UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 333-34835-01
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
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MARYLAND 87-0516235
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(State of organization) (I.R.S. Employer Identification No.)
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115 (801) 486-3911
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(Address of principal executive offices, including zip code) (Registrant's telephone number, including area code)
</TABLE>
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]
<PAGE>
INDEX
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PART I: FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements 3
Condensed Consolidated Balance Sheet as of March 31, 2000
and December 31, 1999 4
Condensed Consolidated Statement of Operations for the Three Months
Ended March 31, 2000 and 1999 5
Condensed Consolidated Statement of Cash Flows
for the Three Months Ended March 31, 2000 and 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II: OTHER INFORMATION
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Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
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<PAGE> 2
Certain matters discussed under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Quantitative and
Qualitative Disclosures About Market Risk" and elsewhere in this Quarterly
Report on Form 10-Q 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
ITEM 1. FINANCIAL STATEMENTS
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The information furnished in the accompanying financial statements listed
in the index on page 2 of this Quarterly Report on Form 10-Q reflects only
normal recurring adjustments which are, in the opinion of management, necessary
for a fair presentation of the aforementioned financial statements for the
interim periods.
The aforementioned financial statements should be read in conjunction with
the notes to the financial statements and Management's Discussion and Analysis
of Financial Condition and Results of Operations and Price Development Company,
Limited Partnership's Annual Report on Form 10-K for the year ended December
31, 1999, including the financial statements and notes thereto.
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PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
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<CAPTION>
(UNAUDITED)
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MARCH 31, DECEMBER 31,
2000 1999
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<S> <C> <C>
ASSETS
Real Estate Assets, Including Assets Under Development
of $21,551 and $18,389 $ 884,548 $ 876,388
Less: Accumulated Depreciation (140,798) (135,027)
----------------- ----------------
Net Real Estate Assets 743,750 741,361
Cash 5,332 7,767
Restricted Cash 4,290 3,149
Other Assets 21,993 23,949
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$ 775,365 $ 776,226
================= ================
LIABILITIES AND PARTNERS' CAPITAL
Borrowings $ 444,911 $ 438,241
Accounts Payable and Accrued Expenses 14,388 16,716
Distributions Payable 9,511 --
Other Liabilities 878 847
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469,688 455,804
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Minority Interest 2,186 2,429
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Commitments and Contingencies
Partners' Capital
General Partner 169,179 182,951
Preferred Limited Partners 104,571 104,571
Limited Partners 29,741 30,471
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303,491 317,993
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$ 775,365 $ 776,226
================= ================
</TABLE>
See accompanying notes to financial statements.
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PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER PARTNERSHIP UNIT AMOUNTS)
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FOR THE THREE MONTHS ENDED MARCH 31,
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2000 1999
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Revenues
Minimum Rents $ 24,817 $ 24,954
Percentage and Overage Rents 437 424
Recoveries from Tenants 7,449 6,768
Interest 152 123
Other 44 142
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32,899 32,411
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Expenses
Operating and Maintenance 5,627 5,446
Real Estate Taxes and Insurance 3,676 3,308
General and Administrative 1,619 1,794
Depreciation 6,358 5,247
Amortization of Deferred Financing Costs 408 423
Amortization of Deferred Leasing Costs 172 168
Interest 7,449 7,359
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25,309 23,745
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7,590 8,666
Minority Interest in Income of Consolidated Partnerships 213 (1,023)
Gain on Sale of Real Estate 243 --
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Net Income $ 8,046 $ 7,643
Preferred Unit Distribution (2,405) --
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Net Income Available to Common Unitholders $ 5,641 $ 7,643
================ ===============
Basic Earnings Per Partnership Unit $ 0.28 $ 0.36
================ ===============
Diluted Earnings Per Partnership Unit $ 0.28 $ 0.36
================ ===============
Basic Weighted Average Number of Partnership Units Outstanding 20,173 21,318
Add: Dilutive Effect of Stock Options 1 37
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Diluted Weighted Average Number of Partnership Units Outstanding 20,174 21,355
================ ===============
</TABLE>
See accompanying notes to financial statements.
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PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
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For the Three Months Ended March 31,
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2000 1999
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 18,394 $ 13,218
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CASH FLOWS FROM INVESTING ACTIVITIES
Real Estate Assets, Developed or Acquired,
Net of Accounts Payable (13,456) (9,719)
Proceeds from the Sale of Real Estate 292 --
Increase in Restricted Cash (1,141) (679)
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Net Cash Used in Investing Activities (14,305) (10,398)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings 7,000 10,427
Repayment of Borrowings (330) (11,153)
Distributions to Preferred Unitholders (2,405) --
Distributions to Minority Interests (30) (16)
Deferred Financing Costs (127) (130)
Repurchase of Common Units (10,632) --
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Net Cash Used in Financing Activities (6,524) (872)
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Net (Decrease) Increase in Cash (2,435) 1,948
Cash, Beginning of Period 7,767 5,123
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Cash, End of Period $ 5,332 $ 7,071
=============== ===============
</TABLE>
See accompanying notes to financial statements.
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PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER PARTNERSHIP UNIT DATA)
1. BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES
Price Development Company, Limited Partnership (the "Operating
Partnership") is primarily engaged in the business of owning, leasing,
managing, operating, developing and redeveloping regional malls, community
centers and other commercial properties. The tenant base includes primarily
national, regional and retail chains and local retail companies. Consequently,
the credit risk is concentrated in the retail industry. JP Realty, Inc., a
Maryland corporation (the "Company"), is the sole general partner of the
Operating Partnership. The Company conducts all of its business operations
through, and holds a controlling 82% general partner interest in, the Operating
Partnership. As calculated, the Company's percentage of general partner
interest in the Operating Partnership was based on the number of outstanding
common units of limited partner interest (excluding outstanding preferred units
of limited partner interest) on March 31, 2000. Since there are no material
differences between the Company and the Operating Partnership they will be
collectively referred to as the "Company" unless the context requires
otherwise.
The interim financial data for the three-months ended March 31, 2000 and
1999 is unaudited; however, in the opinion of the Company, the interim
financial data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
periods. Certain amounts in the 1999 financial statements have been
reclassified to conform to the 2000 presentation.
On January 1, 2000, the Company stopped accruing revenues for Percentage
and Overage Rents based upon recent accounting guidance issued by the
Securities and Exchange Commission in Staff Accounting Bulletin No. 101
"Revenue Recognition". Prior to the issuance of the Staff Accounting Bulletin
No. 101 "Revenue Recognition," the Company recognized percentage and overage
rents revenue monthly on an accrual basis based on estimated annual amounts.
Under the new guidance percentage and overage rents revenue is recognized in
the interim periods in which the specified target that triggers the contingent
rental income is achieved.
As a result of adopting the Staff Accounting Bulletin No. 101 "Revenue
Recognition," percentage and overage rents revenue and total revenues decreased
$578 during the three months ended March 31, 1999, which will be recognized in
the fourth quarter. In addition, if the change in revenue recognition
described above had not been made, the net income for the three months ended
March 31, 1999 would have been $6,837 or $0.39 per basic and diluted earnings
per share.
2. BORROWINGS
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MARCH 31,
2000
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Notes, unsecured; interest at 7.29%, maturing 2005 to 2008 $ 100,000
Credit facility, unsecured; weighted average interest at 6.95% during 98,000
2000, due in 2000
Mortgage payable, secured by real estate; interest at 6.68%, due in 2008 83,207
Notes, secured by real estate; interest at 6.37%, due in 2001 61,223
Construction loan, secured by real estate; interest at 7.50% as of March
31, 2000, due in 2001 43,792
Construction loan, secured by real estate; interest at 7.63% as of March
31, 2000, due in 2001 41,600
Mortgage payable, secured by real estate; interest at 8.5%, due in 2000 12,074
Other notes payable, secured by real estate; interest ranging from 7.0% to
9.99%, maturing 2000 to 2095 5,015
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$ 444,911
==============
</TABLE>
On October 16, 1997, the Operating Partnership obtained a $150,000 three-
year unsecured credit facility (the "Credit Facility") from a syndicate of
banks. On December 18, 1997, the amount was increased to $200,000. The Credit
Facility has
<PAGE> 7
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER PARTNERSHIP UNIT DATA)
2. BORROWINGS (CONTINUED)
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 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 syndicate. The Credit Facility is used for
general corporate purposes including stock repurchase, development, working
capital, repayment of indebtedness and/or amortization payments. The Credit
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 March 31, 2000, the Operating Partnership was in
compliance with all these covenants. The Credit Facility is due October 2000,
at which time the Operating Partnership intends to renew or refinance the
Credit Facility.
The $100,000 notes have an interest rate of 7.29% payable semi-annually
on March 11th and September 11th of each year. The Operating Partnership had
entered into an interest rate protection agreement in anticipation of issuing
these notes and received $270 as a result of terminating this agreement making
the effective rate of interest of these notes 7.24%.
3. PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma summary financial information for the
three months ended March 31, 2000 and 1999, is presented as if the 1999
issuances of Series A and Series B preferred units by the Operating Partnership
(Note 4) had been consummated as of January 1, 1999.
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FOR THE THREE MONTHS ENDED MARCH 31,
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2000 1999
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Total Revenues $ 32,899 $ 32,411
Net Income $ 5,641 $ 6,780
Basic Earnings Per Partnership Unit $ 0.28 $ 0.32
Diluted Earnings Per Partnership Unit $ 0.28 $ 0.32
</TABLE>
The pro forma 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 1999 issuances of Series A and Series B
preferred units had been completed as of the beginning of the periods
presented, nor does it purport to represent the results of operations for
future periods.
4. PARTNERS' CAPITAL
The following table summarizes changes in partners' capital since December
31, 1999:
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PREFERRED COMMON
GENERAL LIMITED LIMITED
PARTNER PARTNERS PARTNERS TOTAL
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Partners' Capital at December 31, 1999 182,951 $ 104,571 $ 30,471 $ 317,993
Conversion of Limited Partners' Interests 1 -- (1) --
Distributions Accrued (7,766) -- (1,745) (9,511)
Net Income 4,625 2,405 1,016 8,046
Preferred Unit Distribution -- (2,405) -- (2,405)
Repurchase of Common Units (10,632) -- -- (10,632)
----------- ----------- ----------- ----------
Partners' Capital at March 31, 2000 $ 169,179 $ 104,571 $ 29,741 $ 303,491
=========== =========== =========== ==========
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PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER PARTNERSHIP UNIT DATA)
4. PARTNERS' CAPITAL (CONTINUED)
On April 23, 1999, the Operating Partnership issued 510,000 Series A
8.75% cumulative redeemable preferred units ("Series A Preferred Units") in a
private placement. Each Series A Preferred Unit represents a unit of limited
partner interest with a liquidation value of twenty-five dollars per unit. The
Operating Partnership used the net proceeds of approximately $12,345 for the
partial repayment of borrowings outstanding under the Credit Facility. On July
28, 1999, the Operating Partnership also issued 3,800,000 Series B 8.95%
cumulative redeemable preferred units ("Series B Preferred Units") in a private
placement. Each Series B Preferred Unit represents a unit of limited partner
interest with a liquidation value of twenty-five dollars per unit. The Company
used the proceeds of approximately $92,226 to repay $90,000 borrowings
outstanding under the Credit Facility and increase operating cash. Quarterly
dividends to the holders of the Series A and Series B Preferred Units are due
on the last day of each March, June, September and December. For the period
ending March 31, 2000, distributions for the Series A and Series B Preferred
Units were approximately $279 and $2,126, respectively.
In October 1999, the Board of Trustees authorized the Company to
repurchase up to $25,000 of the Company's Common Stock through open market
purchases and private transactions. Through December 31, 1999, the Company had
repurchased approximately 856,600 shares of Common Stock for a total cost of
approximately $14,366. During the quarter ended March 31, 2000, approximately
606,500 additional shares of stock were purchased for $10,632. All shares
which have been repurchased have been retired. The Operating Partnership
repurchased an equivalent number of Operating Partnership Units from the
Company.
5. SEGMENT INFORMATION
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The following information presents 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" in the Operating Partnership's
Annual Report on Form 10-K for the year ended December 31, 1999. Segment data
includes total revenues and property net operating income (revenues less
operating and maintenance expense, real estate taxes and insurance expense and
advertising and promotion expense ("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 18 regional malls in eight states
containing approximately 10,291,000 square feet of total gross leasable area
("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 approximately 3,362,000 square feet of total GLA and one
freestanding retail property containing approximately 2,000 square feet of GLA.
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.
<PAGE> 9
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER PARTNERSHIP UNIT DATA)
5. SEGMENT INFORMATION (CONTINUED)
The table below presents information about the Operating Partnership's
reportable segments for the quarters ending March 31:
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REGIONAL COMMUNITY COMMERCIAL
MALLS CENTERS PROPERTIES OTHER TOTAL
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
2000
- ----
Total Revenues $ 26,258 $ 4,554 $ 1,898 $ 189 $ 32,899
Property Operating Expenses (1) (7,749) (1,125) (425) (4) (9,303)
----------
Property NOI (2) 18,509 3,429 1,493 185 23,596
Unallocated Expenses (3) -- -- -- (16,006 ) (16,006)
Unallocated Minority Interest (4) -- -- -- 213 213
Unallocated Other (5) -- -- -- 243 243
Consolidated Net Income -- -- -- -- 8,046
Additions to Real Estate Assets 8,277 389 145 -- 8,811
Total Assets (6) 644,478 83,808 30,636 16,443 775,365
1999
- ----
Total Revenues $ 24,103 $ 6,360 $ 1,724 $ 224 $ 32,411
Property Operating Expenses (1) (7,350) (1,000) (404) -- (8,754)
---------- ----------- ----------- ----------- ---------
Property NOI (2) 16,753 5,360 1,320 224 23,657
Unallocated Expenses (3) -- -- -- (14,991) (14,991)
Unallocated Minority Interest (4) -- -- -- (1,023) (1,023)
Consolidated Net Income -- -- -- -- 7,643
Additions to Real Estate Assets 6,592 2,625 469 26 9,712
Total Assets (6) 607,695 81,993 31,152 16,904 737,744
</TABLE>
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(1) Property operating expenses consist of operating, maintenance, real estate
taxes and insurance expenses as listed in the condensed 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 condensed consolidated statement of
operations.
(4) Unallocated minority interest includes minority interest in income of
consolidated partnerships as listed in the condensed consolidated
statement of operations.
(5) Unallocated other includes gain on sales of real estate as listed in the
consolidated statement of operations.
(6) Unallocated other total assets include cash, corporate offices,
miscellaneous real estate and deferred financing costs.
6. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Unitholders of Operating Partnership elected to convert 125 and 200 common
units of limited partner interest having a recorded value of $1 and $2,
respectively, into shares of common stock during the three months ended March
31, 2000 and 1999, respectively.
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MARCH 31, MARCH 31,
2000 1999
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SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
The following non-cash transactions occurred:
Distributions Accrued For General Partner Not Paid $ 7,766 $ 8,184
Distributions Accrued For Limited Partners Not Paid $ 1,745 $ 1,710
</TABLE>
<PAGE> 10
7. SUBSEQUENT EVENT
On May 1, 2000, the Operating Partnership issued 320,000 Series C 8.75%
cumulative redeemable preferred units (the "Series C Preferred Units"), with a
liquidation value of twenty-five dollars per unit, in exchange for a gross
contribution of $8,000. The Operating Partnership used the proceeds, less
applicable transaction costs and expenses, to pay down the borrowings under the
Credit Facility. The Series C Preferred Units, which may be redeemed by the
Operating Partnership on or after May 1, 2005, have no stated maturity or
mandatory redemption and are not convertible into any other securities of the
Operating Partnership. The Series C Preferred Units are exchangeable at the
option of the preferred unitholder at a rate of one Series B Preferred Unit for
one share of the Company's Series C 8.75% cumulative redeemable preferred stock
beginning May 1, 2010, or earlier under certain circumstances.
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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OVERVIEW
The following discussion should be read in conjunction with 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, operating,
development, redevelopment and acquisition of retail properties in Utah, Idaho,
Colorado, Arizona, Nevada, New Mexico and Wyoming (the "Intermountain Region"),
as well as in Oregon, Washington and California. JP Realty, Inc. conducts all
of its business operations through, and held an 82% controlling general partner
interest in, Price Development Company, Limited Partnership ("the Operating
Partnership") as of March 31, 2000. The Operating Partnership's existing
portfolio consists of 50 properties, in three operating segments, including 18
enclosed regional malls, 25 community centers together with one freestanding
retail property and six mixed-use commercial properties.
The Company's operations in 2000 were positively impacted by the October
20, 1999 opening of the Mall at Sierra Vista, the November 11, 1999 opening of
a sixteen screen Cinemark Theater at Provo Towne Center, the expansion at Boise
Towne Plaza as well as its other development activities. Development
activities added a combined 473,700 square feet of total gross leasable area
("GLA") to the retail portfolio (46,500 in June 1999, 6,000 in September 1999,
335,000 in October 1999, 74,000 in November 1999 and 12,200 in December 1999).
JP Realty, Inc. together with the Operating Partnership and its other
subsidiaries, shall be referred to herein as (the "Company").
REVENUE RECOGNITION
On January 1, 2000, the Company stopped accruing revenues for Percentage
and Overage Rents based upon recent accounting guidance issued by the
Securities and Exchange Commission in Staff Accounting Bulletin No. 101
"Revenue Recognition." Prior to the issuance of the Staff Accounting Bulletin
No. 101 "Revenue Recognition," the Company recognized percentage and overage
rents revenue monthly on an accrual basis based on estimated annual amounts.
Under the new guidance percentage and overage rents revenue is recognized in
the interim periods in which the specified target that triggers the contingent
rental income is achieved.
As a result of adopting the Staff Accounting Bulletin No. 101 "Revenue
Recognition," percentage and overage rents revenue and total revenues decreased
$578 during the three months ended March 31, 1999, which will be recognized in
the fourth quarter. In addition, if the change in revenue recognition
described above had not been made, the net income for the three months ended
March 31, 1999 would have been $6,837 or $0.39 per basic and diluted earnings
per share.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 2000 TO THREE MONTHS ENDED MARCH
31, 1999 (DOLLARS IN THOUSANDS)
Total revenues for the three months ended March 31, 2000 increased $488 or
2% to $32,899 as compared to $32,411 in 1999. Minimum rents decreased $137 or
1% to $24,817 as compared to $24,954 in 1999. The decrease is a result of a
one-time, non-cash, lease termination settlement of $1,957 occurring during
1999. Excluding the $1,957 one-time, non-cash transaction in 1999, minimum
rents increased $1,820 or 8%. Additionally, percentage and overage rents
increased $13 or 3% to $437 as compared to $424 in 1999.
The October 20, 1999 opening of the Mall at Sierra Vista, the November 11,
1999 opening of Cinemark Theater at Provo Towne Centre and the expansion of
Boise Towne Plaza contributed $855 to the minimum rent increase. Minimum rents
for the remaining property portfolio increased $965 in 2000 as compared to
1999.
Revenues recognized from straight-line rents were $397 in 2000 as compared
to $280 in 1999.
<PAGE> 12
Recoveries from tenants increased $681 or 10% to $7,449 as compared to
$6,768 in 1999. Property operating expenses, including operating and
maintenance, and real estate taxes and insurance increased $181 or 3% and $368
or 11% respectively. The opening of the Mall at Sierra Vista, the Cinemark
Theater at Provo Towne Centre and the expansion of Boise Towne Plaza
contributed $238 to recoveries from tenants, $238 to property operating
expenses, including operating and maintenance, and $155 to real estate taxes
and insurance. Recoveries from tenants as a percentage of property operating
expenses were 80% compared to 77% in 1999.
Depreciation and amortization increased $1,100 or 19% to $6,938 as compared
to $5,838 in 1999. This increase is primarily due to the opening of the Mall
at Sierra Vista and the increases in newly developed GLA.
Interest expense increased $90 or 1% to $7,449 as compared to $7,359 in
1999. This increase resulted from higher interest rates on lower borrowings
and a decrease in capitalized interest due to completed GLA. Interest
capitalized on projects under development was $380 in 2000 as compared to $505
in 1999.
The Operating Partnership completed two preferred unit transactions in the
second and third quarters of 1999 which resulted in net proceeds of
approximately $104,571. The Company used approximately $102,300 to reduce
borrowings. The reduction of net income for the quarter ended March 31, 2000
associated with issuing the preferred units was $845.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of its liquidity and capital resources have
historically been for distributions, property acquisitions, property
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"), JP Realty, Inc. is required to distribute to its stockholders at
least 95% of its "Real Estate Investment Trust Taxable Income," as defined in
the Code. During the quarter ended March 31, 2000, the Company declared a
distribution of $.48 per share payable April 18, 2000 to the stockholders and
unitholders of record as of April 6, 2000.
The Company's principal source of liquidity is its cash flow from
operations generated from its real estate investments. As of March 31, 2000,
the Company's cash and restricted cash amounted to approximately $9.6 million.
In addition to its cash and restricted cash, unused capacity under its Credit
Facility totaled $92.5 million at March 31, 2000.
The Company expects to meet its short-term cash requirements, including
distributions, recurring capital expenditures related to maintenance and
improvement of existing properties, through undistributed funds from
operations, cash balances and advances under the Credit Facility.
The Operating Partnership's principal long-term liquidity requirements will
be the repayment of principal on its outstanding secured and unsecured
indebtedness. At March 31, 2000, the Operating Partnership's total outstanding
indebtedness was approximately $444.9 million. Such indebtedness included: (i)
the outstanding balance on the $200 million Credit Facility which equaled $98
million at March 31, 2000 and is due October 2000; (ii) the $12.1 million 8.5%
note secured by real estate, which requires a balloon payment of approximately
$11.9 million in October 2000; (iii) the $61.2 million 6.37% notes secured by
real estate which mature in January 2001; (iv) the Provo Towne Centre
construction loan of approximately $43.8 million which is due in July 2001; (v)
the Spokane Valley Mall construction loan of $41.6 million which is due in
August 2001; (vi) the $100 million senior notes principal payable at $25
million a year beginning March 2005; and (vii) the $83.2 million 6.68% first
mortgage, which requires a balloon payment of approximately $73.0 million in
September 2008.
On April 23, 1999, the Operating Partnership issued 510,000 8.75% Series A
preferred units ("Series A Preferred Units") in a private placement. Each
Series A Preferred Unit represents a limited partner interest with a
liquidation value of twenty-five dollars per unit. The Operating Partnership
used the net proceeds of approximately $12.3 million for the partial repayment
of borrowings outstanding under the Credit Facility. On July 28, 1999, the
Operating Partnership also issued 3,800,000 Series B 8.95% preferred units
("Series B Preferred Units") in a private placement. Each Series B Preferred
Unit represents a limited partnership interest with a liquidation value of
twenty-five dollars per unit. The Company used proceeds of approximately $92.2
million to repay $90 million in borrowings outstanding under the Credit
Facility and increase operating cash. On May 1, 2000, the Operating
Partnership issued 320,000 Series C 8.75% preferred units ("Series C Preferred
Units") in a private placement. Each Series C Preferred Unit represents a
limited partner interest with a liquidation value of twenty-five dollars per
unit. The Company used the gross proceeds of $8 million to pay transaction
costs and for the partial repayment of borrowings outstanding under the Credit
Facility. Quarterly distributions of approximately $278,900, $2,125,600 and
$175,000
<PAGE> 13
are due to the holders of the Series A, Series B and Series C Preferred Units
respectively, on the last day of each March, June, September and December.
Additional long-term capital needs of the Company relate to the expansion
of NorthTown Mall, an enclosed regional mall in Spokane, Washington, through
its consolidated partnership Price Spokane, Limited Partnership. The project
is expected to be completed in the third quarter of 2000 and will add
approximately 100,000 square feet of GLA. At March 31, 2000, the Operating
Partnership had expended an aggregate of approximately $14.0 million for
expansion costs and anticipates expending an additional $6.3 million to
complete the project, which will be funded by the Credit Facility. The Company
is currently involved in smaller expansion and renovation projects of its
properties, which will also be financed by the Credit Facility.
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 costs primarily through advances under the 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.
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 guarantees. This
registration statement, when combined with the Company's unused portion of its
previous shelf registration, would allow for up to $400 million of securities
to be offered by the Company and the Operating Partnership. On March 11, 1998,
pursuant to this registration statement, the Operating Partnership 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 as a result
of terminating this agreement making the effective rate of interest on these
notes 7.24%. Interest payments are due semi annually on March 11th and
September 11th 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 Credit Facility. At March 31, 2000, the
Company and the Operating Partnership had an aggregate of $300 million in
registered securities available under its effective shelf registration
statement.
The Company intends to fund its distribution, development, expansion,
renovation acquisition and debt repayment activities from its Credit Facility
as well as other debt and equity financings, including public financings. The
Company's ratio of debt-to-total market capitalization was approximately 49% at
March 31, 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-----------------------------------------------------------
The Operating Partnership's exposure to market risk is limited to the
impact of 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. At March 31, 2000, the Operating Partnership had approximately
$261,519,000 of fixed rate debt, consisting of $100,000,000 unsecured senior
notes and $161,519,000 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 was approximately
7.0% for the period ended March 31, 2000. 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 has approximately $12,120,000 in fixed rate debt maturing in 2000.
The Operating Partnership's Credit Facility 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 March 31,
2000, the Operating Partnership had approximately $183,392,000 in outstanding
variable rate debt. The weighted average rate of interest on the variable
interest rate debt was approximately 7.3% for the period ended March 31, 2000.
If the interest rate for the Operating Partnership's variable rate debt
increased or decreased by 1% during 2000, the Operating Partnership's interest
rate expense on its outstanding variable rate debt would increase or decrease,
as the case may be, by approximately $1,834,000.
<PAGE> 14
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.
PART II
ITEM 1. LEGAL PROCEEDINGS
-----------------
The Operating Partnership is not aware of any pending or threatened
litigation at this time that will have a material adverse effect on the
Operating Partnership or any of its properties.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
On May 1, 2000, the Operating Partnership sold 320,000 Series C
Preferred Units to SSB Tax Advantage Exchange Fund I, LLC for a purchase price
of $8,000,000. The Series C Preferred Units were issued in a private
transaction exempt from the registration requirements of the Securities Act of
1933 by virtue of Section 4(2) thereunder. The Series C Preferred Units are
exchangeable at the option of the preferred unitholder at a rate of one Series
C Preferred Unit for one share of the Company's Series C 8.75% cumulative
redeemable preferred stock beginning May 11, 2010 or earlier under certain
circumstances.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not applicable.
ITEM 5. OTHER INFORMATION
-----------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) EXHIBITS
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <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 Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership**
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))***
10.15 First Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership**
10.16 Second Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership**
10.17 Third Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership****
10.18 Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership*****
10.19 Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership
27.1 Financial Data Schedule
- ----------------------
* 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 Operating Partnership's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999 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.
**** Document was previously filed with Operating Partnership's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999 and is incorporated herein by reference.
***** Document was previously filed with the Operating Partnership's Annual Report on Form 10-K for the year ended
December 31, 1999 and is incorporated herein by reference.
(b) CURRENT REPORTS ON FORM 8-K
None
</TABLE>
<PAGE> 16
SIGNATURES
Pursuant to the requirements 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
(Registrant)
<S> <C>
May 12, 2000 /s/ G. Rex Frazier
- -------------------------------------- ---------------------------------------
(Date) G. Rex Frazier
PRESIDENT, CHIEF OPERATING OFFICER,
AND DIRECTOR
May 12, 2000 /s/ M. Scott Collins
- -------------------------------------- ---------------------------------------
(Date) M. Scott Collins
VICE PRESIDENT--CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL
& ACCOUNTING OFFICER)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <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 Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership**
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))***
10.15 First Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership**
10.16 Second Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership**
10.17 Third Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership****
10.18 Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership*****
10.19 Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership
27.1 Financial Data Schedule
- --------------------------
* 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 Operating Partnership's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999 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.
**** Document was previously filed with Operating Partnership's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999 and is incorporated herein by reference.
***** Document was previously filed with the Operating Partnership's Annual Report on Form 10-K for the year ended
December 31, 1999 and is incorporated herein by reference.
(b) CURRENT REPORTS ON FORM 8-K
None
</TABLE>
FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
FIFTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP (the
"Partnership"), dated as of May 1, 2000 (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 First Amendment shall have the same meanings ascribed
to them in the Partnership Agreement.
W I T N E S S E T H:
WHEREAS, on the date hereof, Salomon Smith Barney Tax Advantaged
Exchange Fund III, LLC, a Delaware limited liability company (the
"Contributor"), has made a capital contribution of $8,000,000 in cash to the
Partnership in exchange for which Contributor is entitled to receive an
aggregate of 320,000 8.75% Series C Cumulative Redeemable Preferred Units (the
"Series C Preferred Units") in the Partnership with the rights, preferences,
exchange and other rights, voting powers and restrictions, limitations as to
distributions, qualifications and terms and conditions as set forth in the
Partnership Agreement, as amended hereby;
WHEREAS, Contributor desires to become a party to the Partnership
Agreement as a Limited Partner and to be bound by the terms, conditions and
other provisions of the Partnership Agreement;
WHEREAS, the Partnership Agreement is hereby amended (the
"Amendment") to reflect (i) the issuance of the Series C Preferred Units, (ii)
the admission of Contributor as a Limited Partner and holder of 320,000 Series
C Preferred Units, and (iii) other matters described herein;
WHEREAS, pursuant to Section 11.4.C of the Partnership Agreement,
the General Partner has approved the 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, pursuant to Section 4.2 of the Partnership Agreement, the
General Partner is authorized to enter into this Fifth Amendment for purposes
of amending the Partnership Agreement to include the Amendment and the Schedule
of Partners attached hereto.
NOW, THEREFORE, pursuant to Sections 4.2 and 11.4.B of the
Partnership Agreement, the General Partner hereby amends the Partnership
Agreement as follows:
1. ISSUANCE OF PREFERRED UNITS. Pursuant to Section 4.2.A of the
Partnership Agreement, the Partnership hereby designates a new series of
Preferred Units as 8.75% Series C Cumulative Redeemable Preferred Units
("Series C Preferred Units") and the Series C Preferred Units shall have the
rights, preferences, exchange rights, voting powers and other restrictions,
limitations as to distributions, qualifications and terms and conditions
specified in the Partnership Unit Designation attached as SCHEDULE A to this
Amendment to the Partnership Agreement (which schedule shall be titled Schedule
C when attached to the Partnership Agreement).
<PAGE> 1
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
Amendment.
3. RATIFICATION. Except as expressly modified by this Amendment,
all of the provisions of the Partnership Agreement are hereby affirmed and
ratified and remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed by the
General Partner on behalf of the Partnership and the admitted Limited Partner
as of the day and year set forth below.
DATED: May 1, 2000 GENERAL PARTNER:
J.P. REALTY, INC.
By: /s/ G. Rex Frazier
-------------------
Name: G. Rex Frazier
Title: President
SALOMON SMITH BARNEY TAX ADVANTAGED EXCHANGE
FUND III, LLC
By: /s/ Sheri Cabasso
--------------------
Name: Sheri Cabasso
Title: Vice President
<PAGE>
SCHEDULE A
----------
Terms of 8.75% Series C Cumulative Redeemable Preferred Units
SECTION 1 DEFINITIONS. Capitalized terms that are used herein shall have
the same meanings as set forth in the attached Second Amended and Restated
Agreement of Limited Partnership of Price Development Company. Limited
Partnership (the "PARTNERSHIP AGREEMENT") or as otherwise set forth below:
(a) "AFFILIATE" means, as to any Person, any entity which, directly or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person.
(b) "CHARTER" means the Articles of Amendment and Restatement of the
Company, dated as of November 19, 1993, as originally filed as an Articles of
Incorporation with the Maryland State Department of Assessments and Taxation
(the "DEPARTMENT") on September 8, 1993. as amended by a Certificate of
Correction on October 22, 1993, as thereafter amended on October 27, 1993 and
by those certain Articles Supplementary filed with the Department on April 23,
1999, July 28, 1999 and May 1, 2000, and as further amended and restated from
time to time.
(c) "LIQUIDATION PREFERENCE" means, with respect to the Series C
Preferred Units, the sum, payable in U.S. dollars, of (i) $25.00 per Series C
Preferred Unit, plus (ii) the amount of any accumulated and unpaid Priority
Return (as hereinafter defined) with respect to such unit, whether or not
declared, to the date of payment.
(d) "PARITY PREFERRED UNITS" means any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or outstanding
and expressly designated by the Partnership to rank on a parity with the Series
C Preferred Units (as hereinafter defined) with respect to distributions and
rights upon voluntary or involuntary liquidation, winding-up or dissolution of
the Partnership.
(e) "PRIORITY RETURN" means an amount, payable in U.S. dollars, equal to
8.75% per annum of the Liquidation Preference per Series C Preferred Unit,
commencing on the date of issuance of such Series C Preferred Unit, determined
on the basis of a 360-day year of twelve 30-day months (or actual days for any
month which is shorter than a full monthly period), cumulative to the extent
not distributed on any Series C Preferred Unit Distribution Payment Date.
(f) "PTP" means a "publicly traded partnership" within the meaning of
Section 7704 of the Code.
(g) "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity of which
a majority of (i) voting power of the voting equity securities or (ii) the
outstanding equity interests, is owned, directly or indirectly, by such person.
SECTION 2 DESIGNATION AND NUMBER. Pursuant to section 4.2 of the
Partnership Agreement, a series of Partnership Units in the Partnership
designated as the "8.75% Series C Cumulative Redeemable Preferred Units." (the
"SERIES C PREFERRED UNITS") is hereby established. The number of Series
Preferred Units shall be 320,000.
SECTION 3 DISTRIBUTIONS. (a) PAYMENT OF DISTRIBUTIONS. Subject to the
rights of holders of Parity Preferred Units as to the payment of distributions,
pursuant to other Partnership Unit Designations executed under Section 4.2 of
the Partnership Agreement, holders of Series C Preferred Units shall be
entitled to receive the Priority Return when, as and if declared by the
Partnership acting through the General Partner. Such distributions shall be
cumulative, shall accrue from the original date of issuance of the Series C
Preferred Units and will be payable (i) quarterly (such quarterly periods for
purposes of
<PAGE>
payment and accrual will be the quarterly periods ending on the dates
specified in this sentence and not calendar year quarters) in arrears, on
March 31, June 30, September 30, and December 31 of each year commencing on
June 30, 2000 and, (ii) in the event of a redemption of Series C Preferred
Units on the redemption date (each a "SERIES C PREFERRED UNIT DISTRIBUTION
PAYMENT DATE"). If any Series C Preferred Unit Distribution Payment Date is
not a Business Day (as hereinafter defined), then payment of the distribution
to be made on such date will made on the Business Day immediately preceding
such date with the same force and effect as if made on such date.
Distributions on the Series C Preferred Units will be made to the holders of
record of the Series C Preferred Units on the relevant record dates to be fixed
by the Partnership acting through the General Partner, which relevant record
dates to be fixed by the Partnership acting through the General Partner, which
record dates shall in no event exceed 15 Business Days prior to the relevant
Series C Preferred Unit Distribution Payment Date (the "SERIES C PREFERRED UNIT
PARTNERSHIP RECORD DATE").
(b) The term "BUSINESS DAY" means each day, other than a Saturday or a
Sunday, which is not a day on which banking institutions in New York, New York
are authorized or required by law, regulation or executive order to close.
(c) PROHIBITION ON DISTRIBUTION. No distributions on Series C Preferred
Units shall be authorized by the General Partner or paid or set apart for
payment by the Partnership at any such time as the terms and provisions of any
agreement of the Partnership or the General Partner, including any agreement
relating to indebtedness, prohibits such authorization, payment or setting
apart for payment or provides that such authorization, payment or setting apart
for payment would constitute a breach thereof or a default thereunder, or to
the extent that such authorization or payment shall be restricted or prohibited
by law.
(d) DISTRIBUTIONS CUMULATIVE. Distribution on the Series C Preferred
Units will accrue whether or not the terms and provisions of any agreement of
the Partnership, including any agreement relating to its indebtedness at any
time prohibit the current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally available for
the payment of such distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series C Preferred Units
will accumulate as of the Series C Preferred Unit Distribution Payment Date on
which they first become payable. Distributions on account of arrears for any
past distribution periods may be declared and paid at any time, without
reference to a regular Series C preferred Unit Distribution Payment Date to
holders of record of the Series C Preferred Units on the record date fixed by
the Partnership acting through the General Partner which date shall not be more
than 15 Business Days prior to the payment date. Accumulated and unpaid
distributions will not bear interest.
(e) PRIORITY AS TO DISTRIBUTIONS. (i) So long as any Series C
Preferred Units are outstanding, no distribution of cash or other property
shall be authorized, declared, paid or set apart for payment on or with respect
to any class or series of Partnership Interest ranking junior as to the payment
of distributions or rights upon a voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership to the Series C Preferred Units
(collectively, "JUNIOR UNITS"), nor shall any cash or other property be set
aside for or applied to the purchase, redemption or other acquisition for
consideration of any Series C Preferred units, any Parity Preferred Units or
other acquisition for consideration of any Series C Preferred Units, any Parity
Preferred Units or any Junior Units, unless, in each case, all distributions
accumulated on all Series C Preferred Units and all classes and series of
outstanding Parity Preferred Units have been paid in full. The foregoing
sentence shall not prohibit (x) distributions payable solely in Junior Units,
(y) the conversion of Junior Units or Parity Preferred Units into Partnership
Interests ranking junior to the Series C Preferred Units, or (z) the redemption
of Partnership Interests corresponding to any Series C Preferred Stock, Parity
Preferred Stock or Junior Stock to be purchased by the General Partner pursuant
to Article NINTH of the Charter) to preserve the General Partner's
status as a real estate investment trust, provided
<PAGE>
that such redemption shall be upon the same terms as the corresponding purchase
pursuant to Article NINTH of the Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series C Preferred Units, all distributions authorized and
declared on the Series C Preferred Units and all classes or series of
outstanding Parity Preferred Units shall be authorized and declared so that the
amount of distributions authorized and declared per Series C Preferred Unit and
such other classes or series of Parity Preferred Units shall in all cases bear
to each other the same ratio that accrued distributions per Series C Preferred
Unit and such other classes or series of Parity Preferred Units (which shall
not include any accumulation in respect of unpaid distributions for prior
distribution periods if such class or series of Parity Preferred Units do not
have cumulative distribution rights) bear to each other.
(f) NO FURTHER RIGHTS. Holders of Series C Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of time full cumulative distributions described herein.
SECTION 4 LIQUIDATION PROCEEDS. (a) Subject to the rights of holders of
Parity Preferred Units with respect to rights upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, each holder of
Series C Preferred Units shall be entitled to receive out of the assets of the
Partnership legally available for distribution or the proceeds thereof, after
payment or provision for debts and other liabilities of the Partnership, but
before any payment or distributions of the assets shall be made to holders of
Junior Units, an amount equal to such holder's Liquidation Preference;
provided, however, that in no event shall such amount exceed such holder's
Capital Account balance on the date of distribution. If, upon such voluntary or
involuntary liquidation, dissolution or winding-up, there are insufficient
assets to permit full payment of liquidating distributions to the holders of
Series C Preferred Units and any Parity Preferred Units as to rights upon
liquidating, dissolution or winding-up of the Partnership, all payments of
liquidation, distributions on the Series C Preferred Units and such Parity
Preferred Units shall be made so that the payments on the Series C Preferred
Units and such Parity Preferred Units shall in all cases bear to each other the
same ratio that the respective rights of the Series C Preferred Units and such
other Parity Preferred Units (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such Parity
Preferred Units do not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Partnership bear to each other.
(b) NOTICE. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by (i) fax and (ii) by
first class mail, postage pre-paid, not less than 30 and not more than 60 days
prior to the payment date stated therein, to each record holder of the Series C
Preferred Units at the respective addresses of such holders as the same shall
appear on the transfer records of the Partnership.
(c) NO FURTHER RIGHTS. After payment of the full amount of the
Liquidation Preference to which they are entitled, the holders of Series C
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
(d) CONSOLIDATION, MERGER OR CERTAIN OTHER TRANSACTIONS. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the General Partner to, or the consolidation or merger or other
business combination of the Partnership with or into, any corporation, trust or
other entity (or of any corporation, trust or other entity with or into the
Partnership) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
<PAGE>
SECTION 5 OPTIONAL REDEMPTION. (a) RIGHT OF OPTIONAL REDEMPTION. The
Series C Preferred Units may not be redeemed prior to May 1, 2005. On or after
such date, the Partnership shall have the right to redeem the Series C
Preferred Units, in whole (but, not in part), at any time, upon not less than
30 nor more than 60 days' written notice, at a redemption price, payable in
cash, equal to the Liquidation Preference (the "SERIES C REDEMPTION PRICE").
(b) LIMITATION ON REDEMPTION. (i) The Series C Redemption Price (other
than the portion thereof consisting of accumulated but unpaid distributions)
will be payable solely out of the sale proceeds of capital stock of the General
Partner, which will be contributed by the General Partner to the Partnership as
an additional capital contribution, or out of the sale of limited partnership
interests in the Partnership and from no other source. For purposes of the
preceding sentence, "capital stock" means any equity securities (including
Common Stock and Preferred Stock (as such terms are defined in the Charter of
the General Partner), shares, participation or other ownership interest
(however designated) and any rights (other than debt securities convertible
into or exchangeable for equity securities) or options to purchase any of the
foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series C Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series C Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) PROCEDURES FOR REDEMPTION. (i) Notice of redemption will he (A)
faxed, and (B) mailed by the Partnership, by certified mail, postage prepaid,
not less than 30 nor more than 60 days prior to the redemption date, addressed
to the respective holders of record of the Series C Preferred Units at their
respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series C Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (1) the redemption
date, (2) the Series C Redemption Price, (3) the aggregate number of Series C
Preferred Units to be redeemed, (4) the place or places where such Series C
Preferred Units are to be surrendered for payment of the Series C Redemption
Price, (5) that distributions on the Series C Preferred Units to be redeemed
will cease to accumulate on such redemption date and (6) that payment of the
Series C Redemption Price will be made upon presentation and surrender of such
Series C Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series C Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series C Preferred Units being
redeemed funds sufficient to pay the applicable Series C Redemption Price and
will give irrevocable instructions and authority to pay such Series C
Redemption Price to the holders of the Series C Preferred Units upon surrender
of the Series C Preferred Units by such holders at the place designated in the
notice of redemption. On and after the date of redemption, distributions will
cease to accumulate on the Series C Preferred Units called for redemption,
unless the Partnership defaults in the payment thereof, if any date fixed for
redemption of Series C Preferred Units is not a Business Day, then payment of
the Series C Redemption Price payable on such date will he made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls
in the next calendar year, such payment will he made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series C Redemption Price
is improperly withheld or refused and not paid by the Partnership,
distributions on such Series C Preferred Units will continue to accumulate from
the original redemption date to the date of payment, in which case the actual
payment date will he considered the date fixed for redemption for purposes of
calculating the applicable Series C Redemption Price.
<PAGE>
SECTION 6 VOTING RIGHTS. (a) GENERAL. Holders of the Series C
Preferred Units will not have any voting rights or right to consent to any
matter requiring the consent or approval of the Limited Partners, except as set
forth in Section 14.2 of the Partnership Agreement and in this Section 6.
(b) CERTAIN VOTING RIGHTS. So long as any Series C Preferred Units
remain outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series C Preferred Units outstanding
at the time: (i) authorize or create, or increase the authorized or issued
amount of, any class or series of Partnership Interests ranking prior to the
Series C Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests into any such Partnership Interest, or create, authorize or issue any
obligations or security convertible into or evidencing the right to purchase
any such Partnership Interests; (ii) authorize or create, or increase the
authorized or issued amount of any Parity Preferred Units or reclassify any
Partnership Interest into any such Partnership Interest or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests but only to the extent such Parity
Preferred Units are issued to an Affiliate of the Partnership, other than the
General Partner to the extent the issuance of such interests was to allow the
General Partner to issue corresponding preferred stock to persons who are not
Affiliates of the Partnership; or (iii) either (A) exchange shares with,
consolidate with, merge into or with, or convey, transfer or lease its assets
substantially as an entirety, to any corporation or other entity or (B) amend,
alter or repeal the provisions of the Partnership Agreement, whether by merger,
consolidation or otherwise, that would adversely affect the powers, special
rights, preferences, privileges or voting power of the Series C Preferred Units
or the holders thereof: PROVIDED, HOWEVER, that with respect to the occurrence
of a share exchange, merger, consolidation or a sale or lease of all of the
Partnership's assets as an entirety, so long as (1) the Partnership is the
surviving entity and the Series C Preferred Units remain outstanding with the
terms thereof unchanged, or (2) the resulting, surviving or transferee entity
is a partnership, limited liability company or other pass-through entity
organized under the laws of any state and substitutes the Series C Preferred
Units for other interests in such entity having substantially the same terms
and rights as the Series C Preferred Units, including with respect to
distributions, voting rights and rights upon liquidation, dissolution or
winding-up, then the occurrence of any such event shall not be deemed to
adversely affect such rights, privileges or voting powers of the holders of the
Series C Preferred Units; and PROVIDED FURTHER that any increase in the amount
of Partnership Interests or the creation or issuance of any other class or
series of Partnership Interests, in each case ranking (y) junior to the Series
C Preferred Units with respect to payment of distributions or the distribution
of assets upon liquidation, dissolution or winding-up, or (z) on a parity to
the Series C Preferred Units with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up, to the
extent such Partnership Interest are not issued to an affiliate of the
Partnership, other than the General Partner to the extent the issuance of such
interests was to allow the General Partner to issue corresponding preferred
stock to persons who are not Affiliates of the Partnership, such issuance shall
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers. In the event of any conflict between the
provisions of Section 14.2 of the Partnership Agreement and the provisions of
this SECTION 6, the provisions of this SECTION 6 shall control.
SECTION 7 TRANSFER RESTRICTIONS. The Series C Preferred Units shall be
subject to all of the provisions of Article 11 of the Partnership Agreement.
Article 11 is hereby amended by adding a new Section 11.8 to the end of Article
11 as follows:
"11.8 Notwithstanding anything to the contrary contained in Article 11
hereof, (i) a transfer of all or any portion of the Series C Preferred Units
shall not require the consent of the General Partner; (ii) the transferee of
such transfer shall be admitted to the Partnership as a Limited Partner on the
closing date of such transfer; (iii) the Partnership and the General Partner
shall treat such transferee as the absolute owner of the interest transferred
in all respects; and (iv) the General Partner shall not have the right to
require any transferor or transferee of such Series C Preferred Units to have
such Series C Preferred Units redeemed; provided that the foregoing shall not
apply to (x) a transfer in violation of Section 11.3C
<PAGE>
hereof, (y) a transfer that would create a risk that the Partnership would
fail to qualify for the private placement or lack of actual trading safe
harbor of Notice 88-75 or Treasury Regulation *1.7704-1, and (z) a transfer
to any Person that is a competitor (as reasonably determined by the General
Partner) of the General Partner."
SECTION 8 EXCHANGE RIGHTS. (a) RIGHT TO EXCHANGE. (i) Subject in all
cases to the ownership limitations set forth in the Charter, Series C Preferred
Units will he exchangeable in whole (but not in part) at any time on or after
the tenth (10th) anniversary of the date of issuance, at the option of the
holders thereof, for authorized but previously unissued shares of 8.75% Series
C Cumulative Redeemable Preferred Stock of the General Partner (the "SERIES C
PREFERRED STOCK") at an exchange rate of one share of Series C Preferred Stock
for one Series C Preferred Unit, subject to adjustment as described below (the
"SERIES C EXCHANGE PRICE"), provided that the Series C Preferred Units will
become exchangeable at any time, in whole (but not in part), at the option of
the holders of Series C Preferred Units for Series C Preferred Stock if (x) at
any time full distributions shall not have been timely made on any Series C
Preferred Unit with respect to six prior quarterly distribution periods,
whether or not consecutive; PROVIDED, HOWEVER, that a distribution in respect
of Series C Preferred Units shall be considered timely made if made within two
Business Days after the applicable Series C Preferred Units Distribution
Payment Date if at the time of such late payment there shall not be any prior
quarterly distribution periods in respect of which full distributions were not
timely made, (y) upon receipt by a holder or holders of Series C Preferred
Units of (1) notice from the General Partner that the General Partner or a
Subsidiary of the General Partner has taken the position that the Partnership
is, or upon the occurrence of a defined event in the immediate future will be,
a PTP and (2) an opinion rendered by an outside nationally recognized
independent counsel familiar with such matters addressed to a holder or holders
of Series C Preferred Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will
be, a PTP, or (z) the holders of the Series C Preferred Units determine and the
General Partner confirms that such holders hold or will hold 20% or more of the
profits and capital interests of the Partnership: PROVIDED, that (i) in the
case of clause (z), the Series C Preferred Units will be exchangeable only to
the extent necessary to reduce the holdings of the holders of the Series C
Preferred Units to less than 20% of the profits and capital interests of the
Partnership and (ii) if such notice and opinion described in clauses (1) and
(2) refers to a defined event, the Series C Preferred Units will become
exchangeable only after the defined event occurs; PROVIDED FURTHER, that in the
event any such exchange would result from application of clause (y)(2) above,
no exchange will he available to the holders of Series C Preferred Units if,
within 15 Business Days of the date of delivery of the opinion referred to in
clause (y)(2) above, the General Partner delivers to such holders an opinion
rendered by an outside nationally recognized independent counsel familiar with
such matters addressed to the General Partner, that upon the occurrence of such
defined event the Partnership will not or likely will not become a PTP. In
addition to and not in limitation of the foregoing, but subject to the
ownership limitations in the Charter, the Series C Preferred Units may be
exchanged for Series C Preferred Stock, in whole (but not in part), at the
option of any holder prior to the tenth (10th) anniversary of the issuance date
and after the third anniversary thereof if such holder of Series C Preferred
Units shall deliver to the General Partner either (i) a private letter ruling
addressed to such holder of Series C Preferred Units or (ii) an opinion of
independent counsel reasonably acceptable to the General Partner based on the
enactment of temporary or final Treasury Regulations or the publication of a
Revenue Ruling, in either case to the effect that an exchange of the Series C
Preferred Units at such earlier time would not cause the Series C Preferred
Units to be considered "stock and securities" within the meaning of
Section 351(c) of the Code for purposes of determining whether time holder of
such Series C Preferred Units is an "investment company" under Section 721(b)
of the Code if an exchange is permitted at such earlier date.
(ii) Notwithstanding anything to the contrary set forth in SECTION
8(A)(I), if an Exchange Notice (as hereinafter defined) has been delivered to
the General Partner, then the General Partner may, at its option, elect to
redeem or cause the Partnership to redeem all (but not a portion) of the
<PAGE>
outstanding Series C Preferred Units for cash in an amount equal to the
Liquidation Preference per Series C Preferred Unit. The General Partner may
exercise its option to redeem the Series C Preferred Units for cash pursuant to
this SECTION 8(A)(II) by giving each holder of record of Series C Preferred
Units notice of its election to redeem for cash, within 15 Business Days after
receipt of the Exchange Notice, by fax and registered mail, postage paid, at
time address of each holder as it may appear on the records of the Partnership
stating (A) the redemption date, which shall be no later than 60 days following
the receipt of the Exchange Notice, (B) the redemption price, (C) the place or
places where the Series C Preferred Units are to be surrendered for payment of
the redemption price, (D) that distributions on the Series C Preferred Units
will cease to accrue on such redemption date, (E) that payment of the
redemption price will he made upon presentation and surrender of time Series C
Preferred Units and (F) the aggregate number of Series C Preferred Units to be
redeemed.
(iii) If an exchange of all or a portion of Series C Preferred Units
pursuant to SECTION 8(A)(I) would violate the provisions on ownership
limitation of the General Partner set forth in Article NINTH of the Charter of
the General Partner with respect to the Series C Preferred Stock, the General
Partner shall give written notice thereof to each holder of record of Series C
Preferred Units, within 15 Business Days following receipt of the Exchange
Notice, by fax, and registered mail, postage prepaid, at the address of each
such holder set forth in the records of the Partnership. In such event, each
holder of Series C Preferred Units shall he entitled to exchange, pursuant to
the provisions of SECTION 8(B) a number of Series C Preferred Units which would
comply with the provisions on the ownership limitation of the General Partner
set forth in such Article NINTH of the Charter of the General Partner and any
Series C Preferred Units not so exchanged (the "EXCESS UNITS") shall be
redeemed by the Partnership for cash in an amount equal to the Liquidation
Preference. The written notice of the General Partner shall state (A) the
number of Excess Units held by such holder, (B) the redemption price of the
Excess Units, (C) the date on which such Excess Units shall he redeemed, which
date shall be no later than 60 days following the receipt of the Exchange
Notice, (D) the place or places where such Excess Units are to be surrendered
for payment of the Redemption Price, (E) that distributions on the Excess Units
will cease to accrue on such redemption date, and (F) that payment of the
redemption price will be made upon presentation and surrender of such Excess
Units. In the event an exchange would result in Excess Units, as a condition
to such exchange each holder of such units agrees to provide representations
and covenants reasonably requested by the General Partner relating to (1) the
widely held nature of the interests in such holder, sufficient to assure the
General Partner that the holder's ownership of stock of the General Partner
(without regard to the limits described above) will not cause any individual to
own in excess of 5.0% of the stock of the General Partner; and (2) to the
extent such holder can so represent and covenant without obtaining information
from its owners, the holder's ownership of Units of the Partnership and its
affiliates.
(iv) The redemption of Series C Preferred Units described in SECTION
8(A)(II) AND (III) shall be subject to the provisions of SECTION 5 provided,
however, that the term "redemption price" in such Section shall he read to mean
the Liquidation Preference per Series C Preferred Unit being redeemed.
(b) PROCEDURE FOR EXCHANGE. (i) Any exchange shall be exercised
pursuant to a notice of exchange (the "EXCHANGE NOTICE") delivered to the
General Partner by the holder who is exercising such exchange right, by fax and
by certified mail postage prepaid. The exchange of Series C Preferred Units,
or a specified portion thereof, may be effected after the fifth Business Day
following receipt by the General Partner of the Exchange Notice by delivering
certificates, if any, representing such Series C Preferred Units to be
exchanged together with, if applicable, written notice of exchange and a proper
assignment of such Series C Preferred Units to the office of the General
Partner maintained for such purpose. Currently, such office is located at 35
Century Park-Way, Salt Lake City, Utah 84115. Each exchange will be deemed to
have been effected immediately prior to the close of business on the date on
which such Series C Preferred Units to be exchanged (together with all required
documentation) shall have been surrendered and notice shall have been received
by the General Partner as aforesaid and the
<PAGE>
Exchange Price shall have been paid. Any Series C Preferred Stock issued
pursuant to this SECTION 8 shall be delivered as shares which are duly
authorized, validly issued, fully paid and nonassessable, free of pledge, lien,
encumbrance or restriction other than those provided in the Charter, the
ByLaws of the General Partner, the Securities Act of 1933, as amended, and
relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series C Preferred Units for
shares of Series C Preferred Stock, an amount equal to the accrued and unpaid
Priority Return, whether or not declared, to the date of exchange on any Series
C Preferred Units tendered for exchange shall (a) accrue on the shares of the
Series C Preferred Stock for which such Series C Preferred Units are exchanged,
and (b) continue to accrue on such Series C Preferred Units, which shall remain
outstanding following such exchange, with the General Partner as the holder of
such Series C Preferred Units. Notwithstanding anything to the contrary set
forth herein, in no event shall a holder of a Series C Preferred Unit that was
validly exchanged into Series C Preferred Stock pursuant to this section (other
than the General Partner now holding such Series C Preferred Unit), receive a
distribution from the Partnership, if such holder, after exchange, is entitled
to receive a distribution from the General Partner with respect to the share of
Series C Preferred Stock for which such Series C Preferred Unit was exchanged
or redeemed.
(iii) Fractional shares of Series C Preferred Stock are not to be
issued upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series C Preferred Stock on
the day prior to the exchange date as determined in good faith by the Board of
Directors of the General Partner.
(c) ADJUSTMENT OF EXCHANGE PRICE. (i) The Exchange Price is subject to
adjustment upon certain events, including subdivisions, combinations and
reclassification of the Series C Preferred Stock.
(ii) In case the General Partner shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the General Partner's
capital stock or sale of all or substantially all of the General Partner's
assets), in each case as a result of which the Series C Preferred Stock will be
converted into the right to receive shares of capital stock, other securities
or other property (including cash or any combination thereof), each Series C
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property (including cash or
any combination thereof) upon the consummation of such transaction by a holder
of that number of shares of Series C Preferred Stock or fraction thereof into
which one Series C Preferred Unit was exchangeable immediately prior to such
transaction. The General Partner may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
SECTION 9 NO CONVERSION RIGHTS. Except as set forth in SECTION 8, the
holders of the Series C Preferred Units shall not have any rights to convert
such units into shares of any other class or series of stock or into any other
securities of, or interest in, the Partnership.
SECTION 10 NO SINKING FUND. No sinking fund shall be established for the
retirement or redemption of Series C Preferred Units.
SECTION 11 EXHIBIT A TO PARTNERSHIP AGREEMENT. In order to duly reflect
the issuance of the Series C Preferred Units provided for herein, the
Partnership Agreement is hereby further amended pursuant to Section 14.1.B
thereof by deleting Exhibit A thereto and replacing Exhibit A attached hereto
therefor.
SECTION 12 ALLOCATION OF GROSS INCOME. The following paragraph shall be
applied in conjunction with Section 6.2H of the Partnership Agreement:
The allocation of gross income to the Series C Preferred Units
pursuant to Section 6.2H for any Partnership Year shall be limited to the
excess, if
<PAGE>
any, of Profits over Losses for all Partnership Years since
the issuance of the Series C Preferred Units (calculated solely for this
purpose as if Section 6.2H were not part of the Partnership Agreement and
without regard to Depreciation); PROVIDED, that the aggregate gross
income allocation to be made to the Class C Preferred Units and any other
Parity Preferred Units subject to a similar limitation shall not exceed
the relevant amount of Profits over Losses available to be allocated to
all such Parity Preferred Units.
<PAGE>
EXHIBIT A
---------
PARTNERS AND PARTNERSHIP INTERESTS
----------------------------------
<TABLE>
<CAPTION>
Partnership Percentage
Name of Partner Units Interest
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
GENERAL PARTNER
- ---------------
JP Realty, Inc.
35 Century Park-Way
Salt Lake City, Utah 84115 16,219,290 81.68727%
LIMITED PARTNERS
- ----------------
Boise Mall Investment Company, Ltd. 824,411 4.15208%
Brown, Mike 125 0.00063%
Butterworth, Jodi 150 0.00076%
Bybee, Terry 320 0.00161%
Cache Valley Mall Partnership, Ltd. 328,813 1.65604%
Chandler, Harry 100 0.00050%
Clauson, Pat 100 0.00050%
Cloward, Burke 35,460 0.17859%
Cordano, Alan 765 0.00385%
Cordano, James 1,531 0.00771%
Curtis, Greg 24 0.00012%
East Ridge Partnership 100 0.00050%
Enslow, Mike 320 0.00161%
Fairfax Holding, LLC 786,226 3.95977%
Frank, Alan 5,486 0.02763%
Frazier, G. Rex 3,680 0.01853%
Frei, Michael 6,817 0.03433%
Gillette, Jerry 100 0.00050%
Hall Investment Company 10,204 0.05139%
Hansen, Kenneth 5,102 0.02570%
JCP Realty, Inc. 350,460 1.76507%
KFC Advertising 5,487 0.02763%
Kelley, Chad 125 0.00063%
Kelley, Paul 25 0.00013%
King American Hospital, Ltd. 63,424 0.31943%
King Provo, Ltd. 64,872 0.32672%
King, Warren P. 6,244 0.03145%
Mendenhall, Paul K. 214 0.00108%
Mulkey, Tom 100 0.00050%
North Plains Development Company, Ltd. 19,033 0.09586%
</TABLE>
<TABLE>
<CAPTION>
Partnership Percentage
Name of Partner Units Interest
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
North Plains Land Company, Ltd. 1,758 0.00885%
Olson, Carl 1,894 0.00954%
Orton, Byron 125 0.00063%
Peterson, Martin G. 692 0.00349%
Pine Ridge Development Company, Ltd. 77,641 0.39103%
Pine Ridge Land Company, Ltd. 5,176 0.02607%
Price, John 200 0.00101%
Price, Steven 350 0.00176%
Price 800 Company, Ltd. 156,615 0.78878%
Price Commerce, Ltd. 63,423 0.31943%
Price East Bay, Ltd. 37,157 0.18714%
Price Eugene Bailey Company, Ltd. 17,497 0.08812%
Price Fremont Company, Ltd. 166,315 0.83763%
Price Glendale Company, Ltd. 3,935 0.01982%
Price Orem Investment Company, Ltd. 66,747 0.33617%
Price Plaza 800 Company, Ltd. 12,199 0.06144%
Price Riverside Company, Ltd. 10,983 0.05532%
Price Rock Springs Company, Ltd. 11,100 0.05590%
Price Taywin Company, Ltd. 106,381 0.53578%
Priet, Nettie 100 0.00050%
Red Cliff Mall Investment Company 167,379 0.84299%
Roebbelen Engineering 72,000 0.36262%
Souvall, Sam 23,371 0.11771%
Taycor Ltd. 35,462 0.17860%
Tech Park II Company, Ltd. 4,929 0.02482%
Vise, Phil 160 0.00081%
Watcott, Keith 35,460 0.17859%
Watkins, Gary 5,102 0.02570%
Wilcher, Abe 5,306 0.02672%
Wilcher, Lena 10,000 0.05036%
YSP 16,787 0.08455%
--------------------- ---------------------
Total 19,855,352 100.00000%
--------------------- ---------------------
SSB Tax Advantaged Exchange Fund I, LLC 510,000 100.00000%{1}
--------------------- --------------------
Belcrest Realty Corporation 2,575,000 73.02632%{2}
Belair Real Estate Corporation 1,255,000 26.97368%{2}
--------------------- --------------------
3,800,000 100.00000%
--------------------- --------------------
SSB Tax Advantaged Exchange Fund III, LLC 320,000 100.00000%{3}
--------------------- --------------------
</TABLE>
1. Represents all of the Series A Preferred Units issued by the Partnership.
2. Represents a percentage of the Series B Preferred Units issued by the
Partnership.
3. Represents all of the Series C Preferred Units issued by the Partnership.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PRICE
DEVELOPMENT COMPANY, LIMITED PARTNERSHIP FORM 10-Q FOR THE PERIOD ENDED
MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> $ 9,622 $ 11,355
<SECURITIES> 0 0
<RECEIVABLES> 0<F1> 0<F1>
<ALLOWANCES> 0<F1> 0<F1>
<INVENTORY> 0 0
<CURRENT-ASSETS> 0<F2> 0<F2>
<PP&E> 0<F1> 0<F1>
<DEPRECIATION> 0<F1> 0<F1>
<TOTAL-ASSETS> 775,365 738,322
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
104,571 0
<COMMON> 198,920 235,248
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 775,365 738,322
<SALES> 0 0
<TOTAL-REVENUES> 32,899 32,411
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 17,860<F3> 16,386<F4>
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 7,449 7,359
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,641 7,643
<EPS-BASIC> $0.28 $0.36
<EPS-DILUTED> $0.28 $0.36
<FN>
<F1>The Company utilizes a condensed balance sheet format for 10-Q reporting.
Amounts are included in Other Assets.
<F2>The financial statements reflect an unclassifed balance sheet due to the
nature of the Company's industry - Real Estate.
<F3>Amount is comprised of $25,309 of expenses less interest expense of $7,449
reflected elsewhere in this Financial Data Schedule.
<F4>Amount is comprised of $23,745 of expenses less interest expense of $7,359
reflected elsewhere in this Financial Data Schedule.
</FN>
</TABLE>
