>
Pine Ridge Mall Pocatello RM 25,818 148,908 437,987 612,713 501,213 111,500(13) 96.9% 96.3% 87.4% Fee/GL
(7) (14) JCPenney,
ZCMI,
The
Bon
March<e'>,
Sears,
ShopKo
Silver Lake Mall Coeur RM 20,090 97,266 217,493 334,849 327,913 6,936 98.7% 98.7% 95.5% Fee JCPenney,
(7) d'Alene Sears,
Emporium,
Lamonts
WASHINGTON
- -----------
NorthTown Mall Spokane RM -- 408,671 541,209 949,880 707,488 242,392(15) 90.8% 87.7% 78.7% Fee JCPenney,
(7) Sears,
Mervyn's,
The
Bon
March<e'>,
Emporium
Spokane Valley Spokane RM 66,066 274,236 369,875 710,177 467,909 242,268(16) 92.8% 89.0% 81.3% Fee JCPenney,
Mall (7) Sears,
The
Bon
March<e'>
Three Rivers
Mall (7) Kelso RM 199,623 126,687 188,076 514,386 345,579 168,807(17) 96.1% 94.2% 84.2% Fee JCPenney,
Sears,
The
Bon
March<e'>,
Emporium
OREGON
- -------
Salem Center Salem RM 45,000 168,206 438,000 651,206 213,206 438,000(18) 94.9% 84.4% 80.2% Fee/
GL(19) JCPenney,
Nordstrom,
Mervyn's,
Meier
&
Frank
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<PAGE> 4
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RETAIL PROPERTIES (continued)
OCCUPANCY AS OF
12/31/98
-----------------------
FREE
STANDING TENANT TOTAL TENANT BASED BASED TENANT OWNER-
PROPERTY STORES(2) SHOPS(3) ANCHORS GLA(4) GLA(5) OWNED ON TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE(1) (SQ. FT.)(SQ. FT.)(SQ. FT.) (SQ. FT.) (SQ. FT.)(SQ. FT.) GLA GLA SPACE TYPE(6) ANCHORS
- --------------- -------- -------- --------- -------- -------- --------- --------- ------- ------- ------ ------- ------ --------
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REGIONAL MALLS
(CONTINUED)
WYOMING
- ----------
Eastridge Mall Casper RM 17,500 264,429 289,796 571,725 495,842 75,883(20) 92.1% 90.9% 82.9% Fee JCPenney,
Target,
Sears,
The
Bon
March<e'>
White Mountain Rock RM 26,025 105,962 208,452 340,439 340,439 -- 76.3% 76.3% 74.8% Fee JCPenney,
Mall (7) Springs Her-
bergers,
Wal-
Mart
NEW MEXICO
- -----------
Animas Valley Farming- RM 33,000 221,946 271,155 526,101 466,763 59,338(20) 88.5% 87.0% 72.7% Fee JCPenney,
Mall ton Sears,
Dil-
lards's,
Beall's,
(21)
North Plains
Mall (7) Clovis RM 19,076 81,416 195,431 295,923 292,803 3,120 63.1% 62.7% 83.6% Fee JCPenney,
Sears,
Beall's,
(22)
CALIFORNIA
- -----------
Visalia Mall Visalia RM 8,510 174,317 257,000 439,827 439,827 -- 97.2% 97.2% 93.0% Fee JCPenney,
-------- --------- --------- --------- --------- --------- ------- ------ ------ Gotts-
chalk's
Subtotal
Regional Malls 679,699 3,382,467 5,747,888 9,810,054 7,422,263 2,387,791 92.68% 90.32% 83.19%
======= ========= ========= ========= ========= ========= ====== ====== ======
COMMUNITY
CENTERS
UTAH
- -----
Bank One Nephi FR 3,590 -- -- 3,590 3,590 -- 100.0% 100.0% -- Fee None
Cottonwood
Square Salt CC -- 35,467 41,612 77,079 77,079 -- 90.9% 90.9% 80.2% Fee/ Albert-
Lake GL sons
City
Fort
Union Plaza Salt CC 33,190 -- -- 33,190 33,190 -- 100.0% 100.0% -- GL None
Lake
City
Gateway Crossing Bount- CC 35,620 65,932 174,047 275,599 145,639 129,960(13) 99.6% 99.2% 98.2% Fee Ernst
iful Home
Center
(23),
ShopKo,
TJ
Maxx
North Temple Salt CC -- 10,085 -- 10,085 10,085 --(24) 100.0% 100.0% 100.0% Fee Albert-
Shops Lake sons,
City Rite-
Aid
Orem Plaza-
Center Street Orem CC 15,491 18,814 62,420 96,725 91,125 5,600 97.0% 96.8% 84.6% Fee Savers,
Showbiz
Pizza
Orem Plaza-
State Street Orem CC 8,045 19,057 -- 27,102 27,102 --(25) 92.9% 92.9% 90.0% Fee Rite
Aid
Plaza 9400 Sandy CC 34,510 55,445 136,745 226,700 226,700 -- 100.0% 100.0% 100.0% GL Albert-
sons,
Fred
Meyer
Red Cliffs
Plaza St. CC 20,023 -- 46,626 66,649 57,322 9,327 30.0% 18.7% -- Fee (22)
George
River Pointe West CC 18,522 56,120 135,707 210,349 56,120 154,229(26) 97.1% 89.3% 89.3% Fee Albert-
sons,
ShopKo
Riverside Plaza Provo CC 10,050 11,363 156,454 177,867 174,867 3,000 99.0% 99.0% 84.8% Fee Macey's,
Rite
Aid,
Mac
Frugals
University Orem CC 33,401 38,551 128,091 200,043 199,143 900 100.0% 100.0% 100.0% Fee Burling-
Crossing ton,
Coat(27),
Office
Max(28),
CompUSA
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<PAGE> 5
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RETAIL PROPERTIES (continued)
OCCUPANCY AS OF
12/31/98
-----------------------
FREE
STANDING TENANT TOTAL TENANT BASED BASED TENANT OWNER-
PROPERTY STORES(2) SHOPS(3) ANCHORS GLA(4) GLA(5) OWNED ON TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE(1)(SQ. FT.)(SQ. FT.)(SQ. FT.) (SQ. FT.)(SQ. FT.) (SQ. FT.) GLA GLA SPACE TYPE(6) ANCHORS
- --------------- -------- ------- ------- --------- -------- --------- -------- --------- -------- ------ ----- ------ ----------
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COMMUNITY
CENTERS
(CONTINUED)
IDAHO
- -----
Alameda Plaza Pocatello CC 19,049 27,346 143,946 190,341 190,341 -- 100.0% 100.0% 100.0% Fee Albert-
sons,
Fred Meyer
Baskin Robbins Idaho FR 1,761 -- -- 1,761 1,761 -- 100.0% 100.0% -- Fee None
17th Street Falls
Boise Plaza Boise CC -- -- 108,464 108,464 108,464 -- 100.0% 100.0% -- PI Burlington
(29) Coat(26),
Albertsons
Boise Towne
Plaza Boise CC -- -- 91,534 91,534 91,534 -- 100.0% 100.0% -- Fee Circuit
City,
Linens' n
Things,
Old
Navy
Twin Falls Twin CC -- 37,680 -- 37,680 37,680 -- 100.0% 100.0% -- Fee None(30)
Crossing Falls
Yellowstone Idaho CC 16,865 36,923 166,733 220,521 218,721 1,800 86.3% 86.2% 55.8% PI Albert-
Square Falls (31) sons,
Fred
Meyer
(32)
OREGON
- ------
Bailey Hills Eugene CC 12,000 11,895 155,000 178,895 11,895 167,000(33)100.0% 100.0% 100.0% Fee Safeway,
Plaza ShopKo
Division
Crossing Portland CC 2,589 24,091 67,960 94,640 92,051 2,589 97.1% 97.0% 88.6% Fee Thirtfway,
Rite
Aid
Halsey Crossing Gresham CC 7,267 23,071 52,764 83,102 83,102 -- 97.4% 97.4% 90.7% GL Safeway
NEVADA
- -------
Fremont Plaza Las CC 6,542 19,643 77,348 103,533 103,533 -- 100.0% 100.0% 100.0% GL Smith's
Vegas Food &
Drug,
Sav-On
Drug
Plaza 800 Sparks CC 5,985 21,821 139,607 167,413 167,413 -- 97.0% 97.0% 77.2% GL Albert-
sons,
ShopKo
COLORADO
- ---------
Austin Bluffs Colorado CC 9,447 35,859 71,543 116,849 78,902 37,947(34)100.0% 100.0% 100.0% Fee Albert-
Plaza Springs sons,
Longs
Drug
ARIZONA
- -------
Fry's Shopping Glendale CC 8,564 38,781 71,919 119,264 119,264 -- 96.3% 96.3% 88.6% Fee Fry's
Plaza Foods
Woodlands
Village Flagstaff CC 4,020 43,380 146,898 194,298 91,858 102,440(10) 98.5% 96.8% 93.2% Fee Bashas',
Wal-
Mart
CALIFORNIA
- ----------
Anaheim Plaza Anaheim CC 10,000 -- 67,433 77,433 77,433 -- 93.5% 93.5% -- PI
(35) (22)
------- --------- --------- ---------- --------- ---------- ----- ----- -----
Total
Community
Centers 316,531 631,324 2,242,851 3,190,706 2,575,914 614,792 96.25% 95.35% 90.84%
------- --------- --------- ---------- --------- ---------- ------ ------ ------
Total Retail
Properties 996,230 4,013,791 7,990,739 13,000,760 9,998,177 3,002,583 93.55% 91.62% 84.33%
======= ========= ========= ========== ========= ========== ====== ====== ======
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<PAGE> 6
RETAIL PROPERTIES (continued)
- ---------------------------------------------------
(1)Property type definitions are as follows: Regional Mall--RM, Community
Centers--CC, Free-standing Retail Properties--FR.
(2)Freestanding stores means leasable buildings or other structures located on
a property which are not physically attached to a mall or community center.
(3)Tenant shops means non-anchor retail stores located in a mall or community
center.
(4)Represents Operating Partnership-owned leasable area and tenant-owned
leasable area within the Properties.
(5)Represents Operating Partnership-owned leasable area within the Properties.
(6)Ownership type definitions are as follows: Fee, Groundlease-GL and
Partnership Interest-PI.
(7)Secured Property as of December 31, 1998.
(8)The Operating Partnership owns a ground lease on one-half acre.
(9) Tenant-owned space at this property includes Dillard's and Sears.
(10) Tenant-owned space at this Property includes Wal-Mart.
(11) Tenant-owned space at this Property includes Dillard's, JCPenney, Sears
and Mervyn's.
(12) The Operating Partnership owns a ground lease on two acres.
(13) Tenant owned space at this Property includes ShopKo.
(14) The Operating Partnership owns two ground leases on 7.3 acres and 1.2
acres.
(15) Tenant-owned space at this property includes Sears and Mervyn's.
(16) Tenant-owned space at this property includes Sears and The Bon
March<e'>.
(17) Tenant-owned space at this property includes Target and Top Foods.
(18) Tenant-owned space at this property includes JCPenney, Mervyn's,
Nordstrom and Meier and Frank.
(19) The Operating Partnership owns seven ground leases comprising a total of
1.58 acres and 2.35 acres in fee.
(20) Tenant-owned space at this Property includes Target.
(21) Tenant-owned space at this Property includes property owned by a third
party that is vacant.
(22) Anchor space is vacant as of December 31, 1998.
(23) Ernst Home Center has filed for protection under the United States
Bankruptcy Code ("Bankruptcy Code") but continues to be responsible for
lease payments and at December 31, 1998 was still paying rent pursuant
to the terms of the lease and the Bankruptcy Code.
(24) Tenant-owned space at this Property includes Albertsons and Rite Aid.
(25) Tenant-owned space at this Property includes Rite Aid.
(26) Tenant-owned space at this Property includes Albertsons and ShopKo.
(27) The Operating Partnership's lease is with Fred Meyer which subleases the
Property space to Burlington Coat.
(28) The Operating Partnership's lease is with Fred Meyer which subleases the
space to Burlington Coat. 33.6% of the space represented by the
Burlington Coat sublease is further subleased to Office Max.
(29) The Operating Partnership's ownership represents a 73.3% partnership
interest in the current fee holder of the property.
(30) The Operating Partnership's lease subleases the Property to several
other retailers.
(31) The Operating Partnership's ownership represents a 83.5% partnership
interest in the current fee holder of the Property.
(32) Fred Meyer is paying rent but not occupying the space. The lease ends
in November 2002.
(33) Tenant-owned space at this property includes Safeway and ShopKo.
(34) Tenant-owned space at this Property includes Longs Drugs.
(35) The Operating Partnership's ownership interest represents a 50%
partnership interest in the current ground lease holder of the Property.
<PAGE> 7
<TABLE>
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COMMERCIAL PROPERTIES
OCCUPANCY
PROPERTY GLA BASED ON OWNERSHIP
PROPERTY LOCATION TYPE (1) (SQ. FT.) GLA TYPE
- ---------------------------- --------------- -------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
UTAH
- -----
Price Business Center-Pioneer Salt Lake City BP 497,892 79.00% Fee
Square
Price Business Center-South Main Salt Lake City BP 112,963 82.65% Fee
Price Business Center-Timesquare Salt Lake City BP 289,423 94.22% Fee
Sears-Eastbay Provo CP 48,880 100.00% Fee
Price Business Center-Commerce West Valley City BP 393,360 89.75% Fee
Park
IDAHO
- -----
Boise/FSB Plaza Boise CP 11,058 38.55% Fee
---------- ----------
1,353,576 86.11%
========== ==========
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(1) Property type definitions are as follows: Business Park--BP, Commercial
Property--CP.
SIGNIFICANT PROPERTIES
Boise Towne Square contributed in excess of 10% of the Company's total
rental revenue (i.e. minimum rents plus percentage rents "Rental Revenue") for
the year ended December 31, 1998. Additionally, NorthTown Mall, comprised in
excess of 10% of the book value of Company assets for the year ended December
31, 1998. Certain additional information relating to these Properties is set
forth below.
BOISE TOWNE SQUARE
Boise Towne Square is centrally located in Boise, Idaho adjacent to the
main thoroughfare of the city. Boise Towne Square was opened by the
Predecessor Companies in October of 1988. Boise Towne Square is the dominant
regional mall in its trade area, with several community centers as its major
competition.
The Company completed in August 1998, a 294,804 square foot expansion of
Boise Towne Square. The project added 186,500 square feet of Total GLA for
Dillard's (a new anchor tenant), approximately 44,900 square feet of GLA for
the expansion of The Bon March<e'> (an existing anchor tenant) and
approximately 63,000 square feet of GLA for additional shops.
The Company leases approximately two acres which is utilized for
perimeter parking and landscaping from Union Pacific Railroad Company on a
year-to-year basis from December 1 to November 30 at a current rental rate of
$25,000 per year. Boise Towne Square is part of the collateral securing the
Mortgage Debt and the Company believes it is adequately insured. Depreciation
is taken utilizing the straight line method over 40 years with a net book basis
of approximately $44,720,000, $31,301,000 and $32,543,000 at December 31, 1998,
1997 and 1996, respectively. It is the Company's policy to renovate, expand
and upgrade as warranted by market conditions.
<PAGE> 8
As of December 31, 1998, 1997 and 1996, Boise Towne Square was 98%,98%
and 99% occupied, respectively, with an average annual rent for shop tenants
per square foot of $17.90, $18.40 and $18.06 for the years ended on those
respective dates. Its major tenants occupying 10% or more of Total GLA are all
department stores and include JCPenney, Dillard's and The Bon March<e'>.
JCPenney and Dillard's own their own land and buildings and are subject to a
Construction, Operation and Reciprocal Easement Agreement that expires in 2078,
while The Bon March<e'>'s lease is for a term of 20 years, expiring in 2008,
with two 20-year extension options.
Boise Towne Square's leases will expire on the following schedule:
<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF GLA
Annualized ANNUALIZED Represented by Expiring
--------------------------------
Number APPROXIMATE Base Rent Base Per Square Assuming No Assuming Full
Lease Expiration of Leases GLA Under Foot Under Exercise of Exercise of
Year Ending December 31, Expiring SQUARE FEET Expiring Leases Expiring Leases(1) Renewal Options Renewal Options
- ------------------------- ---------- ----------- --------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1999............. 20 36,953 $ 768,085 $20.79 6.27% 5.25%
2000............. 29 58,610 1,160,248 19.80 9.94% 7.55%
2001............. 14 30,771 605,790 19.69 5.22% 4.40%
2002............. 9 15,550 238,772 15.36 2.64% 1.53%
2003............. 19 30,046 747,274 24.87 5.10% 4.81%
2004............. 8 31,648 544,322 17.20 5.37% 2.88%
2005............. 3 9,793 180,922 18.47 1.66% 1.66%
2006............. 7 19,541 362,979 18.58 3.31% 2.29%
2007............. 4 9,249 227,900 24.64 1.57% 1.57%
2008............. 20 212,245 1,982,388 9.34 36.00% 5.20%
2009 and thereafter 16 58,682 1,262,369 21.51 9.95% 7.13%
- ------------------------- ---------- ----------- --------------- ---------------
Total .......... 149 513,088 87.03% 44.27%
========== =========== =============== ===============
</TABLE>
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 9
NORTHTOWN MALL
On August 6, 1998, the Company purchased NorthTown Mall, a two-level,
949,880 square foot regional mall, located in Spokane, Washington. NorthTown
Mall is Spokane's largest mall with competition coming from the Company's
Spokane Valley Mall as well as one other mall and several community centers.
As of December 31, 1998, the mall was 90.8% leased. Its major tenants
occupying 10% or more of Total GLA are all department stores and include
JCPenney and Sears. Sears owns its own land and buildings and is subject to a
Construction, Operation and Reciprocal Easement Agreement that expires in 2040,
while JCPenney's lease is for a term of 20 years, expiring in 2011 with six,
five-year extension options.
NorthTown Mall is collateral securing a first mortgage used to purchase
the mall. The balance at December 31, 1998 on the first mortgage was
$84,277,000. Depreciation is taken utilizing the straight line method over 40
years with a net book basis of approximately $126,126,000. It is the Company's
policy to renovate, expand and upgrade as warranted by market conditions.
NorthTown Mall's leases will expire on the following schedule:
<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF GLA
Annualized ANNUALIZED Represented by Expiring Leases
---------------------------------------
Number APPROXIMATE Base Rent Base Per Square Assuming No Assuming Full
Lease Expiration of Leases GLA Under Foot Under Exercise of Exercise of
Year Ending December 31, Expiring SQUARE Expiring Expiring Leases Renewal Options Renewal
FEET Leases (1) Options
- ------------------------ ---------- ----------- ----------- --------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
1999............. 5 5,928 $ 175,837 $ 29.66 0.84% 0.69%
2000............. 11 17,361 418,674 24.12 2.45% 2.45%
2001............. 22 26,886 895,607 33.31 3.80% 3.70%
2002............. 29 106,948 2,259,207 21.12 15.12% 15.12%
2003............. 16 23,212 673,330 29.01 3.28% 3.28%
2004............. 13 36,087 911,334 25.25 5.10% 5.10%
2005............. 11 17,214 589,340 34.24 2.43% 2.43%
2006............. 10 21,366 679,232 31.79 3.02% 3.02%
2007............. 11 34,884 903,233 25.89 4.93% 4.93%
2008............. 2 3,957 97,500 24.64 0.56% 0.56%
2009 and thereafter 6 301,404 1,751,788 5.81 42.60% 0.37%
- ------------------------ ---------- ----------- ------------------ ------------------
Total .......... 136 595,247 84.13% 41.65%
========== =========== =================== ==================
</TABLE>
- ------------------------
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 10
THE COMPANY'S LARGEST TENANTS
Large stores (over 20,000 square feet per store) occupy 57.5% of the
Total GLA of the Company's regional malls and community centers. The Company's
largest tenants include JCPenney, Sears, The Bon March<e'>, ZCMI, Dillard's,
Wal-Mart, Mervyns, Meir & Frank, The Emporium, Gottschalk's, ShopKo,
Albertsons, Fred Meyer and Burlington Coat. No tenant represented more than
4.05% of the Company's total Rental Revenues for the year ended December 31,
1998.
ANCHORS
Regional malls and community centers usually contain one or more large
retail companies known as "anchors." Anchors, which include traditional
department stores, general merchandise stores, large fashion specialty stores,
value oriented specialty stores and discount stores, usually inventory a broad
range of products that appeal to many shoppers. Anchors either own their own
stores (and sufficient parking) or lease their stores from the owner of the
mall or center. Although the rent and other charges paid by anchors are
usually much less (on a per square foot basis) than the rent and other charges
paid by other tenants, their presence typically attracts many shoppers and
enhances the value of a mall or community center.
Anchor tenants in the regional malls are JCPenney, Sears, The Bon
March<e'>, ZCMI, Dillard's, Wal-Mart, Mervyn's, Meier & Frank, The Emporium,
Gottschalk's, ShopKo, Lamonts, Target and Nordstrom. Anchors in the regional
malls occupy 58.6% of Total GLA of the regional malls. The following table
summarizes the Total GLA owned and leased as of December 31, 1998 by these
anchors:
<TABLE>
<CAPTION>
COMPANY-
NUMBER OF OWNED
ANCHOR COMPANY- ANCHOR- ANCHOR PERCENT ANCHORS
STORES OWNED OWNED TOTAL GLA TOTAL GLA AS % OF
ANCHOR SQUARE SQUARE SQUARE REVENUE (1)
FEET FEET FEET
- ------------------------- ------------------ ----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
JCPenney 17 1,203,754 243,591 1,447,345 10.08% 4.05%
Sears 12 546,847 513,776 1,060,623 7.39% 2.77%
The Bon March<e'> 7 499,846 120,420 620,266 4.32% 2.95%
ZCMI 5 562,754 -- 562,754 3.92% 2.01%
Dillard's 3 72,212 387,630 459,842 3.20% *
Wal-Mart 3 86,944 210,128 297,072 2.07% *
Mervyn's 3 -- 241,560 241,560 1.68% --
Meier & Frank 1 -- 183,500 183,500 1.28% --
The Emporium 3 153,003 -- 153,003 1.07% *
Gottschalk's 1 150,000 -- 150,000 1.04% *
ShopKo 1 -- 111,500 111,500 0.78% --
Lamonts 2 80,953 -- 80,953 0.56% *
Target 1 -- 75,883 75,883 0.53% --
Nordstrom 1 -- 72,000 72,000 0.50% --
</TABLE>
- -------------------------------
* Less than 1%
(1) Revenue defined as minimum rents plus percentage rents
<PAGE> 11
Anchor tenants occupying the greatest amount of Total GLA in the Company's
community centers are ShopKo, Albertsons, Fred Meyer, Burlington Coat, Safeway,
Wal-Mart, Rite Aid and Macey's. Anchors in the community centers occupy
approximately 70.2% of Total GLA of the community centers. The following table
summarizes the Total GLA owned and leased as of December 31, 1998 by these
anchors:
<TABLE>
<CAPTION>
NUMBER COMPANY- ANCHOR-OWNED ANCHOR PERCENT COMPANY-
OF ANCHOR OWNED SQUARE FEET TOTAL GLA TOTAL GLA OWNED
ANCHOR STORES SQUARE FEET SQUARE ANCHORS
FEET AS % OF
REVENUE (1)
- -------------------------- ------------ ------------ ------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ShopKo ................ 4 104,000 297,140 401,140 2.79% *
Albertsons ............ 8 269,098 41,407 310,505 2.16% *
Fred Meyer ............ 3 309,944 -- 309,944 2.16% *
Burlington Coat (2) ... 2 174,248 -- 174,248 1.21% *
Safeway................ 2 52,764 53,000 105,764 0.74% *
Wal-Mart............... 1 -- 102,440 102,440 0.71% --
Rite Aid ............. 2 70,583 -- 70,583 0.49% *
Macey's ............... 1 59,350 -- 59,350 0.41% *
</TABLE>
- --------------------------
* Less than 1%.
(1) Revenue defined as minimum rents plus percentage rents.
(2) Sublease from Fred Meyer, Inc.
MAJOR TENANTS
Non-anchor tenants owned by major national retail chains lease a
considerable amount of space in the Company's retail properties. Such retail
chains include Venator Group (Footlocker, Lady Footlocker, Kids Footlocker,
Northern Reflections, Afterthoughts, Champs, San Francisco Music Box,
Colorado), Limited Group (Lane Bryant, Lerner, Limited, Limited Express,
Victoria's Secret, Bath & Body Works, Structure, Ambercrombie & Fitch), The
Buckle, Eddie Bauer, Zales Corporation, Gymboree, Lenscrafters, Disney, Fred
Meyer Jewelers, Millers Outpost, Waldenbooks, B. Dalton Bookseller, Barnes &
Noble, Gap Stores Inc. (Gap, Gap Kids, Baby Gap, Gap Body, Banana Republic),
General Mills (Olive Garden, Red Lobster), Deb Shops, Regis, Jay Jacobs,
Maurices, Famous Footwear, Pearle Vision, Radio Shack, Kay Bee Toys, Claire's
Boutique, Schubach Jewelers, Helzberg, Ben Bridge, Camelot Music, Musicland
(Sam Goody, Musicland, Sun Coast Pictures), Sole Outdoors, Finish Line, Foot
Action, Anne Taylor, Natural Wonders, Hallmark, American Greetings, Contempo
Casuals, Payless Shoesource, Ritz Camera, Motherhood Maternity and GNC.
LEASES
Most of the Company's leases are long-term leases that contain fixed base
rents and step-ups in rent typically occurring every three to five years.
These leases generally pass through to the tenant the tenant's share of common
area charges, including insurance costs and real estate taxes. Generally, all
of the regional mall leases and certain of the community center leases include
roof and structure repair costs in common area charges. The Company's leases
also generally provide for additional rents based on a percentage of tenant
sales. For the years ended December 31, 1998, 1997 and 1996, such percentage
and overage rents accounted for approximately 5.4%, 6.1% and 7.2%,
respectively, of total rental income from the Properties owned by the Company
during such periods.
<PAGE> 12
The following table sets forth information relating to the Rental Revenue
from the Properties for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
PROPERTY TYPE 1998 1997 1996 1995 1994
- --------------------------------- ------------ ------------- ------------- ------------ ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Regional Malls................ $ 62,673 $ 44,005 $ 36,286 $ 29,299 $ 24,860
Community Centers and
Free-Standing Retail Properties 14,718 13,192 13,591 12,173 10,658
Commercial Properties......... 6,548 6,323 6,631 5,633 4,929
------------ ------------- ------------- ------------ ------------
Total......................... $ 83,939 $ 63,520 $ 56,508 $ 47,105 $ 40,447
============ ============= ============ ============ ============
</TABLE>
VACANT SPACE
Approximately 1,026,000 square feet, or 7.15%, of Total GLA was vacant as
of December 31, 1998. Of this vacant space, approximately 718,000 square feet
was in the regional mall portfolio (21% of which is anchor and 79% of which is
mall shop space), 120,000 square feet was in the community center portfolio and
188,000 square feet was in the commercial portfolio.
The following tables set forth information relating to lease expirations
for retail stores in the regional malls and community centers as well as
commercial property leases in effect as of December 31, 1998, over the ten-year
period commencing January 1, 1999 and thereafter for large stores (over 20,000
square feet) and small stores (20,000 square feet or less) at the retail
properties and for all leases at the commercial properties. Unless otherwise
indicated, all information set forth below assumes that none of the tenants
exercise renewal options and excludes leases that had not commenced as of
December 31, 1998.
<PAGE> 13
<TABLE>
<CAPTION>
Regional Malls
Lease Expirations for
Retail Store Leases (over 20,000 square feet)
LEASE EXPIRATION NUMBER OF APPROXIMATE ANNUALIZED AVERAGE
YEAR ENDING LEASES GLA IN BASE ANNUALIZED BASE
DECEMBER 31, EXPIRING SQUARE FEET RENT UNDER RENT PER SQUARE
EXPIRING FOOT UNDER
LEASES EXPIRING
LEASES(1)
- -------------------------------- ------------------- ----------------- -------------- ----------------
<S> <C> <C> <C> <C>
1999 2 73,986 $ 218,487 $2.95
2000 -- -- -- --
2001 5 272,458 791,332 2.90
2002 3 127,597 642,998 5.04
2003 3 106,613 330,302 3.10
2004 3 291,298 663,001 2.28
2005 1 33,421 111,605 3.34
2006 2 147,560 440,236 2.98
2007 1 50,061 222,992 4.45
2008 and thereafter 28 2,372,049 10,675,993 4.50
------------------- -----------------
Total 48 3,475,043
=================== =================
</TABLE>
<TABLE>
<CAPTION>
Regional Malls
Lease Expirations for
Retail Store Leases (20,000 square feet or less)
ANNUALIZED AVERAGE
NUMBER OF BASE ANNUALIZED BASE
LEASE EXPIRATION LEASES APPROXIMATE RENT UNDER RENT PER SQUARE
YEAR ENDING EXPIRING GLA IN EXPIRING FOOT UNDER
DECEMBER 31, SQUARE FEET LEASES EXPIRING
LEASES(1)
- -------------------------------------- ------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1999 113 181,346 $ 3,081,739 $ 16.99
2000 158 301,621 5,161,646 17.11
2001 136 249,115 4,098,901 16.45
2002 132 296,556 5,302,230 17.88
2003 110 236,738 4,208,747 17.78
2004 81 227,827 4,196,402 18.42
2005 68 149,676 3,407,675 22.77
2006 59 144,845 3,293,996 22.74
2007 88 204,671 4,907,566 23.98
2008 and thereafter 189 643,782 12,182,991 18.92
------------ --------------
Total 1,134 2,636,177
============ ==============
</TABLE>
---------------------------
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 14
<TABLE>
<CAPTION>
COMMUNITY CENTERS
Lease Expirations for
Retail Store Leases (over 20,000 square feet)
ANNUALIZED AVERAGE
NUMBER OF BASE ANNUALIZED BASE
LEASE EXPIRATION LEASES APPROXIMATE RENT UNDER RENT PER SQUARE
YEAR ENDING EXPIRING GLA IN EXPIRING FOOT UNDER
DECEMBER 31, SQUARE FEET LEASES EXPIRING
LEASES(1)
- ----------------------------------------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
1999 -- -- $ -- $ --
2000 3 119,045 406,579 3.42
2001 4 323,260 749,011 2.32
2002 2 133,861 343,645 2.57
2003 6 246,867 751,486 3.04
2004 2 129,525 287,956 2.22
2005 -- -- -- --
2006 1 37,680 122,460 3.25
2007 2 90,960 120,000 1.32
2008 and thereafter 17 659,771 4,675,462 7.09
- ----------------------------------------- ------------- -----------
Total 37 1,740,969
============= ===========
</TABLE>
<TABLE>
<CAPTION>
COMMUNITY CENTERS
Lease Expirations for
Retail Store Leases (20,000 square feet or less)
ANNUALIZED AVERAGE
NUMBER OF BASE ANNUALIZED BASE
LEASE EXPIRATION LEASES APPROXIMATE RENT UNDER RENT PER SQUARE
YEAR ENDING EXPIRING GLA IN EXPIRING FOOT UNDER
DECEMBER 31, SQUARE FEET LEASES EXPIRING
LEASES(1)
- ---------------------------------------- ----------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
1999 41 100,756 $ 1,076,535 $ 10.68
2000 43 93,564 1,007,886 10.77
2001 53 125,430 1,309,348 10.44
2002 28 94,107 807,108 8.58
2003 25 95,713 1,118,911 11.69
2004 7 27,761 305,999 11.02
2005 4 15,826 165,217 10.44
2006 5 24,986 296,335 11.86
2007 3 9,363 114,750 12.26
2008 and thereafter 13 53,885 1,292,858 23.99
----------- -------------
Total 222 641,391
=========== ================
</TABLE>
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 15
<TABLE>
<CAPTION>
Lease Expirations for
Commercial Properties
ANNUALIZED AVERAGE
NUMBER OF BASE ANNUALIZED BASE
LEASE EXPIRATION LEASES APPROXIMATE RENT UNDER RENT PER SQUARE
YEAR ENDING EXPIRING GLA IN EXPIRING FOOT UNDER
DECEMBER 31, SQUARE FEET LEASES EXPIRING
LEASES(1)
- -------------------------------------------- ----------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
1999 14 201,730 $ 1,023,036 $5.07
2000 12 362,289 1,944,174 5.37
2001 8 57,920 309,550 5.34
2002 9 167,186 1,171,248 7.01
2003 6 185,127 1,056,971 5.71
2004 2 72,880 360,691 4.95
2005 -- -- -- --
2006 -- -- -- --
2007 -- -- -- --
2008 and thereafter 2 82,829 428,558 5.17
- -------------------------------------------- ----------- ---------------
Total 53 1,129,961
=========== ===============
</TABLE>
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
As leases expire, the Company currently expects to be able to increase
rental revenue by re-leasing the underlying space (either to a new tenant or
to an existing tenant) at rental rates that are at or higher than the
existing rates.
OPERATIONS AND MANAGEMENT
The Company performs all property management functions for the
Properties. At December 31, 1998, the Company had 359 full-time employees
devoted exclusively to property management. Each of the regional malls has on-
site management and maintenance personnel as well as a marketing staff to
assist the mall tenants in promoting and advertising their products. Overall
supervision of mall operations, headed by a Director of Enclosed Malls, is
conducted in a centralized fashion in order to take advantage of economies of
scale and to deliver a uniform presentation of all management functions. The
Company's internal property management information system enables it to quickly
determine tenant status, tenant gross sales, insurance, and other critical
information in order to effectively manage the affairs of its real property
portfolio. The data collected regarding percentage sales allows the Company to
predict sales, to retain tenants and enhance mall stability.
The Leasing/Development Department is responsible for maintaining
relationships with tenants that afford the Company opportunities for new
development and expansion. The Company conducts an active program of leasing,
within the common area space of its malls and community centers, kiosks and
other promotional displays on a seasonal basis. In addition to increased
customer traffic, this approach generates additional revenue for the Company
and offers an opportunity for entrepreneurial individuals interested in opening
stores on a more permanent basis within one of the Company's Properties.
The Company's property management efforts will continue to be directed
toward improving the attractiveness and appeal of its retail properties and
providing a pleasant shopping environment in order to increase overall tenant
sales and rents. The Company strives to meet the needs of its tenants in the
areas of promotion, marketing and ongoing management of its Properties and
seeks to bring together a sufficient critical mass of complementary upscale and
brand-name tenants. As part of its property management efforts, the Company
monitors tenant mix, store size, sales results and store locations, and works
closely with tenants to improve the overall performance of their stores. The
Company seeks to anticipate trends in the retailing industry and introduce new
retail names and concepts into its retail Properties in response to these
trends. The Company maintains its malls and community centers to very high
standards and believes that the aesthetics, ambiance and cleanliness of these
Properties contribute to repeat visits by customers.
<PAGE> 16
ACQUISITION
On August 6, 1998, the Company through a consolidated partnership, which
has a wholly-owned subsidiary of the Company as a 1% general partner and the
Operating Partnership as a 99% limited partner, bought NorthTown Mall in
Spokane, Washington. NorthTown Mall is an enclosed regional mall containing
949,880 feet of Total GLA. The major anchor department stores at NorthTown
Mall are: The Bon March<e'>, JCPenney, Sears, Mervyn's and Emporium. The
purchase price paid for NorthTown Mall was $128.0 million of which $84.5
million was financed utilizing a first mortgage and $43.5 million was funded
out of the Operating Partnership's credit facility.
DEVELOPMENT
Since 1976, the Company and the Predecessor Companies have been
responsible for developing more retail malls in the region covered by Utah,
Idaho, Colorado, Nevada, New Mexico and Wyoming than any other developer,
having constructed, developed or redeveloped 12 malls in the region (as well as
three other malls in Oregon and Washington). The Company maintains the in-
house capability to bring a project from concept to completion. The
Leasing/Development Department had a total of 29 full-time employees at
December 31, 1998, including directors of Leasing, Development, Tenant
Coordination and Design/Drafting.
In August 1998, the Company completed a 294,804 square foot expansion at
the Boise Towne Square in Boise Idaho. The projection added 186,500 square
feet of Total GLA for Dillard's (a new anchor tenant), approximately 44,900
square feet of GLA for the expansion of The Bon March<e'> (an existing anchor
tenant) and approximately 63,000 square feet of GLA for additional shops.
The Operating Partnership developed Provo Towne Centre, a 723,000 square
foot enclosed regional mall, located in Provo, Utah. Provo Towne Center is
anchored by JCPenney, Sears, and Dillard's and includes space for more than 80
mall shops. The mall is currently developing a sixteen screen Cinemark Theater
which will add approximately 74,000 square feet of additional GLA.
In October 1998, the Operating Partnership added Sears as a fourth anchor
tenant at Red Cliffs Mall in St. George, Utah. The Sears store added
approximately 70,400 square feet of GLA to Red Cliffs Mall and a Sears Tire and
Battery shop added approximately 9,600 square feet of GLA at Red Cliffs Plaza.
In 1998, the Company also added approximately 15,000 square feet of GLA
at Boise Towne Plaza in Boise, Idaho and approximately 10,600 of square feet of
Total GLA for a Sears Tire and Battery and approximately 9,400 square feet of
Total GLA for a Pier-1 Imports both at Spokane Valley Mall in Spokane,
Washington.
The Company is developing a mall at Sierra Vista, Arizona. The project
is expected to be completed in the fourth quarter of 1999 and to add
approximately 400,000 square feet of Total GLA. Additionally, the Company is
currently contemplating the expansion and renovation of several other of its
Properties as well as other developments and acquisitions.
Further, the Properties contain approximately 95 acres of vacant land
suitable for additional retail expansion projects. Likewise, the Properties
include additional improved land ready for development of approximately 339,000
square feet of free standing retail space. The Company will seek to expand
these and other Properties in its retail portfolio, as well as newly acquired
properties, depending on tenant demand and market conditions.
THIRD-PARTY PROPERTY MANAGEMENT
The Company provides third-party property management for an office
building and a commercial building located in the greater Salt Lake City, Utah
metropolitan area, a commercial building located in Albuquerque, New Mexico and
Silver Lake Plaza, a community center, located in Coeur d'Alene, Idaho. In
addition to these arrangements, the Company plans to pursue other property
management opportunities. Because property management facilitates an
understanding of a property's value and potential for cash flow growth, the
Company believes that, in addition to generating property management fees,
third-party property management arrangements can be a source of future
acquisitions for the Company. For example, the Company was the property
manager for Eastridge Mall and Silver Lake Mall prior to their acquisitions by
the Company.
<PAGE> 17
EMPLOYEES
The Company had over 650 employees at December 31, 1998. The Company
believes its relationship with its employees is very good. None of the
Company's employees are unionized.
ITEM 3. LEGAL PROCEEDINGS
The Operating Partnership is not aware of any pending or threatened
litigation at this time that will have a materially adverse effect on the
Operating Partnership or any of the Properties or its development parcels.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In October 1998, the Company, as general partner of the Operating
Partnership, solicited the consent of the limited partners of the Operating
Partnership to amend the Amended and Restated Agreement of Limited Partnership
of the Operating Partnership to provide certain limited partners with a deficit
capital account restoration obligation. On October 16, 1998, the limited
partners of the Operating Partnership (other than the Company) consented to the
proposed amendment to the Amended and Restated Agreement of Limited Partnership
of the Operating Partnership.
The following consents were cast by the limited partners of the Operating
Partnership (other than the Company) with respect to the proposed amendment to
the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership:
<TABLE>
<CAPTION>
UNITS
VOTED UNITS
FOR WITHHELD
----------- -----------
<S> <C> <C>
3,003,470 674,435
</TABLE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
At December 31, 1998, there was no established public trading market for
the Operating Partnership Units ("OP Units"). As of March 11, 1999, there were
63 holders of OP Units. The following table sets forth to the distributions
paid per OP Unit for each of the quarters presented:
<TABLE>
<CAPTION>
DISTRIBUTION
PER OP UNIT
------------
<S> <C>
Year Ended 12/31/97
First Quarter $ .435
Second Quarter .435
Third Quarter .435
Fourth Quarter .450
Year Ended 12/31/98
First Quarter $ .450
Second Quarter .450
Third Quarter .450
Fourth Quarter .465
</TABLE>
<PAGE> 18
During 1998 and 1997, the Operating Partnership recorded regular
quarterly distributions, totaling $38,609,000 and $37,220,000, respectively,
or $1.815 and $1.755 per OP Unit, respectively. On behalf of the Operating
Partnership, the Board of Directors of the Company has declared a quarterly
distribution, payable to holder of OP Units of record as of April 6, 1999, of
$.465 per OP Unit which is an amount equivalent to an annual distribution of
$1.86 per OP Unit. Future distributions will be determined by the Board of
Directors of the Company, the general partner of the Operating Partnership,
and will be dependent upon cash available for distribution, financial
position and cash requirements of the Company and the Operating Partnership.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial and other data for
(i) the Operating Partnership for the years ended December 31, 1998, 1997,
1996, 1995, and for the period January 21, 1994 through December 31, 1994 and
(ii) for the Predecessor Companies for the period January 1, 1994 through
January 20, 1994. The historical financial information for all the periods
have been derived from the audited historical consolidated and combined
financial statements.
The following selected financial information should be read in
conjunction with all of the financial statements included elsewhere herein
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
SELECTED FINANCIAL DATA
(Dollars in Thousands except per share amounts)
<TABLE>
<CAPTION>
OPERATING PARTNERSHIP
PREDECESSOR
COMPANIES
JANUARY JANUARY
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 21, 1,
DECEMBER DECEMBER DECEMBER DECEMBER 1994 TO 1994 TO
31, 1998 31, 1997 31, 1996 31, 1995 DECEMBER JANUARY
31, 20,
1994 (1) 1994
------------- ------------ ------------ ----------- --------- ------------
<C> <C> <C> <C> <C> <C>
Revenues $ 109,069 $ 82,973 $72,949 $60,950 $50,071 $2,578
------------- ------------ ------------ ----------- --------- ------------
Expenses
Operating Expenses before Interest,
Depreciation and Amortization 36,088 27,434 24,405 20,389 17,090 893
Interest 20,501 9,066 7,776 6,623 5,873 826
Depreciation and Amortization 19,543 13,410 11,979 11,528 8,734 430
------------ ------------ ------------ ----------- --------- ------------
Total 76,132 49,910 44,160 38,540 31,697 2,149
------------ ------------ ------------ ----------- --------- ------------
32,937 33,063 28,789 22,410 18,374 429
Minority Interest in Income of
Consolidated Partnerships (421) (394) (389) (421) (277) --
Equity in Net Loss of
Partnership Interest -- -- -- (184) (82) 7
Gain on Sales of Real Estate 1,096 339 94 918 -- --
------------ ------------ ------------ ----------- --------- ------------
Income Before Extraordinary Item 33,612 33,008 28,494 22,723 18,015 436
Extraordinary Item - Loss on
Extinguishment of Debt -- (162) -- -- (6,670) --
------------ ------------ ------------ ----------- --------- ------------
Net Income $ 33,612 $ 32,846 $28,494 $22,723 $11,345 $436
============ ============ ============= =========== ========= ============
Basic Earnings Per OP Unit (2)
Income Before Extraordinary Item $1.58 $1.57 $1.45 $1.26 $1.07
Extraordinary Item -- (.01) -- -- (.40)
------------ ------------ ------------ ----------- ---------
Net Income $1.58 $1.56 $1.45 $1.26 $0.67
============ ============ ============ =========== =========
Diluted Earnings Per OP Unit (2)
Income Before Extraordinary Item $1.57 $1.55 $1.44 $1.26 $1.07
Extraordinary Item -- (.01) -- -- (.40)
------------ ------------ ------------ ----------- ---------
Net Income $1.57 $1.54 $1.44 $1.26 .67
============ ============ ============ =========== =========
Distributions per OP Unit $1.815 $1.755 $1.695 $1.635 $1.525
============ ============ ============ =========== =========
</TABLE>
<PAGE> 19
SELECTED FINANCIAL DATA
(Dollars in Thousands except per share amounts)
<TABLE>
<CAPTION>
OPERATING PARTNERSHIP PREDECESSOR
------------------------------------------------------------------------------ COMPANIES
JANUARY JANUARY
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 21, 1,
DECEMBER DECEMBER DECEMBER DECEMBER 1994 TO 1994 TO
31, 1998 31, 1997 31, 1996 31, 1995 DECEMBER JANUARY
31, 20,
1994 (1) 1994
------------- ------------ ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data
Real Estate, before Accumulated
Depreciation $815,756 $619,371 $ 453,241 $ 388,205 $321,242 N/A
Total Assets 733,155 545,684 381,360 327,061 281,696 N/A
Borrowings 472,990 283,390 162,375 106,406 108,741 N/A
Partners' Equity (Deficit) 236,921 241,007 204,666 209,742 163,073 N/A
OTHER DATA
Funds From Operations (3) 50,397 45,028 39,195 32,139 26,083 859
Net Operating Income 72,981 55,539 48,544 40,561 32,981 1,685
NUMBER OF PROPERTIES/TOTAL GLA AT DECEMBER 31,
1998 1997 1996 1995 1994
------------- ------------ ------------ ----------- ---------
Number of Properties at
Year-End 50 48 44 43 40
============= ============ ============ =========== =========
Total GLA in Square Feet at
Year-End:
Malls 9,810,000 7,745,000 5,553,000 5,020,000 3,898,000
Community Centers and
Free-Standing Retail
Properties 3,191,000 3,164,000 3,091,000 3,091,000 2,997,000
Commercial Properties 1,354,000 1,418,000 1,418,000 1,394,000 1,113,000
------------- ------------ ------------ ----------- ---------
Total 14,355,000 12,327,000 10,062,000 9,505,000 8,008,000
============= ============ ============ =========== =========
</TABLE>
- --------------------------
(1)The Company closed its initial public offering of shares of Common Stock on
January 21, 1994.
(2)Basic Earnings Per OP Unit based on 21,298,000, 21,119,000, 19,668,000,
18,037,000 and 16,923,000 weighted average number of OP Units outstanding
for the years ended December 31, 1998, 1997, 1996, 1995 and 1994,
respectively. Diluted Earnings Per OP Unit based on 21,401,000, 21,285,000,
19,753,000, 18,103,000 and 16,992,000 weighted diluted average number of OP
Units outstanding for years ended December 31, 1998, 1997, 1996, 1995, and
1994, respectively.
(3)The Company, the general partner of the Operating Partnership, considers
funds from operations to be an appropriate measure of the performance of an
equity REIT. Funds from operations ("FFO") is defined by the National
Association of Real Estate Investment Trusts ("NAREIT") as "net income
(computed in accordance with generally accepted accounting principles),
excluding gains (or losses) from debt restructuring and sales of property,
plus depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures." While the Company believes that FFO is
the most relevant and widely used measure of its operating performance, it
does not represent cash generated from operating activities in accordance
with generally accepted accounting principles and is not indicative of cash
available to fund cash needs. FFO should not be considered as an
alternative to net income as an indication of the Company's or the Operating
Partnership's operating performance or as an alternative to cash flow as a
measure of liquidity. The Company's presentation of FFO, however, may not
be comparable to other similarly titled measures used by other equity REITs.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources."
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with "Selected
Financial Data" and the Consolidated Financial Statements of the Operating
Partnership and the Notes thereto appearing elsewhere herein.
JP Realty, Inc. is a fully integrated, self administered and self-managed
REIT primarily engaged in the ownership, leasing, management, operation,
development, redevelopment and acquisition of retail properties in the
Intermountain Region, as well as in Oregon, Washington and California. JP
Realty, Inc. conducts all of its business operations through, and held an 83%
controlling general partner interest in, Price Development Company, Limited
Partnership ("the Operating Partnership") as of December 31, 1998. The
Operating Partnership's existing portfolio consists of 50 properties, in three
operating segments, including 17 enclosed regional malls, 25 community centers
together with two freestanding retail properties and six mixed-use commercial
properties ("Properties"). JP Realty, Inc.'s financial conditions and results
of operations before depreciation were positively impacted by the Operating
Partnership's August 6, 1998 acquisition of NorthTown Mall, the December 30,
1997 acquisition of Salem Center, the June 1997 acquisitions of the Silver Lake
Mall and Visalia Mall, the August 13, 1997 opening of the Spokane Valley Mall,
the October 28, 1998 opening of Provo Towne Centre, and the 1996 acquisition of
the Grand Teton Mall. The Operating Partnership's acquisition and development
activities added a combined 4,357,000 square feet of Total GLA to the retail
portfolio during 1998 and 1997. JP Realty, Inc., together with the Operating
Partnership and its other subsidiaries, shall be referred to herein as (the
"Company").
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
For the year ended December 31, 1998, income before extraordinary item
increased $604,000 or 2%when compared to the year ended December 31, 1997. The
improvement in operations was primarily attributable to the following factors:
an increase in minimum rents of $19,824,000; an increase in percentage and
overage rents of $595,000, an increase in recoveries from tenants of $5,579,000
and an increase in other revenues of $240,000. These increases were offset by
an increase in operating expenses of $7,695,000; an increase in general and
administrative expense of $959,000; an increase in interest expense of
$11,435,000 and a net increase in depreciation and amortization of $6,133,000.
Funds from operations increased $5,369,000 or 12% primarily as a result
of acquisitions and developments as discussed herein.
Total revenues for the year ended December 31, 1998 increased $26,096,000
or 31% to $109,069,000 as compared to $82,973,000 in 1997. This increase is
primarily attributable to a $19,824,000 or 33% increase in minimum rents to
$79,448,000 compared to $59,624,000 in 1997. Percentage and overage rents
increased $595,000 or 15% to $4,491,000 compared to $3,896,000. Additionally,
recoveries from tenants increased $5,579,000 or 31% to $23,778,000 as compared
to $18,199,000 in 1997 and other income increased $240,000. Recoveries from
Tenants as a percentage of operating expenses were 80% in 1998, compared to 83%
in 1997.
The June 1997 acquisitions of Silver Lake Mall and Visalia Mall, the
August 13, 1997 opening of Spokane Valley Mall, the December 30, 1997
acquisition of Salem Center, the August 6, 1998 acquisition of NorthTown Mall
and the October 28, 1998 opening of Provo Towne Centre contributed $15,371,000
to the minimum rent increase, $887,000 to the percentage and overage rents
increase and $4,971,000 of the increase in recoveries from tenants. The
November 1997, opening of Boise Towne Plaza contributed $1,100,000 to the
minimum rent increase and $139,000 to the increase in recoveries from tenants.
Commercial property revenues increased $950,000 to $8,299,000 compared to
$7,349,000 in 1997. The increase in commercial properties revenue was
primarily due to new tenant leases with higher tenant recoveries offset
somewhat by decreased occupancy levels.
Revenues recognized from straight-line rents were $931,000 in 1998 and
$505,000 in 1997.
Property operating expenses, including operating and maintenance expense
and real estate taxes and insurance expense increased $4,601,000 or 34% and
$3,094,000 or 36%, respectively. These increases were attributable to the
acquisitions of NorthTown Mall, Salem Center, Silver Lake Mall and Visalia Mall
and the opening of Spokane Valley Mall, Boise Towne Plaza
<PAGE> 21
and Provo Towne
Centre. These properties contributed $4,570,000 to operating and maintenance
expense and $2,487,000 to taxes and insurance.
General and administrative expenses increased $959,000 or 18% to
$6,406,000 as compared to $5,447,000. The increase is primarily related to
increased costs associated with growth of the Company due to the acquisitions
of NorthTown Mall, Salem Center, Silver Lake Mall, Visalia Mall and the opening
of Spokane Valley Mall, Boise Towne Plaza and Provo Towne Centre.
Interest expense increased $11,435,000 or 126% to $20,501,000 as compared
to $9,066,000 in 1997. This increase is the result of additional interest on
new borrowings to acquire NorthTown Mall, Salem Center, Silver Lake Mall and
Visalia Mall and on borrowings related to Spokane Valley Mall and Provo Towne
Centre.
Depreciation expense increased $5,504,000 or 47% to $17,306,000 as
compared to $11,802,000 in 1997. This increase is primarily due to the
acquisition of NorthTown Mall, Salem Center, Silver Lake Mall and Visalia Mall,
the opening of the Spokane Valley Mall, Boise Towne Plaza and Provo Towne
Centre and tenant allowances given on existing GLA.
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
For the year ended December 31, 1997, income before extraordinary item
increased $4,514,000 or 16% when compared to the year ended December 31, 1996.
The improvement in operations was primarily attributable to the following
factors: an increase in minimum rents of $7,177,000; and an increase in
recoveries from tenants of $2,642,000 and an increase in other revenues of
$373,000. These increases were offset by an increase in operating expenses of
$1,775,000; an increase in taxes and insurance of $867,000; an increase in
general and administrative expense of $387,000; an increase in interest expense
of $1,290,000 and a net increase in depreciation and amortization of
$1,431,000.
Funds from operations increased $5,425,000 or 14% primarily as a result
of acquisitions and developments as discussed herein.
Total revenues for the year ended December 31, 1997 increased $10,024,000
or 14% to $82,973,000 as compared to $72,949,000 in 1996. This increase is
primarily attributable to a $7,177,000 or 14% increase in minimum rents to
$59,624,000 as compared to $52,447,000 in 1996. Additionally, recoveries from
tenants increased $2,642,000 or 17% to $18,199,000 as compared to $15,557,000
in 1996 and other income increased $373,000. Recoveries from Tenants as a
percentage of operating expenses were 83% in 1997, compared to 80% in 1996.
The April 1996 acquisition of Grand Teton Mall, the June 1997
acquisitions of Silver Lake Mall and Visalia Mall and the August 13, 1997
opening of Spokane Valley Mall contributed $6,923,000 to the minimum rent
increase and $2,453,000 to the increase in recoveries from tenants. Minimum
rent growth in the remaining portfolio was offset by certain unexpected
vacancies in the retail and commercial properties.
Property operating expenses, including operating and maintenance expense,
real estate taxes and insurance expense increased $1,775,000 or 15% and
$867,000 or 11%, respectively. These increases were attributable to the
acquisitions of Grand Teton Mall, Silver Lake Mall, Visalia Mall and the
opening of Spokane Valley Mall. These properties contributed $1,804,000 to
operating and maintenance expense and $885,000 to taxes and insurance.
General and administrative expense increased $387,000 or 8% to $5,447,000
as compared to $5,060,000. The increase is primarily due to payroll costs from
additional personnel added to support the Company's growth.
Interest expense increased $1,290,000 or 17% to $9,066,000 as compared to
$7,776,000 in 1996. This increase is the result of additional interest on new
borrowings to acquire Silver Lake Mall, Visalia Mall and on borrowings related
to Spokane Valley Mall.
Depreciation expense increased $1,572,000 or 15% to $11,802,000 as
compared to $10,230,000 in 1996. This increase is primarily due to the
acquisitions of Grand Teton Mall, Silver Lake Mall, Visalia Mall, the opening
of the Spokane Valley Mall and tenant allowances given on existing GLA.
<PAGE> 22
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of its liquidity and capital resources have
historically been for distributions, property acquisitions, development,
expansion and renovation programs and debt repayment. To maintain its
qualification as a REIT under the Internal Revenue Code of 1986, as amended
(the "Code"), the Company is required to distribute to its shareholders at
least 95% of its "Real Estate Investment Trust Taxable Income" as defined in
the Code. The Company declared quarterly distributions aggregating $1.815 per
share in 1998. Approximately 17% of the Company's 1998 distributions
represented a return of capital. Future distributions will be determined based
on actual results of operations and cash available for distribution.
The Company's principal source of liquidity is the cash flow from
operations generated from its real estate investments. As of December 31,
1998, the Company's cash and restricted cash amounted to approximately $8.7
million. In addition to its cash and restricted cash, unused capacity under
its $200 million credit facility and $10 million credit facility totaled $99.7
million at year end.
The Company generally intends to distribute up to approximately 80% of
its funds from operations with the remaining amounts to be held for capital
expenditures and additional growth. The Company expects to meet its other
short-term cash requirements including recurring capital expenditures related
to maintenance and improvements of existing properties, through undistributed
funds from operations, cash balances and advances under the credit facilities.
The Company prepares an annual capital expenditure and maintenance budget
for each Property which includes provisions for all necessary recurring capital
improvements. The Company believes that its undistributed funds from
operations will provide the necessary funding for these requirements. The
Company believes that these funds will be sufficient to cover (i) tenant finish
costs associated with the renewal or replacement of current tenant leases as
existing leases expire and (ii) capital expenditures which will not be
reimbursed by tenants. During 1998, the Company had capital expenditures,
excluding acquisitions, totaling approximately $66,363,000. This amount
consists of $57,892,000 in revenue enhancing construction and development,
$4,207,000 in revenue enhancing tenant allowances, $3,164,000, in non-revenue
enhancing tenant allowances and $437,000 in other non-revenue enhancing capital
expenditures. The Company also paid $663,000 in leasing commissions to outside
parties. Of this amount, $532,000 was considered revenue enhancing and
$131,000 was considered non-revenue enhancing. Exclusive of construction and
development, capital expenditures (both revenue and non-revenue enhancing) for
the existing Properties are budgeted in 1999 to be approximately $6.9 million.
The Company's principal long-term liquidity requirements will be the
repayment of principal on the Spokane Valley Mall construction loan of
approximately $47.5 million which is due in July 1999 and which the Company
intends to convert to permanent financing in 1999, the $95 million mortgage
debt, which matures in 2001 and which requires principal payments in an amount
necessary to reduce the debt to $83.1 million as of January 21, 2000, the
repayment of the $100 million senior notes principal payable at $25 million a
year starting in March 2005, the repayment of the $84.5 million first mortgage,
which requires a balloon payment of approximately $73 million in September
2008, and to retire outstanding balances under the $200 million credit
facility.
The Operating Partnership is continuing the development of Provo Towne
Centre, an enclosed regional mall in Provo, Utah through its consolidated
partnership, Provo Mall Development Company, Ltd. On September 4, 1998, Provo
Mall Development Company, Ltd. entered into a $50 million construction loan
facility to meet its development and construction needs regarding the Provo
project. The construction loan facility is guaranteed by the Operating
Partnership. The Provo project has incurred costs of approximately $63.3
million as of December 31, 1998, which have been funded from the Company's
credit facilities and the construction loan facility. As of December 31, 1998,
borrowings on the construction loan facility were approximately $27.5 million.
This property will also represent a future long-term capital need for the
Company, as the total cost of the project is estimated to be approximately $77
million. The Company expects to fund this project through advances under its
credit facilities in combination with its construction loan facility. Provo
Towne Centre opened October 28, 1998 and contains approximately 723,300 square
feet of Total GLA.
The Company is also contemplating the expansion and renovation of several
of its existing properties and additional development projects and acquisitions
as a means to expand its portfolio. The Company does not expect to generate
sufficient funds from operations to meet such long-term needs and intends to
finance these amounts primarily through advances under the $200 million credit
facility, together with equity and debt offerings and individual property
financing. The availability of such financing will influence the Company's
decision to proceed with, and the pace of its development and acquisition
activities.
<PAGE> 23
On September 2, 1997, the Company and the Operating Partnership filed a
shelf registration statement on Form S-3 with the Securities and Exchange
Commission for the purpose of registering common stock, preferred stock,
depositary shares, common stock warrants, debt securities and guaranties. This
registration statement, when combined with the Company's unused portion of its
previous shelf registration, allowed for up to an aggregate of $400 million of
securities to be offered by the Company and the Operating Partnership. On
March 11, 1998, the Operating Partnership under this registration statement,
issued $100 million of ten year senior unsecured notes bearing annual interest
at a rate of 7.29%. The Operating Partnership had entered into an interest
rate protection agreement in anticipation of issuing these notes and received
$270,000 as a result of terminating this agreement making the effective rate of
interest on these notes at 7.24%. Interest payments are due semi annually on
March 11 and September 11 of each year. Principal payments of $25 million are
due annually beginning March 2005. The proceeds were used to partially repay
outstanding borrowings under the $200 million credit facility.
The Company intends to fund its distribution, development, expansion,
renovation, acquisition and debt repayment activities from its credit
facilities as well as other debt and equity financing, including public
financing, in a manner consistent with its intention to operate with a
conservative debt-to-total market capitalization ratio. The Company's ratio of
debt-to-total market capitalization was approximately 53% as of December 31,
1998.
The Company believes that to facilitate a clear understanding of the
consolidated historical operating results of the Company and Predecessor
Companies, net income should be examined in conjunction with funds from
operations. The Company considers funds from operations to be an appropriate
measure of the performance of an equity REIT. Funds from operations ("FFO") is
defined by the National Association of Real Estate Investment Trusts ("NAREIT")
as "net income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures." While the Company believes
that FFO is the most relevant and widely used measure of its operating
performance, it does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not indicative
of cash available to fund cash needs. FFO should not be considered as an
alternative to net income as an indication of the Company's operating
performance or as an alternative to cash flow as a measure of liquidity. The
Company's presentation of FFO, however, may not be comparable to other
similarly titled measures used by other equity REITs.
The Company's calculation of funds from operations is as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
COMPANY COMPANY
HISTORICAL HISTORICAL
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
---------------- ---------------
Income Before Minority Interest, Gain on Sales of
Real Estate and Extraordinary Item.............. $ 32,937 $ 33,063
Add: Depreciation of Buildings & Improvements... 17,072 11,599
Add: Amortization of Deferred Leasing Costs..... 665 639
Less: Minority Interest in Income of
Consolidated Partnerships .................... (277) (273)
--------------- --------------
Funds From Operations .......................... $ 50,397 $ 45,028
=============== ==============
</TABLE>
YEAR 2000 ISSUES
In the past, many computer software programs were written using two
digits rather than four to define the applicable year. As a result, date-
sensitive computer software may recognize a date using "00" as the year 1900
rather than the year 2000. This is generally referred to as the Year 2000
("Y2K") issue. If this situation occurs, the potential exists for computer
system failures or miscalculations by computer programs, which could disrupt
the Company's operations.
The Company has developed a comprehensive strategy for updating its
systems for Y2K compliance. The Company's information technology ("IT")
systems include software and hardware purchased from outside vendors, as well
as in-house
<PAGE> 24
developed software. The Company believes that vendor developed
software and hardware will be made Y2K compliant through vendor-provided
updates or replacement with other Y2K compliant software and hardware that will
be installed, tested and in use prior to the end of 1999. In-house developed
software is currently being identified and assessed. Modifications are being
and will continue to be made as necessary to bring such software into Y2K
compliance and validate such in-house developed compliance prior to the end of
1999.
The Company is continuing in the process of identifying significant non-
IT systems which may be impacted by the Y2K problem, including those relating
to property management (e.g. alarm systems and HVAC systems). Once identified,
the Company will then determine, through inquiries of equipment suppliers, as
well as testing of such equipment, the extent of renovations required, if any.
The Company believes that the identification of a significant majority of the
Company's non-IT systems has been completed, and that modifications, validation
and implementation will be completed during 1999.
The Company is also identifying third parties with which it has a
significant relationship that, in the event of a Y2K failure, could have a
material impact on its financial position or operating results. Third parties
include energy and utility suppliers, creditors, service and product suppliers
and the Company's significant tenants. These relationships, especially those
associated with certain suppliers and tenants, are material to the Company and
a Y2K failure for one or more of these parties could result in a material
adverse effect on the Company's operating results and financial position. The
Company is making inquiries of these third parties to assess their Y2K
readiness. The Company expects that this process will be on-going throughout
the current year.
The Company currently estimates that the costs to address Y2K issues will
not exceed $200,000. Costs include incremental salary and fringe benefits for
personnel, hardware and software costs, and consulting and travel expenses
associated with addressing Y2K issues. These costs will be expensed as
incurred or, in the case of equipment or software replacement, will be
capitalized and depreciated over the expected useful life. The Company
recognizes that the total cost estimate is likely to increase as it completes
its assessment of non-IT systems. The Company is not currently able to
reasonably estimate the ultimate cost to be incurred for the assessment,
remediation, upgrade, replacement and testing of its impacted non-IT systems.
The worst case Y2K scenarios could be as insignificant as a minor
interruption in property management services provided to tenants at the
Company's Properties resulting from unanticipated problems encountered in the
IT systems of the Company or any of the significant third parties with whom the
Company does business. The pervasiveness of the Y2K issue makes it likely that
previously unidentified issues will require remediation during the normal
course of business. In such a case, the Company anticipates that transactions
could be processed manually while IT and other systems are repaired and that
such interruptions would have a minor effect on the Company's operations. On
the other hand, a worst case Y2K scenario could be as far reaching as an
extended loss of utility service resulting from interruptions at the point of
power generation, on-line transmission, or local distribution to the Company's
Properties. Such an interruption could result in an inability to provide
tenants with access to their spaces thereby affecting the Company's ability to
collect rents and pay its obligations which could result in a material adverse
effect on the Company's operating results and financial position.
INFLATION
Inflation has remained relatively low during the past three years and has
had minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the retail tenants' leases contain provisions
designed to protect the Company from the impact of inflation. Such provisions
include clauses enabling the Company to receive percentage rents based on
tenants' gross sales, which generally increase as prices rise, and/or
escalation clauses, which generally increase rents during the terms of the
leases. In addition, many of the leases are for terms less than ten years,
which may enable the Company to replace existing leases with new leases at
higher base and/or percentage rents if rents of the existing leases are below
then-existing market rates. Substantially all of the leases, other than those
for anchors, require the tenants to pay a proportionate share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation.
However, inflation may have a negative impact on some of the Company's
other operating items. Interest and general and administrative expenses may be
adversely affected by inflation as these specified costs could increase at a
rate higher than rents. Also, for tenant leases with specified rent increases,
inflation may have a negative effect as the specified rent increases in these
leases could be lower than the increase in the inflation rate at any given
time.
<PAGE> 25
OTHER MATTERS
The Company has reviewed all recently issued, but not yet adopted
accounting standards in order to determine their effects, if any, on the
results of operations or financial position of the Company. Based on that
review, the Company believes that none of these pronouncements will have a
significant effect on current or future earnings or operations.
The statements contained in this annual report on Form 10-K that are not
purely historical fact are forward looking statements including statements
regarding the Operating Partnership's expectations, budgets, estimates,
contemplations and Y2K compliance. All forward looking statements included in
this document are based on information available to the Operating Partnership
on the date hereof, and the Operating Partnership assumes no obligation to
update any such forward looking statement. It is important to note that the
Operating Partnership's actual results could differ materially from those in
such forward looking statements. Certain factors that might cause such
differences include those relating to changes in economic climate, local
conditions, law and regulations, the relative illiquidity of real property
investments, the potential bankruptcy of tenants and the development,
redevelopment or expansion of properties and unexpected developments
surrounding the Y2K issues.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Operating Partnership's exposure to market risk is limited to
fluctuations in the general level of interest rates on its current and future
fixed and variable rate debt obligations. Even though its philosophy is to
maintain a fairly low tolerance to interest rate fluctuation risk, the
Operating Partnership is still vulnerable, however, to significant fluctuations
in interest rates on its variable rate debt, on any future repricing or
refinancing of its fixed rate debt and on future debt.
The Operating Partnership uses long-term and medium-term debt as a source
of capital. The Operating Partnership has $297,135,000 of fixed rate debt
consisting of $100,000,000 unsecured public bonds and $197,135,000 in mortgages
and notes secured by real estate. The various fixed rate debt instruments
mature starting in the year 2000 through 2095. The average rate of interest on
the fixed rate debt is 6.9%. When debt instruments of this type mature,
the Operating Partnership typically refinances such debt at the then-existing
market interest rates which may be more or less than the interest rates on the
maturing debt. In addition, the Operating Partnership may attempt to reduce
interest rate risk associated with a forecasted issuance of new fixed rate
debt by entering into interest rate protection agreements. The Operating
Partnership does not have any fixed rate debt maturing in 1999.
The Operating Partnership's credit facilities and existing construction
loans have variable interest rates and any fluctuation in interest rates could
increase or decrease the Operating Partnership's interest expense. At December
31, 1998, the Operating Partnership had approximately $175,855,000 in
outstanding variable rate debt. If the interest rate for the Operating
Partnership's variable rate debt increase or decreased by 1% during 1999, the
Operating Partnership's interest rate expense on its outstanding variable rate
debt would increase or decrease, as the case may be, by approximately
$1,758,550.
Due to the uncertainty of fluctuations in interest rates and the specific
actions that might be taken by the Operating Partnership to mitigate the impact
of such fluctuations and their possible effects, the foregoing sensitivity
analysis assumes no changes in the Operating Partnership's financial structure.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are listed in the Index
to Financial Statements and Financial Statement Schedules appearing on Page F-1
of this Form 10-K.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
During the two most recent fiscal years, the Operating Partnership has
not experienced any changes in or disagreements with its independent auditors.
<PAGE> 26
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Operating Partnership does not have any directors or executive
officers. The Company, as the sole general partner of the Operating
Partnership, controls the day-to-day operations of the Operating Partnership.
Information regarding (i) the Company's Directors appears under the appropriate
caption in the Company's proxy statement for its 1999 Annual Meeting of
Stockholders to be file with the Commission pursuant too Regulation 14A and
(ii) the Company's Executive Officers appears in Item 4A of the Company's
Annual Report on Form 10-K for the year ended December 31, 1998. The Operating
Partnership does not have any equity securities registered pursuant to Section
12 of the Securities Exchange Act of 1934 and, therefore, is not required to
provide the information requested by Item 405 of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
The Operating Partnership does not have any directors or executive
officers. The Company, as the sole general partner of the Operating
Partnership, controls the day-to-day operations of the Operating Partnership.
Information regarding executive compensation of the Company's Executive
Officers appears under the appropriate caption in the Company's proxy statement
for its 1999 Annual Meeting of Stockholders to be filed with the Commission
pursuant to Regulation 14A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Operating Partnership does not have any voting securities or any
directors or executive officers and, therefore, is not required to provide the
information requested by Item 403 of Regulation S-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Operating Partnership does not have any voting securities or any
directors or executive officers and, therefore, is not required to provide the
information requested by Item 404 of Regulation S-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Financial Statements Schedules
See Index to Financial Statements and Financial Statement Schedules
appearing on page F-1 of this Form 10-K
(b)Reports on Form 8-K
None
(c) Exhibits
ITEM 14A.SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE
EXCHANGE ACT
No annual report to security holders or any proxy statement, form of
proxy or other proxy soliciting material will be
sent by the Operating Partnership to security holders.
<PAGE> 27
EXHIBIT INDEX
DESCRIPTION
<TABLE>
<CAPTION>
Exhibit Page
NUMBER NUMBER
<S> <C> <C> <C>
4.1 Form of Debt Security (4.6)*
4.2 Indenture, dated March 11, 1998, by and between the Operating Partnership and
The Chase Manhattan Bank as trustee (4.8)*
4.3 First Supplemental Indenture, dated March 11, 1998, by and between the
Operating Partnership and The Chase Manhattan Bank as trustee (4.9)*
10.1 Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership (10(a))**
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P.
(10(b))**
10.3 Loan Agreements related to Mortgage Debt and related documents (10(c))**
i) Deed of Trust, Mortgage, Security Agreement and Assignment of Leases and Rents
of Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and a Trustee
iv) Limited Guarantee Agreement (Guarantee of Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of Collection) for Price Group
Investors
vi) Cash Collateral Account Security, Pledge and Assignment Agreement among Price
Financing Partnership, L.P., Price Capital Corp. and Continental Bank N.A.
vii) Note Issuance Agency Agreement between Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among Price Financing Partnership, L.P. and
Price Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement of Price Financing Partnership,
L.P.
10.6 Registration Rights Agreement among the Company and the Limited Partners of
Price Development Company, Limited Partnership (10(g))**
10.7 Amendment No. 1 to Registration Rights Agreement, dated August 1, 1995, among
the Company and the Limited Partners of Price Development Company, Limited
Partnership**
10.8 Exchange Agreement among the Company and the Limited Partners of Price
Development Company, Limited Partnership (10(h))**
10.10 Amendment to Groundlease between Price Development Company and Alvin Malstrom
as Trustee and C.F. Malstrom, dated December 31, 1985. (Groundlease for Plaza
9400) (10(j))**
10.11 Lease Agreement between The Corporation of the President of the Church of
Jesus Christ of Latter Day Saints and Price-James and Assumptions, dated
September 24, 1979. (Groundlease for Anaheim Plaza) (10(k))**
10.12 Indenture of Lease between Ambrose and Zelda Motta and Cordova Village, dated
July 26, 1974, and Amendments and Transfers thereto. (Groundlease for Fort
Union Plaza) (10(l))**
10.13 Lease Agreement between Advance Management Corporation and Price Rentals, Inc.
and dated August 1, 1975 and Amendments thereto. (Groundlease for Price
Fremont) (10(m))**
10.14 Groundlease between Aldo Rossi and Price Development Company, dated June 1,
1989, and related documents. (Groundlease for Halsey Crossing) (10(n))**
10.16 Second Amendment to Amended and Restated Agreement of Limited Partnership of
Price Development Company, Limited Partnership.
23. Consent of Independent Accountants
27. Financial Data Schedule
</TABLE>
* Documents were previously filed with the Operating Partnership's Current
Report on Form 8-K dated March 12, 1998, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
** Documents were previously filed with the Company's Registration Statement
on Form S-11, File No. 33-68844, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
<PAGE> 28
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.
<TABLE>
<CAPTION>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
<S> <C> <C>
By: JP Realty, Inc. as a General Partner
By: /S/ JOHN PRICE
---------------------------
John Price
Date: March 19, 1999 Chairman of the Board of Directors
and Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C> <C>
/S/ JOHN PRICE Chairman of the Board of Directors, March 19, 1999
- --------------------------- Chief Executive Officer, Director
John Price (Principal Executive Officer) of JP
Realty, Inc. a General Partner
/S/ G. REX FRAZIER President and Chief Operating Officer, March 19, 1999
- --------------------------- Director of JP Realty, Inc., a General
G. Rex Frazier Partner
/S/ M. SCOTT COLLINS Vice President-Chief Financial Officer March 19, 1999
- --------------------------- and Treasurer (Principal Financial and
M. Scott Collins Accounting Officer) of JP Realty,
Inc., a General Partner
/S/ WARREN P. KING Director of JP Realty, Inc., a General March 19, 1999
- --------------------------- Partner
Warren P. King
/S/ SAM W. SOUVALL Director of JP Realty, Inc., a General March 19, 1999
- --------------------------- Partner
Sam W. Souvall
</TABLE>
<PAGE>
EXHIBIT INDEX
DESCRIPTION
<TABLE>
<CAPTION>
Exhibit Page
NUMBER NUMBER
<S> <C> <C> <C>
4.1 Form of Debt Security (4.6)*
4.2 Indenture, dated March 11, 1998, by and between the Operating Partnership and The
Chase Manhattan Bank as trustee (4.8)*
4.3 First Supplemental Indenture, dated March 11, 1998, by and between the Operating
Partnership and The Chase Manhattan Bank as trustee (4.9)*
10.1 Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership (10(a))**
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P. (10(b))**
10.3 Loan Agreements related to Mortgage Debt and related documents (10(c))**
i) Deed of Trust, Mortgage, Security Agreement and Assignment of Leases and Rents of
Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and a Trustee
iv) Limited Guarantee Agreement (Guarantee of Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of Collection) for Price Group Investors
vi) Cash Collateral Account Security, Pledge and Assignment Agreement among Price
Financing Partnership, L.P., Price Capital Corp. and Continental Bank N.A.
vii) Note Issuance Agency Agreement between Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among Price Financing Partnership, L.P. and
Price Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement of Price Financing Partnership,
L.P.
10.6 Registration Rights Agreement among the Company and the Limited Partners of Price
Development Company, Limited Partnership (10(g))**
10.7 Amendment No. 1 to Registration Rights Agreement, dated August 1, 1995, among the
Company and the Limited Partners of Price Development Company, Limited
Partnership**
10.8 Exchange Agreement among the Company and the Limited Partners of Price
Development Company, Limited Partnership (10(h))**
10.10 Amendment to Groundlease between Price Development Company and Alvin Malstrom as
Trustee and C.F. Malstrom, dated December 31, 1985. (Groundlease for Plaza 9400)
(10(j))**
10.11 Lease Agreement between The Corporation of the President of the Church of Jesus
Christ of Latter Day Saints and Price-James and Assumptions, dated September 24,
1979. (Groundlease for Anaheim Plaza) (10(k))**
10.12 Indenture of Lease between Ambrose and Zelda Motta and Cordova Village, dated
July 26, 1974, and Amendments and Transfers thereto. (Groundlease for Fort Union
Plaza) (10(l))**
10.13 Lease Agreement between Advance Management Corporation and Price Rentals, Inc.
and dated August 1, 1975 and Amendments thereto. (Groundlease for Price Fremont)
(10(m))**
10.14 Groundlease between Aldo Rossi and Price Development Company, dated June 1, 1989,
and related documents. (Groundlease for Halsey Crossing) (10(n))**
10.16 Second Amendment to Amended and Restated Agreement of Limited Partnership of
Price Development Company, Limited Partnership.
23. Consent of Independent Accountants
27. Financial Data Schedule
</TABLE>
* Documents were previously filed with the Operating Partnership's Current
Report on Form 8-K dated March 12, 1998, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
** Documents were previously filed with the Company's Registration Statement
on Form S-11, File No. 33-68844, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants F-2
Consolidated Balance Sheet as of December 31, 1998 and 1997 F-3
Consolidated Statement of Operations
for the years ended December 31, 1998, 1997 and 1996 F-4
Consolidated Statement of Partners' Capital F-5
Consolidated Statement of Cash Flows
for the years ended December 31, 1998, 1997 and 1996 F-6
Notes to Consolidated Financial Statements F-7
Schedule II - Valuation and Qualifying Accounts F-19
Schedule III - Real Estate and Accumulated Depreciation F-20
</TABLE>
<PAGE> F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
of Price Development Company, Limited Partnership
In our opinion, the consolidated financial statements listed in the
accompanying index, present fairly, in all material respects, the financial
position of Price Development Company, Limited Partnership and its subsidiaries
at December 31, 1998 and 1997, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1998,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/S/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
Salt Lake City, Utah
February 3, 1999
<PAGE> F-2
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
---------------- --------------
<S> <C> <C>
ASSETS
Real Estate Assets
Land.......................................... $ 102,921 $ 95,523
Buildings..................................... 684,762 490,183
---------------- --------------
787,683 585,706
Less: Accumulated Depreciation ............... (114,136) (98,404)
---------------- --------------
Operating Real Estate Assets ........... 673,547 487,302
Real Estate Under Development ............... 28,073 33,665
---------------- --------------
Net Real Estate Assets .................. 701,620 520,967
Cash........................................... 5,123 5,603
Restricted Cash ............................... 3,605 2,465
Accounts Receivable, Net ..................... 9,713 5,759
Deferred Charges, Net ......................... 8,570 7,536
Other Assets................................... 4,524 3,354
---------------- --------------
$ 733,155 $ 545,684
================ ==============
LIABILITIES AND PARTNERS' EQUITY
Borrowings..................................... $ 472,990 $ 283,390
Accounts Payable and Accrued Expenses ........ 20,411 18,840
Other Liabilities ............................. 798 617
---------------- --------------
494,199 302,847
---------------- --------------
Minority Interests ............................ 2,035 1,830
---------------- --------------
Commitments and Contingencies
PARTNERS' CAPITAL
General Partner ............................... 204,384 207,581
Limited Partners .............................. 32,537 33,426
---------------- --------------
236,921 241,007
---------------- --------------
$ 733,155 $ 545,684
================ ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> F-3
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS - EXCEPT PER PARTNERSHIP UNIT AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
<S> <C> <C> <C>
1998 1997 1996
------------ --------------- --------------
REVENUES
Minimum Rents............................ $ 79,448 $ 59,624 $ 52,447
Percentage and Overage Rents ............ 4,491 3,896 4,061
Recoveries from Tenants ................. 23,778 18,199 15,557
Interest ................................ 404 546 549
Other.................................... 948 708 335
------------ --------------- --------------
109,069 82,973 72,949
------------ --------------- --------------
EXPENSES
Operating and Maintenance ............... 17,366 12,990 11,240
Real Estate Taxes and Insurance ......... 11,640 8,546 7,679
Advertising and Promotions .............. 676 451 426
General and Administrative .............. 6,406 5,447 5,060
Depreciation............................. 17,306 11,802 10,230
Amortization of Deferred Financing Costs 1,572 969 1,085
Amortization of Deferred Leasing Costs .. 665 639 664
Interest ................................ 20,501 9,066 7,776
------------ --------------- --------------
76,132 49,910 44,160
------------ --------------- --------------
32,937 33,063 28,789
Minority Interest in Income of Consolidated
Partnerships............................. (421) (394) (389)
Gain on Sales of Real Estate ............ 1,096 339 94
------------ --------------- --------------
Income Before Extraordinary Item ........ 33,612 33,008 28,494
Extraordinary Item - Loss on Extinguishment of
Debt..................................... -- (162) --
------------ --------------- --------------
Net Income............................... $ 33,612 $ 32,846 $ 28,494
============ =============== ==============
Basic Earnings Per Partnership Unit:
Income Before Extraordinary Item ...... $ 1.58 $ 1.57 $ 1.45
Extraordinary Item...................... -- (0.01) --
------------ --------------- --------------
Net Income............................... $ 1.58 $ 1.56 $ 1.45
============ =============== ==============
Diluted Earnings Per Partnership Unit:
Income Before Extraordinary Item ...... $ 1.57 $ 1.55 $ 1.44
Extraordinary Item...................... -- (0.01) --
------------ --------------- --------------
Net Income............................... $ 1.57 $ 1.54 $ 1.44
============ =============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> F-4
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS Total
-------------- ------------ -----------
<S> <C> <C> <C>
Partners' Capital at December 31, 1995 $ 175,604 $ 34,138 $ 209,742
Units Issued Upon Exercise of Stock Options 407 -- 407
Conversion of Limited Partners' Interests 164 (164) --
Distributions (27,139) (6,838) (33,977)
Net Income 23,250 5,244 28,494
-------------- ------------ -----------
Partners' Capital at December 31, 1996 172,286 32,380 204,666
Units Issued for Proceeds from Sale of Common 38,632 -- 38,632
Stock
Units Issued Upon Exercise of Stock Options 220 -- 220
Conversion of Limited Partners' Interests 40 (40) --
Units Issued for Acquisition -- 1,863 1,863
Distributions (30,797) (6,423) (37,220)
Net Income 27,200 5,646 32,846
-------------- ------------ -----------
Partners' Capital at December 31, 1997 207,581 33,426 241,007
Units Issued upon Exercise of Stock Options 911 -- 911
Conversion of Limited Partners' Interest 3 (3) --
Distributions (31,916) (6,693) (38,609)
Net Income 27,805 5,807 33,612
-------------- ------------ -----------
Partners Capital at December 31, 1998 $ 204,384 $ 32,537 $ 236,921
============== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> F-5
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
<S> <C> <C> <C>
1998 1997 1996
-------------- --------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 33,612 $ 32,846 $ 28,494
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities
Depreciation 17,306 11,802 10,230
Amortization 2,237 1,608 1,749
Minority Interest in Income of Consolidated 421 394 389
Partnerships
Gain on Sales of Real Estate (1,096) (339) (94)
Increase in Accounts Receivable (4,112) (2,261) (786)
Increase in Deferred Charges (927) (1,128) (387)
Increase in Accounts Payable and Accrued Expenses 3,739 3,368 3,774
Increase in Other Assets (1,129) (1,917) (295)
-------------- --------------- -------------
Net Cash Provided by Operating Activities 50,051 44,373 43,074
-------------- --------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Real Estate Assets, Developed or Acquired (200,022) (137,560) (65,323)
Proceeds from Sales of Real Estate 1,289 469 --
(Increase) Decrease in Restricted Cash (1,140) (93) 92
-------------- --------------- -------------
Net Cash Used in Investing Activities (199,873) (137,184) (65,231)
-------------- --------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings 289,384 219,088 65,442
Repayment of Borrowings (99,784) (123,320) (9,473)
Deferred Financing Costs (2,344) (1,503) --
Net Proceeds from Sale of Partnership Units 923 38,865 407
Capital Contribution by Minority Partner -- 1,000 --
Distributions Paid to Partners (38,609) (37,220) (33,977)
Distributions Paid to Minority Interests (228) (246) (319)
-------------- --------------- -------------
Net Cash Provided by Financing Activities 149,342 96,664 22,080
-------------- --------------- -------------
Net (Decrease) Increase in Cash (480) 3,853 (77)
Cash, Beginning of Period 5,603 1,750 1,827
-------------- --------------- -------------
Cash, End of Period $ 5,123 $ 5,603 $ 1,750
============== =============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> F-6
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. BUSINESS AND BASIS OF PRESENTATION
BUSINESS
Price Development Company, Limited Partnership (the "Operating
Partnership"), a Maryland Corporation, is engaged in the business of owning,
leasing, managing, operating, developing and redeveloping regional malls,
community centers and other commercial properties. The Operating Partnership's
general partner, JP Realty, Inc. (the "Company") is a real estate investment
trust ("REIT") as defined by the Internal Revenue Code and owns an interest in
and conducts its business activities through the Operating Partnership. The
Company owned an 82.7 percent general partnership interest in the Operating
Partnership at December 31, 1998 and 1997. The Operating Partnership owns a
portfolio of 50 properties consisting of 17 enclosed regional malls, 25
community centers, two free-standing retail properties and six mixed-use
commercial properties located in the Western United States. The tenant base
includes primarily national, regional and local retailers; as such, the
Company's credit risk is concentrated in the retail industry.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of the Operating Partnership and all controlled affiliates.
The effect of all significant intercompany balances and transactions have
been eliminated in the consolidated presentation. Certain amounts in the 1997
and 1996 financial statements have been reclassified to conform with the 1998
presentation.
The preparation of these financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
REAL ESTATE ASSETS
Real estate assets are stated at cost less accumulated depreciation. At
each balance sheet date, the Operating Partnership reviews book values of real
estate assets for possible impairment based upon expectations of future
nondiscounted cash flows (excluding interest) from each property.
Costs directly related to the acquisition and development of real estate
assets, including overhead costs directly attributable to property development
are capitalized. Interest and real estate taxes incurred during the
development and construction periods are also capitalized.
Depreciation is computed on a straight-line basis generally over 40 years
for buildings and four to ten years for equipment and fixtures. Tenant
improvements are capitalized and depreciated on a straight-line basis over the
life of the related lease. Expenditures for maintenance and repairs are
charged to operations as incurred. Major replacements and betterments which
improve or extend the life of the asset are capitalized and depreciated over
their estimated useful lives.
REVENUE RECOGNITION
Certain minimum rents are recognized monthly based upon amounts which are
currently due from tenants, when such amounts are not materially different than
recognizing the fixed cash flow over the initial term of the lease using the
straight-line
method. All other minimum rents are recognized using the straight-line method.
Effective April 1, 1998, the Operating Partnership prospectively adopted the
provisions of Issue No. 98-9 ("EITF 98-9") Accounting for Contingent Rent in
Interim
<PAGE> F-7
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
Financial Periods, which was issued on May 21, 1998 by the Financial Accounting
Standards Board Emerging Issues Task Force and which significantly changed the
Operating Partnership's recognition of percentage and overage rents revenue in
interim
periods. Prior to the adoption of EITF 98-9, the Operating Partnership
recognized percentage and overage rents revenue monthly on an accrual basis
based on estimated annual amounts. Under the provisions of EITF 98-9,
percentage and overage rents revenue is recognized in the interim periods in
which the specified target that triggers the contingent rental income is
achieved. The adoption of EITF 98-9 did not have a material impact on the
amount of annual percentage and overage rents revenue recognized in 1998. The
Operating Partnership receives reimbursements from tenants for certain costs as
provided in the lease agreements. These costs consist of real estate taxes,
insurance, common area maintenance and other recoverable costs. Recoveries
from tenants are recognized monthly on an accrual basis based on estimated
amounts.
An allowance for doubtful accounts has been provided against the portion
of tenant accounts receivable which is estimated to be uncollectible. Tenant
accounts receivable in the accompanying consolidated balance sheet are shown
net of allowance for doubtful accounts of $741 and $570 as of December 31, 1998
and 1997, respectively.
RESTRICTED CASH
Restricted cash is held under terms of loan agreements to be used for
certain capital expenditures, property tax payments and funds held in reserve
by a trustee for interest payments on borrowings.
DEFERRED CHARGES
Deferred charges consists principally of financing fees and leasing
commissions paid to third parties. These costs are amortized on a straight-
line basis, which approximates the effective interest method, over the terms of
the respective agreements. Deferred charges in the accompanying consolidated
balance sheet are shown net of accumulated amortization of $6,981 and $5,857 as
of December 31, 1998 and 1997, respectively.
INCOME TAXES
Income taxes have not been provided in the accompanying financial
statements as the tax effects of the Operating Partnership's operations accrue
directly to the partners.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Standards ("SFAS") No. 130 "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is defined as the change in equity
of a business enterprise during a period from transactions and other events and
circumstances from nonowner sources. The new standard divides comprehensive
income into two components: (1) net income and (2) other comprehensive income.
This standard was adopted by the Operating Partnership in 1998, but does not
impact the Operating Partnership's 1998 financial statements as the Operating
Partnership has no "other comprehensive income" in any of the periods
presented.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes standards
for disclosure about operating segments in annual financial statements and
selected
information in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. This statement supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise". The new standard requires that
comparative information from earlier years be restated to conform to the
requirements of this standard. This standard was adopted by the Operating
Partnership in 1998. (Note 14).
<PAGE> F-8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
In June 1997, the FASB issued SFAS No.132, "Employer's Disclosures About
Pensions and Other Postretirement Benefits". SFAS No. 132 standardizes the
disclosure requirements for pensions and other postretirement benefit plans.
The adoption of this standard has no impact on the Operating Partnership's 1998
financial statements.
In June 1997, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. This statement will be effective for the Operating
Partnership beginning January 1, 2000. The Operating Partnership did not hold
any derivative instruments December 31, 1998.
3. ACQUISITIONS AND DEVELOPMENTS
ACQUISITIONS
On August 6, 1998, the Company, through a consolidated partnership of
which the Operating Partnership owns 99% and is a limited partner and a wholly
owned subsidiary owns 1% and is the general partner, bought NorthTown Mall,
located in Spokane, Washington for $128,000. The acquisition was financed
utilizing a first mortgage of $84,500 and $43,500 of borrowings on the
Operating Partnership's unsecured credit facility. The Operating Partnership
issued a letter of credit to the first mortgage holder in the amount of $9,500
to guarantee the completion of additional property development work.
On December 30, 1997, the Operating Partnership acquired Salem Center, a
mall located in Salem, Oregon for $32,500. The acquisition was financed
utilizing borrowings on its unsecured credit facility.
On June 30, 1997, the Operating Partnership acquired Visalia Mall located
in Visalia, California for $38,000. The acquisition was financed principally
from borrowings.
On June 1, 1997, the Operating Partnership acquired the remaining 70%
interest in Silver Lake Mall, Ltd. a Limited Partnership owning Silver Lake
Mall located in Coeur d'Alene, Idaho. Prior to the acquisition, the Operating
Partnership held a 30% interest in the partnership. The acquisition was
financed by issuing 72,000 Operating Partnership Units ("OP Units") and
assuming debt totaling $24,755.
DEVELOPMENTS
The Operating Partnership developed Provo Towne Centre, an enclosed
regional mall in Provo, Utah through its consolidated partnership Provo Mall
Development Company, LTD. The mall held it's grand opening on October 28, 1998
and added approximately 723,000 square feet of total gross leasable area
(Company-owned leasable area plus any tenant-owned leasable area within the
Company's properties or ("Total GLA")) as of December 31, 1998. The mall is
currently developing a sixteen-screen Cinemark Theater which will add
approximately 74,000 square feet of additional gross leasable area (Company
owned leasable area within the Company's properties or ("GLA")). At December
31, 1998, the partnership had expended $63,323 for development costs and
anticipates expending an additional $13,677 to complete the development during
1999. At December 31, 1998, the Operating Partnership had leased approximately
93% of the mall.
In August 1998, the Company completed an expansion at Boise Towne Square
in Boise, Idaho adding 294,804 square feet of Total GLA. Dillard's was added
as a new anchor with approximately 186,500 square feet of Total GLA, The Bon
March<e'> expanded its space by 44,903 square feet of GLA and approximately
63,000 square feet of additional shop GLA was added.
The Company has added Sears as a fourth anchor tenant at Red Cliffs Mall
in St. George, Utah. The Sears store opened
<PAGE> F-9
3. ACQUISITIONS AND DEVELOPMENTS (CONTINUED)
in October 1998 and added approximately 70,400 square feet of GLA to Red Cliffs
Mall and a Sears Tire and Battery shop added approximately 9,600 square feet of
GLA at Red Cliffs Plaza.
The Company added approximately 15,000 square feet of GLA at Boise Towne
Plaza in Boise, Idaho in March 1998. The first phase of construction at Boise
Towne Plaza opened in November 1997, adding 76,414 square feet of retail space.
The Operating Partnership, through its consolidated partnership Spokane
Mall Development Company, Limited Partnership, completed the development of
Spokane Valley Mall located in Spokane, Washington and held a grand opening on
August 13, 1997. During 1998 two freestanding pads at the mall were developed,
which includes a Sears Tire and Battery shop and a Pier 1 Imports. The mall
contains approximately 710,000 square feet of Total GLA as of December 31,
1998. The partnership expended a total of $65,071 for the development. At
December 31, 1998, the Operating Partnership had leased approximately 93% of
the mall.
During 1997, the Company also completed the construction of a 76,411
square foot Sears department store at the Pine Ridge Mall located in Pocatello,
Idaho, a 36,036 square foot addition to the Sears department store at the
Silver Lake Mall, located in Coeur d'Alene, Idaho and a 5,500 square foot
restaurant at the Animas Valley Mall located in Farmington, New Mexico.
4. BORROWINGS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
<S> <C> <C>
1998 1997
------------ -------------
Notes, unsecured; interest at 7.29%, maturing 2005 to 2008 $ 100,000 $ --
Credit Facility, unsecured; weighted average interest at 6.43% 100,800 127,000
during 1998 and 6.75% during 1997
Notes, secured by real estate; interest at 6.37%, due in 2001 95,000 95,000
Mortgage payable, secured by real estate; interest at 6.68%, 84,277 --
due in 2008
Construction loan, secured by real estate; interest at 6.81% 47,505 43,009
as of December 31, 1998, due in 1999
Construction loan, secured by real estate; interest at 7.08% 27,550 --
as of December 31, 1998, due in 2001
Mortgage payable, secured by real estate; interest at 8.5%, 12,510 12,827
due in 2000
Other notes payable, secured by real estate; interest ranging 5,348 5,554
from 7.0% to 9.99%, maturing 2000 to 2095 ------------ ------------
$ 472,990 $ 283,390
============ ============
</TABLE>
CREDIT FACILITIES
On October 16, 1997, the Operating Partnership obtained a $150,000 three
year unsecured credit facility (the "1997 Credit Facility") from a group of
banks. On December 18, 1997, the amount was increased to $200,000. The
facility has a three
year term and bears interest, at the option of the Operating Partnership, at
one, or a combination, of (i) the higher of the federal funds rate plus 50
basis points or the prime rate, or (ii) LIBOR plus a spread of 70 to 130 basis
points. The LIBOR spread is determined by the Operating Partnership's credit
rating and/or leverage ratio. The 1997 Credit Facility also includes a
competitive bid option in the amount of $100,000 which will allow the Operating
Partnership to solicit bids for borrowings from
the bank group. The facility is used for general corporate purposes including
development, working capital, equity investments, repayment of amounts
outstanding under its other credit facilities, repayment of indebtedness and/or
amortization payments. The facility contains restrictive covenants including
limitations on the amount of secured and unsecured debt, and requires the
Operating Partnership to maintain certain financial ratios. At December 31,
1998, the Operating Partnership was in compliance with all these covenants.
The Operating Partnership paid commitment fees totaling $514 and $50 in 1998
and 1997, respectively.
<PAGE> F-10
4. BORROWINGS (CONTINUED)
On March 16, 1998, the Operating Partnership entered into a $10,000
unsecured credit facility. The credit facility has been used for general
business and cash management purposes. The Operating Partnership paid
commitment fees totaling $33 in 1998.
On November 7, 1997, the Operating Partnership borrowed $85,000 from the
1997 Credit Facility and utilized the proceeds to retire and cancel previously
existing credit facilities and to pay for development activities. Deferred
financing costs related to the canceled credit facilities were written-off
resulting in an extraordinary loss of $133, net of minority interest. On
December 29, 1997, the Operating Partnership borrowed an additional $42,000
to pay for the acquisition of Salem Center (Note 3) and for development
activities. On August 6, 1998, the Operating Partnership borrowed $43,500 from
its 1997 Credit Facility as part of the purchase of NorthTown Mall (Note 3).
In August 1998, the Operating Partnership issued a $9,500 letter of credit
backed by the 1997 Credit Facility to the NorthTown Mall first mortgage holder
to guarantee the completion of additional property development work. The
Company does not expect any material losses to result from the letter of credit
and management is therefore of the opinion that the fair value of this
instrument at December 31, 1998 is zero. The Operating Partnership borrowed an
additional $29,300 for development activities during 1998. At December 31,
1998, the 1997 Credit Facility had a balance of $100,800.
On March 8, 1995, the Operating Partnership entered into a $50,000
secured credit facility agreement which provided for a two year commitment with
an option to extend for an additional year (which option was exercised on
January 22, 1997). Borrowings under this agreement were collateralized by
certain real estate assets. The credit facility bore interest at a floating
rate equal to 115 basis points over the established rate of AAA commercial
paper and was guaranteed by the Company. The Operating Partnership paid
commitment fees totaling $280 in 1997. On November 7, 1997, borrowings under
this credit facility were retired and the facility was canceled.
On January 22, 1996, the Operating Partnership entered into a $25,000
unsecured credit facility agreement which provided for a two year commitment
with an option to extend for an additional year (which option was exercised on
January 24, 1997). On October 6, 1997, the limit was raised to $40,000. The
Operating Partnership paid commitment fees totaling $86 in 1997. On November
7, 1997, borrowings under this credit facility were retired and the facility
was canceled.
NOTES
On March 11, 1998, the Operating Partnership under its shelf
registration, issued $100,000 of ten year senior unsecured notes bearing
interest at a fixed 7.29% per annum. The Operating Partnership had entered
into an interest rate protection agreement in anticipation of issuing these
notes and received $270 as a result of this agreement, making the effective
fixed rate of interest on these notes 7.24% per annum. Interest payments are
due semi-annually on March 11 and September 11 of each year. Principal
payments of $25,000 are due annually beginning March 2005. The proceeds were
used to partially repay outstanding borrowings under the 1997 Credit Facility.
On January 21, 1994, a subsidiary of the Operating Partnership issued
$95,000 in secured notes bearing interest at a fixed 6.37% per annum. The
notes require quarterly interest payments and a principal payment of $11,875 on
January 21, 2000 with the remaining balance due on January 21, 2001. The
subsidiary has an option to extend the notes to January 21, 2003.
CONSTRUCTION LOANS
On September 4, 1998, Provo Mall Development Company, LTD., a
consolidated partnership of which the Operating
Partnership is the general partner, entered into a $50,000 construction loan
facility. The construction loan facility will be used to fund the development
and construction of Provo Towne Centre in Provo, Utah. The construction loan
facility matures on July 1, 2001 with an optional two-year extension, is
collateralized by Provo Towne Centre and guaranteed by the Operating
Partnership. The loan bears interest at a variable rate indexed to the LIBOR
rate. At December 31, 1998, the loan had a balance of $27,550.
<PAGE F-11
4. BORROWINGS (CONTINUED)
On July 30, 1996, Spokane Mall Development Company Limited Partnership, a
consolidated partnership of which the Operating Partnership is the general
partner, entered into a $50,000 construction loan facility. The proceeds from
this construction loan facility have been used to fund the development and
construction of the Spokane Valley Mall in Spokane, Washington. The
construction loan facility has a three year term with an optional two year
extension, is collateralized by the
Spokane Valley Mall and guaranteed by the Operating Partnership. The loan
bears interest at a variable interest rate indexed to the LIBOR rate. At
December 31, 1998, the loan had a balance of $47,505.
MORTGAGES PAYABLE
On August 6, 1998, the Company and Operating Partnership, through a
consolidated partnership, acquired NorthTown Mall. The partnership obtained a
new first mortgage in the amount of $84,500. The loan has a ten year term,
6.68% fixed rate, and a thirty-year amortization payoff schedule with a balloon
payment of approximately $73,000. At December 31, 1998 the loan had a balance
of $84,277.
In June 1997, the Operating Partnership assumed a mortgage note of
$24,755 as part of the acquisition of Silver Lake Mall (Note 3) and retired
portions of the debt principally using borrowings under a credit facility. The
assumed debt bears interest at a fixed 8.5% per annum and has a maturity date
of October 1, 2000 when a balloon payment of $11,971 is due. At December 31,
1998, the loan had a balance of $12,510.
INTEREST RATE PROTECTION AGREEMENT
In December 1997, the Operating Partnership entered into an interest rate
protection agreement with a notional value of $100,000 and a forward yield of
5.74% based on the 10-year treasury note. This interest rate protection
agreement was used to hedge the interest rate on the offering of unsecured debt
on March 11, 1998. The Operating Partnership received $270 as a result of
terminating this agreement.
SCHEDULED PRINCIPAL REPAYMENTS
<TABLE>
<CAPTION>
The following summarizes the scheduled maturities of borrowings at December
31, 1998: Total
------------
<S> <C> <C>
Year
1999........................................................... $ 49,037
2000........................................................... 125,950
2001........................................................... 113,351
2002........................................................... 1,174
2003........................................................... 1,528
Thereafter .................................................... 181,950
------------
$ 472,990
============
</TABLE>
The amount of $47,505 for the construction loan facility collateralized
by Spokane Valley Mall is included in the 1999 scheduled maturities of
borrowings. The Company intends to convert this construction loan facility to
permanent financing in 1999.
5. CAPITAL TRANSACTIONS
The limited partners of the Operating Partnership have an option to
convert their OP Units into shares of the Company's Common Stock. The
Operating Partnership will issue an equivalent number of OP Units to the
Company as general partnership interests. In 1998 and 1997, 285 and 4,000 OP
Units were converted into shares.
<PAGE> F-12
5. CAPITAL TRANSACTIONS (CONTINUED)
On January 28, 1997, the Company sold 1,500,000 shares of Common Stock in
an underwritten public offering at $27.13 per share. Net proceeds of $38,632
were contributed to the Operating Partnership in exchange for additional OP
Units and were principally used to repay indebtedness incurred by the Operating
Partnership to fund acquisition activities.
On June 1, 1997, the Operating Partnership issued 72,000 OP Units in the
acquisition of Silver Lake Mall (Note 3). The value of the OP Units at June 1,
1997 was $1,863 (Note 8).
6. RENTAL INCOME
Substantially all real estate held for investment is leased to retail and
commercial tenants. These operating leases generally range from 1 to 25 years
and provide for minimum monthly rents, and in certain instances percentage
rents based on the tenants' sales, and generally require the tenants to pay
property taxes, insurance and maintenance charges.
All non-cancelable leases, assuming no new or renegotiated leases or
option extensions, in effect at December 31, 1998 provide for the following
minimum future rental income:
<TABLE>
<CAPTION>
Year Total
----------
<S> <C> <C>
1999.................................................. $ 78,855
2000.................................................. 73,294
2001.................................................. 65,757
2002.................................................. 58,188
2003.................................................. 51,141
Thereafter............................................ 293,079
----------
$ 620,314
==========
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
Future minimum rental payments under the terms of all non-cancelable
operating leases under which the Operating Partnership is the lessee,
principally for ground leases, are as follows:
<TABLE>
<CAPTION>
Year Total
-----------
<S> <C> <C>
1999........................................................... $ 983
2000........................................................... 986
2001........................................................... 998
2002........................................................... 1,012
2003........................................................... 968
Thereafter .................................................... 26,390
----------
$ 31,337
==========
</TABLE>
The Company is a defendant in certain litigation relating to its business
activities. Management does not believe that the resolution of these matters
will have a materially adverse effect upon the financial position, results of
operations or cash flows of the Operating Partnership.
8. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During 1998, 1997 and 1996, non-cash investing and financing transactions
included an increase in accounts payable of $1,693, $3,861 and $0,
respectively, related to development activities, the assumption of debt related
to the
<PAGE> F-13
8. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (CONTINUED)
acquisition of Salem Center totaling $494 in December 1997, the assumption of
debt related to the acquisition of Silver Lake Mall totaling $24,755 in June
1997, and the write-off of capitalized tenant allowances of $657, $406 and
$159, respectively.
In addition, the holders of Operating Partnership Units elected to convert 285,
4,000 and 16,000 OP Units, having a recorded value of $3, $40 and $164, into
Common Stock in 1998, 1997 and 1996, respectively.
Interest paid (net of capitalized amounts of $3,754, $3,509 and $1,261
for 1998, 1997 and 1996) aggregated $17,763, $8,276, and $7,707 for 1998, 1997
and 1996, respectively.
<TABLE>
<CAPTION>
Purchase of the remaining 70% interest in Silver Lake Mall, Ltd.
<S> <C> <C> <C>
72,000 Operating Partnership Units issued ........... $ 1,863
Book value of 30% equity investment in Silver Lake Mall, Ltd. (1,555 )
Debt assumed.......................................... 24,755
--------------
$ 25,063
==============
</TABLE>
9. RELATED PARTY TRANSACTIONS
The Operating Partnership leases computer services from Alta Computer
Services, Inc. ("Alta"). Alta is majority owned by three directors of the
Company. The Operating Partnership paid $175, $200, and $194 in 1998, 1997 and
1996, respectively, for such services.
The Operating Partnership has entered into a management agreement under
which the Operating Partnership performs certain accounting and management
functions on behalf of a company, whose majority owner is the Chairman of the
Board of Directors of the Company. Management fees collected by the Operating
Partnership under this agreement totaled $72 for each of the three years ended
December 31, 1998.
10. STOCK INCENTIVE PLAN
On October 26, 1993, the Company adopted the 1993 Stock Option Plan which
authorizes the discretionary grant by the Executive Compensation Committee of
options intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code to key employees of the Company and
the discretionary grant of nonqualified stock options to key employees,
directors and consultants of the Company. The maximum number of shares of
Common Stock subject to option under the Company's Plan is 1,100,000. The
proceeds received by the Company upon exercise of options are contributed to
the Operating Partnership in exchange for the issuance of an equivalent number
of OP Units. No stock options may be granted after ten years from the date of
adoption and options must be granted at a price generally not less than the
fair market value of the Company's Common Stock at the date of grant. These
options vest over a period of not more than five years.
A summary of the Company's 1993 Stock Option Plan activity is set forth below:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------------ ------------- ---------- ------------ ---------- ------------
Outstanding at beginning of year 553,000 $ 18.07 558,000 $ 17.99 494,000 $ 17.56
Granted 165,000 25.21 7,000 25.38 107,000 20.02
Exercised (51,000) 17.92 (12,000) 18.64 (22,000) 17.57
Forfeited (36,000) 22.49 -- -- (21,000) 18.85
--------- -------- ------- ------- ------- -------
Outstanding at end of year 631,000* $ 21.37 553,000 $ 18.07 558,000 $ 17.99
========= ======== ======= ======= ======= =======
Exercisable at end of year 360,000 $ 18.06 277,000 $ 17.87 178,000 $ 17.77
========= ======== ======= ======= ======= =======
</TABLE>
* The weighted average remaining contractual life of options outstanding as of
December 31, 1998 was 5 years. The range of option prices was $17.50 to
$25.38 per share.
<PAGE> F-14
10. STOCK INCENTIVE PLAN (CONTINUED)
The Operating Partnership has applied Accounting Principals
Board Opinion 25 and selected interpretations in accounting for its
plan. Accordingly, no compensation costs have been recognized. Had
compensation costs for the Operating Partnership's plan been
determined based on the fair value at the grant date for options
granted in 1998, 1997 and 1996, respectively, in accordance with the
method required by SFAS 123, "Accounting for Stock-Based
Compensation", the Operating Partnership's net income and net income
per share would have been reduced to the proforma amounts as
follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996
-------------- ------------- --------------
Net income
As reported............................... $ 33,612 $ 32,846 $ 28,494
Proforma ............................... $ 33,477 $ 32,800 $ 28,451
Basic net income per share
As reported ......................... $ 1.58 $ 1.56 $ 1.45
Proforma ............................. $ 1.57 $ 1.55 $ 1.45
Diluted net income per share
As reported ................... $ 1.57 $ 1.54 $ 1.44
Proforma ........................... $ 1.56 $ 1.54 $ 1.44
</TABLE>
The fair value of each option grant was estimated on the date
of grant using the Black-Sholes options pricing model using the
following assumptions:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996
--------------- --------------- ---------------
Risk free interest rate 5.51% 6.67% 5.50%
Dividend yield...................... ..... 7.14% 7.00% 7.00%
Expected life....................... ..... 5 years 9 years 10 years
Expected volatility . 17.00% 16.50% 16.00%
Weighted average per share fair value of
options granted during the year $ 2.08 $ 2.53 $ 1.47
</TABLE>
11. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) profit sharing plan which
permits participating employees to defer up to a maximum of
15% of their compensation up to the maximum allowed by
Internal Revenue Service Code. The Company matches 50% of
the qualified employees' contributions up to a maximum of $1
per employee each year. Employees working a minimum of 1,000
hours per year who have completed at least one year of
service and attained the age of 21 are qualified to
participate in the plan. The employees' contributions are
immediately vested. Additionally, the Company annually
contributes 3% of base salary to the plan for each qualified
employee. Contributions from the Company vest based upon
employees' years of service and beginning at 20% per year
after one year of service. The Company's contributions to
the plan in 1998, 1997 and 1996 were $279, $225 and $190,
respectively.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were
determined by management using available market information.
Considerable judgment is necessary to interpret market data
and develop estimated fair value. Accordingly, the estimates
<PAGE> F-15
12. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
presented herein are not necessarily indicative of the
amounts the Operating Partnership could realize on
disposition of the financial instruments. The use of
different market assumptions and/or estimation methodologies
may have a material effect on the estimated fair value
amounts.
The carrying value of cash, accounts receivable and
accounts payable at December 31, 1998 and 1997 are reasonable
estimates of their fair values because of the short maturity
of these financial instruments.
Borrowings with an aggregate carrying value of $472,990
and $283,390 have an estimated aggregate fair value of
$472,690 and $283,533 at December 31, 1998 and 1997,
respectively. Estimated fair value is based on interest
rates currently available to the Operating Partnership for
issuance of borrowings with similar terms and remaining
maturities.
13. EARNINGS PER OP UNIT
The following table provides a reconciliation of both
income before extraordinary items and the number of OP Units
used in the computations of basic earnings per OP Unit, which
utilizes the weighted average number of OP Units outstanding
without regard to potentially dilutive OP Units and diluted
earnings per OP Unit, which includes all such OP Units.
Effect has been given to the Company's stock option plan
(Note 10) since proceeds received by the Company upon
exercise of options are contributed to the Operating
Partnership in exchange for the issuance of an equivalent
number of OP Units.
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996
-------------- -------------- --------------
Income (Numerator)
Before Extraordinary Item $ 33,612 $ 33,008 $ 28,494
============== ============== ==============
Shares (Denominator)
Basic-average common shares outstanding 21,298,000 21,119,000 19,668,000
Add: Dilutive effect of stock options 103,000 166,000 85,000
-------------- -------------- --------------
Diluted shares 21,401,000 21,285,000 19,753,000
============== ============== ==============
Per-Share Amounts - Income Before Extraordinary Item
Basic $ 1.58 $ 1.57 $ 1.45
============== ============== ==============
Diluted $ 1.57 $ 1.55 $ 1.44
============== ============== ==============
</TABLE>
Options to purchase 631,000, 553,000 and 558,000 shares
of Common Stock were outstanding at December 31, 1998, 1997
and 1996, respectively (Note 10), a portion of which has been
reflected above using the treasury stock method.
14. SEGMENT INFORMATION
In 1998, the Operating Partnership adopted SFAS No.
131. The prior years' information has been restated to
present the Operating Partnership's three reportable
segments: 1) regional malls, 2) community centers, and 3)
commercial properties in conformity with SFAS No. 131.
The accounting policies of the segments are the same as
those described in the "Summary of Significant Accounting
Policies." Segment data includes total revenues and property
net operating income (revenues less operating and
maintenance, real estate taxes and insurance and advertising
and promotions ("Property NOI")). The Operating Partnership
evaluates the performance of its segments and allocates
resources to them based on Property NOI.
The regional mall segment consists of 17 regional malls
in seven states containing approximately 9,810,000 square
feet of Total GLA and which range in size from approximately
296,000 to 1,171,000 square feet of Total GLA.
The community center segment consists of 25 properties
in seven states containing over 3,185,000 square feet of
Total GLA and two freestanding retail properties containing
approximately 5,000 square feet of GLA.
<PAGE> F-16
14. SEGMENT INFORMATION (CONTINUED)
The commercial properties include six mixed-use
commercial/business properties with 38 commercial buildings
containing approximately 1,354,000 square feet of GLA which
are located primarily in the Salt Lake City, Utah area where
the Company's headquarters is located.
The table below presents information about the
Operating Partnership's reportable segments for the years
ending December 31:
<TABLE>
<CAPTION>
REGIONAL COMMUNITY COMMERCIAL
MALLS CENTERS PROPERTIES OTHER TOTAL
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998
- ------
Total Revenues $ 82,622 $ 17,849 $ 8,299 $ 299 $ 109,069
Property Operating Expenses (1) 23,895 4,144 1,643 -- 29,682
----------- ----------- ------------ ----------- -----------
Property NOI (2) 58,727 13,705 6,656 299 79,387
Unallocated Expenses (3) -- -- -- 46,450 46,450
Unallocated Minority Interest (4) -- -- -- 421 421
Unallocated Other (5) -- -- -- 1,096 1,096
Consolidated Net Income -- -- -- -- 33,612
Additions to Real Estate Assets 190,942 845 597 5,470 197,854
Total Assets (6) 604,937 80,307 30,899 17,012 733,155
1997
- -----
Total Revenues 58,069 16,649 7,349 906 82,973
Property Operating Expenses (1) 16,175 4,053 1,759 -- 21,987
----------- ----------- ------------ ----------- -----------
Property NOI (2) 41,894 12,596 5,590 906 60,986
Unallocated Expenses (3) -- -- -- 27,923 27,923
Unallocated Minority Interest (4) -- -- -- 394 394
Unallocated Other (5) -- -- -- 177 177
Consolidated Net Income -- -- -- -- 32,846
Additions to Real Estate Assets 154,331 11,246 907 -- 166,484
Total Assets 423,800 80,274 31,909 9,701 545,684
1996
- -----
Total Revenues 47,891 16,854 7,644 560 72,949
Property Operating Expenses (1) 13,843 3,869 1,633 -- 19,345
----------- ----------- ------------ ----------- -----------
Property NOI (2) 34,048 12,985 6,011 560 53,604
Unallocated Expenses (3) -- -- -- 24,815 24,815
Unallocated Minority Interest (4) -- -- -- 389 389
Unallocated Other (5) -- -- -- 94 94
Consolidated Net Income -- -- -- -- 28,494
Additions to Real Estate 61,376 2,002 1,450 495 65,323
</TABLE>
(1) Property operating expenses consist of operating, maintenance, real
estate taxes, insurance, advertising and promotion expenses as listed
in the consolidated statement of operations.
(2) Total revenues minus property operating expenses.
(3) Unallocated expenses consist of general and administrative,
depreciation, amortization of deferred financing costs, amortization
of deferred leasing costs and interest as listed in the consolidated
statement of operations.
(4) Unallocated minority interest includes minority interest in income of
consolidated partnerships.
(5) Unallocated other includes gain on sale of real estate and loss on
extinguishment of debt as listed in the consolidated statement of
operations.
(6) Unallocated other total assets include cash, corporate offices and
deferred financing costs.
<PAGE> F-17
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial information for each of the quarters in 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH TOTAL
------------ ---------- ---------- ---------- ---------
YEAR ENDED 1998
Total Revenues............... $ 24,503 $ 23,283* $ 27,046* $ 34,237* $ 109,069
Income Before Extraordinary Item, Gain on
Sales of Real Estate and Minority Interest 8,093 7,112 6,922 10,810 32,937
Net Income ............ 7,991 7,018 7,051 11,552 33,612
Basic Earnings Per OP Unit .. 0.38 0.33 0.33 0.54 1.58
Diluted Earnings Per OP Unit 0.37 0.33 0.33 0.54 1.57
Distributions Declared Per OP Unit 0.450 0.450 0.450 0.465 1.815**
YEAR ENDED 1997
Total Revenues ............ $ 18,375 $ 18,617 $ 21,773 $ 24,208 $ 82,973
Income Before Extraordinary Item, Gain on
Sales of Real Estate and Minority Interest 7,555 8,137 8,230 9,141 33,063
Net Income................. 7,456 8,368 8,137 8,885 32,846
Basic Earnings Per OP Unit....... 0.36 0.39 0.38 0.43 1.56
Diluted Earnings Per OP Unit 0.36 0.39 0.38 0.41 1.54
Distributions Declared Per OP Unit 0.435 0.435 0.435 0.450 1.755**
</TABLE>
* Effective April 1, 1998, the Company prospectively adopted the
provisions of Issue No. 98-9 ("EITF 98-9") Accounting For Contingent
Rent in Interim Financial Periods, which was issued on May 21, 1998 by
the Financial Accounting Standards Board Emerging Issues Task Force and
which significantly changes the Company's recognition of percentage and
overage rents revenue in interim periods. See Note 2.
** Of which $.308 and $.194 represents a non-taxable return of capital for
1998 and 1997, respectively.
16. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited proforma summary financial
information for 1998 and 1997, is presented as if the
acquisitions of NorthTown Mall, Silver Lake Mall, Visalia
Mall, Salem Center and the additional Common Stock offering
and additional OP Units issued on January 22, 1997, had been
consummated as of January 1, 1997.
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C> <C> <C>
Revenues..... $ 117,384 $ 107,418
Income Before Extraordinary Item............... $ 32,915 $ 32,497
Net Income... $ 32,915 $ 32,335
Basic Earnings Per Share
Income Before Extraordinary Item............. $ 1.55 $ 1.53
Net Income. $ 1.55 $ 1.52
Diluted Earnings Per Share
Income Before Extraordinary Item............ $ 1.54 $ 1.52
Net Income $ 1.54 $ 1.51
</TABLE>
The proforma financial information summarized above is
presented for information purposes only and may not be
indicative of what actual results of operations would have
been had the acquisitions and offering been completed as of
the beginning of the periods presented, nor does it purport
to represent the results of operations for future periods.
<PAGE> F-18
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SCHEDULE II
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING EXPENSE BALANCE AT
OF YEAR DEDUCTIONS END OF YEAR
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Allowance for uncollectible accounts $ 570 $ 537 $ 366 $ 741
Year ended December 31, 1997
Allowance for uncollectible accounts $ 489 $ 346 $ 265 $ 570
Year ended December 31, 1996
Allowance for uncollectible accounts $ 504 $ 340 $ 355 $ 489
</TABLE>
<PAGE> F-19
<TABLE>
<CAPTION>
SCHEDULE III
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
CAPITALIZED GROSS AMOUNT AT WHICH
INITIAL COSTS SUBSEQUENT CARRIED AT CLOSE OF PERIOD DEPREC-
------------------- ---------------------------- IABLE
RELATED BUILDING & TO BLDG. & ACCUMULATED LIVES
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION(1) LAND Improvements TOTAL(2) DEPRECIATION CONSTRUCTION ACQUIRED YEARS
- ------------ ----------- ------ ------------ ------------- ------ ------------ ------- ------------- ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REGIONAL
MALLS
Animas
Valley Mall, $ -- $ 3,902 $ 24,059 723 3,902 24,782 28,684 $ 2,185 -- 1995 40
Farmington,
NM
Boise Towne
Square, Boise, 32,475 9,218 -- 48,994 9,218 48,994 58,212 13,748 1987-88 1985-86 5-40
ID
Cache Valley
Mall,
Logan, UT 5,781 909 -- 8,727 909 8,727 9,636 4,537 1975-76 1973-75 10-40
Cottonwood
Mall,
Salt Lake 19,857 7,514 20,776 30,959 7,514 51,735 59,249 19,696 1981-87 1980 4-40
City, UT
Eastridge
Mall,
Casper, WY -- 4,300 19,896 5,915 4,300 25,811 30,111 1,930 -- 1995 40
Grand Teton
Mall, Idaho -- 5,802 28,614 3,037 7,743 29,710 37,453 2,033 -- 1996 40
Falls, ID
North Plains
Mall, Clovis, 5,472 2,664 -- 12,479 2,664 12,479 15,143 3,690 1984-85 1979-84 10-40
NM
NorthTown
Mall, Spokane,
WA 84,277 6,902 120,458 19 6,902 120,477 127,379 1,253 1997-98 1997 40
Pine Ridge
Mall,
Pocatello, 10,019 1,883 -- 21,911 1,883 21,911 23,794 8,501 1979-81 1979 10-40
ID
Provo Towne
Centre, Provo, 30,550 13,829 41,820 7,674 9,241 54,082 63,323 202 1997-98 1997 40
UT
Red Cliffs
Mall,
St. George, 6,235 903 -- 13,546 903 13,546 14,449 3,339 1989-90 1989 3-40
UT
Salem Center,
Salem, OR -- 1,704 30,504 396 1,704 30,900 32,604 770 -- 1997 40
Silver Lake
Mall,
Coeur d'Alene, 12,510 4,055 21,379 394 4,055 21,773 25,828 856 -- 1997 40
ID
Spokane Valley
Mall, Spokane 47,505 6,645 34,341 24,085 6,745 58,326 65,071 2,387 1990-97 1990 40
WA
Three Rivers
Mall, Kelso,
WA 10,175 1,977 -- 20,538 1,977 20,538 22,515 5,554 1986-87 1984 10-40
Visalia Mall,
Visalia, CA -- 6,146 31,812 1,187 6,146 32,999 39,145 1,300 -- 1997 40
White Mountain
Mall, Rock 5,083 1,120 -- 15,742 1,120 15,742 16,862 6,532 1977-78 1977 40
Springs, WY
COMMUNITY
CENTERS
Alameda Plaza,
Pocatello, ID -- 500 -- 3,365 500 3,365 3,865 1,922 1973 1973 40
Anaheim Plaza,
Anaheim, CA -- -- -- 54 -- 54 54 32 1980-81 1979 40
Austin Bluffs
Plaza, -- 1,488 -- 1,923 1,488 1,923 3,411 628 1985 1979 3-40
Colorado
Springs, CO
Bailey Hills
Plaza,
Eugene, OR -- 157 -- 297 157 297 454 54 1988-89 1988 40
Baskin Robbins
17th St., -- 9 67 7 9 74 83 20 -- 1988 40
Idaho Falls, ID
Boise Plaza,
Boise, ID -- 322 -- 1,382 322 1,382 1,704 935 1970-71 1970 40
Boise Towne
Plaza,
Boise, ID -- 3,316 4,243 1,693 3,316 5,936 9,252 258 1996-97 1994 40
Cottonwood
Square,
Salt Lake -- 1,926 3,535 6 1,926 3,541 5,467 266 -- 1995 40
City, UT
Division
Crossing,
Portland, OR -- 2,429 -- 4,483 2,429 4,483 6,912 933 1990-91 1990 20-40
Fort Union
Plaza,
Salt Lake -- 21 -- 1,623 21 1,623 1,644 657 1979-84 -- 40
City, UT
Fremont Plaza,
Las Vegas, NV -- -- -- 2,254 -- 2,254 2,254 1,190 1976-80 -- 40
Fry's Shopping
Plaza,
Glendale, AZ -- 353 -- 4,672 1,254 3,771 5,025 1,647 1980-81 1980 40
Gateway
Crossing,
Bountiful, UT -- 3,644 -- 8,487 3,644 8,487 12,131 1,277 1990-92 1990 40
</TABLE>
<PAGE> F-20
[CAPTION]
<TABLE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
CAPITALIZED GROSS AMOUNT AT WHICH
INITIAL COSTS SUBSEQUENT CARRIED AT CLOSE OF PERIOD DEPREC-
------------------ ---------------------------- IABLE
RELATED BUILDING & TO BLDG. & ACCUMULATED LIVES
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION(1) LAND Improvements TOTAL(2) DEPRECIATION CONSTRUCTION ACQUIRED YEARS
- ------------- ------------ ----- ------------ ------------- ------ ------------ ------- ------------- ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNITY
CENTERS
(CONTINUED)
Halsey
Crossing,
Gresham, OR -- -- -- 2,383 -- 2,383 2,383 569 1989-91 -- 4-40
Nephi Bank,
Nephi, UT -- 17 183 -- 17 183 200 144 -- 1976 40
North Temple
Shops, Salt
Lake City, UT -- 60 -- 177 60 177 237 89 1970 1970 40
Orem Plaza
Center Street,
Orem, UT -- 371 330 1,091 344 1,448 1,792 653 1976-87 1973 10-40
Orem Plaza
State Street,
Orem, UT -- 126 -- 687 126 687 813 368 1975 1973 29-40
Plaza 800,
Sparks, NV -- 33 2,969 42 33 3,011 3,044 1,747 1974 -- 40
Plaza 9400,
Sandy, UT -- -- -- 4,514 -- 4,514 4,514 2,048 1976-84 -- 10-40
Red Cliffs
Plaza, St.
George, UT -- -- 2,403 -- -- 2,403 2,403 255 1994-95 1994-95 40
River Pointe
Plaza, West
Jordan, UT -- 1,130 -- 2,668 1,130 2,668 3,798 817 1987-88 1986-87 5-40
Riverside
Plaza,
Provo, UT -- 427 1,886 4,006 427 5,892 6,319 1,558 1978-81 1977 40
Twin Falls
Crossing,
Twin
Falls, ID -- 125 -- 776 125 776 901 426 1976 1975 40
University
Crossing,
Orem, UT -- 230 -- 5,017 230 5,017 5,247 1,804 1971-92 1971 40
Woodlands
Village,
Flagstaff, AZ -- 2,068 5,329 236 2,068 5,565 7,633 604 -- 1994 40
Yellowstone
Square, Idaho
Falls, ID -- 355 -- 4,552 355 4,552 4,907 2,686 1972-77 1972 40
COMMERCIAL
PROPERTIES
First Security
Place, Boise, -- 300 -- 3,249 300 3,249 3,549 1,553 1978-80 1978 10-40
ID
Price Business
Center -
Commerce Park, -- 415 2,109 8,524 1,147 9,901 11,048 1,596 1980 1973-95 40
West Valley
City, UT
Price Business
Center-
Pioneer
Square, -- 658 -- 9,956 616 9,998 10,614 3,212 1974-92 1973 3-40
Salt Lake
City, UT
Price Business
Center-South
Main, -- 317 -- 1,949 295 1,971 2,266 1,015 1967-82 1966-81 3-40
Salt Lake City,
Utah
Price Business
Center-
Timesquare, -- 581 -- 9,439 581 9,439 10,020 3,854 1974-80 1972-80 5-40
Salt Lake
City, UT
Sears-Eastbay,
Provo, UT 1,766 275 -- 2,079 275 2,079 2,354 509 1989-90 1989 40
OTHER REAL
ESTATE
The Mall
at Sierra
Vista, -- 1,636 885 -- 1,636 885 2,521 --
Sierra
Vista, AZ
Miscellaneous
Real Estate -- 1,164 17 6,298 1,164 6,315 7,479 297 -- 1980-98 40
-------- -------- --------- ----------- -------- ---------- --------- ---------- ----------
TOTAL $271,705 $103,926 $ 397,615 $ 314,215 $102,921 $ 712,835 $ 815,756 $ 114,136
======== ======== ========= =========== ======== ========== ========= ==========
</TABLE>
----------------------
(1) Included are development costs subsequent to acquisition or opening of
property.
(2) The aggregate cost for Federal Income Tax purposes was approximately
$829,467 at December 31, 1998.
<PAGE> F-21
<TABLE>
<CAPTION>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
A summary of activity for real estate investments and accumulated depreciation is as follows:
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
<S> <C> <C> <C>
1998 1997 1996
------------- --------------- -------------
Real Estate Investments
Balance at Beginning of Year $ 619,371 $ 453,241 $ 388,205
Acquisitions 128,000 96,615 37,055
Improvements 69,854 69,921 28,268
Disposition of Property (1,469) (406) (287)
------------- ------------- -------------
Balance at End of Year $ 815,756 $ 619,371 $ 453,241
============= ============= =============
Accumulated Depreciation
Balance at Beginning of Year $ 98,404 $ 87,318 $ 77,462
Depreciation 17,072 11,492 10,015
Depreciation of Disposed Property (1,340) (406) (159)
------------- ------------- -------------
Balance at End of Year $ 114,136 $ 98,404 $ 87,318
============= ============= =============
</TABLE>
<PAGE> F-22
EXHIBIT 10.16
SECOND AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
SECOND AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP (the
"Partnership"), dated as of January 21, 1994, as amended by the First Amendment
thereto, dated as of January 21, 1994 (the "Partnership Agreement"), by and
among JP Realty, Inc., as general partner (the "General Partner"), and the
Persons whose names are set forth on EXHIBIT A attached thereto and any other
Persons who may have become partners in the Partnership as provided therein, as
limited partners (the "Limited Partners"). Capitalized terms used but not
otherwise defined in this Second Amendment shall have the same meanings
ascribed to them in the Partnership Agreement.
W I T N E S E T H:
WHEREAS, pursuant to Section 14.1.A of the Partnership Agreement, a
majority of the Limited Partners of the Partnership have approved an amendment
(the "Amendment") to the Partnership Agreement relating to the subject matter
hereof; and
WHEREAS, pursuant to Section 14.1.B of the Partnership Agreement, the
General Partner has approved an amendment to, and restatement of, the Schedule
of Partners set forth on EXHIBIT A to the Partnership Agreement (the "Schedule
of Partners") that reflects the current composition of the partners of the
Partnership; and
WHEREAS, in accordance with the terms of the Partnership Agreement,
the General Partner has been authorized to enter into this Second Amendment for
the purpose of amending the Partnership Agreement to include the Amendment and
the Schedule of Partners attached hereto.
<PAGE>
NOW, THEREFORE, pursuant to the authority granted by the Limited
Partners and pursuant to Section 11.4.B of the Partnership Agreement the
General Partner hereby amends the Partnership Agreement as follows:
1. THE AMENDMENT. The Partnership Agreement is hereby amended as
follows:
(A) The following terms and phrases and their respective meanings
are hereby added to Article I of the Partnership Agreement:
"AGGREGATE RESTORATION AMOUNT" means with respect to the Obligated
Partners, as a group, the aggregate balances of the Restoration Amounts,
if any, of the Obligated Partners, as determined on the date in question.
"DEBT SERVICE" means, for any period, the sum of interest expense and
regularly scheduled principal amortization for the most recently available
trailing twelve-month period.
"EBITDA" means, for any period, the earnings of the Partnership for
such period before interest expense, taxes, depreciation and amortization,
determined in each case on a consolidated basis in accordance with GAAP.
"GAAP" means the generally accepted accounting principles in effect
in the United States.
"GUARANTEED AMOUNT" means, with respect to each Obligated Partner,
the amount, if any, of the Price Capital Corp. $95 million Collateralized
Notes due 2001 directly guaranteed by such Obligated Partner (or its
partners in the case of Fairfax Holding, LLC) pursuant to a Limited
Guarantee Agreement, dated January 21, 1994, by and among the Obligated
Partner, Continental Bank, N.A. and, if applicable, certain partners of
the Obligated Partner.
"MARKET VALUE OF TOTAL EQUITY" means the total value of all
outstanding Partnership Units, with each Partnership Unit valued at the
current market value of a REIT Share.
"OBLIGATED PARTNER(S)" means that or those Limited Partner(s) listed
as Obligated Partner(s) on EXHIBIT B attached hereto and made a part
hereof, as such exhibit may be amended from time to time by the General
Partner. Any successor, assignee or transferee of the entire Partnership
Interest of an Obligated Partner shall be considered an Obligated Partner;
provided, however, that if an Obligated Partner, which is not an
individual (an "Entity Obligated Partner"), makes a liquidating
distribution to an interest holder who is being allocated a portion of
such Entity Obligated Partner's Restoration Amount, the General Partner
shall amend EXHIBIT B to add such distributee as an additional Obligated
Partner with a Restoration Amount equal to such distributee's allocable
share of such Entity Obligated Partner's Restoration Amount and the
Restoration Amount of the Entity Obligated Partner shall be reduced
accordingly.
"RESTORATION AMOUNT" means with respect to any Obligated Partner, the
amount set
<PAGE>
forth opposite the name of such Obligated Partner on EXHIBIT B
attached hereto and made a part hereof, as such exhibit may be adjusted
from time to time by the General Partner. If an Entity Obligated Partner
makes a liquidating distribution to an interest holder who is being
allocated a portion of such Entity Obligated Partner's Restoration Amount,
the General Partner shall amend EXHIBIT B to add such distributee as an
additional Obligated Partner, and the Restoration Amount of such
additional Obligated Partner shall equal such distributee's allocable
share of the Entity Obligated Partner's Restoration Amount, and the
Restoration Amount of the Entity Obligated Partner shall be reduced
accordingly.
"RECOURSE LIABILITY" means the amount of indebtedness owed by the
Partnership other than Nonrecourse Liabilities and Partner Nonrecourse
Debt.
"TOTAL LIABILITIES" means, as of the date of determination, all
liabilities of the Partnership, determined on a consolidated basis in
conformity with GAAP.
(B) The definition of "Adjusted Capital Account" set forth in
Article I of the Partnership Agreement is hereby deleted in its entirety and
replaced by the following:
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for
each Partner for each Partnership Year (i) increased by any amounts which
such Partner is obligated to restore pursuant to any provision of this
Agreement or otherwise or is deemed to be obligated to restore pursuant to
Regulation 1.704-1(b)(ii)(c) or the penultimate sentences of Regulations
(section) 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the items
described in Regulations (section) 1.704-1(b)(2)(ii)(d)(4), (5), and (6).
The foregoing definition of Adjusted Capital Account is intended to comply
with the provisions of Regulations(section) 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
(C) Section 4.1 of the Partnership Agreement is hereby deleted in
its entirety and replaced by the following:
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
At the time of the execution of this Agreement, the Partners shall
make Capital Contributions set forth in EXHIBIT A to this Agreement. Each
Partner shall own Partnership Units in the amount set forth for such
Partner in EXHIBIT A and shall have a Percentage Interest in the
Partnership as set forth for such Partner in EXHIBIT A, which Percentage
Interest shall be adjusted in EXHIBIT A from time to time by the General
Partner to the extent necessary in accordance with the terms of this
Agreement to reflect accurately exchanges of Partnership Units for REIT
Shares in accordance with the Exchange Agreement, Capital Contributions,
the issuance of additional Partnership Units (pursuant to any merger or
otherwise), a change in the number of issued and outstanding REIT Shares
pursuant to Section 7.4.D of this Agreement, or an adjustment of the
nature contemplated by Section 7.5.B hereof. Except as provided in
Sections 4.2, 10.5 and 13.3, the Partners shall have no obligation to make
any additional Capital Contributions or loans to the Partnership.
(D) Section 6.1 of the Partnership Agreement is hereby deleted in
its entirety and replaced by the following:
<PAGE>
Section 6.1 ALLOCATIONS OF PROFITS AND LOSSES
A. ALLOCATION OF PROFITS. After giving effect to the mandatory
allocations set forth in Section 6.2, Profits for any Partnership Year or
other applicable period shall be allocated to the Partners in the
following order of priority:
(i) First, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner pursuant to Section
6.1.B(iv) exceed the cumulative Profits allocated to the General Partner
pursuant to this Section 6.1.A(i);
(ii) Second, to each Partner to the extent of and in proportion
to the amount by which the cumulative Losses allocated to such Partner
pursuant to Section 6.1.B(iii) exceed the cumulative Profits allocated to
such Partner pursuant to this Section 6.1.A(ii);
(iii) Third, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner pursuant to Section
6.1.B(ii), exceed the cumulative Profits allocated to the General Partner
pursuant to this Section 6.1.A(iii);
(iv) Fourth, to each Partner to the extent of and in proportion
to the amount by which the cumulative Losses allocated to such Partner
pursuant to Section 6.1.B(i), exceed the cumulative Profits allocated to
such Partner pursuant to this Section 6.1.A(iv); and
(v) Thereafter, to the Partners in accordance with their
respective Percentage Interests.
B. ALLOCATION OF LOSSES. After giving effect to the mandatory
allocations set forth in Section 6.2, Losses for any Partnership Year or
other applicable period shall be allocated to the Partners in the
following order of priority:
(i) First, to the Partners, in proportion to their respective
Percentage Interests; provided that Losses allocated pursuant to this
Section 6.1.B(i) shall not exceed the maximum amount of Losses that can be
allocated without causing any Partner to have a negative Adjusted Capital
Account balance (excluding for this purpose any increase to such Adjusted
Capital Account for a Partner's actual obligation to fund a deficit
Capital Account balance, including the obligation of an Obligated Partner
to fund a deficit Capital Account balance pursuant to Section 13.3
hereof);
(ii) Second, to the General Partner, until the General Partner's
Adjusted Capital Account (excluding for this purpose any increase to such
Adjusted Capital Account Deficit for the obligation of the General Partner
to actually fund a deficit Capital Account balance) equals the excess of
(i) the amount of Recourse Liabilities over (ii) the Aggregate Restoration
Amount;
(iii) Third, to the Obligated Partners, in proportion to their
respective Restoration Amounts, until such time as the Obligated Partners
have been allocated an aggregate amount of Losses pursuant to this Section
6.1.B(iii) equal to the Aggregate Restoration Amount; and
(iv) Thereafter, to the General Partner.
<PAGE>
This Section 6.1 shall control notwithstanding any reallocation or
adjustment of taxable income, loss or other items by the IRS or any other
taxing authority; provided, however, that neither the Partnership nor the
General Partner (nor any of their respective affiliates) is required to
indemnify any Obligated Partner (or its affiliates) for the loss of any
tax benefit resulting from any reallocation or adjustment of taxable
income, loss or other items by the IRS or other taxing authority. The
provisions of this Section 6.1 shall not be amended in a manner which
adversely affects an Obligated Partner (without the consent of such
Obligated Partner), provided that the General Partner may amend EXHIBIT B
to add additional Obligated Partners.
(E) Section 13.3 of the Partnership Agreement is hereby deleted in
its entirety and replaced by the following:
Section 13.3 NEGATIVE CAPITAL ACCOUNTS
A. Except as provided in the next sentence and Section 13.3.B, no
Partner shall be liable to the Partnership or to any other Partner for any
deficit or negative balance which may exist in such Partner's Capital
Account. Upon liquidation of an Obligated Partner's interest in the
Partnership pursuant to a liquidation of the Partnership or by means of a
distribution to the Obligated Partner by the Partnership, if any such
Obligated Partner has a deficit balance in its Capital Account (after
giving effect to all contributions, distributions, allocations and
adjustments to Capital Accounts for all periods), each such Obligated
Partner shall contribute to the capital of the Partnership an amount equal
to its respective deficit balance; such obligation to be satisfied by the
end of the Partnership Year of liquidation (or, if later, within ninety
(90) days following the liquidation and dissolution of the Partnership.)
Such contributions shall be used to make payments to creditors of the
Partnership and such Obligated Partners (i) shall not be subrogated to the
rights of any such creditor against the General Partner, the Partnership,
another Partner or any person related thereto, and (ii) hereby waive any
right to reimbursement, contribution or similar right to which such
Obligated Partners might otherwise be entitled as a result of the
performance of its obligations under this Agreement.
B. Notwithstanding any other provision of this Agreement, an
Obligated Partner shall cease to be an Obligated Partner upon an exchange
of all of such Obligated Partner's remaining Partnership Units for REIT
Shares (pursuant to the Exchange Agreement) 6 months after the date of
such exchange unless at the time of, or during the 6 month period
following, such exchange, there has been:
(i) An entry of a decree or order for relief in respect of the
Partnership by a court having jurisdiction over a substantial part of the
Partnership's assets, or the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
the Partnership or of any substantial part of its property, or ordering
the winding up or liquidation of the Partnership's affairs, in an
involuntary case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law; or
(ii) The commencement against the Partnership of an involuntary
case under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal
<PAGE>
or state bankruptcy, insolvency or other
similar law; or
(iii) The commencement by the Partnership of a voluntary case
under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, or the consent by it to the entry of an order for relief in an
involuntary case under any such law or the consent by it to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the
Partnership or of any substantial part of its property, or the making by
it of a general assignment for the benefit of creditors, or the failure of
Partnership generally to pay its debts as such debts become due or the
taking of any action in furtherance of any of the foregoing; or
(iv) A failure by the Partnership to maintain a ratio of Total
Liabilities to Market Value of Total Equity of less than 400%; or
(v) A failure by the Partnership to maintain a ratio of EBITDA
to Debt Service of greater than 110%.
Following the passage of the six-month period described in this
Section 13.3.B, an Obligated Partner shall cease to be an Obligated
Partner at the first time, if any, that all of the conditions set forth in
(i) through (v) above are no longer in existence.
(F) Section 14.1 of the Partnership Agreement is hereby amended to
include the following Subsection D:
D. Notwithstanding Sections 14.1.A, 14.1.B and 14.1.C hereof,
the General Partner shall have the power, without the consent of the
Limited Partners (whether or not Obligated Partners), to amend EXHIBIT B
hereto for the purpose of adding, substituting or removing an Obligated
Partner or adjusting the Restoration Amount with respect to any Obligated
Partner; provided, however, EXHIBIT B shall not be amended without the
prior written consent of the Obligated Partner(s) being adversely affected
thereby. Notwithstanding the foregoing sentence, in connection with any
liquidating distribution made by an Entity Obligated Partner to an
interest holder who is being allocated a portion of such Entity Obligated
Partner's Restoration Amount, the General Partner shall also have the
power, without the consent of the Limited Partners (whether or not
Obligated Partners), to amend EXHIBIT B hereto for the purpose of (i)
adding such distributee as an additional Obligated Partner with a
Restoration Amount equal to such distributee's allocable share of such
Entity Obligated Partner's Restoration Amount and (ii) making a
corresponding reduction in the Restoration Amount of such Entity Obligated
Partner.
(G) EXHIBIT B attached to this Second Amendment is hereby added to
the Partnership Agreement as EXHIBIT B.
2. SCHEDULE OF PARTNERS. The Schedule of Partners which is set forth on
EXHIBIT A to the Partnership Agreement is hereby deleted in its entirety and
replaced by the Schedule of Partners on EXHIBIT A attached to this Second
Amendment.
<PAGE>
3. RATIFICATION. Except as expressly modified by this Second Amendment,
all of the provisions of the Partnership Agreement are hereby affirmed and
ratified and remain in full force and effect.
IN WITNESS WHEREOF, this Second Amendment has been duly executed by
the General Partner on behalf of the Partnership as of the day and year set
forth below.
DATED: December 16, 1998 GENERAL PARTNER:
JP REALTY, INC.
By: /S/ G. REX FRAZIER
-----------------------
Name: G. Rex Frazier
Title: President
<PAGE>
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Name of Partner Partnership Percentage
Units Interest
------------------ ----------------
<S> <C> <C>
GENERAL PARTNER
JP Realty, Inc. 17,640,547 82.74778%
35 Century Park-Way
Salt Lake City, Utah 84115
LIMITED PARTNERS
Boise Mall Investment Company, Ltd. 824,411 3.86712%
Brown, Mike 125 .00059%
Butterworth, Jodi 150 .00070%
Bybee, Terry 320 .00150%
Cache Valley Mall Partnership, Ltd. 328,813 1.54239%
Chandler, Harry 100 .00047%
Clauson, Pat 100 .00047%
Cloward, Burke 35,460 .16633%
Cordano, Alan 765 .00359%
Cordano, James 1,531 .00718%
Curtis, Greg 24 .00011%
Curtis, Vardell 125 .00059%
Dalton, Jim 100 .00047%
East Ridge Partnership 100 .00047%
Enslow, Mike 320 .00150%
Fairfax Holding, LLC 786,226 3.68801%
Frank, Alan 5,486 .02573%
Frazier, G. Rex 3,680 .01726%
Frei, Michael 6,817 .03198%
Gillette, Jerry 100 .00047%
Hall Investment Company 10,204 .04786%
Hansen, Kenneth 5,102 .02393%
JCP Realty, Inc. 350,460 1.64393%
Johnson, Kent 200 .00094%
KFC Advertising 5,487 .02574%
KP Associates 126,847 .59501%
Kelley, Chad 125 .00059%
Kelley, Paul 25 .00012%
King, Warren P. 6,244 .02929%
Mendenhall, Paul K. 214 .00100%
Mulkey, Tom 100 .00047%
North Plains Development Company, Ltd. 19,033 .08928%
North Plains Land Company, Ltd. 1,758 .00825%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name of Partner Partnership Percentage
Units Interest
------------------ ----------------
<S> <C> <C>
Olson, Carl 1,894 .00888%
Orton, Byron 125 .00059%
Peterson, Martin G. 692 .00325%
Pine Ridge Development Company, Ltd. 77,641 .36420%
Pine Ridge Land Company, Ltd. 5,176 .02428%
Price, John 100 .00047%
Price, Steven 350 .00164%
Price 800 Company, Ltd. 156,615 .73465%
Price Eugene Bailey Company, Ltd. 17,497 .08207%
Price Fremont Company, Ltd. 166,315 .78015%
Price Glendale Company, Ltd. 3,935 .01846%
Price Orem Investment Company, Ltd. 66,747 .31309%
Price Plaza 800 Company, Ltd. 12,199 .05722%
Price Provo Company, Ltd. 102,029 .47859%
Price Riverside Company, Ltd. 10,983 .05152%
Price Rock Springs Company, Ltd. 11,100 .05207%
Price Taywin Company, Ltd. 106,381 .49901%
Priet, Nettie 100 .00047%
Red Cliff Mall Investment Company 167,379 .78514%
RMC Mall Corp. 41,518 .19475%
Roebbelen Engineering 72,000 .33774%
Souvall, Sam 23,371 .10963%
Taycor Ltd. 35,462 .16634%
Tech Park II Company, Ltd. 4,929 .02312%
Vise, Phil 160 .00075%
Watcott, Keith 35,460 .16633%
Watkins, Gary 5,102 .02393%
Wilcher, Abe 5,306 .02489%
Wilcher, Lena 10,000 .04691%
YSP 16,787 .07874%
---------- ----------
21,318,452 100.00000%
========== ==========
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-3 (No. 333-34835
and No. 333-34835-01) of Price Development Company, Limited Partnership of
our report dated February 3, 1999, on our audits of the consolidated
financial statements and financial statements schedules of Price
Development Company, Limited Partnership as of December 31, 1998 and 1997,
and for the years ended December 31, 1998, 1997 and 1996, which report is
included in this annual report on Form 10-K.
/S/ PRICEWATERHOUSECOOPERS LLP
- -------------------------------
PricewaterhouseCoopers LLP
Salt Lake City, Utah
March 17, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PRICE
DEVELOPMENT COMPANY, LIMITED PARTNERSHIP FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<PERIOD-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<CASH> $5,123 $5,603 0
<SECURITIES> 0 0 0
<RECEIVABLES> 10,454 6,329 0
<ALLOWANCES> (741) (570) 0
<INVENTORY> 0<F1> 0<F1> 0
<CURRENT-ASSETS> 0 0 0
<PP&E> 0<F2> 0<F2> 0
<DEPRECIATION> 0<F2> 0<F2> 0
<TOTAL-ASSETS> 733,155 545,684 0
<CURRENT-LIABILITIES> 0<F1> 0<F1> 0
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 2 2 0
<OTHER-SE> 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 733,155 545,684 0
<SALES> 0 0 0
<TOTAL-REVENUES> 109,069 82,973 72,949
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 55,631<F3> 40,844<F4> 36,384<F5>
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 20,501 9,066 7,776
<INCOME-PRETAX> 0 0 0
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 (162) 0
<CHANGES> 0 0 0
<NET-INCOME> 33,612 32,846 28,494
<EPS-PRIMARY> $1.58<F6> $1.56<F6> $1.45<F6>
<EPS-DILUTED> $1.57<F6> $1.54<F6> $1.44<F6>
<FN>
<F1>The financial statements reflect an unclassified balance sheet due to the
nature of the Company's industry - Real Estate.
<F2>The Company utilizes a condensed balance sheet format for 10-K reporting.
Amounts are included in Other Assets.
<F3>Amount is comprised of $76,132 of expenses less interest expense of $20,501
reflected elsewhere in this Financial Data Schedule.
<F4>Amount is comprised of $49,910 of expenses less interest expense of $9,066
reflected elsewhere in this Financial Data Schedule.
<F5>Amount is comprised of $44,160 of expenses less interest expense of $7,776
reflected elsewhere in this Financial Data Schedule.
<F6>Amount reflects new standard of FAS 128 for Basic Earnings Per Share and
Diluted Earnings Per Share.
</FN>
</TABLE>
